England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
ADMINISTRATIVE COURT
HHJ Mackie QC (Sitting as a Deputy High Court Judge)
CO/9038/2007

		Royal Courts of Justice Strand, London, WC2A 2LL
		11/07/2008

Lord Justice Toulson :

Introduction

1. This appeal from a judgment of His Honour Judge Mackie QC in the Administrative Court concerns the method used by the appellant local authority in determining the level of priority to be given to the respondent, Ms Faarah, on its housing list.
2. Southwark has the highest ratio of social housing to privately owned housing of any local authority in England. It has a high incidence of people who are homeless or in overcrowded accommodation, chronically sick, disabled, unemployed, victims of violence, single parents with dependant children or who fall into more than one of those categories. To make matters worse, much of its housing stock is in need of repair or maintenance. The staff of its housing department are involved in a daily battle to try to deal with heavy and competing demands for housing accommodation.
3. Section 167 of the Housing Act 1996, as amended, provides:

"(1) Every local housing authority shall have a scheme (their "allocation scheme") for determining priorities, and as to the procedure to be followed, in allocating housing accommodation.

For this purpose "procedure" includes all aspects of the allocation process, including the persons or descriptions of persons by whom decisions are to be taken.

(1A) The scheme shall include a statement of the authority's policy on offering people who are to be allocated housing accommodation –

(a) a choice of housing accommodation; or

(b) the opportunity to express preferences about the housing accommodation to be allocated to them.

(2) As regards priorities, the scheme shall be framed so as to secure that reasonable preference is given to –

…

(c) people occupying insanitary or overcrowded housing or otherwise living in unsatisfactory housing conditions;

(d) people who need to move on welfare or medical grounds (including grounds relating to a disability);

…

(6) Subject to the above provisions, and to any regulations made under them, the authority may decide on what principles the scheme is to be framed."

(The section contains a number of provisions which give regulatory powers to the Secretary of State.)

"(8) A local housing authority shall not allocate housing accommodation except in accordance with their allocation scheme."

4. Section 168 provides:

"(1) A local housing authority shall publish a summary of their allocation scheme and provide a copy of the summary free of charge to any member of the public who asks for one.

(2) The authority shall make the scheme available for inspection at their principal office and shall provide a copy of the scheme, on payment of a reasonable fee, to any member of the public who asks for one.

(3) When the authority make an alteration to their scheme reflecting a major change of policy, they shall within a reasonable period of time take such steps as they consider reasonable to bring the effect of the alteration to the attention of those likely to be affected by it."

5. Section 169 requires local authorities to have regard in the exercise of their functions under the relevant part of the Act to such guidance as may from time to time be given by the Secretary of State.

