The High Court in the case of R (Croydon Property Forum) v London Borough of Croydon considered what is required of a local authority in order to satisfy its statutory duty to 'take reasonable steps to consult those who are likely to be affected' by a decision.
The case related to the decision by the London Borough of Croydon ('the Council') to designate the whole of its area as an area of 'selective' licensing under section 80 of the Housing Act 2004 - that is, as an area in which all private rented houses are required to be licensed by the Council.
The claimants argued that the Council had made this decision without having taken the reasonable steps to consult required by statute. However, the judge, Sir Stephen Silber, after reviewing the extensive consultation exercise carried out by the Council before making the designation, declared himself 'quite satisfied' that the statutory duty had been discharged.
The case is the third legal challenge to a selective licensing designation made on the basis of alleged inadequate consultation by a local authority, and Croydon is the first council successfully to defend its consultation process. The licensing scheme can continue to be implemented and will come into effect on 1 October 2015.
The case is also of wider significance for the interpretation of equivalent statutory consultation duties in other contexts.
John Cooper and Kieran Laird of our Public Law & Regulation team, together with Clive Sheldon QC of 11 KBW, acted for the Council - instructed by Julie Belvir, Borough Solicitor and Director of Legal and Democratic Services.
Background
Selective licensing is a means by which local authorities may seek to address low housing demand or (as in the case of Croydon) persistent anti-social behaviour which private landlords are failing to take appropriate action to address. Under Part 3 of the Housing Act 2004 ('the Act'), an authority faced with one of these problems may designate all or part of its area as an area of selective licensing.
The effect of a designation is to require private landlords (or their agents) to obtain licences in respect of any houses which they propose to let to tenants. Licences will contain conditions which can be enforced by local authorities, and therefore act as a means of imposing a system of regulation on the private rented sector. Licence holders must be fit and proper persons. A failure by a landlord to ensure that a licence is obtained for a relevant property is a criminal offence.
However, selective licensing should not be confused with the legally discrete regime for the licensing of houses in multiple occupation, which is established under Part 2 of the Act.
Because of the significance of selective licensing - for landlords, tenants and the wider community in the area to which it applies - a local authority must, before designating a part of its area for licensing, take 'reasonable steps to consult persons who are likely to be affected by the designation' (section 80(9) of the Act).
In this case, the Council's cabinet agreed to consult on a proposal for a selective licensing scheme in June 2014. The consultation was carried out over a six month period starting in September 2014, and took place in three stages -
- Stage 1 was a two-month, non-statutory engagement with key stakeholders. It included sending a postal survey to over 9,000 landlords and agents with properties in the borough, a workshop for landlords and agents, and the publication of significant quantities of information about selective licensing. At this stage it was clearly indicated to all interested parties that there would be further statutory consultation.
- Stage 2 was a four-week statutory consultation which identified four options, and indicated that borough-wide licensing was the Council's preference. This was publicised in a wide variety of ways, using both traditional media (e.g. advertisements in local papers, a local public meeting and a face-to-face survey of a random sample of households) and a range of electronic means of communication (websites, various social media, email). Information was placed on plasma screens in Council buildings, and news of the consultation was released to and reported on by the local press.
- Stage 3 was a further ten-week consultation carried out using a wide range of traditional and social media, and additionally consulting those in surrounding areas using press advertising in local papers and the London Metro.
At the end of this process, the Council considered the consultation responses and decided to adopt its preferred consultation proposal of designating the whole of the borough for selective licensing. The decision was 'called in' by the Overview and Scrutiny Committee, which decided that it could proceed to implementation with effect from 1 October 2015.
The Judgment
The Croydon Property Forum represents a number of developers and landlords in the Croydon area. It argued that the Council had failed to discharge its duty to take reasonable steps to consult in two broad respects.
First, it said that there was a failure to consult with 'developers as a class', arguing that no special steps were taken to draw the attention of property developers to the consultation. Second, it claimed that landlords were not adequately consulted because there was no repeat at the second and third stages of the consultation of the direct mailing approach that had been taken at the first stage, and that the Council had instead irrationally relied on 'general advertising' at these stages.
The judge rejected these submissions. Even applying a 'strict construction' of the statutory obligation, he considered that they must fail for the following reasons:
- Although Stage 1 was a non-statutory part of the consultation, it was of 'great relevance' to an assessment of the Council's performance of its statutory duty. It served as 'a trailer for the full consultation process'.
