England and Wales High Court (Administrative Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		13/07/2009

Mr Justice Cranston :

INTRODUCTION

1. This is a challenge by way of judicial review to the policy of the Westminster City Council ("the Council") that only studio-sized accommodation will be made available in future to housing management organisations like the claimant to offer to their staff. At the permission stage I rejected as unarguable aspects of the claim which contended that the policy is unlawful because it is irrational, takes into account irrelevant considerations and was introduced without adequate consultation.
2. It seemed to me that the Council faces housing pressures because of a shortfall of accommodation for applicants for council accommodation. That is the background to this policy. In balancing the various factors – the benefit which the policy produces by making sure that the amount of family-sized accommodation available is maximised on the one hand, and the adverse effects on residential staff who have families on the other hand – the Council could not be said to have acted irrationally or in a way which took into account irrelevant considerations or failed to have regard to relevant considerations (whichever way the matter is put). As for consultation, the Council produced evidence that the claimant is a member of a local Resident's Panel and that the Residents' Panel has an input into the Allocations Working Party, which is a subgroup of the Council's Housing Panel. In the result the claimant was consulted, albeit indirectly.
3. The one issue which troubled me, and which I thought was arguable, relates to the possible discriminatory ramifications of the policy. By providing that a housing management organisation like the claimant should only offer studio flats, that might arguably involve discrimination in breach of Parts 2 and 3 of the Sex Discrimination Act 1975 because of its impact on residential staff with families. Although I dealt with the matter at the permission stage, by chance the matter was allocated to me for a short judicial review hearing. In the skeleton argument for the hearing, the claimant referred, for the first time, to section 76A of the Act. In fairness to the Council, since the issue had not been raised at the permission stage, I allowed them to make short written submissions on the point, following the hearing.

Background

4. The claimant is a tenants' and residents' management organisation which manages Odhams Walk, Longacre, London. That comprises some 102 residential properties owned by the Council. The structure of the legal arrangement between the various parties is of some importance.

(a) Management agreement

5. The Court now has a copy of the Tenant Management Organisation Agreement ("the Agreement"), dated 2 April 2001, under which the claimant manages the properties. The Agreement contains this clause:

"4.1 The Council appoints the [claimant] as the Council's Agent in respect of the management responsibilities delegated to the [claimant] in accordance with the terms of this Agreement …"

Clause 6 is entitled "The [claimant's] role as managing agent for the Council". It reads, in part:

"6.1 The [claimant] shall carry out housing management functions in relation to the Property, as agent of the Council in accordance with the terms of this Agreement.

6.2 In carrying out these functions the [claimant] shall comply with the legal obligations which bind the Council in respect of these functions.

6.6 The [claimant] shall comply with instructions from the Council which the Council may reasonably need to give to ensure compliance with obligations imposed by law on the Council or the [claimant]."

6. Clause 9 of the Agreement is entitled Equal Opportunities.

"9.1 The [claimant] shall operate equal opportunities policies and procedures in all aspects of its work as Managing Agent of the Property. By implementing equal opportunities policies and procedures the [claimant] shall ensure that it does not discriminate against any person on the grounds of race, ethnic origin, disability, nationality, gender, sexuality (lesbians/gay men), age, class, appearance, religion, responsibility for dependants, unrelated criminal convictions, being HIV positive or having AIDS, or any other matter which causes any person to be treated with injustice."

Clause 9.3 requires the claimant to keep proper records of its implementations of its equal opportunities policies and procedures in all aspects of its work as managing agent of the property, including the employment of staff. Annex 2 contains the claimant's equal opportunities policy. The introduction reads:

"Odhams Walk Resident Management (OWRM) supports the principle of equal opportunities in all areas of its service delivery and employment and opposes all forms of unlawful or unfair discrimination on the grounds of colour, race, nationality, ethnic or national origin, religious belief, political standing or belief, age, gender, sexual orientation, marital status or disability."

