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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Bokrosova v London Borough of Lambeth [2015] EWHC 3386 (Admin) (24 November 2015) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2015/3386.html Cite as: [2015] EWHC 3386 (Admin), [2015] WLR(D) 478, [2016] PTSR 355

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		24/11/2015

Mrs Justice Elisabeth Laing DBE:

1. On 9 March 2015 the Cabinet of the Defendant ('the Council') resolved among other things

a. that the cost estimate to bring the Cressingham Gardens Estate ('CGE') up to the Lambeth Housing Standard ('LHS') was £9.4m;

b. that there was then no provision for the cost of a refurbishment-only programme in the Council's LHS programme, and the Council had a duty to say what was feasible within budgetary constraints;

c. to recommend that officers consult further on options for significant regeneration of CGE (as set out in the report) and that a viable regeneration proposal be brought back to the Council's Cabinet ('the Cabinet') in May 2015 with full supporting evidence;

d. that there was a commitment to work with residents to develop the regeneration proposals.

2. This claim was lodged on 9 June 2015. Permission to apply for judicial review was given by Holman J on 10 July 2014 on two grounds (by reference to the grounds pleaded in the claim form). It was arguable that the decision to drop options 1-3 was unlawful because

a. in breach of section 105 of the Housing Act 1985 and of the common law requirements for a lawful consultation the Cabinet did not conscientiously take into account the views of residents expressed in response to the information pack and other information provided at workshops and meetings; and

b. in breach of the general requirements of lawful consultation (as above) the Council decided not to proceed with options 1-3 because they were 'not affordable'.

3. The Claimant was represented by Mr Wolfe QC and Mr Glenister. The Defendant was represented by Mr Holbrook. I am grateful to all counsel for their helpful skeleton arguments and to Mr Wolfe and Mr Holbrook for their oral submissions.

The background

The Lambeth Estate Regeneration Programme

4. On 22 October 2012, a report on the Lambeth Estate Regeneration Programme ('LERP') was presented to the Cabinet and approved. The aim of the programme was to improve existing residents' housing and to provide new homes at council rent levels. Three principles had been used to identify estates which were suitable for regeneration. They were to focus on the estates where (1) the costs of providing the LHS were prohibitive; (2) residents and the Council considered that bringing housing up to the LHS would fail to address underlying issues such as the basic condition of the homes or wider problems experienced by residents; and (3) the wider benefits of regeneration would justify it.
5. The report noted that in March 2012 the Council had approved the LHS. It required nearly £500m to be spent over five years. There was a £56m funding shortfall and some problems would not be solved by implementing the LHS. This had led to preparatory work on the LERP. Paragraph 2.8 of the report identified CEG as an estate which met two of the criteria. The annual maintenance costs were high but structural problems meant that there was little visible improvement from repairs. 'Together difficult decisions need to be made as to whether to continue investing in properties… or whether to look at alternative options'. The Council was said to be exploring the options with residents; after a six-month period of 'co-producing options', a 'preferred option' would be presented to the Cabinet.

December 2012

6. In December 2012, a document headed 'Cressingham Gardens: the case for action' was sent to residents. It said that CGE was popular but that 43% of tenanted properties were 'non decent'. The Council had spent £1.84m on 'responsive repairs' in the past six years, but the overall condition of the properties was not improving. Simply refurbishing all the homes was not the answer. Tenants' lives could be improved by offering them new homes. The Council could look at whether there were ways to manage CGE better. The Council would work with tenants and the tenants' and residents' association ('TRA') to 'look at all possible options for improving [CGE]; and so long as they are high quality, affordable, sustainable and meet the needs of residents… then they will be considered.'
7. The Council had given information to the TRA about refurbishment costs. Basic refurbishment would cost £3.4m. There were three issues with those costs. The actual costs could be greater, basic refurbishment would lead to limited improvements to the inside of homes, and it did not include the cost of remedying structural problems. The Council explained what further works would be needed. The Council considered that the actual cost of bringing CGE up to the LHS would be significantly more than £3.4m. The Council then set out a timetable for engaging with the residents of part of CGE on those issues.

Social Life's activities in 2013

8. Between July and September 2013, Social Life, a firm engaged by the Council, led a 'consultation and co-production process'. They interviewed residents. Their findings were published in October 2013.

The project delivery team

9. According to the report for the Cabinet meeting on 9 March 2015, the next 'significant period of engagement' began in November 2014. However, before that, the Council established, in spring 2014, a 'project delivery team' for CGE. Its terms of reference included considering 'regeneration options' for CGE which met the aims of the Council and 'Community wider objectives', steering and managing regeneration options and co-producing the regeneration options with the residents. The project team members were to 'scrutinise, question and investigate information' and raise issues which had been highlighted by residents. Strategic Urban Futures ('SUF') were appointed by the Council to help the residents.
10. Email exchanges in late September and October 2014 between Ms Gniewosz, a leaseholder, and council officers show that she was asking for detailed financial information about the options, including full 30-year cash-flow models for each of the options to enable options to be played with, and 30-year forecasts of debt headroom and the Housing Revenue Account ('HRA') financial model. On 7 October 2014, the project team members, including Ms Gniewosz, were emailed a number of attachments for a meeting the following Friday. They included, I am told by Mr Holbrook, 30-year 'rough' NPV (that is, 'net present value') models for the options which were then being considered, including the refurbishment option. This was the only time any financial information was provided to the project team, Mr Wolfe submitted. Ms Gniewosz repeated her earlier request when these documents were emailed to her.
11. On 15 October 2014 there was a meeting of the project team. Ms Gniewosz was present. Mr Vokes, for the Council, set out a 'programme of engagement which would enable residents to discuss the different options for the future of CGE'. Provisional dates for workshops were set out. Paragraph 3.1 of the minutes records that a sub-group would be set up to look at financial modelling. The first step would be to agree assumptions to be used in the model. Those included buy-back values for leaseholders, the value of new properties and information on the LHS costs. Paragraph 3.2 says, 'It was agreed that an NPV calculation would be used so that the options could be compared however the Council stressed that if [CGE] went back into the LHS programme then the Council would not use an NPV financing model as the estate would be treated in the same way as all other estates being refurbished so the works would be funded through the LHS financial model'.
12. On 16 October 2015 Mr Vokes of the Council emailed Ms Gniewosz among others to say that it had been agreed at the meeting the previous night to set up a sub-group of the project team which would develop an NPV model for each of the options. The purpose was to provide 'a comparable baseline'. The NPV models needed to be completed for the first workshop on 29 October 2014. In fact, though there were later emails on this topic, no further NPV models were ever produced.

