The Queen v The London Borough of Ealing and Another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LLOYD,LORD JUSTICE WOOLF,LORD JUSTICE RUSSELL |
| Judgment Date | 03 April 1992 |
| Judgment citation (vLex) | [1992] EWCA Civ J0403-10 |
| Court | Court of Appeal (Civil Division) |
| Date | 03 April 1992 |
| Docket Number | 92/0379 |
[1992] EWCA Civ J0403-10
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(MR. JUSTICE SIMON BROWN)
Royal Courts of Justice
Lord Justice Lloyd
Lord Justice Woolf
and
Lord Justice Russell
92/0379
QBCOF 92/0066/D
MR. A. ARDEN QC and MR. M. WESTGATE (instructed by Messrs. Alan Edwards & Co., W.ll) appeared on behalf of the Appellant/Applicant.
MR. J. GOUDIE QC and MR. A. WILKIE (instructed by Head of Legal Services, Law & Administration Division, London Borough of Ealing, W.5) appeared on behalf of the Respondents/Respondents.
In this appeal we are concerned with the statutory "ring fencing" of a local housing authority's Housing Revenue Account. Ring fencing was introduced by Part VI of the Local Government & Housing Act 1989. The legislative purpose was to secure that the Housing Revenue Account should be self-balancing, that is to say, that it should not be subsidised out of the general rate fund (as it was then called) or be subject to expenditure not properly attributable to housing or other property within the account. The keeping of the Housing Revenue Account is governed by Schedule IV of the Act. Part I of the Schedule deals with credits, Part II with debits, Part III with special cases, and Part IV is supplementary.
The present case turns on Item 1 of Part II of the Schedule which covers:
"The expenditure of the authority of the year in respect of the repair, maintenance, supervision and management of houses and other property within the account, but not including expenditure properly debited to the authority's Housing Repairs Account.
If the Secretary of State so directs, this item shall include, or not include, such expenditure as may be determined by or under the direction."
The applicant is a tenant of the London Borough of Ealing. She challenges the way in which the council has dealt with three items of expenditure in the 1991/1992 estimates, namely (i) the Homeless Persons Unit, (ii) the Housing Advisory Service and (iii) the Sheltered Housing Service. I shall deal with each of these headings in turn. But before doing so, I would make these general comments on the scope of Item 1.
(i) The provision which enables the Secretary of State to direct an item of expenditure to be included or not included in Item 1 appears to give him a wide discretion. But it does not, I think, enable him to go outside the statutory language. Thus he has no power to include in Item 1 an item of expenditure which is not in respect of "the repair, maintenance, supervision or management of houses or other property", according to the ordinary and natural meaning of those words. The concluding provision of Item 1 should be contrasted with Item 9 of Part I, which gives the Secretary of State unlimited discretion to direct sums to be credited to the Housing Revenue Account from other revenue accounts, and Item 8 of Part II which appears to give an equally wide discretion in relation to debits.
(ii) By the same token the local housing authority cannot go outside the statutory language. If an item of expenditure falls within Item 1 on its true construction, it must be debited. If it does not fall within Item 1, or some other item in Part II of the Schedule, then it may not be debited. It was common ground that if the three items of expenditure with which we are concerned do not fall within Item 1, they must be excluded. They do not fall within any of the other items in Part II of the Schedule.
(iii) The phrase "management of houses and other property" should be given a wide construction: see Shelley v. London County Council [1948] 1 KB 274 Lord Greene M.R. at 286.
(iv) The fact that the Secretary of State has a limited discretion in relation to Item 1 shows that there are items of expenditure which, on the true construction of the statutory language, may fall on the borderline. Local authorities have a discretion to include or exclude such items, subject to any direction by the Secretary of State. But this is the limit of the local authority's discretion.
(iv) Whether any particular item of expenditure falls within Item 1 is a question of fact. Whether it is capable of falling within Item 1 is a question of law.
(vi) The fact that the respondents, or other local authorities have included a particular item of expenditure within their Housing Revenue Account prior to the 1989 Act throws very little light on the true construction of Item 1. The whole purpose of Part VI of the 1989 Act was to introduce, by gradual stages, a degree of uniformity.