There then follows a list of the relevant legislation, governing the activities of the claimant.

7. Chapter 6 of the Agreement is entitled "Staffing and management of the relationship between the [claimant] and the Council". In employing staff, the claimant must comply with statutory provisions listed, including the Sex Discrimination Act 1975. However, staff are employed by the claimant, not the Council. "2.1 The duties of any staff employed by the [claimant] and their terms and conditions of employment (including salaries and rates of pay) shall be determined by the [claimant] and copies of the [claimant's] recruitment policy, disciplinary procedure and standard terms and conditions are in Annex A to this chapter."
8. Annex A to chapter 6 contains the recruitment policy, disciplinary procedure and standard terms and conditions for the claimant's staff. Under the Agreement the claimant aims to fulfil the policy and procedures in respect of recruitment of staff outlined in its equal opportunities policy and procedures. All vacant posts are to be advertised in the local press and at the local job centre. A copy of the claimant's Equal Opportunities policy statement is to be included in the recruitment information package. The standard employment contract is set out in the annex.

(b) A caretaker employed

9. On 1^st March 2003, the claimant entered into a contract of employment with a Charles Healey, to occupy the position of caretaker at Odhams Walk. Mr Healey's employment contract states, under the heading "Salary":

"This salary is in addition to a 1 bedroomed flat being provided as part of the salary package, and the council tax is paid on this property. Should your employment with Odhams Walk Residents Management cease the entitlement to remain at the property also ends."

Since taking up his post as resident caretaker Mr Healey and his partner now have a family of two young children, a boy and a girl.

(c) The licence agreements

10. By an agreement which took effect from 1 November 2003 the Council granted a licence to the claimant to occupy a flat known as H73 Odhams Walk for the purpose of providing accommodation to an employee, for the better performance of their duties on the estate. The agreement provides:

"The accommodation is only to be used for your member of staff Charles Healey who is specifically required to live in or very close to his main workplace for the proper performance of his duties. The occupation of such accommodation being an essential requirement of his contract of employment. The post covered by this arrangement is a Caretaker/Cleaner. On termination of the employee's contract of employment their right to occupy the property will cease and the property will revert to the Council."

11. In turn, the claimant granted a licence, also effective from 1 November 2003, to Mr Healey, to occupy the property "for the proper performance of their (sic) duties".

"This Licence Agreement is granted on the condition that the Employee's appointment as a Caretaker, specifically requires them to live in or very close to their main workplace for the proper performance of their duties."

The conditions of the agreement were that the right to occupation of the property would end on the termination of the contract of employment or if the contract of employment no longer required the employee to reside at the property.

(d) The Council's policy

12. The Council's policy ("the policy") on accommodation for staff of housing management organisations originated in a report by officers dated 30^th October 2006. The report noted that for recently appointed staff, the Council offered a management organisation a suitable unit on licence and the latter then offered a further licence of the unit to their employee. This ensured the employee did not gain security of tenure and the licence was terminated when the employment ceased. As a result there was no re-housing duty unless the member of staff qualified for one of the Council's housing priority groups. The report continued:

"5.3.3 Because of the pressure on our housing stock, particularly family sized housing, it is important also that the providers do not call upon the City Council to provide family sized units for their residential staff. It is thus recommended only studio sized accommodation will be made available to providers to offer on licence to their staff.

5.3.4 Once this decision has been taken providers advertising vacancies for residential posts will make clear that only studio sized accommodation is available with the job."

