London Borough of Newham v Khatun & Ors

Factual and Procedural Background

These conjoined appeals arise from judicial review applications brought by three respondents against decisions of the London Borough of Newham ("the Council") concerning its duties under Part VII of the Housing Act 1996 ("the 1996 Act") relating to homeless persons. Each respondent had applied to the Council for accommodation under the homelessness provisions. The judicial review challenged the Council’s policy requiring homeless applicants to accept or refuse accommodation offers without prior opportunity to view the properties. The Administrative Court, by Newman J, granted the respondents’ applications for judicial review on 10th October 2003. The Council now appeals those orders.

A second discrete issue arose in one respondent’s case concerning whether the Unfair Terms in Consumer Contracts Regulations 1999 ("the Regulations") and Council Directive 93/13/EEC ("the Directive") apply to the tenancy terms offered by the Council under its statutory duty. This preliminary issue was dealt with by Newman J, who held that the Regulations and Directive do apply. The Council appeals this finding as well, although it advances this ground primarily to clarify the law.

Legal Issues Presented

1. Whether the Council’s policy requiring homeless applicants to accept or refuse accommodation offers without the opportunity to view the property beforehand is lawful.
2. Whether the Unfair Terms in Consumer Contracts Regulations 1999 and Council Directive 93/13/EEC apply to tenancy agreements granted by the Council under its statutory duties, including whether these measures apply to contracts relating to land, to public authorities such as the Council, and whether the Council is a "seller or supplier" and the respondents "consumers" within the meaning of the Regulations and Directive.

Arguments of the Parties

Appellants' Arguments (The Council)

• The Council contends that its policy is lawful and justified by the statutory scheme and the practical need to move homeless families out of temporary bed and breakfast accommodation swiftly, in line with government targets.
• It argues that the statutory homelessness scheme does not confer a right to view accommodation prior to acceptance and that the applicants’ subjective views on suitability are not legally relevant to the Council’s decision.
• The Council submits that the Secretary of State’s guidance, while to be considered, does not prohibit departures justified by policy aims such as reducing time in temporary accommodation.
• Regarding the second issue, the Council argues that the Regulations and Directive do not apply to contracts relating to land, nor to public authorities in the exercise of statutory functions, and thus do not apply to its tenancy agreements under Part VII.

Respondents' Arguments

• The respondents, through their counsel, assert that the Council’s policy is "manifestly unreasonable, offensive, unfair and accordingly unlawful" because it denies applicants the opportunity to view accommodation before being required to accept or reject it.
• They contend that the policy infringes procedural fairness and the statutory scheme, effectively coercing applicants under threat of immediate cancellation of temporary accommodation.
• On the second issue, they argue that the Regulations and Directive apply to the Council’s tenancy agreements, thereby subjecting the Council’s standard terms to scrutiny for unfairness.

Table of Precedents Cited

Court's Reasoning and Analysis

The court first examined the Council’s policy requiring homeless applicants to accept or refuse accommodation offers without prior viewing. It analysed the statutory homelessness framework under Part VII of the Housing Act 1996, noting the absence of any express statutory right to view accommodation before acceptance. The court identified three potential legal bases for such a right: statutory conferment, procedural fairness (natural justice), and the Council’s duty to act reasonably (Wednesbury principle).

The court concluded that no statutory right to view existed and that the common law standards of procedural fairness do not require a right to be heard in this context because homelessness applications are "application" cases rather than "forfeiture" cases. The Council’s duty to take into account relevant considerations does not compel it to afford applicants a viewing opportunity, as the applicants’ subjective views on suitability are not legally relevant factors. The court emphasised that the policy must be assessed on whether any reasonable council would fail to provide a viewing opportunity, and found that it was not irrational for the Council to proceed without it.

The court also addressed the alleged oppressive nature of the policy, specifically the threat of immediate cancellation of temporary accommodation if the offer is refused on the spot. It held that this was not perverse or disproportionate, given the statutory right of review available to applicants and the Council’s legitimate aim of moving families out of bed and breakfast accommodation quickly. The court found no evidence that the respondents suffered actual oppression.

Regarding the Secretary of State’s guidance, the court recognised that the Council’s policy departed from recommendations to allow reasonable time for applicants to consider offers. However, the court accepted that the Council’s policy was justified by the lawful goal of reducing time in temporary accommodation, and the departure was not unlawful.

On the second issue, the court undertook a detailed purposive construction of the Directive and Regulations governing unfair terms in consumer contracts. It rejected the Council’s argument that the measures exclude contracts relating to land, reasoning that the Directive’s consumer protection purpose and the language of multiple official EU texts support inclusion of land transactions within scope. The court also held that public authorities such as the Council fall within the Directive’s scope when engaging in economic activities, such as granting tenancies for rent under Part VII, which could be carried out by private undertakings for profit.

Finally, the court found that the Council qualifies as a "seller or supplier" and the respondents as "consumers" within the meaning of the Regulations and Directive, thereby confirming their applicability to the Council’s tenancy agreements.

Holding and Implications

The court ALLOWED the appeal in part by overturning the Administrative Court’s decision on the first issue, thereby upholding the lawfulness of the Council’s policy that does not provide homeless applicants an opportunity to view accommodation before acceptance.

Simultaneously, the court UPHELD the decision on the second issue that the Unfair Terms in Consumer Contracts Regulations 1999 and Council Directive 93/13/EEC apply to the Council’s tenancy agreements under Part VII of the Housing Act 1996.

The direct effect is that the Council’s policy on accommodation offers stands as lawful, but its tenancy agreements remain subject to consumer protection scrutiny for unfair terms. No new precedent was established altering the statutory homelessness scheme, but the ruling clarifies the scope of consumer protection law in public housing tenancy contracts.