R (Z and Anor) v Hackney LBC & Anor

[2020] UKSC 40, Lords Reed, Kerr, Kitchen and Sales and Lady Arden

Introduction

The case involved a challenge to Hackney’s allocation of about 1% of its social housing via a charitable housing association (Agudas Israel Housing Association/ AIHA) which prioritized applicants from the Orthodox Jewish Community. The reasons for the priority were, inter alia, that Orthodox Jewish families were disadvantaged in access to general social housing by reason of their tendency to have large families; that they suffered from significant economic disadvantage and discrimination in access to private sector accommodation; and that they needed to live in proximity to each other for religious reasons and because of antisemitism. The decision is an important one in rejecting the argument that a narrow approach should be taken to the parameters of lawful positive action.

The claimants, a mother and child who were not Orthodox Jews, complained that they had been unlawfully discriminated against on grounds of race and/or religion contrary to s13(1) EqA. The local authority accepted that its approach did involve direct discrimination, but sought to rely on ss158 and 193 EqA. The former (so far as relevant) permits proportionate action to be taken to enable or encourage persons who share a protected characteristic to overcome or minimise a disadvantage connected to the characteristic, or to meet needs that are different from the needs of persons who do not share it. Section 193 permits the restriction of benefits provided in pursuance of a charitable instrument to persons who share a protected characteristic(other than colour) where this is ((2)(a)) a proportionate means of achieving a legitimate aim, or ((2)(b)) for the purpose of preventing or compensating for a disadvantage linked to the protected characteristic.

The decisions below

The Divisional Court ruled that the arrangements were a proportionate means of overcoming disadvantages shared by members of the Orthodox Jewish community and meeting the needs of those members, and that they were permitted by ss158 and 193 EqA. This being the case, the Court was satisfied that the local authority’s allocation policy was lawful ([2019] EWHC 139 (Admin)).

In their appeal to the Court of Appeal the claimants argued that the Divisional Court had erred in concluding that the discrimination was proportionate and further argued that s193(2)(b) EqA, which did not in terms contain a proportionality requirement, had to be interpreted so to do. In making this argument the claimants sought to rely on (i) Article 14 ECHR, read with Article 8 or Article 9 and (ii) the Race Directive (in cases in which it applied) both of which (it was said) imposed a proportionality requirement as a condition of legality. They further argued that not to read s193(2)(b) subject to a requirement of proportionality would produce absurd consequences.

The Court of Appeal rejected the challenge ([2019] EWCA Civ 1099), concluding (as regards (i) that AIHA’s allocation policy did not fall within the ambit of Articles 8 or 9 ECHR and, in any event, that it was not “possible” to read a proportionality requirement into s193(2)(b) by virtue of s3(1) HRA. Section 193(2)(b) had to be read in the context of the scheme of the EqA and in light of its juxtaposition with s 193(2)(a), and to read a proportionality requirement into s192(2)(b) would make the provision redundant and hence, in effect, would disapply it. This was impermissible under s3(1) HRA (see §53).

As regards the EU argument ((ii) above), the Court of Appeal pointed out that the case had proceeded in the Divisional Court on the basis that AIHA had discriminated against the appellant on grounds of religion alone, the claimants having invited the Court not to deal with the allegation of discrimination on grounds of race. This being the case, and the Race Directive being inapplicable to religious discrimination, the claimants were unable to show that the Marleasing principle of sympathetic construction applied. The Court ruled that the claimant could not rely on the fact that in another case the s193(2)(b) might conflict with the Race Directive, and EU law might trump the domestic provision, in her case where no relevant EU rights were in issue. The Court of Appeal rejected the claim that the absence of a proportionality test in s193(2)(b) EqA would result in absurdity in view of the fact that charitable objects must (by virtue of the Charities Act), be for the public benefit. Further, the absence of a proportionality requirement from s193(2)(b) must be taken to be a deliberate policy choice by Parliament, and was well within the legislature’s margin of appreciation. Finally, the Court ruled that the Divisional Court had in any event been entitled to find that the discrimination was proportionate.

The Supreme Court

Lord Sales delivered a judgment with Lords Reed, President, Kerr, Kitchin and Sales agreed, Lady Arden concurring on the basis that the Divisional Court’s evaluation of proportionality was one which it was entitled to make, and which could not be set aside on appeal.

The claimants argued before the Supreme Court that the discrimination in issue breached the Race Directive and that, this being the case, s193 EqA had to be read compatibly with the Directive or disapplied. The Court allowed the necessary amendment to the claimants’ case but ruled that the Directive did not apply because the discrimination in this case, unlike that in the JFS case (R (E) v Governing Body of JFS [2009] UKSC 15; [2010] 2 AC 728) was on grounds of religious observance rather than (as there) recognition as Jewish according to the Office of the Chief Rabbi (which depended on matrilineal descent). It might be thought unlikely that anyone not recognised as Jewish on grounds of matrilineal descent would be engaged in Orthodox Jewish religious observance. But the Court rejected the claim that EU law would have prohibited the discrimination in issue even had it applied.

