Court Report Part Three: “Show-stopping” memo was not promised financial analysis

Doubt has been cast over a document penned by a senior Lambeth Council accountant which was supposedly the “show-stopping” revelation leading to a decision to demolish up to 300 homes.

The local authority claimed during the High Court hearing that the internal memo, said to have been written by town hall accountant Julie Curtis, was the game-changing moment that caused them to shut down the consultation on “refurbishment options” for Cressingham Gardens estate.

The Curtis document did not come to light earlier, despite a string of opportunities, including an email from resident board member Gerlinde Gniewosz, who was raising the alarm that the proper financial analysis had not been carried out, it was revealed.

The judge, Mrs Justice Elisabeth Laing, had earlier asked Jon Holbrook, for the council, “What changed?” between November 2014 when the refurb was still an option, and when the council pulled the plug in March this year. Mr Holbrook offered the memo.

The note, entitled “Cressingham Gardens Full Refurbishment Affordability”, had not been disclosed despite a request under the Freedom of Information (FOI) Act, in which Ms Gniewosz asked for evidence of the analysis behind the decision. The council’s response to the FOI was to re-issue the same housing revenue account [HRA] business plan issued in December 2014, adding that all the analysis they possessed was included in the publicly available Cabinet report.

Regeneration boss Neil Vokes claimed to have received an updated HRA business plan in mid February, that led the Cabinet member for regeneration, Councillor Matthew Bennett, to make the decision that some or all of the homes would be demolished.

Mr Vokes stated: “At about the time of the 2nd ad hoc meeting of 16 February I received the updated HRA business plan which confirmed that no more than £3.4m would be available for the estate from the HRA. This meant that even with the Morrow [resident-commissioned repairs costings of £7m] (which the council did not accept) refurbishment was now known to be unaffordable. It was this information that prompted Councillor Bennett’s letter of 26 February and the Cabinet decision of 9 March to stop consulting on the refurb options.”

By way of explanation for the council’s failure to disclose such an important document as part of its “duty of candour”, Mr Holbrook said earlier: “There are so many documents in this case, Mr Vokes has made an assertion and if I had to bring a document to support every assertion he makes, there would be a lot more documents than there are already. I can see it’s relevant and I can copy it and bring it to court.”

The judge remarked: “You’d think, if it was such an important document, it would have been printed out and put in a file somewhere.”

The memo finally appeared on the second day of the review into the “unlawful” decision to strike off options one to three – the “refurbishment options”. Mr Vokes, who as programme director for strategic capital projects is the council’s main witness, apologised for what he called an oversight.

David Wolfe, QC, for the claimant, noted the one-page Curtis note contained no reference to the £3.4m ceiling that Mr Vokes said was central to the decision, and was not in any way the detailed analysis that had been promised.

Mr Wolfe said: “I may be missing something, but I don’t see any reference in that memo to any £3.4m being available.”

The QC also questioned why, if the document was such a game-changer, it did not come to light as the result of a series of emails on the same day.

Mr Wolfe noted the Curtis missive was dated February 13, the same day as the financial viability topic was under discussion in emails, into which Ms Curtis was copied.

The discussion began when regeneration manager Lucia Deere distributed the project timeline among the project team, proposing various drop-in sessions, a survey of resident opinion in March and a Cabinet decision on the estate’s future in May.

Later that day, resident representative Ms Gniewosz replied, asking: “I also see no allocation of time for the financial sub-group to meet. Are you ignoring this? It has only met once in October last year. This needs to be done before any Info Pack can be drawn up, since you have still not done a proper financial model to show viability.”

A few minutes later, independent resident adviser Simon Slater, added: “I would recommend the timeline needs to reflect completion of work streams and feedback to project board to assess outcomes. …I’m assuming that residents will want time to digest the information sent to them and have individual home visits. Following the discussions and hopefully agreement on refurbishment costs, the financial viability sub group needs to meet to assess the impact these figures have on viability calculations.”

Mr Wolfe observed: “Julie Curtis receives a flurry of emails reflecting the fact that viability calculations are still very much alive, at least in the minds of Mr Slater and Ms Gniewosz.

[Ms] Curtis has produced the document that’s then said to be the show-stopper, with the viability calculations. It is perhaps surprising that she doesn’t circulate it more widely.”

He said that soon after that there had been a project team meeting, which would have been yet “another opportunity to reveal this document”. “Not done,” he added.

The project team never receives it,” said the barrister. “They only learn of the effect of it in the letter from Mr Bennett. Where’s the detailed analysis? Neither we, nor the court, have ever seen it.”

