Many local authorities use private accommodation for temporary accommodation under Housing Act 1996 Part VII. This may be by an LA ALMO ‘managing agency’, on which more at another time, or by licence agreements with private agencies.

One of the latter came to grief in Birmingham in 2008 and the decision to abandon the agency agreement was the subject of judicial review proceedings in First Real Estates (UK) Limited v Birmingham City Council [2009] EWHC 817 (Admin).

First Real Estates (FRE) supplied temporary accommodation to Brimingham between 2005 and 2008. It was founded by Iftikhar Hussain, who had previously worked for Dyadal Property Link. Dyadal then became one of FRE’s major suppliers of licences for properties, which private landlords in turn submitted to Dyadal. FRE wold supply properties to Birmingham at very short notice and ended up being used, a lot, by the HPU. After a little while FRE began representing itself as ‘registered agents for Birmingham City Council’. it is worth noting that there was no express register or agency agreement with BCC in place. Instead each property was taken under a licence agreement which stated that “The licence is terminable by either party on receipt of written notice at any time”. On FRE’s part, the licence stated “we warrant for our part that the Housing Unit complies with all current legislation and is fully licensed as required to be used as residential property.”

In late 2007, Birmingham decided to put provision of temporary accomodation to public tender and FRE were informed that its tender had not been successful. While the tender process rolled on, FRE properties continued to be used extensively by BCC.

After a few years of apparently happy licencing, Birmingham were made aware of some issues with the accommodation provided by FRE.

CLP, no strangers to this blog, had threatened to bring JR proceedings over one property as being unsuitable for the discharge of Part VII duty and submitted a complaint about another property’s appalling condition and alleging that:

The Agent who showed Mr Nurhussein around the property gave the impression that he was from the local authority. He advised Mr Nurhussein that if he failed to sign for the accommodation, then he would be on the streets.

Mr N was moved to B&B on the day the letter was received.

Another licencee left accomodation after one night because “it was dirty, infested with insects in the kitchen and broken windows. My mother also witnessed seeing mice in the kitchen”

And then came the other complaints:

By letter dated 30 May 2008 one Maxine Goggins of Weir Housing Ltd wrote to the Council a letter stating that she had received a call from someone who identified herself as Nicky from FRE “in a very aggressive manner and a male voice could be heard in the background to prompt the caller”. Ms Goggins stated “When I tried to defend myself I was continually spoken over and told it was now a police matter”. Ms Goggins understood that the call was prompted by FRE’s discovery of a Weir Housing Ltd business card in the possession of an occupant of one of FRE’s properties.

A Council officer identified rent claimed in respect of an empty property. And:

Another Council officer, Gary Nicholls, reported that he had received an e-mail from a British Gas contract manager alleging that one of his engineers was offered extra work by Mr Hussain in exchange for omitting various findings from his report. The e-mail caused the Council particular concern.
11. The Council also became concerned about the safety of gas appliances and gas supplied in properties supplied by FRE. By a letter dated 21 May 2008 Lisa Barker, the Council’s interim head of housing, referred to “discrepancies” in the gas safety certificates supplied by FRE in respect of fifteen properties. The letter stated that the Council’s private sector housing services team would undertake inspections of all the properties managed by FRE, following which FRE would be advised, in writing, of the inspection carried out, the contraventions (if any) and the necessary remedial works to ensure that the properties comply with the Council’s enforcement standards. The Council received no response to that letter.

All in all, not a pretty picture. Still, when FRE came to a meeting arranged by the Council to discuss standards of properties, they apparently arrived confident that failing to meet basic standards for habitable property was a minor glitch that could be sorted out. To that end:

Mr Iftikhar Hussain attended that meeting along with his solicitor (Ms Virk), Mr Naeem and Councillor Tariq Ayoub Khan. Mr Khan is deputy leader of the Liberal Democratic Party in Birmingham. He had known Mr Iftikhar Hussain for over twelve years and spoke well of him. He had in the past made representations to the Council on behalf of FRE, particularly about a delay in making payments. He attended the meeting on 16 June because he understood “the aim of the meeting was to resolve issues and the way forward for both parties was to work together … At the commencement of the meeting I spoke and told everyone that I was hoping a constructive way forward would be worked on to avoid a potentially embarrassing situation”.

We will say no more about Mr Khan’s presence over the volumes already spoken by the invitation by FRE to attend and his mention of a ‘potentially embarrassing situation’ which is oh so redolent of Yes Minister.

Unfortunately for FRE, at the meeting of 16 June 2008, BCC first raised the complaints and then said that FRE’s services were being ended on 7 days notice.

