Charities, Discrimination and Positive Action

On 16 October 2020 the Supreme Court delivered its judgement R (on the application of Z and another) v Hackney London Borough Council and another [2020] UKSC 40.

The appeal considers the application of anti-discrimination laws to charities where they are established to provide benefits for particular groups which are the subject of their charitable objectives.

The Court unanimously decided that the policy of a charitable housing association to offer social housing only to members of the Orthodox Jewish community was lawful under the Equality Act 2010.

Background

The principal appellant (the "appellant") is a mother with four children. The family is not a member of the Orthodox Jewish community. The first respondent is the local housing authority Hackney London Borough Council (the "Council") and the second respondent is the charity Agudas Israel Housing Association Ltd ("AIHA").

AIHA's charitable objective is to provide housing for the Orthodox Jewish community in Hackney. AIHA makes property available to the Council for people who have applied for social housing and its selection criteria is in line with the charitable objectives, meaning that housing is offered to members of the Orthodox Jewish community. The Council does not have a right to compel AIHA to take tenants who do not fall within the scope of AIHA's selection criteria.

The appellant was assessed by the Council as falling within a group with a high need for re-housing. The appellant was not offered housing let by AIHA as she is not from the Orthodox Jewish community. Whilst the appellant was waiting for housing, property owned by AIHA became available and was offered to members of the Orthodox Jewish Community. The appellant had to wait longer than them to be allocated to suitable property. 

The Appellants sought to challenge AIHA's allocation policy and the Council's allocation arrangements with AIHA by means of an application for judicial review. The principal appellant claimed direct discrimination on the grounds of race and religion. AIHA accepted that it distinguishes between applicants on the grounds of religion and this constitutes unlawful direct discrimination, however it denied discrimination on the grounds of race.

The claim was dismissed by the Divisional Court, as were subsequent appeals to the Court of Appeal and Supreme Court.

The Supreme Court's decision

The Supreme court unanimously dismissed the appeal and held that AIHA could rely on the following two defences under the Equality Act 2010 (the "Act"), which permit conduct which may otherwise constitute unlawful discrimination.

1. Section 158 of the Act: Positive Action

Section 158 Act provides a defence where positive action addresses the needs or disadvantages connected to a protected characteristic and is in a proportionate manner. The Divisional Court held that section 158 of the Act applied in this instance. The Orthodox Jewish community in Hackney suffers housing disadvantages and has different housing needs relating to their religion. AIHA's policy enables the community to overcome or minimise these disadvantages and the policy was a proportionate means of doing so. The Court of Appeal and Supreme Court agreed with the Divisional Court and the appeal was dismissed.

Counsel for the appellants argued that section 158 of the Act is limited to promoting equality of opportunity and does not include the pursuit of equality of outcomes. This argument was rejected by the Supreme Court and it was held that positive action is not limited to promoting equality of opportunity. Positive action can pursue equality of outcome by overcoming or minimising disadvantages connected to a protected characteristic.

The Supreme Court also agreed that the Divisional Court's finding of proportionality could only be set aside if it had misdirected itself or reached a decision which was wrong.

2. Section 193 of the Act: Charities

Section 193 of the Act authorises charities to restrict benefits to people who share a protected characteristic where this is pursuant to their charitable instrument and it is either:

1. a proportionate means of achieving a legitimate aim; or
2. for the purpose of preventing or compensating for a disadvantage linked to the protected characteristic. 

The Supreme Court held that section 193(a) of the Act applied as AIHA had a legitimate aim in endeavouring to minimise the disadvantages suffered by the Orthodox Jewish community in Hackney. The measures taken to promote that aim, such as rules about who could apply for social housing provided by the charity, were proportionate.

The Supreme Court also held that section 193(b) of the Act applied and that AIHA's policy was a method of preventing or compensating for the community's disadvantage due to a protected characteristic. The Supreme Court held that the exclusion of any express requirement for proportionality in section 193(b) of the Act was a deliberate decision by Parliament and no proportionality requirement is to be read in under EU law or Human Rights Act 1998. For charities, this is in the interests of conserving their resources for use in fulfilling their charitable objectives rather than wasting resources on the costs of potentially having to provide proportionality justifications.

Comment

The case, and particularly the second limb of section 193(b) will be of interest to charities who are dedicating to providing benefits to a certain disadvantaged group as it shows that a charity is entitled to benefit a particular group sharing a protected characteristic without necessarily committing unlawful direct discrimination.

The case also highlights the limited circumstances in which an appellate court can interfere with a lower court's assessment of proportionality and consequently the importance of running proportionality arguments effectively in the first instance.

If you require further information on anything in this article, please contact Khalid Sofi (khalid.sofi@lbmw.com) or Beatrice Lewers (beatrice.lewers@lbmw.com).