Neutral Citation Number: [2007] EWCA Civ 795
Case No: C1/2007/0777
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, 
QUEENS BENCH DIVISION, ADMINISTRATIVE COURT
THE HONOURABLE MR JUSTICE FORBES
LOWER COURT NUMBER: CO/1337/2007.
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 27/07/2007
Before :

LADY JUSTICE SMITH
LORD JUSTICE LLOYD
and
LORD JUSTICE WILSON
- - - - - - - - - - - - - - - - - - - - -
Between :

	CAROLE SWORDS
	Appellant	
	- and -
		
	THE SECRETARY OF STATE FOR COMMUNITIES AND LOCAL GOVERNMENT

- and –

LONDON BOROUGH OF TOWER HAMLETS

- and –

OLD FORD HOUSING ASSOCIATION	Respondent

First Interested Party

Second Interested Party
	
- - - - - - - - - - - - - - - - - - - - -

(Transcript of the Handed Down Judgment of
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No:  020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
- - - - - - - - - - - - - - - - - - - - -

David Wolfe (instructed by Leigh Day & Co) for the Appellant
Jonathan Swift and Deok Joo Rhee (instructed by The Treasury Solicitor) for the Respondent.
Kelvin Rutledge and Siân Davies (instructed by Tower Hamlets Legal Services) for the First Interested Party
Jane Oldham (instructed by Prince Evans) for the Second Interested Party.

