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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Weaver, R (on the application of) v London & Quadrant Housing Trust [2008] EWHC 1377 (Admin) (24 June 2008) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2008/1377.html Cite as: [2008] NPC 74, [2009] 1 All ER 17, [2008] EWHC 1377 (Admin)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
DIVISIONAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		24/06/2008

Lord Justice Richards :

1. The claimant, Mrs Susan Weaver, has been an assured tenant of London & Quadrant Housing Trust ("LQHT") since 1993. LQHT is a registered social landlord ("RSL") under the Housing Act 1996. In these proceedings she challenges LQHT's decision to seek an order for possession against her on ground 8 in schedule 2 to the Housing Act 1988 (at least eight weeks' rent arrears). By s.7 of that Act, the court must make an order for possession if ground 8 is established. It is contended that LQHT was in breach of a legitimate expectation in failing to pursue all reasonable alternatives before resorting to a mandatory ground for possession. The breach of legitimate expectation is also relied on in support of a contention that the decision was in breach of the claimant's rights under article 8 ECHR or article 1 of protocol 1.
2. Those grounds of challenge raise prior issues as to the amenability of LQHT to judicial review on a conventional public law basis and as to whether it is a "public authority" within the meaning of s.6(3)(b) of the Human Rights Act 1998. In advancing the case for the claimant, Mr Drabble QC has taken the latter point first. Applying the reasoning of the House of Lords in YL v Birmingham City Council [2007] 3 WLR 112 to the functions of RSLs, he contends that LQHT is for relevant purposes a public authority. If that is right, he contends that LQHT must also be amenable to judicial review on a conventional public law basis and that the court should not follow earlier authority to a contrary effect.
3. This is perhaps a strange way round in which to develop a case based primarily on breach of legitimate expectation, but I think it right to address the arguments in the terms in which they were presented. Mr Drabble also urged the court to decide the issue of public authority even if it was against the claimant on legitimate expectation and Convention rights, since the claimant has received public funding on the basis that this is regarded as a test case on the issue of public authority.

Social housing and registered social landlords

4. Social housing organisations provide affordable housing to those whose needs are not met by the market. About one half of social housing in England and Wales is provided by RSLs, amounting to some 2 million homes. Other categories of provider are local authorities as owners and managers of social housing; arm's length management organisations of local authorities; and a range of unregistered bodies, including for-profit providers.
5. A publication, Delivering Affordable Housing, issued in November 2006 by the Department for Communities and Local Government sets out the Government's aims for affordable housing and includes the following:

"30. Affordable housing includes social rented and intermediate housing, provided to specified eligible households whose needs are not met by the market. Affordable housing should:

meet the needs of eligible households including availability at a cost low enough for them to afford, determined with regard to local incomes and local house prices; and

include provisions for: (i) the home to be retained for future eligible households; or (ii) if these restrictions are lifted, for any subsidy to be recycled for alternative affordable housing provision.

31. Social rented housing is rented housing owned and managed by local authorities and RSLs, for which guideline target rents are determined through the national rent regime. The proposals set out in the Three Year Review of Rent Restructuring (July 2004) were implemented as policy in April 2006. It may also include rented housing owned or managed by other persons and provided under equivalent rental arrangements to the above, as agreed with the local authority or with the Housing Corporation as a condition of grant.

…

35. Normally, only households on local authority and RSL registers are eligible for social rented housing. Target rents are set under a national regime; are well below market levels; and, are normally based on relative property values, local earning levels and property size. When a household ceases to occupy a social rented home, it is normally made available to other households eligible for social rented housing. Social rented homes are normally owned and/or managed by a RSL (or other body agreed by the Housing Corporation), and will be required by regulation or contract to meet the criteria."

6. That passage refers to target rents set under a national regime. Since December 2000 there has been a Government policy of some complexity, to which effect is given through the control and influence exercised over RSLs by the Housing Corporation, directed towards, inter alia, the achievement of a closer link between rents and the qualities which tenants value in properties, and the removal of unjustifiable differences between the rents set by local authorities and those set by RSLs. The policy is described in the Guide to Social Rent Reforms issued in March 2001 by the Department of the Environment, Transport and the Regions.
7. The Housing Corporation itself is an executive non-departmental public body responsible to the Secretary of State and having a range of functions designed principally to fund the development of affordable housing in England through a variety of providers, and to regulate and facilitate the proper performance of the RSL sector.
8. Pursuant to s.1 of the Housing Act 1996, the Housing Corporation maintains a register of social landlords. The requirements for registration include charitable or non-profit-making status (s.2) and satisfaction of other criteria laid down by the Corporation (s.5). By s.7 and schedule 1, RSLs are subject to detailed regulation.
9. The supervision and control of RSLs is one of the general functions conferred on the Housing Corporation by s.75 of the Housing Associations Act 1985. Its specific functions under the Housing Act 1996 include the power to determine standards of performance in connection with the provision of housing by RSLs (s.34), the duty to collect information as to the levels of performance achieved by them (s.35) and the power to issue guidance with respect to the management of housing accommodation by them and as to their own governance and management (s.36). Guidance with respect to the management of housing accommodation may relate to matters such as housing demands for which provision should be made, the allocation of housing accommodation between individuals, and the terms of tenancies and the principles upon which levels of rent should be determined.
10. The specific issue of legitimate expectation in this case arises out of guidance issued by the Housing Corporation in respect of evictions: I shall describe that guidance later in this judgment. Another relevant area of guidance, raised in the context of submissions on whether RSLs are public authorities, concerns rent levels. The departmental Guide to Social Rent Reforms, referred to above, contains an annex (Annex B) setting out the Housing Corporation's approach towards implementation of the Government's policy on the setting of social rents. The key principles include:

"B2.3 The Corporation's rent restructuring proposals will build upon the existing regime for rent influencing and will continue to seek to bear down on rent increases through the issue of a guideline limit for rent increases and influence rent levels through the restructuring framework.

B2.4 RSL's will be able to set rents at a level that allows them to meet their financial commitments, maintain their stock and continue to function as financially viable organisations. They must be able to meet their obligations to tenants.

B2.5 The Corporation will agree a derogation from the rent restructuring framework where an RSL can demonstrate that it cannot reasonably achieve the target rents over the 10 year implementation period …."

11. There is no statutory requirement to take the Housing Corporation's guidance into account, but in considering whether action needs to be taken to ensure the proper management of the affairs of an RSL the Housing Corporation may have regard to the extent to which such guidance is being or has been followed (s.36(7)).
12. The Housing Corporation's overall approach to regulation is illustrated by its Regulatory Code and Guidance published in August 2005, the foreword to which states:

"The Housing Corporation's Regulatory Code sets out the fundamental obligations of housing associations in meeting the Corporation's regulatory requirements.

… We now use the Code as a reference point for all our regulatory activity, including our registration criteria and our published assessments of larger associations.

…

Regulatory guidance is shown alongside the Code. In assessing an association's compliance with the Code, the Corporation will consider whether guidance has been followed or whether any alternative action taken by the association has achieved, or is likely to achieve, the same objectives.

The Code and guidance reflect our full range of powers as a regulator. Among those is a specific power under Section 36 of the Housing Act 1996 to issue housing management guidance, subject to consultation and subsequent approval by the Secretary of State. The Corporation may have regard to the extent to which such guidance has been followed in deciding whether to take action …."