13. The policy was approved by executive decision of the Council's cabinet member for housing in January 2007. As adopted the policy is "that studio sized accommodation only is to be made available to housing management provider organisations to offer on license to their residential staff."
14. Attempts were made by the claimant throughout 2008 to persuade the Council to permit them to licence a 3-bedroom flat to Mr Healey. At the time, a secure tenant occupying a 3-bedroom flat was agreeable to moving to the 1-bedroom flat occupied under license by Mr Healy, thus allowing the Council to licence the vacant 3-bedrom flat to the claimant. The proposal was rejected by the Council. In the course of correspondence on the issue the Council stated, in a letter dated 7 September 2007, that "… the Council currently makes available to providers of housing management services only studio or one-bed accommodation for their residential staff." The letter continued that the Director of Housing would be prepared to exercise her discretion to grant a licence of a 2-bedroom property to the claimant as part of a three way move releasing the 3-bedrom flat. The same letter acknowledged that there was not a 2-bedroom flat currently available nor was one likely to be available in the foreseeable future.

The law

15. The case turns on the impact of the Sex Discrimination Act 1975 ("the 1975 Act"). Discrimination to which the Act applies is set out in Part 1. By section 1(1) a person directly discriminates against women if, broadly speaking, he treats her less favourably on the grounds of her sex than he would a man, or applies a requirement or condition which is such that the proportion of women who can comply with it is considerably smaller than the proportion of men, and which is not capable of being justified. There is a comparable provision for indirect discrimination: section 1(2).

"In any circumstances relevant for the purposes of a provision to which this subsection applies, a person discriminates against a woman if –

(a) on the ground of her sex, he treats her less favourably than he treats or would treat a man, or

(b) he applies to her a provision, criterion or practice which he applies or would apply equally to a man, but –

(i) which puts or would put women at a particular disadvantage when compared with men,

(ii) which puts her at that disadvantage, and

(iii) which he cannot show to be a proportionate means of achieving a legitimate aim."

Section 3 identifies discrimination in like terms for married persons, and civil partners, in employment, where it cannot be shown that the less favourable treatment is a proportionate means of achieving a legitimate end.

16. The Act then prohibits discrimination in specified areas. In Part 2, section 6 provides, so far as is relevant, for discrimination in employment;

"(1) It is unlawful for a person, in relation to employment by him at an establishment in Great Britain, to discriminate against a woman –

(a) in the arrangements he makes for the purpose of determining who should be offered that employment, or

(b) in the terms on which he offers her that employment, or

(c) by refusing deliberately omitting to offer her that employment.

(2) It is unlawful for a person, in the case of a woman employed by him at an establishment in Great Britain, to discriminate against her –

(a) in the way he affords her access to opportunities for promotion, transfer or training, or to any other benefits, facilities or services, or by refusing or deliberately omitting to afford her access to them, or

(b) by dismissing her, or subjecting her to any other detriment."

Similarly, in Part 3, section 30 deals with discrimination in the disposal or management of premises:

"(1) It is unlawful for a person, in relation to premises in Great Britain of which he has power to dispose, to discriminate against a woman –

(a) in terms on which he offers her those premises, or

(b) by refusing her application for those premises, or

(c) in his treatment of her in relation to any list of persons in need of premises of that description."

(1A) It is unlawful for such a person to subject to harassment a woman who applies for the premises.

(2) It is unlawful for a person, in relation to premises managed by him, to discriminate against a woman occupying the premises –

(a) in the way he affords her access to any benefits or facilities, or by refusing or deliberately omitting to afford her access to them, or

(b) by evicting her, or subjecting her to any other detriment.

(2A) It is unlawful for such a person to subject to harassment a woman who occupies the premises.

(3) Subsection (1) does not apply to a person who owns an estate or interest in the premises and wholly occupies them unless he uses the services of an estate for the purposes of the disposal of the premises, or publishes or causes to be published an advertisement in connection with the disposal.

(4) Subsections (1A) and (2A) apply in relation to an application for or occupation of premises except in so far as they relate to an excluded matter.

