Scottish Court of Session Decisions

OUTER HOUSE, COURT OF SESSION

[2017] CSOH 1

P1181/15

OPINION OF LORD MULHOLLAND

In the petition

MASROOR HUSSAIN

Petitioner

against

GLASGOW CITY COUNCIL

Respondent

Petitioner:  M Dailly, (sol adv); Drummond Miller LLP 

Respondent:  Divers; Glasgow City Council Legal Department

05 January 2017

Introduction
[1]        This is a Judicial Review of a decision of Glasgow City Council, the respondent,  of 24 July 2015 in relation to a statutory housing grant. 

[2]        The petitioner is the co-owner of Flat 2/2, 196 Langside Road, Glasgow with his wife. The flat is located on the second floor of a tenement block of flats in Govanhill, Glasgow.  As a result of a survey of properties in the area the respondent identified certain works which required to be carried out to the fabric of the tenement building.  As a result the respondent served a notice dated 12 April 2011 on the owners of the property, which included the petitioner, in terms of section 30 of the Housing (Scotland) Act 2006 (the Act).  The work notice is headed:  “Notice to owner of a house which is sub‑standard under Part 1 of the Housing (Scotland) Act 2006”.  The notice advises the owners of the flats at 196 Langside Road, Glasgow that the property is sub‑standard, in disrepair and works must be carried out to put right a number of defects which are listed in the notice.  Repairs or replacement is required of the roof, windows, chimney heads, stonework and pointing, gutters and downpipes, drainage, timbers in the roof space, walls and ceilings, damp proof course and some structural defects within flats.  The petitioner was given 21 days to complete these works.  The 21 day period expired on 3 May 2011.  Neither the petitioner nor any of the other owners of the flats within 196 Langside Road, Glasgow appealed the notice in terms of section 64 of Act. 

[3]        The petitioner, together with the other owners of the flats, submitted a proposed voluntary scheme of repairs to the respondent in March 2012 with a view to obtaining a grant for part of the costs of the repairs.  The proposed scheme was reviewed by the respondent who decided it was not suitable for grant purposes.  This was intimated in a letter dated 27 June 2012 to the petitioner.  The letter is No 11 of the joint inventory of productions.  The respondent decided to carry out the said works.  In the said letter the respondent advised the petitioner:

“In the circumstances I have to advise you that I shall be instructing the necessary repairs through a statutory contract in accordance with the Work Notice issued on 12 April 2011.  The contract will be supervised by a surveyor appointed by the Council.”

The letter also advised the petitioner that the respondent would be prepared to offer grant assistance for the cost of the repairs.  A meeting with the petitioner and other owners was held on 8 October 2012.  The minutes of the meeting, which are No 1 of the joint inventory of productions, confirm that owner occupiers would be eligible for a grant of 50% of the cost of the repairs.  If, however, owners wished to be considered for a grant of up to 75% (75% is the maximum grant available) then full income and family details supported by documentary evidence would require to be provided to the respondent.  A lift in grant from 50% to 75% was therefore means tested.  The minutes also record that it was made clear at the meeting that a condition of the grant funding was that the owner’s share of the cost of repairs must be fully paid to the respondent by the time the final account for the works was issued.  This was normally 6 months or so after the works had been completed and therefore each owner had roughly one and a half to two years to raise their necessary share of the funding.  Failure to pay this amount by this time would see the grant eligibility removed and the owner would be liable for their share of the full cost of the works. 

