Court Report Part Two: Judicial review hears Lambeth Council downplayed voice of opposition to demolition

Lambeth Council confessed at the High Court to downplaying the voice of opposition in a consultation on the proposed demolition of 300 homes.

The local authority justified manipulating the consultation results as a means of neutralising strong feelings that it claimed were “skewing sentiment” on the housing estate, the court heard.

Most residents who responded to the consultation supported refurbishment of the estate, but the council gave “little weight” to those opinions in an effort to balance them with the supposed views of those who had not taken part, it was said.

Lambeth launched a consultation on the future of Cressingham Gardens estate in Tulse Hill, south London, in September 2012, as a result of a legal requirement for council homes to be brought up to the Decent Homes Standard.

During protracted questioning by the judge Mrs Justice Elisabeth Laing, Jon Holbrook, defending, admitted the council “developed” how resident opinion was presented.

The judge had asked him: “Is your submission that Lambeth set out a process of consultation and then when it got the feeling it wasn’t going the way it wanted to, it decided to change it?”

Eva Bokrosova, a tenant on the estate, is challenging Lambeth Cabinet’s “unlawful” decision on March 9 this year, to pull the plug on options one to three – the “refurbishment options” – without doing the promised financial analysis and without properly taking account of the results of a series of workshops, including ones looking at ways of funding the repairs.

David Wolfe, QC, for Ms Bokrosova, has asked the judge to quash the decision, which would require the consultation to be run again.

Lambeth Council regeneration boss Neil Vokes accepts the council cut short the consultation, but local authority lawyers claim that as the decision-maker, it was entitled to take a view on affordability, after allegedly realising the cash was not available for the refurbishment options. Lambeth denies that action was unfair or unlawful and further denies failing to “conscientiously take into account consultation responses”.

Mr Holbrook, for the council, told the court the estate was put into the regeneration programme in 2012 because of a £56m shortfall in the borough-wide Decent Homes Programme refurbishment fund.

The barrister referred to a document entitled “Strategic Delivery Approach” from that time, describing the “wider benefits” of new homes that meet modern standards and the potential opportunities to increase housing density.

The barrister claimed Cressingham was expensive to maintain, with many properties in poor condition, adding: “The bases that exist to this day and make it an attractive proposition for regeneration are the same that existed in 2012.”

Another document entitled: “The Case for Action”, recognised how Cressingham is a “popular estate” and the “majority like living there”. Mr Holbrook added: “The problem is that a significant number of residents live in properties that are not decent. Simply refurbishing the estate is not the answer.”

The barrister claimed that in December 2012, the council wrote to residents advising them that £3.4m was unlikely to be enough money to bring the homes up to standard. “Much of what he [Mr Wolfe] has said to you about residents not being aware of the costs and financial issues is something Lambeth can not accept,” said the barrister.

He claimed one of the first examples of the effectiveness of the project team, set up for elected resident representatives and council officials to scrutinise the issues, was the commissioning of the “Tall survey”, a report on the repairs needed.

Describing the project team meeting, Mr Holbrook pointed out that “the claimant wasn’t there”, while Gerlinde Gniewosz, a resident representative on the project team who owns a flat on the estate, was present.

Addressing the accusation that it was cost rather than affordability that was eventually discussed, the barrister said: “It was obviously important to agree how much refurbishment would cost. Until there’s an agreed figure, it’s not going to be possible to decide if it’s affordable. It was not necessary to commission an independent report on [homeowner] buyback costs because these would change when it came to it.”

One of the concerns raised by Ms Gniewosz, who is a qualified accountant and has a Masters in Business Administration from Harvard Business School, was that the council was undervaluing the homes and therefore painting a false impression of costs.

To facilitate answers to the number of questions being asked about the finances, the council set up a dedicated “financial viability subgroup”. The barrister said: “It became clear to Mr Vokes that there were so many challenges coming from Ms Gniewosz that the whole process was fraught with difficulty from the outset. That’s why he thought it would be helpful to have a much smaller group, so that ultimately the three QS’s [quantity surveyors] could get into a room and try to agree the cost of refurbishment.”

