Local authority – Housing – Demolition – Consultation – Defendant local authority resolving to demolish and rebuild properties on estate – Claimant secure tenant applying for judicial review – Whether consultation process being unlawful – Whether defendants acting unlawfully by choosing an option which failed to meet criterion that scheme should have positive net present value (NPV) – Whether defendants breaching article 1 of Protocol 1 of European Convention on Human Rights (A1P1) by interfering with ability of secure tenants to rely upon statutory right to buy – Application dismissed
The claimant was a secure tenant of the defendant local authority at 8, Hambridge Way, Cressingham Gardens, London SW2. His home was located on the Cressingham Gardens Estate. The defendants were the local housing authority for their area and responsible for the estate under the Housing Act 1985. The estate consisted of 306 dwellings and the defendants considered that it was costly to maintain and suffered from design problems which could not be remedied by refurbishment. It began a consultation process based on five options, one of which included the demolition of all 306 homes and the redevelopment of 464 new ones.
A group of residents put forward a plan for refurbishment which had a positive net present value (NPV) of £6.6m compared to a negative NPV of £19.4m for the defendants’ option. The defendants published an officers’ report which rejected the residents’ plan and recommended redevelopment of the entire estate. The defendants resolved to authorise redevelopment of the entire estate which involved the displacement of all existing tenants and owners and the demolition of existing homes.
The claimant applied for judicial review the defendants’ resolution to authorise the redevelopment. He said that the defendants had wrongly produced a positive NPV result for its option based upon a discounted cash flow assessment which took account of a payment of £7.5m to a special purpose vehicle it had set up to borrow from financial institutions. The claimant contended, among other things, that the consultation process had been unlawful; the defendants had acted unlawfully by choosing an option which failed to meet their own mandatory criterion that the scheme should have a positive NPV; and there had been a breach of article 1 of Protocol 1 of the European Convention on Human Rights (A1P1) by interfering with the ability of secure tenants to rely upon a statutory right to buy.
Held: The application was dismissed.
(1) The consultation exercise undertaken by the defendants was in the context of their very broad powers of management under section 21(1) of the Housing Act 1985. Parliament had entrusted the general function of managing the housing stock within the borough to a democratically elected body, which could be expected to well understand the potentially competing interests of the residents of one estate in comparison to others. They were entitled to rely on independent advice such as that contained in an officers’ report unless it was so obviously wrong that the authority knew or ought to have known that they were acting irrationally: R v Darlington Borough Council, ex parte Indescon Ltd [1990] 1 EGLR 278 and R (on the application of Faraday Ltd) v West Berkshire Council [2016] EWHC 2166 (Admin); [2016] PLSCS 240 applied.
(2) A consultation exercise which was flawed in one or more respects was not necessarily so procedurally unfair as to be unlawful. In reality, a conclusion that a consultation exercise was unlawful on the grounds of unfairness would be based on a finding that something had gone clearly and radically wrong. The failure of the consultation documentation to explain that the defendants’ inability to service their debt was the real constraint on the provision of housing revenue account funding for refurbishment did not justify the quashing of the decision under challenge unless substantial prejudice had been caused in the sense of unfairness or failure to ensure participation in decision-making. Moreover, the claimant had not challenged on public law grounds the defendants’ freestanding decision that the refurbishment options did not represent value for money. Therefore, the consultation exercise carried out by the defendants was not unlawful. There was nothing misleading or irrational about the decision: R (on the application of Greenpeace Ltd) v Secretary of State for Transport [2007] Env LR 29 and R (on the application of Baird) v Environment Agency [2011] EWHC 939 (Admin) followed; R (on the application of Moseley) v Haringey London Borough Council [2014] UKSC 56 distinguished.
(3) The claimant had not shown that it was irrational or unlawful for the defendants to rely upon the advice of its expert consultants or their computations showing a positive NPV for its demolition option. Even if it had been found that there was an error in not including the recoupment of £7.5m as a cash flow expense, it was inevitable that the decision would have been reached to reject the refurbishment options and adopt the demolition option (applying Simplex GE (Holdings) Ltd v Secretary of State for the Environment (1988) 5 P&CR 306; R (on the application of Smith) v North Eastern Derbyshire PCT [2006] 1 WLR 315). Alternatively, it was highly likely that the outcome would have been the same or not substantially different within the meaning of section 31 of the Senior Courts Act 1981.
(4) A1P1 was not engaged. It was an intrinsic feature of a secure tenancy that it was granted subject to statutory termination on a number of grounds (and not merely redevelopment) which, by definition, would cause the secure tenant to lose the potentiality of choosing to rely upon a right to buy his home at some point in the future. If that was to happen, the suitable accommodation which had to be available to him might, or might not, carry with it a statutory right to buy. It followed that the “possession” which was held by a secure tenant did not include an absolute right to exercise a right to buy, irrespective of whether he continued to have a secure tenancy of that dwelling. Instead, the potential exercise of that statutory right to buy was conditional upon the tenant continuing to hold the secure tenancy of his property. That tenancy might be brought to an end by the operation of the 1985 Act, which included the redevelopment ground. That limitation which was placed upon the continued existence, and exercise, of the right to buy was imposed upon the tenancy with its bundle of rights and obligations by the legislation which created the legal notions of a secure tenancy and a right to buy. In any event, there was no legal requirement for the defendants to have regard to the contractual right to buy issue when reaching their decision since that was not an obviously material consideration for the purposes of that decision.
David Wolfe QC and Leon Glenister (instructed by Leigh Day) appeared for the claimant; James Goudie QC and Jon Holbrook (instructed by Lambeth London Borough Council) appeared for the defendants.
Eileen O’Grady, barrister
Click here to read a transcript of R (on the application of Plant) v Lambeth London Borough Council