[4]        The petitioner submitted his  grant application on 2 November 2012.  The petitioner’s grant application for 75% of the funding of the cost of repairs was approved by the respondent subject to a number of conditions.  The relevant condition for the purpose of this review is that failure by the petitioner to pay his 25% share of the cost of repairs by the time the final account is agreed would result in the grant being removed and he would be liable for his full (100%) share of the costs of the repairs.  This is set out in an email to the petitioner from the respondent dated 16 November 2012, which is No 2 of the joint inventory of productions.  This condition was reiterated in a further email to the petitioner from the respondent dated 21 November 2012, which is No 3 of the joint inventory of productions.  This condition was highlighted in bold.  On the same day the respondent wrote to the petitioner confirming the 75% grant towards his share of the costs of the repairs subject to the condition that the petitioner’s 25% share of the cost of the repairs should be paid by the time the final account was agreed.  The petitioner did not challenge this condition. The petitioner signed a mandate dated 8 April 2013 for additional works within the contract.  The mandate is No 12 of the joint inventory of productions.  The works commenced on 29 November 2012 and on 26 July 2013 the petitioner was sent a letter advising him of the likely costs.  The letter notes that assuming a grant of 75% was payable the petitioner’s contribution would be £15,884.89.  The letter also reiterates that it is a condition of the grant that the petitioner’s share of the cost of repairs must be paid to the respondent by the time the final account is issued.  The petitioner was reminded that failure to pay his share of the costs by this time would see his grant eligibility removed and he would be liable for the full cost of the works, including an additional sum to cover professional and administrative expenses. 

[5]        The works were completed on 21 January 2014 and a final account for the works was issued by the contractors on 7 May 2015.  Notices were sent by the respondent to the petitioner and the other owners on 27 May 2015, seeking payment of their shares of the cost (calculated after deduction of grant monies).  The notices are No 6 of the joint inventory of productions.  The contribution required by the petitioner was £21,360.89 which was to be paid no later than Friday 10 July 2015.  Immediately underneath this figure is a warning that failure to pay the contribution by that date would result in the respondent issuing an account for the full cost of the works and therefore the petitioner would be liable for his full share of the cost amounting to £84,923.56. 

[6]        On 30 June 2015 the respondent received a letter from the petitioner indicating an inability to pay the 25% share of the cost of repairs and seeking time to pay.  This was refused by the respondent by letter of 2 July 2015, which is No 8 of the joint inventory of productions.  Paragraph 3 of the letter records that owners have been given to 10 July 2015 to make payment in order to qualify for the grant.  This is described by the respondent as a more than generous offer given the length of time that each owner has been aware that such a bill would be forthcoming.  Each owner’s share of the cost after the grant has been deducted needs to be paid in full prior to 10 July 2015 in order to secure the grant funding.  No repayment options were available and the paragraph ends with the respondent confirming that they are aware of the financial circumstances of the petitioner and his family which is why they have been offered the maximum grant of 75%.  The respondent then reiterates that if payment is not made in full by this date then the petitioner would be liable for his share of the full costs of the work amounting to £84,923.56.  The petitioner did not make payment of his share of the cost of repairs by the due date.  The respondent by letter of 24 July 2015 to the petitioner’s solicitors confirmed the terms of the letter of 2 July 2015.  As the petitioner had not met the condition of the offer of grant, the grant was withdrawn and the petitioner was liable for his full share of the works.  The petitioner then lodged a summary application at Glasgow Sheriff Court on 5 August 2015 appealing the demand for full payment in terms of section 64(1)(d)(i) of the Housing (Scotland) Act 2006.  The application seeks to reduce the full cost of the repairs to £21,360.89, the amount of the petitioner’s share of the cost of the repairs after the 75% grant had been deducted.  The application records that the pursuer intends to make payment of this sum by instalments of £150 per month.  This application is sisted pending determination of this Judicial Review.

Judicial Review challenge
[7]        The petitioner asserts that the respondent in imposing as a term of grant assistance a requirement for him to make full payment of his share of the cost of repair by the time the final account was issued, otherwise he would be liable for the full costs, was ultra vires of its powers in terms of Part 2 of the Housing (Scotland) Act 2006.  A challenge was initially taken to the competency of the Judicial Review on the basis that it was incompetent to judicially review a private law contract.  This was however not argued, the respondent having accepted that the grant (and the conditions attached thereto) was not a contract.  The respondent also challenged the petition on the basis that there had been delay, taciturnity and acquiescence by the petitioner.  However during submissions it was accepted that if the court held that the grant condition was ultra vires then delay, taciturnity and acquiescence would not provide an answer in favour of the respondent.  The review therefore turns simply on the issue of whether the grant condition was ultra vires of the powers in terms of Part 2 of the Housing (Scotland) Act 2006. 