21 October 2014 letter to residents

13. On 21 October 2014 Mr Vokes wrote to the residents. He said the Council understood residents' concerns and frustration. The purpose of 'this engagement' was to come up with a solution to those concerns about the poor condition of their homes and to look at opportunities for building new extra homes. The Council did not intend to sell CGE to a private developer. No decision on the future of CGE had been made. The Council had set out a new timetable of workshops so that as many people as possible could get involved. The workshops would start in early November and run until the end of January 2015. Social Life and others would be co-ordinating additional sessions to discuss some issues more fully. These would discuss green retrofitting, and alternative resident management options. 'At the end of this process you will be asked for your views on each of the affordable and feasible options for [CGE]' as part of the test of opinion. Mr Holbrook submitted that these words showed that the Council was preparing the ground to discount some options if they proved not to be affordable or feasible.
14. The letter set out a timetable for 5 workshops. The first would set up working groups. It was suggested that one of those would deal with financial modelling, one with green retrofitting and one with resident management options. Workshop 2 was to for tenants to discuss 'What does the refurbishment option mean for you? ....'. Workshop 3 was for leaseholders and freeholders to discuss similar options. Workshop 4 was for 'feedback' from workshops to residents, and workshop 5 was 'a final session setting out all the options in detail'.

The finance sub-group 27 October 2014

15. There was a meeting of the finance sub-group on 27 October 2014. It was agreed that the purpose was to 'produce a model which will assist residents in their decision making process in respect of any option presented'. The model would be a 30-year discounted cash flow ('DCF') version identifying a net present value. This is the only meeting of this sub-group which took place, although there were two later meetings of what Mr Holbrook referred to as the 'ad hoc' group, which I describe below. A undated note of that meeting was also prepared by Gary Chase, who, according to Ms Gniewosz, is an independent financial expert brought in by SUF. Mr Chase expressed his surprise that the NPV calculation was not being done by a financial expert, and his views that he would have liked to see a draft NPV to discuss and review, and that information should be provided before the next meeting in excel format. He recorded that it was agreed that 'after the npv analysis' the Council would 'demonstrate the effect on their HRA and affordability issues for each option.'

31 October 2014 email

16. On 31 October 2014, Simon Slater of SUF emailed residents. He said that he had met Mr Vokes to find out how the consultation would work. He indicated that sub-groups would 'probably meet 2-3 times during the consultation process and their deliberations will feed back into the wider consultation process'.

6 November 2014 letter

17. On 6 November 2015 Mr Vokes wrote again to the residents. On the reverse of the letter was a timetable of workshops. It was the same as the timetable attached to the 21 October letter, except that it added that there would be a test of opinion in February 2015; and once that had happened, a report would be presented to the Cabinet with the results of the test of opinion so that a decision could be made.
18. Mr Vokes attached background information for the workshops which were going to take place during November, December and January. The pack provided 'the Council's view on what the issues and challenges are and what the headline options for [CGE] are'. The Council was committed to a huge capital investment of £490m. There was an urgent need for new homes. For every family in a Lambeth Council home, there was somebody on the waiting list. 27,000 families were living in overcrowded accommodation. The population was growing, increasing pressure on housing. The Council believed new homes at council rent levels could be built at CGE and existing homes could be improved.
19. A survey by Tall of a sample of homes had shown problems. The Council was concerned that the amount of money needed to repair CGE was more than it had available. To bring the homes up to LHS would cost £14m. The average cost of doing LHS works in CGE was higher than the average for other estates (£45,000 per tenanted home as opposed to £16,000). Those costs would be reviewed as part of the process to get a more accurate picture. 'That sum of money is not possible either for Lambeth tenants or the Council'. Most of the money spent on housing came from tenants' rents. If more is spent on one estate than on others, that has to come from all tenants' rents. The amount the Council could borrow was capped. But those challenges did not lessen, in any way, the Council's commitment to providing better quality homes for all tenants.
20. Under the heading 'Developing options for the estate' the document said that options had first been worked up over the summer. The Council explained how the regeneration of an estate could be funded. Under the heading 'What are the options?' the Council listed the options which had been looked at. 'Ultimately' the Council could only consider options which were affordable. So that the Council could compare options and see what could be afforded, the Council had looked at the income and expenditure for each option over a 30-year period. All the options had used a cross subsidy approach by which money raised through private sales would be reinvested in CGE to provide new homes at council rent levels. Option 1 was that all the homes would be refurbished. Options 2 and 3 provided for refurbishment with increasing levels of demolition and new building. Option 4 was described as 'medium intervention development' and option 5 as 'comprehensive redevelopment'.
21. Under option 1, the Council said that refurbishment would cost £12-15m, but other necessary repairs would increase that cost. The works would have a substantial impact on residents. It would mean that further substantial works would be needed in the future for which no funding was currently available. This option provided no new homes. 'In order for this option to be considered the Council would need to look at ways of reducing the refurbishment figure and/or finding alternative funding sources (in addition to LHS monies) to deliver the works'.
22. Option 2 involved the demolition of 19 homes and the building of 38 new ones. The aim was to generate a small surplus which could be used to subsidise the refurbishment costs of existing properties. Under option 3, 31 homes would be demolished; three owned, 22 tenanted and six which were empty. 22 new council homes would be provided for the displaced tenants, 12 new council homes and 19 homes for sale. This model assumed that the home owners would be bought out, and that would generate a small surplus to help pay for the refurbishment of the other properties. Option 4 was deliverable with a small deficit. Option 5 was unlikely to be supported by local people and the financial analysis showed a significant deficit. This option was 'clearly unaffordable'.
23. Under 'Decision making and next steps' the document said that a series of workshops would enable these options to be discussed. Sub-groups would meet to consider such issues as finances. At the end of the process, '...you will be asked for your view on each of the affordable and deliverable options as part of the test of opinion'. The options would be presented to the Cabinet member for Housing 'along with the comments received' so a decision could be made on the preferred option. A further consultation would be carried out after the decision of the Cabinet member.