Factual background: the old scheme and the new scheme

6. Ms Faarah is the tenant of a three bedroomed council flat on the top floor of a three-storey block in Peckham. She has a chronic back condition which restricts her mobility. The block does not have a lift. She lives in the flat with her seven children, the oldest of whom is now aged 13, and her sister.
7. On 25 June 2003 Ms Faarah applied to Southwark for a transfer. At that time Southwark's allocation scheme ("the old scheme") ranked applicants on a points based system. Points for overcrowding were allocated at the rate of 5 points for every necessary bed space which the applicant's current accommodation lacked. Points for illness or disability depended on the degree to which the person's current accommodation impacted on their medical condition. 10 points would be allocated in the case of "any household which includes a person(s) with an illness or disability which is not helped by the current living conditions and a move is desirable" (original emphasis). 20 points would be allocated in a case of "any household which includes a person(s) with an illness or disability which is affected by their current living conditions and a move is needed to alleviate the medical condition" ...original emphasis). 30 points would be awarded where a person had a serious illness or disability affected to a marked degree by their present living conditions.
8. In April 2003, after a medical assessment by a nursing officer, Southwark informed Ms Faarah that 20 medical points would be added to any other housing points she might have. It follows that the relevant medical officer must have been satisfied at that time that Ms Faarah's back disability was affected by her current living conditions and that a move was needed to alleviate her medical condition.
9. On 1 July 2003 Southwark registered Ms Faarah on its housing list as an applicant with 45 points, made up of 20 medical points and 25 points for overcrowding.
10. Under the old scheme Southwark would make offers of accommodation to those in priority need based on considerations of availability and relative need as assessed under the points system. An applicant's only choice was whether or not to accept the accommodation offered.
11. In January 2005 the government set out a new national housing policy in a white paper entitled "Sustainable Communities; a Five Year Plan from the office of the Deputy Prime Minister". A major part of the policy was to try to introduce more tenant choice into the process of the allocation of local authority housing. By 2010 all local authorities were to be required to adopt allocation schemes involving choice based lettings or CBL's. If such a scheme were not to be unduly complex, it would be necessary to have a simplified way of categorising those with different levels of housing need. The white paper encouraged local authorities to replace points systems by broader systems of banding.
12. In September 2005 Southwark introduced a new allocation scheme ("the new scheme"). Under the new scheme applicants for housing accommodation would be placed on a single list divided into four bands, band 1 being the top band. Each week (initially fortnightly) Southwark would publish a list of available accommodation. Anyone on the housing list could bid for a property. A bidder in a higher band would have priority over a bidder in a lower band. If there were multiple bids for the same property by applicants in the same band, the successful bidder would be the person registered on the list at the earliest date. If there was more than one bidder in the same band who was registered on the same date, the computer would make a random selection.
13. Under the new scheme all applicants were placed in band 4 unless they qualified for a higher band. A person might qualify for band 3, among other reasons, on grounds of medical priority or overcrowding.
14. The category of overcrowding applied to all applicants who were short of one bedroom or more in their current home. There is no dispute that at all the relevant times Ms Faarah was in this category. As to medical priority, paragraph 3.9 of the new scheme provided:

"Applicants who suffer from an illness or disability will be assessed by the Medical Assessment Service. These applications can be given the following priority:

Band 4

Households which include a person (or persons) with an illness or disability which is not helped by their current home and where a move is desirable (but not necessary) will remain in band 4. (original emphasis)

Band 3 – Medical Priority

Households which include a person (or persons) whose illness or disability is made worse by their present home and who need a move to improve the effect on their medical condition will be awarded Medical Priority or registration in Band 3." (original emphasis)

15. The new scheme also recognised a higher category, not directly relevant in the present case, of households including a person with a serious illness or disability made significantly worse by their current home and where urgent re-housing was assessed as being vital. Such cases would be referred by the Medical Assessment Service to a Medical Assessment Panel and would be eligible for inclusion in band 2.
16. Under paragraph 3.12 of the new scheme applicants who qualified to be registered in band 3 on more than one ground, such as overcrowding and medical priority, would be awarded increased priority for multiple needs and would be registered in band 2.
17. On the introduction of the new scheme Southwark could have required everyone who was already on the housing list to make a fresh application if they wished to be included in the housing list under the new scheme, but sensibly it did not do so. Instead it used its past assessments to place those already on the current list into the new bands. The battle in the present case is over the way in which Southwark did so in the case of Ms Faarah.

The issues

18. Ms Faarah's primary contention is that on the introduction of the new scheme she should have been registered in band 2. Since she had already been assessed as somebody with a medical disability which was affected by her current living conditions and who needed a move to alleviate her medical condition, she qualified to be registered in band 3 on grounds of medical priority. She also qualified to be registered in band 3 on grounds of overcrowding. Because of her multiple needs she therefore qualified to be registered in band 2.
19. A second issue has also been raised. If Ms Faarah is right on the first issue, she has contended that she should have been given a registration date in band 2 of 1 July 2003, i.e. the date of her original registration on the housing list.
20. Southwark disagrees on both issues. It also criticises Ms Faarah for delay and says that, independently of any other reasons, relief should be refused on that ground.