13. The power of RSLs to dispose of land is restricted by ss.8-10 of the Housing Act 1996, the effect of which is that in general the consent of the Housing Corporation is required for any disposal (just as, by s.32 of the Housing Act 1985, a local authority requires the consent of the Secretary of State to dispose of land held by it for relevant purposes). By s.10, exceptions include lettings under an assured tenancy or a secure tenancy, and disposals under the "right to buy" provisions of Part 5 of the Housing Act 1985 or under s.16 of the Housing Act 1996, which gives a tenant of an RSL the right to acquire his dwelling if he is a tenant under an assured tenancy, the dwelling was provided with public money (such as a grant under s.18 – see below) and has remained in the social rented sector, and he satisfies any further qualifying conditions applicable under Part 5 of the 1985 Act. There are provisions for ensuring that receipts from sales under s.16 are recycled to provide further social rented housing.
14. By s.18 of the Housing Act 1996, the Housing Corporation may make social housing grants to RSLs in respect of expenditure incurred or to be incurred by them in connection with their housing activities. By s.27, it may require such grants to be dealt with as specified by it or to be repaid. Grants may also be made under other provisions of the same chapter of the Act. By s.27A, grants may also be made for defined purposes to persons other than RSLs, including profit-making organisations. In practice, both grant funding and (to an increasing extent) private sources of finance are important for RSLs: according to the 2007 Cave Review of Social Housing Regulation, Every Tenant Matters, the ratio of private finance to public money in the social housing sector is 2:1. Grants are made in general to assist in the acquisition of additional housing stock through purchase or new development. They are subject to a bidding process in which value for money and financial viability have to be demonstrated. The conditions on which they are made require them to be repaid if the housing is disposed of, unless the grant is recycled though investment in further new homes.
15. By s.167 of the Housing Act 1996, local housing authorities are required to have an allocation scheme for determining priorities in allocating housing accommodation. A duty of co-operation is imposed on RSLs by s.170, which provides that "[w]here a local housing authority so request, a registered social landlord shall co-operate to such extent as is reasonable in the circumstances in offering accommodation to people with priority under the authority's allocation scheme".
16. Another statutory function of RSLs is the power to apply for anti-social behaviour orders under s.1 of the Crime and Disorder Act 1998: the definition of "relevant authority" under that section includes an RSL.

London & Quadrant Housing Trust

17. LQHT is a society registered under the Industrial and Provident Societies Act 1965 and is a non-profit-making charity with the primary object of carrying on, for the benefit of the community, the business of providing housing, accommodation and assistance to help house people and associated facilities, amenities and services for poor people or for the relief of aged, disabled, handicapped or chronically sick people. It is a housing association within the meaning of the Housing Associations Act 1985 and, as already stated, an RSL regulated by the Housing Corporation under the Housing Act 1996. It is the parent body of the London & Quadrant Group ("the L&Q Group"), which comprises a number of legally distinct entities, some but not all of which are charitable and/or RSLs.
18. LQHT is constituted and governed by its rules. Those rules provide for its business to be conducted by its board and shareholders. None of the board members is a representative of a local authority or other public body and no such authority or body has any controlling influence over the board. Board members formerly gave their services free of charge, but from 2008 their appointments include provision for remuneration.
19. The activities undertaken by LQHT and the L&Q Group include not only the arranging and managing of lettings, but the development of new housing, for which purpose it has a very substantial land-bank. It provides a number of different types of accommodation and services to meet the housing and care needs of different groups of people in accordance with its charitable objects. The majority of tenants hold under weekly periodic agreements, but across the L&Q Group as a whole there are also different forms of tenure, including long leaseholds.
20. LQHT is funded by the income it receives from rents, by grants and by private borrowing. Its turnover in the two financial years 2004 to 2006 was £331.5 million, which consisted largely of rent receipts. During the same period it received from the Housing Corporation capital grants totalling £268.7 million. The evidence is that such grants are for particular development programmes, as opposed to a generalised subsidy or block grant; and that private sources of finance (most commonly, commercial loans from banks, as well as proceeds from the sale of existing housing stock) have become the dominant component of its capital funding and are set to become even more so: for example, over the next two financial years only 44 per cent of the cost of development work by the L&Q Group is expected to be funded by grants (the figure for LQHT itself has not been provided).
21. Only about 10 per cent of the housing stock owned or managed by LQHT has been transferred from the public sector (by contrast with the position of some RSLs which have been formed specifically for the purpose of receiving large scale voluntary transfers from local authorities). The remainder has been built by LQHT or acquired from private ownership.
22. LQHT has full control over its housing stock in terms of whether and when to let the property after a vacancy arises, as well as the criteria used in selecting an appropriate occupier for a particular property. Whilst maintaining such control over the housing management and lettings process, it has arrangements with a number of local authorities (no doubt reflecting the duty of co-operation under s.170 of the Housing Act 1996) whereby the authority nominates persons to be selected by LQHT as tenants for some lettings: during the year to 31 March 2006, 64 per cent of its new lettings were the result of nominations by local authorities, and 30 per cent were internal transfers. It also participates on a voluntary basis in a number of lettings schemes with local authorities and other RSLs across London by which it affords wider opportunities for its residents to apply for accommodation elsewhere and it widens the range of potential applicants for its own housing stock.

LQHT's relationship with the claimant

23. The claimant's accommodation was acquired by LQHT in March 1993 on the open market under one of its purchasing schemes. The first letting of the property by LQHT was to the claimant. The tenancy was granted pursuant to the nomination of the claimant by the London Borough of Richmond-upon-Thames. She had previously been housed by that authority pursuant to its main housing duty under the homelessness provisions of Part VII of the Housing Act 1996.
24. The claimant lives at the premises with her three children. In recent years she has been partly in work, partly on maternity leave and partly unemployed. She has been in intermittent receipt of welfare benefits. From early 2004 there was an increasing problem of rent arrears, leading to action of various sorts and culminating in the decision now under challenge to seek an order for possession on the mandatory ground 8. I shall give greater detail of this when considering the issue of legitimate expectation.

Is LQHT a "public authority"?

25. Section 6(1) of the Human Rights Act 1998 makes it unlawful for "a public authority" to act in a way which is incompatible with a Convention right. Section 6(3)(b) provides that "public authority" includes "any person certain of whose functions are functions of a public nature"; save that, by section 6(5), in relation to a particular act, a person is not a public authority by virtue only of s.6(3)(b) if the nature of the act is private.
26. The claimant disavows any suggestion that LQHT is a "core" public authority, as it is sometimes described, that is a body which is to be regarded as a public authority in relation to all its functions. The claimant's case is that LQHT is a "hybrid" or "functional" public authority, some of whose functions are of a public nature, and that those functions include the functions it performs when providing affordable housing in the social rented sector; and the particular acts of deciding to grant or terminate tenancies of social housing are said to concern the allocation of public housing resources and not to be purely private in nature.
27. At the centre of Mr Drabble's argument is YL v Birmingham City Council. Before I consider that case, however, it is helpful to refer by way of background to three earlier authorities relating specifically to housing associations or RSLs.
28. In Peabody Housing Association Ltd v Green (1978) 38 P&CR 644 the Court of Appeal rejected a claim that in serving a notice to quit a housing association (which would now be an RSL) was exercising statutory powers, even on the assumption that it was in receipt of public money which it was obliged to spend in a particular way. The decision was equivalent to a decision that such an activity is not amenable to judicial review; but the case was, of course, decided before the expansion in the scope of judicial review in modern times.
29. R v Servite Houses, ex p. Goldsmith [2001] LGR 55 was factually similar to YL v Birmingham City Council, but was decided before the Human Rights Act 1998 came into force. A local authority, in the exercise of its powers under the National Assistance Act 1948, had placed the applicants in a care home owned by an RSL. When the RSL subsequently decided to close the home, proceedings were brought against it for breach of legitimate expectation. Moses J held that the RSL's decision was not amenable to judicial review. The relationship between it and the local authority was purely commercial, the source of the RSL's power was purely contractual and there was an absence of any statutory underpinning.
30. In Poplar Housing and Regeneration Community Association Ltd v Donoghue [2002] QB 48 the association was an RSL created by the local authority in order to transfer to it a substantial proportion of the authority's housing stock. The defendant was the tenant of one of the properties transferred. She sought to resist an order for possession on the ground that the RSL was a public authority and was contravening her Convention rights. The Court of Appeal held that the RSL was a public authority but that it was not acting in contravention of the defendant's Convention rights. In reaching its conclusion as to public authority, the court attached particular importance to a number of considerations (para 65). It said inter alia that the emphasis on public functions reflected the approach adopted in judicial review; that the act of providing accommodation to rent is not, without more, a public function; that the fact that a body is a charity or is conducted not for profit means that it is likely to be motivated by what it perceives to be the public interest, but this does not point to it being a public authority. It referred to the closeness of the relationship which existed between the local authority and the RSL: the RSL had been created by the local authority to take a transfer of housing stock, five of its board members were also members of the local authority, and it was subject to the guidance of the local authority as to the manner in which it acted towards the defendant. Further, the RSL stood in relation to the defendant in very much the position previously occupied by the local authority. The court went on to state that there was no clear demarcation between public and private bodies and functions, and that the decision was very much one of fact and degree; but that in the particular case the role of the RSL was so closely assimilated to that of the local authority that it was performing public and not private functions (para 66).

