EXTRA DIVISION, INNER HOUSE, COURT OF SESSION
Lord Carloway Lord Clarke Lord Emslie	[2010] CSIH 51 OPINION OF THE COURT delivered by LORD CARLOWAY in the appeal from the Sheriffdom of Glasgow and Strathkelvin at Glasgow by the respondents in the summary application by THEM PROPERTIES LLP, Appellants and Respondents against GLASGOW CITY COUNCIL, Respondents and Appellants _______

Act : J A Brown; HBM Sayers, Glasgow

Alt : SPL Wolffe, QC; Solicitor to the City of Edinburgh Council

16 June 2010

1. Legislation

[1] The Civic Government (Scotland) Act 1982 (Licensing of Houses in Multiple Occupation) Order 2000 (SSI 2000 No 177) provides that giving permission for "a house in multiple occupation" ("HMO") to be occupied is an activity requiring a licence. The Order does not set out any criteria for the grant of a licence, which is, subject to certain modifications, governed by the general regime applicable to many different types of local authority licence set out in Schedule 1 to the 1982 Act. The Schedule provides:

"5(3) ...a licensing authority shall refuse an application to grant or to renew a licence if, in their opinion -

(a) the applicant ... is ... (ii) not a fit and proper person to be the holder of the licence;

(b) ...

(c) where the licence applied for relates to an activity consisting of or including the use of premises ... those premises are not ...suitable or convenient for the conduct of the activity having regard to -

(i) the location, character or condition of the premises...

(ii) the nature and extent of the proposed activity

(iii) the kind of persons likely to be in the premises...

(iv) the possibility of undue public nuisance; or

(v) public order or public safety; or

(d) there is other good reason for refusing the application;

and otherwise shall grant the application".

2. The Appellants' Application

[2] On 24 May 2007, the appellants applied to the respondents for the grant of a HMO licence in respect of Flat 2/2, 12 Oakfield Avenue. The flat is on the second floor. It is one of eight in the tenement, which is located close to Glasgow University and forms part of a terrace running northwards from University Avenue to Great Western Road. When the appellants bought the flat in April 2007, it was already in multiple occupation; having five male students as tenants. The previous owners had had a HMO licence for some years. Four other flats in the tenement were tenanted by students and their owners also had the relative HMO licences. In June 2007, the existing tenants left and the flat was re-let to five female students in terms of a short assured tenancy agreement.

[3] Letters of objection to the grant of a licence were received by the respondents from occupiers of two other flats in the tenement. The first, dated 5 June 2007, was from the occupier of the flat immediately below number 2/2. She raised a number of issues. These included, first, overcrowding; there being between sixteen and twenty students in the tenement during term time. Secondly, there was safety. One student had thrown a wardrobe out of a third floor window into the back court in the early hours of the morning. It had tipped over and broken a bedroom window of the main door flat (number 14). Another incident involved the students being entertained by a fire eater in the back court, again in the early hours of the morning. Thirdly, there was the condition of the flat itself. Fourthly, she complained of noise as follows:

"There has been a track record of noisy, inconsiderate tenants in this flat. When it was managed by an agent there was some improvement. But problems persisted and I had to complain on several occasions last year, to the students and eventually to the agent. A persistent problem was loud music and the thump from the bass of a Hi Fi. Worst of all was being kept awake at night by one tenant. He regularly came in during the wee small hours and dropped heavy items on the floor. The sound of heavy items being dragged around the room and doors slamming could be heard. There were loud conversations which lasted until 3.00 or even 5.00 am. This tenant once brought about 20 people back to the flat, after he had been asked about two hours earlier, to quiet down".

Fifthly, the objector complained of being unable to have common repairs executed because of the number of HMO flats. Sixthly, there was the volume of refuse, often disposed of carelessly. Finally, there was litter in the form of beer cans, bottles etc. in the front garden. The second letter dated 7 June 2007, from the occupier of number 14, was much shorter, but it too complained of the wardrobe incident, which had involved the window of her son's bedroom. It referred to the level of noise, which disturbed her children's sleep, and the dumping of items in communal areas. She concluded:

"I feel we have our fair share of multiple occupancy in this close and I would like 1 year where I get some uninterrupted sleep and do not have to worry about my children's safety when they are asleep in bed".