Emails in November 2014

24. On 11 November 2014, Social Life emailed the residents. The email said that four more workshops were planned. Working groups had been set up and would 'feed back their work to the larger workshops'. These included groups on resident management options, green retrofitting and NPV modelling. The last had already started and was looking at 'the detail of how the assessment of financial viability is made'.
25. Mr Vokes sent an email on 13 November 2015 to Ms Gniewosz, saying that the NPV group was still led by Alistair Russell. He was an employee of Ian Sayer & Co, a firm of surveyors. Mr Vokes said he had forwarded various requests for information and as soon as he had that information he would set up a further NPV sub-group meeting to 'agree the assumptions and progress the modelling'. This was a response to an in inquiry from Ms Gniewosz on 12 November. She said she was worried that nothing was happening as there had been no attempt to provide the group with 'any of the promised data' and no follow-up meeting had been arranged.
26. Also on 13 November 2014, Ms Gniewosz emailed Mr Vokes. She asked whether he would be reconvening the NPV team before 22 November 2015. He replied that once he had received updated information from LL [that is, Lambeth Living, the Council's Arms Length Management Organisation] he was going to ask Alistair [Russell] to reconvene the NPV financial modelling group so the updated information could be discussed and included in the models.

Events in December 2014

27. On 1 December 2014, the project team met. The minutes record that various sub-groups had been set up, including a 'Finance and NPV' group.
28. On 12 December 2015, Social Life emailed the residents about a meeting on 19 January 2015. The same day, Ms Gniewosz said in an email that she was concerned that there had not been a second meeting of the finance sub-group. She asked when she could expect 'even an excel model'. This email was forwarded to Mr Vokes. On 19 December Simon Slater asked Alistair Russell when the next meeting of the finance sub-group would be. His reply was that that it would be early in the New Year. He was waiting for answers from the Council to questions asked by Ms Gniewosz. He would then complete the model, and issue it in advance.
29. In December 2014, a further report set out the Council's commitment to 1000 homes at council rent levels. It recommended that an important route to his should be the regeneration of estates. The role of the Council was to fill gaps which the market could not. It was important to recognise the high level of housing need in the borough. There had been high levels of economic polarisation and of population growth in Lambeth. The future needs of residents would not be served by market forces alone. Lambeth's estates were its biggest asset and if the Council was to tackle the housing crisis it needed to use that land 'efficiently and effectively to deliver benefit to as many people as possible'.
30. CGE had been included in phase 1 of the LERP; but discussions with the residents had been going on since 2013. CGE was chosen because it would be expensive to refurbish and the low density of the estate meant that there was scope to increase the number of homes. A project team including representatives of residents had been set up and a design team, cost consultant and engagement team had been engaged in order to explore options for the future of the estate.

Events in January 2015

31. On 12 January 2015, there was a further meeting of the project team. The minutes record that Ms Gniewosz raised a concern about finance issues, and introduced Simon Morrow (a quantity surveyor she had instructed). He had surveyed 22 properties on the CGE but would not say which ones. Those present agreed to have a special meeting on 26 January to discuss the figures produced by him, by LL and by Ian Sayers. LL were to provide a breakdown of their figures.
32. On 14 January 2015, Ms Gniewosz emailed Mr Vokes, among others. She asked when the next finance meeting was going to be. She was 'constantly asking', but getting no answer. She said to Mr Vokes that he had mentioned that there was a new set of numbers and asked him to send them before the next meeting. He said in his reply that the Council had asked LL to meet the residents' quantity surveyor (Ian Morrow) to discuss costs. Once this had happened, 'We will update the appraisals and reconvene the financial sub-group'. The notes of the 19 January working group feedback session record that the residents' representatives on the finance working group were meeting with the Council on 26 January 'to go through the refurbishment costs with Quantity Surveyors. Aim is to agree a realistic figure that will go into each of the 5 options'.
33. On Monday 26 January 2015, Ms Gniewosz emailed Social Life about the last workshop (planned for 31 January 2015). Among other things, she said that she had still not seen a 'full financial model – ever'. She was sick of asking for the basics and not getting them. She asked what the point of a project team was if they were not being shown information in draft. It was a sham consultation. There was no way LL's costs would be ready by Saturday.
34. Mr Vokes emailed Ms Gniewosz on 26 January. He said that they were waiting for the outcome of that evening's meeting, at which costs would be discussed, so that Alistair could update the appraisals and circulate them to the finance sub-group. Ms Gniewosz asked why the financial models could not be sent out. It was 'absolutely unprofessional' that no figures had been sent out since October; and the model had never been sent. It was 'totally a sham'. She asked when the finance sub-group meeting would be; it was not advisable to send out figures to residents which had not been discussed. Mr Vokes replied that the Council would not issue financial information on Saturday which had not been discussed. It would issue such information on the refurbishment costs 'subject to tonight's meeting'.
35. There was a meeting of the 'ad hoc group' on 26 January 2015. Ms Gniewosz says that at that meeting LL were unable to justify their figures.
36. On 28 January Mr Vokes emailed Mr Slater and others. Mr Slater had asked, in the wake of the meeting on 26 January, what information would be available on Saturday about refurbishment costs. 'Saturday' was 31 January, when the final workshop was due to happen. Mr Vokes replied that the tenant offers would be ready on Saturday; and was hoping that the freehold questions would be answered by then. He suggested that details be provided on the agreed refurbishments, but that they should say that there were areas which were not agreed and needed to be looked at in more detail. The Council had recommended to LL that they commission a quantity surveyor to review the information and produce a 'properly costed report based on evidence and sensible assumptions'.
37. The meeting which had been due to take place on 31 January 2015 was cancelled by the Council. The flyer announcing this said that this was because it had not been possible fully to involve the project team in planning that session. The Council would meet the project team on 2 February 2015 to discuss the next steps.

The meeting of 2 February 2015

38. The minutes of that meeting record that LL had gone through the comparative figures and a further meeting would be arranged to run through LL's findings with residents. That meeting 'subsequently' took place on 16 February (from which I infer that the minutes of the meeting of 2 February were compiled after 16 February 2015).

