Judgments - Mayor and Burgesses of the London Borough of Lewisham (Appellants) v Malcolm (Respondent)

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41.  As to the two factual issues, it is not necessary in view of my conclusion on the main issue to spend time on them. I will simply say that, on the first of the factual issues, I would not have disagreed with the conclusions Arden LJ expressed. The medical evidence was not challenged and did indicate that Mr Malcolm suffered from a disability as defined in section 1 of the Act. As to the second factual issue, however, I find myself in agreement with the learned trial judge’s conclusion that Mr Malcolm had shown insufficient connection between his schizophrenia and the sub-letting to justify a finding that the sub-letting was causally connected with the schizophrenia or, to put the point another way, that the schizophrenia was causally responsible for the sub-letting. I would allow this appeal and restore the order of Judge Hallon.

BARONESS HALE OF RICHMOND

My Lords

42.  The issue before us is whether and in what circumstances a disabled tenant can rely upon sections 22 and 24 of the Disability Discrimination Act 1995 (the DDA) to resist what would otherwise be an unanswerable claim to possession by his landlord. The primary case advanced on behalf of the appellant local authority landlord (the Council) is that the DDA affords no defence to the possession claim. The secondary case is that there was no breach of the DDA in any event. This raises questions about the fundamental principles underlying disability discrimination law. Is it intended simply to secure that disabled people are treated in the same way as other people who do not have their disability? Or is it intended to secure that they are treated differently from other people in order that they can play as full as possible a part in society whatever their disabilities?

The facts

43.  In February 2002, the Council let a flat to the respondent, Courtney Malcolm, who had applied under the homelessness provisions of the Housing Act 1996. The tenancy was a secure tenancy for the purpose of section 79 of the Housing Act 1995. Because Mr Malcolm had previously been a tenant of the Council, he was entitled to exercise a right to buy the flat. He applied to do so in March 2002. The purchase had still not been completed in 2004 when the material events took place, but by then Mr Malcolm had accepted the Council’s offer to purchase at the price indicated and had arranged a mortgage. When he applied for the mortgage he was employed by a housing association. Having secured the mortgage offer, his solicitors sent the signed transfer document to the Council on 22 June 2004 saying that he wished to complete the transaction on 26 July 2004.

44.  Also on 22 June 2004, Mr Malcolm sublet the flat on an assured shorthold tenancy for a period of six months. This was a breach of the express terms of his tenancy agreement, clause B3 of which provided:

“You must live in the property as your only or principal home. You must not sublet. You must not be absent (except in cases of emergency) for a continuous period of more than two months without first obtaining the written permission of the Council.”

Clause B5 of the agreement warned secure tenants that subletting also had the automatic effect that the tenancy was no longer a secure tenancy and could never subsequently become one.

45.  By section 79(1) of the Housing Act 1985, a tenancy is only a secure tenancy at a time when both the “landlord condition” and the “tenant condition” are satisfied. By section 81, the “tenant condition” is only satisfied when the tenant is an individual and occupies the dwelling as his only or principal home. Furthermore, by section 93(2):

“If the tenant under a secure tenancy parts with the possession of the dwelling-house or sublets the whole of it (or sublets first part of it and then the remainder), the tenancy ceases to be a secure tenancy and cannot subsequently become a secure tenancy.”

The reasons for these provisions are obvious. There is a very limited stock of social housing in this country. It is intended for the people who are most in need of it because they less able than others to acquire their own housing, whether by renting or buying, in the open market. Local authorities are obliged to follow statutory criteria in allocating council housing. They also have statutory duties to house homeless people who have particularly pressing needs. It is unfair to the people who have a good claim to social housing to allow people who have so little need of it that they can sublet it and live elsewhere to retain their security. Nor should council tenants be allowed to make money out of their council housing by treating it as an investment.

