Z & Anor, R (on the application of) v Hackney London Borough Council & Anor (Rev 1) (2020) UKSC 40

The issue of the application of the Equality Act to local authority nomination agreements with housing charities reached the Supreme Court. This was initially a judicial review of Hackney’s agreement with Agudas Israel Housing Association, and AIHA’s own policy that it offered tenancies only to members of the Orthodox Jewish community. The judicial review failed at first instance (our report here), and an appeal to the Court of Appeal was dismissed. The claimant, Z, raised a further appeal to the Supreme Court.

At first instance AIHA admitted that its policy discriminated on ground of religion, but argued that it had the statutory defences under s.158 and 193 Equality Act 2020, and so the divisional court found. The divisional court was not asked to address discrimination on ground of race. In the Court of Appeal, Z argued that there was discrimination on ground of race, the statutory defences did not apply and Council Directive 2000/43/EC (the ‘race directive’) did apply. The Court of Appeal rejected this on the basis that the applicant could not show she had suffered discrimination on the basis of race.

In the Supreme Court, the applicant introduced a new argument that

“the appellant was in fact affected by direct discrimination by AIHA on grounds of race or ethnic origin, contrary to the Race Directive. He submits that the appellant was subject to direct discrimination on grounds of ethnic origin which was the same as that found by this court, by a majority, to have occurred in R (E) v Governing Body of JFS (United Synagogue intervening) (2009) UKSC 15 (“JFS”) in the context of the application of domestic anti-discrimination legislation, and that this means that she must be taken to have been subjected to direct discrimination on grounds of race or ethnic origin for the purposes of the Race Directive.”

The Supreme Court was not happy with how this was raised, but agreed to consider it. A suggestion by the applicant that AIHA was a public body for the purposes of the Human Rights Act 1997 was, however, rejected.

Section 158 Equality Act provides (in relation to direct discrimination)

“(1) This section applies if a person (P) reasonably thinks that –
(a) persons who share a protected characteristic suffer a disadvantage connected to the characteristic,
(b) persons who share a protected characteristic have needs that are different from the needs of persons who do not share it, or
(c) participation in an activity by persons who share a protected characteristic is disproportionately low.

(2) This Act does not prohibit P from taking any action which is a proportionate means of achieving the aim of –
(a) enabling or encouraging persons who share the protected characteristic to overcome or minimise that disadvantage,
(b) meeting those needs, or
(c) enabling or encouraging persons who share the protected characteristic to participate in that activity.
…
(4) This section does not apply to – (a) action within section 159(3)

And s.193 provides:

“(1) A person does not contravene this Act only by restricting the provision of benefits to persons who share a protected characteristic if –
(a) the person acts in pursuance of a charitable instrument, and
(b) the provision of the benefits is within subsection (2).

(2) The provision of benefits is within this subsection if it is –
(a) a proportionate means of achieving a legitimate aim, or
(b) for the purpose of preventing or compensating for a disadvantage linked to the protected characteristic.”

Z was on Hackney’s housing list, with the highest priority and need for a four bedroom property. During the time that she was waiting, 6 four bedroom properties from AIHA were advertised by the council but Hackney did not put her forward to AIHA as she was not an Orthodox Jew. Z has since been housed suitably, before the Court of Appeal hearing.

The applicant argued that AIHA’s allocation policy was not proportionate

the relevant test of proportionality is that to be found in EU law and says that the Divisional Court erred in discounting the Briheche judgment as relevant guidance. On this appeal, Mr Wise (for the applicant) relies on Briheche and a number of other judgments of the CJEU which he submits show that positive discrimination is only permissible under EU law if its object is equality of opportunity for a disadvantaged group rather than equality of outcome; where a disadvantaged person is given priority only in circumstances where an objective assessment has been carried out to compare their position with that of a person who does not share the relevant characteristic and the positions are found to be equivalent, so that the relevant characteristic is taken into account only as a tie-break at the end of that process; and where the policy in question has a safety valve to allow priority in exceptional cases for a person who does not share the relevant characteristic. In this case, however, the Divisional Court did not assess proportionality in this way. Mr Wise submits that AIHA’s policy on allocation cannot be regarded as proportionate according to this standard. It is concerned with equality of outcome rather than equality of opportunity; AIHA does not conduct assessments of the needs of non-members of the Orthodox Jewish community who might apply for social housing to compare them with the needs of members of that community; AIHA does not treat membership of the Orthodox Jewish community as a final tie-break, where an assessment of the needs of an applicant for social housing who is not a member of the community as compared with those of an applicant who is a member shows that they are broadly equivalent; and AIHA’s policy does not include a safety-valve to allow a property to be allocated to a non-member of the Orthodox Jewish community in preference to members of the community in exceptional circumstances.