- The publicity given to the consultation at Stages 2 and 3 was 'comprehensive'. The Council had used 'an impressive variety of different means of communication to alert all different groups in Croydon of its planned intention to use the selective licensing scheme'.
- It was 'reasonable to assume' that any person investing or considering in investing in Croydon (i.e. in particular, developers) would have carried out some 'due diligence' as to the plans of the Council.
- The consultation exercise lasted six months in total, with considerable publicity given to it.
- Given these circumstances, 'it could reasonably be expected that anyone with a connection to or interest in Croydon would have had the Council's proposals drawn to their attention'. Some developers claimed not to have been aware of the consultation, but the judge said that he did 'not understand how that occurred bearing in mind the extensive publicity'.
- The Council did exactly what was specified in DCLG guidance on selective licensing, namely to 'ensure that consultation is widely publicised using various channels of communication'.
In any event, even though the Council had fully complied with the statute on its strict construction, the judge did not in fact think that this approach was the correct one to adopt. In judicial review it set a standard that was 'too favourable' to the claimant.
For the correct standard, the judge drew on dicta from two previous cases. In R (Wainwright) v Richmond upon Thames LBC, a case also concerned with the extent of a statutory consultation duty, Clarke LJ said that: 'the council must have a comparatively wide discretion as to how the process is carried out'. In R (Greenpeace) v Secretary of State for Trade and Industry, Sullivan J said that: 'a decision-maker will usually have a broad discretion as to how a consultation exercise should be carried out' and that a conclusion that a consultation exercise was unlawful will usually require a finding that 'something went "clearly and radically" wrong'.
Applying these principles to the present case, the judge had no difficulty in concluding that the Council acted within its wide discretion, and that nothing went clearly and radically wrong.
In short, as the judge rightly observed, 'it is almost invariably possible to suggest ways in which this or indeed any consultation exercise might be improved', but this is not the standard of review to be applied. Whether on a strict construction of the statute or (which was more appropriate) by allowing the Council the wide discretion to which it was entitled, Croydon's consultation exercise could not be impugned.
Commentary
Selective licensing has been increasingly widely used by local authorities, and in its wake has brought a number of legal challenges from developers, landlords or their agents. Prior to this case, there were four challenges - two against the substantive rationale of councils for introducing selective licensing, which were unsuccessful (Thanet and Rotherham), and two against the consultation process that was conducted by councils before making their decisions, which were successful (Hyndburn and Enfield).
The history of these cases therefore evidences the unsurprising proposition that it is generally easier in judicial review to challenge procedural failures than the substantive reasoning for a decision.
However, Croydon has become the first local authority successfully to defend its consultation process prior to a selective licensing decision, and indeed the judgment is a clear endorsement of that process and of the nature and extent of the steps taken by the Council to engage all interested parties in and outside its area.
More generally, the case is of importance because it deals with an aspect of the law on consultation which is often neglected.
Typically, in consultation cases, a statutory duty sitting behind the consultation is a mere background fact. The substance of the challenge is more likely to consider the consultation process triggered by that duty against the public law standards of fairness known as the Sedley requirements (recently re-affirmed by the Supreme Court in Moseley).
In Croydon, however, there was no challenge at all on this basis; no suggestion that there was anything wrong with the full and clear materials produced by the Council, the point in time at which consultation took place, the time allowed, or the conscientious consideration given by the Council to the responses received.
Instead, Croydon is entirely about the statutory duty itself. What does it mean to be required to 'take reasonable steps to consult'? Specifically, to what extent does this requirement impose a duty on a public authority not merely to publicise a consultation very widely in ways which are likely to draw it to the attention of interested parties, but actively to target specific groups and ensure that they are being engaged in the process?
The Court made three points of particular general importance. First, a statutory duty of this nature is to be read as allowing an authority a wide discretion as to how it goes about its consultation. It is almost always going to be possible to suggest how a consultation process might have been improved in some way, but that is not the test to be applied. Something must have been very wrong in order for the process to fall outside the scope of the authority's discretion.
Second (even if this element of discretion were not present and a strict construction of the statute were applied), businesses who are interested in the subject-matter of a consultation have some responsibility to use 'due diligence' to inform themselves of it and take steps to respond. Third, (and again, even on a strict construction), general publicity given to a consultation via a wide range of modern media is an appropriate satisfaction of a reasonable steps duty, especially if some action was taken to draw the attention of interested parties to the fact that the consultation could be expected.
Aside from its legal merit as an interpretation of statutory consultation duties, this is also an admirably pragmatic view of such duties as they apply to public authorities in the real world.