46.  In early July 2004, the Council discovered that Mr Malcolm had sublet the flat. An occupancy check had revealed the sub-tenants in occupation. On 6 July 2004, therefore, the Council gave him Notice to Quit requiring him to vacate the flat on 9 August 2004. They also declined to proceed with the right to buy transaction. In November 2004, they completed the claim form and particulars of claim for possession, and the claim was issued by the county court on 2 December 2004. The reasons given for making the claim were these:

“The claimant as a council is statutorily bound to observe the allocation scheme and the scheme for helping homeless people with accommodation as set out in the Housing Act 1996 with respect to allocating council tenancies. It would be unfair to applicants for council housing and homelessness applicants under those schemes to allow the [subtenants] to stay in the property as a result of [Mr Malcolm] having wrongfully sublet it to them. The Council has a serious shortage of properties to let to applicants and [Mr Malcolm] is in breach of the terms of his tenancy agreement and therefore the Council requires possession of this property.”

47.  In his defence, filed on 8 March 2005, Mr Malcolm claimed that he suffered from a disability for the purposes of the DDA, that the reason why the Council was seeking possession was because of his disability, and that unless the Council could show justification the Court was precluded from making a possession order against him.

48.  Mr Malcolm was born in 1964. He was diagnosed with schizophrenia in 1985. This necessitated a total of ten admissions to hospital between 1985 and 1990, two of which were compulsory admissions under the Mental Health Act 1983. His condition was then stabilised on drugs. From 1989 he was consistently in employment. He was managed as an out-patient and responded well to depot anti-psychotic medication. According to a report from his psychiatrist, Dr Sivathasan, dated 16 February 2005, he periodically requested that it should be discontinued or he defaulted and his mental state invariably deteriorated within weeks or months.

49.  This last information must have been culled from medical records, because Dr Sivathasan first saw Mr Malcolm at his “care programme approach” meeting in October 2003. The patient requested a change from depot to oral medication and this was agreed. But when Dr Sivathasan saw him again in April 2004, he had not been complying with his oral medication, “and he became dysfunctional at work, eventually, simply sitting at his desk. He was losing weight, not sleeping or eating". This may simply have been what the patient said, but Dr Sivathasan also reported that “he demonstrated marked psychomotor retardation, associated with impoverished concrete thinking". Mr Malcolm agreed to restart the oral medication but there were still compliance problems and so in July 2004 they reverted to the depot medication which he continued to take.

50.  Mr Malcolm’s employment with the housing association ended in May 2004. There is no independent evidence of why this happened, but Mr Clifford, his social worker, and Dr Sivathasan felt that it was because he had become unwell. Two days after the Notice to Quit, they wrote to the Council, asking them to reconsider the decision because of Mr Malcolm’s severe mental health problems. They realised that the situation had been brought about because of his own actions but were concerned that it might result in another mental breakdown. Each wrote again in February 2005, after the possession proceedings had begun, pointing out that the decision to sublet was during the period when Mr Malcolm was unwell and (in Mr Clifford’s words) “as a result unlikely to make decisions that were in his best interests or with full capacity to understand the consequences", and strongly opposing the action against him.

51.  Nevertheless, the action eventually proceeded to trial in the county court in March 2006. The judge heard oral evidence from two council officers, from Mr Malcolm, his brother, his mother and his sister. She also had the written report of Dr Steadman, an independent psychiatrist jointly instructed by both sides. That report confirmed Dr Sivathasan’s opinion that Mr Malcolm’s non-compliance with oral medication was almost certainly the cause of his mental deterioration. Dr Steadman’s view was that “on the balance of probabilities, this gentleman may well have had the mental capacity to enter into a contract but I feel that he would not have had the mental capacity to properly understand the issues concerning such or the potential ramifications of such".

52.  The judge granted the possession order. Her principal reason for doing so was that the 1995 Act was not brought into play at all where security was lost by operation of law. There was no discretion for the court to exercise. But in case she was wrong on that, she also made findings of fact: first, that Mr Malcolm was not disabled for the purpose of the Act because she was unable to say that his illness had a substantial effect upon his ability to carry out day to day activities; and secondly, that the subletting was a planned decision, closely linked to his proposed purchase on mortgage, and not an irrational act caused by his illness.