Hearing dates : 21 and 22 May 2007
- - - - - - - - - - - - - - - - - - - - -
Judgement
Lord Justice Wilson: 
SECTION A: INTRODUCTION
1.	With leave granted by Toulson LJ on paper, Ms Swords, the Appellant, appeals against a decision of Forbes J sitting in the Queen’s Bench Division, Administrative Court, on 4 April 2007 to refuse to quash a decision by the Secretary of State for Communities and Local Government (“the Secretary of State”), the Respondent, dated 9 February 2007, whereby consent was given to a proposed transfer by the London Borough of Tower Hamlets (“Tower Hamlets”), the First Interested Party, to Old Ford Housing Association (“Old Ford”), the Second Interested Party, of freehold title to housing estates in Tower Hamlets known collectively as “the Parkside estate” (“the estate”). In principle the Secretary of State’s consent enables Tower Hamlets to effect the transfer; but the transfer has been stayed pending determination of this appeal. Of the dwellings on the estate, about 1285 are occupied by tenants, of whom the Appellant is one, and about 1000 are owned by leaseholders.
2.	In 2000 the government published a Housing Green Paper entitled “Quality and Choice; a decent home for all”, by which it explained that all social housing should by 2010 be brought up to specified standards of decency. Since then local housing authorities have had to address the means by which their properties can by 2010 be brought up to the standards there set. Local authorities who lack substantial funds of their own with which to meet the “decent homes” standard have been told by central government to consider three options: first, a Voluntary Transfer, Large Scale or Small Scale, to a Registered Social Landlord, such as a Housing Association, which could, with borrowings or otherwise, fund the requisite improvements; or, second, a Private Finance Initiative contract; or, third, transfer to an Arms Length Management Organisation of the management, but not the ownership, of their housing stock. Critics have strongly urged that there should be a so-called “Fourth Option”, namely central government subsidy of local authorities otherwise unable to fund the requisite improvements but, to date, there is no sign that central government is prepared to retreat from its refusal to provide such subsidy. 
3.	In about 2002 Tower Hamlets decided that, in respect of a number of their estates, including the estate, the only viable option for meeting the “decent homes” standard was by way of Large Scale Voluntary Transfers; and a referendum of all secure and introductory tenants on all such estates resulted in a vote in favour of such transfers. Thereupon various steering groups, comprising tenants and leaseholders, were set up in respect of each estate; and one of the group’s functions was to identify the preferred transferee. The steering group referable to the estate selected Old Ford as its preferred transferee. Old Ford is a Housing Association registered with the Housing Corporation and thus subject to its control. 
4.	From about 2003 to date, the proposal that the estate should be transferred by Tower Hamlets to Old Ford has been extremely controversial. The appellant is one of a number of tenants who, along with a number of leaseholders, have been articulating the strongest opposition to it in a well-organised way which can properly be described as a campaign. When, during the oral argument, we sought to collect from Mr Wolfe, who represents the appellant, the grounds of her objection to the transfer, he evinced reluctance to be drawn into the detail. He submitted that the judge had been right not to address the merits and demerits of the transfer and that we would be straying from the supervisory jurisdiction in play in these proceedings were we to press him in that regard. Mr Rutledge, on the other hand, submitted on behalf of Tower Hamlets that, if Mr Wolfe was to persuade us that the Secretary of State’s decision had been unlawful, it would be relevant to the exercise of the resultant discretion as to the grant of any remedy for the court to consider the nature of the appellant’s objections as well as, by contrast, the alleged strength of feeling on the part of other tenants and leaseholders, including those in the steering group now known as the “Residents’ Group”, that the transfer should take place and should indeed have taken place long ago, as well as features such as the effect of further delay. To the extent that it is possible on the evidence to discern its nature, the appellant’s objection to the transfer relates, so Mr Wolfe broadly indicated, not just to narrow points of difference about the status of a secure tenant of a local authority under the Housing Act 1985 (“the Act”), on the one hand, and of an assured tenant of a Housing Association under the Housing Act 1988, on the other, but also to more general, indeed – so he said – “ethereal”, considerations. For his part, Mr Rutledge submitted that Mr Wolfe had declined to pick up the gauntlet which he, Mr Rutledge, had thrown down in stating that the legal distinctions between the two sorts of tenancy were barely discernible. After making his brief reference to “ethereal” considerations, Mr Wolfe mentioned democratically elected landlords and privatisation; and he spoke darkly of ‘the devil you know’. What, however, shines through the evidence is a real sense of grievance on the part of the appellant, and probably of many others on the estate, about the way in which Tower Hamlets purported to discharge their duties to the residents in connection with the proposed transfer and in which the Secretary of State purported to exercise her discretion to grant consent to it.
5.	The hearing before the judge was a composite hearing of the appellant’s application for permission to apply for judicial review and, in the event that such was granted, of the substantive application. To the judge, she put forward five grounds of challenge to the decision. In respect of the first three grounds, the judge granted permission but refused the substantive application. In respect of the last two grounds, he refused permission. The appeal relates only to the first three grounds, which have in effect become the grounds of appeal. The first is that, in granting her consent, the Secretary of State unlawfully failed to take into account the views of the leaseholders on the estate as opposed to the tenants such as the appellant herself. The second is that the Secretary of State unlawfully failed to consider whether the documentation provided to the tenants prior to a ballot conducted by Tower Hamlets referable to the proposed transfer in July 2005 complied with the provisions of a manual published by the Office of the Deputy Prime Minister, he having been responsible up to 4 May 2006 for the discharge of the functions under the Act of 1985 which since then have been vested in the Secretary of State. The third is that the Secretary of State unlawfully both failed to consider whether the pre-ballot consultation with tenants and leaseholders and the actual balloting process referable to them in July 2005 were adequately conducted by Tower Hamlets and, in particular, failed to evaluate numerous complaints which had been brought to her attention in that overall regard. 