Pre-trial history

21. On 30 August 2005 Southwark wrote to Ms Faarah explaining that a new scheme was about to come into effect. The letter informed her that her current re-housing application entitled her to bid in band 4 and that her qualifying date for the band was 1 July 2003. It did not inform her why she had been allocated to band 4 or, for that matter, whether band 4 was the bottom or top band. It is accepted that on any view the letter was wrong and that she was at least entitled to bid in band 3 (by reason of overcrowding). Ms Faarah was not asked to provide information for a fresh medical assessment.
22. On 3 August 2006 Southwark sent Ms Faarah a pro forma letter asking if she wished to remain on the housing list. She replied that she did. Enclosed with Southwark's letter was a note that her household was recognised as having 5 bed needs, that she was currently registered within band 3 and that her registration date was 19 September 2005. No explanation was given for the selection of band 3 (although the reason might be inferred by anyone familiar with the scheme from the reference to her bed needs) or for the alteration of her registration date from 1 July 2003 (as stated in the letter of 30 August 2005) to 19 September 2005 (i.e. the inception of the new scheme).
23. In March 2007 Ms Faarah took two significant steps. She submitted fresh medical assessment forms to Southwark in respect of herself and her oldest daughter, who suffered from asthma. She also consulted Southwark Law Centre.
24. On 26 March 2007 the Law Centre sent a pre-action protocol letter to Southwark arguing that Ms Faarah ought to be registered in band 2 and that she should be given a priority date not later than April 2003 (since by that date she was overcrowded and had also been assessed as requiring re-housing on medical grounds).
25. On 4 April 2007 Southwark replied that Ms Faarah had been placed in band 3 because of overcrowding and that she had a registration date of 1 July 2003 because that was when she had been previously registered. The letter continued:

"Your client was awarded 20 medical points but that does not give her a medical priority so she does not qualify to be placed in band 2."

No further explanation was provided.

26. On 9 May 2007 the Law Centre wrote to Southwark setting out the published criteria on which Ms Faarah had been given 20 medical points under the old scheme ("any household which includes a person with an illness or disability and which is affected by their current living conditions and a move is needed to alleviate the medical condition") and the published criteria for inclusion in band 3 on grounds of medical priority under the new scheme ("households which include a person (or persons) whose illness or disability is made worse by their present home and who need to move to improve the affect on their medical condition)".
27. The letter observed that it would have been open to Southwark to have reassessed the medical needs of all pre-existing applicants, but that it had not done so. The letter enquired why in those circumstances, and given Ms Faarah's previous medical assessment, she was not accepted as qualifying for band 3 on medical grounds.
28. Southwark's reply, dated 11 May 2007 was delphic. It stated:

"I have been instructed that the applicants who had medical points before the current housing policy came into operation were put into different categories of A, B and N.

Those who had 21 points and above were put into category A, those who had between 10 and 20 points were put into category B and do not have a medical priority and those who had less than 10 points were put into category N. If more than one member of the family was in category B, this pushed the family into A and so it would have a medical priority."

29. The letter did not explain on what medical (or other) basis these different categories had been created or how they reflected the medical criteria set out in the new scheme.
30. On 25 May 2007 the Law Centre wrote to Southwark:

"Please disclose the documentation relating to the decision to place applicants with 10 to 20 points in category B, and the decision to translate that to no priority under the new (Sept 05) scheme. In other words, it would seem that a group of people were given category B priority under the old scheme, and had that priority removed under the new scheme. Your published scheme does not include information about this process."

There was no reply.

31. In July 2007 a medical assessment of Ms Faarah's daughter resulted in Southwark concluding that it was desirable for her to be moved on medical grounds; that an overall assessment of the medical needs of everyone in the household meant that it was necessary for the household to move; that Ms Faarah was therefore entitled to be registered in band 3 on medical grounds; and that she was accordingly entitled to be registered in band 2 on grounds of multiple needs. Ms Faarah was consequently registered in band 2 with a date for priority purposes of 4 July 2007. This, of course, did not affect the issues whether she ought previously to have been registered in band 2, and if so, what priority date should have been given to her.
32. On 16 August 2007 the Law Centre sent Southwark a further pre-action protocol letter. Southwark replied on 27 September 2007 reiterating that Ms Faarah did not have medical priority until a medical assessment was carried out on her daughter on 4 July 2007.

