Housing: Charity

Where there were still many Orthodox Jews in Hackney who the second respondent charity (the housing association) could not accommodate and who still suffered the disadvantages associated with the relevant protected characteristic, the Supreme Court (the SC) held that, unless and until the aim of elimination of such disadvantages was achieved, it would be proportionate for the housing association to operate a simple ‘blanket policy’ to allocate its properties to members of the Orthodox Jewish community as a means of promoting that legitimate aim. The SC, in so ruling, dismissed the appellants’ appeal, concerning the dismissal of their judicial review claim based on the fact that they had been unable to gain access to the properties let by the housing association, because they were not Orthodox Jews. The SC held that the Court of Appeal, Civil Division, had been right to construe s 193(2)(b) of the Equality Act 2010 as not being dependent on a proportionality assessment to be conducted by the court, and that the conventional approach adopted by the Divisional Court and the Court of Appeal on the question of proportionality had been correct. Accordingly, the SC agreed with the Court of Appeal that there was no proper basis on which an appellate court could interfere with the Divisional Court’s conclusion that the housing association’s policy was a measure which was proportionate to  legitimate aims. The court considered that, if the state was entitled to use ‘bright line’ criteria for distribution of social welfare benefits, still more would that be true for a charity.

The appeal concerned the obligations under the Equality Act 2010 (EqA 2010) of the second respondent (AIHA), which was a charity set up to provide housing in Hackney for a disadvantaged group, the observant Orthodox Jewish community comprising, in particular, the Haredi community. AIHA’s charitable objective was to make social housing available primarily for members of the Orthodox Jewish community. Because there was a surplus of demand for social housing from the members of that community, as compared with the properties which AIHA had available, in practice, all of its properties were allocated to members of the Orthodox Jewish community.

The first respondent (the authority) was a local housing authority with statutory functions in relation to the allocation of social housing. The authority did not have any right to compel AIHA to take tenants who did not fall within the scope of the latter’s charitable objective and its selection criteria. Accordingly, the authority only nominated members of the Orthodox Jewish community to be housed in property owned by AIHA.

The authority identified the first appellant (Z), a single mother of four children (two of whom were autistic), as having the highest level of housing need in the borough due to the vulnerability of her children. Z was not a member of the Orthodox Jewish community and, so, she had been unable to gain access to the properties let by AIHA, whereas other families from the Orthodox Jewish community had been able to access such housing. Accordingly, the appellant had to wait longer than those families to be allocated a suitable property by the authority from its other social housing resources, as they became available.

The appellants brought a judicial review claim, challenging AIHA’s allocation policy and the authority’s allocation arrangements. In particular, the first appellant alleged unlawful direct discrimination against her on grounds of her religion and race.

The Divisional Court dismissed the claim, holding that AIHA’s allocation policy  was a proportionate means to achieve aims falling within EqA 2010 s 158(2)(a) and (b). The Court of Appeal, Civil Division, dismissed the appellants’ appeal.

The appellants appealed to the Supreme Court.

(1) Whether AIHA could lawfully restrict the provision of its social housing to members of the Orthodox Jewish community. In particular, whether AIHA’s arrangements amounted to impermissible positive discrimination, as opposed to permissible positive action for the purposes of EqA 2010 s 158 and/or s 193; and whether the courts below had been entitled to conclude that AIHA’s arrangements were a proportionate means of achieving the aims referred to in either s 158(2) or s 193(2) (issues (3) and (4) respectively) (see [19]-[21] of the judgment for ss 158 and 193).

The appellants’ grounds of appeal in relation to issues (3) and (4) failed. The consequence was that the appeal, as a whole, would be dismissed (see [87] of the judgment).