Mr Wolfe referred the court to a statement in the residents’ information pack, circulated at the beginning of that period of intensive consultation. The statement reflected on an earlier costing for repairs, based on the Tall structural survey of the estate.

It said: “Based on the findings of the Tall survey we believe that the figure on Cressingham Gardens is in the region of £45,000 per property. That sum of money is not possible either for Lambeth tenants or the council.”

The QC said that this calculation was based on the higher £14m costing, which was lowered considerably in January 2015. In addition, no information was provided about “what would be affordable if the cost came down or what the affordability threshold may be. …if there’s a £3.4m cut off or anything like that”.

He referred to another paragraph in the pack, which claimed: “So that we can compare the options and see what can be afforded, the council has looked at the income and expenditure for each option over a 30-year period.”

Mr Wolfe pointed out: “The council has never presented, defended or explained any 30-year assessment on which it said it was relying.”

Similarly, the same document’s summary of the issues on option one, stated: “In order for this option to be considered, the council would need to look at ways of reducing the refurbishment figure and/or find alternative funding sources (in addition to the Lambeth Housing Standard monies) to deliver the works.”

The document also outlined how grants might be available for building affordable homes, a funding opportunity Mr Wolfe argued should have been factored in for assessing options two and three – the other refurbishment options which entailed minimal demolition and some infill development.

Of course the decision cuts out one, two and three,” said the QC.

Mr Wolfe then moved on to Mr Holbrook’s argument that the council felt compelled to re-weight the findings of the consultation to reflect hidden support for demolition.

Mr Holbrook had earlier implied that it was mainly leaseholders who were asking for refurbishment, with tenants favouring demolition.

Mr Wolfe directed the court to a table of tenants’ views recorded by consultation firm Social Life, at workshops in November and December. He said: “What’s interesting is tenants’ views aren’t materially different in terms of their preference to those of homeowners. Tenants are still overwhelmingly in favour of one, two and three.

The suggestion that somehow homeowners want refurbishment options and tenants want regeneration options, is simply not sustained by this table.”

The court heard that looking at the over-all picture, at a November 7 workshop, 30 residents said full refurbishment was “very good” and only one said “very bad”. Some 33 residents rated full demolition as “very bad”, while only three said these options were preferable.

Regarding comments made earlier by Mr Holbrook about the Cabinet meeting being an opportunity for residents to get their views across, Mr Wolfe said: “That’s no substitute for compliance with the framework which Lambeth itself set in place. It’s simply not an answer.”

There was more laughter from the public gallery when Mr Wolfe added: “This also goes to the point about [the Cabinet members] having read it in the newspapers. The point of this process was to get residents’ views on relatively technical matters – finance, management options – and it was the responses to those things that should have been fed back to the Cabinet members.”

Mr Wolfe underlined his point that far from being “not pertinent”, as stated by the council, the discussions of the subgroups, which among other things were considering alternative funding structures for repairs, were “very much part of what needed to be fed back to Cabinet”.

The QC suggested that after regarding the views as being skewed in the wrong direction, the council then decided to “nobble the Cabinet” by leaving them out.

That’s plainly bad in law,” said Mr Wolfe. “Section 105 makes it clear that the decision-maker takes into account the representations.”

The barrister said it was one thing to provide a summary of the views, and another to “materially change the nature of what’s reported back”. “That in itself is a free-standing unlawful approach,” he added.

The QC went on to assert that Mr Holbrook had incorrectly drawn an inference from the notes of the first workshop, in which residents were complaining about repairs, that they were “anti option one”. “There’s nothing that says: “Please demolish our homes,” said Mr Wolfe. “You surely can’t read these comments as anti option one because that’s not the box they ticked when they went out.”

The barrister said that far from the council not agreeing to do a 30-year calculation, it had committed to that “many times”. He cited not just the document sent to residents which said it had in fact been done, but also notes of an October 27 project team meeting.

Theres a clear single aim,” said Mr Wolfe. “This is the way it was going to be done and this was the assessment that was going to be undertaken.”

Picking up on Mr Holbrook’s criticism of Ms Gniewosz that she conflated “process and outcome”, Mr Wolfe said: “There’s no evidence she did, but even if she did, so what? Her state of mind doesn’t excuse their illegality.”

He said the council is now arguing that: “In effect, we decided we weren’t going to do a 30-year NPV [Net Present Value] approach.”

But we see no reference to that change of approach,” added the QC. “At no point does Lambeth say: “OK people, we’ve changed our approach. They simply give a new answer on a completely unannounced basis.”

