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A Christmas gift for you: Contracting out and more

By Dave

I appreciate that it isn’t exactly pc still to like Phil Spector’s album, but I do think it remains the best of the lot.  And, in a way, Tachie, Terera and Il v Welwyn Hatfield BC [2013] EWHC 3972 (QB) is a Christmas gift for local authorities which have contracted out their homelessness decision-making (on which we have paused for comment a couple of times here and here).  Frankly also, as we shall see, in my view they really got away with it, not just on the contracting out issue but also on some pretty ropey, undoubtedly harsh decision-making.  It’s a bit of a monster of a case, which was transferred from the County Court to the High Court and, one suspects, is on its way to the Court of Appeal and quite possibly the Supreme Court.  Fair play to Toby Vanhegan for bringing the challenge and trying (unsuccessfuly) to sustain it against what sounds like a pretty hostile judicial audience; and also to Ranjit Bhose for successfully defending it all.

Welwyn decided to go down the ALMO route, pretty late in the day, after their housing options review.  Their cabinet resolved to seek the Secretary of State’s approval which was forthcoming.  On 31 March 2010, the Council itself in full meeting (at which the Cabinet members attended) then approved the delegation of the housing management functions to the ALMO.  They amended the modular management agreement, which was not very wise, as we shall see.  They also contracted out by way of delegation the housing advice and housing needs service – ie their Part VII functions – which their solicitors confirmed was fully compliant with the 2006 Contracting Out SI.  Subsequently, perhaps after Toby Vanhegan began sniffing around, in January 2013, the full Council recorded that the period of the contracting out be 10 years, ratified the management agreement so far as necessary, and approved an amendment to the Council’s constitution to remove uncertainty as to its meaning.  Again reading between the lines, after service of Toby Vanhegan’s skeleton argument, the Deputy Leader of the Council and Executive Member, Resources made a decision under the Council’s special urgency provisions on 25 November 2013, effectively seeking retrospective to ratify the earlier decisions.  This was, undoubtedly, perspicacious.

The Council’s original constitution contained  a distinction between, on the one hand non-executive functions, which could be contracted out, and “discretionary decision making”, which could not be contracted out (Article 11.4).  This bizarre distinction not unreasonably led to the argument that Part VII decision-making, being discretionary, could not be contracted out under the terms of the constitution.  Now, academics and others will appreciate the literature on the meaning of discretion (Kenneth Culp Davies, Keith Hawkins, Roy Sainsbury, Denis Galligan, Carol Harlow, Rick Rawlings etc etc) and practitioners will, no doubt, be aware of the pretty convincing line of authority that basically says Part VII is discretionary.  As Vanhegan seems to have put it (pace Sainsbury), even the “robotic” stuff, like enquiries and investigations is discretionary in nature.  Jay J (great name btw) found against him, and his reasoning is utterly unconvincing.  He envisages a spectrum of decision-making, from high level political decisions to the robotic decisions (visions of Peter Crouch here), “with a significant grey area between” – what Dworkin might have referred to as the hole in the doughnut, although that analogy is inexact here.  Jay J says:

Within this grey area one may well discern “elements of discretion”, but I would prefer to characterise these as evaluative judgments which entail an assessment and interpretation of the available material, and the drawing of inferential conclusions from the facts as found by the local authority. I cannot accept that decisions of this nature amount to “discretionary decision making” within the meaning of the exception to Article 11.4.  [26]

Apparently, Part VII is a “tightly controlled statutory scheme” and the fact that different local authorities might reach different decisions on the same evidence “… does not convert the process into ‘discretionary decision-making'”.  As I say, that reasoning doesn’t really convince me.  Article 11.4 was just wrong-headed and just because that would have meant they could not delegate their functions under the 1996 SI surely could not undermine its clear words (although Jay J seems to think it could: [30]).

However, the Appellants did win on the ground that, as this was a contracting out of an “executive function”, it could only have been done by the Cabinet, not by the full Council.  Jay J subsequently regards the procedural challenges “arid and technical” ([57]) – well, they may be, but that is kind of what the law requires; and, if you don’t comply with the law normally, then you’re in trouble.

