London Borough of Newham v Khatun & Ors

A homeless applicant has no statutory or common law right to view accommodation before deciding whether to accept it. A housing authority determines the inquiries needed to assess suitability, subject to review for irrationality. It may require an immediate decision where the applicant can accept the property and challenge suitability afterwards.

Statutory guidance must be considered, but it is not law. An authority may depart from it for clear and lawful reasons.

The consumer unfair-terms regime applies to contracts concerning land. A public authority granting tenancies for rent acts as a seller or supplier where the activity is one that a private undertaking could perform for profit. Its tenants may therefore be consumers.

The three respondents applied to the London Borough of Newham for accommodation under Part VII of the Housing Act 1996. After accepting the full homelessness duty, the Council offered private-sector leased accommodation. Its policy required applicants to accept or refuse at a sign-up appointment without first viewing the property. Refusal could lead to immediate cancellation of bed and breakfast accommodation.

Newman J granted the respondents' applications for judicial review. He held that the policy was unlawful and that the Unfair Terms in Consumer Contracts Regulations 1999 and Council Directive 93/13/EEC applied to the Council's tenancy agreements.

The Council appealed on both issues. The central questions were whether public law or the statutory guidance required an opportunity to view and comment before acceptance, and whether the consumer unfair-terms regime applied to land contracts and to tenancies granted by a public authority performing statutory homelessness functions.

Appeal allowed in part. Laws LJ delivered the judgment, with which Wilson J and Auld LJ agreed.

1. Part VII of the Housing Act 1996 conferred no express or implied right to view or be heard before an applicant accepted accommodation. Common law fairness did not supply such a right. Applying the application-and-deprivation distinction in McInnes v Onslow Fane [1978] 1 WLR 1520, a homelessness application was a paradigm application for a statutory benefit. The practical need to process many applications against scarce resources was legitimately relevant.

2. The Council was required to make a rational assessment of suitability, but the applicant's subjective view was not a legally compulsory relevant consideration. Where legislation does not prescribe the necessary inquiries, the authority determines their manner and intensity subject to the Wednesbury principle [1948] 1 KB 223. A court may intervene only where no reasonable authority could regard the inquiries made as sufficient. The Council's information-gathering arrangements did not meet that threshold.

3. The policy was neither oppressive nor perverse. Although possible cancellation of bed and breakfast accommodation exerted pressure, the statute gave no entitlement to choose between properties. Sections 202(1)(f) and 202(1A) permitted an applicant to accept an offer and seek review of its suitability. Section 204 added an appeal on a point of law. The applicant therefore had an alternative to homelessness while pursuing a challenge.

4. Guidance issued under section 182 had to be considered but was not a source of law. Departure required clear reasons. The Council departed from the recommended reflection period to move families promptly from unsuitable bed and breakfast accommodation. That was a lawful and sufficiently clear reason, reinforced by the 2003 suitability Order.

5. Council Directive 93/13/EEC and the Unfair Terms in Consumer Contracts Regulations 1999 applied to contracts concerning land. Their dominant purpose was a high level of consumer protection. The Directive contemplated all consumer contracts unless expressly excluded, and no land exclusion appeared.

6. A public authority was not excluded merely because of its governmental status. Granting a tenancy for rent was an activity capable of being carried on by a private undertaking for profit and therefore fell within "trade, business or profession". The Council was a seller or supplier and the respondents were consumers. Newman J's ruling on this preliminary issue was upheld, but whether particular tenancy terms were unfair remained undecided.

1. Court of Appeal (Civil Division): In London Borough of Newham v Khatun & Ors [2004] EWCA Civ 55, the court unanimously allowed the Council's appeal concerning the lawfulness of its no-viewing policy. It upheld the ruling that the consumer unfair-terms regime applied to the Council's tenancies.
2. Administrative Court: Newman J granted the three applications for judicial review on 10 October 2003. He held the policy unlawful and decided, as a preliminary issue, that the Unfair Terms in Consumer Contracts Regulations 1999 and Council Directive 93/13/EEC applied to the tenancies.