Email exchanges on 13 February 2015

39. On 13 February 2015 the project team were emailed documents for discussion at a project team meeting on 2 March 2015. These included a project time line. This showed a refurbishment costings review continuing for another three weeks '(?)', and the preparation of a design options information pack also continuing for some weeks. The Cabinet was to make a decision in May 2015. Mr Slater replied to this email. He thought the timeline needed to reflect the completion of workstreams and feedback to the project board to assess outcomes. He said that after discussion and hopefully agreement of refurbishment costs, the financial viability sub-group needed to meet in order to assess the impact of those figures on financial viability. Ms Gniewosz added in a further email that no time had been allowed for that meeting. The sub-group had only met once, in October, and needed to meet again before the information pack was drawn up.

The 13 February 2015 document

40. Also on 13 February 2015, Julie Curtis created a document. She was then the senior accountant managing the Council's HRA. She was also a member of the project group, or at least, attended their meetings, and was copied into many, if not all, of the emails from Ms Gniewosz asking for financial information. At some point in February it seems that she emailed this document to Mr Vokes, although the Council has not disclosed that email. This document was addressed to the CGE 'project group'.
41. This document was annexed to Mr Vokes's third witness statement. It was not produced until the second morning of the hearing. That was a surprising development. It might be thought that this document had been asked for by Ms Gniewosz in requests made under the Freedom of Information Act 2000 ('FOIA'), before this litigation began, and by the Claimant's solicitors in the letter before claim. It is an important document, because it is said to be what led the Council to withdraw three options from the consultation arrangements. So irrespective of any requests by the Claimant or by anyone else, the Council should have disclosed it in this litigation sooner than it did, pursuant to its duty of candour. Mr Vokes explained that he has been very busy on various projects since about November 2014. He receives 200 emails a day and had overlooked it.
42. Ms Gniewosz made two FOIA requests. In response to the first, she received, in December 2014, the 30-year HRA business plan in the form of a multiple sheet excel spreadsheet. Ms Gniewosz says, in her second witness statement, that she later asked for the information supporting the conclusions of the Cabinet (on 9 March 2015) that options 1-3 were not affordable. The author of the Council's initial response to her second FOIA request stated that he/she had 'been advised by colleagues that the 9 March Cabinet paper includes both within the body of the report and in the accompanying appendices the documentation, evidence and analysis to support the conclusion that options 1-3 were not affordable'. Ms Gniewosz asked for a review, and on 10 August 2015 was sent 'HRA Model Dashboard 20142015.xlsx'. That file extension suggests this is a plan with a base year of 2014-15. In her first witness statement, Ms Gniewosz says that the sheet tab entitled 'O-Dash' seems to be very similar to a document disclosed by the Council in its response to the letter before claim; all the numbers are the same, but the heading is different, and comments have been removed. In her second witness statement she says that this document is also very similar to the document which was provided in December 2014. The plan does not identify individual estates, she adds. That evidence has not been contradicted by the Council. Her analysis of this document is that, given the Council's assumption that the refurbishment works would be incurred over a 6-year period, they could be afforded.
43. Ms Curtis said in the 13 February 2015 document that option 1 would rely solely on funding from 'within the HRA as there would be no additional income streams or funding available'. The other options included some external funding that 'make them more financially viable and do not place additional pressures on the HRA, along with delivering New Homes'. She gave a cost for refurbishment of £9.9 m which is somewhat different from the LL figure. She said that it would need to be met 'from within the HRA as there is currently no provision for this scheme of works within the Council's LHS programme'. The 'current version' of the HRA business plan with 2015/16 as the base year, she said, indicated that 'there is minimal or no scope for any additional funding of Capital or revenue works over the current LHS programme and the ongoing investment required in stock post LHS. The HRA business plan assumes contributions from Leaseholders to the financing of the Capital spend requirements. This profile has risks attached to it…'. Despite leaseholder contributions and the recent Decent Homes Backlog funding for 2015/16, there was still a funding gap for years 4 to 5 of the business plan. The Council was committed to the LHS programme and investment in housing stock as described in the 'Building Cost Model'. Her conclusion was that option 1 was not 'financially viable or supportable by the Council and should be disregarded going forwards'.

Mr Vokes's evidence about the Council's financial analysis

44. In his first witness statement, Mr Vokes said that from November 2014 to March 2015, the Council had done a 'detailed analysis' of its HRA business plan 'to see whether or how additional funding could be secured for refurbishment works on the estate. But it was not possible. All income and expenditure for the estate is part of the HRA because the estate is council property. This means that there are strict budgeting controls because the Council cannot by law run a deficit on the HRA, which is a ring-fenced account in the Council's overall accounting systems'. It may be that 'additional' means 'in addition to the £3.4m referred to in paragraph 4.c) of Mr Vokes's first witness statement'.
45. He also said in his first witness statement that refurbishment money must come from reserves in the HRA, borrowing via the HRA or from grants from central Government (the Decent Homes Programme). There were no reserves in the HRA. Borrowing via the HRA was capped, and the Council had reached its cap. 'The Central Government grant secured by [the Council] is being used to deliver refurbishment works to council properties throughout the borough.' He added that it would theoretically have been possible to spend more on CGE by spending less on other estates, but that this would have been 'grossly unfair to the Council's other leaseholders and tenants', because the average unit cost of refurbishment is so much higher for CGE than for other estates.
46. What Mr Vokes said about this in his second witness statement was that at about the time of the 'second ad hoc meeting' of 16 February 2015, he received 'the updated HRA business plan which confirmed that no more than £3.4m would be available for the estate from the HRA'. This, he says, was the information which prompted the letter of 26 February 2015 (to which I will come). I observe that the document dated 13 February does not seem to be the updated HRA business plan (although it may refer to it) and it does not seem to show that any money at all let alone 'no more than 3.4m' is available for the estate from the HRA.

Further events in February 2015

47. On 16 February 2015 there was a further meeting of the 'ad hoc group'.
48. On 18 February 2015, Mr Vokes replied to a complaint Ms Gniewosz had made in November 2014. She responded on 22 February 2015. She said, among other things, that she had consistently asked for NPV calculations as per the HM Treasury Green Book.

