R (on the application of Z & Anor) v Hackney London Borough Council & Anor [2020] UKSC 40

A single mother with four children, including two autistic sons, challenged a Jewish housing association's policy of allocating social housing primarily to Orthodox Jews. The Supreme Court unanimously dismissed her appeal, finding the policy was proportionate positive action lawful under the Equality Act 2010.

Facts

Agudas Israel Housing Association Ltd (‘AIHA’) is a charitable housing association established in 1986 with the object of providing social housing primarily for members of the Orthodox Jewish community, particularly the Haredi community in Stamford Hill, Hackney. AIHA owns 470 properties, representing approximately 1% of the general social housing stock in Hackney. Owing to the substantial unmet demand from the Orthodox Jewish community, in practice all of AIHA’s properties are allocated to members of that community.

Hackney London Borough Council nominates applicants to AIHA properties, but only nominates those meeting AIHA’s criteria. The appellant, a single mother of four small children (including twin daughters and two autistic sons), is not a member of the Orthodox Jewish community. Although identified by the Council as having priority need, she had to wait longer for suitable accommodation while at least six four-bedroom AIHA properties became available and were allocated to Orthodox Jewish families. She was eventually housed in suitable accommodation between the Divisional Court and Court of Appeal hearings.

The Divisional Court made extensive findings regarding disadvantages faced by the Orthodox Jewish community, including: severe overcrowding (average household size 6.3 versus 2.43 for Hackney generally); significant poverty and deprivation correlated with religion; widespread anti-Semitism and anti-Semitic crime; discrimination in the private rental sector; and a pressing need to live in close proximity for religious, educational, and communal reasons.

Issues

The Supreme Court had to consider:

• Whether AIHA’s allocation arrangements amounted to impermissible positive discrimination rather than permissible positive action under sections 158 and 193 of the Equality Act 2010;
• Whether the courts below were entitled to conclude AIHA’s arrangements were a proportionate means of achieving legitimate aims;
• Whether section 193(2)(b) of the 2010 Act contains an implied proportionality requirement (whether by virtue of EU law or section 3(1) of the Human Rights Act 1998);
• Whether the allocation of social housing falls within the ambit of article 8 ECHR for article 14 purposes;
• Whether AIHA’s allocation policy involved direct discrimination on grounds of race or ethnic origin contrary to Council Directive 2000/43/EC (the Race Directive).

Arguments

Appellant’s submissions

Mr Wise QC argued that AIHA’s policy amounted to unlawful direct discrimination on grounds of religion (and, on a new argument raised at the Supreme Court, on grounds of ethnic origin contrary to the Race Directive, relying on R (E) v Governing Body of JFS). He submitted that the policy constituted impermissible positive discrimination rather than positive action, relying on CJEU authorities including Kalanke, Marschall, Badeck, Abrahamsson, Lommers, and Briheche, contending that positive discrimination is only permissible where aimed at equality of opportunity, assessed on an individualised basis with a tie-break mechanism and safety valve. He also argued that section 193(2)(b) must be read as containing a proportionality requirement, relying on article 14 ECHR read with article 8, the Marleasing principle, and the avoidance of absurdity.

Respondents’ submissions

Mr Grodzinski QC for AIHA argued that the allocation policy was proportionate positive action addressing real disadvantages, that section 193(2)(b) contains no proportionality requirement (Parliament having struck the balance itself), and that the policy discriminates on grounds of religious observance rather than ethnic origin, so the Race Directive is not engaged.

Judgment

Proportionality under sections 158 and 193(2)(a)

Lord Sales (with whom Lord Reed, Lord Kerr and Lord Kitchin agreed) rejected the appellant’s reliance on the CJEU positive discrimination jurisprudence. Those cases concerned article 2(4) of the Equal Treatment Directive, which permits derogation only to promote equal opportunity. By contrast, section 158 and section 193 of the 2010 Act permit broader legitimate aims including achieving particular outcomes for disadvantaged groups. The more analogous CJEU authority was the Grand Chamber decision in Cresco, concerning article 7 of the Framework Directive, which confirms a conventional proportionality analysis applies.

