The Upper Tribunal (Lands Chamber) has held that a sole company director's liability under section 251 of the Housing Act 2004 for a company's HMO offence could not be ruled out because compliance was delegated to someone who was not a director.
Key facts
- Who: Directors of companies that manage houses in multiple occupation (HMOs) and who face financial penalties for housing offences said to have been committed by the company
- From: 19 October 2026 (date of judgment)
- Source: Salford City Council v Richard Brown [2026] UKUT 393 (LC)
In February 2023 Salford City Council imposed a financial penalty of £10,850 on Mr Richard Brown. It said a company had failed to comply with the regulations applicable to an HMO at 151 Manchester Road, Worsley, and that he was liable as a director under section 251. Mr Brown was the sole director of a number of related property management companies. The HMO was managed by Want This Room Limited (WTR), one of the companies of which he was a director.
Mr Brown appealed to the First-tier Tribunal (FTT). In its decision of 18 August 2025 it accepted his evidence. He held over 30 director appointments and worked mostly remotely. He dealt with financial matters, while day-to-day management of WTR was left to Ms Egan and her team. Mr Brown described Ms Egan as a shadow director and a "50% joint venture partner". The FTT recorded that she was not a director of WTR or of his other companies. The FTT found that neglect on Mr Brown's part had not been proved and did not confirm the penalty. It did not decide whether WTR had committed an offence.
The question
Section 251 makes a director personally liable where a company's offence is proved to have been committed with the director's consent or connivance, or to be attributable to the director's neglect. The question was whether delegating compliance to a person who was not a director meant the offence could not be attributable to Mr Brown's neglect.
The decision
Upper Tribunal Judge Elizabeth Cooke allowed the council's appeal and remitted the matter to the FTT.
The reasoning
- Liability does not follow from being a director alone. But neglect can be inferred where the matter was within the director's responsibility, and the judge said a sole director is responsible for all of a company's actions.
- The judge rejected the argument that a specific act the director should have done must be identified.
- Earlier cases accepted that one director can rely on another director who is responsible for a different area. If Ms Egan had been a statutory director, the judge said, that would have ended the matter so far as Mr Brown was concerned.
- That reasoning did not extend to a person who was not a director, officer or employee of the company. Signing letters as "Director", holding herself out as one, being described as a shadow director, or being said to have an equitable interest did not give Ms Egan a director's legal role and statutory responsibilities.
- The judge said that a director who has over-stretched himself does not lose his statutory liabilities.
Judge Cooke stressed that this does not mean Mr Brown is liable. The FTT must first decide whether WTR committed an offence and how, and then whether it was attributable to his neglect.
What this means for company directors
- In this appeal, the Upper Tribunal held that the FTT was wrong to rule out a sole director's liability under section 251 on the ground that compliance had been delegated to a person who was not a director.
- Liability is not automatic. The tribunal said it depends on whether the company committed an offence and whether that offence was attributable to the director's neglect.
- A director facing a penalty or proceedings under section 251 should get legal advice before any deadline passes.
Sources
- Salford City Council v Richard Brown [2026] UKUT 393 (LC), Upper Tribunal (Lands Chamber), 19 October 2026: https://caselaw.nationalarchives.gov.uk/ukut/lc/2026/393