Macleod, R (on the application of) v The Governors of the Peabody Trust

The claimant sought judicial review of the defendant housing association's refusal to approve a mutual exchange. The key legal questions were whether Peabody's decision was amenable to judicial review as the exercise of a public function, whether Peabody had unlawfully fettered its discretion or failed to follow its own mutual exchange policy, whether it had breached the public sector equality duty in section 149 of the Equality Act 2010, and whether the decision was irrational.

The court applied the public-function factors identified in R (Weaver) v London & Quadrant Housing Trust and the approach in R (McIntyre) v Gentoo Group Limited, and examined the contractual context produced by the Crown Estate Commissioners' transfer (including a nominations agreement and a non-assignment clause). The court concluded that, on the facts, Peabody was not exercising a public function in relation to the transferred intermediate-tenure properties and so the decision was not amenable to judicial review.

In any event the court held that Peabody’s refusal was justifiable in light of contractual constraints (the non-assignment clause and the nominations agreement), that any departure from Peabody’s published mutual-exchange policy was explainable and proportionate, that the claimant had not adduced sufficient evidence to show a breach of the section 149 duty, and that the decision was not irrational. The application for judicial review was dismissed.

Background and parties. The claimant, an assured tenant who had taken a tenancy from the Crown Estate Commissioners in 2009 which was transferred to Peabody in 2011, sought judicial review of Peabody's refusal to approve a mutual exchange with a council tenant in Edinburgh. Peabody had acquired some 1,200 dwellings from the Crown Estate subject to a detailed Nominations Agreement that restricted lettings to defined "key workers" at sub-market rents and included a Transfer Policy. The claimant relied on Peabody's published mutual exchange policy, alleged unlawful fettering and irrationality, and alleged failure to have due regard to disability under section 149 of the Equality Act 2010.

Procedural posture and relief sought. This was a first-instance judicial review claim. The claimant sought permission to challenge Peabody’s decision refusing approval for the mutual exchange.

Issues framed by the court. (i) Whether Peabody’s decision was amenable to judicial review as the exercise of a public function; (ii) whether Peabody breached its own mutual exchange policy or unlawfully fettered its discretion; (iii) whether Peabody failed to comply with the public sector equality duty in section 149 of the Equality Act 2010; and (iv) whether the decision was irrational or otherwise unlawful.

Court’s reasoning and findings. The court reviewed the leading authority in this field, R (Weaver) v London and Quadrant Housing Trust, and related authority such as R (McIntyre) v Gentoo Group Limited, and emphasised that the Weaver factors must be applied to the facts of each case. The judge found that, on these facts, Peabody was not exercising a public function in relation to the claimant’s intermediate-tenure tenancy: the properties had been bought using bond finance rather than direct public subsidy; the transferred units were not clearly "social housing" within the meaning invoked; Peabody had no allocation relationship with local authorities; and rents were not subject to the same statutory regulation as general social housing. The cumulative effect did not yield the requisite "public flavour".

Even assuming the decision were amenable to review, the court held that contractual constraints were decisive: the claimant’s tenancy contained a non-assignment clause that did not permit a mutual exchange, and the Nominations Agreement constrained Peabody’s ability to allow a tenant other than an approved nominee to occupy the unit except in defined "true void" circumstances. Those contractual and policy considerations justified Peabody’s refusal and meant the decision was within the range of reasonable responses. The court found poor administration in late disclosure of restrictions and noted Peabody’s offer of £200 compensation, but concluded that this did not render the decision unlawful. On the public sector equality duty, the claimant had provided minimal and largely unsupported evidence about his disability; the court was not satisfied that a proper s.149 exercise would have altered the outcome and declined to grant relief on that ground.

Disposition. The application for judicial review was dismissed.

The application for judicial review is dismissed. The court held that Peabody was not exercising a public function in relation to the transferred intermediate-tenure properties and therefore the decision was not amenable to judicial review on that basis. Alternatively, contractual constraints (the tenancy non-assignment clause and the Crown Estate Nominations Agreement) and legitimate departures from Peabody’s mutual exchange policy justified the refusal; the claimant failed to show the public sector equality duty in section 149 would have produced a different outcome; and the decision was not irrational.