The computer shouldn’t have said “no” – artificial intelligence lacked discretion!

23rd June 2021

As a landlord, it can be a stressful managing several properties. Disputes can arise, so it is essential that you seek legal advice early on.

We recently acted for a residential landlord in an appeal to the First Tier Tribunal, Property Chamber, against financial penalties imposed by Leeds City Council under the section 249A Housing Act 2004.

This provision gives a Local Housing Authority (“LHA”) the power to impose a financial penalty on a person if it is satisfied beyond reasonable doubt that the person’s conduct amounts to a relevant housing offence.

A person who is subject to such a penalty may appeal against it under Schedule 13A of the Act, and the appeal is in effect a rehearing of the LHA’s decision.  The appeal can be on the basis that no offences have been committed and/or that the penalties imposed are excessive.

In this case, the client was the owner of five substantial Edwardian houses in Leeds each of which was occupied by four tenants.

Following inspections by the LHA he received notices from the Council informing him of its intention to impose penalties which in total amounted to almost £92,000.  The  notices were sketchy, and further information was obtained from the Council and representations made on the landlord’s behalf against the imposition of the penalties and the amount.  The Council ignored the representations and served final notices imposing the same penalty as was in the original ones. .

It turned out that the penalties imposed were calculated by a computer programme which produced the figure, but which programme had no algorithm to identify the need to apply a degree of balance/fairness to the penalties it calculated.

The landlord appealed to the Property Tribunal arguing that offences had not been committed, that in relation to certain matters he had acted on the advice of a housing officer and in any event, the penalties imposed were too large in themselves and significantly too large overall and that the Council should have carried out a balancing exercise to look at the totality of the penalties which were imposed.

The case occupied the Tribunal for two days and the landlord was successful in reducing the penalties by almost 50%, from £92,000 to £47,250.  It was found that  the landlord had a reasonable excuse for acting as he did in relation to some matters because he was entitled to rely on the advice of the LHA’s officer, some issues which the Council sought to rely upon had not been properly particularised in the notices and were dismissed. The Tribunal found that some issues were  considered to be the appropriate individual penalties before it carried out an exercise under the “Totality Principle” to decide the correct figure to levied upon the landlord.

The evidence of the housing officer was that he had not applied this principle  at all.  His evidence was that he had used the Council’s computer programme, which does not make any allowance for the Totality Principle.

The computer programme had automatically populated sections of a spreadsheet and gave no opportunity for the decision maker to apply any discretion.

The Council officer had wrongly taken the view that the Totality Principle had no part to play in his exercise.  The Tribunal was of the opinion that whilst the computerised system was, “a useful tool …. It should not be allowed to make the ultimate decision.”

The Tribunal felt that it was wrong for the housing officer simply to do, “what the computer told him to do”.  The Tribunal accepted the landlord’s argument that the Council should have stood back and looked at the totality of the penalties before deciding a final figure.

If you are a landlord concerned about  financial penalties, or needs advice on any other property related disputes, we’re here for you – get in touch.

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