YL v Birmingham City Council

31. The position of RSLs must now be reassessed by reference to the decision of the House of Lords in YL v Birmingham City Council. The claimant in that case was an elderly lady to whom the council owed a duty under section 21 of the National Assistance Act 1948 to make arrangements for providing residential accommodation. The council contracted with an independent provider of services (Southern Cross, a privately owned profit-earning company) for the claimant to be placed in one of its care homes, which accommodated both privately funded residents and those whose fees were paid by the council in full or in part. Upon the company subsequently seeking to terminate the contract for her care and to remove her from the home, the question arose whether it was exercising public functions within s.6(3)(b) of the 1998 Act and would be acting in breach of her Convention rights if it moved her out of the home. The House of Lords held by a majority of 3:2 that the provision of care and accommodation by the company was not a public function and fell outside the ambit of section 6(3)(b). Mr Drabble submits that the reasoning of the majority, when applied to the facts of the present case, leads to the contrary conclusion that the relevant function of LQHT is a public function.
32. Lord Mance, one of the majority, drew attention to the rationale of s.6 as explained in Aston Cantlow and Wilmcote with Billesley Parochial Church Council v Wallbank [2004] 1 AC 546 ("Aston Cantlow"), such that the essential question under s.6(3)(b) is whether the person or body is carrying out the kind of public function of government which would engage the responsibility of the United Kingdom before the Strasbourg court (paras 87-88). He also referred to what was said by Lord Nicholls in Aston Cantlow about the characteristics of persons or bodies which might constitute core or hybrid public authorities, including the view that there is no single test of universal application to decide whether a function is of a public nature, but that factors to be taken into account include the extent to which in carrying out the relevant function the body is publicly funded, or is exercising statutory powers, or is taking the place of central government or local authorities, or is providing a public service (para 91; see also para 103).
33. One of the principles that Lord Mance identified in the Strasbourg case-law is that the state may in some circumstances remain responsible for the conduct of private law institutions to which it has delegated state powers: see paras 92 and 97-98, referring inter alia to Wós v Poland (application no. 22860/02, unreported).
34. Drawing on case-law relating to the susceptibility of bodies to judicial review, Lord Mance made clear that the possession of statutory powers is not a necessary condition for a body to be a public authority, though the existence and source of any special powers or duties is a very relevant factor (paras 101-102). In the same passage he referred back to the fact that in Aston Cantlow their Lordships had found the concept "governmental" or "of government" useful.
35. In a passage referring at the outset to the hallmarks of a core public authority but going on to consider a public authority within s.6(3)(b), Lord Mance stated:

"105. Democratic accountability, an obligation to act only in the public interest and (in most cases today) a statutory constitution exclude the sectional or personally motivated interests of privately owned, profit-earning enterprises. Public funding and the provision of a public service are most easily understood in a similar sense. In a much looser sense, the self-interested endeavour of individuals usually works to the general benefit of society, as Adam Smith noted. But more than that is required under section 6(3)(b). The difficulty is where to draw the line. Public funding takes various forms. The injection of capital or subsidy into an organisation in return for undertaking a non-commercial role or activity of general public interest may be one thing; payment for services under a contractual arrangements with a company aiming to profit commercially thereby is potentially quite another. In every case, the ultimate focus must be upon the nature of the functions being undertaken. The deployment in Poplar Housing [2002] QB 48, apparently as a decisive factor in favour of the application of section 6(3)(b), of the close historical and organisational assimilation of Poplar Housing with the local authority is in my view open to the objection that this did not bear on the function or role that Poplar Housing was performing."

36. I have referred already to the Poplar Housing Association case. Although Lord Mance objected to the court's reasoning in that case, and Baroness Hale made a similar criticism at para 61, I do not read their judgments as disapproving the result of the case: whether the case was rightly or wrongly decided was not a matter that the House of Lords needed to consider.
37. In a central passage of his judgment, Lord Mance gave these reasons for holding that Southern Cross was not performing a public function:

"115. I do not regard the actual provision, as opposed to the arrangement of care and accommodation for those unable to arrange it themselves as an inherently governmental function …. I can see no basis, and none was really suggested, on which a private care home could somehow be regarded as exercising functions of a public nature in providing care and accommodation for 'self-funders', those who or whose relatives could fund and make their own arrangements. The local authority's involvement is aimed at making arrangements (including funding) which put those in need in effectively the same position as those 'self-funders'. Once such arrangements are made, the actual provision of care and accommodation is a different matter, which, as the modern legislation recognises, does not need actually to be undertaken by the local authority and can take place in the private sector, as it does for those who or whose relatives are able to make arrangements including funding for themselves.

116. In providing care and accommodation, Southern Cross acts as a private, profit-earning company. It is subject to close statutory regulation in the public interest. But so are many private occupations and businesses, with operations which impact on members of the public in matters as diverse for example as life, healthy, privacy or financial well-being. Regulation by the state is no real pointer towards the person regulated being a state or governmental body or a person with a function of a public nature, if anything perhaps the contrary. The private and commercial motivation behind Southern Cross's operations does in contrast point against treating Southern Cross as a person with a function of a public nature …"

38. He went on to point to the undesirability of distinguishing between privately funded and publicly funded residents of the same care home, notwithstanding the existence of some differences between them (paras 117-119); and, approving the reasoning in R v Servite Houses, ex p. Goldsmith (para 29 above), to state that "the essentially contractual source and nature of Southern Cross's activities differentiates them from any 'function of a public nature'" (para 120).
39. Lord Neuberger agreed with Lord Mance's reasons and conclusion, but went on to explain his own thinking in some detail. His starting-point was that a straightforward arrangement whereby a proprietor of a care home agrees to provide care and accommodation for a person under a private contract with that person or a relative would not engage s.6(3)(b), notwithstanding the existence of detailed regulation of care homes or the fact that the service can fairly be said to be to the public benefit (paras 133-138). He did not consider the statutory involvement of the council to convert the function into one of a public nature, even though the council itself was performing a public function by arranging care and accommodation in accordance with its public duty (paras 140-141). He considered at some length the significance of contracting-out of services, which arose out of the fact that the council paid for the claimant's care and accommodation and that it could have provided the care and accommodation itself. Whilst acknowledging that there was undoubted force in the point that, if a person would have Convention rights if a service were provided by a core public authority, she should not lose them merely because the service is contracted-out by that authority to a private company, he listed a number of countervailing arguments, including the following:

"147. First, this is not a case of contracting out a duty ….

148. Secondly, where a company carries on a business providing services for individuals, it appears to me that there is a difference between (a) a core public authority supporting, or subsidising, the business generally (e.g. a care home all of whose expenses are met either as they arise or by a grant intended to cover all such expenses), and (b) such an authority funding services provided by the business to specific individuals (e.g. some or all of a care home's care and accommodation charges for a person who is not well off). I consider that it is easier in the former case to contend that the business as a whole is therefore a function 'of a public nature', than it is in the latter case to contend that the services provided to the specific individuals constitute such a function ….

149. Thirdly, Mrs YL continues to enjoy Convention rights in respect of the provision of care and accommodation provided under section 21 of the 1948 Act against Birmingham, even after the care and accommodation was provided to her ….

