Clays Lane Housing Co-Operative Ltd, R (on the application of) v Housing Corporation

Proportionality under article 1 of the First Protocol is context-sensitive. Where a statutory regulator has lawfully decided that property must be transferred and must choose between two proposed transferees, it must strike a fair balance. Its choice must be supported by a compelling public-interest case and be reasonably necessary, but need not invariably be the least intrusive option.

Procedural fairness requires the regulator to disclose material concerns and consider representations. It does not necessarily require a separate meeting. A mistake of fact may invalidate a regulatory decision where the fact was existing, established and material, and the affected party was not responsible for the mistake.

The appellant housing co-operative was a registered social landlord whose management had been found seriously deficient following a statutory inquiry. The Housing Corporation decided that its land should be transferred to another registered social landlord. It preferred a compulsory transfer to the Peabody Trust over the appellant's proposed transfer of engagements to a Scottish housing co-operative.

Keith J granted permission to seek judicial review but dismissed the substantive application. The appeal concerned whether the compulsory transfer was proportionate under article 1 of the First Protocol, whether concerns about cross-border regulation had been handled fairly, and whether the later confirmation of Peabody as transferee rested on a material mistake about its financial position.

1. Appeal dismissed. The compulsory transfer did not violate article 1 of the First Protocol. Maurice Kay LJ held that proportionality was context-sensitive. The Housing Corporation had already made an unassailable decision that a transfer was required because of mismanagement. Its remaining task was to choose between two proposed transferees. It had to strike a fair balance and make a decision supported by a compelling public-interest case which was reasonably necessary. It was not invariably obliged to choose the option least intrusive of Convention rights.
2. The requirement of necessity in proportionality review does not invariably mean strict or absolute necessity. The approach in R (Daly) v Secretary of State for the Home Department [2001] UKHL 26 was compatible with the rejection of strict necessity in James v United Kingdom [1986] 8 EHRR 123. The two-stage formulation in Samaroo v Secretary of State for the Home Department [2001] EWCA Civ 1139 required adaptation in this regulatory context. A mandatory least-intrusive-option rule could compel a regulator to select a distinctly inferior means of performing its statutory functions.
3. Although Keith J had not expressly added reasonable necessity to the compelling-public-interest test, the Housing Corporation had compared the public-interest consequences of both options. It found that Peabody provided the certainty required for effective regulation. It would inevitably have reached the same decision had it expressly applied the full test.
4. There was no procedural unfairness concerning dual English and Scottish regulation. The Housing Corporation disclosed its legal and practical concerns in correspondence and board papers. The appellant could respond in writing and through counsel at board meetings. Fairness required disclosure of the concerns and due consideration of representations, but did not require the regulator to convene a separate meeting. Brooke LJ gave additional reasons agreeing that the appellant had received ample notice but had not proposed solutions to the practical problems.
5. The July 2003 decision was not vitiated by mistake of fact. Peabody still held a favourable regulatory assessment, and its later deterioration resulted from developments after the decision. There was no mistake about an existing, established fact within the principles stated in E v Secretary of State for the Home Department [2004] EWCA Civ 49. Nor was the regulator obliged in these circumstances to canvass the appellant's views about another regulated body's finances.

Waller LJ and Brooke LJ agreed with Maurice Kay LJ. The appeal was dismissed unanimously.

1. Court of Appeal (Civil Division): Dismissed the appeal and upheld the dismissal of the judicial review claim.
2. Administrative Court: Keith J granted permission to apply for judicial review but dismissed the substantive application on 14 May 2004. He refused permission to appeal.
3. Permission proceedings: Ouseley J initially refused permission to seek judicial review. Stanley Burnton J directed a rolled-up hearing. Buxton LJ later refused permission to appeal, but Auld and Jacob LJJ granted permission on all but one proposed ground.