Judicial review and Southwark's evidence in response

33. On 11 October 2007 Ms Faarah issued her claim for Judicial Review. The remedies claimed included a quashing order in respect of Southwark's decision letter of 27 September 2007 and a declaration that its allocation scheme was unlawful in that the priority date of applicants was not being computed in accordance with its published policy. On 21 January 2008 Wilkie J gave leave to apply for Judicial Review.
34. Shortly before the hearing Southwark filed a witness statement by Ms Caroline Cobb, the leader of its housing register team. In it she stated that when Southwark introduced the new scheme in September 2005 it adopted an "administrative practice" in placing applicants with medical points under the old scheme into the banding under the new scheme. The practice involved those who had medical points being placed into three categories. Those with 30 points were coded A, those with 20 points B and those with 10 points C. If more than one member of the household had been previously assessed for medical priority, then the composite assessment of the family was taken into account for medical priority under the new scheme. She stated:

"Under the new banding scheme a household assessed with one A [i.e. 30 points] or one B plus one C (or more) [i.e. 30 points or more] would be deemed as meeting the minimum criteria for priority for band 3 on medical grounds."

35. Ms Cobb's statement did not explain the rationale for this administrative practice. She did, however, produce an internal 3 page document by a senior IT officer containing what she described as "a draft proposal for dealing with the arrangements transposing medical points under the old scheme into banding under the new scheme". This document was dated 12 July 2006, i.e. nine months after the inception of the new scheme.
36. Ms Cobb said that the administrative practice was not published, because it was considered to be a "one-off" administrative task. She also stated:

"The proposal document was drafted by the senior IT officer and is generally correct in setting out the changes to the IT records and the general way forward on this. However, the description of the new codes is the individual IT officer's interpretation and does not reflect the provisions of the criteria for medical priority as set out in para 3.9 of the council's lettings policy. "

37. On its face, that was a candid admission that in the cases of Ms Faarah and others like her the council adopted an unpublished administrative practice which did not reflect the criteria for medical priority set out in its published allocation scheme. On the hearing of the appeal Mr Broatch, on Southwark's behalf, submitted that the statement should not be read in that way. Some time was therefore spent in examining how the description of the new codes in the IT officer's proposal document could be understood in a way which reflected the criteria for medical priority set out in the published allocation scheme. Study of the document did not yield that result. In fact, it proved to be a fruitless exercise. For one thing, the document is internally contradictory. Further, after some discussion Mr Broatch told the court, on instructions, that it was in fact no more than a proposal which had not been adopted.

The first issue

38. The judge said that he could discern no difference between the requirement of 20 points under the old scheme and band 3 under the new scheme. The wording was virtually identical and fresh medical assessments had understandably not been carried out. Southwark had, by adopting the "A, B, N" coding, built a process by which those who had qualified for one set of wording under the old scheme were treated as having failed to meet the same wording under the new scheme. Southwark had therefore acted unlawfully as regards those in the position of Ms Faarah.
39. Mr Broatch attacked the judge's reasoning in various ways but his arguments on this part of the case essentially amounted to two. These were, first, that the judge was wrong to treat the criteria for 20 medical points under the old scheme and for inclusion in band 3 on medical grounds under the new scheme as indistinguishable in substance, and secondly, that in any event Southwark was entitled in the exercise of its discretion to adopt the administrative practice that it did as a transitional step in moving from the old scheme to the new scheme.
40. In my judgment the judge's reasoning and conclusion on this part of the case cannot be faulted. Under the old scheme the expression "a person with an illness or disability which is affected by their current living conditions" must mean "adversely affected". Like the judge, I can discern no difference in substance between (a) a person with an illness or disability which is adversely affected by their current living conditions, and in whose case a move is needed to alleviate the medical condition, and (b) a person whose illness or disability is made worse by their present home and who needs a move to improve the effect on their medical condition. Under both schemes, the condition of such a person is to be contrasted with that of a person with an illness or disability "which is not helped" by their current living conditions and where "a move is desirable" (who under the old scheme received 10 points and under the new scheme remains in band 4).
41. As to the second argument, the statute gives to a housing authority a wide discretion in devising its allocation scheme. Having done so, the authority must not allocate housing accommodation except in accordance with the scheme; s 167 (8). In this case Southwark adopted a new scheme incorporating the criteria for medical priority set out in paragraph 3.9. It then introduced an unpublished administrative practice which cannot be squared with those criteria. During the appeal Mr Broatch was invited to explain how the administrative practice could be reconciled with the medical criteria set out in paragraph 3.9. He was unable to do so. It cannot. Ms Cobb was recognising reality when she acknowledged that the coding system used by Southwark's IT officers did not reflect the provisions of the criteria for medical priority set out in the allocation scheme. The consequence was that people on the housing list before the introduction of the new scheme and who fulfilled the criteria for inclusion in band 3 on medical grounds were not so treated unless some further requirement was met. This practice was in breach of Southwark's duty under s 167(8).

