Heald & Ors v London Borough of Brent

A local housing authority may contract out its homelessness review function under Part VII of the Housing Act 1996. The statutory contracting-out power encompasses reviews under sections 202 and 203 because the applicable Order expressly excludes other functions, but not reviews.

Contracting out does not necessarily infringe article 6. The procedure must be assessed as a whole, including the county court appeal. A contractor need not possess the independence expected of a court, provided the arrangement is not materially less fair than an in-house review.

Apparent bias is determined by whether a fair-minded and informed observer would conclude that there was a real possibility of bias.

Four applicants appealed against county court orders dismissing their statutory appeals concerning homelessness and accommodation decisions made by the London Borough of Brent. Their reviews had been conducted by the controlling shareholder and employee of Housing Reviews Ltd under contracts with Brent. The review decisions upheld Brent’s original decisions.

The applicants contended that Brent could not lawfully contract out reviews under sections 202 and 203 of the Housing Act 1996. They also alleged insufficient independence, apparent bias arising from the contractor’s commercial position and website, infringement of article 6 of the European Convention on Human Rights, and misleading presentation of the reviewer as a council officer.

The central issues were whether the statutory review function could be contracted out and whether the resulting procedure satisfied the requirements of independence, impartiality and fairness.

1. Appeals dismissed. The review function under sections 202 and 203 of the Housing Act 1996 could lawfully be contracted out. Section 70 of the Deregulation and Contracting Out Act 1994 and regulation 3 of the relevant 1996 Order authorised an external contractor to exercise Part VII functions unless expressly excluded. Schedule 2 excluded specified functions but not reviews. The contractor’s employee was therefore capable of carrying out the reviews: per Stanley Burnton LJ, with whom Sir Simon Tuckey and Sedley LJ agreed.

2. The doubts expressed in Runa Begum v Tower Hamlets LBC [2003] UKHL 5 did not displace the clear language of the legislation. Regulation 2 of the 1999 Review Procedures Regulations supported this construction because it contemplated that a review decision might be made by someone other than an officer of the authority. It did not matter to the legality of contracting out whether the contractor made the final decision or submitted a determination for adoption by Brent.

3. Contracting out did not necessarily infringe article 6. Under Runa Begum, an in-house review complied with article 6 when the statutory procedure, including the county court appeal, was viewed as a whole, despite the reviewer’s lack of institutional independence. An external reviewer was not necessarily less impartial or materially less independent than an employee. Brent adopted the decisions as its own and remained democratically accountable for the efficiency and fairness of its review procedure.

4. The contractor’s short-term and terminable agreement did not make the overall procedure materially less fair than an in-house review. His work for several authorities afforded some practical independence. Sedley LJ added that, although contracting out an adjudicative function had evident weaknesses, a competent outsider might provide greater independence and impartiality than one council officer reviewing another’s decision.

5. The established apparent-bias test was whether a fair-minded and informed observer would conclude that there was a real possibility of bias. The contractor’s website and success statistics did not satisfy that test. Properly understood, success referred to lawful, fair and defensible reviews rather than the rejection of applicants.

6. The decision letters misleadingly suggested that the reviewer was a Brent officer. The misdescription was immaterial because Brent was entitled to use him. A materially misleading letter might, in another case, support judicial review. The first county court judge also gave inadequate reasons by merely preferring one side’s submissions, but the error was academic because his conclusion was correct.

1. Court of Appeal (Civil Division): The four appeals were dismissed. The Court held that Brent could lawfully contract out the homelessness review function and that the reviews were not invalid for want of independence, apparent bias or misleading presentation.

2. Willesden County Court: HHJ McDowall dismissed Ms Heald’s appeal under section 204 of the Housing Act 1996. His conclusion on contracting out was correct, although his reasons were inadequate.

3. Central London County Court: HHJ Mitchell dismissed the appeals of Ms Al-Jarah, Ms Ahmad and Ms Kidane. He held that contracting out was permitted, that the reviewer was not apparently biased and that the individual review decisions contained no legal defect.