Imagine that you are landlord of Anywhere Business Park, and Unit 1 is let to Mr Problem. He, without any reference to you, carries out alterations to the unit which in your view will make it virtually unlettable in future, and which give rise to concerns about its structural integrity. You issue court proceedings to evict him and claim damages.

In the course of the court proceedings it emerges that Mr Problem, unbeknown to you, suffers from schizophrenia, which impaired his judgment, and could have led to him deciding to carry out the alterations. The court decides, as a result, that your action to evict him amounted to unlawful discrimination on the grounds of disability, even though you knew nothing about his illness.

This not only prevents the eviction and defeats your claim for damages, but also prevents any other action against him; such as an injunction forcing him to put the property back as it was. Moreover it exposes you to an action for damages for unlawful discrimination.

Now imagine that your tenant of Unit 2 on the same business park applies to you for consent to transfer their lease to Mr Problem. To refuse consent on the basis that his mental condition may lead him to make disastrous decisions in relation to the property would also be unlawful discrimination.

This was actually the state of the law until a recent landmark decision in the House of Lords, concerning the meaning of “discrimination” in the Disability Discrimination Act 1995 (“DDA”).

Background

The case concerned is London Borough of Lewisham v Malcolm [2008]. The factual background was essentially as in the above Unit 1 example, except that it was a residential property, and the breach of covenant on the tenant’s part was not quite so alarming. Mr Malcolm had sublet the property without consent and his landlord, London Borough of Lewisham, took action to evict him.

The legislation

The relevant provisions of the DDA are:

  • Section 22(3)(c), by which “It is unlawful for a person managing any premises to discriminate against a disabled person occupying those premises …by evicting the disabled person, or subjecting him to any other detriment”; and
  • Section 24(1), which provides that for the purposes of section 22, a person discriminates against a disabled person 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”.

A problem of interpretation

Section 24(1) logically requires that a ‘comparator’ be identified, that is, a notional “other to whom that reason does not or would not apply”. One can then compare how the landlord has treated or would treat such a person, as against how the landlord has actually treated the disabled person. In identifying the appropriate comparator, however, the courts have struggled with the apparently innocuous words “that reason”.

To understand why, let’s refer back to the example of Mr Problem. The reason for eviction is that he has carried out unlawful alterations; this reason is related to his disability, i.e. his mental illness.

  • If one interprets “that reason” in section 24(1) as referring back simply to the earlier words “a reason”, the appropriate comparator is a tenant who has not unlawfully altered the property. Would they be evicted? Of course not, therefore the disabled person has been treated less favourably than the comparator, therefore there is unlawful disability discrimination. That is what one may call the “wider” interpretation.
  • The “narrower” interpretation is to regard “that reason” as referring back to the words “a reason which relates to the disabled person’s disability”. This interpretation brings the disability back into the equation, so that the appropriate comparator becomes a tenant without a mental disability who has carried out unlawful alterations. Would they be evicted? Yes of course they would, so the disabled person is not treated less favourably, therefore there is no discrimination.

The House of Lords was faced with a choice between these two interpretations.

The comparator issue

Since 1999, and the decision in Clark v Novacold Ltd [1999], the courts have been proceeding on the basis that the wider interpretation, is the correct one. Thus, for example, in both North Devon Homes Ltd v Brazier [2003] and Manchester City Council v Romano [2004], the reason for the attempt to evict was anti-social behaviour towards other tenants, arising out of mental disability. In both cases, the court took as the comparator a tenant whose behaviour was not antisocial, and who accordingly would not have been evicted. Result: unlawful discrimination (although in Romano, the landlord was able to take advantage of the statutory defence of justification).

As their lordships pointed out in Malcolm, the consequence of adopting the wider interpretation is that the comparison must logically always result in a finding of discrimination, since without the reason for the unfavourable treatment, there would be no unfavourable treatment. The comparison becomes a pointless exercise.

If the narrower interpretation at (2) above is adopted, though, it becomes much harder for the disabled person to establish discrimination. Where there is a legal ground for eviction, a landlord will always say “I would have evicted whether or not they were disabled.” Proving the contrary may be an uphill struggle.

An issue of policy

The choice between the two interpretations comes down to a question of the intended policy behind the DDA and related legislation. As Baroness Hale of Richmond observed in Malcolm:

“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?”

It is easy to state the question, but not so easy to come at a satisfactory answer. As Lord Justice Mummery remarked in Novacold: “anyone who thinks there is an easy way of achieving a sensible, workable and fair balance between the competing interests has probably not given much serious thought to the problem.”

Lord Neuberger of Abbotsbury, while acknowledging in his opinion in Malcolm that “anti-discrimination statutes should, at least in general, be construed benevolently towards their intended beneficiaries”, set out how the wider interpretation:

“could produce a particularly unjust regime for landlords... under section 22(1) and (4), a landlord could not lawfully refuse to let, or permit an assignment, to a person with a record of non-payment of rent due to disability, so he would often be obliged to let to such a person. Thereafter, under section 22(3)(c), he might never obtain possession against that person for nonpayment of rent. Indeed… the landlord could not even sue for rent arrears.

The wider construction… would mean that a licensee, whose licence had expired and who refused to vacate because of physical or mental disability, could not be evicted, or even sued for damages, by virtue of section 22(3)(c). Even a person who entered as a trespasser would… appear to be immune from suit if his entry or remaining on the property was attributable to his disability.”

These outcomes he described as “startling, indeed penal, results”.

In the event, four out of the five members of the court concluded that the narrower construction was the correct one, and accordingly overruled Clark v Novacold.

Knowledge of disability

For good measure, the court was unanimous in holding that there could generally be no unlawful discrimination unless the person alleged to have discriminated had some degree of knowledge of the disability. This is particularly welcome because a finding of unlawful discrimination may not simply determine that some action taken was unlawful, it may also give rise to an action for damages. That would be a hard outcome in circumstances where the ‘discriminator’ had no knowledge of the disability.

Need for reform?

Novacold having been overturned is big news in disability discrimination law, and will be of particular relevance and interest to employers. For landlords the “startling, indeed penal, results” identified by Lord Neuberger are no longer a threat. It was apparent, though, from remarks made by various of the judges, that they found it regrettable to be faced with such a choice between extremes: on the one hand, penalising holders of private property rights to an unacceptable degree; and on the other, emasculating the anti-discrimination legislation.

Though their lordships did not indicate that they considered reform necessary, it is perhaps becoming apparent that the law as presently formulated is struggling, in cases such as this, to achieve that “sensible, workable and fair balance between the competing interests” to which Lord Justice Mummery referred.