Full text

Khatun & Ors v. Newham LBC
Court of Appeal

February 24, 2004


Laws L.J.:

Introductory

1 These are conjoined appeals, with permission granted by myself on October 29, 2003, against orders made by Newman J. in the Administrative Court on October 10, 2003 when he granted applications for judicial review brought by each of the three respondents against decisions made by the London Borough of Newham ("the Council") in the context of the Council's responsibilities arising under the homeless persons legislation contained in Pt VII of the Housing Act 1996 ("the 1996 Act"). The respondents had all applied to the Council as homeless persons to be provided with accommodation pursuant to Pt VII.
2 In essence the judicial review proceedings constituted an assault on the policy or practice adopted by the Council in providing housing to persons to whom they owe the duty imposed by s. 193(2) of the 1996 Act, namely to secure that accommodation is available for their occupation. The core of the complaint is that the Council requires such a person to accept or refuse the accommodation offered without his being given an opportunity first to view the property. I shall explain the details in due course. This policy or practice was excoriated in the court below by Mr Luba Q.C. for the respondents as being "manifestly unreasonable, offensive, unfair and accordingly unlawful". The judge, while using somewhat different language, essentially accepted the criticisms of the policy that were put forward.
3 There was a second point in the case, entirely discrete from the first. It was directly raised in only one of the applications, that of Ms Khatun. In summary the question was whether the Unfair Terms in Consumer Contracts Regulations 1999 ("the Regulations") and Council Directive 93/13/EEC ("the Directive") applied to the terms on which accommodation was let by the Council pursuant to its duty under Pt VII. The answer to the question fell principally to be determined by reference to a wider issue, namely whether the Regulations and the Directive applied to contracts for the grant or transfer of an interest in land at all; but it depended also on the answers to two associated further questions, namely whether the Regulations and the Directive applied to public authorities such as the Council, and whether the Council was a "seller or supplier" and the respondents were "consumers" within the meaning of the Regulations and the Directive.
4 This second point in the case was by agreement dealt with by the judge as a preliminary issue (or rather three linked preliminary issues). In the event that the judge found that the Regulations and Directive indeed applied to the terms on which the Council let accommodation to tenants, it was agreed that all questions as to whether the Council's standard non-secure tenancy agreement was in fact unfair and unlawful were to be adjourned to enable the Council and the Office of Fair Trading ("the OFT") to resolve, if possible, any differences between them by agreement. The OFT is what is called the "lead regulator" with enforcement powers under the Regulations. It was joined as an interested party before Newman J. and appeared by leading counsel to argue the preliminary point of principle. Likewise the OFT has been represented before us, by Mr Green Q.C., Newman J. found that the Regulations and Directive did indeed apply to the Council's tenancies.
5 In these appeals the Council seek to overturn Newman J.'s conclusions on both issues in the case, although upon the second issue Mr Underwood Q.C. for the Council in his skeleton argument (para.29) makes it clear that the Council's case is advanced "for the sake of good order and to clarify the law".

The First Issue

6 I turn to the first issue, relating to the Council's policy. It is convenient to set out or summarise the relevant provisions of the 1996 Act and certain statutory guidance given by the Secretary of State before describing the policy itself in more detail and adverting briefly to the facts of the three individual cases. Then I will address the merits of the arguments.

(1) The Housing Act 1996 Part VII

7 Part VII of the 1996 Act opens with s.175 which defines homelessness. I need not set it out. Section 182 provides:
"(1) In the exercise of their functions relating to homelessness and the prevention of homelessness, a local housing authority or social services authority shall have regard to such guidance as may from time to time be given by the Secretary of State.
(2) The Secretary of State may give guidance either generally or to specified descriptions of authorities."
Section 184(1):
"If the local housing authority have reason to believe that an applicant may be homeless or threatened with homelessness, they shall make such enquiries as are necessary to satisfy themselves--
(a) whether he is eligible for assistance, and
(b) if so, whether any duty, and if so what duty, is owed to him under the following provisions of this Part."
Section 188:
"(1) If the local housing authority have reason to believe that an applicant may be homeless, eligible for assistance and have a priority need, they shall secure that accommodation is available for his occupation pending a decision as to the duty (if any) owed to him under the following provisions of this Part.
...
(3) The duty ceases when the authority's decision is notified to the applicant, even if the applicant requests a review of the decision (see section 202).
The authority may secure that accommodation is available for the applicant's occupation pending a decision on a review."
Section 189 defines those in priority need. In summary they are pregnant women, persons with dependent children, persons who are vulnerable through old age or certain other causes, and persons rendered homeless as a result of an emergency. Section 190 imposes limited duties upon a local authority where it is satisfied that an applicant is homeless, but became so intentionally. Section 191 explains what is meant by "becoming homeless intentionally". Section 193 imposes on local housing authorities what is known (in the argot of this branch of the law) as "the full housing duty". It is at the centre of these appeals. I should set out the following subsections:
"(1) This section applies where the local housing authority are satisfied that an applicant is homeless, eligible for assistance and has a priority need, and are not satisfied that he became homeless intentionally.
(2) Unless the authority refer the application to another local housing authority ... they shall secure that accommodation is available for occupation by the applicant.
(3) The authority are subject to the duty under this section until it ceases by virtue of any of the following provisions of this section.
(3A) The authority shall, on becoming subject to the duty under this section, give the applicant a copy of the statement included in their allocation scheme by virtue of section 167(1A) (policy on offering choice to people allocated housing accommodation under Part VI).
(5) The local housing authority shall cease to be subject to the duty under this section if the applicant, having been informed by the authority of the possible consequences of refusal and of his right to request a review of the suitability of the accommodation, refuses an offer of accommodation which the authority are satisfied is suitable for him and the authority notify him that they regard themselves as having discharged their duty under this section.
(6) The local housing authority shall cease to be subject to the duty under this section if the applicant --
a) ceases to be eligible for assistance,
b) becomes homeless intentionally from the accommodation made available for his occupation,
c) accepts an offer of accommodation under Part VI ..., or
cc) accepts an offer of an assured tenancy (other than an assured shorthold tenancy) from a private landlord,
d) otherwise voluntarily ceases to occupy as his only or principal home the accommodation made available for his occupation.
(7) The local housing authority shall also cease to be subject to the duty under this section if the applicant, having been informed of the possible consequence of refusal and of his right to request a review of the suitability of the accommodation, refuses a final offer of accommodation under Part VI.
...
(7B) The authority shall also cease to be subject to the duty under this section if the applicant accepts a qualifying offer of an assured shorthold tenancy which is made by a private landlord in relation to any accommodation which is, or may become, available for the applicant's occupation.
...
(7D) For the purposes of subsection (7B) an offer of an assured shorthold tenancy is a qualifying offer if--
a) it is made, with the approval of the authority, in pursuance of arrangements made by the authority with the landlord with a view to bringing the authority's duty under this section to an end;
...
(7F) The local housing authority shall not--
a) make a final offer of accommodation under Part VI for the purposes of subsection (7); or
b) approve an offer of an assured shorthold tenancy for the purposes of subsection (7B),
unless they are satisfied that the accommodation is suitable for the applicant and that it is reasonable for him to accept the offer.
(8) For the purposes of subsection (7F) an applicant may reasonably be expected to accept an offer even though he is under contractual or other obligations in respect of his existing accommodation, provided he is able to bring those obligations to an end before he is required to take up the offer.
(9) A person who ceases to be owed the duty under this section may make a fresh application to the authority for accommodation or assistance in obtaining accommodation.
Lastly, s.202:
"(1) An applicant has the right to request a review of--
...
b) any decision of a local housing authority as to what duty (if any) is owed to him under sections 190 to 193 ... (duties to persons found to be homeless ...),
...
f) any decision of a local housing authority as to the suitability of accommodation offered to him in discharge of their duty under any of the provisions mentioned in paragraph (b) ... or as to the suitability of accommodation offered to him as mentioned in section 193(7).
(1A) An applicant who is offered accommodation as mentioned in section 193(5) or (7) may under subsection (1)(f) request a review of the suitability of the accommodation offered to him whether or not he has accepted the offer.
...
(3) A request for review must be made before the end of the period of 21 days beginning with the day on which he is notified of the authority's decision or such longer period as the authority may in writing allow.
(4) On a request being duly made to them, the authority or authorities concerned shall review their decision."
Section 204, which I need not set out, confers on an applicant who is dissatisfied with a decision taken on a review under s.202 a right of appeal to the county court "on any point of law arising from the decision or, as the case may be, the original decision."
8 It will be observed that there are some cross-references in these provisions to Pt VI of the 1996 Act. Pt VI contains measures which condition the allocation of social housing in the ordinary way by local authorities. There is no analogue to the full housing duty arising under s.193(2); indeed s.159(7) provides: "[s]ubject to the provisions of this Part, a local housing authority may allocate housing accommodation in such manner as they consider appropriate". Section 167 requires every local housing authority to maintain an allocation scheme for determining priorities in the allocation of housing.