53.  The Court of Appeal allowed Mr Malcolm’s appeal, dismissed the possession proceedings, and declared that the notice to quit and possession action constituted unlawful discrimination contrary to Part III of the 1995 Act: [2008] Ch 129. They found that Mr Malcolm was disabled within the meaning of the Act; that there was “an appropriate relationship” between the reason for the Council’s actions and the illness; that his treatment had been less favourable than that of others to whom that reason did not apply; and (by a majority) that the fact that the landlord did not know of the disability did not preclude a finding of discrimination.

The legislation

54.  Sections 79(1), 81, and 93 of the Housing Act 1985, which meant that Mr Malcolm’s tenancy ceased by operation of law to be a secure tenancy within the meaning of that Act and could never subsequently become one, have already been quoted. In consequence, section 84 of the 1985 Act, which prohibits the making of an order for the possession of a dwelling let on a secure tenancy except on one or more of the grounds set out in Schedule 2 , did not apply. Mr Malcolm was left with his contractual weekly tenancy, terminable on four weeks’ notice. Unless he went voluntarily, of course, a court order would be required to evict him, but the court had no discretion to refuse the Council the possession order to which they were entitled if they applied for it.

55.  Since the events with which we are concerned, the Disability Discrimination Act 1995 has been amended by the Disability Discrimination Act 1995 (Amendment) Regulations 2003 SI 2003/1673 and by the Disability Discrimination Act 2005. Our task, however, is to construe the DDA as it stood when these events took place. Reference will therefore be made in the present tense to provisions which have since changed.

56.  The definition of disability which applies throughout the Act is given in section 1(1):

“Subject to the provisions of Schedule 1, a person has a disability for the purposes of this Act if he has a physical or mental impairment which has a substantial and long-term adverse effect on his ability to carry out normal day-to-day activities.”

Schedule 1 further defines or explains the various elements of this definition. Paragraph 4 provides that an impairment is to be taken to affect the ability of the person concerned to carry out normal day-to-day activities only if it affects one of a list of capacities; the relevant capacities here are “(g) memory or ability to concentrate, learn or understand” and “(h) perception of the risk of physical danger". Paragraph 6 provides that an impairment which would be likely to have a substantial adverse effect were it not for corrective measures, including medical treatment, is to be treated as having that effect. Paragraph 2(2) provides that where an impairment ceases to have a substantial adverse effect upon on a person’s ability to carry out normal day-to-day activities, it is to be treated as continuing to have that effect if that effect is likely to recur.

57.  Part II of the Act then deals with the meaning of discrimination and the prohibited acts of discrimination in the employment field. Section 5(1) provides that “an employer discriminates against a disabled person if (a) for a reason which relates to the disabled person’s disability, he treats him less favourably than he treats or would treat others to whom that reason does not or would not apply; and (b) he cannot show that the treatment in question is justified.” Section 5(2) provides that failing to comply with a duty to make reasonable adjustments in order to cater for a disability is also discrimination. The duty to make those adjustments is dealt with in section 6. By section 5(3) and 5(4), each kind of discrimination can be justified if the reason “is both material to the circumstances of the particular case and substantial".

58.  Part III deals with discrimination in other areas. Sections 19 and 20 deal with the prohibited acts of discrimination and the meaning of discrimination in relation to goods, facilities and services. Section 20(1) and (2) define discrimination in the same way as in section 5(1) and (2) above. The duty of service providers to make reasonable adjustments is dealt with in section 21. Justification, however, is dealt with differently from section 5. Instead of the broad but objective criteria laid down in section 5(3) and (4), section 20(3) provides that treatment can be justified only if (a) in the opinion of the provider one or more of the conditions listed in section 20(4) applies and (b) it is in all the circumstances reasonable for him to hold that opinion. Thus there is a focus on what the provider believed, provided that it was reasonable for him to do so. But the list of justifying conditions in section 20(4) is short and precisely defined.