150. Fourthly, much of the concern of those who consider that contractors under contracting-out arrangements should have a Convention liability co-extensive with that which the contracting-out authority would have, is based on the nature of the powers given to contractors under such arrangements. … In the present type of case, however, the proprietor of a care home is not given significant, if any, statutory powers …."

40. Having referred to a number of wider considerations, including the assistance to be derived from authorities on the amenability of bodies to judicial review and from the Strasbourg jurisprudence, and the weight placed in Aston Cantlow on whether functions are "governmental" in nature, Lord Neuberger drew matters together in the following passage, which provides a useful summary of the factors considered by him to be of particular relevance:

"160. With the assistance of this guidance, and looking at other policy issues, the following considerations (which, in some cases, have already been mentioned and, in other cases, overlap to some extent and are not ranked in order of importance), are in point: (a) the activities of Southern Cross in providing care and accommodation for Mrs YL would not be susceptible to judicial review; (b) Mrs YL would not, I think, be treated by the Strasbourg court as having Convention rights against Southern Cross, and she retains her Convention rights against Birmingham; (c) Southern Cross's functions with regard to the provision of care and accommodation would not be regarded as 'governmental' in nature, at least in the United Kingdom; (d) in relation to its business, a care home proprietor such as Southern Cross has no special statutory powers in relation to those it provides with care and accommodation, or otherwise; (e) neither the care home nor any aspect of its operation, as opposed to the cost of the care and accommodation provided to Mrs YL and others in her situation, is funded by Birmingham; and (f) the rights and liabilities between Southern Cross and Mrs YL arise under a private law contract. When taken together, these considerations establish to my satisfaction that the provision of care and accommodation by Southern Cross to Mrs YL, despite being arranged and paid for by Birmingham pursuant to its statutory duty under sections 21 to 26 of the 1948 Act, is not a function 'of a public nature' within section 6(3)(b)."

41. In developing that reasoning, Lord Neuberger observed that the fact that local authorities provide free or subsidised accommodation for those who need it does not mean that a private landlord falls within s.6(3)(b) even if its tenants receive rent support (including direct payment to the landlord) from a local authority; and he came back to the point already mentioned, that it is "much easier to invoke public funding to support the notion that a service is a function of 'a public nature' where the funding effectively subsidises, in whole or in part, the cost of the service as a whole, rather than consisting of paying for the provision of that service to a specific person" (paras 164-165). Thus he considered it far easier to argue that s.6(3)(b) is engaged in relation to the provision of free housing by an entity all of whose activities are wholly funded by a local authority than it is in relation to the provision of housing by an independently funded entity to impecunious tenants whose rent is paid by the local authority.
42. Lord Scott agreed with both Lord Mance and Lord Neuberger, expressing his reasons in summary terms as follows

"26. … Southern Cross is a company carrying on a socially useful business for profit. It is neither a charity nor a philanthropist. It enters into private law contracts with the residents in its care homes and with the local authorities with whom it does business. It receives no public funding, enjoys no special statutory powers, and is at liberty to accept or reject residents as it chooses (subject, of course, to anti-discrimination legislation which affects everyone who offers a service to the public) and to charge whatever fees in its commercial judgment it thinks suitable. It is operating in a commercial market with commercial competitors."

43. I have concentrated on the reasoning of the majority, as did Mr Drabble, since that is the reasoning he must rely on if he is to succeed in the present case, though the reasoning of the minority (Lord Bingham and Baroness Hale) is undoubtedly more favourable to the position for which he contends.

The rival submissions

44. Applying YL v Birmingham City Council, Mr Drabble submitted that LQHT is to be seen as carrying out a governmental function, namely the management and allocation of state-subsidised housing (cf. Novoseletskiy v Ukraine (2006) 46 EHRR 53, where a body responsible for the management and distribution of part of the state-owned housing stock was held by the Strasbourg court to be a governmental organisation for whose acts and omissions the state was liable). He placed great emphasis on the substantial public funding of LQHT by means of capital grants awarded by the Housing Corporation, and submitted that the RSL side of the social rented housing sector is established under the Housing Act 1996 and funded by government in order to deliver affordable housing to those eligible for it. The management of such housing, including the setting of rents, is subject to guidance issued by the Housing Corporation. LQHT, in common with other RSLs, takes the place of local housing authorities in the provision of social housing, not by providing a service for a commercial fee but by itself allocating and managing public housing resources in the public interest. Although the relationship is not, in terms of strict legal analysis, one of delegation of functions, the Strasbourg case-law concerning delegation of state powers to private law institutions (e.g. Wós v Poland) is nevertheless relevant. In a wider sense LQHT is entrusted with public monies and required to use those resources in a manner which serves the public interest. Unlike Southern Cross, it is a non-profit-making organisation and is not acting out of private and commercial motivations. All this is said to lead to the conclusion that, viewed both in terms of the individual factors in play and as a matter of global impression, LQHT is exercising a public function when providing affordable housing in the social rented sector.
45. Further, the particular acts of deciding to grant or terminate tenancies of social housing are decisions concerning the allocation of public housing resources and, as such, are not purely private in nature. A decision to terminate a tenancy leads to the withdrawal of a public funded resource from the tenant affected. Although the claimant was formerly homeless and the termination of her tenancy will trigger fresh duties of the local authority under the homelessness legislation, the position is different from that in YL v Birmingham City Council, where the council had a continuing duty under s.21 of the 1948 Act which was unaffected by Southern Cross's decision to close the claimant's care home. More generally, it is well established that decisions about eviction can have a public law character so as to be subject to the control of public law: see, for example, Wandsworth London Borough Council v Winder [1985] AC 461 and Wandsworth London Borough Council v A [2000] 1 WLR 1246 at 1252H-1253B.
46. In summarising Mr Drabble's submissions, I have omitted what I consider to be a plainly misconceived contention in his skeleton argument that in providing housing to applicants with priority under local housing authorities' allocation schemes, LQHT is acting in the exercise of a statutory power under s.8 of the Housing Act 1996 and pursuant to a statutory duty under s.170 of that Act. Its power to grant tenancies and otherwise to dispose of property derives from its own rules, albeit it is subject to the restrictions in ss.8-10 of the Housing Act 1996; and its duty of co-operation under s.170 is not to be equated to a statutory duty to grant a tenancy. This particular attempt to inject a statutory underpinning into the position of LQHT goes too far, but does not affect the wider points made about the role of LQHT and other RSLs within the overall arrangements for the provision of social rented housing.
47. Mr Drabble also referred to the Government's acceptance that RSLs fall within the definition of "bodies governed by public law" for the purposes of the EC directives on public procurement. It seems to me, however, that Mr Drabble can derive no support from that, both because the Government's view is not determinative of the legal position and because concepts of EC law do not provide reliable guidance in the context of the Convention and the Human Rights Act 1998 (cf Aston Cantlow paras 53-55, per Lord Hope).
48. Mr Arden QC, for LQHT, accepted that certain of the functions of an RSL may be public functions: for example, its statutory function in relation to anti-social behaviour orders, or functions carried out pursuant to specific statutory delegations by local housing authorities, such as a delegation under s.27 of the Housing Act 1985, as substituted, of the authority's management functions in relation to its housing stock. These specific situations are to be distinguished, however, from the RSL's function of managing and allocating its own housing stock.
49. Mr Arden counselled caution in relation to the issue of public subsidy. Public funding played no real part in the reasoning of the court in Poplar Housing Association Ltd v Donoghue. It is clear from YL v Birmingham City Council that the subsidising of an individual tenant's rent through housing benefit does not make a landlord a public authority. Another form of subsidy, at the other extreme, is a block grant for an organisation; but even that does not necessarily make the recipient a public authority, and in any event it is not the kind of grant in issue in the present case. This case falls in the middle, namely the payment of grants for specific development programmes. Such grants, however, account for only a minority of the capital funding of RSLs; they are also available to other persons, including profit-making organisations; and they represent only one of a variety of means through which, over time, public monies have been deployed in order to secure the supply of low-cost housing. primarily from the private sector. Thus, public funding does not answer the question whether a body is a public authority. The focus should be on function, not funding.
50. As to that, Mr Arden submitted that the provision of housing, save as regards the special duties imposed in relation to the homeless, has never been a public function in the same sense as has the provision of education or social care. Further, the relationship between LQHT and the claimant is contractual, a factor which was at the heart of the reasoning in Servite Houses, as approved in YL v Birmingham City Council. LQHT, like other RSLs, has a private law status and has conducted its affairs on that basis. Its functions do not have the governmental element referred to in Aston Cantlow and YL v Birmingham City Council. The fact that RSLs are subject to detailed regulation does not point towards their being public authorities, as is clear from the reasoning of the majority in YL v Birmingham City Council.
51. Even if the allocation of housing is a public function, Mr Arden submitted that the termination of a tenancy is not: it is a management decision and is governed by the terms of the contract, subject to any relevant statutory protections for the tenant and to the statutory procedures for recovery of possession. He referred to Peabody Housing Association and submitted that, with the exception of Poplar Housing Association, which turned on its particular facts and was disapproved in YL v Birmingham City Council (an aspect of the submission that I have already rejected), there has been nothing in the subsequent authorities to support the view that the termination of a tenancy is a public function or is amenable to challenge on public law grounds.