(2) The Secretary of State's Guidance

9 The Secretary of State has issued guidance under s.182 of the 1996 Act, in the shape of a document titled "Homelessness -- Code of Guidance for Local Authorities" published in July 2002 by the Office of the Deputy Prime Minister and the Department of Health. In light of one of Mr Luba's submissions for the respondents I should set out paras 9.11 and 9.12:
"9.11. Housing authorities must not make a final offer under Part 6 or approve a qualifying offer of an assured shorthold tenancy unless they are satisfied that the accommodation is suitable for the applicant and that it is reasonable for him or her to accept the offer. Where an applicant has contractual or other obligations in respect of his or her existing accommodation (e.g. a tenancy agreement or lease), the housing authority can reasonably expect the offer to be taken up only if the applicant is able to bring those obligations to an end before he or she is required to take up the offer (s.193(8)).
9.12. Housing authorities must allow applicants a reasonable period for considering offers of accommodation, particularly final offers made under Part 6 that will bring the homelessness duty to an end whether accepted or refused. There is no set reasonable period; some applicants may require longer than others depending on their circumstances, whether they wish to seek advice in making their decision and whether they are already familiar with the property in question. Longer periods may be required where the applicant is in hospital or temporarily absent from the district. In deciding what is a reasonable period, housing authorities must take into account the applicant's circumstances in each case."

(3) The Council's Policy

10 Now I may turn to the policy adopted by the Council, complained of in these proceedings. The engine of the policy is the fact that it shortens the period in which a homeless person is provided with temporary bed and breakfast accommodation, initially under s.188 of the 1996 Act, before moving into what I may call long-term accommodation after the full housing duty has been accepted in his case by the Council under s.193(1). At that stage a transfer is arranged, as soon as it can be done, usually to a self-contained private sector leased ("PSL") property. The government has set a target for all local authorities, to be met by April 2004, by which (broadly) no households should have to live in bed and breakfast accommodation for more than six weeks unless there are exceptional circumstances. As it happens this target took concrete legal form on December 19, 2003, the day after the conclusion of the hearing before us, when the Secretary of State (acting under powers conferred by the 1996 Act) made the Homelessness (Suitability of Accommodation) (England) Order 2003 and simultaneously published guidance relating to the Order under s.182. Mr Luba helpfully sent copies of these documents to the court on January 14, 2004. By para.3 of the Order "B & B accommodation is not to be regarded as suitable for an applicant with family commitments" for the purposes inter alia of s.193(2), unless (para.4(1)(b)) "the applicant occupies B & B accommodation for a period ... which does not exceed 6 weeks". "[A]pplicant with family commitments" and "B & B accommodation" are defined in para.2, but I need not set out the definitions. Paragraph 1 of the guidance reads:
"Bed and breakfast accommodation caters for very short-term stays only and generally will afford residents only limited privacy and may lack certain important amenities such as cooking and laundry facilities. Consequently, where possible, housing authorities should avoid using bed and breakfast hotels to discharge a duty to secure accommodation for homeless applicants."
The Order will come into force on April 1, 2004.
11 Before coming to the policy itself I should add that there was evidence before the judge from Ferzana Ali, the Manager of the Council's Homeless Persons Unit, that the Council had 870 households in bed and breakfast accommodation in the week commencing March 24, 2003; and the Council receives new applications to be housed under Pt VII at the rate of about 2700 per annum. It pays between £200 and £280 per week rent for each PSL property. It charges its tenants of such property a flat rate of £310 per week. The difference is accounted for by administrative costs and other expenses.
12 That is the background. As I have foreshadowed, the Council's policy distinctly concerns the stage in the statutory scheme arising after the full housing duty has been accepted by the Council under s.193(1) of the 1996 Act. However I should explain the process which takes place before that stage is reached, when an applicant comes forward for assistance under Pt VII. The applicant is interviewed, and the information thus obtained is recorded on an application form. It provides for the inclusion of details such as family composition, previous addresses, the identity of the applicant's doctor or health visitor, children's schools and so forth. The applicant is asked to state the cause of his homelessness. Any other comments or observations are recorded. Since the applications made by these respondents were processed, the Council has also introduced a form to be filled in stating the applicant's area preference or preferences. At this stage, pending a decision whether to accept the full housing duty under s.193, the applicant may be housed in bed and breakfast accommodation.
13 The application is then considered by the Council's appropriate officers. If the s.193 duty is accepted on the facts, a caseworker completes what is called a nomination form. This sets out material based on the earlier interview, and the caseworker may have sought information from the applicant's general practitioner and advice from the Council's medical officer. These facts serve to provide the data used for the selection of a PSL property as being suitable for the applicant. This is done by an allocation officer who is trained in the task. He or she has the material in the nomination form and access to the applicant's file, and may go back to the caseworker to elucidate any point of doubt or difficulty. Until a property has been selected which the Council regard as suitable, the applicant will ordinarily remain in bed and breakfast accommodation, now being provided in fulfilment for the time being of the full s.193 duty.
14 After a property has been selected, the applicant is invited to attend an appointment to sign the tenancy agreement and collect the keys. Here is the letter to the respondent Rashida Khatun, dated November 25, 2002:
"I am pleased to inform you that the Homeless Persons Unit can now transfer you to alternative temporary accommodation. This accommodation is available under the Private Leasing Scheme and is a self-contained unfurnished property.
You should come to the Homeless Persons Unit, 3 Pragel Street, London E13 9HB at 11.00 am on Thursday 12th December 2002 to collect keys and sign the Tenancy Agreement.
We will continue your hotel booking for a further 3 nights if necessary from your appointment date, in order for you to arrange for gas and electricity supplies to be connected.
If you are unable to keep the above appointment, please telephone on the above number to arrange another appointment. Failure to contact us will result in immediate cancellation of your Bed and Breakfast booking and the offer of accommodation will be withdrawn.
You must ensure that you bring with you proof of identity, ie wage slips, benefits book, letter from employer etc., so that the Housing Benefit form can be completed on the appointment day.
If you have a partner, please ensure he/she turns up also, otherwise sign-up will not take place.
Please note, if you decide not to accept this offer, you will not receive any further offers while enquiries on your application are ongoing. If you are in Bed and Breakfast accommodation it will be cancelled. If you have received a positive decision to your application (letter re: s.184 accept), your application will be closed. Please note that this Authority may consider that you have rendered yourself intentionally homeless if you make a subsequent application.
This accommodation is considered suitable for you and is offered under s.193 of Housing Act 1996. You may apply for a review of the suitability of this accommodation provided you request this within 21 days of receiving this letter."
As the judge noted, identical letters were sent to the other two respondents. In fact Ms Khatun, on being offered a different property at a later date, received a further letter which modified what had been said in the penultimate paragraph which I have set out. The substitute paragraph was in these terms:
"You are advised that if you refuse an offer of suitable accommodation you may not receive any further offers and your current accommodation provided by the council may be cancelled. If you need any further advice on this matter please speak to a member of our staff when you attend the above-mentioned appointment."
15 No opportunity to view the selected property is given to the applicant before the appointment letter is sent. The appointment letter itself (as is apparent from that sent to Ms Khatun) offers no such opportunity; indeed, beyond the fact that the accommodation "is available under the Private Leasing Scheme and is a self-contained unfurnished property", the letter imparts no information about the property. In particular its address is not stated.
16 Come the appointment itself, the evidence is that the applicant is then told of the location, size and type of the selected property. Again, however, no opportunity to view is offered before the applicant is asked to decide whether or not to accept it. At the appointment the applicant may obviously accept or decline the property. Whether he accepts or declines, he enjoys a statutory right to have the question of suitability reviewed by the Council: s.202(1A). If he accepts it and seeks no review, or the review upholds the suitability decision and the applicant is satisfied with that, there is an end of the matter. If he declines to accept, then--whether or not, as I understand it, he seeks a statutory review--he is interviewed by a caseworker who makes a fresh decision on suitability taking account, of course, of what the applicant has said in interview after being informed of the location, type and size of the property. (If at this stage the applicant seeks to contact a solicitor, he is given an opportunity to do so.) If the caseworker then considers the accommodation is unsuitable, the offer is withdrawn. In that case the full s.193 duty plainly continues and the Council will be obliged to locate and offer another property. If on the other hand the caseworker considers the property to be suitable, it is re-offered to the applicant. No doubt there may be further discussions between the caseworker and the applicant; but the bottom line, if I may use the phrase, is that if the caseworker persists in the view that the accommodation is suitable but the applicant does not then accept it, he is treated as having refused the offer and the Council will regard its duty under s.193 as having been discharged. It will cancel the applicant's bed and breakfast accommodation with immediate effect. Or at least it will feel free to do so: Mr Underwood pointed to certain evidence suggesting that in practice the Council adopted a more flexible approach, and I will come to that. Mr Luba submitted that the "real sting" in the Council's procedures adopted under the policy is the fact or threat of instant cancellation of the applicant's bed and breakfast accommodation in the event that he does not accept the offered PSL property then and there.