SECTION B: THE STATUTORY FRAMEWORK
6.	It is agreed that the consent of the Secretary of State to the proposed disposal by Tower Hamlets of the estate to Old Ford is required by each of two sections of the Act, namely sections 32 and 43.
7.	Section  32 provides: 
“(1) Without prejudice to the provisions of Part V (the right to buy) …, a local authority shall have power by this section, and not otherwise, to dispose of land held by them for the purposes of this Part.
(2) A disposal under this section may be effected in any manner but … shall not be made without the consent of the Secretary of State.”
8.	Section 43 provides:
“(1) The consent of the Secretary of State is required for the disposal by a local authority, otherwise than in pursuance of to Part V (the right to buy) …, of a house belonging to the authority –    
(a) which is let on a secured tenancy [or an introductory tenancy], or
(b) of which a lease has been granted in pursuance of Part V, 
but which has not been acquired or appropriated by the authority for the purposes of this Part.”
9.	The exercise of the discretion granted to the Secretary of State in determining whether to give consent to a disposal pursuant to sections 32 and 43 is subject to elaboration set out in sections 34(4A) and 43(4A) respectively. The wording of both subsections is identical and runs as follows: 
“The matters to which the Secretary of State may have regard in determining whether to give consent and, if so, to what conditions consent should be subject shall include – 
(a)	the extent (if any) to which the person to whom the proposed disposal is to be made (in this subsection referred to as “the intending purchaser”) is, or is likely to be, dependent upon, controlled by or subject to influence from the local authority making the disposal or any members or officers of that authority;
(b)	the extent (if any) to which the proposed disposal would result in the intending purchaser becoming the predominant or a substantial owner in any area of housing accommodation let on tenancies or subject to licences;
(c)	the terms of the proposed disposal; and
(d)	 any other matters whatsoever which he considers relevant.”
10.	In the Act there are, however, important further provisions in relation to a local authority’s proposed disposal to a private sector landlord, such as Old Ford, of dwelling-houses subject to secure or introductory tenancies and to the requisite consent of the Secretary of State thereto. The provisions are introduced by section 106A, which reads:
“(1) The provisions of Schedule 3A have effect with respect to the duties of –
(a)	a local authority proposing to dispose of  dwelling-houses subject to secure … or introductory tenancies …, and
(b)	the Secretary of State in considering whether to give his consent to such a disposal, 
to have regard to the views of tenants liable as a result of the disposal to cease to be secure … or introductory tenants….”
11.	Schedule 3A provides:
CONSULTATION BEFORE DISPOSAL TO PRIVATE SECTOR LANDLORD
Disposals to which this Schedule applies
1.	(1) This Schedule applies to the disposal by a local authority of an interest in land as result of which a secure tenant … or an introductory tenant … of the authority will become the tenant of a private sector landlord.
…
    Application for Secretary of State’s consent
2.	(1) The Secretary of State shall not entertain an application for his consent to a disposal to which this Schedule applies unless the authority certify …
  (a) that the requirements of paragraph 3 as to consultation have       been complied with …
  (b) …
and the certificate shall be accompanied by a copy of the notices given by the authority in accordance with that paragraph.
…
(3) References in this Schedule to the Secretary of State’s consent to a disposal are to the consent required by section 32 or 43 (general requirement of consent for disposal of houses or land held for housing purposes). 
             Requirements as to consultation
3.	(1) The requirements as to consultation referred to above are as follows.
(2) The authority shall serve notice in writing on the tenant informing him of – 
(a) such details of their proposal as the authority consider appropriate, but including the identity of the person to whom the disposal is to be made,
(b) the likely consequences of the disposal for the tenant, and
(c) the effect of the provisions of this Schedule and … in the case of a secure tenant … of sections 171A to 171H (preservation of right to buy on disposal to private sector landlord),
and informing him that he may, within such reasonable period as may be specified in the notice, make representations to the authority.
(3) The authority shall consider any representations made to them within that period and shall serve a further written notice on the tenant informing him –
(a) of any significant changes in their proposal, and
(b) that he may within such period as is specified (which must be at least 28 days after the service of the notice) communicate to the Secretary of State his objection to the proposal,
and informing him of the effect of paragraph 5 (consent to be withheld if majority of tenants are opposed).
Power to require further consultation
4.	  The Secretary of State may require the authority to carry out such further consultation with their tenants, and to give him such information as to the results of that consultation, as he may direct.
Consent to be withheld if majority of tenants are opposed
5.	   (1) The Secretary of State shall not give his consent if it appears to him that a majority of the tenants of the dwelling-houses to which the application relates do not wish the disposal to proceed; but this does not affect his general discretion to refuse consent on grounds relating to whether a disposal has the support of the tenants or on any other ground.
 (2) In making his decision the Secretary of State may have regard to any information available to him; and the local authority shall give him such information as to the representations made to them by tenants and others, and other relevant matters, as he may require.
Protection of purchasers
6.   The Secretary of State’s consent to a disposal is not invalidated by a failure on his part or that of the local authority to comply with the requirements of this Schedule.”