Applying the appellate standard set out in In re B and R (R) v Chief Constable of Greater Manchester Police, the Supreme Court held the Divisional Court’s conclusion that AIHA’s policy was proportionate could not be faulted. The disadvantages to non-members were ‘minuscule’ (withdrawal of 1% of available units), while the needs of the Orthodox Jewish community were ‘many and compelling’. The Court endorsed the use of ‘bright line’ criteria, referencing R (Ahmad) v Newham LBC and R (Tigere), and recognised that proportionality must be assessed on a group basis.

The Court held the ‘blanket’ effect of the policy in current market conditions did not render it disproportionate, as unmet community need far exceeded supply and flexibility existed within the policy for allocation to non-members should surplus arise.

Interpretation of section 193(2)(b)

The Court agreed with Lewison LJ that no proportionality requirement can be implied into section 193(2)(b). Parliament itself had established a regime which was proportionate and compatible with article 14 ECHR and EU law, taking into account the public benefit test under the Charities Act 2011 and the deliberate distinction between the two limbs of section 193(2). Reading a proportionality requirement into sub-paragraph (b) would make it redundant given sub-paragraph (a).

Even if article 14 were engaged, section 3(1) HRA could not be used to import a proportionality requirement because this would go against the grain of the legislation and undermine a fundamental feature of Parliament’s scheme (applying Ghaidan v Godin-Mendoza). The same conclusion applied to the Marleasing interpretive obligation.

Race Directive

The Court distinguished JFS, where admission turned on matrilineal descent (a test of ethnic origin). Here, AIHA’s criterion concerned religious observance, not descent, and discrimination on grounds of religious belief or observance is not prohibited by the Race Directive. The Court declined to express a concluded view on whether article 8 ECHR was engaged, leaving the ambit point for another case.

Lady Arden’s concurrence

Lady Arden agreed, emphasising that the appellate function is one of review: where the first instance court has made no error and there is no flaw in its judgment, the appellate court should not make its own assessment of proportionality.

Implications

The decision confirms that charities providing housing to disadvantaged religious or other protected-characteristic groups may lawfully allocate housing primarily (or, in practice, exclusively) to members of those groups, provided the statutory conditions in sections 158 or 193 of the Equality Act 2010 are satisfied. It endorses a group-based, rather than individualised, approach to proportionality assessment in this context, consistent with the bright-line categorisation permitted in state welfare cases.

The judgment clarifies that section 193(2)(b) provides a defence not dependent on a judicial proportionality assessment, Parliament having legislated that balance itself with reference to EU law and ECHR requirements. This offers charities practical certainty and protects their administrative resources.

The distinction drawn with JFS is significant: selection based on religious observance is treated as religious discrimination (potentially lawful under the 2010 Act defences), not discrimination on ethnic origin under the Race Directive. However, the Court expressly left open whether persons engaging in Orthodox Jewish observance might, on different evidence, form a Mandla ethnic group.

The decision underscores the limited role of appellate courts when reviewing proportionality assessments, requiring identifiable flaws in reasoning rather than mere disagreement. It also leaves open important questions as to the ambit of article 8 ECHR for article 14 purposes in the housing allocation context, particularly where no positive obligation on the state is clearly engaged and the body in question is not a public authority under section 6 HRA.

The decision matters for housing associations with religious or ethnic charitable objects, for local housing authorities with nomination arrangements, and for applicants for social housing. It reflects the wider tension between anti-discrimination principles and the legitimate pursuit by charities of focused benevolence for disadvantaged communities.

Verdict: The Supreme Court unanimously dismissed the appeal. AIHA’s allocation policy was a proportionate means of achieving legitimate aims under sections 158 and 193(2)(a) of the Equality Act 2010, and section 193(2)(b) provided a complete defence without requiring any separate judicial proportionality assessment. The appellant’s new claim under the Race Directive also failed, as AIHA discriminated on grounds of religious observance, not ethnic origin.

Source: Z & Anor, R (on the application of) v Hackney London Borough Council & Anor [2020] UKSC 40