(4) The Particular Facts of the Respondents' Cases

17 Offers were made to all three respondents. Ms Zeb and Ms Iqbal attended their "sign-up" interviews respectively on January 2, and February 6, 2003. Each declined to accept the offer made. Neither suggested any reason why she considered the property unsuitable. Each stated that she was refusing the offered property because her solicitor had advised her to do so unless she was able to view it first. In the case of Zeb there is uncontested evidence from Habiba Sukabawa, a caseworker with the Council, as follows:
"5. I phoned Ms Zeb's solicitors in an attempt to understand her reasons for rejecting the property. He was unable to make any comment on the suitability of the property but informed me that he was advising all clients not to accept properties without viewing because his firm was seeking to challenge Newham's policy."
All three respondents have been represented by the same solicitors, the Aina Khan Partnership. In my judgment the facts stated by Habiba Sukabawa demonstrate an abuse by these solicitors of their relationship with vulnerable clients. They were treating the clients as pawns in a campaign they had themselves conceived against the Council, with no particular regard to the clients' individual interests.
18 Notices were issued to Ms Zeb and Ms Iqbal stating that the Council's duties were at an end and their bed and breakfast accommodation was cancelled. However neither was evicted then and there: a fact relied on to illustrate the more flexible approach to which, as I have said, Mr Underwood draws attention. Ms Zeb and Ms Iqbal each sought a review under s.202 of the 1996 Act. In the course of the review each was given a further opportunity to accept the accommodation originally offered, and each then accepted it; having by now viewed the property. Ms Iqbal, however, sought a further review stating that she had suffered harassment. This review was successful and on March 17, 2003 Ms Iqbal was nominated for alternative accommodation. But in the event she remained where she was.
19 Ms Khatun, by contrast with the others, signed the proffered tenancy agreement on the occasion of her interview on December 12, 2002. The next day she went to see the Aina Khan Partnership, when she "learned that they had received instructions from other clients in respect of the practices of the council" (Ms Khatun's statement, February 12, 2003). On the same day, December 13, 2002, they applied on her behalf for a review under s.202. The accommodation was above a public house. Ms Khatun is a Muslim. She was subjected to racial abuse by customers of the pub and suffered other problems and difficulties. Her case on review was accepted and she was offered alternative accommodation on April 24, 2003. She moved on April 30, 2003.


(5) The Judge's Approach to the First Issue

20 In condemning the policy the judge below first discussed the impact of the Secretary of State's guidance. Having held that the absence or denial of any opportunity to view the offered property before the applicant is required to decide whether or not to accept it was contrary to the guidance, he said:
"26. In my judgment to depart from national guidance given under statute in order to achieve a national guidelines target, which has been set administratively, is to run the risk of acting unlawfully by failing to follow the guidance ... 27. In my judgment the Defendant should not have permitted the targets which had been set to deflect its attention from the import of the guidance ..."
Although with respect the point is by no means entirely clear, I take the judge to be holding in these passages that the Council's policy is unlawful because it involves a departure from the guidance for which no sufficient justification is demonstrated. If so, this is a free-standing basis for the policy's condemnation. I find it convenient to revisit that after considering Mr Luba's more direct assaults on the policy.
21 Mr Luba seeks to support the reasoning of the judge which follows upon his observations about the Secretary of State's guidance. Immediately after the passage I have cited from the judgment, Newman J. continued as follows:
"... More than that, the view it [sc. the Council] held ... to the effect that its state of knowledge, at the signing of the tenancy agreement, as to the suitability of the accommodation, was of paramount importance, was wrong. As a result it failed, when devising the policy, to pay sufficient regard to the interests of the applicants ... 28. I have no doubt that, subject to any legitimate considerations to the contrary, the fair and practical administration of the law in this regard requires that an opportunity should be given to applicants to view accommodation before they enter into a tenancy agreement ... [I]nspection of the physical condition and precise location are relevant to reaching a decision to pay rent and assume legal obligations as a tenant."
Then, under the heading "OPPRESSION", the judge continued:
"32. ... The efficiency of the Defendant in administering the system and its success in offering and providing suitable accommodation is not the issue. The issue is, whether there is any reason for not providing an applicant with an opportunity to view accommodation, if one is requested, before requiring them under threat of a legal sanction, to sign a tenancy agreement giving rise to legal obligations. I accept that the Defendant endeavours ... to match the PSL property to the applicant and generally succeeds, but the catalogue of information may or may not be determinative of suitability. Ultimately whether there is to be an issue will depend upon the applicant having seen the property and considered its suitability. That is what, in my judgment, Parliament contemplated when legislating for a right of review. It did not legislate for the local authority's judgment to operate, at any stage, as final and conclusive."
Lastly, the judge summarised his reasons for striking down the policy:
"38. This policy ... led it [sc. the Council] to assume that a homeless person did not require the same degree of freedom to contract as would have unhesitatingly been accorded by it to others. The terms of the letter to invite applicants to an interview and the practice employed at the signing appointment were coercive and unfair. They departed from the Code. They infringed an applicant's right to be sufficiently informed in connection with the legal obligations to be assumed by the tenancy agreement. They were designed to wrongfully restrict the circumstances in which a review could be requested. It follows the policy is unlawful."
22 Now, I recognise of course that the judge's language is not to be picked over as if it were to be found in a contract or a statute. But I have to say that I have found the search for the precise ratio of the decision below disconcertingly elusive. Mr Luba firmly submits (see, for example, para.10 of his skeleton argument) that the judge was right for the reasons he gave. In these circumstances it is I think appropriate to scrutinise the judge's reasoning with particular care.
23 It is clear at least that the judge considered that an applicant for Pt VII accommodation possesses an enforceable right to an opportunity to view the offered property and to express his opinions about it to the Council before being asked to decide whether he accepts it; and that the fulfilment of this right is in effect a condition of the statutory scheme's lawful operation. What is less clear is the judge's view of the possible legal source or sources of such a right. In my judgment it is important to examine with some rigour the question where they might be found. I think there are three potential sources. The first is the most obvious: it is where the right is conferred by statute. Newman J. appears to have thought that the statute impliedly conferred such a right (para.32: "That is what, in my judgment, Parliament contemplated ..."). The second potential source of such a right consists in the demands of procedural fairness or, in the older language, natural justice. Thus it would be said that it is unfair if the applicant is not given such an opportunity to view and comment. The third consists in the Council's duty to perform its functions reasonably according to the Wednesbury principle[1948] 1 K.B. 223, or at any rate one aspect of it, namely its duty to apprise itself of all factors relevant to its decision as to the suitability of a property to the needs of the applicant. Thus it would be said that unless the applicant is given such an opportunity, the Council will have failed to take the necessary reasonable steps to inform itself of these relevant factors. But this last case is not a true instance of a conferment of a right. Rather, the need (if it arises) to have regard to the applicant's views about the offered accommodation is an aspect of the Council's general duty to perform its statutory function properly. The practical consequence of this duty's proper execution, however, may be to entitle the applicant to view the property and have his say.



24 I think the judge has conflated these latter two potential sources of the right as I have described them. His reasoning (which I have set out) in paras 27, 28 and 32 suggests as much. By contrast the emphasis in para.38 is more pointedly towards an independent right to be informed, as a matter of fairness. Overall the judge held, as I read the judgment, that one way or another an applicant's legal right to enjoy an opportunity to view the offered property and to express his views about it to the Council was established by engagement of all of the three potential sources which I have identified.

(6) Mr Luba's Submissions

25 As regards an applicant's putative right to view the offered property and to express his views about it to the Council before being asked to make a decision, Mr Luba sought to support the judge's conclusion by reference to the second and third potential sources of such a right as I have described them (fairness and Wednesbury respectively). As for Wednesbury, as I understood him Mr Luba submitted that the applicant's input arising from his having viewed the premises was a legally indispensable element in the Council's decision-making process under s.193.
26 But Mr Luba advanced a further and separate argument on the first issue in the appeal, which he says is also supported by the judge's reasoning. I apprehend that he would position this argument at the forefront of his case. I have already noticed (para.16) his submission that the "real sting" in the Council's procedures adopted under the policy is the fact or threat of instant cancellation of the applicant's bed and breakfast accommodation in the event that he does not accept the offered PSL property then and there. The argument is that this aspect of the policy is so oppressive as to be perverse. Thus it also engages Wednesbury, which condemns perverse decisions. Mr Luba referred us to the decision of Carnwath J. as he then was in R v Secretary of State Ex p. Shelter CO/2765/96 (August 23, 1996). That case concerned the impact of legislation relating to immigration control upon the operation of provisions contained in Pt III of the Housing Act 1985, which was the predecessor of Pt VII of the 1996 Act. Carnwath J. discussed the position arising where enquiries show that a person housed pursuant to the local authority's interim duty (now to be found in s.188 of the 1996 Act) is not entitled to the benefit of the full housing duty, now of course arising under s.193. He said:
"That does not mean that they [sc. the local authority] can simply terminate without further notice. They are under a public law duty to act reasonably, which is of particular importance when one is dealing with a need so basic as the need for a roof over one's head ... [A]t the very least I do not see how the time allowed, even in the most precarious case, can reasonably be less than the time normally given to someone found intentionally homeless, which I understand in Westminster would be 14 days subject to any particular considerations and I understand some other authorities it is 28 days."



(7) Conclusions on the First Issue: (a) A Right to View and Comment?

