Tribunal Cancels £11,000 Penalty Against Sole Company Director

Upper Tribunal says director’s position alone did not establish consent under section 251.

The Upper Tribunal has cancelled an £11,000 financial penalty imposed on Tariq Khuja after finding there was no proper basis for concluding that he had consented to housing offences committed by his company.

The case concerned OX1 Limited, the corporate landlord of three flats at The Blarney Stone in Banbury. Khuja was the company’s sole director and shareholder. Cherwell District Council had imposed penalties on both OX1 Limited and Khuja following breaches of regulations applying to houses in multiple occupation (HMOs).

The First-tier Tribunal had reduced the original penalty from £24,975 to £11,000 for each of Khuja and OX1 Limited. It concluded that Khuja had consented to the company’s breaches because he was its sole director, shareholder and “directing mind”.

The Upper Tribunal, however, found that this was not enough to establish personal liability under section 251 of the Housing Act 2004. The provision can make a company officer personally liable where an offence committed by a corporate body is proved to have occurred with the officer’s consent or connivance, or is attributable to the officer’s neglect.

Judge Elizabeth Cooke said liability does not follow simply from holding the position of director. For consent to be established, directly or by inference, the director must be shown to have known the facts constituting the offence. A finding that a director ought to have known what was happening, or that compliance fell within their responsibilities, may indicate neglect but does not itself establish consent.

In Khuja’s case, the Tribunal found no evidence that he knew about the regulatory breaches before the council’s inspection in August 2023. After he became aware of the issues, he worked with the council to remedy them. The Tribunal therefore said that his later knowledge could not support an inference that the breaches had been committed with his consent.

The Tribunal also considered the separate issue of double-counting. Referring to Sutton v Norwich City Council, it said the First-tier Tribunal had failed to properly consider the effect of imposing penalties on both the company and its sole director. Because the company penalty remained in place, the personal penalty also required careful consideration to avoid effectively penalising the director twice.

The Upper Tribunal declined to send the case back to the First-tier Tribunal for reconsideration. It concluded that remission would be potentially futile, disproportionate and unfair given the evidence available.

The Tribunal therefore set aside the £11,000 penalty against Khuja and cancelled it. The penalty imposed on OX1 Limited was not challenged in this appeal and remains in place.

The decision provides a specific clarification of section 251: a director’s position alone cannot establish consent to a corporate housing offence. Evidence of actual knowledge of the facts constituting the offence is required where personal liability is based on consent.