The second issue

42. Given that Ms Faarah should have been placed in band 2 on the inception of the new scheme (because of her qualification for band 3 on both medical and overcrowding grounds, which together entitled her to registration in band 2 because of her "multiple needs"), there remains the question about what priority date she should have received. The judge said:

"In failing to give those who reach band 3, and then band 2, priority back to the date upon which they qualified for band 3 medical priority (i.e. 20 points) Southwark is failing to allocate fairly and rationally under the Act as regards those in the position of the claimant and to that extent is acting unlawfully."

43. If the judge meant by this that Ms Faarah should have been given a priority date of 1 July 2003, he did not formally make an order to that effect. By paragraph 1 of his order he directed that Southwark's decision letter dated 27 September 2007 notifying Ms Faarah that her "priority date" was 4 July 2007 be quashed. In paragraph 2 of the order he made the following declarations:

"(i) The transitional arrangements whereby the defendant transposed medical points under the defendant's previous points based scheme into bands under the current choice based lettings scheme are unlawful in that an applicant awarded 20 medical points under the points scheme is not awarded band 3 medical priority under the current scheme;

(ii) Paragraph 3.1.2 of the defendant's allocation scheme is unlawful in that it does not accurately specify the basis upon which the relevant priority date is computed."

44. The first part of that declaration reflects the judge's decision on the principal issue, with which I agree.
45. The second part of the declaration is strange on its face. An allocation scheme lawfully made under s 167 is not rendered unlawful by the authority departing from it. The new scheme as published does not provide for anybody to be given a priority date pre-dating the inception of the scheme. Mr Latham said on Ms Faarah's behalf that in practice Southwark has given earlier priority dates, as evidenced in this case by Southwark at one time giving Ms Faarah a registration in band 3 with a date of 1 July 2003. Others had had their priority backdated to the 1990's. He submitted that consistency in the application of that practice should mean that her registration in band 2 should be from the same date. Mr Broatch responded that this could not be right since the multiple needs provision of the new scheme, on which Ms Faarah's successful argument for her uplift to band 2 depended, did not exist prior to the inception of the new scheme.
46. I see the attractiveness at first sight of Mr Latham's argument that since Southwark applied a practice under the new scheme of giving registration dates which preceded the inception of the scheme, Ms Faarah should have been given a band registration and priority date which reflected the band for which she qualified under the new scheme and the date of her original registration on the housing list. But I can also see counter arguments. First and foremost, I can see potential arguments from other applicants that nobody should have been given a date for the purposes of the new scheme which pre-dated the inception of the scheme. Secondly, I can see potential arguments that if pre-dating were applied in the way contended for by Ms Faarah, it could give her an "unfair" advantage over other applicants who might have been on the housing list for a shorter period but with a higher points score. Under the old scheme, somebody on the list with a higher points score would have had priority over Ms Faarah. If under the new scheme they both fell into the same band, they would fall to be treated alike; but if both were additionally given a priority date to reflect their registration under the old scheme, the person with the previous higher score would rank below the person with previous lower score after the introduction of the new scheme. However it is not for the court to decide what would be the fairest system. A change of system may produce winners and losers. The court is concerned only with the legality of what Southwark has done.
47. In summary, these are my conclusions on this part of the case:

(1) I have already noted that the judge did not make a formal declaration that Ms Faarah was entitled to registration in band 2 with a priority date prior to the inception of the new scheme; nor is there a respondent's notice asking this court to make such a declaration. Mr Latham was wise in all the circumstances not to seek such a declaration. It would have given rise to a number of issues on which we have not heard full argument. My remaining conclusions are provisional and expressed only in the light of such argument as we have heard and in case they may assist the parties.