27 As I have said I will deal separately with the impact of the Secretary of State's guidance. On Mr Luba's first contention (that is, leaving aside his distinct argument as to perversity) that a Pt VII applicant enjoys a right to view and comment on an offered property before being required to decide whether or not to accept it, I would at the outset make these observations. I have stated that there are three potential sources of such a right, though the last is not truly categorised as a free-standing right; and that the judge below has conflated the latter two. Now, I recognise that it is not always useful to assess the merits of public law claims by making distinctions such as that between rights of procedural fairness and the discipline of sound reasoning. These two goods often run into one another, and austere legalisms may stunt rather than prosper the principled development of the law. But there is an important difference of substance between a statutory scheme within which an affected party enjoys a right to be heard truly so called, and one within which he enjoys only the right to take the benefit of an executive decision in his favour if the relevant public body so concludes, albeit the decision- maker's duty to have regard to relevant considerations may require him to take into account the affected person's views about the subject-matter. In the second class of case, consulting the affected person is only a means to an end: the end of accurate decision-making. But in the first class of case the right to be heard (while it may no doubt promote accurate decision-making) is an end in itself: it is simply the doing of justice, which requires no utilitarian justification.
28 The first question on this part of the case is, to which of these two kinds of scheme does Pt VII of the 1996 Act belong. Its answer depends on the proper construction of the material statutory provisions which I have already set out, and consideration of the common law's requirements of procedural fairness. If it belongs to the first, Newman J. arrived at the right conclusion and the appeal must fail on the first issue. If it belongs to the second, there is a further question which engages the third potential source of a right, albeit misnamed as such: does the policy, by forbidding the applicant to view the property and comment, disable the Council from an appreciation of all the factors relevant to its decision as to the suitability of the offered property?
29 It is plain to my mind that the statute does not confer any right to be heard as such on a Pt VII applicant. There is nothing in any of the provisions which has that effect. Mr Luba did not suggest there was any express conferment of such a right. Nor did the judge below. And in my judgment it cannot be got by implication from the statutory language; if the judge (para.32 of the judgment, which I have cited) took a contrary view, then with respect he was in error.
30 That is not, however, necessarily the end of the question. Should a right to be heard be inserted or implied into the statutory scheme not by virtue of the statute's words, but by force of our public law standards of procedural fairness? Should "the justice of the common law" as Byles J. put it in Cooper v Wandsworth Board of Works (1863) 14 C.B. (N.S.) 180, 194 "supply the omissions of the legislature"?
31 That the courts may in the name of fairness insist on the conferment upon affected persons of a right to be heard in the administration of a statutory scheme, itself silent as to such a right, cannot be doubted. But it is not the law that they will always do so. The court is more likely to feel constrained to "supply the omissions of the legislature" where the decision in question is one which may diminish or extinguish an established right or interest already belonging to the affected person, rather than one which will grant or withhold a benefit or bounty not previously enjoyed, and for which there is merely an entitlement to apply. This is the distinction between "forfeiture" (or "deprivation") cases and "application" cases, drawn by Megarry J. in McInnes v Onslow Fane [1978] 1 W.L.R. 1520. It is not hard and fast. There may be cases where refusal of the application (for example, the refusal of a passport) will carry adverse implications for other rights or interests which the applicant may expect to enjoy. But in general the distinction possesses much force. In an "application" case there is likely to be legal space for the decision-maker to exercise a discretion whether or not to accord a right to be heard. In doing so, he will of course have regard to the practicalities of the statutory scheme's operation. A perceived need in the general interest to process applications speedily, against a background of many applicants and scarce resources, may be a legitimate and important factor.
32 In light of all these considerations I conclude that the common law's standards of procedural fairness do not require the court to confer a right to be heard, properly so called, upon applicants for Pt VII accommodation. This is--and I do not for a moment undervalue the acute importance of the matter to the homeless person seeking a roof over his head--a paradigm of an "application" case. In my judgment it belongs to the second kind of scheme which I have described, that is one in which there is no right to be heard as such and the applicant enjoys only the right to take the benefit of an executive decision in his favour if the relevant public body so concludes. Here I would emphasise my specific disagreement with these two sentences from the judgment below, which I have already set out but would repeat in this context:
"32. ... The efficiency of the Defendant in administering the system and its success in offering and providing suitable accommodation is not the issue. The issue is, whether there is any reason for not providing an applicant with an opportunity to view accommodation, if one is requested, before requiring them under threat of a legal sanction, to sign a tenancy agreement giving rise to legal obligations."
In my judgment the Council's "success in offering and providing suitable accommodation" is precisely the issue; or rather, it will precisely constitute (where it eventuates) the fulfilment of the statutory scheme. The judge's statement of the issue assumes a right to view the offered property, and asks whether there is any reason to dislodge such a right. But this approach is not vouched by anything in the statute.
33 However in these circumstances there is as I have foreshadowed a further question, which concerns the third (miscalled) category of right which I have identified. Even though there is no free-standing right to be heard, does the decision-maker's duty to have regard to relevant considerations nevertheless require him to ascertain and take into account the affected person's views about the subject-matter? More pointedly in the present context, does the policy, by denying the applicant the opportunity to view the property and comment, disable the Council from the process of accurate decision-making--from an appreciation of all the factors relevant to its decision as to the suitability of the offered property?
34 As I see it the best starting-point for consideration of this question is a passage from the speech of Lord Scarman in Re Findlay [1985] A.C. 318. I need say nothing of the case's facts. Lord Scarman stated (at 333F-334B)]:
"He [counsel] prayed in aid some observations of Cooke J. in the New Zealand case of CREEDNZ Inc v Governor General [1981] 1 N.Z.L.R. 172. The facts of that case bear no resemblance to this case. But the judge did consider the question of the proper exercise of an administrative discretion in a situation where a statute permits but does not require consideration of certain matters. The judge said, at p.183:
'What has to be emphasised is that it is only when the statute expressly or impliedly identifies considerations required to be taken into account by the authority as a matter of legal obligation that the court holds a decision invalid on the ground now invoked. It is not enough that a consideration is one that may properly be taken into account, nor even that it is one which many people, including the court itself, would have taken into account if they had to make the decision.'
These words certainly do not support Mr. Sedley's submission. But ... the judge in a later passage at p.183, line 33, did recognise that in certain circumstances, notwithstanding the silence of the statute, 'there will be some matters so obviously material to a decision on a particular project that anything short of direct consideration of them by the ministers ... would not be in accordance with the intention of the Act.'
These two passages are, in my view, a correct statement of principle."
35 In my judgment CREEDNZ ( via the decision in Findlay) does not only support the proposition that where a statute conferring discretionary power provides no lexicon of the matters to be treated as relevant by the decision-maker, then it is for the decision-maker and not the court to conclude what is relevant subject only to Wednesbury review. By extension it gives authority also for a different but closely related proposition, namely that it is for the decision-maker and not the court, subject again to Wednesbury review, to decide upon the manner and intensity of enquiry to be undertaken into any relevant factor accepted or demonstrated as such. This view is I think supported by the judgment of Schiemann J. as he then was in Ex p. Costello (1989) 21 H.L.R. 301, to which Mr Luba referred us. That case concerned the degree of inquiry which an authority was obliged to undertake into issues of priority need and intentional homelessness. At p.309 Schiemann J. said:
"In my view the court should establish what material was before the authority and should only strike down a decision by the authority not to make further enquiries if no reasonable council possessed of that material could suppose that the inquiries they had made were sufficient."
This approach is lent authoritative support by the decision of this court in R v Royal Borough of Kensington and Chelsea Ex p. Bayani (1990) 22 H.L.R. 406, which was concerned with the authority's duty of inquiry in a homelessness case. Neill L.J. said at 415:
"The court should not intervene merely because it considers that further inquiries would have been sensible or desirable. It should intervene only if no reasonable housing authority could have been satisfied on the basis of the inquiries made."
36 In my judgment, subject to Mr Luba's argument on oppression which is free-standing, these materials demonstrate that the court would only strike down the policy denying any opportunity to view and comment if it were satisfied that no reasonable council charged with Pt VII responsibilities would fail to accord such an opportunity, because if that were not given they would condemn themselves to a further failure, namely a failure properly to apprise themselves of factors relevant to a decision on suitability.
37 If that is the right approach, the view that no reasonable council would fail to accord such an opportunity is in my opinion entirely unsustainable. First, I am clear that the applicant's subjective view of suitability is not a factor which a reasonable council is obliged in principle to regard as relevant to their decision. R v Wycombe DC Ex p. Hazeltine (1993) 25 H.L.R. 313, cited at para.14.2 of Mr Luba's skeleton argument, is nothing to the contrary: that was a case in which the authority *325 made an offer without waiting for admittedly relevant material (forthcoming medical evidence which the council's officer had herself suggested be obtained).
38 Although they were canvassed in the context of counsel's submissions relating to the Secretary of State's guidance, with which I have yet to deal, it is appropriate here to refer to Parr v Wyre Borough Council 2 H.L.R. 71. (1982) and R v London Borough of Wandsworth Ex p. Lindsay 18 H.L.R. 502. (1986), which were decided under the predecessor legislation. In Parr Lord Denning M.R. referred at pp.78-9 to para.2-21 of the then Code of Guidance:
"It says:
'This need [to consult other authorities] need not prevent arrangements being made, taking full account of the wishes of the applicant, for another authority to take responsibility for him.'
That imports that the wishes of the applicant are to be taken into account."
In Ex p. Lindsay Simon Brown J. as he then was said this at p.507:
"[ Parr] continues to be of relevance since it has been overruled [sc. implicitly by the decision of their Lordships' House in Ex p. Puhlhofer[1986] A.C. 484 only on the point as to the appropriateness of the accommodation offered and not upon the second question which was also considered by the Court of Appeal as to the applicant's entitlement to be given a proper opportunity of considering the offer, both by being told sufficient details about the premises and by being given time to take a decision."
I would disavow the proposition, so far as it is advanced, that the reasoning in these cases suggests (whether by force of public law principle, or of the words of the legislation or the guidance) that the applicant's subjective views on suitability are in truth a compulsory relevant factor in the authority's process of decision. The distinction between such a proposition and the notion that the applicant's preferences must be taken into account is fragile to the point of disappearance. No doubt, where an authority operates a procedure by which an applicant is in fact afforded an opportunity to view and comment, it would be difficult to see how the authority might then rationally decline to consider what the applicant had to say. Of course I do not suggest that the applicant's views are not capable of being treated by a reasonable authority as relevant to its decision. I hold only that they are not required by law to be so treated.
39 Moreover the cases of Parr and Lindsay preceded the introduction in February 2002 of the right of review provided by s.202(1A), which in my judgment has an important bearing on the propriety of the Council's insistence upon a decision from the applicant then and there at the interview. I will deal with that aspect more fully in addressing Mr Luba's argument on oppression at para.41.
40 More generally, the procedures which the Council have in place, and which I have described, for obtaining information that is relevant in each case to the issue of suitability cannot be categorised as so inadequate as to violate the common law standard of rationality. The procedures are obviously not perfect. A more intensive fact-gathering exercise would or might well have picked up the problems (to put it mildly) associated with locating Ms Khatun's accommodation above a public house. And Mr Underwood accepted that there would be no particular difficulty in identifying the address of the property in the appointment letter. But the court has no role to impose what it perceives as ideal solutions under cover of the Wednesbury principle's application. And the Council is entitled -- I would incline to say obliged -- to adopt procedures which balance the interests of the individual applicant, who has no relevant rights but what the statute gives him, with the general interest in the scheme's efficient administration, which should so far as possible be economic and expeditious.