What this actually meant is that the Council would be seeking alternative accommodation for those in FRE temporary accommodation after 7 days. A continuing process. And also that there would be no new licences taken.

FRE sought judicial review of the decision, on grounds that the decision was unfair and unreasonable because:
(i) The Council did not notify FRE in advance of the particular issues and properties to be discussed at the meeting that day.
(ii) At the commencement of the meeting Mr Iftikhar Hussain was presented with a letter setting out various allegations of regulatory defects but was not given time to investigate these and to respond as he would wish.
(iii) The allegations as to non-compliance with the Gas Safety (Installation and Use) Regulations related to more than 150 certificates so that it would take considerable time to check them but Mr Hussain was not allowed the time to do so.
(iv) The allegations as to non-compliance with the Health and Safety Rating System introduced under Part I of the Housing Act related to 23 properties so that it would take considerable time to check them but Mr Hussain was not allowed the time to do so.
(v) No period of time was offered to FRE at the meeting on 16 June to remedy the various defects in the properties of which complaint was made.
(vi) The Claimant had not been forewarned of “the vital fact” that the meeting was to be followed by a discussion as to whether the Council would continue to use FRE’s services.

Now, quite apart from the written warning of investigation of Gas Safety inspections that FRE had already received, quite how it can be unfair to ‘not give time to remedy’ evidenced breaches of fundamental statutory duty is beyond me, particularly as the Council wasn’t actually issuing enforcement notices. But this is by the by as the prime issue was whether the decision was properly subject to judicial review.

On this FRE submitted that there was an ‘overarching agreement’ between it and the Council pursuant to which:

“The Claimant has a legitimate and reasonable expectation that the arrangements between it and the [Council] would not be abrogated in a summary and arbitrary fashion and with no adequate notice”. FRE admitted that there was no written agreement, but maintained that “an estalished arrangement was undoubtedly in place whereby reliance was placed on the Claimant by the Defendant to provide services to house the homeless on a temporary basis to discharge their responsibilities and the Claimant placed reliance on the Defendant to use its service and to discharge its invoices as they fell due.”

The Council maintained that FRE was simply one of a number of providers that they contracted with on a case by case basis to provide accommodation. References to an ‘arrangement’ in letters from the Council simply referred to the specific private contractual nature of the licences.

The Court took the Council’s view, despite the clear fact that FRE had been used extensively by the Council in discharge of Part VII duties. This was a series of private contracts, not an overarching agreement.

This did not prevent the contracts being subject to judicial review, but the question was whether the contested power was defined by statute. Here the contracts were private contractual agreements and there was no register of approved suppliers involved. S19(9) of the Local Government Act 1989, argued by FRE, was simply not relevant as it did not create a right to judicial review where that would not otherwise be the case:

In principle it cannot be right to permit a claimant suing a public body for breach of contract to invoke public law, for as Neuberger LJ (as he then was) stated in Supportways v Hampshire CC, [2006] LGR 837:
“If he could do so, it would place a party who contracts with a public body in an unjustifiably more privileged position than a party who contracts with anyone else, and a public body in an unjustifiably less favourable position than any other contracting party”.

And that, apart from a swift disposal of any hopes of a private/contractual claim FRE might possibly thought they might have, was that. The claim failed, costs to Birmingham.

But there is one point I’d take issue with. FRE didn’t plead legitimate expectation, but the Court pointed to the Council’s letter to FRE dated 21 May 2008 in which the Council stated

that it would inspect the properties managed by FRE in the next 4-5 weeks and “following the inspection your company will be advised, in writing, of the inspection carried out, the contraventions (if any) and the necessary remedial works to ensure that the property complies with the Council’s adopted enforcement standards for all private sector housing”. It is fairly to be inferred into that letter that if FRE were to conduct any of the remedial works identified as necessary in the course of such inspections, so as to bring the relevant property up to the Council’s enforcement standards for public housing, the Council would consider such property as suitable for its use in providing public housing. But the decision of 16 June 2008 intervened before the inspections were completed.

This is surely wrong. Firstly the Council didn’t set ‘public housing’ enforcement standards, but private housing standards. The Council is the enforcement body for those standards generally, via the EHOs and enforcement orders. There can hardly be any legitimate expectation for continued licensing in the Council stating that it would be taking the usual warning and enforcement steps that it should do for any private letting accommodation in breach of statutory requirements. I can only hope the Court didn’t pay this point full attention because it was, effectively, obiter.

All of this tempts me to post on Street v Mountford and s.11 L&T 1985 liability in such situations, but that will have to wait for another time.