Court of Appeal upholds “reasonable excuse” defence where landlord was deemed served with (but never received) improvement notice

Summary

In a judgment of some importance for housing enforcement and appeals against financial penalties, the Court of Appeal has dismissed Manchester City Council’s appeal and confirmed that a landlord may rely on the statutory defence of “reasonable excuse” where an improvement notice, although validly served, was never in fact received.

The appeal concerned the proper interpretation and application of section 30(4) of the Housing Act 2004 (“HA 2004”), which provides a defence to the offence of failing to comply with an improvement notice where the person served has a “reasonable excuse”. The decision provides authoritative guidance on the relationship between effective service, non‑receipt, and the scope of the reasonable excuse defence.

Background

The Respondent landlord, Naila Tabbasam, owned and let a single residential property in Manchester. Following complaints from tenants, the Council served an improvement notice in May 2019, together with a sequence of related enforcement documents. Those documents were sent to the address recorded in the proprietorship register at HM Land Registry (the tenanted property itself) and to a former address appearing on council tax records, which Ms Tabbasam had in fact vacated in 2014.

Ms Tabbasam did not receive any of this correspondence. The tenants did not forward it to her and she no longer lived at the alternative address used by the Council.

In January 2020 the Council imposed a financial penalty for non‑compliance with the improvement notice. Ms Tabbasam first became aware of the enforcement action only months later, when a payment notice was sent to her current home address (which was also available to the Council’s in their tax records). Ms Tabbasam appealed.

The First‑tier Tribunal accepted on the authority of Oldham MBC v Tanna [2017] EWCA Civ 50 that the notice had been validly served, rejected the reasonable excuse defence, but reduced the penalty. On appeal, the Upper Tribunal allowed Ms Tabbasam’s appeal, finding that she did have a reasonable excuse. The Council appealed to the Court of Appeal.

The Appeal

The appeal raised a narrow but important question: where an improvement notice has been properly served at the address shown on the Land Registry title, can a landlord nevertheless establish a defence of reasonable excuse on the basis that the notice was never received?

The Council argued that permitting such a defence would undermine the statutory scheme, particularly where the failure of receipt was said to be attributable to the landlord’s own failure to update address details. Reliance was placed on authority concerning deemed service and on cases in which ignorance of legal obligations has not excused regulatory breaches.

The Judgment

Giving the leading judgment, Lord Justice Zacaroli (with whom Lady Justice Falk and Lord Justice Dove agreed) dismissed the appeal.

The Court made clear that there is a critical distinction between:

• whether an improvement notice has been validly served (a question going to the elements of the offence); and
• whether, despite valid service, the recipient has a reasonable excuse for failing to comply with it.

The Court held that earlier authorities concerning effective service – including cases where severe consequences flowed despite non‑receipt – were of limited relevance because they did not involve a statutory defence of reasonable excuse.

Importantly, the Court rejected the proposition that a landlord is automatically precluded from relying on the defence merely because the address for service at the Land Registry was not updated. The responsibility to keep an address for service does not, without more, render non‑receipt culpable in every case. In fact, in this case, Ms Tabbasam had not breached any obligation as the Court did not consider it wrong to have identified the address of the tenanted property as the address for service with HMLR.

On the evidence accepted by the tribunals below, Ms Tabbasam had never received the improvement notice, had not deliberately evaded service, and had remedied the defects once she became aware of them. The immediate cause of the failure of receipt was that correspondence sent to the tenanted property was not passed on by the tenants. In those circumstances, it was open to the Upper Tribunal to find that she had a reasonable excuse within the meaning of section 30(4).

Comment

Some commentators have raised concerns that this decision was liable to help assist landlords in evading financial penalties. They may record the address of the property as the address at HMLR, and thereby evade service of notices. While this is the decision in the present case, the Court was at pains to emphasise that the reasonable excuse defence is ultimately fact sensitive. A local authority has the ability to source the address of the landlord under s.16 of the Local Government (Miscellaneous Provisions) Act 1976 and ultimately will need to in fact serve a landlord when they seek to enforce payment.

The Court also drew a distinction between licensing cases – where compliance is binary and anyone is capable of knowing if the statutory requirements are met – and improvement notice cases – where compliance is necessarily dependant on the content of the notice.

A copy of the Judgment can be found here.

Hugh Rowan appeared on a pro bono basis instructed by Advocate as junior Counsel for the Respondent.