(8) Conclusions on the First Issue: (b) Oppression?

41 Clearly a public body may choose to deploy powers it enjoys under statute in so draconian a fashion that the hardship suffered by affected individuals in consequence will justify the court in condemning the exercise as irrational or perverse. That is of course the language of Wednesbury, as I have said. It may well be that the court's decision in such cases today would more aptly be articulated in terms of the proportionality principle; indeed, as likely as not one or other of the guarantees secured in the European Convention on Human Rights ("ECHR") would be engaged, although in this case Mr Luba has not advanced any claim distinctly grounded in the Human Rights Act 1998. At all events it is plain that oppressive decisions may be held repugnant to compulsory public law standards. I need not lengthen this judgment by setting out instances.
42 Where such an argument is raised, its force has to be assessed in the context of the statutory scheme in question. The statute is no less the starting-point here than it is, as I have held, for the earlier questions as to a right to view and comment. Now, it is I think obvious that the fact or threat of instant cancellation of the applicant's bed and breakfast accommodation in the event that he does not accept the offered PSL property then and there operates, or at the very least may operate, to put pressure on the applicant to sign up. The judge was offended (para.38 of the judgment) by what he saw as a deprivation of "the same degree of freedom to contract as would have unhesitatingly been accorded ... to others". But this betrays, as in my judgment the whole of this part of the argument betrays, an implicit failure to recognise and respect essential characteristics of the scheme. Of course it is for the applicant to choose whether to accept the offered property, and in that sense he is free to contract or not. But he and the Council are not, even notionally, parties in a like bargaining position. In particular there is nothing in the statute to confer on him the enjoyment of any choice as between one property and another. It is the Council's view of what is suitable that is determinative. I have already held (para.38) that the applicant's view of suitability is not a factor which a reasonable council is obliged to regard as relevant to their decision.
43 The applicant enjoys important protections. Under s.202(1)(f) and (1A) of the 1996 Act he has a right of review of the suitability of the accommodation offered whether or not he has accepted the offer. If, then, under pressure of the threat that his bed and breakfast accommodation will be cancelled, he accepts the offered accommodation against his own wishes, he is not fixed with it. The right of review, which of course is internal to the Council, is given objective force by the right of appeal to the county court on a point of law under s.204: a statutory form of judicial review. And judicial review in the High Court remains available where that is a proper and appropriate recourse.
44 Finally, it is evident (in contrast to Carnwath J.'s case, Ex p. Shelter) that we are not here confronted with a state of affairs in which the Council proposes, as it were, to put the applicant on the street with no options. As I have said he can accept the offered property and seek a review. In the nature of things the offered property (whatever complaint may be made about it) is likely to be better suited to the applicant's needs and those of his family than the bed and breakfast accommodation where he has so far been housed. I have heard nothing to suggest that the observations in the Secretary of State's guidance accompanying the Order made on December 19, 2003, which I have set out at para.10, does anything but reflect a true state of affairs.
45 In all these circumstances I do not consider it oppressive or perverse, or disproportionate to the purpose in question (which must be the fair and efficient administration of the scheme), for the Council to require an applicant who has not viewed the offered property to decide whether or not to accept it on pain of his bed and breakfast accommodation being cancelled then and there if he does not.
46 I should add that I have entertained some doubt as to whether, in any event, any of these respondents should have been accorded standing to challenge the Council's policy distinctly on grounds of its being oppressive. It is in my judgment plain that on the facts they have not been victims of anything that might reasonably be called oppression at the Council's hands. As I have explained (paras 17 and 18) neither Ms Zeb nor Ms Iqbal was evicted from her temporary accommodation upon her refusal to accept the offered property. Ms Khatun signed the tenancy agreement on the occasion of her interview. But that is not the length of it. In each of the three cases, before the appointment letter was sent, the solicitors wrote to the Council complaining in forceful language of the hardship suffered by the respondents by their being beleaguered in bed and breakfast accommodation: from which, of course, they might enjoy immediate relief when in each case the PSL property was offered. However, no point as to standing was argued before us. I have concluded that it would not be right for the court to take such a point now to the respondents' prejudice. In any case the questions arising on this part of the case are not without some general importance.

(9) Conclusions on the First Issue: (c) the Secretary of State's Guidance

47 Although the guidance is provided for by statute and housing authorities are obliged by s.182 of the 1996 Act to have regard to it, it is not a source of law. However Mr Luba cited in his skeleton (para.22) the decision of Dyson J. as he then was in R v North Derbyshire Health Authority Ex p. Fisher (1997-8) 1 C.C.L.R. 150to support the proposition that an authority is not entitled to depart from guidance given in a circular issued by central government, to which it is obliged by statute to have regard, merely because it disagrees with it. But this case, I think, goes no further than to underline what is conventional law, namely that respondents to such a circular must (a) take it into account and (b) if they decide to depart from it, give clear reasons for doing so. If the decision is thought to support a proposition which would bind public bodies more tightly to a duty of obedience to guidance to which by statute they are obliged (no more, no less) to have regard, then I would respectfully question its correctness.
48 I have set out (para.9) the material provisions in the guidance. The critical paragraph is 9.12 of the guidance text, not least the opening words: "Housing authorities must allow applicants a reasonable period for considering offers of accommodation ..." Mr Luba says that the Council's policy represents a wholesale and (I am sure he would add) insufficiently reasoned departure from this approach. He says that this is demonstrated by the Council's Detailed Grounds of Defence in the Khatun case, where it was stated (para.13):
"Obviously, Newham is conscious of the Code of Guidance, and has regard to it. Nevertheless, having regard also to the need to move families from bed and breakfast, it considers its current practice to be preferable to the one advocated by the Code. The current Code was published in July 2002, when the state of the law was that local housing authorities were under no obligation to offer applicants a review if they accepted the property."
For good measure Mr Luba submits that this last sentence is mistaken: the right of review given by s.202(1A) of the 1996 Act had effect from February 2002. As a matter of fact, that is quite right.
49 Mr Underwood drew particular attention to the focus of the guidance upon the making of offers under Pt VI of the 1996 Act (para.9.11, but also 9.12: "... particularly final offers made under Pt 6"). Part VI, as I have said, contains measures which condition the allocation of social housing in the ordinary way by local authorities. I understood Mr Underwood to suggest that the guidance's commendation of "a reasonable period for considering offers of accommodation" was put forward essentially in relation to offers under Pt VI which, though they represent a means of fulfilling the Pt VII duty (see s.193(3A), (6)(c), (7), (7F) and (8)), are not its paradigm case. So far as it goes that is right. But as its title shows the guidance is firmly concerned with the responsibilities of housing authorities generally under Pt VII, and it is not clear to me why an applicant should have longer to reflect on an offer made under Pt VI in fulfilment of the Pt VII duty than one made pursuant to any other legitimate Pt VII avenue. I do not consider that the guidance can be sidelined quite as Mr Underwood would propose; and the Council's policy indeed represents a departure from its recommendations as regards the time for reflection to be accorded to Pt VII applicants.
50 But the reason for the departure is perfectly clear. It is the goal of getting families out of bed and breakfast accommodation as quickly as possible, itself vouchsafed by the Secretary of State's Order and further guidance made and given in December 2003. That is a perfectly lawful goal, and the Council's aspiration to it cannot in my judgment be criticised by reference to any suggested legal constraints touching the guidance. In consequence the policy is not to be struck down for want of compliance with the guidance, nor for want of sufficient reason for failure to comply.
51 For all these reasons I would conclude the first issue in favour of the appellant Council.



The Second Issue

52 As I have foreshadowed in para.3, there are really three questions here, as follows. (1) Do the Directive and the Regulations apply to contracts relating to land (that is, contracts for the disposal of an interest in or rights of occupation over land)? (2) Do the Directive and the Regulations apply to public authorities such as the Council? (3) Is the Council a "seller or supplier" and are the respondents "consumers" within the meaning of the Regulations and the Directive? The starting-point for consideration of these questions is the relevant legislative and ancillary materials. I shall first set out those which bear on the first of these three questions: beginning with the Directive itself.

