In R (on the application of Z and another) v Hackney London Borough Council and another  UKSC 40 the Supreme Court (the SC) upheld the decisions of the Divisional Court and the Court of Appeal that it was lawful under the Equality Act 2010 (the EA 2010) for a small, charitable Orthodox Jewish housing association to operate a housing allocation policy which restricted its tenancies to members of the Orthodox Jewish community (OJC).
The Supreme Court considered for the first time:
- positive action (s.158 of the EA 2010 which provides a defence where positive action addresses in a proportionate manner needs or disadvantages connected to a protected characteristic (PC));
- and the charities exception (s.193 of the EA 2010 permits charities to restrict benefits to those with a PC if that restriction is in pursuance of a charitable instrument and a proportionate means of achieving a legitimate aim or for the purpose of preventing a disadvantage linked to the PC)
as defences to unlawful direct religious discrimination (ss 13(1) and 29(1) of the EA 2010).
Hackney London Borough Council (Hackney) discharges its housing functions by nominating applicants for social housing to properties owned by independent housing associations such as Agudas Israel Housing Association (AIHA).
AIHA is a charitable housing association whose charitable objects are to carry on for the benefit of the community (and primarily for the benefit of the OJC) the business of providing housing.
The OJC tend to have larger families so AIHA has larger properties and a greater share of the stock of larger properties available for social housing in Hackney.
Z was a single parent of 4 children. She has two sons with autism and twin daughters. She is not a member of the OJC. She was assessed by Hackney as having the highest need for re-housing but no offer of suitable accommodation was made.
Up to the point where the case came before the Divisional Court at least six four-bed properties owned by AIHA became available, were advertised by Hackney but because of AIHA's policy of only letting to members of the OJC, Hackney did not put the Appellants forward for consideration.
Between the hearing in the Divisional Court and the Court of Appeal hearing, a four-bed property became available and was allocated to the Appellants.
The Divisional Court found (and the facts were not disputed):
- The disadvantages faced by the OJC are real and substantial (poverty, deprivation, overcrowding);
- Those disadvantages are “connected with” their religion;
- The needs of the OJC differ from others - to live relatively close to each other to reduce fears regarding anti-Semitic abuse and crime; for community facilities, including schools and synagogues; and for property that will accommodate larger families; and
- AIHA’s arrangements for allocating housing, which place Orthodox Jews in a primary position, enable them both to avoid the disadvantages and to meet the needs referred to.
Permissible Positive Action v Impermissible Positive Discrimination
On the basis of these findings the Divisional Court held that the requirements for positive action under s.158 of the EA 2010 were met. The Court of Appeal dismissed the appeal. Before the SC the Appellants argued that a line of EU Court of Justice caselaw restricted the scope of permissible positive action to promoting equality of opportunity but not equality of outcomes. The Appellants also argued that the Divisional Court had got the assessment of proportionality wrong.
The SC rejected both arguments.
Notably, the SC held that positive action is not limited to promoting equality of opportunity, and may pursue equality of outcomes, by overcoming or minimising disadvantages connected to a PC.
The SC set out the role of an appeal court when a proportionality assessment is being considered by a lower court and concluded that a proportionality assessment would only be set aside on appeal if there was a legal misdirection, or the assessment was “wrong” in the sense that there had been a significant error of principle or some other identifiable flaw in the reasoning.
The SC made two specific points on the proportionality test in this case: (1) the AIHA's policy operates as a direct counter to discrimination suffered by the OJC in obtaining housing in the private housing sector; (2) given that IAHA could not allocate enough properties to eliminate the disadvantage, having a "blanket policy" was not disproportionate.
As a result of upholding the proportionality decision of the Divisional Court, the appeal was dismissed but the SC went on to consider the charities exception under s.193 of the EA 2010.
The issue here concerned the fact that s.193(2)(b) of the EA 2010 does not include any express proportionality requirement whereas s.193(2)(a) does.
The SC held that this was a deliberate decision by Parliament and that no proportionality requirement was to be read in under EU law or the Human Rights Act 1998 to s.193(2)(b). On this further basis also, AIHA’s policy was lawful.
The meaning of this is that the charities exception route to justifying discrimination can be exercised without having to undertake a proportionality assessment (via s.193(2)(b) of the EA 2010).
- It will be a comfort to charities to learn that there is no additional proportionality assessment required under s.193(2)(b) of the EA.
- This is a significant decision for organisations looking to undertake forms of positive action and for charities seeking to restrict the benefits they provide in favour of a particular group with a shared PC.
- It would now appear that quotas seeking to secure substantive equality outcomes are lawful.
- This decision will make it more difficult to challenge housing allocation policies on the grounds of unlawful discrimination particularly where housing need and demand exceed supply.