Business tenancies and the Equality Act

Public authorities that lease premises on tenancies governed by the Landlord and Tenant Act 1954 ('the 1954 Act') face a new hurdle, should they wish to seek possession of the premises: satisfaction of the public sector equality duty. As a recent case confirms for the first time, a failure on the part of the public authority to observe section 149 of the Equality Act 2010 can prevent it from being able to seek possession of the property concerned.

Public authorities, and in particular local authorities, often have large landbanks which are let out to companies and third sector organisations such as charities. In the event that premises are let out on a non-residential tenancy, it is likely that the tenancy will be a business tenancy for the purposes of the 1954 Act: section 23 defines a business as including "a trade, profession or employment and includes any activity carried on by a body of persons, whether corporate or unincorporated". It was held in Secretary of State for Transport v Jenkins (2000) 79 P. & C.R. 118 CA that this statutory definition is wide enough to include organisations which carry on charitable or not-for-profit activities.

Tenancies which fall within section 23 attract the protection of Part II of the 1954 Act. Section 24 of the 1954 Act provides for the continuation of tenancies agreed between the parties on a statutory basis even where the tenancy concerned has expired.

In order to terminate the tenancy, or indeed to oppose the granting of a new tenancy to the tenant, the landlord will (unless the tenant leaves of its own accord) have to convince the court that it can satisfy one of the grounds in section 30 of the Act. Satisfying one of these grounds can be difficult enough for a landlord to achieve. However, if the landlord is able to do so, it is normally mandatory for the court to grant possession of the property under section 29 of the 1954 Act.

Public sector equality duty

Section 149 (1) of the Equality Act 2010 requires a public authority, "in the exercise of its functions" (which must logically include the exercise of its rights as landowner), to have "due regard to the need to:

(a) eliminate discrimination, harassment, victimisation and any other conduct that is prohibited by or under this Act;

(b) advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it;

(c) foster good relations between persons who share a relevant protected characteristic and persons who do not share it."

?Section 149 also applies to a person who is not a public authority but who nevertheless exercises public functions.

Under subsection (3), having due regard to the need to advance equality of opportunity involves having due regard, in particular, to the need to:

"(a) remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic;

(b) take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it;

(c) encourage persons who share a relevant protected characteristic to participate in public life or in any other activity in which participation by such persons is disproportionately low."

?The relevant protected characteristics for the purposes of subsection (1) (b) are age, disability, gender reassignment, pregnancy and maternity, race, religion or belief, sex and sexual orientation.

Very often, the organisation occupying the premises as tenant may play a role in advancing the prospects of those who share one of the relevant characteristics: indeed, any organisation which provides services for the benefit of people within the protected characteristics is likely to. A decision to seek possession of the premises held by the organisation may therefore engage the duty under section 149, as the decision will have a detrimental effect on that organisation's ability to meet the needs of the protected community it serves. This is particularly so if the organisation is charitable, and would have limited funds to relocate elsewhere.

Due regard

In the event that a public authority is seeking possession in such circumstances, it must then have due regard to the matters specified in section 149. Having 'due regard' does not necessarily require the public authority to carry out an equality impact assessment, but only to have the regard that is appropriate in the circumstances to the matters in section 149 (R (on the application of Williams and another) v Surrey County Council [2012] EWHC 867). Nevertheless, the public authority is required to have regard to the duty "in substance, with rigour and with an open mind", rather than ticking boxes, and the authorities recommend that a proper record is kept of the duty being considered. The question as to whether the public authority has had due regard is one of fact for the court to determine.

One very important point is that the duty is a continuing one. It does not simply suffice for the public authority to consider the section 149 duty at the outset. The duty must be "kept in mind by decision makers throughout the decision making process". In the context of a possession claim, important stages at which the duty should be considered may include when a notice to quit is issued, when proceedings are commenced and when any possession order is enforced.

Fortunately in some circumstances for the public authority, however, a failure to observe section 149 does not mean that any possession proceedings will be automatically dismissed.

In Barnsley Metropolitan Borough Council v Norton [2011] EWCA Civ 834 the Court of Appeal considered an analogous duty under section 49A of the Disability Discrimination Act 1995, in the context of a claim for possession of residential premises occupied by a disabled person (amongst others). The occupants appealed against an order for possession. Despite the local authority having failed to consider section 49A, the appeal was dismissed. It was held that the court had a discretion not to dismiss the possession proceedings, and that the local authority could and would take the matters in section 49A into account at the point of executing the possession order, when it would have a duty to re-house the disabled occupant under the homelessness legislation.

In London Borough of Southwark v CYPA (2013), in which we both acted as counsel, Southwark Council applied for possession of premises which were occupied by the Community Youth Provisions Association (CYPA) under the 1954 Act. The CYPA is a charity which provides educational services to underprivileged children in the Southwark area who are predominantly from the black and minority ethnic (BME) community.

The CYPA's premises consisted of two rooms in the Thomas Calton Centre, which had been let to the charity since 1991. The Thomas Calton Centre is a building owned by Southwark Council, and from which the council provides its adult learning service. The council obtained a grant to refurbish the whole building, including the premises occupied by the CYPA, which would no longer exist after the works were completed. The council further argued that it would occupy the CYPA's premises for the purpose of adult learning classes. It therefore served a notice of termination of the tenancy under section 25 of the 1954 Act, stating that the tenancy should be terminated under sections 30(1)(f) and (g).

The council had initially failed to consider the section 149 duty at all, despite a letter having been sent to it by the CYPA asserting that the duty would be engaged because of the fact that the CYPA provided its services to the BME community. The council commenced proceedings without having regard to section 149, but one of its officers gave evidence at trial that the section 149 duty was considered in conference with counsel after the CYPA's defence raising the issue was served.

The court held that the council was entitled to a termination of the tenancy under the 1954 Act, as it had demonstrated that it would occupy the premises for the purposes of the adult learning service. However, it held that the proceedings should be dismissed on account of a failure to comply with the section 149 duty. Even though evidence had been given that the section 149 duty had been considered, no minuted record had been produced of that consideration, and in such circumstances, the council was unable to show that the duty had been considered in substance. Given that the council had a firm commitment to seeking possession of the premises by the time the duty was considered, the court also accepted the CYPA's submission that due regard was not given to section 149 as any consideration which had been given must have been biased.

The CYPA case is a graphic example of the extra difficulty which section 149 can pose to public authorities who are seeking possession of premises let under the 1954 Act. Proper consideration of the section 149 duty at an early stage and then throughout the process is essential.