59.  Sections 22 and 24 deal with the prohibited acts of discrimination and the meaning of discrimination in relation to premises. The relevant act for our purposes is in section 22(3), which makes it “unlawful for a person managing any premises to discriminate against a disabled person occupying those premises - . . . (c) by evicting the disabled person, or subjecting him to any other detriment". Section 24(1) deals with the meaning of discrimination for the purpose of section 22. It is in the same terms as sections 5(1) and 20(1):

“. . . a person (‘A’) discriminates against a disabled person if - (a) for a reason which relates to the disabled person’s disability, he treats him less favourably then he treats or would treat others to whom that reason does not or would not apply; and (b) he cannot show that the treatment in question is justified".

Before the 2005 Act amendments, there was no duty to make reasonable adjustments in relation to premises.

60.  Section 24(2) deals with justification in the same way as does section 20(3) in relation to services. Treatment is justified only if A is of the opinion that one or more of the conditions listed in section 24(3) are satisfied and it is reasonable for him to hold that opinion. The conditions listed in section 24(3) are also narrowly defined and it is common ground that none of them applies in this case. There is nothing, for example, to cover the situation of a landlord or other landowner who is entitled to recover possession of his property where in all the circumstances of the case it is reasonable for him to do so.

The issues

61.  There is little doubt what the sensible answer to the issues in this case would be. It would be to enable, in the first place the Council, and in the second place the court to balance the competing interests. On the one hand, there is the public interest in the proper use of social housing, which means that local authorities should not be required to continue to supply a home to a person who no longer needs it and merely wishes to make a profit out of it, or indeed to a person who will never be able to comply with the conditions of the tenancy. On the other hand, there is the right of people with disabilities to be treated as equal citizens, entitled to have due allowance made for the consequences of their disability. This, in essence, is the result which the Equality and Human Rights Commission would like us to be able to achieve.

62.  The problem is that the legislation does not readily enable that to be done. There are three essential issues in this case. First, was Mr Malcolm disabled at all at the material time? This is not the most important issue in the case, being essentially a question of fact, but logically it comes before all the others. Secondly, was he, for a reason which relates to his disability, treated less favourably than a person to whom that reason did not apply? The interpretation of those words is the central issue in the case. Thirdly, if the Council did treat Mr Malcolm in a manner made unlawful by the DDA, what effect if any does this have on their right to claim possession of their property?

(1) Was Mr Malcolm a disabled person at the relevant time?

63.  The judge concluded that he was not. She directed herself that he needed to show that “his illness is a well-recognised clinical illness; that it has a substantial long-term effect on his ability to carry out day-to-day activities; that if there is no present substantial adverse effect but it is likely to recur then the court will treat it as continuing, and if there is no present substantial adverse effect because of treatment then the court will treat the condition as existing. The day-to-day activities which are adversely affected are . . . the memory or ability to concentrate, learn or understand and the perception of risk of physical danger". That is an impeccable direction as far as it goes.

64.  Her main problem was that the psychiatrists had not been asked to express an opinion as to the effect of the illness on Mr Malcolm’s ability to carry out those normal day-to-day activities. There was some evidence from members of his family that he had lost weight, looked dishevelled, had mood swings and was unpredictable. She had in mind that this was during the period when he was at his worst, having come off the depot medication. She concluded from that and what the psychiatrists had said that the illness had some adverse effect on his ability to carry out day-to-day activities; but in the light of the actual activities undertaken during the period, she was unable to say that this was a substantial effect.

65.  The Court of Appeal disagreed. It has been common ground at all stages in the case that in this context “substantial” means “more than minor or trivial": see Goodwin v Patent Office [1999] ICR 302, EAT, Morison J, p 310C; cited with apparent approval in Manchester City Council v Romano (Disability Rights Commission intervening) [2004] EWCA Civ 834; [2005] 1 WLR 2775, para 33. Had the judge expressly so directed herself, in the view of the Court of Appeal, she could not have reached the conclusion that a person with chronic schizophrenia, who if not under regular anti-psychotic medication deteriorated so far that he could not do his job, was not disabled.