12.	Thus:
(a)	A local authority proposing to dispose of land subject to secure or introductory tenancies to a private sector landlord has a duty to consult such tenants but the duty does not extend to the consultation of leaseholders.
(b)	The first part of the requirement as to consultation is set out in paragraph 3(2) of Schedule 3A (“the schedule”). That is conveniently described as “Stage One”.
(c)	The second part of the requirement is set out in paragraph 3(3) of the schedule. That is conveniently described as “Stage Two”.
(d)	The schedule then turns to the role of the Secretary of State in the giving or withholding of his consent to the disposal. Paragraph 2(3) makes clear that the references in the schedule to consent are references to the consent required by section 32 or 43.
(e)	The Secretary of State is precluded by paragraph 2(1) from even entertaining an application for consent unless the local authority certify that they have complied with the requirements of consultation set by paragraph 3 and have provided the Secretary of State with a copy of the two requisite notices.
(f)	Paragraphs 4 and 5(2) empower the Secretary of State to require the local authority to carry out further consultation with tenants and to provide him with information on relevant matters.
(g)	Paragraph 5(1) is particularly important in that it erodes the Secretary of State’s discretion. For he cannot give his consent if it appears to him that a majority of the tenants do not wish the disposal to proceed. The necessary majority is, of course, not of the tenants who choose to take part in any ballot conducted by or on behalf of the local authority but, rather, of all the tenants subject to the proposed disposal. The rest of the subparagraph is also important. Although the initial presentation on behalf of the Secretary of State in these proceedings betrayed confusion in this regard, said by Mr Wolfe to afford a significant window into the unlawfulness of her procedure, it is now common ground, as is made amply clear by paragraph 2(3), that the reference in paragraph 5(1) to the Secretary of State’s general discretion to refuse consent is not an introduction of some fresh or additional discretion but is a reference back to the discretions conferred by sections 32 and 43 of the Act.
(h)	An argument by the Secretary of State to the judge referable to paragraph 6 of the schedule failed to find favour with him but, in that it is the subject of a Respondent’s Notice on her part, I will return to it in [53] – [57] below.
SECTION C: THE MANUAL
13.	In that the proposed disposal of the estate was included in the government’s “2005 Programme” for disposals, and indeed even now remains within that programme, it is the “Housing Transfer Manual 2005 Programme” (“the manual”) which is relevant to this case. It was published by the Office of the Deputy Prime Minister in October 2004. In the words of section 1.1 
“This manual…can be considered the definitive guidance to authorities considering the completion of a housing transfer in 2005. It will also be of interest to tenants of authorities that are considering transfer and to prospective recipient landlords.”