17. Then in Part 8, Supplemental, section 76A(1) provides that a public authority in carrying out its public functions must have due regard to the need to eliminate unlawful discrimination and to promote equality of opportunity between men and women. A failure of performance of the duty under subsection (1) does not confer a cause of action at private law: s.76A(6).
18. The prohibition of discrimination in employment covers the arrangements an employer makes for the purpose of determining who should be offered employment; the terms on which he offers that employment; and the refusing or deliberate omission of an offer of employment: s.6(1)(a)-(c). General statements of intent in respect of recruitment are relevant, even if there is no immediate, identifiable victim: Centrum voor gelijkheid van kansen en voor racismebestrijding v Firma Feryn NV, European Court Of Justice, Case C-54/07, The Times, July 16, 2008. That decision turned on the Equal Treatment Directive, 2000/43/EC, [2000] OJ L 180/22. Article 2 reads, in part:

"1. For the purposes of this Directive, the principle of equal treatment shall mean that there shall be no direct or indirect discrimination based on racial or ethnic origin.

2. For the purposes of paragraph 1:

(a) direct discrimination shall be taken to occur where one person is treated less favourably than another is, has been or would be treated in a comparable situation on grounds of racial or ethnic origin."

19. The background to that case was that the Centre for Equal Opportunities and Combatting Racism in Belgium claimed that the defendant, a Belgium sales and installation company, applied a discriminatory recruitment policy. That was because of public statements made by the director of the company to the effect that his undertaking was looking to recruit fitters, but that it could not employ immigrants because customers were reluctant to give them access to their homes. The Belgium Court referred six questions to the European Court of Justice ("the ECJ"), including whether there was direct discrimination within the meaning of Article 2(2)(a) of Council Directive 2000/43/EC where an employer, after putting up a conspicuous job vacancy notice, made the public statements indicated. The ECJ was also asked whether it was sufficient for a finding of direct discrimination in the conditions for access to paid employment to establish that the employer applied directly discriminatory selection criteria. In relation to these questions the ECJ accepted that whilst it was true that Article 2(2)(a) of Directive 2000/43/EC defines direct discrimination as a situation in which one person "is treated" less favourably than another in a comparable situation, it could not be inferred from the lack of an identifiable complainant that there is no direct discrimination within its terms. The ECJ referred in paragraph 23 to recital 8 of that Directive's preamble, which says that its objective is to foster conditions for a socially inclusive labour market. The ECJ held:

"The fact that an employer declares publicly that it will not recruit employees of a certain ethnic or racial origin, something which is clearly likely to strongly dissuade certain candidates from submitting their candidature and, accordingly, to hinder their access to the labour market, constitutes direct discrimination in respect of recruitment within the meaning of Directive 2000/43. The existence of such direct discrimination is not dependant on the identification of a complainant who claims to have been the victim": at [25]

The claimant's submissions

20. In his submissions for the claimant, Mr McCafferty contended that, contrary to sections 6 and 30 of the 1975 Act the policy discriminated indirectly against women and married persons in the field of employment and housing. He accepted that the Council is not the direct employer or landlord of the existing or any future residential caretaker at Odhams Walk. However, what the policy requires the claimant to do is attributable to the Council because of the principal-agent relationship between it and the claimant under the Agreement. The Council, by the policy, places a restriction on the claimant because only studio or one-bed accommodation will be made available on licence. Thus the claimant cannot employ anyone who has a family since their occupation of the licensed accommodation would constitute statutory overcrowding. It is more likely that women, as single mothers, married persons and civil partners will have the responsibility for children, or at least more likely to have that responsibility than single men. They will not be able to take up employment as a caretaker because of the condition imposed by the Council. Such persons will, therefore, be discriminated against. Under the Agreement, and as a matter of law, the claimant must abide by the 1975 Act. The policy, in effect, seeks to insist that the claimant must discriminate against women, married persons, and persons in a civil partnership in their employment and housing practice contrary to the 1975 Act.
21. In Mr McCafferty's submissions a further effect of the policy is, at least potentially, to place the claimant in a position of constructively dismissing their employee. Due to the restriction placed on it by the Council's policy, an employee with children would have to choose between living in statutory overcrowded conditions, as defined by section 324 of the Housing Act 1985, or leave the claimant's employment. That is, prima facie, constructive dismissal and is unlawful for that reason. The Council's policy, it is contended, amounts to a public declaration that persons in a certain class – those with children such that the occupation of a bed-sit or one-bedroomed flat will be unsuitable – will not be employed for the position of resident caretaker at Odhams Walk. Such a public statement is analogous to the statement in Centrum, on limiting candidates for a position on the grounds of race or ethnic origin. As such, it is discriminatory and hence unlawful. In relation to section 30 of the Act, it is submitted that the effect of the policy is to discriminate against women as they are more likely to have responsibility for the welfare of children and hence require accommodation greater than the policy permits the claimant to offer.
22. Finally, it is said, the Council's policy constitutes a breach of the duty imposed on it under section 76A of the 1975 Act to have regard to the need to eliminate unlawful discrimination and to promote equality of opportunity between men and women. In R (on the application of Meany) v Harlow District Council [2009] EWHC 559 (admin) Davies J granted judicial review because there was nothing to show that the local authority in that case had due regard to statutory criteria when adopting a budget cut. The same was the position here.