The claimants sought to argue that EU law permitted positive discrimination only where the aim of the discrimination was to provide equality of opportunity rather than equality of outcome, and that a disadvantaged person could be given priority only in a “tie-break” situation  (relying on the employment-related cases of  Kalanke v Freie Hansestadt Bremen (Case C-450/93), Marschall v Land Nordrhein-Westfalen (Case C-409/95), re Badeck (Case C-158/97), Abrahamsson v Fogelqvist (Case C-407/98), Lommers v Minister van Landbouw, Natuurbeheer en Visserij (Case C-476/99), Cresco Investigation GmbH v Achatzi (Case C-193/17) and EFTA Surveillance Authority v Norway (Case E-1/02)). Lord Sales ruled at §62 that “There is no general doctrine of positive discrimination in EU law, which is subject to the limitations for which Mr Wise contends” and that “The judgments in these cases addressed the specific requirements arising under legislative instruments which are not applicable in the present case, in particular the Equal Treatment Directive”. Article 2(4) of that Directive defined the aim of positive discrimination as equality of opportunity in employment rather than equality of outcome whereas (§66) in ss158 and 193(2)(a) a wider range of permissible legitimate aims was specified which included:

“seeking to achieve particular outcomes, ie enabling persons who share the protected characteristic to overcome or minimise disadvantages they suffer which are connected to the characteristic or to meet needs particular to persons with the protected characteristic, in the case of section 158; or any legitimate aim in the case of section 193(2)(a) (which includes aims recognised as legitimate under section 158). Accordingly, 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”.

Lord Sales concluded at §75 that “Not only was [the conclusion on proportionality one] which the Divisional Court was entitled to reach, I agree with it”. He stated at §76 that the 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” and at §77 that the Court had been correct to reject the claimants’ criticism that AIHA’s allocation policy was an illegitimate ‘blanket policy’.

“There is some flexibility in the policy as it is formulated, in that it allows for AIHA to allocate properties to non-members of the Orthodox Jewish community if AIHA has properties surplus to the demand from that community. However, in circumstances in which demand from that community far exceeds supply, allocation to non-members is not a realistic prospect in the foreseeable future. As Lewison LJ pointed out, the market circumstances are such that AIHA’s allocation policy (in combination with the limited number of properties AIHA owns) does not achieve the aim of meeting the needs of the Orthodox Jewish community in Hackney, but only goes some way towards achieving that aim. There are still many Orthodox Jews in Hackney whom AIHA cannot accommodate and who still suffer the disadvantages associated with the relevant protected characteristic. Unless and until the aim of elimination of such disadvantages is 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. So even though market circumstances give AIHA’s policy, in practice, a ‘blanket’ effect, that does not show that it is a measure which is disproportionate to that aim.

At §§78-82 Lord Sales rejected the argument put for the claimant that the application of the policy was disproportionate in view of the fact that she had had to wait almost 18 months for a suitable property while at least six four-bedroom properties owned by AIHA were advertised by the Council for members of the Orthodox Jewish community, stating that “the courts below were 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’ and at §82 that “the proportionality assessment would be distorted by simply taking the worst affected individual who is not covered by the measure and comparing her with the most favourably affected individual who is covered by it”.

His Lordship went on to conclude that a broad margin of appreciation was applicable in view of the social welfare context in which the “Use of bright line criteria … is justified because it minimises the costs of administration of a social welfare scheme; it may be the best way of ensuring that resources are efficiently directed to the group which, overall, needs them most; it can reduce delay in the provision of benefits; and it provides clear and transparent rules which can be applied accurately and consistently, thereby eliminating the need for invidious comparisons of individual cases in all their variety, with the risk of arbitrariness in outcomes which that may involve” (§85). At §86 his Lordship stated that “[t]hese 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” given the fact that charities did “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” whose minimisation of the costs of administration, further, was in the public interest.

Although not strictly necessary in view of his conclusions on s158 EqA, Lord Sale went on to consider the position under s193(2)(b) EqA, ruling that, whether or not Article 8 (and therefore Article 14) ECHR was applicable in the case, the Court of Appeal was right to construe s193(2)(b) as not being dependent on a proportionality assessment to be conducted by the court (§96). He reached this conclusion because (a) by s193(1) read with s193(2)(b), Parliament had “itself established a regime which is proportionate and compatible with article 14” and (b) “even if that is not the case … it is not possible under section 3(1) of the HRA to read an additional proportionality requirement into section 193(2)(b)” (§97). His Lordship traced the history of the predecessor provisions of s193 EqA and referred to the Parliamentary debates on s193 which showed that sub-paragraphs (a) and (b) were intended “to serve as distinct conditions for the operation of the charitable exemption” and that Parliament had considered them to be compatible with both EU law and Article 14 (§§101-104). At §105 he pointed out the benefit to charities of not having to conduct a separate proportionality assessment when relying on s193(2)(b), which “helps to ensure that the scarce resources of charities are channelled through to those who need them, rather than being diverted to meet costs of administration, legal proceedings and threats of legal proceedings” and at §106 he drew attention to the fact that the state, rather than charities, had the responsibility of providing essential welfare benefits for all who need them.

“107. The margin of appreciation to be afforded to Parliament when it has sought to strike a balance between competing interests varies depending on context. Where, as here, Parliament has had its attention directed to the competing interests and to the need for the regime it enacts to strike a balance which is fair and proportionate and has plainly legislated with a view to satisfying that requirement, the margin of appreciation will tend to be wider. A court should accord weight to the judgment made by the democratic legislature on a subject where different views regarding what constitutes a fair balance can reasonably be entertained…

110. In my judgment, having regard to the relevant margin of appreciation, the fact that charitable provision supplements basic social welfare provision by the state, the general regulation of charities to ensure they provide public benefits, the desirability of ensuring that the resources of charities are not diverted from being used to meet social needs and the way in which Parliament has carefully and deliberately framed the section 193(2)(b) limb of the exemption to meet the proportionality tests in EU law and under the ECHR, that limb of the exemption satisfies the proportionality requirement across the range of cases in which it applies. There is, 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.”

 

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