R (Z) v Hackney London Borough Council

This appeal concerned whether the allocation policy of a charitable housing association (Agudas Israel Housing Association Ltd, AIHA) which gives primary priority to members of the Orthodox Jewish community unlawfully constituted direct discrimination under the Equality Act 2010. The principal statutory issues were the application of sections 158 and 193 of the Equality Act 2010 and whether section 193(2)(b) requires a separate proportionality assessment. The Supreme Court upheld the conclusions of the courts below that: (i) AIHA’s policy falls within the positive-action/charitable exemptions in sections 158 and 193; (ii) on the evidence the policy was a proportionate means of achieving legitimate aims in relation to the needs and disadvantages of the Orthodox Jewish community; and (iii) section 193(2)(b) does not, by its ordinary meaning, import an additional judicial proportionality requirement. The court also refused the late-raised argument that the allocation policy amounted to direct discrimination on grounds of race under the Race Directive, because AIHA’s selection criterion was religious observance rather than a matrilineal/ethnic test of the kind considered in JFS.

The appellant, a non-Orthodox single mother with children (two of whom have autism), challenged the practice of AIHA of allocating its social housing primarily to members of the Orthodox Jewish community. AIHA is a registered charity whose objects prioritise housing for the Orthodox Jewish community; it supplies a small proportion (about 1%) of Hackney’s social housing stock and lets proportionately more large properties suited to large Orthodox families.

The appellant alleged unlawful direct discrimination on grounds of religion and race under the Equality Act 2010 and, at a late stage in this court, advanced a new argument relying on the Race Directive that the practice amounted to direct discrimination on grounds of ethnic origin. The lower courts (Divisional Court [2019] EWHC 139 (Admin) and Court of Appeal [2019] EWCA Civ 1099) found for AIHA: they accepted the factual evidence about the particular needs and disadvantages of the Orthodox Jewish community (including security concerns, need for proximity to community facilities and high levels of overcrowding) and held AIHA’s policy was justified under section 158 and or section 193(2)(a)/(b).

Issues for the Supreme Court included: whether section 193(2)(b) requires a judicial proportionality test; whether AIHA’s policy constituted impermissible positive discrimination rather than permissible positive action; whether the policy was proportionate; and whether the Race Directive applied. The court confirmed the structured proportionality approach articulated in Akerman-Livingstone applies when proportionality is in issue under section 158 and section 193(2)(a). Applying that approach and giving appropriate deference to the factual findings of the Divisional Court about market conditions and community needs, the court held the lower courts were entitled to find the policy proportionate in context. The court held that section 193(2)(b) does not include an implied proportionality requirement: Parliament had deliberately crafted two distinct limbs in section 193(2), and to import such a requirement would render subsection (b) redundant. The late Race Directive argument failed because AIHA’s selection was addressed to religious observance rather than the matrilineal/ethnic criterion with which JFS was concerned; there was no adequately pleaded or evidenced case to treat AIHA’s practice as direct racial discrimination under the Race Directive. The court therefore dismissed the appeal.

• Nature of claim: judicial review / statutory discrimination claim seeking declarations and remedies for alleged direct discrimination in allocation of social housing; challenge to legality of charitable allocation policy under Equality Act 2010 and, late in the appeal, reliance on the Race Directive and related EU instruments.
• Issues framed: (i) whether section 193(2)(b) requires proportionality; (ii) whether allocation of social housing falls within the ambit of article 8 ECHR for article 14 discrimination; (iii) whether AIHA’s policy is permissible positive action or impermissible positive discrimination; (iv) whether AIHA’s policy was proportionate; (v) whether policy amounted to direct discrimination on grounds of race under the Race Directive.
• Reasoning summary: the court applied established proportionality methodology to sections 158 and 193(2)(a), endorsed the factual findings of the Divisional Court about the Orthodox Jewish community’s needs and the acute supply/demand imbalance, and held those findings justified the allocation policy as proportionate in context; it further held that section 193(2)(b) is a distinct, deliberate legislative limb not to be read as importing a separate judicial proportionality requirement; the Race Directive argument failed for lack of pleaded/evidenced basis that AIHA’s criterion involved ethnic origin rather than religious observance.

Appeal dismissed. The Supreme Court agreed with the Divisional Court and Court of Appeal that AIHA’s allocation policy fell within the lawful positive-action/charitable defences in sections 158 and 193 of the Equality Act 2010, that on the facts the policy was a proportionate means of pursuing legitimate aims, and that section 193(2)(b) does not itself import a separate judicial proportionality requirement; the late-raised Race Directive argument failed because AIHA’s criterion was religious observance rather than an ethnic-origin test.

Divisional Court (Administrative Court) judgment dismissing claim: R (on the application of Z and another) v Hackney London Borough Council and another [2019] EWHC 139 (Admin); appeal dismissed by the Court of Appeal: [2019] EWCA Civ 1099; appeal to the Supreme Court: [2020] UKSC 40 (this judgment).