Mrs Justice Laing inquired: “It’s important to agree the assumptions?”

Mr Holbrook replied: “There comes a point at which a consultation ceases to be a consultation and is more concerned with resident-led decision-making. It’s another thing to be constantly challenged and Lambeth would say, by a very small number, and one significant one. It became very difficult to conduct the consultation in the circumstances. Yes you do need to agree the buyback costs. The point I’m making is the whole process becomes slow and fraught with difficulty. Lambeth went to great lengths to try and agree that. It paid for residents to commission their own report on refurbishment from Simon Morrow.”

The court heard later that in fact Mr Morrow was instructed by residents and provided his quantity surveying services for free, entirely outside the council commissioning process.

Mr Holbrook insisted that refurbishment would mean “all that money has to come either from the HRA [Housing Revenue Account] or borrowing”. He added: “Lambeth had reached its ceiling. That posed Lambeth a difficult problem.” But he said that by setting up a Special Purpose Vehicle (SPV), a company into which the estate would be transferred: “Lambeth can attract private investment. This I believe this is a fairly standard way of raising investment for redevelopment.”

The barrister then read out an excerpt from an email written by ward councillor Marcia Cameron, describing how in October 2014 there was a protest involving “60-70 residents marching down the hill banging drums and shouting”.

Mr Holbrook added: “The only point I’m making about this is that from the outset this was always a very sensitive issue. It’s politically sensitive. Indeed, Ms Bokrosova notes this march even made the ITV news that evening. This was a high profile protest. Lambeth doesn’t accept that councillors didn’t know how some residents felt. It goes some way to explaining the difficult decisions.”

The court heard earlier how residents were explicitly told there was no fixed budget allocation, and that far from £3.4m being a cut off point, various funding options were under discussion. Mr Wolfe, for the claimant, earlier pointed to evidence that the £3.4m figure – which the council appears to claim was as a “provision” against which affordability was being measured – was always presented to residents as an “initial cost estimate”.

The description of £3.4m as a costing was twice confirmed in writing, first in a response to a freedom of information request in March 2013, and again in an email from Sue Foster OBE, executive director for housing, regeneration and environment.

Mr Holbrook said a council-penned letter was sent to residents early this year, “indicating Lambeth was preparing the ground to drop unaffordable options”.

The judge remarked: “I don’t understand that analysis because why wasn’t it known that none of the refurbishment options were affordable? What changed?”

Mr Holbrook said: “There were two unknowns. One was how much it would cost.”

The judge said: “It was never going to be less than £3.4m was it?”

One of the points about consultation is that in involving residents there’s an attempt to try and get them to understand what the figures are,” explained the barrister. “If residents are saying it’s going to cost £7m and Lambeth is saying it’s going to cost £12m…”

The judge persisted: “Even if they did agree, they were never going to agree a figure that was less than £4m. What changed between October 2014 and March 2015?”

Mr Holbrook said: “The second unknown was how much money was going to be available. That’s why Mr Vokes refers to getting the business plan update in February 2015. They weren’t going to be able to get more than £4m from the HRA and would need some other sources that Mr Wolfe refers to.”

The judge inquired: “So you accept that money could be available from other sources apart from the HRA?”

The lawyer said: “The claimant has made much of the green retrofit. That might have made properties better for the leaseholders but it would not change the cost.”

The court has heard how a green retrofit could make properties more energy efficient, attracting grants for the refurbishment.

Mr Holbrook turned to receive instructions from Mr Vokes, who was blushing ever more deeply as he sat in the well of the court. “Mr Vokes says that it wasn’t possible for Lambeth to increase its borrowing because that had been capped and it had reached its ceiling, but what was an option was taking more money from the HRA and spending it on the estate,” added Mr Holbrook.

