Mrs Nicole Tachie and Others v Welwyn Hatfield Borough Council
| Jurisdiction | England & Wales |
| Judge | Mr Justice Jay |
| Judgment Date | 13 December 2013 |
| Neutral Citation | [2013] EWHC 3972 (QB) |
| Date | 13 December 2013 |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ13X03030-32 |
[2013] EWHC 3972 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Jay
Case No: HQ13X03030-32
Mr Toby Vanhegan (instructed by Arkwrights Solicitors) for the Appellants
Mr Ranjit Bhose QC and Ms Kuljit Bhogal (instructed by Welwyn Hatfield Legal Department) for the Respondent
Hearing dates: 26th, 27th, 28th and 29th November 2013
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
These three appeals are brought under section 204 of the Housing Act 1996 against the Respondent's review decisions made under section 202. The appeals were originally in the Luton or Watford County Courts but by Order dated 27 th September 2012 they were transferred to this Court by HHJ Kay QC. The reason for the transfer was that a number of common issues arise out of the Respondent's purported contracting out of its Part VII homelessness functions to the Welwyn Hatfield Community Housing Trust ("the WHCHT") which is an "arms-length management organisation" ("ALMO") established by the Respondent with effect from 1 st April 2010. The Appellant's basic contention is that the Respondent's contracting out was ultra vires its powers and that this Court should therefore quash the review decisions in each of the cases in the exercise of its powers on appeal under section 204. Before I set out the specific issues which arise from my determination on a generic basis, I need to set out some of the relevant history summarising what is contained in the written evidence and the parties' skeleton arguments.
Essential Factual Background
ALMOs are corporate vehicles introduced by Central Government in the first decade of this century as an option for local authorities who wished to retain ownership of their local housing stock to obtain additional funds to improve quality. More background detail is to be found in the ODPM's Guidance on Arms Length Management of Local Authority Housing, 2004 edition, clauses 2.1, 2.4, 2.7, 3.1, 3.2, 3.3, 3.5, 3.6, 3.8 and 3.9. I will be returning to these in the context of Mr Vanhegan's submission on discretionary decision making, but for present purposes it is sufficient to record that whereas ALMOs are characterised as having a significant degree of independence from their parent local authorities, they are 100% controlled by the latter and are usually constituted as companies limited by guarantee. Homelessness functions may be contracted out, in which circumstances the statutory responsibility remains with the local authority; but strategic decision-making may not be.
From 2003 onwards the Respondent undertook a detailed Options Appraisal to consider the future of its housing stock in the light of the Decent Homes Programme. This process involved resident consultation and majority support, and continued over a number of years. It led to a decision to set up the WHCHT. On 6 th June 2006 Cabinet resolved that the work of the Housing Options Working Group be noted and that the group be asked to report back to a future meeting of Cabinet on the merits of the options for the future management of the Respondent's housing stock with recommendations for further action [5/116–7]. There was a further resolution of the Cabinet Housing Panel on 23 rd June 2008 [5/123], and on 9 th September 2008 the Respondent's Chief Housing Officer reported to Cabinet recommending that the latter agree in principle to set up a tenant-led community housing trust [5/136]. Clause 5.4.2 of the same report provided additional detail and explained that the community housing trust would be a company limited by guarantee, wholly owned by the Respondent, " but with the power sitting with an independent tenant-led board (made up of 7 tenants, 5 independent and 3 council nominee members)". Furthermore, clause 5.4.3 provided [5/140]:
"The working group also considered the extent to which operational housing services including homelessness and housing advice should be included within any proposed trust. The group were of the view that there were significant benefits to continuing to provide these currently interlinked services within the trust, although based on a separate service level agreement"
In other words, instead of being located within the Council, the "department" discharging Part VII homelessness functions in the Respondent's name would be within the new Trust.