Submissions for the petitioner
[8]        The petitioner avers that there is nothing in Part 2 of the Act (relating to the provision of grants to meet the cost of repairs) which allows the respondent to impose a pre‑payment condition for a grant, the pre‑payment condition being payment of the petitioner’s share of the cost of repairs by the time the final account was issued.  Part 2 of the Act makes reference to certain conditions which may be imposed by a local authority (for example the conditions referred to in section 75 and 82) when issuing a grant or loan for housing repair assistance.  The conditions do not include the pre‑payment condition imposed by the respondent on the petitioner in respect of the payment of the grant.  If Parliament had intended such a condition then it would have expressly provided for it in the Act.  Such a condition is contrary to the policy objective of Part 2 of the Act and is not set out or mentioned in the respondent’s statement of assistance published in terms of section 72 of the Act, No 10 of the joint inventory of productions.  As the respondent had made a decision to award the petitioner a 75% grant for the cost of repairs this cannot be withdrawn on the basis of the imposition of a condition which is ultra vires of the Act. 

Submissions for the respondent
[9]        The respondent submitted that the pre‑payment condition of the grant was intra vires being permitted in terms of sections 74(4) and 81(1)(d) of the Act.  The condition was imposed for a purpose relating to Part 2 of the Act and was not for an ulterior motive.  The condition was not so unreasonable that no reasonable local authority could have imposed it, see Stewart v Perth and Kinross Council 2004 SC (HL) 71 per Lord Rodger at paragraph 55.  The purpose of the pre‑payment condition was consistent with the guidance for local authorities published by the Scottish Government.

Decision
[10]      The Housing (Scotland) Act 2006 implemented the recommendation of the Housing Improvement Task Force (Stewardship and Responsibility:  A Policy Framework for Private Sector Housing in Scotland, 2003) that primary responsibility for the repair and maintenance of private sector houses rests with their owners, while recognising the need to provide support where necessary.  Under the Act, local authorities have a range of powers to enforce work on private homes and broad discretionary powers to provide assistance to homeowners.  Homeowners were encouraged to invest in their property, maintaining it to an acceptable standard and freeing income that would otherwise be used on energy consumption.  The statutory guidance issued by the Scottish Government to local authorities is No 13 of the joint inventory of productions.  It is clear from this document that the purpose of the legislation was to address problems with conditions and quality of private housing against a background of ever increasing liabilities and limited public funds.  The approach in Part 2 of the Act was to encourage owners to accept responsibility for the costs attributable to their property as opposed to believing that government (including local authorities) would pay the costs.  Paragraph 3.9 of the statutory guidance provides:

“3.9 The use of open ended grant programmes for assistance in the general maintenance and improvement of properties is, however, considered by Ministers to be counter productive.  It leads to unrealistic expectations about the extent to which government is prepared to pay for works most owners routinely carry out from their own resources.  With national resources for tackling serious disrepair in the private sector representing only around 1% of the total cost of necessary works, local authorities must consider the use of non‑financial and financial alternatives to grant if they are to make significant and lasting progress against their strategies.”           

[11]      `Part 2 of the Act is headed Scheme for Assistance for Housing Purposes, Provision of Assistance for Housing Purposes.  Section 71 of the Act allows local authorities to provide for the provision of assistance to a person in connection with the improvement, repair or maintenance of a house (see sub‑section 2(c)).  This may take the form of a grant (sub‑section 3(g)), loans, advice, information, staff services or other assistance set out in sub‑section 3.  In respect of a grant the local authority has discretion on whether to provide assistance.  Section 71(4) provides that:

“Assistance may be provided on such terms as the authority thinks fit (subject to any provision about such terms made by or under this Part).”

In terms of sub‑sections (6) and (7) Scottish Ministers may by regulations make further provisions about the provision of assistance.  The regulations may make provision as to the terms which may be imposed under sub‑section 4 on providing any such assistance (including provision restricting or requiring the imposition of a term).