Discussion and conclusion

23. Although I have not found the matter easy, it seems to me that, assuming there is discrimination under Part 1 of the Act, the answer to the claimant's contentions is to be found in the nature of the legal arrangements between the Council and the claimant on the one hand, and the claimant and its employee on the other. Once that is understood it becomes evident that the Council's policy does not constitute a breach of Part 2 and 3 of the Sex Discrimination Act 1976.
24. At the outset it must be appreciated that the principal-agent relationship between the Council and the claimant is limited in scope. Clauses 4 and 6 of the Agreement confine it to management of the properties at Odhams Walk. That the claimant is the Council's agent in this regard does not mean that any employee of the claimant has a direct relationship with the Council.
25. As a matter of law the Council do not employ the claimant's staff nor do they house them. Staff are employed directly by the claimant and its staff have no employment or landlord and tenant relationship with the Council arising out of their status as the claimant's employee. Chapter 6 of the Agreement makes clear that the claimant determines independently of the Council what remuneration and other terms it will offer its employees. As far as the Council's policy is concerned, as a matter of legal analysis the Council does not determine whom it is that the claimant may employ. Similarly, with housing, there is no landlord – tenant relationship between the Council and the claimant's employees and the Council does not choose the claimant's licencees.
26. Nor does the policy prevent the claimant from making accommodation arrangements for its residential staff which differ from the objectives of the policy, if that were thought desirable by the claimant. Neither the Agreement nor the policy prescribe what arrangements the claimant may make with its employees about housing. It is a matter for the claimant as to what arrangements it wishes to agree as regards the remuneration package to be provided for a position, including whether salary plus accommodation is available or whether an employee is simply offered a salary without any accommodation.
27. One then turns to the statutory language in the 1975 Act. That contemplates a direct relationship between one person and another before it has any purchase. In defining direct and indirect discrimination for the purposes of any provision in the 1975 Act, it seems essential that there be a direct relationship between one person and another in which the one treats the other less favourably or applies a condition, criterion or practice, the consequence of which is adverse to the other. In section 1 the statutory language is to the effect that "a person discriminates against a woman if (a) on the grounds of her sex he treats her less favourably …" and so on. The same direct relationship is evident in the language of section 3, discrimination against married persons and civil partners in the employment field.
28. The same language is evident in Parts II and III of the Act. Section 6 makes it unlawful for a person in relation to employment by him to discriminate against a woman in relation to the arrangements he makes for recruitment, setting the terms of her employment and making offers of employment to her. The section also concerns discrimination by the discriminator in relation to the access he affords her to benefits and dismissing or subjecting her to any other detriment. Similarly, section 30 makes it unlawful for a person to discriminate against a woman as regards the terms on which he offers her premises or refuses her application for premises; and, it is unlawful for the manager of premises to discriminate against a woman in occupation of premises as regards provision of access to benefits or by evicting or subjecting her to any other detriment.
29. The claimant conceded that the Council is not in the type of direct relationship with the claimant's existing or prospective employees which is required under these legislative provisions. The claimant's case was advanced on the basis of agency, but agency does not assist since the claimant is the agent of the Council only in relation to the management of the properties, not as regards the employment of staff or their accommodation. Alternatively, it was said that the policy would cause the claimant to dismiss an employee. In theory there is no reason for this to occur because alternative housing arrangements could be made.