---------------------------

(1) The Directive

53 The Directive was adopted pursuant to Art.100a of the Treaty (now Art.95). In light of some aspects of the argument, it is necessary to cite Art.100a to this following extent:
"1. ... The Council shall ... adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.
2. Paragraph 1 shall not apply to fiscal provisions, to those relating to the free movement of persons nor to those relating to the rights and interests of employed persons.
3. The Commission, in its proposals envisaged in paragraph 1 concerning health, safety, environmental protection and consumer protection, will take as a base a high level of protection, taking account in particular of any new development based on scientific facts. Within their respective powers, the European Parliament and the Council will also seek to achieve this objective."
54 Much reference was made in the course of argument to the recitals in the Directive's preamble. It is a theme of Mr Underwood's submissions for the Council that phrases such as "goods and services" and "sellers of goods and suppliers of services" (used in the Directive and, as I shall show, elsewhere) suggest a legislative intention to exclude transactions in land from the regime in hand. I will come later to the significance of these expressions, not least the repeated references to "goods and services". It is enough for the purpose of introducing the Directive to indicate that this form of words frequently appears in the recitals; I need not cite examples merely to demonstrate the fact. At this stage I will set out only the following excerpts from the recitals (to which I have attributed numbers for convenience):
"(8) Whereas the two Community programmes for a consumer protection and information policy underlined the importance of safeguarding consumers in the matter of unfair terms of contract ...;
(9) Whereas in accordance with the principle laid down under the heading 'Protection of the economic interests of the consumers', as stated in those programmes: 'acquirers of goods and services should be protected against the abuse of power by the seller or supplier, in particular against one-sided standard contracts and the unfair exclusion of essential rights in contracts';
(10) Whereas more effective protection of the consumer can be achieved by adopting uniform rules of law in the matter of unfair terms; whereas those rules should apply to all contracts concluded between sellers or suppliers and consumers; whereas as a result inter alia contracts relating to employment, contracts relating to succession rights, contracts relating to rights under family law and contracts relating to the incorporation and organization of companies or partnership agreements must be excluded from this Directive ..."
55 Now I may turn to the executive text of the Directive. Here are the material provisions:

"Article 1

1. The purpose of this Directive is to approximate the laws, regulations and administrative provisions of the Member States relating to unfair terms in contracts concluded between a seller or supplier and a consumer.
...

Article 2

For the purposes of this Directive:
...
(c) 'seller or supplier' means any natural or legal person who, in contracts covered by this Directive, is acting for purposes relating to his trade, business or profession, whether publicly owned or privately owned.

Article 3

1. A contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties' rights and obligations arising under the contract, to the detriment of the consumer.

Article 6

1. Member States shall lay down that unfair terms used in a contract concluded with a consumer by a seller or supplier shall, as provided for under their national law, not be binding on the consumer and that the contract shall continue to bind the parties upon those terms if it is capable of continuing in existence without the unfair terms."

(2) The Regulations

56 The only vires cited in the preamble to the Regulations is s.2(2) of the European Communities Act 1972. Thus the Regulations purport to do no more nor less than constitute the transposition of the Directive's requirements into the law of the United Kingdom. Accordingly their scope is to be determined by reference to the scope of the Directive. So much, I understand, is uncontentious. There being no debate as to the legal efficacy of the Directive's transposition into domestic law, it follows that nothing turns on the words of the Regulations. I will merely note these features of the Regulations for completeness. First, para.3(1) contains a definition of "seller or supplier" which precisely follows the language of the Directive. Then para.4(1) provides:
"These Regulations apply in relation to unfair terms in contracts concluded between a seller or a supplier and a consumer."
Paragraph 5 (and more particularly Sch.2, given effect by para.5(5)) makes provision for rules and instances by reference to which a contractual term will fall to be treated as unfair. The instances given are, in the inelegant language of para.5(5), "non-exhaustive". I need not set them out. Paragraph 6(1) provides:
"... the unfairness of a contractual term shall be assessed, taking into account the nature of the goods or services for which the contract was concluded and by referring, at the time of conclusion of the contract, to all the circumstances attending the conclusion of the contract and to all the other terms of the contract or of another contract on which it is dependent."
57 Mr Green and Mr Underwood are agreed upon the proposition (which I take to be elementary) that the Directive must be construed purposively. As to what the purpose is, while Mr Underwood submitted (para.36 of his skeleton argument) that "[t]he Council intended to introduce minimum standards of fairness into contracts between providers of goods and services on the one hand and consumers on the other, in order to further competition", he did not, I think, cavil at Mr Green's broad argument that the Directive's dominant purpose is that of consumer protection. Nor could he: the terms of Art.100a(3) of the Treaty, and of recitals (8), (9) and (10) in the Directive's preamble, as well as other texts to which we were referred, put the matter beyond doubt. Where counsel differed, of course, was upon the question whether the protection secured by the Directive extends to contracts for the transfer of interests in land. Mr Green and Mr Underwood both rely on materials aside from the Directive itself (including other legislation) to make good their respective positions. I will refer to some of these before confronting the arguments. First among them are documents which form part of the travaux preparatoires of the Directive. As such they are of course ordinary aids to its interpretation.

(3) The Community Programmes of 1975 and 1981

58 These are the programmes referred to in recitals (8) and (9) in the Directive's preamble. The first provided for a "preliminary programme ... for a consumer protection and information policy", and the second sought to continue the work of the first, which had been set to run for only four years. Mr Underwood drew attention to the language of various provisions in these documents to show their emphasis on the protection of consumers of "goods and services". He pointed to references to "consumer durables". He submitted that Art.19 of the 1975 programme uses the term "products" interchangeably with "goods". He referred to the expression "improved consultation between consumers on the one hand and manufacturers and retailers on the other" in Art.1(2) of the 1981 programme. It is I hope no injustice to Mr Underwood's clients if I do not set out these texts. I should say that there is no explicit reference in the programmes to transactions in land.

(4) The Draft Proposed Directive and the Opinion of the Economic and Social Committee

59 The Commission put forward a draft directive on September 3, 1990. This is one of the places for Mr Underwood's submission, here in particular by reference to Art.4, that the language is that of "goods and services". I need not however set out any part of the text of the draft directive save Art.1:
"The purpose of this Directive is to approximate the laws, regulations and administrative provisions of the Member States relating to unfair terms in consumer contracts."
60 There is then the Opinion of the Economic and Social Committee ("ECOSOC"). This document is by way of a commentary on the Commission proposal. Paragraph 2.2.2 is of interest:
"The Committee recognizes the need for a European instrument intended to restore some balance in consumer contracts. A fear is expressed in some circles as to the negative impact of the directive on the industrial, commercial and other professional sectors, the Committee's reaction is that:
. The directive will not constitute a major departure from the law of contract in nine Member States (United Kingdom, France, Germany, the Netherlands, Spain, Portugal, Ireland, Denmark, Luxembourg), whose legislations related to unfair contract terms contain principles which are very close to those of the directive, and which already apply to the contracting parties in these States,
. The directive will not introduce dramatic changes in contract law in the three Member States (Belgium, Italy, Greece) where no specific legislation exists, as in these countries case-law already, even if sometimes with hesitation, penalizes unfair contract terms."
Then at 2.3.1 ECOSOC says this:
"According to the Commission proposal, the Directive applies to all consumer contract terms, be they standard or individually negotiated ..."
Finally, 2.8.4:
"The Committee invites the Commission to carefully revise the drafting of the different language versions of the annex, because many of the notions are not sufficiently clear and give rise to major difficulties of interpretation."
The annex referred to appears at the end of the draft directive and consists of a list of terms or types of terms which will be taken to be unfair. Mr Underwood says that if it had been intended that the Directive should cover transactions in land ECOSOC could and would at this point have picked up a difference, which is relied on before us by Mr Green, between the English "goods" and the French "biens" (the latter is said to include land). I shall deal with that when I confront the arguments.

(5) The Explanatory Memorandum

61 This is a substantial document which was presented by the Commission on September 3, 1990 accompanying its proposal for an unfair contract terms directive. Both counsel relied on it. I must set out or summarise certain passages. Mr Green drew particular attention to the text's first paragraph (p.2 of the document) where this appears:
"It cannot be assumed that consumers who cross frontiers to buy goods or services, or to invest or acquire property in other Member States, have understood and agreed the terms of a contract they have made, if they do not speak the local language or are unfamiliar with the local law ..." (my emphasis)
Then at pp.2-3:
"Turning to the substance of the proposal, Article 1 defines its scope as including every contract between a consumer and a party acting in the course of his trade, business or profession ..."
It will be seen that there is some difference in the language of Art.1 of the draft directive and Art.1 of the Directive as it was made, both of which I have set out. I would observe at this stage that this comment of the Commission, at pp.2-3 of the Explanatory Memorandum, applies with like force to both texts.
62 Mr Underwood was again able to point to numerous references, in the text of the Explanatory Memorandum, to "goods and services". He also referred to the document's quite extensive discussion of the national laws of the Member States, and in particular the absence of any comment in the section dealing with the law of the United Kingdom (pp.47-53) upon the fact that our domestic legislation on unfair terms (principally, of course, the Unfair Contract Terms Act 1977) does not extend to transactions in land; whereas there are two references (pp.3 and 63 bis) to the exclusion of insurance contracts from the application of the 1977 Act. I should notice also that the discussion of German law (pp.18-20) contains no reference to the fact (as we were told is the case) that the unfair terms provisions in that jurisdiction do extend to contracts for the transfer of interests in land.
63 Lastly I should set out this passage, relied on by Mr Underwood (p.13):
"But we are very far away from large-scale harmonisation. The time is not ripe for approximating or unifying the national laws relating to the whole field of contractual and quasi-contractual obligations or even to the limited sphere of the sale of goods and provision of services. The most positive step that the European Community can at present take in this important branch of the law ... is:
. to eliminate unfair terms in contracts concluded with consumers, by specifically identifying certain terms which should never be used in such contracts, and
. to fix the basic minimum obligations which in every Member State the consumer should reasonably be able to require the seller of goods or services to satisfy when selling to the consumer."