Conclusions on public authority

52. I have not found this an altogether easy issue to resolve. The difficulty of drawing the dividing line between public and private functions in the context of s.6 of the Human Rights Act 1998 is illustrated by the differences of judicial view in previous cases. It seems to me, however, that there are factors which push this case further towards the public function side of the line than in YL v Birmingham City Council; and the overall conclusion I have reached is that the management and allocation of housing stock by LQHT is indeed a function of a public nature and that LQHT is therefore to be regarded for relevant purposes as a public authority within s.6(3)(b).
53. The management and allocation of housing stock is not in itself an inherently governmental activity. A private sector landlord carrying on an ordinary commercial business in the letting of accommodation would not be a public authority. But that is not this case. It is true that LQHT is constituted and governed by its own rules, owns and manages its own housing stock and enters into private law contracts with tenants. The nature of its activities, however, and the context within which it operates make this a very different situation from an ordinary commercial business.
54. LQHT is a non-profit-making charity acting for the benefit of the community in providing housing for the poor and other disadvantaged groups. That may not point in itself to its being a public authority (see Poplar Housing Association, as summarised at para 30 above), but it does mean that the case lacks the private and commercial features which were held in YL v Birmingham City Council to point against treating Southern Cross as a public authority.
55. LQHT operates within a particular sector, that of social rented housing, which is not simply subject to detailed regulation (held in YL v Birmingham City Council not to be a pointer towards a body being a public authority) but is permeated by state control and influence with a view to meeting the Government's aims for affordable housing, and in which RSLs work side by side with, and can in a very real sense be said to take the place of, local authorities.
56. In relation to RSLs, control and influence is exercised through the Housing Corporation. Although statutory guidance under s.36 of the Housing Act 1996 is non-binding, there is clearly indirect pressure on RSLs to comply with it; and the extent of control and influence to which RSLs are subject in practice is illustrated both by the Corporation's approach towards implementation of the Government's policy on the setting of social rents (para 10 above) and by the general statements in the Corporation's Regulatory Code and Guidance (para 12 above).
57. Of particular importance is the nature and extent of public subsidy of the activities of LQHT, in common with other RSLs. I leave aside the payment of rent for individual tenants by way of housing benefit, which is of no real significance. The point of significance is the receipt of capital grants from the Housing Corporation, especially social housing grants under s.18 of the Housing Act 1996. The sums involved are very large – over £268 million in two recent financial years (see para 20 above). The fact that they are for particular development programmes rather than block grants for the general purposes of LQHT does not seem to me to affect the position. They are directed towards increasing the housing stock available in the social rented housing sector and are one of the means by which the state secures the delivery of affordable housing to those eligible for it. I bear in mind that private funding is also, and increasingly, important. I also bear in mind that RSLs are not unique in obtaining social housing grants. The fact remains, however, that LQHT's business as a whole is heavily subsidised by the state and that this funding is attributable to the role that LQHT, like others RSLs, plays in the implementation of government policy. In the words of Lord Mance at para 105 of YL v Birmingham City Council, this is a clear case of "[t]he injection of capital or subsidy into an organisation in return for undertaking a non-commercial role or activity of general public interest".
58. Another relevant feature is the voluntary transfer of housing stock to RSLs from the public sector, which again reflects the fact that RSLs are performing functions of the same kind as local authorities in the provision of social rented housing. LQHT is, of course, not in the same position as the RSL in the Poplar Housing Association case, which was formed for the specific purpose of taking a transfer of a substantial part of the local authority's housing stock. But the 10 per cent or so of LQHT's housing stock which has been transferred from the public sector is still a significant proportion.
59. The duty of co-operation with local authorities under s.170 of the Housing Act 1996 is also of significance. In providing accommodation to those with priority under local authorities' allocation schemes, LQHT does not have a purely commercial relationship with the local authorities, but is operating under arrangements made within the framework of that statutory duty. It is striking that well over half of LQHT's new lettings are the result of nominations made by local authorities pursuant to such arrangements (para 22 above).
60. YL v Birmingham City Council shows that, although the question whether a body is a public authority for the purposes of the Human Rights Act 1998 is not to be equated with the question whether it is amenable to judicial review, since the rationale under the 1998 Act is different, it may nonetheless be helpful to consider amenability to judicial review. In this case Mr Drabble seeks to turn that round by deriving LQHT's amenability to judicial review from its status as a public authority under the 1998 Act. That is no doubt because he faces the difficulty that, on existing authority (Peabody Housing Association and Servite Houses), a decision by an RSL to terminate a tenancy is considered to be a matter of private, not public, law and not to be susceptible of judicial review. Mr Drabble, at least in his skeleton argument, did advance a separate contention that LQHT is amenable to judicial review on a conventional basis, but the matters he relied on are much the same as those relied on in support of his arguments as to public authority. In the circumstances I think it better to leave the question of amenability to judicial review out of account when considering the issue of public authority, not least to avoid a danger of circularity of reasoning.
61. There is, however, one aspect of the reasoning in the judicial review cases that I should mention, which is the court's rejection in Peabody Housing Association of the argument that in serving a notice to quit a housing association was exercising statutory powers. It remains the case that RSLs have no relevant statutory powers (leaving aside the power to apply for anti-social behaviour orders, which is not directly relevant here) and that in terminating a tenancy an RSL is relying on private law rights and on the general law concerning recovery of possession through court proceedings. The point is of limited significance: whilst the enjoyment of relevant statutory powers would have told in favour of RSLs being public authorities, the absence of such powers does not preclude their being public authorities.
62. Reference to the termination of a tenancy brings me to a final point on this issue, which is that if the allocation of housing stock by LQHT is a public function, then it would in my view be wrong to separate out "management" decisions concerning the termination of a tenancy as acts of a purely private nature. The allocation and management of the housing stock are to be regarded as part and parcel of a single function or as closely related functions. It would be artificial to separate out the act of terminating a tenancy, or indeed other acts in the course of management of a property, from the act of granting a tenancy. Moreover, as Mr Drabble submitted, the termination of a tenancy leads to the withdrawal of a publicly funded or subsidised resource from the tenant and is likely to trigger fresh duties of the local authority, and has been recognised in the context of judicial review as involving decisions capable of having a public law character. If LQHT is a public authority in relation to the grant of a tenancy, then it is equally a public authority in relation to the termination of the tenancy.
63. For those reasons I accept the claimant's case that LQHT is for relevant purposes a public authority within s.6(3)(b) of the Human Rights Act 1998. As will become clear from the latter part of this judgment, it is a finding which in my view takes the claimant nowhere on the facts of this case, and I think it unlikely to be of great practical significance in many other cases. But in so far as the case is concerned with the establishment of this point of principle, I would find in the claimant's favour on it.

