What rights residents?

On 20th June 2007 the House of Lords delivered its judgement in the case of YL (by her litigation friend the official solicitor) –v- Birmingham City Council and Others This was a case of particular importance relating to the effect of Section 6(3)(b) of the Human Rights Act 1998 and the role of hybrid public authorities.
The five law lords decided by a three to two majority that a private care home providing accommodation in pursuance of an agreement with a local authority was not a public authority or exercising public functions for the purposes of s6(3)(b) of the Human Rights Act 1998.
It is interesting that, despite using the same facts and comprehensive review of authorities, the majority and dissenting judgements are so starkly divided. There are no grey areas, with both sides of the divide equally convinced that the legal position is clear.

The facts of the case
The case concerned an 84-year old lady suffering from Alzheimer’s disease, who was resident within the jurisdiction of the Birmingham City Council. In pursuance of its statutory obligations in relation to this lady, the following agreements were in place:

1. A service provision contract between Birmingham City Council and a private care organisation company, Southern Cross, by which Southern Cross undertook to provide residential care services in accordance with the care plan for the lady concerned, in return for which Birmingham City Council would pay the social services department rate for residential accommodation. The lady also required nursing care, paid for by the local NHS Primary Care Trust. Clause 55.1 of the Service Provision Contract provided that the company had to observe the provisions of the Human Rights Act 1998 in relation to the residents;
2. A care home placement agreement between Birmingham City Council, Southern Cross, and the resident or person representing her. This was subject to the service-provision contract at (1) above, but under the placement agreement the resident agreed to pay direct to the Council such sums as the Council adjudicated should be paid to them in return for the residential care;
3. A third-party funding agreement, as the cost of residential care exceeded the amount that the council was prepared to pay. The appellant’s daughter was paying £35 per week;
4. A further agreement between the local authority, the company, the resident and the resident’s representative, detailing the specific accommodation and services that would be provided and also the detailed payment arrangements. Under this agreement, the accommodation would be provided until the death of the resident or until earlier termination on four weeks notice. The contract provided that notice would only be given for various good reasons. One of the reasons included the behaviour of the resident.

In June 2006, the company made it clear that they were to serve notice for the appellant to leave the residential care home on the grounds of her behaviour. The official solicitor launched proceedings in the family division on behalf of the appellant seeking various declarations for her protection. One of the items in the official solicitor’s proceedings was a declaration that the company, in providing residential care to local authority residents, was a public authority because it was exercised in public functions under s6(3)(b) Human Rights Act 1998.
The High Court ordered that the issue relating to the Human Rights Act be tried as a preliminary issue. Both the High Court [2006] EWHC 2681(Fam) and the Court of Appeal [2007] EWCA Civ 26; and [2007] 2 WLR 1097 decided the issues against the appellant on the basis of the previous decision of the Court of Appeal in R(Heather) v Leonard Cheshire Foundation [2002] EWCA C iv 366; [2002] 2 All Er 936. The Court of Appeal, however, recognising the importance of the point that had attracted considerable academic comment, gave leave to appeal to the House of Lords.
Fortunately from the appellant’s point of view, a suitable compromise was reached following the High Court hearing, which enabled her to remain in the care home.

The majority judgements
Lord Scott, Lord Mance and Lord Neuberger came to the conclusion that the care home company Southern Cross was not a public authority and that the service of the notice to quit was not a function of a public nature for the purposes of the Human Rights Act 1998. Within a wide measure of agreement, they arrived at this conclusion by slightly different routes and giving emphasis to slightly different factors.
Lord Scott approached the problem from the point of view of contrasting public and private law. He considered that the basic questions to be answered were:

(a) Whether the functions of Southern Cross were of a public nature;
(b) Whether the notice to quit was served by them, a private act or a public one.

He considered that Southern Cross was not a public authority because the following factors weighed heavily against it:

It carried on a socially useful business for profit but was not a philanthropic organisation or a charity;
Any contracts that it had with local authorities were private law contracts;
There was no public funding, nor were there any special statutory powers accorded to Southern Cross in the running of its homes;
It could accept or reject whatever person it chose into its homes;
It could charge whatever fees that it considered economically justified;
It operated in a commercial market with commercial competitors.