[12]      In terms of section 72 of the Act a local authority must prepare and make publicly available a statement of assistance.  The respondent’s statement of assistance, (No 10 of the joint inventory of productions) was made on 17 April 2009 (revised in June 2012).  Section 1.1 sets out the purpose of the statement.  The statement is produced to prioritise particular types of information, advice, practical support and financial assistance to private house owners relating to works carried out to private houses.  Section 1.2 is headed Vision and Strategy.  It records that using the range of powers granted to local authorities under the Housing (Scotland) Act 2006 and other enactments, the council will assist and encourage owners of private sector housing, to take responsibility for the maintenance and repair of their properties to protect built heritage and to support households in order to revitalise communities so Glasgow can continue to flourish.   To achieve these outcomes the respondent will deliver, fairly and efficiently, information and advice and practical and financial assistance in partnership with owners, landlords, tenants, and other services and stakeholders.  In response to the change in policy focus of the Housing (Scotland) Act 2006, this statement reflected national policy priorities for the repair and improvement of sub‑standard housing, promotion of responsibility of owners to look after their property, and enabled older people and people with disabilities to live independently.

[13]      Section 1.4 is headed Priorities for Assistance.  The statement records that:

“The funding to implement this Section 72 Statement of Assistance is a limited resource.  Therefore, targeting of assistance is required to ensure that help goes to those most in need and strategic objectives are achieved.  Assistance of all types will be prioritised to meet national and local strategic objectives.  Assistance will be prioritised by type of works and by area.

The Priority Works for Assistance are:

(1)        Essential adaptations for people with disabilities.

(2)        Below Tolerable Standard (BTS) properties, properties at risk of becoming BTS and those with other serious disrepair or ground stability problems.  Within this, pre 1919 tenement properties followed by other similar type buildings which require works to common parts will be given priority over works to properties such as 4 in a blocks or single family dwellings.

(3)        Energy efficiency (priority will be given where funding can be secured from the Scottish Government or Utility Companies etc.)

The Priority Areas are:

(1)        Declared housing Renewal Areas (HRA’s).

(2)        Other Priority Areas as identified from time to time by the Council.”

Govanhill, Glasgow where the petitioner’s property is located is a declared housing renewal area.  Paragraph 3.4.4 sets out Conditions of Grant Assistance which are the conditions referred to in section 83 of the Act.  It does not include a pre‑payment condition.  Nor does it include reference to any condition which may be made by Scottish Ministers in terms of section 71 or the conditions referred to in section 75 of the Act.

[14]      Section 75 of the Act is headed Determination of Applications.  Sub‑section 1 provides that it is for the local authority to decide whether to approve an application for a grant.  Sub‑section 2 provides that when approving an application the local authority must then determine the approved expense and where the application is for a grant, the applicant’s contribution.  Sub‑section 3 provides that the local authority may approve an application for a grant only if, in its opinion, all of the conditions in sub‑section 4 (so far as applicable) are satisfied.  Those conditions are that the owners have consented in writing to the application and to being bound by the conditions mentioned in section 83 (in so far as those conditions apply) (sub-section 4(a)), where that work has begun that there were good reasons for beginning it before the application was approved (sub‑section 4(b)), that the house or houses to which the application relates will provide suitable living accommodation and can conform with such requirements with respect to construction and physical condition as the authority considers reasonable (sub‑section 4(c)), that if the house or houses contains more than one house, the work to be carried out would not prevent the improvement of any other house in the premises (sub section 4(d)), and in the case of an application for a standard loan, the applicant is unable to obtain a sufficient loan on fair terms from a commercial lender (subsection 4(e)). 