EqA 2010 made various forms of discrimination unlawful. The relevant protected characteristics were set out in s 4. They included ‘race’ and ‘religion or belief’. Race included colour, nationality and ethnic or national origins. By contrast with the position in relation to indirect discrimination (defined in EqA 2010 s 19), there was no general defence of justification in relation to direct discrimination on the basis of those protected characteristics; but so far as was relevant for present purposes, particular defences were set out in ss 158 and 193. Section 158 provided for an exemption from unlawfulness for positive action to address needs or disadvantages experienced by persons which were connected to a protected characteristic. Section 193 provided an exemption for the activities of charities under defined conditions (see [6], [17]-[21] of the judgment).

Counsel for the appellants (Mr W) submitted that the judgments of the Court of Justice of the European Union showed that positive discrimination was only permissible under EU law if its object was equality of opportunity for a disadvantaged group, rather than equality of outcome; where a disadvantaged person was given priority only in circumstances where an objective assessment had been carried out to compare their position with that of a person who did not share the relevant characteristic and the positions were found to be equivalent, so that the relevant characteristic was taken into account only as a tie-break at the end of that process; and where the policy in question had a safety valve to allow priority in exceptional cases for a person who did not share the relevant characteristic (see [60], [61] of the judgment).

Mr W’s submission was not accepted. There was no general doctrine of positive discrimination in EU law, which was subject to the limitations for which Mr W contended (see [62] of the judgment).

Article 2(1) of Council Directive (EEC) 76/207 (the Equal Treatment Directive) stated that the principle of equal treatment meant that ‘there shall be no discrimination whatsoever on grounds of sex either directly or indirectly’. Article 2(4) provided that the Equal Treatment Directive: ‘shall be without prejudice to measures to promote equal opportunity for men and women, in particular by removing existing inequalities which affect women’s opportunities’ (see [63] of the judgment).

The proportionality analysis required identification of a legitimate aim and then an assessment whether a measure taken to promote that aim was proportionate in its effects in pursuing it, having regard to other interests at stake. For present purposes, what was significant about the Equal Treatment Directive was that art 2(4) identified the aim which was to be regarded as a legitimate basis for departing from the general obligation of equal treatment imposed by art 2(1), namely promotion of equality of opportunity in employment, rather than equality of outcome (see [65] of the judgment).

In each of EqA 2010 ss 158 and 193(2)(a), the range of permissible legitimate aims was wider than the legitimate aim specified in art 2(4) of the Equal Treatment Directive and included seeking to achieve particular outcomes, i.e enabling persons who shared the protected characteristic to overcome or minimise disadvantages they suffered which were connected to the characteristic or to meet needs particular to persons with the protected characteristic, in the case of s 158; or any legitimate aim in the case of s 193(2)(a) (which included aims recognised as legitimate under s 158). Accordingly, the correct question, as the Divisional Court and the Court of Appeal had rightly appreciated, was whether AIHA’s allocation policy was a measure which was proportionate to promoting such aims in relation to ameliorating the position of members of the Orthodox Jewish community. Those aims related to improving outcomes for that community, not merely equality of opportunity of the more limited kind discussed in the cases on the Equal Treatment Directive (see [66] of the judgment).

The Grand Chamber in Cresco Investigation GmbH v Achatzi C-193/17 [2019] IRLR 380 confirmed (at para [65]) the point about the conventional operation of the proportionality principle in the context of anti-discrimination legislation. The guidance in Cresco was relevant in relation to the analogous provisions in EqA 2010 ss 158 and 193. It confirmed that the conventional approach adopted by the Divisional Court and the Court of Appeal on the question of proportionality had been correct (see [65], [72] of the judgment).

It followed that the Divisional Court had correctly directed itself as to the proportionality test to be applied. It had made appropriate findings on the evidence before it, regarding the needs of the Orthodox Jewish community connected to their religion and the disadvantages to which they were subject on grounds of their religion. It had found that the AIHA allocation policy was a legitimate and proportionate means of meeting those needs and of seeking to correct for those disadvantages (see [73] of the judgment).