It was a misuse of language to describe the payments by the local authority to Southern Cross as public funding, or to say that Southern Cross was publicly funded. All the local authority was doing was paying the commercial rate for services, and Southern Cross was a private business with one customer, which just happened to be a local authority.
The position might well have been different if the managers of Southern Cross Homes had special statutory powers over the residents. The case could be resolved on private law and public law principles. The legal relationship between the parties in this case was governed by private law and none of the functions of Southern Cross were of a public nature, nor was the service of the notice to quit anything other than a private act.
The mere fact that care homes were regulated by the State was no real pointer towards whether care homes were a state or governmental body, or a person or corporation with the functions of a public nature. Nor was any wider interpretation necessary. There was ample provision in the Care Standards Act 2000, and under the contract in this case, for the human rights of residents to be protected, and there was no need to extend the scope of the definition of a public authority to accommodate it. For those reasons Southern Cross was not a public authority and the service of notice was a private matter. Referring again to the Aston Cantlow case, and in particular to the judgement of Lord Hope of Craighead, he adopted the statement that “The nature of the Act is to be found in the nature of the obligation which the PCC is seeking to enforce. It is seeking to enforce a civil debt.”
Lord Mance, on the other hand, chose to go back to first principles in relation to human rights and took a purposive interpretation of the Human Rights Act 1998. While authorities on judicial review could be helpful in relation to section 6 of the Act, the 1998 Act had a totally different rationale from judicial review and was more concerned with the scope of state responsibility as it was viewed in the Court of Human Rights at Strasbourg.
Lord Mance examined the domestic and Strasbourg jurisprudence comprehensively, and in domestic case law laid particular stress on the Aston Cantlow1 and Denbigh High School 2 cases. In his view, the essential characteristic of a public authority was that it carried out a function of government which would engage the responsibility of the UK before the Strasbourg courts.
Regulation by the State was no real pointer towards the person regulated being a State or governmental body or a person with a function of a public nature.
In the present case, it was clear that Southern Cross was acting as a private profit-earning company, and its relationships were governed by private law, notwithstanding that it was subjected to close government regulation.
Lord Neuberger adopted the approach of Lord Mance but made a number of observations of his own. He set out the factors that in his view, would tend to support the argument that Southern Cross was a public authority and which had functions of a public nature, which were:

(a) The existence and detailed nature of statutory regulation and control over care homes;
(b) The provision of care and accommodation for the elderly and infirm is a beneficial public service;
(c) The elderly and infirm are particularly vulnerable members of society;
(d) The care and accommodation was provided pursuant to the local authority statutory duty to arrange its provision;
(e) The cost of the care and accommodation was funded by the local authority pursuant to its statutory duty;
(f) The local authority had power to run its own care homes to provide care and accommodation for the elderly and infirm;
(g) The contention that 6(3)(b) should apply to a ‘contracting out’ case.

Lord Neuberger went on to say he considered that each of those factors, if taken individually, would be insufficient to render the provision of care and accommodation by Southern Cross a function of a public nature. It was right to consider the effect of all the factors together within a broader policy context. In considering the wider context, Lord Neuberger referred to the Aston Cantlow case, the Denbigh High School case and R(Quark Fishing Limited) the Secretary of State for Foreign and Commonwealth Affairs [2006] 1 AC529. He paid particular attention to the judgements in Aston Cantlow and, like Lord Mance, considered that this was the best guidance in dealing with what amounted to functions of a public nature. Like Lord Mance, he came to the conclusion in the light of that guidance that functions of a public nature were those that were functions of a governmental nature or inherently governmental. In the light of that guidance the following considerations were relevant:

(a) The activities of Southern Cross in providing care and accommodation for Mrs YL would not be susceptible to judicial review;
(b) Mrs YL would not be treated at Strasbourg as having convention rights against Southern Cross, but would retain convention rights against Birmingham City Council;
(c) Southern Cross’ functions with regard to provision of care and accommodation could not be regarded as governmental in nature, at least in the UK;
(d) In relation to its business, a care proprietor such as Southern Cross had no special statutory powers in relation to those to whom it provided care and accommodation;
(e) Neither the care home nor any aspect of its operation as opposed to the cost of the care and accommodation was funded by Birmingham City Council;
(f) The rights and liabilities between Southern Cross and the resident arose under private contract law.

Taking all these considerations together, Lord Neuberger was satisfied that despite the arrangements being paid for by Birmingham City Council pursuant to its statutory duties, the actions of Southern Cross were not functions of a public nature within s6(3)(b).

The dissenting judgements
Lord Bingham delivered a short judgement in which he adopted the detailed Statement of Facts and Legal Analysis delivered by Baroness Hale of Richmond. He considered that the situation in the present case was clear, and that s6(3)(b) did apply so as to make Southern Cross a public authority, and a serving of the Notice to Quit a public function which engaged the human rights of the appellant.
In his view, there was no summary of factors that could be comprehensive or exhaustive. He considered that some factors such as susceptibility to judicial review or whether the breach was criminal or tortious were not relevant in considering whether functions were of a public nature. He considered that the following factors were appropriate:

The nature of the function in question;
The role and responsibility of the State;
The nature and extent of any statutory power or duty relating to the function. The absence of any of these could be an indication of the private nature of the function;
The extent to which the State directly or indirectly regulates supervisors or inspects the performance of the functions. This is an indication of the importance of the matter to the State;
Is it a function for which the State is willing to pay? The greater the involvement of the State in any function then the greater the responsibility it has;
The extent of the risk (if any) about the improper performance of the function might lead to the violation of the individual's human rights.

