Housing policies, proportionality and positive action: R (Z) v Hackney London Borough Council and Agudas Israel Housing Association

The Supreme Court has handed down judgment in R (on the application of Z and another) v Hackney London Borough Council and Agudas Israel Housing Association [2020] UKSC 40. Never before has the Supreme Court engaged with the positive action provisions contained in the Equality Act 2010 (“EqA 2010”). The Court unanimously decided that the policy of a charitable housing association to offer social housing only to members of the Orthodox Jewish community was lawful under sections 158 and 193 of the EqA 2010.

Factual background

Social housing for members of the Orthodox Jewish community in the London Borough of Hackney is in high demand. A charity, the Agudas Israel Housing Association (“AIHA”), aims to do what it can to meet that demand: its objective is to make social housing available primarily for Orthodox Jewish families.

AIHA owns 470 of the 47,000 units of general social needs housing in Hackney. In practice, given how far demand for social housing in the Orthodox Jewish community exceeds supply, AIHA only considers members of that community when a property becomes available.

For the main appellant Z and her four young children, two of whom have autism, AIHA’s practice was partly responsible for the many months of delay they experienced in finding a four-bedroom property suitable for their needs. Hackney Council considered Z and her family to fall within the group with the highest need for re-housing under its scheme for allocating social housing. However, Z and her family are not members of the Orthodox Jewish community.

Knowing AIHA’s general approach to housing allocation, Hackney Council opted not to put them forward for consideration by AIHA in relation to at least six four-bedroom houses that became available and were advertised during the relevant period. Z and her family have since been provided with suitable accommodation, but the process took far longer than it would have done had they qualified under AIHA’s religious criterion.

Z alleged direct discrimination on the ground of religion against Hackney Council and AIHA. The Divisional Court rejected her claim, and the Court of Appeal dismissed her appeal.

The Supreme Court’s findings

Lord Sales’s judgment, with which the rest of the Court agreed (Lady Arden adding a brief concurring judgment of her own), upheld the lower courts’ decisions. There was no dispute that the conduct complained of amounted to direct discrimination under the EqA 2010 on the ground of religion or belief, but the Supreme Court held that the Divisional Court had been justified in concluding that AIHA had made good its defences under sections 158, 193(2)(a) and 193(2)(b) of the EqA 2010.

What the Divisional Court had recognised was that the Orthodox Jewish community in Hackney had particular needs or disadvantages linked to their protected characteristic. Extensive evidence showed they were particularly likely to have large families, to live in overcrowded conditions, to face prejudice when trying to rent properties in the private sector, to be subjected to anti-Semitic abuse and crime, and to have a need to live close to community facilities.

On that basis, the Divisional Court took the view that AIHA’s policy constituted positive action that was proportionately calibrated to the community’s needs or disadvantages arising from their protected characteristic under section 158, EqA 2010. It had also concluded that, as a charity, AIHA’s restriction of benefits to the Orthodox Jewish community was a proportionate means of achieving a legitimate aim under section 193(2)(a), and was a way of preventing or compensating for disadvantage linked to a protected characteristic under section 193(2)(b).

The Supreme Court agreed with the Court of Appeal in holding that these conclusions ought not to be interfered with, and in particular that no separate proportionality assessment was required for charities wishing to bring defences based on section 193(2)(b). Six key features of the judgment are likely to be of particular relevance to charities wishing to engage in positive action, to discrimination lawyers, and to public law more generally:

(1)   Proportionality analysis for equality of outcome different from that for equality of opportunity: In analysing the proportionality of AIHA’s housing allocation policy, the Supreme Court took the view that the “tie-break” approach adopted in employment cases where the legitimate aim is equality of opportunity was not applicable. Counsel for Z argued that AIHA’s policy was not proportionate, in part because was concerned with equality of outcome and therefore failed to “treat membership of the Orthodox Jewish community as a final tie-break” (para. 60). Lord Sales disagreed, holding that in positive action cases such as this one, equality of outcome was a legitimate aim which gave rise to different proportionality considerations as compared to “equality of opportunity of the more limited kind discussed in the cases on the Equal Treatment Directive” (para. 66).

Relying on the Grand Chamber’s judgment in the CJEU case of Cresco Investigation GmbH v Achatzi (Case C-193/17) [2019] 2 CMLR 20, the Supreme Court decided that the conventional approach to proportionality was the proper approach (para. 72). That in turn meant that the Divisional Court had directed itself correctly, and was entitled to find that AIHA’s allocation policy was a legitimate and proportionate means of meeting the needs and seeking to correct for the disadvantages which the Orthodox Jewish community experienced on the grounds of their religion (para. 73). There was no need for the policy to concern itself with equality of opportunity or indeed to restrict itself only to using the relevant protected characteristic as a tie-breaker where the needs of two candidates were assessed as broadly equivalent.

