James v Hertsmere Borough Council (2020) EWCA Civ 489
What can be addressed in a section 204 Housing Act 1996 appeal of a review decision? What is the scope of the jurisdiction? This second appeal provides answers, albeit in a rather phyrric way.
Mr James had applied to Hertsmere as homeless. A review was sought of the initial s.184 decision that he was not vulnerable and also intentionally homeless. At the time the review was requested Hertsmere had contracted out its review function to Residential Management Group Limited (“RMG”). The review was not completed for 28 weeks, apparently as further medical evidence was required. RMG’s contract had started on 23 August 2017. The contract stated
“RMG will carry out section 202 Housing Act 1996 reviews selected by Hertsmere Quality and Reviews team over a 12 month period. Hertsmere will acknowledge the requests for review and immediately send the referral by email to RMG Ltd.”
Mr J’s review was requested on 6 February 2018, and the review decision made on 24 August 2018.
RMG’s contract also stated
“the period from the commencement date to 11 April 2017 (typo for 2018) unless terminated in accordance with Clause 15 of this agreement. The parties may by agreement extend the Contract Term by periods of up to 12 months at a time, subject to a maximum including the contract term of 3 years.”
“A variation to this Contract (including to the scope and nature of the Services) shall only be valid if it has been agreed in writing and signed by both parties.”
On the s.204 appeal, Mr J argued that the contract meant that RMG had to carry out reviews within the 12 month period, while Hertsmere argued that the review had to be started within the 12 month period. Mr J further argued that RMG’s ability to make a valid review decision ended with the expiry of the 12 months of the contract, and Mr J’s decision was made some 6 months after that.
Hertsmere argued that a) there had been a verbal agreement to extend the contract by an officer of Hertsmere who was “authorised under the contract”, and b) both the original contract and the extension of the contract had been ratified by the Chief Executive and the Leader of the Council in November 2018. Hertsmere also argued that “that challenges to the underlying contracting out were not a proper basis for a s. 204 appeal and that that ground of appeal should be summarily dismissed.”
There were also appeal grounds on vulnerability and the public sector equality duty, but these were dismissed and not appealed further.
The county court dismissed the appeal. On the contracting ground it found:
“31. In other words, even if Mr Kargbo should have been further authorised in writing to take the decision to agree an extension, and even if the extension to the contract should have been reduced to writing, it is clear that these were matters of form and not substance.
32. It is plain that it was the intention of the Respondent Authority to authorise RMG Limited to carry out its functions under section 202 for the initial period of the contract and for the further period of 12 months from 12 April 2018. If there were any irregularities in the process these were cured by the decision of Mr Bright.
Mr J appealed to the court of appeal on the ground that the first instance appeal judgment “was wrong to conclude that the review decision was lawful due to ratification by the Leader.”
Hertsmere opposed this on the grounds that:
(1) The jurisdiction under s. 204 did not extend to a challenge to the lawfulness of the contracting out. That issue could only be pursued through judicial review in the High Court, and the Recorder should have so held. This is the argument fleetingly advanced below.
(2) It is sufficient for it to be lawful that the review was begun during the initial period of the contract even though it was not completed until a later date.
(3) Mr Kargbo (the authorised officer) had authority to agree to extend the contract, and to do so orally. These are issues (a) and (b) as considered by the Recorder.
(4) The extension was validly ratified by the Chief Executive (as well as by the Leader) on 22 November 2018.