The judge responded: “So you’re now accepting that there are other sources of funding?”

After turning to consult Mr Vokes once more, the barrister replied: “It may have been possible to get money through the green retrofit, depending what grant was made available.”

Mr Holbrook claimed there was an “urgent need” to help “vulnerable people living in substandard homes”.

The barrister said one thing that changed was the refurbishment costs: “We can see the figures coming down,” to which the judge remarked: “It’s actually going up from £3.4m.”

Addressing the claim that the promised Net Present Value [NPV] calculation wasn’t done for comparison of the options, the barrister said: “The reason why Lambeth didn’t do NPV on options one to three, is because they knew it wasn’t affordable.”

Identifying a reference in the papers to “Other government money”, the judge asked: “What would that be?”

Mr Holbrook replied: “For additional affordable homes to be built. It wasn’t anticipated there would be more money for refurbishment.”

But the judge said that in an information pack to accompany the workshops, the council stated that for option one to be considered, it would need to look at “finding alternative funding sources”. “My question is, ‘funding sources’ – what’s it referring to?”

Green grants,” replied the barrister.

The judge said: “I’m just trying to get clear what your case is.”

Mr Holbrook said: “This was at the outset of the consultation so Lambeth was keeping an open mind.”

What might those have been?,” repeated the judge.

Mr Holbrook said: “I’m not sure … 6th November… residents always knew option one was going to be a big ask.”

But not such a big ask that they weren’t going to be consulted on it?” suggested Mrs Justice Laing.

Mr Holbrook said: “Of course that’s the nature of consultation, M’Lady.”

The barrister described how the remaining “demolition options” four and five, were thought to be affordable in March, but by July only option five – “comprehensive redevelopment” made the grade. Previously, that option was the one that the council named as least likely. Reading from the resident information pack, Mr Holbrook said: “It is unlikely five will be supported by local people. This option shows a significant deficit. This option is clearly unaffordable.”

Mr Holbrook added of the u-turn: “That was the information that they had at the time.” But “Lambeth was always making it clear that it may stop the consultation on any options that were shown to be unaffordable or not deliverable.”

The judge said: “It could be a bit clearer. It could just say: ‘By the way if we find that something isn’t affordable, we’ll pull the plug.’”

Yes it could,” agreed the barrister.

Reading from notes collated by Social Life, employed from summer 2014 to gather residents’ opinions, Mr Holbrook suggested: “There are many residents who recognise that refurbishment is unrealistic.”

The judge said: “A consultation isn’t a referendum. I don’t think all opinion favoured refurbishment, but that’s not the basis of the argument …they’ve either got good points or bad points …that [how many people are for or against] is not what this case is about.”

No,” agreed the barrister. “But it does show how the local authority as the decision-maker has a very difficult job. It has to hear what the residents say, and it has to weigh them.

The lateness of the hour, 4.40pm, was pointed out to the judge who would normally have concluded the day’s proceedings by that time. She exclaimed: “Oh really? Time flies when you’re having fun. It’s a tribute to the compelling nature of your arguments, Mr Holbrook.”

When the hearing resumed the following morning, Mr Holbrook was keen to address “three preliminary matters” – the first being to correct his assertion about the residents’ quantity surveyor Mr Morrow being funded by the council. “He did the work on an unpaid basis,” interjected Mr Wolfe.

Mr Holbrook then moved on to address the eventual arrival of the elusive “show-stopping” analysis that the council claims led to the March decision.

Overnight, Mr Vokes had located a document entitled: “Briefing Note. Cressingham Gardens Full Refurbishment Affordability”, prepared by senior council accountant Julie Curtis and dated February 13 2015.

It was not the expected HRA business plan as referred to in Mr Vokes’ earlier statement, but a memo re-stating the refurbishment costs. Ms Curtis claims that there was “minimal or no scope for funding” from the HRA. Ms Curtis goes on to state there is “no provision” for the works from the Lambeth Housing Standard budget, the council’s borough-wide refurbishment pot.