[4] The hearing on the application only occurred on 7 May 2008, by which time the appellants had been leasing the flat for over a year without the necessary licence. The appellants were represented by an agent. At the hearing, reports were tabled from the respondents' HMO Unit and from the fire brigade. Neither report made any adverse comment and neither recorded any history of previous complaints. The objector from the flat below addressed the respondents' committee. Manuscript notes from the respondents' officials record her as saying:

"Students & friends don't dispose of rubbish properly. Bulk refuse left in close ...

Noise from one flat affects others

Persistent noise - nocturnal

Loud footsteps & laughing

Now use earplugs".

The objector contended that she ought to be allowed to live in peace. She had not contacted the police because she wanted to remain on friendly terms with the tenants. Other notes continue by referring to the agent having spoken "to the girls" and sent letters to the tenants. The agent appears to have mentioned the possibility of putting in thicker carpets when the tenancy came up for renewal, as it was shortly to do.

3. The Respondents' Decision and the Appeal to the Sheriff

[5] The respondents refused the application in terms of paragraph 5(3)(c) of the Schedule on the grounds that the:

"premises are not suitable or convenient for the conduct of the activity having regard to the nature and extent of the proposed activity; the kind of persons likely to be in the premises; and the possibility of undue public nuisance".

The written reasons for the decision record that the respondents had had regard to the letters of objection as well as the appellants' submissions. They continue:

"The Committee was particularly concerned to note that [the objector] was experiencing difficulties with noise disturbance between the hours of Midnight and 3.00 am caused by the tenants occupying the applicant premises, including the sound of heavy items being dropped on the floor in the early hours of the morning. In particular the Committee noted that a persistent noise problem was being caused by loud music and bass sounds emanating from a sound system in the applicant premises. The Committee further noted that the noise disturbance issues complained of by the objectors had continued despite the issue having been raised on several occasions with the applicants.

The Committee further noted concerns raised by the objectors regarding the unsatisfactory disposal of rubbish and large disregarded items such as furniture and carpets in the communal areas left by tenants of the applicant premises.

The Committee also noted that the objectors occupy premises within the same building as the applicant premises and...were therefore well placed to assess and comment on the possibility of undue public nuisance being caused should the present application be granted".

Although they disregarded the wardrobe incident, which had been caused by tenants of a different flat, the respondents took the view that:

"the objectors concerns as regards the applicant premises were well founded and that those difficulties which had already been encountered as a consequence of the premises being used as a [HMO] were likely to continue if the application were to be granted".

The appellants appealed to the Sheriff by way of Summary Application.

[6] No evidence was led before the Sheriff. There was a joint minute agreeing the location of the flat, the dates of the appellants' acquisition of the subjects and the leases to the two sets of tenants and the lack of objections from the HMO unit and the fire brigade. It was also agreed that the objectors had not objected to the HMO unit, nor had the appellants been served with any noise abatement notices. At the hearing, the appellants contended, inter alia, that the respondents had failed to take into account the state of affairs existing at the time of their decision. The submission was based upon the terms of the decision letter. It was said that the letters of objection did not relate to the appellants or the present tenants. The respondents had failed to distinguish between what was historic and what was current. The Sheriff held as follows:

"[28] ... I agree that the Licensing Committee... is the decision maker and fact finders. Importantly, I agree that a committee is entitled to look at past and historic events in reaching its decision.

[29] ... the Licensing Committee was not entitled to reach the view it did without exploring the issue of present behaviour from the existing tenants of the property involved. ... It is entirely unclear to me what consideration if any was given to the position with regard to noises and refuse relating to the present tenants as at the date of the hearing. It seems to me inequitable for a committee to consider historic events and objections in detail without applying the same scrutiny to the present position and the present tenants. Both historic and present situations should have been looked at and weighed up together by the Licensing Committee before reaching the decision it did. ... in reaching their decision the failure to take proper account of the position at the time of the hearing represents an omission and to a limited extent an error in law. The committee ... therefore failed to take into account a matter which it should have taken into account before reaching the decision it did. This omission is of such a kind that it falls short of unreasonable discretion and does not justify ... a granting of the appeal. I therefore direct that the original application be remitted back to the ... Licensing and Regulatory Committee with an instruction to reconsider the application by taking account of the present position with regard to noise and refuse involving the present tenants".