Is LQHT amenable to judicial review on a conventional basis?

64. I can deal with this issue very briefly. In so far as a function of LQHT is a public function which makes it a public authority for the purposes of the Human Rights Act 1998, then it seems to me that it should equally be amenable to judicial review on conventional public law grounds in respect of its performance of that function. It would be strange if a function had a public character sufficient to engage the application of the 1998 Act yet insufficient to engage the court's normal public law jurisdiction. I did not understand Mr Arden to contend to the contrary.
65. Had I reached a different conclusion on the issue of public authority, I would have rejected Mr Drabble's contention, to the extent that he advanced it in this way, that LQHT is in any event amenable to judicial review on a conventional basis. Equally, my conclusion on the issue of public authority does not mean that LQHT is amenable to judicial review in respect of any function other than one by virtue of which it is a public authority for the purposes of the 1998 Act.
66. The key point for present purposes is that in my opinion it is open in principle to the claimant to bring a challenge by way of judicial review, on the ground of breach of legitimate expectation, to LQHT's decision to terminate her tenancy, just as it is open to her in principle to bring a challenge on Convention grounds against LQHT as a public authority. I therefore turn to consider her substantive grounds of challenge.

The substantive grounds of challenge

67. The claimant is typical of LQHT's tenants in having an assured tenancy under Part 1 of the Housing Act 1988. An assured tenancy can be brought to an end by the landlord only by obtaining an order of the court: s.5(1). The grounds for possession, set out in schedule 2, are either mandatory or discretionary. If the court is satisfied that one of the mandatory grounds is established, it must make a possession order; whereas if it is satisfied that one of the discretionary grounds is established, it may make a possession order if it considers it reasonable to do so (s.7(3)-(4)). Further, if the court is satisfied that a mandatory ground is established, the court's normal powers under s.9 to adjourn the possession proceedings or to postpone, or to stay or suspend the execution of, a possession order are not exercisable.
68. Ground 8, which applies where eight weeks' rent is unpaid at the date of the notice of seeking possession and at the date of the hearing, is a mandatory ground, giving the court very limited scope even to adjourn the proceedings: see North British Housing Association v Matthews [2005] 1 WLR 3133, where the statutory scheme was described as "potentially draconian in its application" (para 33). It may be contrasted with the discretionary ground 10, which applies where rent was in arrears at the date of the notice and some rent is unpaid on the date on which possession proceedings are begun; and with discretionary ground 11, which applies where the tenant has persistently delayed paying rent, whether or not any rent is in arrears at the date on which proceedings are begun. In relation to such discretionary grounds "it is the practice of the court to be merciful to tenants when they go into arrears and to give them a realistic opportunity to pay off the arrears, even though this may take a considerable period of time" (per Peter Gibson LJ in Lambeth London Borough Council v Henry (1999) 32 HLR 874, 877).
69. The claimant's complaint relates to LQHT's use of ground 8 instead of one of the discretionary grounds for possession. It is said that this was in breach of legitimate expectation and in breach of her rights under the Convention.

Breach of legitimate expectation

70. The alleged legitimate expectation arises in this way. Section 3 of the 2003 version (but not of earlier versions) of LQHT's standard terms and conditions of its assured tenancy agreement lists LQHT's responsibilities, covering matters such as repair and decorative condition of the premises. The claimant relies on paragraph 6, which states:

"In providing a housing service we will comply with the regulatory framework and guidance issued by the Housing Corporation."

Although a doubt had arisen as to whether the claimant's agreement in fact incorporated those terms and conditions, the case before us proceeded on the basis of a concession by LQHT that it did.

71. The quoted passage is said to amount to a promise or a clear statement of how LQHT proposes to act in exercising its relevant functions, namely that it will comply with Housing Corporation guidance. It is relied on as giving rise to a legitimate expectation in accordance with the principles in R v North and East Devon Health Authority, ex parte Coughlan [2001] QB 213 (see the summary in the headnote at 214F-G, referring in particular to paras 55-59). As Laws LJ expressed it in Nadarajah v Secretary of State for the Home Department [2005] EWCA Civ 1363, at para 68, "[w]here a public authority has issued a promise or adopted a practice which represents how it proposes to act in a given area, the law will require the promise or practice to be honoured unless there is good reason not to do so". Laws LJ also observed, at para 70, that detrimental reliance on the promise or practice is not a necessary condition but is something to be considered in weighing the question whether denial of the expectation is justified.
72. The relevant guidance is to be found in Housing Corporation Regulatory Circular 07/04, issued in July 2004 under s.36 of the Housing Act 1996 (and subsequently replaced by Circular 02/07 which is in similar terms). According to its summary, the circular "sets out the Housing Corporation expectations of housing associations when assessing the eligibility of applicants for a housing association home, and when working to prevent or respond to breaches of tenancy". Paragraph 1.2 states that "associations should pursue alternative interventions, retaining evictions as a last resort", though that statement is in the context of pressure from tenants and communities to evict those accused of antisocial behaviour. The key passage is at paragraph 3.1.4, in a section headed "Clarification of the Corporation's expectations: evictions". It reads:

"Ground 8 of sch.2 of the Housing Act 1988 is a mandatory ground that can be used to seek possession of an assured tenancy where a tenant has arrears of more than eight weeks' rent. Before using Ground 8, associations should first pursue all other reasonable alternatives to recover the debt. Where the use of Ground 8 forms part of an arrears and eviction policy, tenants should have been consulted and governing board approval for the policy should have been given" (emphasis added).

The Housing Corporation's Regulatory Code and Guidance (para 12 above) at para 3.5(c), which is itself stated to be statutory housing management guidance, simply states: "Legal repossession of a property is sought as a last resort".

73. Mr Drabble submitted that reasonable alternatives to the use of ground 8 are an agreement with the tenant to pay the arrears, a court claim for a money judgment, and a possession claim based on discretionary ground 10 or 11. An RSL might, consistently with the guidance, decide to use ground 8 where it considered it inevitable that the court would make an outright possession order whichever grounds were used, or where there was no real prospect of the tenant repaying, but it would be contrary to the purpose of the guidance for an RSL to decide to use ground 8 in preference to grounds 10 and 11 simply on the basis that the court was likely to make a suspended possession order, which the RSL wished to avoid: it does not lie in the mouth of a public authority to say that a judicial discretion will not be properly exercised.
74. The claimant's solicitor, Mr Brian McKenna, has given evidence, based partly on his own experience and partly on what he has been told by others, that it is the practice of the L&Q Group to bring proceedings solely on ground 8. Reliance is also placed on an Audit Commission report on LQHT dated June 2006, which states at paragraph 114, in a section headed "Housing income management":

"114. L&Q have a firm approach to court action that keeps arrears low. A key aspect of the approach to court action is the regular use of ground 8 (mandatory for the judge to give an order and resulting in an outright rather than suspended possession order). When this approach was introduced it led to an initial decrease in the number of evictions while leading to tenants paying arrears more promptly. Instead of suspended possession orders L&Q will, if the tenant is willing, adjourn on terms that require tenants to pay off £5 per week. This is more than the standard £2.85 per week ordered by the judge for suspended possession orders. The aim of this approach is that those with arrears no longer take calculated risks about court action as the possibility of ongoing stays of execution and minimum payment orders no longer exists."