14.	The guidance in the manual has no statutory force. It is not issued pursuant to statute and thus no statutory requirement is cast upon local authorities to have regard to it. But of course it does not follow that the contents of the manual have no legal significance: they may for example represent statements of policy from which it would be unlawful for the Secretary of State to depart save for good, expressed reason and they may engender legitimate expectations on the part of tenants and others which, if frustrated, may require the court to intervene.
15.	As its title implies, the manual relates only to one of the three options open to local authorities who require external funds in order to meet the decent homes target, namely the option of Voluntary Transfer to a Registered Social Landlord. The purpose of the manual is to provide detailed guidance to local authorities in relation to all stages, both those required by the schedule and otherwise, of the process of such a transfer. The manual therefore moves from the local authority’s need to develop the transfer proposal to its submission of the proposal to the department; thence to the need, in the event that the proposal is for transfer of more than 499 tenanted and leasehold properties, for it to secure a place in the Department’s Large Scale Voluntary Transfer programme; thence to the requirements under the schedule for the authority formally to consult tenants about the proposal; and finally to the submission of an application to the Secretary of State for consent. 
16.	Mr Wolfe’s arguments upon all three grounds of his appeal are based in particular upon part of the contents of section 10 of the manual, entitled “The consultation exercise”, to which is attached “Annex N”, and of section 16, entitled “Applying for the Secretary of State’s consent and completing the transfer”.
SECTION 10 AND ANNEX N
17.	Section 10.23 addresses the notice to be served on tenants at Stage One, i.e. under para. 3(2) of the schedule. It says:
“An authority should draw up its formal consultation document in accordance with the good practice guidance at Annex N. The document should set out clearly the terms of the proposed transfer including tenants’ rights under the assured tenancy regime; it should compare those rights to the rights of secure tenants. The document should explain that, although transferring tenants will have broadly similar rights, some rights will be lost while others will be provided by contract rather than by statute. Any promises made at the informal consultation stage should be incorporated into the formal consultation material.”
The main purpose of Annex N is said to be to help local authorities to prepare the Stage One notice. Paragraphs 10 and 37 of the annex, upon which Mr Wolfe heavily relies, provide:
“The informal material should never be written in such a way that tenants feel the authority is actively promoting a yes vote by presenting only the pro-transfer arguments.                          … 
Tenants need to understand why the council is proposing to transfer their housing, but should not feel that the main purpose of the consultation document is to sell the transfer; rather, it should give neutral information. A balanced and informative approach is needed, which provides brief information on all the options that have been considered.”
	But Mr Swift on behalf of the Secretary of State draws attention to paragraph 43, which says:
“The programme of repairs and improvements that will be offered to tenants is one of the key benefits of transfer and is important in delivering the Government’s decent home objective. Consultation documents should enable each tenant to identify the works that will be carried out to his/her home if the transfer goes ahead … ”
		Mr Swift also refers to paragraph 44, which says:
“Rents are one of the key issues for tenants. They should be presented in a clear and accessible way. In the light of the Government’s rent reforms, we would suggest something along the lines of the following for the beginning of the rents section to put the prospective new landlord’s rent plan into context.  
‘Background                                                                                …                                                                                                   [by 2011/12] social housing tenants should be paying similar rent for a property of a similar standard, size and location, whether their landlord is a local authority or an RSL. This is the Government’s aim’”.
18.	Section 10 continues:
“Establishing tenants’ views
10.24 The Secretary of State cannot grant consent to transfer if it appears to him that the majority of the tenants are opposed to it. Whilst not a legal requirement, we consider that a properly conducted formal ballot, carried out under the auspices of an independent body, is an effective way in which an authority can demonstrate satisfactorily that a majority of tenants are not opposed to the transfer.
…
A ballot of tenants
10.26 We consider that a simple majority of those voting being in favour is sufficient to indicate tenant support for a transfer. …
Who should be consulted?
Tenants
10.30 The statutory consultation procedures are concerned solely with secure tenants or those with an introductory tenancy…                                                                                        
Leaseholders
10.31 There are no statutory requirements for consulting long leaseholders (i.e. people who have exercised their Right to Buy (RTB) on a long leasehold basis or have bought from those who have exercised their RTB) as the terms of their lease would not change if the freehold transferred to an RSL. However, an authority should have engaged leaseholders in the development of the transfer proposal as they are important local stakeholders. The authority will also need to involve leaseholders in the detail of the transfer proposal, where it would result in leaseholders being asked to pay a larger than normal amount to the cost of repairs or improvements, for example to communal areas of blocks of flats.
…  