The observations of Lewison LJ (at paras [63]-[68] of the Court of Appeal’s judgment) about the proper approach for an appellate court when reviewing a finding of proportionality or disproportionality of a measure such as AIHA’s allocation policy were endorsed. Since the Divisional Court had given itself a correct self-direction as to the test to be applied, its conclusion that AIHA’s allocation policy was a proportionate means of pursuing the legitimate aims identified could only be set aside if the appeal court came to the view that its conclusion was wrong in the relevant sense. It was not sufficient that an appellate court might think it would have arrived at a different conclusion had it been considering the matter for the first time. Although the word ‘wrong’ was taken from what was currently CPR 52.21, which was concerned with the powers of the Court of Appeal and certain other appellate courts, but not the Supreme Court, the arguments for a limited role for an appellate court were of general application and the same approach applied at the present level. It would be a recipe for confusion if the present court applied a different standard of review on appeal than that applied by the Court of Appeal (see [56], [74] of the judgment).

The court agreed with Lewison LJ’s assessment (at paras [69]-[88]) that there was no proper basis on which an appellate court could interfere with the Divisional Court’s conclusion that AIHA’s allocation policy was a measure which was proportionate to legitimate aims. Not only had that been a conclusion which the Divisional Court had been entitled to reach, the present court agreed with it (see [57], [75] of the judgment).

AIHA’s allocation policy operated as a direct counter to discrimination suffered by the Orthodox Jewish community in seeking to obtain housing in the private sector. The Divisional Court had properly weighed up the effect of the policy in addressing needs of the Orthodox Jewish community connected with their religion and in correcting for disadvantages suffered by that community (see [76] of the judgment).

Lewison LJ had rightly rejected (at paras [84]-[85]) a further criticism made by Mr W, that the Divisional Court had been wrong to dismiss his argument that AIHA’s allocation policy was an illegitimate ‘blanket policy’. There was some flexibility in the policy as it was formulated, in that it allowed for AIHA to allocate properties to non-members of the Orthodox Jewish community if AIHA had properties surplus to the demand from that community. However, in circumstances in which demand from that community far exceeded supply, allocation to non-members was not a realistic prospect in the foreseeable future. There were still many Orthodox Jews in Hackney who AIHA could not accommodate and who still suffered the disadvantages associated with the relevant protected characteristic. Unless and until the aim of elimination of such disadvantages was achieved, it would be proportionate for AIHA to operate a simple ‘blanket policy’ to allocate its properties to members of the Orthodox Jewish community as a means of promoting that legitimate aim. Accordingly,  even though market circumstances gave AIHA’s policy, in practice, a ‘blanket’ effect, that did not show that it was a measure which was disproportionate to that aim (see [77] of the judgment).

The Divisional Court and the Court of Appeal had rightly taken account of the small impact of AIHA’s allocation policy on the group of persons outside the Orthodox Jewish community when assessing its proportionality with reference to its aim. It was proportionate for AIHA to adopt an allocation policy which aimed to meet the particular needs and alleviate the particular disadvantages experienced by members of the Orthodox Jewish community, as a group, in connection with their religion. In assessing the proportionality of the policy in the light of that aim, the courts below had been entitled to weigh the benefits for that community as a group, as compared with the disadvantages experienced by other groups as a result, rather than by comparing the benefits for that community with the disadvantage suffered by one person drawn from those other groups falling outside the policy (see [79] of the judgment).

Positive action pursuant to s 158 had to address needs or disadvantages experienced in connection with a protected characteristic, and so contemplated that a group-based approach might be adopted, defined by reference to one of the protected characteristics as shared with others (such as gender, disability or religion). Similarly, in the context of s 193, charities typically focused the benefits they aimed to provide on defined groups. Charitable status was a way of recruiting private benevolence for the public good (subject to the public benefit test), and charities focused on providing for particular groups, since that was what motivated private individuals to give money, where they felt a particular link to or concern for the groups in question. It was for the public benefit that private benevolence should be encouraged for projects which supplement welfare and other benefits provided by the state, even though those projects did not confer benefits across the board. Accordingly, Parliament contemplated that the proportionality of measures falling within ss 158 and 193 should be assessed on a group basis, by comparing the advantages for groups covered by the measure in question with the disadvantages for groups falling outside it (see [80]-[84] of the judgment).

