R Macleod v The Governors of the Peabody Trust
| Jurisdiction | England & Wales |
| Judge | Mr Justice William Davis |
| Judgment Date | 08 April 2016 |
| Neutral Citation | [2016] EWHC 737 (Admin) |
| Date | 08 April 2016 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: CO/4886/2015 |
[2016] EWHC 737 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Hon Mr Justice William Davis
Case No: CO/4886/2015
Mr M Westgate QC and Mr D Cowan (instructed by TV Edwards) for the Claimant
Mr Jon Holbrook (instructed by Peabody) for the Defendant
Hearing dates: 26 January 2016
Introduction
Iain Macleod occupies a one bedroomed flat in Bethnal Green as an assured tenant. When he took up his occupancy under an assured tenancy agreement commencing 1 June 2009 his landlords were the Crown Estate Commissioners ("CEC"). In about February 2011 CEC transferred a number of properties to the Defendant ("Peabody"). Mr Macleod's tenancy was transferred to Peabody. In July 2015 Mr Macleod notified Peabody that he wished to exchange his tenancy with the tenant of a property in Edinburgh. Peabody declined to approve such an exchange.
Mr Macleod claims that Peabody is amenable to judicial review as a public body in relation to the decision it made in respect of the proposed exchange. It is said that Peabody failed to follow its own policy in relation to mutual exchange and that in any event it did not take account of its duty under Section 149 of the Equality Act 2010. By reason of those matters it is argued that Peabody unlawfully fettered its discretion and that its decision was irrational.
Peabody's response to Mr Macleod's claim is that he has to satisfy a three-fold test in order to bring a public law challenge to the decision of Peabody. First, it must be shown that Peabody was not required to make the decision it did by reason of contractual obligations. Second, it must be shown that Peabody was exercising a public function when it refused to approve the exchange of Mr Macleod's tenancy. Third, it must be shown the decision itself was not a private law decision. Peabody argues that Mr Macleod cannot satisfy any one of the three limbs. Further, Peabody's case is that, even if its decision were amenable to judicial review, the decision could not be categorised as irrational or unreasonable or unlawful in any other way.
In granting Mr Macleod permission to apply for judicial review of Peabody's decision, the single judge noted that he had a number of hurdles to overcome in order to succeed. She commented that the question of whether the impugned decision was amenable to judicial review was a difficult one. The case as presented on each side has not changed in any material respect since the application for judicial review was first made. The claim made by Mr Macleod remains problematic.
Factual background
CEC let the flat in Bethnal Green (at 69B Approach Road) to Mr Macleod at a rent per calendar month of £469. There was a term of the tenancy agreement relating to assignment, namely clause 4.15. By that term Mr Macleod agreed "not to assign sub-let or part with possession of the whole or any part of the premises nor otherwise grant any licence or carry out any dealing with the premises…." In the following year (2010) an addendum to the tenancy agreement was agreed. This was in anticipation of a sale of the freehold. It confirmed rights which Mr Macleod had and which he would be able to enforce against any future purchaser of the freehold. Thus, it specified that his rent could not exceed 60% of the market rent for a similar property in the area. Mr Macleod's rent is defined as an intermediate rent i.e. below market rent but above a social housing rent level. Nothing was said in the addendum which affected the non-assignment clause.
No evidence was served which explained the precise nature and status of CEC. On behalf of Peabody it was submitted that it was not to be classified as a public body. This submission was met with disdain by counsel for Mr Macleod who argued that CEC by its essence was a public body. Without any evidence it is not easy for me to reach any concluded view on these competing submissions. I was referred to the judgment in CEC v Peabody [2011] EWHC 1467 (Charles Hollander QC sitting as a Deputy High Court Judge) as providing an explanation of the role of CEC in relation to the properties transferred to Peabody. It is to be noted that the issue there was wholly different to the one arising in this case. The decision of the Deputy Judge provides me with little assistance. Though it is not without significance the status of CEC is not critical to the outcome of this claim. The evidence does show that the flat occupied by Mr Macleod was one of some 1,200 dwellings spread over four London estates which were transferred by CEC to Peabody in February 2011. The market price for the transfer was £140 million after a competitive exercise to sell the properties. This price was far less than it would have been had the properties been transferred without encumbrance i.e. so that Peabody could have let them at a market rent. Unencumbered the total value of the properties would have been in excess of £250 million.