                                                                                                                                                 Commonhold and Leasehold Reform Act 2002
10.34 One of the aims of housing transfer is to secure the regeneration of areas, and leaseholders are important stakeholders in the process. Transfer proposals need to address their concerns if proposals are to go ahead smoothly. In addition, leaseholders have a number of rights which have been improved by the Commonhold and Leasehold Reform Act 2002 …
10.36 Leaseholders should be kept informed of progress on the transfer proposal and told that they may make any objections to the transfer to the Secretary of State, who will take them into account when making his decision on the consent application. Where there are significant number of leaseholders, the authority should consider using a separate leaseholder information pack.
10.37 Although an authority may, in order to ascertain their views, ballot leaseholders about a transfer proposal, it is not obliged to do so and it should conduct such a ballot as a separate exercise to ensure that tenants’ views can be clearly demonstrated.” 
SECTION 16
19.	Section 16 of the manual moves to the application for the Secretary of State’s consent. Section 16.2 and 16.3 provides that, in considering an application for consent, the Secretary of State will, in addition to considering any other matters which seem relevant, apply nine criteria there specified. The first is “that the authority’s consultation exercise has been adequate”. The second is “that the majority of secure tenants affected by the proposed transfer are not opposed to it”. By section 16.5 local authorities are informed of various specified items of supporting information which are required to be submitted to the Secretary of State in addition to the formal letter of application for consent. The first – at “a” – is, of course, the certificate required by para. 2(1) of the schedule. The second – at “b” – is “written confirmation of the ballot result”. The third – at “c” – is “final versions of formal consultation material”. And the fifth – at “e” – is “details of any representations made by other parties who have an interest in the transfer, for example long leaseholders”.
SECTION D: THE HISTORY
20.	By letter to each tenant dated 31 May 2005, Tower Hamlets served the notice referable to Stage One. A substantial document entitled “Proposal to Tenants” (“the proposal document”) was enclosed with the letter. The reasonable period for making representations to the authority, to which reference is made in paragraph 3(2) of the schedule, was identified in the letter as until 29 June 2005, namely about 28 days from the date of its likely receipt.
21.	Tower Hamlets had already decided that, although the Secretary of State would be precluded from consenting to the transfer only if it appeared to her that a majority of the tenants subject to it did not wish the disposal to proceed, they, Tower Hamlets, would proceed with the transfer only if a more demanding criterion was satisfied, namely if a majority of tenants who chose to vote in the proposed ballot voted in favour of it. Such was explained in the letter. 
22.	It is of the essence of Mr Wolfe’s second ground of appeal that the Secretary of State failed to consider whether the proposal document attained the standards of balance and neutrality recommended in Annex N. In this regard it is important to note that, by section 2.5, it identified the first key benefit of transfer to be a proposed major regeneration programme on the estate of £42.8 million. In section 2.6, entitled “What would happen if the transfer does not go ahead?”, it explained that
“… you would remain a Council tenant and the Council would keep its responsibilities as your landlord.                                    If tenants vote against transfer it will not be possible for the Council to undertake the proposed improvement and redevelopment programme … The Council would seek to address urgent health and safety repairs from its limited capital budget and to continue normal arrangements for day-to-day repairs and limited works.”
Later, in section 4.5, it said:
“If the transfer does not go ahead, the Government’s new rent policy would still apply and your home would still have to meet the target rent for the area. However, the major regeneration programme proposed in this document would not take place. The Council does not have the money needed to fund the regeneration proposals. Any money it has needs to be spent over the 22,300 other properties it owns across the Borough.”
23.	In the document the tenants were informed that Tower Hamlets were consulting leaseholders separately on the transfer proposals. In the event Tower Hamlets decided to follow the advice in section 10.36 of the manual by supplying the leaseholders with a separate leaseholder information pack. They also decided to conduct a ballot of the leaseholders but of course separately from the tenants.
24.	The requisite invitation by Tower Hamlets to the tenants to make representations to them by 29 June 2005 referable to the proposal resulted in the return to Tower Hamlets of, in effect, 106 response cards, of which 77 were in favour of the transfer, 21 were against it and eight were unsure about it.
25.	Meanwhile Tower Hamlets had commissioned a market research firm to conduct a survey by reference to which the level of awareness and understanding on the part of tenants of the proposals communicated at Stage One could be appraised. The firm’s work took place between 8 and 22 June 2005. Thereupon, also in June 2005, the firm reported its findings to Tower Hamlets, including the facts that 96% of the tenants said that they had received the document entitled “Proposal to Tenants”; that 89% of them said either that they were clear about the proposals or that they more or less understood them; that 75% of them rated as good the way in which Tower Hamlets had kept them informed about the proposals; and that, of the tenants who had been interviewed (being about half of the tenants on the estate), 64% said that they intended to vote in favour of the proposed transfer, 9% said that they intended to vote against it and 27% were undecided.