The interlocutor of 15 January 2009 finds in fact that:

"(6) The committee either did not consider or sufficiently consider the position regarding noise and refuse levels involving the present tenants as at the date of the hearing".

It continues:

"Therefore, repels the plea-in-law for appellant; sustains plea-in-law No. 5 for the respondent and quoad ultra repels the remaining pleas; directs that the appellant's application should be remitted to the respondent for re-determination".

The appellants' plea-in-law read as follows:

"The respondent having erred in law et separatim having based its decision on incorrect material facts et separatim having acted wholly unreasonably in refusing the appellant's application for a grant of a licence for a house in multiple occupation, their decision should be reversed".

The respondents had standard pleas relating to the relevancy of the pleadings and the unfounded nature of the facts averred. They also had a (second) specific plea directed towards an argument about the Environmental Protection Act 1990. The pleas continued:

"4. The respondent not having erred in law et separatim based its decision on incorrect material fact et separatim having acted unreasonably in refusing the appellant's application, the summary application should be refused.

5. Separatim, esto the respondent has erred in law (which is denied) the appellant's application should be remitted to the respondent for re-determination".

4. Submissions
RESPONDENTS

[7] The Sheriff's interlocutor had repelled the appellants' only plea-in-law. That was inconsistent with an order then remitting the case for re-determination or, as it should have been, reconsideration. Reconsideration could only be ordered if an appeal were upheld (1982 Act Schedule 1, para 18(9)). The Sheriff had exceeded her powers in ordering that the respondents take into account specific matters and after carrying out further investigation. Since the Sheriff had upheld the respondents' arguments concerning the relevancy of the appellants' case about the 1990 Act, she ought to have sustained the relative (second) plea-in-law. It was not now being argued that the respondents had proceeded upon incorrect facts or had acted unreasonably. The only argument concerned error of law. The appeal to this Court ought to be allowed by recalling the Sheriff's interlocutor and sustaining the respondents' fourth plea-in-law in part.

[8] The Sheriff had erred in sustaining the appellants' submission that the respondents had failed to distinguish between historic and current material. No such distinction had been made by the appellants at the hearing. There had been no argument that the objections were historic, unrelated to the appellants and the current tenants, and therefore fell to be disregarded. It was not legitimate to advance new material before the Sheriff which had not been raised at the hearing. A difference between the conduct of the present tenants and that of previous occupiers might have been a relevant consideration, but that point had not been made. The appellants had not said "that was then, this is now". It is not surprising, therefore, that no such distinction appears in their decision letter. The respondents had sufficient material before them upon which to determine that the premises were not suitable or convenient for the conduct of the activity having regard to the nature and extent of the proposed activity; the kind of persons likely to be in the premises; and the possibility of undue public nuisance. In that regard, the objections were not contradicted.

APPELLANTS
[9] Despite the infelicity in expression contained in the interlocutor, what the Sheriff had done was allow the appeal because of an error of law, albeit a "limited" one. In that regard the terms of the Sheriff's Note could be used to explain the interlocutor (Pollok School v Glasgow Town Clerk 1947 SC 605, LP (Cooper) at 619). The appellants did not support the Sheriff's conclusion that the respondents had "failed to take into account a matter which [they] should have taken into account" (Sheriff's Note para [29]). The crux of the matter was whether there had been any foundation for the decision reached by the respondents. What the appellants maintained was that the respondents had not properly considered the material presented to them at the hearing. The respondents must be taken to have knowledge of the history of the premises; notably that the previous owners did have a HMO licence for some years. The appellants had no track record to gauge. There had been only one objector at the hearing speaking to historical events. Upon that tenuous foundation the respondents had found that the premises were not suitable. There was no proper basis in fact for that finding (Leisure Inns v Perth and Kinross Licensing Board 1991 SC 224, LJ-C (Ross) at 233). Properly understood, there had been nothing before the respondents to say that the premises were unsuitable. The evidence had all related to events prior to the appellants' ownership and these events could only be relevant if there were a likelihood of repetition.