Councillor Bennett's letter of 26 February 2015

49. On 26 February 2015 Councillor Bennett, the Council's Cabinet member for Housing, wrote to residents to 'update' them on 'the consultation on the future of [CGE]'. He said that CGE had been identified as a possible estate for regeneration in 2012 because of the unaffordable cost of bringing homes up to the LHS and because there was a pressing need for more homes for rent across the borough. The Council needed to find places to build those homes. In December 2014, the Council had decided to provide a 'sizeable proportion' of those homes on six estates, including CGE. Various 'illustrative' options had been considered. 'The intention has always been to work toward a viable solution for the estate and to consult with you as part of the decision making process'.
50. The Council had now done the necessary financial analysis on the refurbishment options (1-3). 'We have worked with residents on the costings, and even using a best-case scenario the lowest cost for refurbishment of the whole estate is still three times what the council can afford and it would not be right to continue to consult with residents about an option which is simply unaffordable and cannot happen'. A paper would be presented to the Cabinet in March 2015 which would recommend that 'those options which neither significantly reduce the costs to refurbish the estate to an affordable level nor deliver the number of new homes that the Council would expect to see, will not be consulted on further' [my emphasis].

Emails on 27 February 2015

51. On 27 February Mr Miah of the Council circulated further documents for the project team meetings which were scheduled for the evening of 2 March 2015 (he had already sent some by email on 13 February 2015). Simon Slater emailed him the same day to ask for the draft cabinet report to be circulated. Councillor Bennett's letter referred to financial viability, but there were no figures in the letter and 'no updated financial or unit options 4 and 5 since October'.

2 March 2015 meeting

52. There was a meeting of the project team on 2 March. By that stage, the cabinet report for the meeting on 9 March had been published. The minutes record Ms Gniewosz expressing dissatisfaction that no NPV assessment had been done, and her belief that if it had been done it would have shown that refurbishment was the only viable option. A council representative explained that this was 'cost-prohibitive within the existing HRA business plan'.

3 March 2015 email

53. Mr Miah emailed the project team on 3 March 2015 with the programme for the next three months of the project. A paper would be presented to the Cabinet on 9 March which 'conclude[d] that Options 1, 2 and 3 are not affordable to be progressed'. Councillor Bennett would explain the Council's thinking on 14 March. The Council would carry out a test of opinion during April, and in May the Cabinet would consider a detailed paper setting out recommendations for the future of CGE.

The report for the Cabinet meeting of 9 March 2015

54. The Cabinet considered a report which was available on the Council's website from 27 February 2015. The report said that the Council was committed to providing 1000 extra homes over the next four years at council rent levels using external capital and long-term investment models. The purpose of the report was to provide an up-date on the CGE regeneration project. A further paper with a recommendation on the preferred option would be put before the Cabinet in May 2015.
55. Under the heading 'Finance summary' the report said that the cost estimate to bring CGE up to the LHS was £9.4m. The original 2012 LHS business plan had a provision of £3.4 for those works. There was no current provision in the LHS business plan and expenditure would need to be re-allocated from other HRA investment programme schemes. The latest version of the HRA business plan (with 2015-16 as the base year) showed that there was 'minimal or no scope for additional funding of capital or revenue works over the current LHS programme and the ongoing investment required in the stock post LHS'. The report made recommendations which are reflected in the resolution I described in paragraph 1, above.
56. The report set out the history. It recounted that the 'options analysis' had 'looked at 5 different scenarios' which were summarised in the report. Of option 1 the report said 'This option would not deliver any new homes at Council rent levels and there is insufficient headroom within the HRA to fund the levels of work required on the estate'.
57. The other options were also described. Each option was assessed against a set of criteria. Paragraph 2.5 of the report said that 'the intention has always been to narrow down the options before going back to the residents as part of the decision making process'. Paragraph 2.9 said that a three-month programme of engagement had 'recently been completed. The Council agreed with the residents to continue exploring refurbishment as an option within that process however it has been clear that full refurbishment of the estate or a significant proportion of the estate is currently unaffordable within the constraints of the [HRA].
58. The Council also does not consider any pure refurbishment option to be in accordance with the Council policy to …deliver[ ] more homes at Council rent levels. [CGE] has been included in the estates regeneration programme, as set out in the Cabinet Paper of December 2014, because there is an opportunity to deliver new homes. Therefore those options which neither significantly reduce the costs to refurbish the estate to an affordable level nor deliver the quantum of new homes that the Council would expect to see will not be consulted on further'. This would enable the Council and residents to focus on options which significantly reduced costs and delivered new homes. That recommendation had been made in letter from [Councillor Bennett] to residents.
59. More information about finance was given in section 3 of the report. The 'upfront capital budget' for LHS had been derived from the 30-year borrowing plan in the HRA. A funding shortfall of £56m had been identified. HRA borrowing was capped and the current forecast showed no borrowing headroom until 2020-21 at the earliest. The actual costs of refurbishment would be considerably higher than the October 2012 estimate of £3.4m in the LHS business plan. The updated cost estimate was £9.4m (excluding the cost of replacing windows).
60. That would need to be met from the HRA, as there was no provision for it in the LHS programme. The LHS cost for CGE was more than £30,000 per unit compared with an average of £11,500-£19,900. The latest version of the HRA business plan (base year 2015-16) showed that there was minimal or no scope for any additional funding of capital or revenue works over the current LHS programme and the continuing spending on stock post LHS. The HRA business plan assumed contributions from leaseholders and this was a risky assumption. Despite those contributions and recent decent homes backlog funding, there was still a funding gap over years 4-5 of the business plan. The estimate by the residents' quantity surveyor was about £7m, but that excluded costs which were necessary.
61. The Council needed to look at other options for CGE. The options which include an element of new build would be able to attract other funding (three examples were given). Those would help to reduce the cost to the Council.
62. The report referred to section 105 of the Housing Act 1985, and to the recent decision of the Supreme Court in Moseley. The Council was required before making any decision to consider representations made to it in accordance with those arrangements. Procedural fairness sometimes requires an authority to explain why alternative proposals have been rejected when consulting residents.
63. The report then said that Social Life had led the consultation and co-production process. It referred to interviews with residents in 2013. The report said that the next significant period of engagement began in November 2014. 'In recognition that the uncertainty over the future of the estate was a serious concern to residents, the Council agreed a 3 month engagement plan at the end of which a decision on the estate could be taken'. Six workshops were run in total plus a feedback session from the six working groups that had been set up to explore particular issues in depth.' The workshops were then described. The working groups were listed, but the finance group was not mentioned. The table did not mention that, as per the notes of the 19 January 2015 feedback session, the work of the finance sub-group had not been completed. Nor did it say that the engagement programme, as originally planned, had not been completed.
64. The views which tenants had expressed to Social Life on 'different indicative options' at workshops on 22 November and 10 December 2014, homeowners at a workshop on 22 November 2014, and residents at a workshop on 7 November 2014 were tabulated. The report audit trail shows that the original discussion with a cabinet member had been on 11 February 2015, and that Finance had been involved in the report since 13 February 2015. The report deadline was 20 February 2015 and it was finally sent on 27 February 2015.