In interpreting the provisions of the Human Rights Act 1998, it needed to be kept in mind that Parliament, in passing that Act, would have been clearly aware that elderly people in care homes of this kind were a vulnerable group. In his view, the performance by a private body A by arrangement of public body B, perhaps at the expense of B, and which, if carried out by B, would be a public function, was precisely the case to which s6(3)(b) of the Human Rights Act 1998 was intended to apply. Baroness Hale of Richmond delivered a lengthy judgement, which dealt fully with the factual background to the case, the history of the home care provision legislation and also the background to the passing of the Human Rights Act 1998 and relevant Strasbourg case law. In considering the definition of public authorities and public functions, she pointed out that in Labour’s consultation document, Bringing Rights Home (December 1996), the Government’s White Paper Rights Brought Home: The Human Rights Bill 1997 Cm3782, and the Government’s Explanation of the Bill in the House of Commons, wide definitions had been adopted. Speaking in the House of Commons, the then Home Secretary, Jack Straw, stated that:

“The Bill had to have a definition of a public authority that went at least as wide and took account of the fact that over the past 20 years an increasingly large number of private bodies such as companies or charities have come to exercise public functions that were previously exercised by public authorities”.

In her view, it was clear that the Government intended that purely private bodies which were providing services previously supplied by the State would be covered, and that there was ample Strasbourg case law to show that States could be responsible for the acts of private bodies.
As to functions of a public nature, this was a domestic law concept, which had no parallel in the Human Rights Convention Jurisprudence.
Referring to the Aston Cantlow case and the judgement of Lord Nicolls of Birkenhead, she indicated that there could be no universal test for deciding whether functions are of a public nature but among the relevant factors in deciding that would be whether the body carrying out the function was publicly funded, was exercising statutory powers taking the place of central government or local authorities or providing a public service.
She summarised the relevant factors as follows:

1. Whether the State has assumed responsibility for seeing that the task is performed;
2. Whether there is a public interest in having the task undertaken;
3. Whether the task is publicly funded. While not everything that was paid for by the State would be a publicly funded task, providing a service to individual members of the public at public expense was rather different;
4. Whether the function involves or potentially involves the use of statutory coercive powers;
5. The unregulated deprivation of liberty relying on the common law doctrine of necessity does engage Article 5 of the European Convention;
6. There is a close connection between the service provided and the core values underlying the European Convention Rights and a clear risk that rights will be violated unless adequate steps are taken to protect the people concerned.

The fact that people are free to make their own private arrangements does not prevent the performance of functions in relation to people who require the services under the statutory arrangements under public expense from being a function of a public nature.
Looking at all these factors together, she was of the opinion that the company, in providing accommodation, health and social care was performing a function of a public nature. It was performed pursuant to statutory arrangements, at public expense, and in the public interest. She had no doubt that Parliament intended that it should be covered by s6(3)(b). The Court of Appeal was wrong to reach a different conclusion in R (Heather) –v- Leonard Cheshire Foundation [2002] 2 All ER 936.

Conclusions
This decision clearly confirms the position as understood from the Court of Appeal Decision in R(Heather) –v- Leonard Cheshire Foundation [2002] 2 All ER 936. The division among the Law Lords mirrors the divisions in the public at large.
Clearly, prior to the passing of the Human Rights Act 1998, there were comments in both the Government White Paper and in the Parliamentary debates to the effect that ‘public authority’ would have a very wide definition, and that the definition might well include charities providing public services. The actual drafting of the Act left the matter open and flexible, with the courts being the only clearly identified core public authority.
Following this judgement, it seems clearer than ever that residents in private or voluntary sector care homes are at a disadvantage compared to those in homes run by local authorities, in that they cannot assert rights under the Human Rights Act to challenge decisions made by those who are caring for them, even though the arrangements for their care have been made through the local authority.
Their Lordships hint at the fact that if there is to be legislation that might bring private or voluntary sector care homes within the scope of the Act, a distinction should be drawn between facilities that are wholly funded from public sources – for example, local authority care homes as opposed to private ones, where only some of the residents are publicly funded.
Leaving aside the considerable legal problems in the way of adopting a wholesale conversion of the charities into public authorities for human rights purposes, there is also the argument that imposing the Human Rights Act on organisations outside the state machinery is not, from a logical point of view, the best way to safeguard the interests of the vulnerable elderly. Might it not be more logical for their interests to be protected through, on the one hand, the contractual relationships between local authorities and care providers and, on the other hand, through the local authorities’ own status as organs of the state?
It will be interesting to see to what extent, if at all, the government is tempted to take up this matter.

Ian Davies is a member of the Charity & Community team at Farrer & Co. He specialises in public law and human rights and their application to voluntary organisations. He can be contacted at imd@farrer.co.uk.

References
1. Aston Cantlow and Wildecote with Billesley Parochial Church Council –v- Wallbank [2004]
2. AC546 2R(SB) –v- Governors of Denbigh High School [2007] 1 AC 100