In a further written statement accompanying the note, Mr Vokes apologised for not disclosing it sooner, claiming: “It was a case of me overlooking the document.” He blamed the oversight on the hundreds of emails he receives every day and his attention being spread across all six estates currently earmarked for “regeneration”.

The judge said: “What’s surely surprising is there have been three opportunities to produce it or if it wasn’t going to be produced in response to the FOI request, it is the council’s duty of candour [in these proceedings].”

Indeed, yes,” replied Mr Holbrook.

The judge later observed that if a document were so important, she would expect it to have been filed away safely.

Mr Holbrook requested to move on to written submissions, because: “I do think it’s important to focus on what’s actually alleged.”

He challenged the claim that the Cabinet did not conscientiously take into account residents’ views, telling the court: “Lambeth denies this because the residents’ views were presented to the Cabinet. The table [summary of resident opinion produced by Social Life] is the result of the consultation exercise. Indeed they were shown there was majority support of viable refurbishment options.”

The court has heard how the feedback from the subgroups was omitted from the Cabinet report, and how the council claimed the content was “not pertinent” to the decision.

Mr Holbrook added: “Eight residents did come to the [March Cabinet] meeting and they were each given three minutes. Moreover we do see Ms Gniewosz’s speech which she made to the meeting.”

Mr Holbrook said that during the meeting, Cabinet member for regeneration, Councillor Matthew Bennett, outlined the Labour administration’s pledge to build 1,000 extra homes, and underlined the claim that it was: “Not affordable to refurbish due to budgetary cuts by the UK government.”

Referring to Ms Gniewosz’s speech, which sought to highlight the mistakes she perceived the council was making, the barrister said: “Essentially this is the difference between the two parties. Different residents are entitled to have their own different and indeed strongly held views.”

The judge said: “I don’t think that’s in dispute.”

My point is consultation is a process. It culminates with a Cabinet decision. It is not necessary for the Cabinet to have all the reports of all the consultation meetings that have taken place. It would ossify council process if that were taken into law.”

You can’t have it both ways,” said the judge. “If the consultation is to consider the representations made, albeit in summary, they have to be reported to the Cabinet. If they’re not reported then it can’t be taken into account.”

My Lady can I deal with that later on,” said Mr Holbrook, before moving on to describe the significance of news reports of the issue in the South London Press.

The judge said: “What does the fact that the matter made it into the South London Press have to do with the legal issues in this case?”

It goes to the issue of what the Cabinet members knew when they took the decision on 9 March,” said Mr Holbrook. “This had been for many months a high profile matter.”

The judge said: “Do we know that all the Cabinet members read the South London Press?”

Mr Vokes says Cabinet members saw it,” replied the barrister. “Cllr Bennett could have made his decision himself but it was made by Cabinet….all the Cabinet members knew the issues. Two ward councillors are well aware of the strength of feeling and they spoke at the Cabinet meeting.

Lambeth was entitled to conclude that the consultation process was being skewed to those opposed to the redevelopment.”

The judge asked: “Where in the report does it say the consultation is being skewed in favour of those who were opposed to redevelopment?”

Mr Holbrook replied: “It is a matter for Lambeth what information it puts before the Cabinet. If it sees that certain sectors of the population are being disproportionately [represented]…”

The judge interjected asking if Mr Vokes dealt with this point in his witness statement and the barrister pointed to a paragraph in which Mr Vokes states: “The Council was concerned that the strength of feeling against redevelopment held by the Save [Cressingham Gardens] campaign was skewing sentiment amongst residents so that those who supported redevelopment felt less inclined to say so.”

Growing impatient, the judge said: “I’m not sure I understand what your case is …I thought you were going to show me material that showed how Lambeth decided in relation to the March decision to give little weight to those who were opposed [to redevelopment].”

Mr Holbrook began: “Those passages talk about increasingly vocal…” But the judge decided: “They don’t lead anywhere.”