The legal framework

65. Section 105 of the Housing Act 1985 is headed 'Consultation on matters of housing management'. It provides, as far as is relevant:

"(1) A landlord authority shall maintain such arrangements as it considers appropriate to enable those of its secure tenants who are likely to be substantially affected by a matter of housing management to which this section applies—

(a) to be informed of the authority's proposals in respect of the matter, and

(b) to make their views known to the authority within a specified period;

and the authority shall, before making any decision on the matter, consider any representations made to it in accordance with those arrangements.

(2) For the purposes of this section, a matter is one of housing management if, in the opinion of the landlord authority, it relates to—

(a) the management, maintenance, improvement or demolition of dwelling-houses let by the authority under secure tenancies, or

(b) the provision of services or amenities in connection with such dwelling-houses;

but not so far as it relates to the rent payable under a secure tenancy or to charges for services or facilities provided by the authority.

(3) This section applies to matters of housing management which, in the opinion of the landlord authority, represent—

(a) a new programme of maintenance, improvement or demolition, or

(b) a change in the practice or policy of the authority,

and are likely substantially to affect either its secure tenants as a whole or a group of them who form a distinct social group or occupy dwelling-houses which constitute a distinct class (whether by reference to the kind of dwelling-house, or the housing estate or other larger area in which they are situated).

…

(5) A landlord authority shall publish details of the arrangements which it makes under this section, and a copy of the documents published under this subsection shall—

(a) be made available at the authority's principal office for inspection at all reasonable hours, without charge, by members of the public, and

(b) be given, on payment of a reasonable fee, to any member of the public who asks for one. "

66. This provision requires a relevant authority to maintain such arrangements as it considers appropriate to enable secure tenants who are likely substantially to be affected by a matter of housing management to which section 105 applies to be informed of the authority's proposals about it and to make their views known to an authority within a specified period.
67. The obligation to make arrangements appears to be a general one, but the drafting contemplates relatively detailed arrangements: the arrangements must enable tenants to make their views known 'within a specified period'; and the authority must publish 'details' of the arrangements which it does make. Section 105 imposes obligations to make arrangements which enable tenants to be informed about an authority's proposals and to make their views (on such proposals) known to the authority. An important specific obligation section 105 imposes is to consider any representations made to it 'in accordance with those arrangements before making any decision on the matter'.
68. A matter is a matter of housing management if 'in the opinion of the authority' it relates to, for example, maintenance improvement or demolition of dwelling houses let by the authority. The section applies to matters of housing management which 'in the opinion of the authority' represent a new programme of maintenance etc, or a change in the policy or practice of the authority'. There is no dispute that the future of CGE was 'a matter of housing management' and one to which section 105 applied, as the cabinet report recognised. Nor is there any suggestion that the arrangements in this case were not appropriate.
69. The drafting of section 105 makes it clear that in three respects, Parliament intended that the authority, and not the court, should be the primary decision maker. Those are the questions whether the arrangements are appropriate, whether a matter is a matter of housing management and whether a matter of housing management is a matter to which section 105 applies.
70. The Council submits that there is no legal basis for supplementing the statutory duty with a common law concept of fairness. Mr Holbrook summarises the duty as a tripartite duty: 'inform; respond and consider'. He relies on R v Brent London Borough Council ex p Morris (1997) 30 HLR 324 as authority for the proposition that the duty imposed by section 105 is not very onerous.
71. But the points made in the passages on which he relies relate to specific challenges made by the applicant in that case to the arrangements which the local housing authority in that case had made in order to comply with section 105. The Court of Appeal decided no more than that the arrangements made by the local housing authority in that case did comply with section 105, despite the attacks made on them by the applicant. In that case the local housing authority set up area housing boards and carried out consultation under section 105 through those boards. Meetings of the boards were held at least quarterly and were open to the public. Notices advertising them were published, as were copies of the agenda.
72. The first question is what arrangements the local housing authority has made in order to comply with the duty imposed by section 105. Once the local housing authority has made such arrangements, there are two further potential questions. One potential question, answered in Morris, in relation to the arrangements made by the local housing authority in that case, was whether those arrangements were appropriate, and, in that sense, complied with section 105. As the court stressed in Morris, it is for the local housing authority, not the court, to decide what arrangements are appropriate. It is only if the local housing authority's view is Wednesbury unreasonable that the court can intervene on that issue.
73. The second question which may arise, the local housing authority having made such arrangements, is whether it has complied with the obligations imposed by section 105 against the background of those arrangements. This may raise, and in this case does starkly raise, the question whether, a local housing authority having made and published arrangements in accordance with section 105, it may then lawfully depart from those arrangements, and, if so, in what circumstances. That, in my judgment, is one of the questions raised by this case, rather than the first potential question to which I have just referred.
74. A second question raised by this case is the relationship between a statutory obligation to consult and the decisions on consultation generally. That is a question which was considered by the Supreme Court in R (Moseley) v Haringey London Borough Council [2014] UKSC 56; [2014] 1 WLR 3947. Both sides referred to this decision. Mr Wolfe submitted, in effect, that the test whether or not a consultation is lawful is the test in R v North and East Devon Health Authority ex p Coughlan [2001] QB 213: see paragraph 25 of Lord Wilson's judgment, with which Lord Kerr concurred.
75. That test, in short, is that whether or not there is a statutory obligation to consult, consultation must take place when proposals are still at a formative stage; it must include sufficient reasons for the proposals to enable consultees to consider them, and respond to them intelligently; enough time must be given for that; and the consultation responses must be taken conscientiously into account when the decision is taken. Lord Reed pointed out that statutory obligations to consult vary widely in content (at paragraph 36). The obligation to consult in that case was imposed, he said, not to ensure procedural fairness, but to 'ensure public participation in the local authority's decision making process' (at paragraph 38). However, he went on to say, in order for consultation to achieve that objective, it must fulfil basic minimum requirements. He referred, in that context, to one aspect of the Coughlan test.
76. The two remaining members of the Supreme Court expressed their agreement with both speeches.
77. Section 105 does not refer to 'consultation'. But it is, in substance, an obligation to consult. Its components reflect the elements of lawful consultation described in Coughlan. I doubt therefore whether there is any difference between the obligations imposed by section 105 and those set out in Coughlan. Lord Reed's speech sheds light on the purpose of section 105. It is, in part, to ensure the participation of tenants in decisions which will substantially affect their homes.