30. Having regard to the legal relationships there is no basis for arguing that the Council has unlawfully discriminated in terms of sections 1 and 3 of the Act: the Council's policy applies to housing management organisations, not to any individual men or women, whether in civil partnerships, married or otherwise. As for section 6, the Council's policy does not concern its relationship with its own employees, but is instead directed at its relationship with housing management organisations such as the claimant. The policy does not seek to determine how the claimant will treat any existing or future employees. Similarly, the Council's policy does not concern the manner or terms on which it offers accommodation to men or women – section 30 – but addresses what type of accommodation it is prepared to offer to housing management organisations in future for their prospective employees.
31. The upshot is that having regard to the legal relationships between the parties and the terms of the Council policy, I can see no basis on which it can be said that the Council's policy constitutes unlawful discrimination of which the claimant can complain. The Council has no present relevant legal relationship with the claimant's employees. There are no arrangements in place which make the Council responsible for the recruitment or retention of staff on behalf of the claimant in future. In law the Council is not responsible for the treatment of the claimant's staff in the course of their recruitment or employment. Nor is the Council responsible for the formulation and application of any conditions applied to the claimant's staff during their recruitment or employment.
32. The Centrum case takes the analysis no further, because it concerned actions by an employer directly engaged in the recruitment of employees, making statements as to whom it was prepared to employ. In the present claim the Council is not an employer of the claimant's existing or prospective employees, so it follows that the Council is not engaged in the recruitment of the claimant's prospective employees or in any employment matters concerning its existing employees. The Council has not made any public statements regarding who should be employed as residential staff by the claimant. Its policy concerns its dealings with housing management organisations in the supply of housing to those organisations and applies to them all.
33. At the last moment the claimant raised a possible breach of section 76A of the Act, in that the Council was said not be have paid due regard to the need to promote equality of opportunity between men and women. Mr Pryce, for the Council, has directed my attention to the Gender Equality Duty – Code of Practice (England and Wales). The code provides guidance at paragraph 1.12 that paying due regard to the general gender equality duty concerns linked issues of proportionality and relevance; the weight given to the general gender equality duty should be proportionate to its relevance to the function being carried out. At paragraphs 2.22 and 2.24 the Code provides that authorities may prioritise giving their attention to functions which particularly affect men and women. Further, an authority may decide that as regards the provision of some services, little or no action is required to discharge the general gender equality duty.
34. The difficulty for the claimant is that it has failed to identify the precise circumstances in which it submits that the Council has not had due regard to the general gender equality duty in a relevant and proportionate way, while carrying out its functions under the policy. The claimant's failure to seek permission to argue this particular point meant that the Council has not adduced evidence or made detailed submissions concerning the issue. After the hearing the claimant referred me to R (on the application of Meany) v Harlow District Council as support. The Council submits that it is clear that the policy the claimant contends is unlawful does not concern the Council providing services to men and women. Rather, its policy concerns its future functions pursuant to its relationships with housing management organisations. In my view, it was for the claimant to demonstrate how the Council failed to have due regard under section 76A to its general equality duty. It has not done so.
35. Consequently, the claim fails. In my judgment, given the way the legal arrangements between the parties are structured, the Council's policy does not discriminate in the manner the claimant has suggested. It is not, on that basis unlawful. There is no evidence that it failed to give due regard to the issue of gender equality.