Council tenancies — Duty to house homeless persons — Whether Unfair Terms in Consumer Contracts Regulations 1999 and Council Directive 93/13/EEC applying to terms upon which council provided accommodation — Part VII of Housing Act 1996 — Appeals allowed in part
The conjoined appeals by the appellant council arose from judicial review claims brought by the respondents, each of whom challenged the council’s housing policy in relation to homeless persons. Each of the respondents had applied to the council to be housed as a homeless person pursuant to the council’s duty under Part VII of the Housing Act 1996. In one of the claims, the question was raised as to whether the Unfair Terms in Consumer Contracts Regulations 1999 and Council Directive 93/13/EEC applied to the terms upon which the council let accommodation pursuant to their Part VII duty. The judge, dealing with the matter as a preliminary issue, held that the 1999 Regulations and the directive did apply. He also concluded that the council’s housing policy was unreasonable and unlawful. The council appealed.
On the issue of consumer contracts, questions arose as to whether: (i) the 1999 Regulations and the directive applied to contracts for the grant or transfer of an interest in land; (ii) they applied to public authorities such as the council; and (iii) the council were a “seller or supplier” and the respondents were “consumers” within the meaning of those provisions. On the first of those points, the council argued that the reference in the directive to “goods and services” should be interpreted as applying only to contracts for goods and services as an English lawyer would understand them, so as to exclude land.
Held: The appeals were allowed in part.
1. The judge had been correct in holding that the 1999 Regulations and the directive applied to the terms upon which the council let accommodation pursuant to their Part VII duty. The 1999 Regulations and the directive applied to contracts relating to land. There was nothing in the directive, in other relevant materials such as the travaux préparatoires, or in the case law to support the proposition that the reference in the directive to “goods and services” did not include land: Starmark Enterprises Ltd v CPL Distribution Ltd [2001] EWCA Civ 1252; [2002] 4 All ER 264 and Freiburger Kommunalbauten GmbH Baugesellschaft & Co KG v Hofstetter C-237/02 unreported 25 September 2003 considered. Such a proposition rested upon the divide in English law between real and personal property, but European legislation had to be read as a single corpus of law that was binding across the member states.
2. The council did not fall outside the scope of the directive merely because they were a public or governmental body. The Part VII functions centrally included the grant of a tenancy for rent, which activity could be carried on by private undertakings in order to make profits: Hoefner v Macrotron GmbH C41/90 [1991] ECR I-1979 considered; BetterCare Group Ltd v Director-General of Fair Trading [2002] CAT 7 applied. Nor were the council able to show that the public interest in the integrity of the domestic statutory scheme under Part VII would be undermined by the application of the directive’s discipline; fair contractual terms ran with, not across, the grain of good administration in that field.
3. In the light of the above, the council were plainly a “seller or supplier”, and the respondents were “consumers” within the meaning of the 1999 Regulations and the directive.
4. In this instance, the council’s housing policy had not been unreasonable or unlawful. The policy had not been oppressive or disproportionate with regard to the purpose in question, namely the fair and efficient administration of the scheme. The judge’s decision as to the unlawfulness of the policy was therefore overturned.
Ashley Underwood QC and Sian Davies (instructed by the solicitor to Newham London Borough Council) appeared for the appellants; Jan Luba QC and Stephen Knafler (instructed by Aina Khan Partnership) appeared for the respondents; Nicholas Green QC (instructed by the Treasury Solicitor) appeared for the Office of Fair Trading, the interested party in the first-named case.
Sally Dobson, barrister
References: EGi Legal News 29/3/04