Discussion

78. I have to decide four questions.

a. Was the Council's decision on 9 March 2015 to stop consulting on options 1, 2 and 3 unlawful?

b. If so, does it appear to me to be highly likely that the outcome for the claimant would not have been substantially different if the conduct complained of had not occurred ('the section 31(2A) question')?

c. If so, are there nonetheless reasons of exceptional public interest for granting relief to the Claimant ('the section 31(2B) question')?

d. If so, was there undue delay in making the application for judicial review and do I consider that the granting of the relief sought would cause substantial hardship to, or substantially prejudice the rights of any person or be detrimental to good administration ('the section 31(6) question')?

(1) Was the decision of 9 March unlawful?

79. I have set out the facts in detail. Having done that, I can give the reasons for my decision relatively shortly. The section 105 arrangements in this case consisted of the detailed and sophisticated programme of consultation which was announced in the letters of 21 October and 6 November 2014. The decision of 9 March 2015 had two relevant effects. It was a decision to renege on those arrangements, and it meant that the Council was unable, before making a decision on the regeneration of the estate, to consider the representations which would have been generated had the arrangements been followed.
80. Mr Holbrook stressed in his submissions how politically sensitive the decision in this case was, and how difficult it was, because it involved balancing the interests of different groups (tenants, homeowners and leaseholders on the estate; and other tenants, whose rents could be adversely affected by a decision to spend more on CGE). I accept that submission. Those factors, I infer, led the Council initially to decide on the elaborate arrangements for tenant involvement which it chose in this case. I infer that the Council took the sensible view that it was only by closely involving the tenants, and getting them to understand exactly what the difficulties with the various options might be, that it could have any chance of gaining their assent to the contentious decision about the future of CGE which it would ultimately have to make.
81. I also accept Mr Holbrook's submission that the Council was careful to prepare the ground for a decision to reject option 1, by saying, more than once, that any option had to be affordable. But that is not necessarily an answer to the challenge in this case. Mr Holbrook rightly accepted that the Council could have made it clearer than it did that it was permitting itself to halt the consultation if it decided in the course of the consultation that an option was unaffordable. In my judgment, the Council did not make that clear at all. Further, as Mr Wolfe rightly accepted, the Council could lawfully have rejected options 1-3 at the end of the announced process of consultation. The question is whether it was lawful for the Council to reject options 1-3 without completing the process which it had advertised to tenants, and, thus, in breach of the section 105 arrangements it had chosen to make.
82. This is not an easy question. Mr Holbrook's most powerful submission, which is reflected in the language of some the documents to which I have referred, was that the Council could not be required to continue with the advertised consultation when it knew that an option or options were not affordable. As soon as it realised that, it was entitled, if not obliged, to call off the consultation. He said that, 'It is the nature of consultation that as unknowns become knowns, things change, Lambeth has to respond'. He also submitted that the Council had to learn from what happened, and to adjust to problems it saw with the consultation. However, in part, at least, that last submission was based on a different part of Mr Holbrook's case, which was, in a nutshell, that the consultation had become unmanageable, and the Council had to make clear that it, rather than the tenants, was the ultimate decision maker: 'There comes a point where it ceases to be consultation and becomes tenant-led decision making'.
83. There are at least two questions here. One is whether, as a matter of law, the Council could lawfully renege on the section 105 arrangements if it discovered a sufficiently significant change of circumstances. A second is whether, as a matter of fact, there was such a change. In that context, I have reflected on the first submission I described in the previous paragraph.
84. I asked Mr Holbrook during the hearing what changed between October 2014 and 26 February 2015. He accepted, I think, that even with what was known in October 2014, option 1 was 'a big ask'. Yet the Council decided to consult on it, along with the other options; in the early stages, indeed, option 5 (which Mr Holbrook told me the Council has in the end chosen) looked an even less likely choice. There was a lack of clarity, on the Council's case, about whether, even in 2012, there was as much as £3.4m available to be spent on CGE. There was also a lack of clarity, on the Council's case, both on the documents, and in Mr Holbrook's submissions, about what other sources of money there might be to help pay for the refurbishment of CGE. Tenants were encouraged to think in the course of the consultation that 'green retrofitting' might help (there was a sub-group working on this) and that tenant management options might also work (there was also a sub-group about that).
85. The impression I have formed from the documents as a whole is that the Council considered from the outset that it was very unlikely to be able to afford to refurbish CGE, but that it considered that it was important to explore thoroughly with the tenants whether that was so, and if so, why. That is precisely why the finance sub-group was set up, with the promise that NPV models for all options would be considered.
86. I have made allowances for the heavy responsibilities which Mr Vokes was carrying at the relevant time. I also bear in mind that Mr Vokes has not been cross-examined. Yet I am uneasy about Ms Curtis's document and its relationship with the consultation and the decision-making processes. I mention three points here. The date of the document is inconsistent with the period of financial analysis referred to in Mr Vokes's first witness statement. The document does not say that options 2 and 3 are unaffordable; indeed, to the extent that it adverts to them, it suggests the reverse. To that extent, the decision of the Cabinet to stop consulting on options 2 and 3 seems inconsistent with the document. The document does not say that 'no more than £3.4m' would be available for CGE from the HRA; but that is what Mr Vokes says in his second witness statement.
87. I do not need to decide whether, as a matter of law, the Council could have stopped the consultation if there had been a sufficiently important change of circumstances. I assume, without deciding, that it could have done so. I am not satisfied, on the evidence, however, that enough changed in February 2015 to entitle the Council to stop consulting on options 1, 2 and 3, contrary to the terms of the section 105 arrangements it had published. My conclusion is that by deciding to remove options 1, 2 and 3 from the consultation on 9 March 2015, the Council acted unlawfully.