[15]      Section 83 is headed Grants and Loans:  Conditions:  Conditions Applicable on Completion of Work.  There are four conditions set out at sub‑sections (4) to (7) (conditions A to D).  The conditions:  (A)  is that the house must be used as a private dwelling, (B) the house must not be occupied by the owner or a member of the owner’s family except as that person’s only or main residence, (C) that the owner of the premises must take all practicable steps to keep it in a good state of repair, and (D) that the owner of the premises must, if required to do so by the local authority, certify that conditions (A) to (C), in so far as they apply, are being observed.  Section 82 is headed Payment of grants and loans.  Sub‑section 1 provides that the local authority must, if the conditions mentioned in sub‑section (2) are satisfied, pay a grant or loan (a) within one month of the date on which, in the authority’s opinion, the house becomes fit for occupation on completion of the work to which the grant relates or (b) by instalments during the carrying out of the work and a final instalment within one month of that date.  The conditions set out in sub‑section (2) are (a) that the work has been carried out to the satisfaction of the authority and (b) in the case of a loan to be secured by a standard security, that the security has been registered in the appropriate Land Register.  Section 80(1) which is headed Terms of loan provides that “A loan may be made on such terms as the local authority thinks fit”.

[16]      Part 2 of the Housing (Scotland) Act 2006 sets out a scheme to achieve the underlying policy aims of the Act.  It is certainly the case that the conditions referred to in Part 2 of the Act do not include a pre‑payment condition nor is such a condition referred to in respondent’s Statement of Assistance.  However, it seems to me that Part 2 of the Act is not prescribing the conditions which can only be imposed by the local authority.  If this was to be the case then I would have expected Parliament to say so and the broad terms of the local authority’s powers to impose conditions would not have been expressed in the way it has been expressed in section 71(4) of the Act.  Section 71(4) expressly states that assistance may be provided on such terms as the authority thinks fit.  This wide power is qualified only by reference to it being subject to any provision about such terms made by or under this part of the Act.  I read this as meaning that where the local authority considers it appropriate to provide assistance on terms which are covered by Part 2 of the Act then those terms are subject to the provisions on such conditions set out in the Act.  The pre‑payment condition was not a term specifically referred to in Part 2 of the Act.  If the local authority could only impose conditions which are specifically referred to in Part 2 of the Act then it would in my opinion make section 71(6) and (7) redundant.  Section 71(6) and (7) allows Scottish Ministers to make regulations on the provision of assistance and the terms which may be imposed under sub‑section (4) on providing assistance (including provision restricting or requiring the imposition of a term).  If the terms which may be imposed are fully set out and prescribed in Part 2 of the Act then there would be no need for a power to make regulations to make provision for terms which may be imposed under sub‑section (4). 

[17]      This interpretation is consistent with the wording of paragraph 3.60 of the statutory guidance for local authorities published by the Scottish Government.  It is headed, “Implementing the Housing (Scotland) Act 2006:  Statutory Guidance for Local Authorities”.  Paragraph 3.60 envisages a local authority applying additional conditions to that specified in section 83.  In these circumstances the guidance notes that if an authority applies additional conditions these will not be governed by the provisions in sections 84 to 87 and the authority will have to specify its own terms governing the conditions it creates, including whether and how repayment will be required on breach.  The guidance provides that the local authority will need to make its own decision as to whether the additional conditions proposed are permissible or whether, for example, they conflict with the conditions already contained in the Act.  The guidance also provides that the local authority will have to assess whether the additional conditions proposed are reasonable.  An example is given, namely where a condition requiring occupancy of the property prior to works commencing may be unreasonable in relation to a disabled person whose assessment of need has concluded that the best option is to move to alternative housing and adapt it.  This is an example of a condition which is not a condition set out in Part 2 of the Act.

[18]      A local authority cannot impose any condition it thinks fit .  Conditions must be reasonable, rational and consistent with the legislation.  I agree with the respondent’s submission that the principles set out in the case of Stewart v Perth and Kinross Council 2004 SC (HL) 71, per the speech of Lord Rodger at paragraph 55, govern in this area of law.  In this case the local authority refused to renew a secondhand car dealer’s licence.  One of the grounds of refusal was a breach of a condition of the licence.  That condition required the dealer to inspect and prepare a report in accordance with the sample inspection report issued by the local authority on any vehicle intended to display for sale to a member of the public, make the report available to any prospective purchaser, display a summary information sheet in a prominent position in the vehicle, provide the purchaser with a copy of the completed inspection report and keep a copy of the report for at least three years.  The sample inspection report required information on the condition of the vehicle and the odometer reading, including whether it was correct or unverified.  The imposition of the conditions was challenged as ultra vires.  The petition was refused by the Lord Ordinary and the dealer reclaimed.  An Extra Division held that the condition was ultra vires and allowed  the reclaiming motion.   The local authority appealed to the House of Lords.  The House of Lords affirmed the judgment of the Inner House.  At paragraph 55 of the judgment per the speech of Lord Rodger (page 87) he said that:

“[55] The critical question is the extent of this power in the case of dealers carrying on their business as dealers in secondhand motor vehicles.  The test is not in dispute.  Guidance can be found in the approach that Viscount Dilhorne summarised for conditions attached to planning permissions in Newbury District Council v Secretary of State for the Environment (page 599):

‘It follows that the conditions imposed must be for a planning purpose and not for any ulterior one, and that they must fairly and reasonably relate to the development permitted.  Also they must not be so unreasonable that no reasonable planning authority could have imposed them.’.

That approach was approved by Lord Keith of Kinkel in Grampian Regional Council v Secretary of State and Aberdeen District Council (page 66).  Here, therefore, the conditions attached to the licence must be for a licensing purpose and not for any ulterior purpose.  They must also fairly and reasonably relate to the business that the licence holder is permitted to carry on as a dealer in secondhand cars.  In addition, they must not be so unreasonable that no reasonable licensing authority would have imposed them.”

[19]      In the present case it seems to me clear that the pre‑payment condition is consistent with the underlying purposes of the Act as set out in the Scottish Government’s statutory guidance for local authorities.  It is also consistent with the respondent’s statement of assistance in respect that the pre‑payment condition is made in relation to the 75% grant covering the cost of the petitioner’s share of the housing repairs.  The imposition of this term is consistent with the desire to encourage owners to accept responsibilities for some of the costs attributable to their property as opposed to their believing that the council would pay the full costs.  Further it has provided the respondent with some certainty as to payment.  Without the respondent underwriting the costs the repairs would not have been carried out.  This certainty allows the architect and contractor to proceed and the term ensures that at the time of payment for the works the respondent was in receipt of the full cost of repairs (grant and petitioner’s share).  This in turn ensures that the respondent was not financially liable out of its own limited budget for housing repairs for the owners’ shares with no certainty as to when the money would be repaid to it.  I therefore conclude that the pre‑payment term was for a purpose related to Part 2 of the Act and was not for an ulterior motive.  Given that the petitioner, having been means tested, had been awarded the maximum grant available, subject to the pre-payment condition, he has had two years prior to the final account being agreed to pay his 25% of his share of the cost of repairs.  It is also the case that he cannot be unaware of the pre‑payment condition well in advance of the date on which payment was due.  This is repeatedly made clear in correspondence and at the public meeting.  I therefore hold that the imposition of the pre-payment condition was reasonable in the circumstances and was for a purpose related to Part 2 of the Act.

[20]      The petitioner argues that the provisions in section 82 of the Act would be rendered redundant on the respondent’s interpretation of section 71(4) of the Act.  On this interpretation the payment of the grant is mandatory if the conditions set out in section 82 are met.  However, if this interpretation is correct then it follows that any additional conditions imposed by the council outwith section 82 are redundant.  I agree with the respondent that section 82 applies to a different situation to that of the petitioner.  It applies to the situation where homeowners have instructed their own contractors to complete the work and that payment of the contractors for the work is made by the homeowners.  This is clear from the terms of section 82.  In particular section 82(1)(a) and (b) envisages the local authority paying by instalments during the carrying out of the work and a final instalment within one month of the date on which in the authority’s opinion the house becomes fit for occupation on completion of the works.  This is consistent with homeowners making payments to account to the contractor as the work progresses.

[21]      I therefore conclude that the pre-payment condition is not ultra vires.  For the reasons set out above I repel the petitioner’s first and second pleas in law and sustain the respondent’s third plea in law.  I therefore refuse the petition.