This was not accepted. There was no such general proposition about positive discrimination in EU law. Indeed the approach was entirely conventional in assessing proportionality – the measures must be appropriate and reasonably necessary.

As the statement of the principle in Akerman-Livingstone makes clear, proportionality analysis requires identification of a legitimate aim and then an assessment whether a measure taken to promote that aim is proportionate in its effects in pursuing it, having regard to other interests at stake.

S.158 and s.193 Equality Act set out a range of legitimate aims, wider than those in article 2 of the Equal Treatment Directive relied upon by the applicant.

the correct question, as the Divisional Court and the Court of Appeal rightly appreciated, is whether AIHA’s allocation policy is a measure which is proportionate to promoting such aims in relation to ameliorating the position of members of the Orthodox Jewish community. Those aims relate 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.

The divisional court had correctly applied the proportionality test.

It 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 found that the AIHA allocation policy was a legitimate and proportionate means of meeting those needs and of seeking to correct for those disadvantages.

There was no basis to disturb those findings. The allocation policy was a counter to the discrimination faced by the Orthodox Jewish community in the private housing sector, and it was not a blanket policy, as AIHA would allocated housing to others if it was in a position of having surplus housing available. The applicant’s attempt to compare the worst affected individual not covered by the measure with the most favourably affected individual who was covered by was not a legitimate approach to the assessment of proportionality.

A ‘bright line’ rule was permissible for social welfare measures, see, for example R (Tigere) v Secretary of State for Business, Innovation and Skills (Just for Kids Law intervening) (2015) UKSC 57, and would be even more so for a charity:

These points apply a fortiori in relation to a proportionality assessment in respect of a measure taken by a charity, such as AIHA’s allocation policy. A charity is a private body which does not have the same responsibility as the state for ensuring equal treatment of citizens, so if the state is entitled to use bright line criteria for distribution of social welfare benefits still more will that be true for a charity. Moreover, charities do not have the same resources as the state, so if the state is entitled to use bright line criteria for distribution of benefits, still more will that be true for a charity. It is in the public interest that charities should be able to minimise their costs of administration.

On the issue of race discrimination, JFS involved a test of matrilineal descent. There was not a specific requirement for orthodox faith. But AIHA did not require matrilineal descent, but rather practising Orthodox Jewish faith.

The applicant had presented no evidence whether persons who engage in Orthodox Jewish religious observance might, by virtue of that, be regarded as part of some wider and differently constituted Mandla Jewish ethnic group. It was not a straightforward factual or legal issue, but one for a future case.

Lastly on s.193(2)(b) Equality Act 2010 and the ambit of article 8 ECHR, and the question of whether AIHA had to show that its policy was proportionate under either EU law or the Human Rights Act, the Court of Appeal was right that there was no such further restriction, as in enacting s.193(2), Parliament must be taken as having been satisfied that the provision satisfied article 14 ECHR and EU law.

In the context of general anti-discrimination legislation as contained in the 2010 Act, it was abundantly obvious that issues would arise under both EU law and article 14 of the ECHR in relation to activities falling within section 193. Parliament, acting with the benefit of the explanation from the government referred to above, must be taken to have made the assessment that by this combination of conditions the regime it enacted in the 2010 Act satisfied the requirement of proportionality for the purposes of EU law. It must equally be taken to have considered that the regime satisfied the requirement of proportionality for the purposes of the ECHR, in particular as it arises under article 14.

It was not clear that the present case fell within the ambit of article 8. The Court of Appeal had found that it didn’t, but the issue should be left ot another case, as it was not necessary to decide in this one. This should not be taken as upholding the Court of Appeal’s view, necessarily.

And lastly, it should be re-iterated that where the first instance court had carried out a proportionality assessment, and “makes no error and there is no flaw in its judgment”, the appellate court should not go on to makes its own assessment of proprotionality, except perhaps in exceptional cases.