In the context of state provision of social welfare benefits, it was well established that it was generally a legitimate approach and in accordance with the principle of proportionality for the state to use bright line criteria to govern their availability. That was to say that the state was entitled to focus provision of social welfare benefits on a particular group, and hence exclude other groups, even though there might be little or no difference at the margins in terms of need between some particular individual in the first group and another particular individual in the excluded groups (see [85] of the judgment).

A charity was a private body which did not have the same responsibility as the state for ensuring equal treatment of citizens, so if the state was entitled to use bright line criteria for distribution of social welfare benefits, still more would that be true for a charity. Moreover, charities did not have the same resources as the state, so if the state was entitled to use bright line criteria for distribution of benefits, still more will that be true for a charity. It was in the public interest that charities should be able to minimise their costs of administration. That was in order to ensure that maximum resources were made available to address the problems which charities seek to alleviate and since otherwise charitable giving might be deterred, if donors felt excessive amounts of what they gave would be spent on administration, rather than actually helping people in need. The aims of minimising wastage of resources on administration and encouraging charitable giving were, themselves, legitimate objectives to be brought into account in the assessment of proportionality (see [86] of the judgment).

R (on the application of RJM (FC) v Secretary of State for Work and Pensions [2008] UKHL 63 applied; Akerman-Livingstone v Aster Communities Ltd (formerly Flourish Homes Ltd) [2015] UKSC 15 applied; R (on the application of Tigere) v Secretary of State for Business, Innovation and Skills [2015] UKSC 57 applied; Cresco Investigation GmbH v Achatzi C-193/17 adopted; Kalanke v Freie Hansestadt Bremen: C-450/93 C-450/93 considered; Marschall v Land Nordrhein-Westfalen: C-409/95 C-409/95 considered; Abrahamsson v Fogelqvist: C-407/98 C-407/98 considered; Lommers v Minister van Landbouw, Natuurbeheer en Visserij: C-476/99 C-476/99 considered; Briheche v Ministre de l’Intérieur, Ministre de l’Éducation nationale and Ministre de la Justice C-319/03 C-319/03 [2005] 1 CMLR 4 considered; R (on the application of Ahmad) v Newham London Borough Council [2009] UKHL 14 considered; R (on the Application of XC) v London Borough of Southwark [2017] EWHC 736 (Admin) considered.

(2) Whether the criterion used by AIHA that an applicant for its properties should be a member of the Orthodox Jewish community amounted to unlawful discrimination on the grounds of grounds of ethnic origin, pursuant to Council Directive (EC) 2000/43  (the Race Directive).

The Race Directive required discrimination on grounds of race or ethnic origin to be made unlawful, including in particular in relation to housing (see [89] of the judgment).

Mr W submitted that JFS R (on the application of E) v Governing Body of JFS (Secretary of State for Children, School and Families, interested parties) (United Synagogue intervening) [2010] 1 All ER 319 established that the criterion used by AIHA that an applicant for its properties should be a member of the Orthodox Jewish community involved discrimination on grounds of ethnic origin, and that that held true for the concept of ethnic origin in the Race Directive itself. That submission could not be sustained on the facts of the case. Unlike in the JFS case, AIHA did not make its selection on the grounds of a person’s Jewish matrilineal descent, but on the grounds of whether they engaged in Orthodox Jewish religious observance (see [92] of the judgment).

R (on the application of E) v Governing Body of JFS (Secretary of State for Children, School and Families, interested parties) (United Synagogue intervening) [2009] UKSC 15 distinguished; Cresco Investigation GmbH v Achatzi C-193/17 considered.