What, My Lady? There were many people who were involved and there were many people who were not involved [in the consultation].”

Yes,” agreed the judge, “But it was Lambeth’s idea to have a consultation structured in this way.”

That’s a very important point about Lambeth being the decision-maker here,” said the barrister. “Lambeth’s entitled to form that view that it is the perspective of the minority that’s being represented at the workshops.

He added: “Lambeth, over a period of time, is realising that the views which are being predominantly expressed at the workshops are not necessarily reflective of the whole body of opinion across this estate.”

The court has heard how after striking off the refurbishment options, Lambeth carried out a test of opinion – but only asking residents their opinions on the two remaining demolition options.

The judge asked: “Is your submission that Lambeth set out a process of consultation and then when it got the feeling it wasn’t going the way it wanted to, it decided to change it?”

It developed it,” replied the barrister.

The judge reminded Mr Holbrook of the agreed order of things being first workshops, then a test of opinion, then the Cabinet decision.

What Lambeth has always said… I accept this has all got confused,” said Mr Holbrook.

The judge said: “If you look at the information pack the documents in autumn show a series of workshops and then a test of opinion.”

Mr Holbrook insisted: “What’s clear was that the test of opinion would be on affordable and deliverable options – that’s what Lambeth did, having narrowed it down to two options.”

The court then heard how Nicholas Greaves, a resident representative on the project team and a tenant on the estate, complained that the subgroups were “dominated by leaseholders”.

Court papers however show that both homeowners and tenants including the claimant, signed up in roughly equal numbers, while Mr Greaves did not join any subgroups.

This is one of the difficulties for any local authority,” continued Mr Holbrook. “The interests of tenants may differ from those of leaseholders. That was a statement made by one of the tenants’ representatives …Ever since the Save campaign was set up…”

I’m still not understanding how this submission relates to the grounds of challenge,” the judge remarked.

What I understand is, what’s challenged is not enough weight was given to the views of the Save campaign,” said the barrister. “The reality was that the residents’ views, no matter how strongly made and expressed, couldn’t make the refurbishment affordable …It was for Lambeth to decide how to take residents’ views into account and having regard to that, the Cabinet process wasn’t unlawful.”

Mr Holbrook said in his second grounds of challenge, Mr Wolfe’s “first argument is to say residents weren’t given a 30-year calculation”. The council’s barrister claimed Mr Vokes was clear from 2013 that: “Lambeth didn’t commit to this regarding unaffordable options.”

This contrasts somewhat with Mr Vokes’ emailed confirmation from October last year, that NPVs would be carried out to provide a “comparable baseline” for the options residents would be discussing at the workshops.

Mr Holbrook went on: “Cressingham Gardens met the three criteria for regeneration. Lambeth residents weren’t taken by surprise by the letter from Cllr Bennett in February 2015. If they didn’t have money in year one, there’s no money for refurb in year two, as a simple matter of logic. I submit it’s absurd as a matter of law, even if it had committed to doing something, if the basis could be shown to be pointless. Consultation is about process, not outcome. Yet Ms Gniewosz fails to make this distinction.”

Mr Holbrook said on February 27, Ms Gniewosz was “unhappy because the council had ruled out refurbishment options”. The barrister added that the consultation process should not be considered a bad one “merely because the conclusion isn’t one you agree with”. “In my submission, Ms Gniewosz was always going to be critical of the outcome,” he said.

The judge commented: “But it could be said that there is a difference between concluding an option was unaffordable without going through the process you have agreed you would go through, and concluding that an option is unaffordable after you have gone through the figures.”

She challenges the consultation because it’s ruled out refurbishment,” insisted Mr Holbrook.

He added: “The next accusation is this figure of £9.4m [one of the costings for refurbishment] had not been subjected to lawful consultation. The accusation that residents had not been given the opportunity to comment on the £9.4m figure is patently wrong as Lambeth had spent considerable effort trying to agree the cost of refurbishment with residents. Residents were involved in commissioning the Tall survey.”