Homeless Persons Unit
In the summer of 1989 the Department of the Environment carried out a survey of local authorities to ascertain the existing practice. The result showed that homelessness administration was charged wholly to the Housing Revenue Account by 44% of those responding, partly to Housing Revenue Account and partly to other accounts by 13%, and wholly to other accounts by 40%. So the practice with regard to homelessness was very mixed. The respondents were among those who made a split between Housing Revenue Account and other accounts. The council decided to continue its former practice under the new Act, subject to one minor change which need not be mentioned. The estimates for 1991/1992 showed that 79.7% of the cost of the Homeless Persons Unit will be charged to the Housing Revenue Account, and the balance of 20.3% to other accounts.
The Homeless Persons Unit comprises 64 staff. Rather over half of these are engaged in managing hostels or other property in which the homeless are given temporary accommodation. Mr. Arden accepts, or rather does not challenge, the propriety of charging their salaries to the Housing Revenue Account. The other half, or 30.2 members of staff to be precise, are engaged in case-work and assessment arising out of the council's statutory duties under Part III of the 1985 Act. In 1990/1991 there were 2,400 homeless housing applications in the Borough of Ealing. Of these 1,100 were provided with permanent housing. The other 1,300 were notified of the council's decision either that they were not homeless, or that they were intentionally homeless, or that they had no priority need, or had been referred to another local authority. The council recognises that time spent by staff on these 1,300 applicants after the decision not to re-house them could not lawfully be charged to the Housing Revenue Account. Accordingly, 25% of the total salary bill of the 30.2 members of staff engaged in case-work and assessment has been charged to the general fund. But this means that the whole of the time spent by the case-work and assessment staff on the 1,300 applicants before the decision not to re-house has been charged to the Housing Revenue Account. Mr. Arden submits that this cannot be right.
Mr. Arden accepts that "management of houses and other property" is wide enough to include the selection of tenants. This is clearly so: see Shelley v. London County Council (1949) AC 56 per Lord Porter at page 66 and per Lord Uthwatt at page 69. It follows that the real dispute between the parties is when the process of selection can be said to start.
Mr. Goudie argues that selection starts as soon as a homeless person makes an application for housing, as virtually all of them do. The enquiries which the council are obliged to make under section 62(1) into the possible homelessness of the applicant, and the further enquiries under section 62(2) as to the applicant's priority need, and so on, are all part of a continuous process of selection, even though in the majority of cases, as we have seen, the applicant ends up without permanent housing.
Mr. Arden says that this is not right. Although he cannot point to the precise moment at which tenant selection starts, it does not include the preliminary sifting of applications under Part III of the Act. That is not management of the council's houses or other property, but management of the homeless.
Mr. Arden has a number of powerful arguments in support of his submission.
(1) In Puhlhofer and Another v. Hillinqdon London Borough Council [1986] 1 AC 484 Lord Brightman said at page 517 at B:
"…although the Act [the Housing (Homeless Persons) Act 1977, now Part III of the 1985 Act] bears the word 'Housing' in its short title, it is not an Act which imposes any duty upon a local authority to house the homeless. As the long title indicates, its object is to make 'further provision as to the functions of local authorities with respect to persons who are homeless or threatened with homelessness'…"
It is an Act to assist persons who are homeless, not an Act to provide them with homes.
(2) There is no obligation on a local housing authority to maintain a housing stock under Part II of the Act. A number of housing authorities have no such stock. Yet their duties under Part III of the Act are not affected.
(3) Under section 22 of the 1985 Act, the council is obliged to secure that reasonable preference in selecting tenants is given to homeless persons to whom they owe a duty under section 65 or section 68 of the Act. But this throws no light on the problem, since the council is under a similar duty in respect of those occupying insanitary or over-crowded houses, or persons living under unsatisfactory housing conditions. It is not suggested that the cost of the council performing its duties under Part IX of the Act (slum clearance), Part X (overcrowding) or Part XI (houses in multiple occupation) are chargeable to the Housing...
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