(6) Two Other Directives

64 So much for the travaux preparatoires of the Directive. I should notice that Mr Underwood also referred to the European Parliament's proposals for amendments to the Directive, which no doubt also form part of the travaux; but that text did not seem to me to offer any assistance. However we have also heard submissions based on provisions contained in other legislation, namely Directive 85/577/EEC ("the Doorstep Selling Directive") and Directive 97/7/EC ("the Distance Selling Directive").
65 These two directives are concerned in different ways, as their names suggest, with the protection of consumers who enter into contracts with traders, and so of course is the Directive. Article 3(2) of the Doorstep Selling Directive (whose recitals refer to the 1975 programme) provides in part:
"This Directive shall not apply to:
(a) contracts for the construction, sale and rental of immovable property or contracts concerning other rights relating to immovable property ..."
66 The Distance Selling Directive was made under the same EU vires as the Directive, that is to say Art.100a of the Treaty (now Art.95), and also was adopted pursuant to the 1975 programme. Article 3 is headed Exemptions and provides in part:
"1. This Directive shall not apply to contracts:
…
. concluded for the construction and sale of immovable property or relating to other immovable property rights, except for rental ...
2. Articles 4, 5, 6 and 7(1) [dealing with specific matters, such as the right to be provided with certain information before the conclusion of a distance contract] shall not apply:
...
. to contracts for the provision of accommodation ..."
67 Mr Green makes the obvious point (it may be none the worse for that) that these texts suggest an approach to drafting on the part of the Community legislators in this field of consumer protection whereby land transactions will be taken to be covered by the measure in question unless expressly excluded.

(7) Arguments from Language

68 It is elementary that all the languages in which EU texts are officially published are equally authoritative for the purpose of the texts' interpretation. Here, Mr Green points in particular to the use of the French "biens" for what in the English versions are referred to as "goods" in the expression "goods and services" (or "goods or services"). "Biens", says Mr Green, in French includes or may include immovables. So much is demonstrated by Art.516 of the French Civil Code and is not, I think, sought to be contradicted by Mr Underwood. The same is true of "beni", "bienes", and "bens" respectively appearing in the Italian, Spanish and Portuguese texts. Mr Green says also that where a French text makes reference specifically to the free movement of goods (which obviously excludes land) the word "marchandises" is used, and again there are analogues in the Italian, Spanish and Portuguese texts.
69 I should notice that where the English text of the Explanatory Memorandum has on p.2, in a passage which I have already cited, "to buy goods or services, or to invest or acquire property in other Member States", the French text (helpfully supplied by the Treasury Solicitor since the hearing) has "pour acheter des biens ou des services, ou pour investir ou acquerir une propriete", which might suggest a distinction between "biens" (goods) and "propriete" (a piece of land). But in my judgment no such distinction can have been intended. The reference to the acquisition of property appears in the Commission's general explanation of the reasons for the Directive, and thus lends significant support to the view that land transactions are included. The choice of words in which to express that very reference cannot sensibly be held to point in the opposite direction.
70 Mr Green has a further point on the language, rather more indirect but not without some force. The English language version of the first sentence of Art.1 of the First Protocol ECHR is in these terms:
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions."
It is well settled that the Article covers all property rights, movable and immovable alike. The French text has "biens" where the English has "possessions". The law of the European Union is generally to be understood and applied conformably with ECHR.

(8) Case Law

71 There is little assistance to be had from the cases. In Starmark Enterprises Ltd v CPL Distribution Ltd [2002] 4 AER 264 Arden L.J. assumed that the Regulations applied to land transactions. She stated (ibid., para.70):
"It is relevant, however, to note that the lease is made between two commercial parties. If the tenant had been a consumer and the provisions for review of rent had not been individually negotiated ..., it would be open to the tenant to argue that, by virtue of the Unfair Terms in Consumer Contracts Regulations 1999 ..., the provisions of proviso (2) are not binding on him."
But the applicability of the Regulations to land transactions was not an issue that fell for judgment in that case. There are two decisions of county courts, and one of a High Court master in Northern Ireland, in which (as I read them) it was also assumed that in principle the Regulations do so apply. I mean no disrespect if I do not set out these materials.
72 Although it also involved an assumption as to the Directive's scope, rather than reasoning to demonstrate it, it is appropriate to refer to the Opinion of the Advocate General in Freiburger Kommunalbauten (Case C-237/02) which was presented on September 25, 2003 (So recently that there is not yet an official English text; we have the original in French, and a translation helpfully provided by the OFT). The case proceeded by way of an application by the German national court for a preliminary ruling as to the compliance or otherwise with Art.3(1) of the Directive of a clause in a contract for the sale of a garage space in a car park yet to be built. As Mr Green submits (para.49 of his skeleton argument) it is clear that the substantive question falling for decision was whether it was for the national court or the Court of Justice to apply the test of fairness under the Directive: it was common ground (and thus not, so far as I can gather, the subject of argument) that a contract for the sale of an interest in land was within the Directive's scope. The judgment of the Court of Justice is still awaited.
73 Mr Green referred also to the CLAB Europa database. This is a publicly accessible resource compiled by the Commission. It contains data concerning the Directive's application in the Member States. It provides references to many decisions of regulatory bodies dealing with complaints of unfair terms in land transactions.

(9) Other Materials

74 The Commission considers that the Directive applies to land transactions: see the Commission's Report of April 27, 2000 "On the Implementation of Council Directive 93/13/EEC ..." p.46, referring to Graphs 14A and 14B which "concern real estate". The Department of Trade and Industry takes a like view, as appears from para.11 of the Regulatory Impact Assessment which it produced before the introduction of the Regulations. It was there stated that amendments to the text of the predecessor regulations of 1994 were
"intended, in particular, to remove any uncertainty that the Regulations are not capable of applying to contracts relating to land to the extent that the Directive does so. Some of the most vulnerable consumers live in rented accommodation and there is much evidence of exploitation and onerous conditions imposed by landlords. Rent and related landlord charges are large elements of the total expenditure of most tenants. Removing unfair terms in tenancy agreements would improve the rights of tenants."
As the judge noted (paragraph 54 of his judgment), the proposed amendments to the regulations of 1994 had in fact been prompted by the Commission.
75 Lastly, there is material before us (referred to by Mr Green at para.56 of his skeleton argument) to show that the Office of the Deputy Prime Minister and the Housing Corporation adopt a like approach.
76 It is right that in its search for a purposive construction of the Directive the court should consider all these materials; though we must with respect not forget that neither the Commission, the Department of Trade, the Deputy Prime Minister nor the Housing Corporation is a source of law as to the Directive's true interpretation.

(10) Conclusions on the Second Issue: (a) Do the Directive and the Regulations apply to contracts relating to land?