(2) It is questionable on what basis Southwark was entitled to give any applicant a priority date which preceded the inception of the new scheme. On its face the scheme does not suggest that any applicant could be given a priority date prior to the inception of the scheme because it states that the date that the relevant priority is awarded becomes the registration date within the relevant band, and the bands only came into existence on the inception of the new scheme. The point was not argued before us because neither party wished to dispute that Southwark might properly register an applicant with an earlier priority date. (Ms Faarah wants an earlier priority date, and it is not in the interests of Southwark to argue that no applicant could be given an earlier priority date since it has in practice given certain applicants earlier priority dates.)

(3) I can see arguments why it might be thought desirable that those previously on the housing list could be given an earlier priority date for reasons of equity and practicality (in particular, to avoid widespread random allocation of housing between a large number of applicants all registered on the same date). However, it is not obvious to me on the limited argument which we have heard that there is necessarily only one rational or fair way in which a system of earlier priority dates might work, and the comparative merits of different possible models would not be a matter for the court to determine.

(4) Any practice which Southwark may have of giving priority dates which precede the inception of the new scheme ought to be published, not only so that applicants may understand where they stand, but also so that any interested party who wants to question the legality of the practice may be in a position to do so. There is, of course, nothing to prevent Southwark from amending its allocation scheme so as to regularise its position for the future.

Relief

48. Mr Broatch argued that no relief ought to have been given to Ms Faarah because of her delay. Relief is a matter within the court's discretion. Questions of delay are usually most relevant at the stage when the court is considering whether to give leave. The court still has a power to refuse relief at the end of a full hearing on the ground of delay, but for obvious reasons it is much less likely to do so. An appellate court will only interfere with the lower court's decision if it is satisfied that the judge acted outside the proper ambit of his discretion. That cannot possibly be said in this case. The judge being rightly satisfied that Southwark had acted, and was continuing to act, unlawfully in its treatment of Ms Faarah's application, there was every reason for him to grant relief to her.
49. Mr Broatch took the technical point on the first paragraph of the judge's order that Southwark's letter of 27 September 2007 was not a decision letter as such but merely a reaffirmation of a position previously adopted. That is a semantic point with no substantial merit. Mr Broatch also attacked the general declarations made by the judge. The first general declaration reflected accurately the illegality which the judge had found and about which I agree with him. Since the illegality was part of a general practice, the declaration was appropriate. Mr Broatch submitted that the making of such a declaration would not be conducive to good administration. When pressed to explain his reasoning, he said that the making of a formal declaration would place a greater onus on the council to correct the practice than if the relief were limited to an order specifically relating to Ms Faarah. I found that a surprising and rather worrying submission. If it is true, it provides all the more reason why it is in the interests of good public administration that the judge's declaration should stand. The second part of the declaration was in my view inappropriate for reasons already set out. Mr Latham did not seek to uphold it but did suggest an alternative form of declaration. I do not consider that it is necessary nor appropriate for there to be any other general declaration than the first declaration made by the judge.
50. For those reasons I would set aside paragraph 2 (ii) of the judge's order but otherwise dismiss the appeal.

Lord Justice Wall:

51. I have had the advantage of reading in draft the judgments of both Toulson and Sedley LJJ. I entirely agree with both, and there is nothing I wish to add.

Lord Justice Sedley:

52. I agree with the judgment of Lord Justice Toulson. There are two things I would like to add.
53. One is that I share his concern at the sustained endeavour of the local authority, through Mr Broatch, to treat this appeal more as a damage limitation exercise than as an endeavour to get their policy and practice within the law. Both Southwark and other authorities with similar schemes have a duty to make sure that their schemes are compliant with their statutory obligations and are not subverted by inconsistent administrative practices.
54. The other rider is that all the members of this court would wish to express their appreciation of the skilful professional service which Ms Faarah has had from the Southwark Law Centre. As the history set out by Lord Justice Toulson shows, the law centre, by careful and well-informed correspondence, was able to locate and challenge the precise error of public administration which this appeal has confirmed. It is of importance to the administration of justice, as well as to many individuals, that there should continue to be law centres like Southwark's which are able to offer professional help of high calibre to the neediest people.