Mr Holbrook said a breakdown of three costings was also included in the Cabinet papers, and added: “With the greatest of respect it can’t be said that this consultation on the £9.4m figure was a sham.”

He continued: “There’s nothing any section of the leaseholders can say to make the refurb come back on the agenda.”

Turning to the claim that at the time of the decision, residents were still waiting for the “key information to evaluate affordability”, Mr Holbrook said: “Lambeth can’t be expected to respond to such a non-specific ground. If you say there’s key information that should have been provided, then spell it out.”

We were shown several emails from Ms Gniewosz requesting the information,” said the judge.

Mr Holbrook said: “Although Ms Gniewosz asked for more financial information, NPVs, these weren’t done by Lambeth. She was asking for information about a process it decided it wasn’t going to do. She was asking for information that never existed because Lambeth didn’t do it. This is not a case of Lambeth has withheld information in a consultation, it’s for Lambeth to decide what documents to provide.”

The judge said: “So why didn’t Lambeth say a lot earlier in response to requests for NPV calculations – we’re not going to do them?”

That’s a fair point,” concurred Mr Holbrook. “That’s Mr Wolfe’s best point. But you can’t say it’s unlawful in a consultation process not to expressly say: ‘We’re not going to give you these documents’.”

Asked by the judge about the relevance of the case of Moseley, heard by the Supreme Court last year, Mr Holbrook said: “Yes, we have to engage with legal principles,” said Mr Holbrook.

Mmm,” said the judge.

Mr Holbrook insisted there was good reason to rule out the refurbishment options, despite ongoing discussions by the green refurbishment and resident management subgroups, which were looking at alternative funding sources and structures provided by the right to manage, or by exercising the right to transfer the estate into community ownership.

That’s not a basis for saying Lambeth’s ruling out of options one to three was unlawful,” said the barrister.

With regard to the right to manage, this wouldn’t resolve the funding issue, because the properties would remain within the HRA,” he claimed.

Reading from Mr Vokes’ witness statement the barrister said: “Ms Gniewosz had her own views about what assumptions should be made and hence what the NPV models would look like.

NPV assumes the residents would want to take control of the estate. Tenants in my experience take comfort in council ownership and leaseholders would face significant service charge demands.”

Mr Holbrook added: “I haven’t looked too closely at the regulations but it’s something they [residents] will have to discuss with the government.”

Referring to the shift in treatment of option five between November and March, Mr Holbrook said: “Option five did become viable. Yes, if someone wants to say this consultation should have had a narrower focus from the beginning, but that’s not an argument for quashing the decision and saying it should be run again.”

The judge said: “I don’t think he [Mr Wolfe] is saying it should have been run with a narrower focus. Are you anticipating something you fear he is going to do?”

He [Mr Wolfe] didn’t mention his grounds yesterday he just gave a narrative,” said Mr Holbrook.

Mr Holbrook then expressed concern over the tactical risks of raising the spectre of the judge finding the council’s conduct unlawful, by addressing the question of whether the outcome would have been “different had the conduct not occurred”. “I don’t think I’m on a sticky wicket,” quipped the barrister. “I say refurbishment remains unaffordable.”

Mr Holbrook highlighted Mr Vokes’ point that council finances will be further tightened by a 1 per cent year-on-year reduction in council rents, announced in Chancellor George Osborne’s July budget.

The barrister said of Ms Gniewosz’s analysis of the amount of money the council could borrow: “She’s not an expert. She’s misreading that document.”

The barrister added: “Even if we assumed that Lambeth had a windfall of say £10m it may decide not to spend it on Cressingham Gardens, at least not on refurbishment, because that would still mean Lambeth would be spending a disproportionate sum of money on residents of this estate. Green grants and right to transfer aren’t going to cause Lambeth to change its mind.”

The case, heard on November 3 and 4, continues.

Read Court Report Part 1

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