(2)   No need for charities to provide separate proportionality justification for positive action: Charities whose policies meet the condition set out in section 193(2)(b) of the EqA 2010 do not have to surmount a free-standing proportionality hurdle in addition, in order to establish that those policies are lawful. Section 193(2)(b) permits charities to adopt policies that are, on their face, discriminatory so long as the provision of benefits only to those who share a particular protected characteristic is done “for the purpose of preventing or compensating for a disadvantage linked to the protected characteristic”.

This reflected Parliament’s legislative purpose in enacting section 193, the Supreme Court held, as well as fulfilling the requirements as to positive action set out in EU law under the Race Directive and the Gender Directive (paras. 101 and 102). In offering a “defence with bright line characteristics”, section 193(2)(b) produced additional and important benefits that had been part of the policy choice made by Parliament in designing the legislation, including: (i) protecting charities’ scarce resources from the costs of potentially having to provide a proportionality justification for any and all positive action measures (para. 105); and (ii) reassuring donors that the money they donate “will reach the persons they intend to benefit” (para. 109).

(3)   Group-based approach to positive action: The Supreme Court indicated that a group-based approach ought to be taken to the positive action provisions of the EqA 2010. That meant that the correct proportionality assessment under section 158 involved weighing the benefits to the Orthodox Jewish community against “the disadvantages experienced by other groups as a result, rather than… comparing the benefits for that community with the disadvantage suffered by one person drawn from those other groups falling outside the policy” (para. 79).

In the context of positive action, if too much weight were given to the case of one badly affected individual outside the relevant group in comparison to one favourably affected individual within the relevant group, the risk was that the proportionality assessment would be skewed towards extremes. It could not be correct, said Lord Sales, to compare “the appellant with a member of the Orthodox Jewish community, out of the many in need, who happened to be fortunate in having one of AIHA’s properties assigned to them in the relevant period” (para. 82). This is of obvious significance for charities attempting, within a sea of generally unmet need, to tackle the specific needs of a group sharing a particular protected characteristic.

(4)   ‘Blanket’ policies: Lord Sales agreed with Lewison LJ’s rejection of a submission made on behalf of Z that the Divisional Court had erred in dismissing the argument that AIHA’s policy was illegitimate because it was a ‘blanket’ policy. This was perceived to be misguided on the facts, which showed some flexibility in the policy because AIHA’s stated aim was primarily, rather than exclusively, to serve the Orthodox Jewish community.

More importantly, though, the Supreme Court recognised that even though “market circumstances” rendered AIHA’s policy a ‘blanket’ one to all intents and purposes, that did not render it disproportionate: “Unless and until the aim of elimination of such disadvantages [to the Orthodox Jewish community] is achieved, it would be proportionate for AIHA to operate a simple ‘blanket policy’ to allocate its properties to members of the Orthodox Jewish community as a means of promoting that legitimate aim” (para. 77).

(5)   Discrimination on the ground of religion versus discrimination on the ground of ethnic origin: The Supreme Court’s judgment offered a healthy counterpoint to the analysis provided in R (E) v Governing Body of JFS [2009] UKSC 15; [2010] 2 AC 728. In a rare example of the Supreme Court permitting a new argument uncanvassed in the courts below to be raised before it (see paras. 9-11), counsel for Z submitted that in line with the JFS case, AIHA’s policy was not only discriminatory on the ground of religion, but also on the ground of ethnic origin.

In JFS, a school had refused admission to a child whose mother’s conversion to non-Orthodox Judaism did not fulfil its entry requirement as to matrilineal descent, according to the standards set by the Office of the Chief Rabbi. By contrast, in Z’s case, the Supreme Court recognised that AIHA’s criteria were different, and were based wholly on engagement with Orthodox Jewish religious observance. On the facts of this case, this was held to be solely a matter of religious belief (para. 92). Lord Sales interestingly left open the question of whether, in a future case, individuals who engage in Orthodox Jewish religious observance might themselves be said to form an ethnic group within the Mandla guidelines.

(6)   Appellate courts and proportionality: The Supreme Court reaffirmed the stance taken in R (AR) v Chief Constable of Greater Manchester Police [2018] UKSC 47; [2018] 1 WLR 4079: it is not for appellate courts to depart from a first instance court’s proportionality assessment provided that that court has directed itself correctly as to the legal test to be applied (paras. 73-74). Lady Arden’s brief concurring judgment focused exclusively on this point: she emphasised that the appellate court’s function “is simply one of review” and that it was therefore “not necessary for this court to express its own view, nor can its view alter the conclusion arrived at by the Divisional Court” (para. 119).

Sam Grodzinski QC acted for the main respondent in the appeal. The case summary and judgment can be found here.

This article was written by Will Bordell.