A landlord company director has had an £11,000 personal housing penalty cancelled after the Upper Tribunal ruled that simply being the firm’s sole director was not enough to establish that he had consented to housing offences.

Tariq Khuja is the director and shareholder of OX1 Ltd, which owned three flats above commercial premises in Banbury – but he was not the landlord.

Cherwell District Council had fined both OX1 and Khuja £24,975 over breaches of regulations applying to HMOs. The First-tier Tribunal (FTT) later reduced the penalties to £11,000 each.

Khuja appealed on two grounds: first, that there was no basis for finding that he had consented to the offence and second, that the FTT had failed to properly consider the risk of double counting when imposing penalties on both him and the company.

Establish

The Upper Tribunal ruled that the FTT had failed to establish a proper basis for finding Khuja personally liable under section 251 of the Housing Act 2004, which did not make a director liable simply because of their position.

Judge Elizabeth Cooke said that a finding that a director “ought to have known” what was happening, or that compliance with housing regulations fell within their responsibilities, might indicate neglect depending on the circumstances, but was not a finding of consent.

In Khuja's case, the FTT had concluded that the breaches were committed with his consent because he was the company’s sole director and shareholder and its “directing mind”.

Defects

But Judge Cooke said there had been no finding that Khuja actually knew about the defects before the council inspected the property in August 2023. The breaches were also omissions rather than decisions or actions, making it difficult to attribute them to Khuja simply because he was the company’s ‘controlling mind’, she said.

She added: “He certainly knew after that, but since from then on he was working with the respondent to remedy the breaches it is impossible to infer from that knowledge that the breaches were committed with his consent.”

The Upper Tribunal noted that Khuja was the sole shareholder, meaning the company’s penalty affected him “pound for pound”, and said this should have been taken into account when determining any personal penalty. The penalty against OX1 Ltd remains in place.

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