75. In order to place that paragraph in context, it is right to note that the section describes LQHT as strong in the area of housing income management and that it states inter alia that there are high levels of rent collection and that rent arrears are low; early intervention and incentives are used to maximise rental income; there is firm but fair action taken to pursue arrears; and there is a firm and effective policy on asking tenants to keep to their tenancy agreement and to pay the rent in advance. However, the report does express concerns about the eviction rate and about a new target set for arrears. It states that the effect of LQHT's approach is that more tenants are being evicted for arrears than is the case in other associations.
76. LQHT's policy is explained in some detail in the witness statement of Mr David McVitty, an Income Manager with LQHT. He describes the positive action taken to help tenants and thus to avoid rent arrears problems in the first place: for example, advice on housing benefit entitlement, assistance with opening and operating a suitable bank account for direct debit payments, weekly monitoring of new accounts, arrangement of support or referral for vulnerable tenants, and provision of arrears and debt advice and of contact details on the back of stationery. He exhibits LQHT's policy on income collection, which states in para 1.2 that the approach taken to arrears management "will be focussed on supporting tenants to sustain their tenancies and developing a culture of prompt and regular rent payment", and that "[a] firm and fair approach will be taken to recovering arrears with priority given to preventative action though enforcement action will be taken as a last resort if all other action has not resolved the matter". Mr McVitty details the various stages of the income collection procedure, which places stress on early intervention as the most efficient and successful way of addressing problems of arrears and seeks to resolve any problem at each stage before moving on to the next stage. He says that the purpose of the collection procedure is to get the money in, not to evict people: this is the driving force and is at the core of pre-court decision-making.
77. Mr McVitty states that LQHT often prefers not to seek a suspended or postponed possession order because in a typical case on the terms imposed by the court it would take about 10 years to clear the debt; in most cases payments are not made correctly and arrears increase, leading to an application for an eviction warrant; and the courts usually tend towards giving the tenant a further chance, in relation to larger arrears which will take even longer to clear. It is denied, however, that LQHT has a policy only to use ground 8:

"33. LQHT has no policy against using the discretionary grounds; indeed some parts of the Group use only those grounds because they do not use Ground 8 at all. LQHT uses Grounds 10 and 11 where this is considered appropriate, both in drafting the NoSP [notice of seeking possession] and when a possession order is sought at a Court hearing. Many of these cases, however, never reach a full hearing because either the arrears are paid or a repayment agreement is made, but as mentioned above LQHT has obtained orders which are subject to the Court's extended discretion under the discretionary grounds.

34. The Claimant alleges … that LQHT has an 'unofficial policy' of ordinarily using ground 8 rather than other means of recovering arrears. This allegation suggests that in some way LQHT deliberately sets out to have the arrears accrue to the level of 8 weeks' rent in order then to be able to rely on Ground 8. This is completely untrue. As I have explained, our principal objectives are to avoid arrears occurring in the first place, but where they do to deal with them without the need for service of a NoSP and certainly without the necessity then to issue proceedings let alone pursue them as far as a hearing …. In those cases where the arrears are high and neither a lump sum nor a suitable agreement is forthcoming, then obtaining an outright order under Ground 8 may be the only realistic or sensible option from the tenant's point of view as much as LQHT's. As indicated above with our experience of suspended and postponed possession orders, most of those who are subject to orders which will take a very long time to pay off large amounts of arrears do not sustain them, leading to further arrears and worry on their part, leaving them in even more debt as they attempt to hang on in the premises, and often ultimately ending in eviction in any event.

35. The decision whether to use Ground 8 in any particular case is one which is dependent on the circumstances of each individual case ….

36. When Ground 8 has been used, the tenant concerned in approximately 80% of cases has found a way to pay the arrears prior to the Court hearing. This has accordingly been a very effective tool for recovering rent arrears."

78. Mr Drabble suggested that the witness statement was drafted in such a way as to disguise the fact that LQHT, as distinct from other parts of the L&Q Group, does not use grounds 10 and 11. On a fair reading of the witness statement, and in the absence of any cross-examination of Mr McVitty, that suggestion is unsustainable. The evidence as a whole does, however, indicate a strong preference by LQHT for the use of ground 8 rather than ground 10 or 11 in a case where large arrears have arisen and attempts to get them cleared have been unsuccessful. That is also consistent with LQHT's approach towards the claimant herself.
79. The court has been provided with a detailed chronology relating to the claimant's rent arrears and steps taken by LQHT to deal with the problem. The main features are these. Between March and July 2004, arrears increased to the level of over 9 weeks' rent, despite contacts with the claimant and a promise by her to make regular payments by direct debit. This led to the service of a notice of seeking possession ("NoSP") on ground 8, but with a letter advising that if the promised regular payments were maintained no further action would be taken. After further defaults, the claimant made a payment towards the end of the year which reduced the arrears to something over 5 weeks' rent. By March 2005, however, arrears had again increased to over 8 weeks' rent, resulting in the service of a further NoSP. The claimant then nearly cleared the arrears. By September 2005 they had increased again to over 5 weeks' rent. Between then and January 2006 there were no additional arrears, since the claimant was in receipt of housing benefit during that period; but the claimant defaulted on an agreement for the payment of existing arrears. From January there was an increase in arrears, to a level of over 8 weeks' rent by April 2006, when a further NoSP was served. This led to a further agreement with the claimant for the payment of the arrears, but again she defaulted and further attempts to secure payment were unsuccessful.
80. Proceedings were issued in July 2006, but the hearing fixed for September was adjourned to enable the claimant to make payments. The problems continued, and by March 2007 arrears had increased to over 23 weeks' rent, though the position was ameliorated to some extent by full housing benefit restarting and being backdated to February 2007. The hearing was re-listed for 27 March. At that hearing the proceedings were dismissed on the basis that a cash payment credited on the date of deemed service of the April 2006 NoSP meant that arrears as at that date were less than 8 weeks' rent.
81. The claimant's solicitor says that at the hearing on 27 March he raised, but LQHT's representative refused to discuss, the issue of repayment of the arrears by instalments. Immediately after the hearing, and on the same date, a further NoSP was served: it is the decision to issue that NoSP which is the subject of challenge. At that time there were arrears of over 19 weeks' rent. Thereafter the claimant remained in receipt of full housing benefit and made some minor payments in respect of the arrears, but they were still at much the same level by December 2007.
82. That is the principal material by reference to which Mr Drabble advanced the case of breach of legitimate expectation.
83. Mr Arden's response for LQHT was that there was no legitimate expectation in this case; and even if there was, there was no breach of it. He submitted that a representation must in general be "clear, unambiguous and unqualified" (R v Inland Revenue Commissioners, ex p. MFK Underwriting Agents Ltd [1990] 1 WLR 1545, 1570B) and have "the character of a contract" (R v North and East Devon Health Authority, ex parte Coughlan, para 59) to give rise to a legitimate expectation. Paragraph 6 of section 3 of LQHT's terms and conditions is a statement of intent or target duty. It refers to the totality of the regulatory framework and guidance issued by the Housing Corporation, which brings in a large body of materials. The claimant does not contend that it amounts to a contractual promise to comply with such materials; but if, in this context, it does not amount to a contractual promise, it equally lacks the character to sustain a legitimate expectation. Moreover the specific guidance relied on, using the language of "last resort" and "all other reasonable alternatives", is not prescriptive and is too vague to sustain a legitimate expectation. A separate argument is that reliance on the representation, if not essential, is a very relevant factor, yet there is no evidence in this case that the claimant was even aware of the existence of LQHT's standard terms and conditions, let alone of their contents.
84. If there was a legitimate expectation, then Mr Arden's submission is that LQHT did not act in breach of it. LQHT's evidence shows that there is no policy always to use ground 8 rather than ground 10 or 11 and that there were valid reasons for LQHT adopting the approach that it did in this case. All reasonable alternatives were pursued before the decision was taken to bring possession proceedings relying on ground 8. Mr Arden also referred the court to LQHT's evidence that compliance with Circular 07/04 (now Circular 02/07) has to be addressed in LQHT's annual compliance statement provided to the Housing Corporation and that LQHT has consistently received a "green light" rating from the Corporation for all aspects of its performance.
85. In my judgment, the claimed legitimate expectation is far too tenuous and general in character to be enforceable in public law, and there was in any event no breach of it.
86. The claimant herself has not given evidence that she had the expectation alleged or even that she knew of the term of the contract from which the expectation is said to have arisen. Indeed, it is a matter of concession rather than hard evidence that LQHT's relevant standard terms and conditions were incorporated in her agreement at all. Thus the expectation is simply an artificial construct derived from the standard terms and conditions and attributed to the claimant, rather than a genuinely held expectation of her own. I regard that as important. A legitimate expectation arises where a decision-maker has led someone affected by the decision to believe that he or she will receive or retain a benefit or advantage, whether procedural or substantive, and it is unfair or an abuse of power to thwart that expectation. Since the claimant was not led to believe in this case that LQHT would act differently from the way in which it did act, it is difficult to see how any relevant expectation can be said to be in play. This point is different from, and logically prior to, the issue of reliance on an expectation. I would accept that reliance is not always necessary, though the absence of reliance may be relevant to the enforceability of an expectation. But in this case not only did the claimant not rely on the representation in question; she did not even know about it.
87. As to the representation itself, that "[i]n providing a housing service we will comply with the regulatory framework and guidance issued by the Housing Corporation", I do not think that it can be read as a clear, unambiguous and unqualified promise or commitment to do everything set out in the guidance issued by the Housing Corporation. The guidance is by its nature guidance, not prescription. The regulatory provisions to which I have referred place the Housing Corporation in a strong position to ensure that it is substantially followed, but there is nothing that turns it into the equivalent of a statutory rule-book, and the Housing Corporation looks not just at whether the guidance has been followed but at whether alternative action has been taken to achieve the same objectives (para 12 above). The statement in LQHT's standard terms and conditions cannot have been intended to give the guidance a status it does not have under the statute or in the Housing Corporation's own practice. At most, Mr Arden's description of it as a "target duty" is more apt. Moreover, if the statement has the character of a promise, there is no reason why it should not be treated as a contractual promise, since it features in the contractual terms and conditions; but it is no part of the claimant's case that the statement is contractually binding. If it lacks the qualities to give it contractual force notwithstanding that it is located in a contract, I am not satisfied that it can properly be treated as having the qualities that justify its enforcement in public law as a legitimate expectation.
88. A further problem in the claimant's way is the wording of the relevant guidance. The broad statements to the effect that possession proceedings should be brought "as a last resort" are obviously too general to assist the claimant. Her case has to rest on the specific statement in para 3.1.4 of Housing Corporation Regulatory Circular 07/04 that "[b]efore using Ground 8, associations should first pursue all other reasonable alternatives to recover the debt". Yet even the reference to "all other reasonable alternatives" introduces significant scope for differences of judgment. In particular, it does not in my view require that, if possession proceedings are brought, they should first be brought on discretionary grounds 10 and 11 (whether always or as a general rule) and that mandatory ground 8 should only be used in the event that proceedings on the discretionary grounds have been unsuccessful in securing payment of the debt or provide no prospect at all of securing payment.
89. Thus, even if I were to accept the existence of a legitimate expectation in terms of the relevant guidance, that is a promise or commitment on the part of LQHT to pursue all other reasonable alternatives to recover the debt before using ground 8, I would not find a breach of it on the facts of this case. I have accepted that the evidence reveals a strong preference by LQHT for the use of ground 8 rather than grounds 10 and 11 once it has reached the stage of recourse to possession proceedings. But, as I have just indicated, I do not accept that the pursuit of all reasonable alternatives requires possession proceedings to be brought first on ground 10 or 11 before reliance can be placed on ground 8. In determining whether proceedings on grounds 10 and 11 represent a reasonable alternative, it is legitimate to consider the likelihood in practice of securing effective repayment of the debt by way of proceedings on those grounds. If such proceedings are unlikely to have that result, LQHT is entitled not to regard them as a reasonable alternative. In any event, when considering reasonable alternatives the focus should be not just on possession proceedings, which should come at the end of the process (a last resort), but also on the measures taken at all prior stages to prevent the build-up of arrears in the first place and to secure the reduction of arrears if they do begin to build up.
90. Looking at the overall history of LQHT's dealings with the claimant, I am not persuaded that LQHT failed to use all reasonable alternatives to recover the debt before using ground 8. In particular, in the light of the history of substantial and repeated defaults, LQHT was in my view entitled to take the view that reliance on ground 10 or 11 did not provide a reasonable alternative means of recovering the debt, and its reliance on ground 8 was in the circumstances in accordance with the relevant guidance and justified.
91. Accordingly the claim based on the conventional public law ground of breach of legitimate expectation should in my opinion fail.

