Social Housing Speed Read – the public body principle

A High Court judge has ruled that a housing association is not a public body in relation to the management of particular properties.

In R (on the application of MACLEOD) v Governors of the Peabody Trust [2016] the claim was filed by a tenant of the Peabody Trust (“Peabody”), Ian Macleod, challenging their decision to reject his request to mutually exchange his tenancy for a tenancy in Edinburgh. Please click here to view the case.

Background

Mr Macleod is a tenant of London-based Landlord Peabody. He had occupied a one bedroomed flat in Bethnal Green as an assured tenant since 1 June 2009.

Initially his landlords were the Crown Estate Commissioners (“CEC”). However, in February 2011 CEC transferred a number of properties to Peabody, one of which was Mr Macleod’s property.

In July 2015 Mr Macleod notified Peabody that he wished to exchange his tenancy with the tenant of another property. Peabody declined to approve an exchange.

Mr Macleod wished to challenge Peabody’s decision not to exchange his tenancy. He asserted that Peabody were amenable to judicial review as a public body.

Mr Macleod claims that Peabody failed to follow its own policy in relation to mutual exchange and that it did not take account of its duty under Section 149 of the Equality Act 2010. As a result, he argued that Peabody unlawfully fettered its discretion and decided irrationally in relation to the requested exchange.

Decision

This case is the first major consideration of the law since Weaver v London and Quadrant [2008] and has revealed an exception for housing associations as public bodies, even when managing properties when faced with a judicial review claim.

Justice Davis reiterated the general principles enunciated by Lord Justice Elias in Weaver have to be applied to the facts of each particular case, and that Weaver did not determine that all housing associations are public bodies.

Justice Davis ruled that, based on the facts of the case, Peabody was not exercising a public function in this situation.

The relevant factors were:

• that Peabody had not used any public subsidy or grants in purchasing the property;
• there was no direct allocation relationship with any local authority;
• rents were not subject to any statutory social rent regulation. It was held that Peabody’s departure from its stated policy was justified on the basis of the non-assignment clause signed by Mr Macleod as well as the nominations agreement between CEC and Peabody which limited Peabody’s power to let a property to someone other than a tenant nominated in accordance with the agreement.

In addition, the judge rejected the claim that Peabody did not take account of its duty under Section 149 of the Equality Act 2010 on the basis that the tenant cannot demonstrate that an exercise of the public sector equality duty would have made any difference to the decision. Furthermore, the judge recognised the limited knowledge Peabody possessed in relation to the tenant’s disability.

The judge rejected the claim that Peabody had unlawfully fettered its discretion and decided irrationally. The judge was of the opinion that any unfettering of discretion was due to contractual and other barriers.

Therefore, the application for judicial review was dismissed.

Implications

In the judgment of Justice Davis the “cumulative effect” of the various factors in the circumstances of this case does not have the sufficiency of public flavour which Lord Justice Elias found in Weaver.

This case will give more confidence to Housing Associations wishing to challenge the general assumption that they are public bodies, in circumstances where their decisions are more akin to that of a private organisation, and ought not to attract the attention of the courts, or provide additional rights where none otherwise exist.

“Public flavour”, a new expression as far as we can tell, is likely to become the new test to determine whether Judicial Review/the Human Rights Act will apply to Housing Associations in the exercise of particular functions.

You will know it when you taste it!

If you have any questions regarding the above and how it will affect social housing providers, or any other questions as a social housing provider, please do not hesitate to contact John Murray or a member of our expert Social Housing Team.