Tariq Khuja and OX1 Limited v Cherwell District Council
| Tribunal | Upper Tribunal (Lands Chamber), on appeal from the First-tier Tribunal, Property Chamber |
| Judge | Upper Tribunal Judge Elizabeth Cooke |
| Decision | 25 September 2026 |
| Hearing | 23 September 2026 |
| Jurisdiction | England and Wales |
| Appellants | Tariq Khuja, sole director of the corporate landlord, and OX1 Limited, freeholder of the property |
| Respondent | Cherwell District Council, the local housing authority |
| Property | Flats 1-3, The Blarney Stone, Banbury, OX15 5AS, three flats over commercial premises |
| Offence | Failure to comply with the Licensing and Management of Houses in Multiple Occupation (Additional Provisions) (England) Regulations 2007, an offence under section 234(5) of the Housing Act 2004 |
| Case reference | LC-2026-000003 |
| First-tier Tribunal references | CAM/38UB/HNA/2024/0614, CAM/38UB/HNA/2024/0615, CAM/38UB/HIR/2025/0001, CAM/38UB/HIN/2025/0002 |
Summary
Cherwell District Council fined OX1 Limited for breaches of the houses in multiple occupation management regulations at three flats in Banbury, and fined Mr Khuja the same sum personally as its sole director. The route to him was section 251 of the Housing Act 2004, which catches a director where the company's offence is committed with his consent or connivance or is attributable to his neglect.
The First-tier Tribunal found consent in one sentence, because he was sole director and shareholder and the directing mind of the company. The Upper Tribunal has set that finding aside. Consent requires proof that the director knew the facts constituting the offence, and no such finding was made. His penalty is cancelled rather than remitted. The company's penalty stands.
Background and facts
OX1 Limited is the freeholder of The Blarney Stone, three flats above commercial premises in Banbury, and Mr Khuja is its sole director. The company let the flats and employed a managing agent. He told the Tribunal he was not directly involved in day to day management, and that in the relevant period his wife was very poorly.
The council inspected on 8, 10 and 16 August 2023 and told the agent at once that urgent work was required. Improvement Notices followed in October 2023, and a notice of intention to impose a penalty went to both company and director on 7 February 2024, listing eight breaches of the 2007 Regulations. Several lay at the interface with the commercial premises below, then being refurbished. The final notice of 11 July 2024 imposed 24,975 pounds on each.
The First-tier Tribunal set aside the Improvement Notice as far too wide, upheld the offence, reduced both penalties to 11,000 pounds, and found Mr Khuja personally liable in a single sentence.
The issue
Mr Khuja argued that the conditions for a director's liability in section 251 were not met, and that identical penalties on him and on his own company counted the same wrong twice.
The council argued that he was the controlling mind, so every decision of the company was taken with his consent. The Tribunal noted that no decisions could be pointed to, because the breaches were omissions.
The decision
The Tribunal began with the statutory text, and with an absence. There is no authoritative case law about section 251, so it was read on its own terms.
it is perfectly clear that the liability of a director or other officer is not established by his position alone; specifically, liability does not follow simply from being the directorJudge Elizabeth Cooke, paragraph 6
Consent, connivance and neglect were then separated. The judge treated section 37 of the Health and Safety at Work Act 1974 as virtually identical and drew on the authorities about it, which say much about neglect and little about consent. Neglect can be inferred where the matter fell within the director's own functions. Consent cannot.
An inference of consent must be an inference of actual knowledge.Judge Elizabeth Cooke, paragraph 11
A finding that the director ought to have known what was happening, or that compliance with the housing regulations was within his area of responsibility, may indicate neglect (depending on the particular facts) but is not a finding of consent.Judge Elizabeth Cooke, paragraph 11
Against that test the single sentence below could not stand. There was no analysis of the section, no consideration of what Mr Khuja knew before the inspection, and none of neglect.
There is no finding of fact, whether from direct evidence or by inference, that he actually knew about the breaches of the regulations before 7 August 2023.Judge Elizabeth Cooke, paragraph 28
What he learned at the inspection could not be turned against him, because from then on he was working with the council to put the breaches right. The finding was unexplained, unsustainable on the evidence, and set aside.
That disposed of the appeal. The Tribunal turned to the second ground only because it bore on whether the case should go back, and held in the alternative that it would also have succeeded. Double counting was mentioned below on liability, then left out when the amounts were fixed, although the company's penalty reaches its sole owner pound for pound.
The council asked for the matter to go back so that section 251 could be tried again on neglect. The Tribunal refused, calling remission possibly futile and certainly disproportionate and unfair. Nothing in the bundle suggested knowledge before 8 August, and management had been delegated to an agent whose arrangements and records were never put in evidence.
The FTT's decision to confirm and vary the financial penalty imposed on Mr Khuja is set aside, and I substitute the Tribunal's decision that the penalty is cancelled.Judge Elizabeth Cooke, paragraph 39
Practical implications
The consent, connivance and neglect formula runs through the regulatory statutes that reach construction and property companies, and the Tribunal read section 251 alongside section 37 of the Health and Safety at Work Act 1974 as virtually the same provision. An authority that wants a director personally must choose its limb and prove it. Consent needs knowledge of the facts. Neglect needs the matter to have fallen within that director's functions.
Delegation to an agent is not a defence in itself, but it changes what the authority has to prove, and here the council had no documents about reporting lines or compliance.
A penalty on a one man company and a matching penalty on its owner will not stand on its own logic. The owner is worse off by the total.
Practice points
- Identify the limb of section 251 in the notice of intention and prove that limb. The notice here pleaded a failure to take reasonable steps to prevent the offences, which is neglect, and the First-tier Tribunal then found consent.
- Consent means the director knew the facts that constitute the offence. He need not have known they amounted to an offence, but knowledge of them has to be found, from direct evidence or by inference.
- Being sole director, sole shareholder or the controlling mind proves none of it, and where the breaches are omissions an argument built on the company's decisions has nothing to bite on.
- Knowledge acquired at an inspection does not make the earlier breaches consensual, and cooperation afterwards cuts the other way.
- If the authority wants neglect, it needs the management arrangements in evidence: the agency agreement, reporting systems, compliance records and maintenance records.
- Raise double counting before the First-tier Tribunal and put the Court of Appeal authority in front of it. The individual's figure may properly fall below the policy range.
- A director facing a penalty alongside the company should consider appealing the personal penalty alone. The company's penalty here was not in issue and stands.