The Court of Appeal held:
On jurisdiction, after considering the various previous cases, including the obiter dicta in Nzolameso v Westminster County Council  UKSC 22, Panayiotou v Waltham Forest LBC (2017) EWCA Civ 1624 (our report) and the decision in Adesotu v Lewisham LBC (2019) EWCA Civ 1405 (our report):
In my view, the correct interpretation of s. 204 Housing Act 1996 is that a point of law arises from a decision if it concerns or relates to the lawfulness of the decision. Both normal statutory construction and the preponderance of authority point to the county court having jurisdiction to hear appeals from s. 202 review decisions that is not limited to points of law that might broadly but imprecisely be described as “points of housing law” but extends to the full range of issues that would otherwise be the subject of an application to the High Court for judicial review. These include challenges on grounds of procedural error, the extent of legal powers (vires), irrationality, and inadequacy of reasons. That much was stated by this court in Nipa Begum in the context of an irrationality challenge and if that decision does not indeed amount to binding authority extending to the circumstances found in this case, the matter can now be put beyond doubt. I do not accept that an error of law arising from a decision can only relate to errors that are intrinsic to the making of the decision or to events during the period between the request for a review and the making of the review decision. That narrow reading conflicts with the intention of the legislation that this statutory appeal jurisdiction should be removed from the Administrative Court and entrusted to the county court. I also consider the submissions on the practical advantages of this interpretation, set out at paragraph 29(2) above, to be well founded and supportive of this conclusion.
I do not believe that this outcome is likely to cause any difficulty in relation to s. 204 appeals. In most cases, any point of law will be specific to the individual decision. Cases where the challenge has a wider focus will be infrequent, and will usually be readily susceptible to resolution as part of the s. 204 appeal, particularly where the challenge is formal and without resonance for the real legal issues and the merits. But if, in a small minority of cases, the county court considers that the issue raised is one of general public importance, it is open to it to transfer it to the High Court under s. 42 of the County Courts Act 1984 in accordance with the criterion at CPR 30.3(2)(e). The issue could then be determined at High Court level, and that court could constitute itself as an Administrative Court if that was felt for some reason a more appropriate vehicle, as happened in Tachie. I nonetheless consider that the county court should be slow to identify an issue as one that it cannot determine for itself. By way of example, had the contracting out issue in the present case been pressed in the court below I would have expected the court to have determined it, and not to have transferred it to the High Court. But, as I say, there may be cases where the general importance of the challenge is such that transfer will be appropriate. By these means, the concerns expressed in Panayiotou are acknowledged, the proper scope of s. 204 upheld, and the residual supervisory jurisdiction of the High Court in the field preserved.
Adesotu concerned a discrimination claim where the Equality Act reserved jurisdiction for the county court, so could be distinguished from the broader principle of public law lawfulness.
However, having won this very important point, Mr J’s appeal failed on the remaining issues.
The ‘authorised officer’ did not have the power to extend the contract, verbally or otherwise. However, although:
ratification of the extension to the contract was required, the Leader of the Council validly performed it. The same conclusion applies in respect of the Chief Executive. There is nothing in the argument that they were ratifying an ultra vires act as the delivery of contracted out review decisions was squarely within the powers of the Council, while the actions in Ashbury and Hobday were outwith the powers of the company and the local authority respectively. Nor, if there was anything to ratify, do the Appellant’s arguments show that the interests of justice would be served by preventing the remedying of a defect that had nothing to do with the merits of the matter and deprived the Appellant of no genuine legal right, but rather of an adventitious advantage.
And on the issue of whether a review had to be completed before the end of the contract term:
I find the submission of the Council as to the meaning of this contract correct in this respect for the reasons it gives. The effect of the Appellant’s submission is that unless the contract happened to be extended no review could be selected by the Council for sending to RMG within 56 days of the end of the contract term. This indeed makes no sense in the context of a contract designed to ensure the uninterrupted performance of a continuing public function. In the end, the Appellant had no answer to this. I would therefore uphold the Recorder’s decision on the further ground that the commissioning of the review within the contract period, without the contract having been subsequently terminated, provided RMG with authorisation to continue and complete the review regardless of whether completion took place after the expiry of the contract term.
This helpful resolves the hitherto vexed question of the extent of the s.204 jurisdiction. It is not simply, as Hertsmere contended, “confined to a point of law arising from the review decision”, it rather extends to the lawfulness of the decision in the broader sense, including “procedural error, the extent of legal powers (vires), irrationality, and inadequacy of reasons”.