With regard to Mr Vokes’ claim that exercising the right to transfer the estate to the community is not a realistic option for the estate, the barrister said: “In other words, somebody has made a decision to rule that out and not include it within the evaluation and presentation. But the Cabinet doesn’t get to see that. Cabinet doesn’t know that.

They don’t even know that the resident management options group was progressing its own investigations into these very things. It may be right that residents might not want it in the end, who’s to say? It’s certainly not for him or the council to second guess that evaluation and rule it out at the start.”

He added: “It is for Lambeth officers to decide. Yes, but they have to comply with the obligations of fairness. It is plainly necessary for members to know about all the different things we have been through.”

The court heard how any claim of unlawful consultation brought after April 13, has an additional defence in that, even if it finds a decision unlawful, the court must refuse to quash the decision “if it appears to the court to be highly likely that the outcome for the applicant would not have been substantially different if the conduct complained of had not occurred”.

Lambeth has argued that if it has to run the consultation again, it would be likely to make the same decision, particularly in light of government plans to reduce council rents. Mr Wolfe said his reading of the statute is not that it is “looking forward to what would happen if the decision is quashed”, but “looking back to what happened at the time”.

Mr Holbrook earlier cited the fact that Lambeth’s Overview and Scrutiny Committee examined the council’s eventual July decision to demolish the entire estate, following a call-in by a Green Party councillor, but found that the decision stood.

Mr Wolfe said: “This is simply looking again at the same material. If they look back at the same material they reach the same conclusion. The point is, what would happen if they looked at different material?”

The barrister referred the court to a passage in the council’s August 2015 call-in report, which stated: “If the Council is asked to consider the decision afresh then it is highly likely that the outcome would not have been substantially different based on the information available to the Council and the need to make a timely and reasonable decision.”

It would have been grammatically correct to state: “would not be substantially different”, the court heard.

The QC said: “It looks awfully like a back-covering exercise. Mindful of the ongoing judicial review challenge, it parachutes in the words of the statute without changing the tense.”

Oh yes,” smiled the judge, before reading the passage again with the correct tense substituted.

Revisiting the council’s claim about Ms Gniewosz causing difficulties with the consultation, which Mr Holbrook repeated, Mr Wolfe said: “He [Mr Vokes] doesn’t say she’s obviously and necessarily wrong. He makes the point about TMOs [tenant management organisations not making much difference because the homes are still within the HRA], but you have a large chunk of unchallenged evaluation. I don’t invite the court to evaluate the material – the point is, it’s unchallenged.”

Mr Holbrook also earlier claimed the judge should find against the claimant because there was a delay bringing the case, resulting in the council having already progressed its regeneration plans.

Mr Wolfe said the delay was in fact caused by the council, which in its initial response to the legal notice, claimed: “Your challenge is premature”, because the consultation was ongoing, giving the impression that all five options were still under consideration.

That response set a bit of a kerfuffle going, with the Legal Aid Agency saying: ‘What are you doing bringing a challenge then?’”

Lambeth eventually confirmed that options one to three were off the table, meaning the funding application could proceed.

Mr Holbrook claimed earlier that Lambeth had also progressed on its March decision, by leaving properties empty when tenants move out. This allowed Mr Wolfe to now make the point that the council has left six flats empty in Crosby Walk for more than 16 years.

Mr Wolfe also referred to the witness statement of another resident representative on the project team, Tom Keene, who confirmed that no significant steps had been taken by the council in furtherance of its regeneration agenda.

Mr Wolfe also attempted to address a limited number of the wider arguments offered by Mr Holbrook, but the judge intervened, saying: “I’m not sure where these points go.”

I’m not sure either but I wanted to clear them up,” said the QC.

Mr Wolfe explained: “Nicholas Greaves was the person who expressed concern about leaseholders being over-involved. He appears not to be involved in any other working group himself. It’s a little bit of a bold complaint from him.”

Gerlinde is the co-chair of the TRA and she’s a member of the project team. She was specifically asked by the project team to be on the financial viability subgroup. So you can hardly complain about her being on that group.”

The QC, acting for Eva Bokrosova, a tenant of the estate, asked the court to quash the decision and give residents “the lawful opportunity of which they were deprived”. He added: “We say very clearly – something has gone very clearly and radically wrong.”

The hearing, which took place on November 3 and 4, adjourned pending the judge’s decision, to be delivered at a future date.

The council denies two grounds of claim that the decision was unlawful and the case continues.

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