5. Decision

[10] The Court proceeds on the basis that, despite the terms of her interlocutor and in particular its treatment of the pleas-in-law, the Sheriff intended to allow the appeal and to remit for a reconsideration. The basis for that has to be that the respondents had erred in law in failing to take into account the "present position with regard to noise and refuse involving the present tenants". It is true that the Sheriff states in terms that this fell "short of unreasonable discretion" and did not "justify ... a granting of the appeal". But a case can only be remitted for a reconsideration if the appeal is allowed (1982 Act, Schedule 1 para 18(9)) and an appeal can only be allowed if there has been some discernible material error on the respondents' part. In that context, the Court is somewhat perplexed by the Sheriff's reference to the respondents' omission being "to a limited extent an error of law". An error of law either exists or not. It may or may not be material, but there is no other relevant degree of legal error.

[11] The appellants correctly conceded that they could not uphold the Sheriff's reasoning, which centred upon the respondents failing to take into account a material consideration. That had not been the basis for the appeal to the Sheriff (see the appellants' plea-in-law). Rather, they contended that there had been no basis in the material presented to them at the hearing for the respondents' finding-in-fact that the premises were not suitable or convenient for use as a HMO in terms of paragraph 5(3)(c) of Schedule 1 to the 1982 Act. It is with some hesitation that the Court has reached the view that this contention cannot be sustained. The reason for that hesitation is that it is not disputed that this flat has been the subject of a HMO licence for some years. The respondents must therefore have deemed it suitable and convenient in terms at least of its location and condition. Given its location in a tenement in a street close to the University, where many of the flats are already covered by HMO licenses, this is hardly surprising.

[12] The issue then is whether, notwithstanding the previous grant of a licence, the respondents had any material before them at the hearing upon which to conclude that the flat had ceased to be suitable and convenient. That material could only have related to the kind of persons likely to be in the premises in the future and the prospective likelihood of some kind of public nuisance in the form of noise and/or refuse. The respondents' conclusion could only arise if they were properly satisfied from that material that the activities of the appellants' tenants were such that the premises had, by reason of that nuisance, become unsuitable or inconvenient for multiple occupancy. In considering that matter, the respondents were certainly entitled to look at the historical perspective, but the key question had to relate to what was to be expected of the appellants' tenants and not what had happened with those under a different landlord.

[13] The appellants submitted to the Sheriff that the respondents had not properly distinguished between the historic and the present. The Sheriff accepted that submission. However, on a proper analysis of the respondents' deliberations, it seems plain that they were not simply looking at what had occurred in the past but were primarily looking at the issue from a future perspective. In particular, although the letter from the respondents quotes passages from the letters of objections, which were of some vintage by the time of the hearing, it also bears to relate to the present. The letter narrates the respondents noting the present concerns of the objector who attended the hearing. These bear to relate to the present since it is specifically stated that the respondents observed that the noise disturbance issues "had continued despite the issue having been raised on several occasions with the applicants". That clearly relates to activities taking place whilst the appellants were landlords and to matters which the appellants had failed to control. Passages quoted from the manuscript notes, such as the reference to the objector "now" wearing ear plugs, also make it clear that the respondents were asking the objector about the present. The letter states that the objectors were well placed to assess and comment on the possibility of undue public nuisance being caused, should the present application be granted. That is a reference to the future. Indeed, if the appellants' then tenants had not been causing problems, it is difficult to see why the objector would have maintained her complaints about them.

[14] There was therefore an adequate basis, in the material presented to them, for the respondents to reach the conclusion they did. For that reason, the appeal to this Court must be allowed. The effect of that is that the Sheriff's interlocutor of 15 January 2009 must be recalled and in its place will be one which: (i) repels the plea-in-law for the appellants; (ii) sustains the fourth plea-in-law for the respondents; and (iii) refuses the appeal contained in the summary application. It is necessary also to alter finding-in-fact (6) in the interlocutor by: (i) deleting "either did not consider or sufficiently consider" and substituting therefore "considered"; and (ii) adding at the end: "There was sufficient material before the Committee upon which to base their decision regarding the suitability and convenience of the flat". The remaining findings-in-fact made by the Sheriff will be affirmed.

[15] Finally, it is worth commenting that, given the somewhat obvious inherent suitability and convenience of this flat as a HMO for students, should the respondents receive a further application for a licence, in which the appellants are able to demonstrate an ability to control the activities of future student tenants, it may be difficult for the respondents to refuse the application for the reasons previously given. Whether to do so or not, however, remains a matter for them to decide in the first instance.