Housing 35 Plus Ltd v Nottingham City Council

Factual and Procedural Background

The Appellant is a fully mutual, non-profit housing co-operative operating multiple properties in The City and registered under the Co-operative and Community Benefit Societies Act 2014. Two of its properties (referred to here as Property A and Property B) were treated by the Respondent as houses in multiple occupation (HMOs) requiring licences under Part 2 of the Housing Act 2004. The Respondent imposed financial penalties under section 249A/section 72 of the 2004 Act for managing HMOs without licences. The Appellant appealed to the First-tier Tribunal (FTT), which held that the society's rules satisfied the exemption in schedule 14, paragraph 2B, and so the properties were not HMOs for the purposes of Part 2. The Respondent successfully appealed to the Upper Tribunal (Lands Chamber), which concluded the rules did not meet the statutory requirement because they empowered a management committee to make management decisions. The Appellant obtained permission to appeal to this Court from Judge Falk. The Court (Judge Nugee giving reasons, with Judges Miles and King agreeing) dismissed the appeal.

Legal Issues Presented

1. Whether the society's rules are "such as to secure that all management decisions of the society are made by the members (or a specified quorum of members) at a general meeting" for the purposes of paragraph 2B(2)(b) of schedule 14 to the Housing Act 2004.

Arguments of the Parties

Appellant's Arguments

• Attorney Manning (with Attorney Henderson) argued the rules, read as a whole, require members in general meeting to decide all management decisions: rule 30 (functions of ordinary general meetings) should be read to mean the general meeting decides management matters, and rule 69 does not empower the committee to decide matters that the rules entrust to the general meeting.

Respondent's Arguments

• The Respondent contended the rules do not meet paragraph 2B(2)(b) because they create a management committee with expressed power to control and direct day-to-day management and to exercise a wide range of powers (set out in rule 69 and elsewhere), meaning not all management decisions are required to be made by members in general meeting.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court analysed the text of the society's rules, focussing on rules 30, 48 and 69 and related provisions. The core analytical steps were:

• Interpretation of rule 30: The Court accepted the Upper Tribunal's reading that the word "discuss" in rule 30 does not equate to "decide." The ordinary meaning of "discuss" is to talk about or review; on its face rule 30 directs general meetings to discuss management decisions that have arisen since the last general meeting, and does not expressly require the general meeting to make those decisions to the exclusion of the committee.
• Interpretation of committee powers (rules 48 and 69): The Court treated rule 69 as conferring broad powers on the committee to "conduct" the business of the co-operative and to exercise powers not required by the rules to be exercised in general meeting. The rule lists specific substantial powers (for example, purchasing property, entering contracts, appointing/removing agents and employees) that are naturally characterised as management decisions.
• Assessment of evidence vs. rule text: Although witness evidence (from the society's chief executive) described practice whereby the committee implemented general meeting decisions and had discretion only over minor operational matters, the Court emphasised that the question is what the rules provide, not how they operate in practice. The rules plainly give the committee power to decide on many matters that are management decisions.
• Consequential statutory interpretation: The Court considered the policy purpose of paragraph 2B—namely, that an exemption exists where residents collectively manage the building and thus do not require regulatory protection—and concluded that the rules must actually secure that all management decisions are made by members in general meeting. Because the rules permit a committee to make significant management decisions, they do not satisfy paragraph 2B(2)(b).

Holding and Implications

APPEAL DISMISSED

Holding: The Court upheld the Upper Tribunal's conclusion that the society's rules do not meet the requirement in paragraph 2B(2)(b) of schedule 14 to the Housing Act 2004 because they permit a management committee to make management decisions rather than requiring all such decisions to be made by members in general meeting.

Implications: The direct effect is that the two properties at issue (Property A and Property B) are not exempt from HMO licensing under paragraph 2B of schedule 14 and thus fall within Part 2 of the 2004 Act for licensing purposes. The Upper Tribunal's order (remitting consideration of the Respondent's other grounds to the FTT) stands. The opinion does not purport to create new legal precedent beyond its application of the statutory text to the society's rules.