(2) The section 31(2A) question

88. The effect of section 31(2A) is to deprive a claimant of relief to which he or she might otherwise be entitled. Section 31(2A) does not expressly impose a burden of proof on a defendant, but it seems to me, in accordance with general principle, that he who asserts must prove. In other words, if the Council asserts that section 31(2A) applies, it must satisfy me that that does.
89. Mr Holbrook submitted that the question was whether on any reconsideration the Council would make the same decision. He submitted, partly by reference to the current position, that it would do (see the material in paragraphs 30-34 of Mr Vokes's first witness statement). For example, after Holman J granted permission, but before the Council found out about that, the Council made a further decision, on 13 July 2015, to re develop the whole estate. Mr Wolfe submitted that that was the wrong question. The question was, instead, whether, if the Council had not acted unlawfully, in the way that it did (ie, if conduct complained of had not occurred), the Council would, on 9 March 2015, nonetheless have made the decision which it did.
90. The application of section 31(2A) to this case is not straightforward. What section 31(2A) seems to be asking, albeit not clearly, is whether, if the defendant's unlawful conduct is taken out of the equation, that would make any difference to the outcome for the claimant. If the section 105 arrangements had not been breached, the financial position would have been much more fully before the Council. In simple terms, it does not appear to me, if that had been the position, that it is highly likely that the decision would have been the same. I do not consider that the test in section 31(2A) is met. I am therefore not required by section 31(2A)(a) to refuse relief.

(3) The section 31(2B) question

91. In case I am wrong about that, I should indicate whether I would have considered that it was appropriate to grant relief for reasons of exceptional public interest. The factors are finely balanced. Mr Holbrook urged on me many powerful points. He referred to the Council's very difficult financial position, the balance to be struck between the interests of residents of CGE, and of the Council's other tenants, and of those on the waiting list, the urgent need for works to be done to CGE, and the need for residents to be certain about the future of CGE. I acknowledge the cumulative force of all those points. On the other side is the need to hold a public body to its promises about how it is to involve tenants in a very important decision about the future of their homes. On balance, I consider that the general public interest factors on which Mr Holbrook relied outweigh the need to hold the Council to its promises to the tenants of CGE. So if I had needed to make a decision on this question, I would have decided that it was not appropriate to grant relief on public interest grounds.

(4) Delay

92. This claim was lodged on the last day of the three-month period provided for by CPR 54.5(i)(a). The claimant said nothing about this timing in her grounds of claim. In its summary grounds, the Council argued that this was not prompt enough, in a context where the Council would be making a further decision within the next two weeks, and council staff had been spending considerable time and effort on working up options 4 and 5. Delay in the project would be unfortunate given the desperate shortage of housing in the borough. The Claimant replied to the summary grounds and explained that part of the delay was caused by the Council's tergiversations in the pre-claim correspondence. The Claimant applied for legal aid on 21 April 2015, and it was not granted until 10 June 2015. When Holman J granted permission to apply for judicial review he did not refer to any lack of promptness.
93. In its detailed grounds the Council pointed out that the Claimant had not explained the delay of more than six weeks between the date of the decision and the application for legal aid. The grant of relief would cause substantial hardship to the Council and to the residents of the estate, and would be likely to be detrimental to good administration. This in turn elicited a further witness statement dated 22 September 2015 from the Claimant, who explained that she had consulted solicitors at the beginning of March. They agreed to investigate. There were many documents to consider. The lawyers then asked for more information. The investigation took about four weeks. She was advised that it was better to apply for legal aid once the investigation was finished. The lawyers arranged a meeting on 17 April at which they gave a positive view, and an emergency application for legal aid was made on 21 April 2015.
94. Mr Wolfe relied on R (Lichfield) Securities v Lichfield District Council [2001] EWCA Civ 304; [2001] PLR 33. He submitted that there was a distinction between promptness and delay. The former had been decided by Holman J and I could not revisit it. I do not accept that analysis. I do, however, accept that by implication, Holman J decided not to refuse permission because of a lack of promptitude, or because of undue delay coupled with prejudice (see CPR 54.5(1) and section 31(6) of the Senior Courts Act 1981).
95. A claimant who brings a claim at the end of, or close to the end of, the three-month period is wise to account for that period in the grounds of claim. A claimant cannot assume that lodging a claim right at the end of the three months insulates him or her against a finding of lack of promptness or of undue delay. The Claimant did not deal with promptness/delay in the grounds of claim. She gave no explanation about timing until her reply. That was served in response to the Council's summary grounds, in which the Council raised delay. She gave no account of what happened in the first half of the three-month period in the reply. The Council pointed out, in its detailed grounds, that the Claimant had not explained why she waited until 21 April 2015 before applying for legal aid. She did, however, explain why in September 2015.
96. In those circumstances, I do not consider that the issue of delay was 'properly argued out at the leave stage', not least because there was no adversarial hearing (as there had been in Lichfield); nor do I think that there are unambiguous findings about it by Holman J which it would be wrong for me to revisit. In Lichfield, Keene J (as he then was) gave a fully reasoned judgment dealing with the argument that leave should be refused because of lack of promptness (see paragraph 10 of the judgment of the Court of Appeal). Moreover, I have material which Holman J did not have.
97. Has there been undue delay? Now that the entire three-month period had been explained, I do not consider that there has. The Claimant acted promptly throughout. That the claim was not lodged sooner, was, in part, because of the time it took for the lawyers to investigate and advise, and for legal aid to be granted. It was also partly because of the Council's equivocations in the pre-action letters about precisely what it had decided. These persisted in its summary grounds, in which it complained that the application of judicial review was premature.

Conclusion

98. For these reasons, my conclusions are that the decision of 9 March 2015 was unlawful and that there are no bars to the grant of relief. The Claimant asked in the claim form for a declaration and a quashing order, and it seems to me that she is entitled to that relief.
99. The issues relating to relief were fully argued at the hearing. Nonetheless, without inviting such submissions, I will give parties an opportunity, having considered the terms of this judgment, to make further submissions about relief if they have any new points to make.

Postscript

100. The Council made further submissions in response to the previous paragraph of this judgment after it was circulated in draft. I was not persuaded by those submissions that I should not quash the decision of 9 March 2015. I could not see, having rejected the Council's arguments about potential discretionary bars to relief, on what principled basis I could withhold relief. The parties' written submissions suggested that there might be doubt about the effect of a quashing order in this case. I should make it clear that its effect is that the whole decision of March 2015 is quashed. How the Council chooses to approach its reconsideration of the questions decided by the resolutions it made on 19 March 2015, is a matter for it to decide, in the light of the terms of this judgment.