(3) It was common ground that, in applying its allocation policy, AIHA acted in pursuance of its charitable instrument, so that EqA 2010 s 193(1)(a) was satisfied, and also that it provided benefits to persons who shared a protected characteristic (i.e religion) ‘for the purpose of preventing or compensating for a disadvantage linked to the protected characteristic’, in the language of s 193(2)(b). The Court of Appeal had held that there was no implied additional requirement in s 193(2)(b) that a charity should have to persuade a court that the measures it took within s 193(2)(b) were proportionate.

The question arose as to whether the Court of Appeal had erred in it’s interpretation of s 193(2)(b).

The Court of Appeal had been right to construe s 193(2)(b) in the way it had, as not being dependent on a proportionality assessment to be conducted by the court (see [96] of the judgment).

It was not possible, under s 3(1) of the Human Rights Act 1998 (HRA 1998), to read an additional proportionality requirement into EqA 2010 s 193(2)(b). To import such a requirement would undermine a fundamental feature of that provision and would go against the grain of what Parliament had intended. HRA 1998 s 3(1) did not allow s 193(2)(b) to be read and given effect in that way. Further and among other things, having regard to the relevant margin of appreciation, the fact that charitable provision supplemented basic social welfare provision by the state, the general regulation of charities to ensure they provided public benefits, the desirability of ensuring that the resources of charities were not diverted from being used to meet social needs and the way in which Parliament had carefully and deliberately framed the s 193(2)(b) limb of the exemption to meet the proportionality tests in EU law and under the European Convention on Human Rights, that limb of the exemption satisfied the proportionality requirement across the range of cases in which it applied. There was, therefore, clearly no basis on which it would be appropriate for the court to seek to imply into that provision an additional requirement that proportionality should be demonstrated separately by a charity in every, or any, case falling within it (see [97]-[110] of the judgment).

The proper approach to construction was that legislation should be read and given effect in a particular case according to its ordinary meaning, unless the person who was affected by it could show that that would be incompatible with their Convention rights under HRA 1998 or some provision of EU law as applied to their case (see [111], [114] of the judgment).

It followed that the judgment of the Divisional Court on the issue of proportionality, in so far as it was relevant to the statutory defences in EqA 2010 ss 158 and 193, could not be faulted. Accordingly, those defences had rightly been found to apply in relation to AIHA. Further, and in any event, the Court of Appeal had been right to conclude that, on its proper interpretation, the statutory defence based on EqA 2010 s 193(2)(b) did not include an implied requirement of proportionality. Accordingly, the Court of Appeal had been right to conclude that AIHA benefited from that defence, whatever the position on the issue of proportionality. Furthermore, the appellants’ new claim based on the Race Directive failed (see [117] of the judgment).

Ghaidan v Godin-Mendoza [2004] UKHL 30 considered; R (on the application of Hurst) v Northern District of London Coroner [2007] UKHL 13 considered; Independent Schools Council v Charity Commission for England and Wales; A-G v Charity Commission for England and Wales [2011] UKUT 421 (TCC) considered; Humphreys v Revenue and Customs Comrs [2012] UKSC 18 considered; R (on the application of SG and others (previously JS and others)) v Secretary of State for Work and Pensions [2015] UKSC 16 considered; Gilham v Ministry of Justice [2019] UKSC 44 considered; Secretary of State for the Home Department v R (on the application of Joint Council for the Welfare of Immigrants) (Residential Landlords Association and others intervening) [2020] EWCA Civ 542 considered.

Appeal dismissed.

Decision of the Court of Appeal, Civil Division [2019] EWCA Civ 1099 affirmed.

 

Ian Wise QC, Michael Armitage and Ciar McAndrew (instructed by Hopkin Murray Beskine) for the appellants.

Matt Hutchings QC and Andrew Lane (instructed by Hackney Legal Services) for the authority.

Sam Grodzinski QC, Christopher Baker and Rea Murray (instructed by Farrer & Co LLP) for AIHA.

Carla Dougan-Bacchus Barrister.