Nevertheless, this was a pyrrhic victory because Welwyn’s retrospective ratification was regarded by Jay J as sorting out the procedural mess they had got themselves into.  In answering the question whether Welwyn had reasonably applied its special urgency procedure (presumably to ward off the vampiric Vanhegan), Jay J held that this was not the exercise of a draconian power like HMO enforcement (Webb v Wandsworth LBC (1989) 21 HLR 325); it was simply an inconvenient minor procedural error to fail to convene a Cabinet meeting on 31 March 2010 “which scarcely impacted on the substance of the matter”.  Apparently, a negative Part VII finding is not draconian because we are not dealing with the removal of private law proprietary rights but the distribution of scanty resources in a system of social welfare.  My strong suspicion is that different people could take a different view on that point.

The other points of equal interest, particularly to DCLG (which presumably will be joined on the anticipated appeal), are, first, whether the Public Contracts Regs 2006 apply to an ALMO.  At heart here, the issue is pretty central to housing policy, viz are ALMOs controlled by the council.  If they are, then the exception to those regs opened up by the ECJ in Teckal Srl v Commune di Viano applies.  Of course, Jay J held that the exception did apply, even though the ALMO board had a three to one non-Council majority.  Here, I can see Jay J’s point – the nature and purpose of an ALMO, as I have written about previously, is to act as a separate vehicle to conduct the Council’s housing management functions but it can hardly be described as being independent of the Council.  However, as others have told me in the past, that dependence does not always mean that ALMOs do as they are told by the Council.  There is an interesting point here which demands careful analysis, I think.

The other interesting point is that the original delegation to the ALMO was not time restricted as required by the contracting out Act.  Jay J regarded this as a bad point, as the resolutions (on which the Council were unable to rely) satisfied him that the “surrounding documents point ineluctably to the conclusion that the relevant authorisation” was time limited.  Hmm, again.

And then we get to the substance of the appeals themselves, all of which go against the Appellants.  There are some nuggets here as well.  Tachie and Terera are intentionality decisions.  The questions here were around whether their accommodation was reasonable to continue to occupy and good faith – the review decisions were particularly harsh, had a whiff of procedural impropriety about them, and made at least one unfortunate comment (referring to a “lifestyle choice”).  On the Tachie appeal, there was a ground of appeal which Jay J mentions without extrapolation which is being saved for the Supreme Court (what was it?  If anybody knows, please tell).

But what really got my goat was the decision in Mr Il’s case that he was not in priority need as not vulnerable.  This seemed a pretty clear Reg 8(2) point.  In essence, his GP and the ALMOs own medical advisor had said that he was vulnerable.  The s 184 decision was not vulnerable.  On review, the ALMO’s medical advisor changed their mind and Mr Il’s representatives weren’t given an opportunity to comment on a further revised opinion.  Just what was going on?  And this is an open and shut Reg 8(2) case, isn’t it?  I repeat what Jay J says at [90] without further comment:

This ground of appeal turns on what is meant by “deficiency or irregularity in the decision, or the manner in which it was made”.  In my judgment, the regulation is referring to a procedural error, to something which has gone wrong in relation to the decision making process requiring heightened obligations of fairness on the local authority to give the Applicant a further chance to make representations, if necessarily orally.  Mr Vanhegan submitted that this criterion is met but I cannot agree.  A change of mind by the Respondent’s medical advisor cannot properly be characterised as a “deficiency or irregularity”.  Put simply, nothing “went wrong” with the decision making process.  I do accept that standard principles of fairness required the Respondent to give this Appellant the opportunity to address the medical officer’s change of mind and this is exactly what happened here.  However, I do not accept that ordinary principles of fairness required the Respondent to give this Appellant yet further opportunities to address the third medical opinion, which in any event was slightly more favourable to him than the second. Mr Vanhegan urged me to approach this case on the basis that it is clear that the Respondent did not even consider whether regulation 8(2) could apply to these facts. It is unclear whether the Respondent went through this thought process, if only to reject it; but whatever the position it is plain to me that regulation 8(2) does not apply. That is the end of the matter.

Shala challenge was also unsuccessful.

I don’t think we’ve heard the last of this one.


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