E-Flash R (Z and others) v (1) Hackney LBC and (2) Agudas Israel Housing Association 
Christopher Baker and Rea Murray of 4-5 Gray’s Inn Square secured a landmark victory in the Court of Appeal for an Orthodox Jewish, charitable housing association, successfully defending its housing allocation policy against an allegation of unlawful discrimination.
R (Z and others) v (1) Hackney LBC and (2) Agudas Israel Housing Association  EWCA Civ 1099
Court of Appeal, 27 June 2019
Lewison and King LLJ and Sir Stephen Richards
The Court of Appeal has upheld the decision of the Divisional Court ( EWHC 139 (Admin)) that it was lawful under the Equality Act 2010 for a small, charitable Orthodox Jewish housing association to operate a housing allocation policy in circumstances which had the effect of restricting tenancies of its properties to members of the Orthodox Jewish Community.
Christopher Baker and Rea Murray of 4-5 Gray’s Inn Square appeared for Agudas Israel Housing Association.
AIHA is a charitable housing association and a private registered provider of social housing. Its charitable objects provide for its activities to be carried out primarily for the benefit of the Orthodox Jewish Community (OJC). The majority of its properties are in Hackney and particularly in the Stamford Hill area where the OJC is concentrated. Stamford Hill is one of the largest Orthodox Jewish communities in Europe and most members of the OJC are unwilling to live outside that area.
AIHA’s allocation policy stated that its primary aim was to house members of the OJC. Because the demand for housing from the OJC was far greater than the supply, the effect of the operation of AIHA’s policy was to preclude anyone who was not a member of the OJC from becoming a tenant of AIHA’s properties.
AIHA had fewer than 1,000 social housing units and was accordingly classified by the Regulator of Social Housing as a smaller provider. Between 2011 and 2018, it had averaged only 12-13 lettings per year. Over 40% of its properties, however, had 4 or more bedrooms, reflecting the overcrowding and large family size common throughout the OJC. In 2017-2018, 50% of all 4-bedroom properties let in Hackney had been let by AIHA; and the figure rose to 100% for all such properties in Stamford Hill.
The accommodation developed by AIHA also had special features to facilitate following the tenets of the Orthodox Jewish faith, such kosher kitchens, and the rules relating to observance of the Sabbath, such as automated household equipment.
Hackney and AIHA were parties to a generic nominations agreement under which Hackney was generally entitled to nominate applicants on their housing register for (among others) 75% of AIHA’s properties with 2 bedrooms or more. The nominations agreement included provisions for dealing with nominations in relation to particular ethnic groups, and for resolving disputes about the application of criteria and policies by housing providers which limited Hackney’s ability to nominate particular applicants to particular properties.
The appellants were a family consisting of a mother with 4 young children, one of whom was diagnosed with autism spectrum disorder. She had lived in Stamford Hill her whole life but was not a member of the OJC. The High Court had previously ordered Hackney to rehouse the family and in 2017 Hackney had agreed in a consent order to offer the next suitable accommodation which became available. Hackney also agreed the family required a 4-bedroom property, among various other features resulting from their needs. No suitable offer had been made by the time of the hearing before the Divisional Court, but in the intervening period a number of 4-bedroom properties owned by AIHA, which fitted the family’s criteria, had become available for letting and had been let to other applicants. By the time of the hearing in the Court of Appeal, however, the family had been allocated suitable accommodation by Hackney.
The appellants alleged that AIHA’s policy involved unlawful racial and other discrimination contrary to s29 Equality Act 2010, ie in respect of the provision of services. The Divisional Court dismissed all the claims against AIHA and Hackney, holding principally that AIHA’s action fell within the exclusions from unlawfulness in ss158 (positive action) and 193 (the charities exception) and that AIHA’s policy was proportionate.
Section 158 provides:
“(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.”
Section 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.”
The appeals against AIHA and Hackney were dismissed on all grounds. As against AIHA, the appellants contended that the Divisional Court was wrong in finding that AIHA’s policy was proportionate. The appellants did not, however, challenge the Divisional Court’s conclusions that s158(1) and s193(1)(a) were satisfied, or that the express terms of s193(2)(b) were satisfied.
Section 193(2)(b) was not to be interpreted as including any requirement of proportionality, for a number of reasons; and accordingly the appeal failed because s193 was satisfied.
AIHA’s allocation policy was not within the ambit of either art 8 or art 9; accordingly, there was no basis for art 14 and s3 Human Rights Act 1998 to apply to the interpretation of s193(2)(b).
The court was not applying EU law in applying s193 to the facts of the present case because the particular discrimination, on the ground of religion, was not within the scope of EU Directive 2000/43 (the Race Directive).
As a matter of interpretation, when considered alongside s193(2)(a) and the other provisions in the Act which expressly contained a requirement of proportionality, it was a deliberate policy choice by Parliament not to require a proportionality assessment.
It was not possible (for the purposes of s3 Human Rights Act 1998 or EU law) to read s193(2)(b) in the manner asserted, because that would render s193(2)(a) redundant.
It was not possible to dismiss as absurd the activities of a charitable institution in fulfilling its charitable objects which, ex hypothesi, must be for the public benefit.
In any event, for the reasons below, the Divisional Court was entitled to find AIHA’s allocation policy was a proportionate means of achieving a legitimate aim.
There was no flaw in the Divisional Court’s analysis on proportionality and it answered the requisite questions posed.
The disadvantage to non-members of the OJC was the withdrawal of 1% of the potentially available units of accommodation across Hackney.
The scale of that disadvantage was minuscule.
The needs of the OJC linked to the relevant protected characteristic were many and compelling.
The allocation of properties to non-members of the OJC would fundamentally undermine AIHA’s charitable objectives. Thus there was no more limited way of achieving the legitimate aim.
Weighing these factors together, AIHA’s allocation policy was proportionate.
This was one of the first decisions by the higher courts on the provisions in ss158 and 193. It will accordingly have particular significance for many organisations looking to undertake forms of positive action, and for charities seeking to restrict the benefits they provide, in favour of only certain limited descriptions of people with protected characteristics. It will be especially relevant in circumstance where limited and scarce resources are being shared out.
Sections 158 and 193 are of general application to all forms of discrimination claims under the Equality Act 2010. The analysis in the present case is accordingly relevant whatever the alleged ground or form of discrimination, or the functional context (whether services, premises, employment or whatever) in which it occurs.
The dividing line between positive action (which is lawful within s158) and positive discrimination (which is unlawful) is, however, highly contextual and sometimes difficult to determine. Proportionality is a necessary requirement under s158, and a sufficient component under s193. The very close evaluation of the evidence by the Divisional Court in the present case on an application for judicial review, upheld on appeal, serves to emphasise the importance of a strong evidential basis for organisations seeking to rely on these defences to discrimination claims.
AIHA accepted that it was a service provider for the purposes of s29, but denied that it exercised any “public function” in this respect (that term being defined by reference to s6 Human Rights Act 1998). The Divisional Court found it unnecessary in the circumstances to determine whether R (Weaver) v London & Quadrant Housing Trust  EWCA Civ 587;  WLR 363 was distinguishable on the facts or remained good law following the substantial de-regulation of private social housing providers; and that point was not decided on appeal. It accordingly remains for another day.
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