The transfer was subject to a detailed Nominations Agreement. This restricted Peabody to letting the properties to key workers as defined in the agreement at sub-market rents. Each property was to be let at no more than 80% of the current market rent. Key workers were defined at those in work with a total family income of less than £60,000 who could afford to pay 80% of market rent from their own resources i.e. without recourse to housing benefit. In addition, Peabody was required to give each tenant enhanced rights of succession and to accept nominations from CEC on any vacant property i.e. to provide accommodation for a key worker. The nomination requirement did not apply in respect of 10% of any properties becoming vacant as true voids in any 12 month period. A true void was defined as a property becoming vacant by reason of inter alia "a tenant…..moving to another landlord" but excluding "a vacant unit if a tenant of another unit moves to the vacant unit".
The agreement between CEC and Peabody set out in an annex the nominating bodies i.e. the employers able to nominate tenants at the properties. These were principally NHS trusts and teachers' employers but also Transport for London, the Metropolitan Police and the Houses of Parliament. As a footnote it appears that Mr Macleod's tenancy arose from his erstwhile employment at the Houses of Parliament. There was a further annex entitled Transfer Policy. This concerned transfers within the housing stock let by Peabody which had been transferred from CEC.
Peabody insofar as is relevant to these proceedings is a housing association with charitable status. One of its charitable purposes – possibly its primary charitable purpose – is to assist the poor of London, in particular in respect of housing the poor. The terms of the nomination agreement were intended to ensure that those working in important occupations for the well-being of London were able to live reasonably close to where they had to work. Those terms were consistent with Peabody's charitable aims. Peabody purchased the properties from CEC using funds raised from a bond issue rather than having recourse to any public funds though the bond over time will be repaid from Peabody's general funds which include some grants from public funds.
Peabody lets many thousands of properties in London other than those which previously were owned by CEC. They have a mutual exchange policy in relation to those properties. At the time of the events concerning Mr Macleod the policy was advertised in headline terms on the Peabody website. The detail of the policy identified that the policy only covered "Peabody's social housing tenants".
In May 2014 Mr Macleod registered with an organisation called House Exchange, a website facilitating the mutual exchange of social housing tenancies. Before doing so he applied to Peabody for their approval of this registration. Such approval was given. After a considerable delay Mr Macleod received an expression of interest from a local authority tenant in Edinburgh. Mr Macleod travelled to Edinburgh to view the proposed exchange property. On deciding that it was suitable, he contacted Peabody and was provided with a Peabody mutual exchange application form. He returned the completed form which made it clear that the proposed exchange was with the tenant of council accommodation in Edinburgh. On the form Mr Macleod noted "I am disabled but that is not covered here".
Mr Macleod submitted the form on 6 July 2015. Peabody responded almost by return on 9 July 2015. The response was terse and to the point. It was in these terms:
"We are unable to process your application because you are currently a non-social housing tenant. On this basis there is no right to a mutual exchange. This does not affect your rights to transfer within the former Crown Estate portfolio."
Mr MacLean responded by e-mail. He pointed out that he had discussed the issue with Peabody Direct (which I take to be some kind of helpline operated by Peabody) prior to considering an exchange and at each stage of the process and that he had not at any point been told that he was not eligible for an exchange. In his e-mail he also stated that he suffered from acute mental illness though he did not give any specifics thereof.
Mr Macleod's e-mail quickly prompted an e-mail in response. Peabody then explained that mistakes had been made in his dealings with Peabody up to the point at which his application for a transfer had been refused. Those dealing with...
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