On 6 th January 2009 Cabinet noted the high level of positive response from tenants, leaseholders and the wider community and agreed to continue to take forward the proposed community housing trust [5/147]. On 3 rd November 2009 the Respondent's Director of Housing reported to Cabinet seeking approval for an application to be made to the Secretary of State for Communities and Local Government asking for consent to delegate housing functions to the proposed WHCHT under s. 27 of the Housing Act 1985[5/149]. On 3 rd November 2009 Cabinet resolved to seek the Secretary of State's approval under s. 27 for delegation of housing functions to the proposed WHCHT; it was also resolved that the terms of the draft management agreement between the Respondent and the WHCHT be agreed [5/152].
Following the resolution by Cabinet, which subsequent evidence demonstrates was unanimous, a formal application was submitted to the Secretary of State on 16 th November 2009 [5/154]. The report made clear that the proposal set out within the application and the supporting papers had been consulted on with tenants, leaseholders and staff of the Council, the Shadow Management Board, and a broad range of stakeholders. The approval documents also made clear that not merely would a series of housing management functions be delegated to the new Trust [5/158], so would all of the Respondent's homelessness functions [5/159]. It is common ground, and in any event vouched by CoA authority as I will be coming to, that "homelessness functions" include all the Respondent's powers and duties under Part VII of the Housing Act 1996. The draft management agreement dated 22 nd October 2009 [5/181a and following] also made that clear, and my attention has been drawn to clause 62.1 of this document [5/181ll] which stated that the agreement " shall expire on 31 st March 2020". It is quite plain in my judgment that the Respondent was working towards a commencement date of 1 st April 2010.
By undated letter received on 18 th January 2010 the Secretary of State for Communities and Local Government gave his approval under s. 27 of the Housing Act 1985 to the Respondent entering into an agreement with the Trust under which the latter would exercise specified management functions as agent for the authority. The approval neither needed to, nor did, concern the contracting out under the Deregulation and Contracting Out Act 1994, but the latter could not occur without the former.
On 31 st March 2010, at a meeting of full Council attended by all 6 members of Cabinet, members considered a report from the Respondent's Director of Housing dated 18 th March 2010 [5/183–184]. The report sought members' agreement to specified changes to the proposed management agreement and their approval for the delegation of housing management functions to what was described as the newly formed WHCHT. This was to be in accordance with the approval obtained from the Secretary of State for Communities and Local Government. Clause 4.5 of the report provided:
"With regard to the delegation of aspects of homelessness, housing advice and Housing Needs Service, the Council's legal advisors, Trowers and Hamlin, have been able to confirm that the proposed detail of delegation is fully compliant with the Local Authorities (Contracting Out of Allocations and Housing and Homelessness Function) Order 1996. As a result the council can be confident that it is able to meet its statutory duties in those respects under current legislation."
By clause 5.1, it was proposed that the WHCHT would take responsibility for Housing Functions with effect from 1 st April 2010 for a period of 10 years.
Full Council duly made the recommended resolutions [5/193–195]. It also resolved to agree the management fee of £9,397,420 for 2010/11 to be payable to the Trust. On 1 st April 2010 the Respondent and the Trust entered into the Management Agreement in terms which fully reflected the antecedent reports and resolutions.
Clause 56 [4/42] of the Management Agreement dealt with employees. The list of staff within the Housing Needs division to be transferred to the Trust included all the employees who were later to make the impugned s. 202 (and s. 184) decisions [4/85]. The provisions of TUPE applied to these transfers.
Since 1 st April 2010 the WHCHT has been undertaking the Part VII Housing Act 1996 functions as specified in the service level agreement on the Respondent's behalf. As it happens all of these functions have been physically undertaken by the Respondent's transferred employees. As Mr Bhose QC has observed, numerous individuals have benefitted from the Respondent's decision making over the years and, save for these three Appellants, no other recipient of an adverse decision has taken the point that the Respondent has been acting unlawfully.
In an attempt to rule out any possibility of a successful challenge to the 2010 decision making process, on 22 nd January 2013 full Council resolved [5/202]: (i) to approve an amendment to Article 11.4 of the Constitution, designed to remove any scope for any uncertainty as to its meaning; (ii) to ratify the entry into...
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