Swords v Secretary of State for Communities & Local Government & Ors

A published housing-transfer manual may state the Secretary of State’s policy even though it has no statutory force. The Secretary of State must have regard to that policy and either follow it or give clear reasons for departure.

Where that policy requires leaseholders’ views to be taken into account, those views must be considered. Their weight is, however, for the Secretary of State, subject to ordinary public-law review. It was rational to give no weight to unreasoned leaseholder opposition where the statutory scheme gives detailed and decisive importance to tenants’ views.

The Secretary of State need not make a free-standing determination of every departure from non-statutory guidance. She must adequately consider material shortcomings in consultation and balloting when deciding whether to consent.

Tower Hamlets proposed to transfer the freehold of the Parkside estate to Old Ford Housing Association. The Secretary of State consented under the Housing Act 1985 after a narrowly favourable tenants’ ballot and a substantially adverse, separate leaseholders’ ballot.

A secure tenant sought judicial review. Forbes J in the Administrative Court refused to quash the consent on 4 April 2007. The tenant appealed on three grounds: failure to take account of leaseholders’ views; failure to consider whether pre-ballot material complied with the Housing Transfer Manual; and failure adequately to investigate complaints about consultation and the ballot.

The central issue was whether the Secretary of State had lawfully exercised her discretion to consent to the transfer.

1. Appeal dismissed. Lord Justice Wilson gave the judgment, with which Lord Justice Lloyd and Lady Justice Smith agreed.

2. The Housing Transfer Manual, although non-statutory guidance, stated the Secretary of State’s policy. Its provisions required her to take account of leaseholders’ objections, including the result of a separate ballot, or clearly explain a departure from that policy. The Secretary of State had considered those views but gave them no weight. That was lawful and not Wednesbury unreasonable. The statutory scheme in Housing Act 1985 Schedule 3A concentrates on tenants: their majority opposition prevents consent, whereas leaseholders’ rights ordinarily remain governed by their leases.

3. Schedule 3A paragraph 6 did not prevent judicial review of an alleged unlawful exercise of the discretions under sections 32 and 43. It protected consent from invalidation for failure to comply with the Schedule’s requirements, including the mandatory majority-opposition requirement, but did not immunise separate public-law errors in exercising the statutory discretion.

4. The Secretary of State was not subject to a distinct duty to decide whether Tower Hamlets had complied with every part of the Manual. She was entitled, and likely, to consider material non-compliance when assessing the adequacy of consultation. The evidence showed that she reviewed the consultation material, obtained further information and considered the survey evidence. Neutral information did not require an artificial presentation that the merits for and against transfer were evenly balanced.

5. Her extended enquiries and dialogue with Tower Hamlets provided an adequate basis for concluding that consultation and the independently supervised ballot were satisfactory. She was not required to investigate individually the complaints attributed to 60 residents. The supplementary witness statement was also properly admitted as elucidation rather than a fundamental alteration of the decision’s reasons.

• Court of Appeal (Civil Division): dismissed the tenant’s appeal in [2007] EWCA Civ 795.
• High Court, Queen’s Bench Division, Administrative Court: Forbes J refused on 4 April 2007 to quash the Secretary of State’s consent to the transfer.