77 The starting-point for the resolution of this question is in my judgment the nature of the Directive's dominant purpose: as I have already said, that of consumer protection. In particular I have in mind the terms of Art.100a(3) of the Treaty, "[t]he Commission ... will take as a base a high level of protection". It is plainly to be assumed that in framing the Directive the Community legislator intended to carry this purpose into effect. On this basis, one would expect transactions in land to fall within the Directive's scope. Some tenants or prospective tenants are especially vulnerable people. For most consumers the acquisition of a home, rent or buy, is a key event in their lives. If the home is bought rather than rented it will most likely be the biggest purchase the buyer has so far ever made. I recognise of course that sales of private houses are most often effected between consumers, rather than between a consumer and a trader. But not all are. And it is commonplace that tenancies are let by landlords who are in business as such. In consequence I am unable to perceive any rationale for the exclusion of land transactions from the Directive's scope. Such an exclusion would cut across the grain of the legislation's aim to provide "a high level of protection". I agree with Mr Green that one would expect to find such an exclusion expressly provided for; and it is not to be found.
78 As for the bite of the various materials I have cited, I consider that the OFT had the better of the argument. First, Mr Underwood's seemingly strong point on the language --that "goods and services" does not include land--is effectively demolished by the impact of the other language texts. "Biens" and its cognates in Italian, Spanish and Portuguese refer to immovables as readily as movables. This alone undercuts a good deal of what Mr Underwood had to say. But more than this: I think, with respect to Mr Underwood, that other aspects of his submissions on this part of the case place an implicit but illegitimate reliance on the large divide in the law of England between real and personal property. He submitted that the Directive should be interpreted as only applying to "contracts for goods and services as an English lawyer would understand those terms". There is plainly no general principle to support such a proposition. Quite the contrary: European legislation has to be read as a single corpus of law binding across the Member States. And the proposition leads to absurdity. A licence of land, which transfers no estate, might be covered by the Directive (as the provision of a service), but a lease or tenancy would not. The sale of a fixture, which by English law is treated as part of the land, would be excluded, but the sale of an identical object--say a statue--which was not fixed to the land would be included. In our domestic law these distinctions have a long history and a present utility. In the context of a Europe-wide scheme of consumer protection, they could be nothing but an embarrassing eccentricity.
79 In fairness Mr Underwood did not at all suggest that his putative conformity between the scope of the Directive and the law of England relating to goods and services was supported by any general principle whatever. But in that case, if his approach is to be made good, it must find some positive support in the text of the Directive or other relevant materials.
80 In my judgment, once one discounts Mr Underwood's argument from language, no such support is to be found and such indications as there are in fact favour the inclusion of land transactions. In particular there are features in the travaux which suggest that the Community legislator attached no significance to the difference between land and other transactions, and proceeded on the basis that the Directive would apply to both. I have already set out Art.1 of the draft directive and the statement in the Explanatory Memorandum (pp.2-3) that the Article defines the measure's scope as including every contract between a consumer and a party acting in the course of his trade. I draw attention also to the reference to investment and the acquisition of property at p.2 of the Memorandum. Taken together these references powerfully suggest that the proposal was to cover all consumer contracts whatever their subject-matter; if there were to be exclusions, they would be specifically provided for. (And that, in my judgment, is precisely what was done in the Doorstep Selling and Distance Selling Directives: I would reject Mr Underwood's submission that the provisions there contained which I have set out do other them evince a legislative intention to exclude land transactions.)
81 There is then the absence from the Explanatory Memorandum of any reference either to the exclusion of land transactions from the British consumer protection legislation, or to their inclusion in the German legislation. That, as it seems to me, sits alongside the fact that in para.2.2.2 of the ECOSOC Opinion the laws of Germany and the United Kingdom (and seven other Member States) are, if I may use the phrase, lumped together for all the world as if there were no significant differences between them; and in my judgment, from the perspective of the Community legislator there were not.
82 Once it is appreciated that any difference between transactions in land on the one hand, and goods and services (as those terms are understood in this jurisdiction) on the other, simply raised no issue for the Directive's drafters, there is nothing left in the text of the travaux to assist Mr Underwood. Nor in the other materials to which I have referred. And while there is plainly no authority, domestic or European, which binds this court to conclude in Mr Green's favour, the learning such as it is points in that direction.
83 In my judgment, then, the Directive and the Regulations apply to contracts relating to land. I turn to the next question arising on the second issue, namely whether the Directive and the Regulations apply to public authorities such as the Council. More accurately, the question should be whether the measures apply to the Council vis-à-vis its functions under Pt VII of the 1996 Act. I can deal with this more shortly, there being in my view little scope for argument on the point. I will first set out selected materials which bear on the question.

(11) The Directive: Two Further Recitals

84 Recitals 14 and 16 are material to this part of the case:
"(14) Whereas Member States must however ensure that unfair terms are not included, particularly because this Directive also applies to trades, business or professions of a public nature;
...
(16) Whereas the assessment, according to the general criteria chosen, of the unfair character of terms, in particular in sale or supply activities of a public nature providing collective services which take account of solidarity among users, must be supplemented by a means of making an overall evaluation of the different interests involved ..."

(12) Case Law

85 In Town Investments Ltd [1978] A.C. 359 their Lordships' House held that the occupation of premises by civil servants for the purpose of carrying out their public duties amounted to a "business" within the definition of "business tenancy" contained in subordinate legislation, "since the meaning of 'business' in the context of the 1972 Order and bearing in mind the object of the counter-inflation legislation, was wide enough to include the business of government carried on by the Crown" (ibid., headnote). Lord Diplock said (383C-D) that "[t]he word ' business' is an etymological chameleon; it suits its meaning to the context in which it is found".
86 In Bettercare Group Ltd [2002] CAT 7 the Appeal Tribunal of the Competition Commission had to consider whether a statutory entity, the North and West Belfast Health and Social Services Trust, which in the course of its statutory functions purchased nursing care services provided at two centres operated by Bettercare, constituted by virtue of those functions an "undertaking" so as to be subject to the prohibition of abuse of a dominant position in a market enacted in s.18(1) of the Competition Act 1998. Giving the judgment of the Tribunal Sir Christopher Bellamy undertook a detailed and wide-ranging review of the material European authorities. Although since the hearing we have been provided with full reports of all the cases cited by Sir Christopher, for my part I will only refer to three. In Hofner & Elser [1991] E.C.R. I-1979 the Court of Justice said this (paragraph 21 of the judgment):
"It must be observed, in the context of competition law, first that the concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed ..."
87 This statement, as Sir Christopher's overview shows, has been repeated many times in the cases. But it does not address the question what constitutes an economic activity for the purposes of the competition rules. In his opinion in Albany International [1999] E.C.R. I-5751 Advocate General Jacobs said this:
"214. [after citing Hofner and other cases] The rationale underlying those cases is that the entities under scrutiny are fulfilling the ' function' of an undertaking. The application of Articles 85 and 86 [sc. of the Treaty] is justified by the fact that those public bodies or individuals are operating on
...
311. As already stated, the Court has generally adopted a functional approach. The basic test is therefore whether the entity in question is engaged in an activity which could, at least in principle, be carried on by a private undertaking in order to make profits."
The kind of case in which the entity's function may be held not to amount to an economic activity is exemplified by Poucet and Pistre [1993] E.C.R. I-637. There, two organisations managed compulsory social welfare schemes. The levels both of the contributions required to be made to the organisations, and of the benefits provided, were under the control of the public authorities. In its judgment the Court of Justice said this:
"8. Those schemes pursue a social objective and embody the principle of solidarity.
9. They are intended to provide cover for all the persons to whom they apply, against the risks of sickness, old age, death and invalidity, regardless of their financial status and their state of health at the time of affiliation.
...
18. Sickness funds, and the organisations involved in the management of the public social security system, fulfil an exclusively social function. That activity is based on the principle of national solidarity and is entirely non profit-making. The benefits paid are statutory benefits bearing no relation to the amount of the contributions.
19. Accordingly, that activity is not an economic activity and, therefore, the organisations to which it is entrusted are not undertakings within the meaning of Articles 85 and 86 of the Treaty."

(13) Conclusions on the Second Issue: (b) Do the Directive and the Regulations apply to public authorities such as the Council?

88 It is to my mind plain beyond doubt that the Council is not taken out of the Directive's scope by reason only of the fact that it is a public or governmental body. Such a conclusion is not only strongly suggested by the Hofner line of reasoning in the competition cases. It is also I think lent force by the two further recitals from the Directive's preamble which I have set out, and, for good measure, the expression "whether publicly owned or privately owned" in Art.2(c). The true question here is analogous to that arising in Bettercare relating to "economic activity": do the Council's Pt VII functions fall within the meaning of "trade, business or profession" in Art.2(c)?
89 I have no doubt but that the answer to this question is Yes. The Pt VII functions centrally involve the grant of a tenancy for rent. This is obviously "an activity which could ... be carried on by a private undertaking in order to make profits". It is so carried on by private undertakings every day.
90 In the course of his reply Mr Underwood sought to make something of the fact that the Council does not act under considerations of commercial choice but is obliged to provide accommodation to applicants if the conditions prescribed by statute are met. That is plainly so. However the nature of the activity which the Pt VII function produces--the grant of a tenancy for rent--remains one which could be (and is, all the time) carried on by private undertakings in order to make profits. But there is a deeper point. Mr Underwood might be on firm ground if he were able to show that the public interest in the integrity of the domestic statutory scheme in question would be undermined by the application of the Directive's discipline. A like consideration was, as I understand it, the focus of the decision in Poucet and Pistre in the competition field. In that case the public interest in the social welfare scheme's "national solidarity" was not compatible with the rigours of the competition regime. But in this case, there is no such point to be made. How could the Pt VII function be undermined by an insistence on fair contractual terms? It could not. Fair contractual terms run with, not across, the grain of good administration in this field. In my judgment therefore Mr Underwood is not supported by the circumstance that the Council is obliged to provide accommodation to applicants where the conditions prescribed by Pt VII of the 1996 Act, notably s.193, are met.
91 I should notice that the duty under s.193(2) to "secure accommodation" does not in any event necessarily require the Council to contract with the applicant. The contract may be entered into between the applicant and a third party if the housing authority has exercised its power in that behalf arising under the Local Authorities (Contracting Out of Allocation of Housing and Homelessness Functions) Order 1996. Pursuant to the Order, the Council has contracted out the provision of bed and breakfast accommodation under s.188 and s.193(2) of the 1996 Act. I make it clear, however, that my decision on this part of the case does not at all depend on the power to contract out. In my judgment the Council's execution of its Pt VII functions falls in any event within the meaning of "trade, business or profession" in Art.2(c) of the Directive.

(14) Conclusions on the Second Issue: (c) Is the Council a "seller or supplier" and are the respondents "consumers" within the meaning of the Regulations and the Directive?

92 Given all I have said so far on the second issue, the answer to this question is so plainly in the affirmative as to require no further reasoning.
93 I would accordingly allow the appeal in part, so far as it relates to what I have called the first issue. I would uphold the judge on the second issue.

Mr Justice Wilson:

94 I agree.

Lord Justice Auld:

95 I also agree.