The Convention issues

92. The Convention issues arise only on the basis that LQHT is a public authority within s.6(3)(b) of the Human Rights Act 1998 but is not susceptible to judicial review on conventional public law lines in relation to the decision to take possession proceedings against the claimant. The arguments also depend on establishing a breach of legitimate expectation. In view of the conclusions I have reached on both those matters, it seems to me that the Convention issues necessarily fall away. But I will explain briefly how the parties' respective cases were put.
93. The case for the claimant is that the decision to evict her from her home interfered with her rights under article 8(1) and was not justified under article 8(2), since the alleged breach of legitimate expectation rendered the interference disproportionate: cf. R v North and East Devon Health Authority, ex parte Coughlan, at para 93, where the court upheld a finding that a decision to move the elderly applicant from her home would be in breach of article 8 in circumstances where she had been promised that it would be a home for life.
94. My finding that there was, on the facts, neither a legitimate expectation nor a breach of any legitimate expectation sinks the argument. But Mr Arden deployed additional weaponry against it, in the form of the reasoning of the majority of the House of Lords in Kay v Lambeth London Borough Council [2006] 2 AC 465. In summary, the majority held that article 8 can be raised as a defence to possession proceedings only in so far as it is contended that the law under which the possession order is sought is incompatible with article 8, and not where the article 8 defence is based solely on the occupier's personal circumstances: see, for example, per Lord Hope at para 110. It was recognised that a conventional public law defence might be available to challenge a decision of a public authority to recover possession, in accordance with the principles in Wandsworth London Borough Council v Winder [1985] AC 461: see para 110 and also per Lord Brown at paras 208-211. On the face of it, however, the possibility of a defence by way of a comparable article 8 challenge to such a decision was excluded.
95. Mr Drabble pointed to the oddity of the position if a conventional public law defence based on breach of legitimate expectation can be advanced against a public authority which is amenable to judicial review but an article 8 defence based on the same facts cannot be raised against a public authority which is not amenable to judicial review. He submitted that Kay v Lambeth London Borough Council was not addressed to that situation and that it must be possible for article 8 to be raised in a case where, for example, the decision to bring possession proceedings involves extreme unfairness of the kind that arose in ex parte Coughlan. Alternatively, if Kay v Lambeth London Borough Council excludes reliance on article 8, then Mr Drabble submitted that essentially the same case would sound under article 1 of protocol 1 to the Convention: the argument relied on Rowland v Environment Agency [2005] 1 Ch 1 and was to the effect that a legitimate expectation in relation to a right to occupy property is itself a property right protected by article 1 of protocol 1.
96. As a final limb to his case, Mr Drabble contended that if the law does preclude a challenge on Convention grounds to the fairness of the decision to bring possession proceedings, then the law itself is incompatible with the Convention and there should be a declaration of incompatibility under s.4 of the Human Rights Act 1998. The Treasury Solicitor notified the court that, if the court contemplated making such a declaration, formal notice should be given to the Secretary of State for Communities and Local Government, who would wish to be joined as a party and to be heard on the issue. On the view I have formed of the case, the question of a declaration of incompatibility does not arise and it is unnecessary for formal notice to be given to the Secretary of State.
97. Although I have thought it helpful to indicate the way in which the parties have put their respective cases on the Convention issues, I think it better in the circumstances not to express any view on them. The issues themselves arise on a somewhat artificial assumption, and any view would necessarily be obiter and would trespass upon territory covered by the House of Lords in Kay v Lambeth London Borough Council. Whether Mr Drabble is right in his attempt to cut down the apparent breadth of the reasoning in that case is best left for consideration if and when the point actually arises for decision.

Conclusion

98. For the reasons given, I would dismiss the claim.

Mrs Justice Swift :

99. I agree.