66.  Mr James Goudie QC, for the Council, complains that the judge cannot have been unaware of the meaning of “substantial", as it was common ground in the arguments before her. She did not have much help from the psychiatric evidence and she was entitled to rely on the oral evidence which she did have. In particular, during the period in question Mr Malcolm had filled in several complex forms and conducted correspondence for the purposes of exercising his right to buy, applying for a mortgage, applying for benefits after he lost his job, looking for work, and instructing agents to let the flat. This did not suggest that the effect upon his memory, concentration or ability to learn or understand was more than minor or trivial even during the period when he was at his worst.

67.  This is not an issue on which I would wish to resolve this case. At first blush, it would seem very surprising if a person with chronic schizophrenia, who needed regular anti-psychotic medication if he was to live a normal life in society, did not fall within the definition of disabled in the Act. Schizophrenia comes in many shapes and forms but it is a major mental illness and the drugs which are used to treat it have major mind-altering effects. On the other hand, the judge did correctly direct herself on what the Act required, and did the best she could with the “fragmentary” evidence available to her. Even supposing for the sake of argument, for the matter has not been argued before us, that the “more than minor or trivial” test is correct, I am not convinced that she applied the wrong test, or that no judge who applied the right test could have reached the conclusion she did.

(2) Less favourable treatment

68.  The central issue is what is meant by the crucial words “if for a reason which relates to the disabled person’s disability, he treats him less favourably than he treats or would treat others to whom that reason does not or would not apply". This contains a series of questions for the fact-finder. There are, as my noble and learned friend Lord Bingham of Cornhill has pointed out, dangers in formulating lists of questions to be answered in cases like this. They are no substitute for applying the words of the statute to the facts of the case in hand. But those words suggest that at least the following four questions will need to be answered in most cases. What is the treatment complained of? What was the reason for the treatment? Did that reason relate to the disabled person’s disability? And was it less favourable than the treatment of others to whom that reason did not apply?

69.  However, before answering those four factual questions, there are two questions of law to be answered. (i) What is meant by a “reason related to” the disability? (ii) What is meant by “others to whom that reason does not or would not apply? It is convenient to deal with the second question first because it is fundamental to the concept of discrimination which underlies the whole of the DDA.

“Others to whom that reason does not or would not apply”

70.  Are the “others", with whose treatment the treatment of the disabled person is to be compared, people to whom “the reason which relates to his disability” does not apply, in other words, non-disabled people in the same situation as the disabled person? Or are they people to whom “that reason” does not apply, in other words, people who have not supplied the employer, the provider or the landlord with the same reason for acting as they did? In our case, is the Council’s treatment of Mr Malcolm to be compared with how they would treat a non-disabled person who had sub-let? Or is it to be compared with how they would treat some-one, whether or not disabled, who had not sub-let at all?

71.  The leading case on this issue in the employment context is Clark v Novacold Ltd [1999] ICR 951. As Mummery LJ observed, at p 962, “Linguistically section 5(1)(a) is ambiguous. The expression ‘that reason’ is, as a matter of ordinary language, capable of bearing either of the suggested meanings". The Court of Appeal decided that it meant the latter. Prima facie, this may appear surprising. It does not fit with our normal assumptions about discrimination. In effect, as Toulson LJ pointed out in the Court of Appeal, it reduces the comparison test to one which will always be met. My noble and learned friend, Lord Neuberger of Abbotsbury, has rehearsed all the inconveniences of such an approach in this particular context.

72.  On closer examination, however, the decision in Clark v Novacold makes sense. There is also good reason to conclude that it reflects the actual intention of Parliament. The object of the earlier race and sex discrimination legislation was to secure that like cases were treated alike regardless of race or sex. The treatment given to a woman was to be compared with the treatment given to a man whose circumstances were alike in every material respect except their sex. The treatment given to a black person was to be compared with the treatment given to a white person whose circumstances were alike in every material respect except their race. The DDA undoubtedly intended that a disabled person should be treated in the same way as a non-disabled person whose circumstances were alike in every other material respect. The formulation readily covers direct discrimination of that sort. If the employer, provider or landlord refuses a job, a haircut or a flat to a disabled person who is just as capable as anyone else of doing the job, sitting in the barber’s chair, or paying the rent and observing the covenants in the tenancy agreement, simply because he is disabled, then “that reason” is the disability itself and would not apply to other people.

 
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