26.	In the light of the representations made to them, Tower Hamlets decided to proceed to Stage Two of the requisite consultation. Thus, by letter to each tenant dated 30 June 2005, they explained that they were proceeding with a formal ballot of all the tenants; that an independent organisation, namely Electoral Reform Services (ERS), which is the ballot administration arm of the Electoral Reform Society, would soon send each tenant a ballot paper; that votes could be cast at polling stations on six specified days between 4 and 19 July 2005 under the supervision of ERS or could be made by telephone until 22 July 2005. In accordance with para. 3(3)(b) of the schedule the tenants were informed that they could communicate objections to the proposal to the Secretary of State at a specified address up to 28 July 2005. 
27.	ERS sent the ballot papers to the tenants and the leaseholders and conducted the two ballots. By letter dated 26 July 2005 it communicated the results to Tower Hamlets. ERS reported that, of the 1795 tenants eligible to vote, 819 had cast valid votes, of which 413 had voted yes to the proposed transfer and 406 had voted no. In other words 23% of the tenants eligible had voted yes and 50.4% of those voting had voted yes; and 22.6% of the tenants eligible had voted no and 49.6% of those voting had voted no. It followed that, were she to take the result of the ballot as a satisfactory demonstration of the wishes of the tenants in accordance with section 10.24 of the manual, the Secretary of State could not conclude that a majority of the tenants did not wish the transfer to proceed. But the stiffer criterion which Tower Hamlets had adopted in order to decide whether to proceed had been satisfied by almost the narrowest of margins.
28.	The report by ERS to Tower Hamlets of the result of the ballot of leaseholders was that, of the 889 leaseholders eligible to vote, 206 had cast votes, of which 40 had voted yes and 166 had voted no. In other words 4.5% of the leaseholders eligible had voted yes and 19.4% of those voting had voted yes; and 18.7% of the leaseholders eligible had voted no and 80.6% of those voting had voted no.
29.	Two days after the date of ERS’s report to Tower Hamlets, the time set in the letters dated 30 June 2005 for communicating objections to the Secretary of State expired. In the event no objection was received.
30.	At that time, however, vehement protests began to be articulated by the appellant and others to Tower Hamlets about the result of the tenants’ vote, in terms particularly of an allegedly one-sided presentation to tenants of the advantages and disadvantages of the proposal and of alleged defects in the way in which the ballot had been conducted, including suggestions that some tenants had not received ballot papers and that others had been inappropriately pressurised by officers of Tower Hamlets and Old Ford to vote in favour of transfer. The first such protest was by letter signed by four tenants, including the appellant, and sent on about 28 July 2005 to Tower Hamlets and at some stage also to the Office of the Deputy Prime Minister. In the letter the four tenants also pressed the significance of the leaseholders’ vote and demanded a fresh ballot of the tenants. By letter dated 16 August 2005 to at least one of the four tenants, probably replicated to the others, Tower Hamlets addressed the complaints in fair detail; rejected them; conceded that the majority of yes votes on the part of the tenants was slim; but alleged that the ballot had been fairly and independently conducted and that there was no ground for conducting another or otherwise holding an enquiry into it. 
31.	Analogous complaints about the consultation process and the ballot surfaced at much the same time and came from a variety of quarters. In and after August 2005 the Office of the Deputy Prime Minister received numerous letters, all in the same terms and typed in the same way (“the template letters”), in which such complaints were made. The Deputy Prime Minister responded to them that, should Tower Hamlets apply for his consent to the transfer, their contents would be taken into consideration. Three ostensible signatories of template letters subsequently denied that they had signed any such letter. A petition against the transfer was also purportedly signed by numerous tenants and leaseholders on the estate and sent to him. In August 2005 Mr George Galloway, the local MP, also wrote to him and suggested that, until serious concerns about the ballot had been independently assessed, its result should not be accepted.
32.	In November 2005 the appellant’s solicitors began to represent her. By letter to Tower Hamlets dated 21 November 2005, they alleged that, in the light of the objections to the nature of the consultation exercise and to the conduct of the ballot, Tower Hamlets had no reasonable basis for asserting that the majority of tenants were not opposed to the transfer and that accordingly they should not apply to the Deputy Prime Minister for consent. It is important to note that the clear focus of the letter was upon the Deputy Prime Minister’s inability to give consent under para. 5(1) of the schedule if it appeared to him that a majority of the tenants did not wish the disposal to proceed. The letter did not refer, expressly or impliedly, to his discretion to refuse consent if not so precluded. Once they had been advised that on 16 January 2006 Tower Hamlets had nevertheless applied to the Deputy Prime Minister for consent, enclosing the certificate required by para. 2(1) of the schedule, the Appellant’s solicitors turned to address the Deputy Prime Minister. By letter dated 23 January 2006 they identified as “the issue” that he could not reasonably conclude that a majority of tenants were not opposed to the transfer. In about six letters sent to the Treasury Solicitor between March and July 2006, they sought to make good their contention that the evidence could not reasonably enable the Deputy Prime Minister and his successor, the Secretary of State, to do other than to conclude that a majority of the tenants did not wish the transfer to proceed. In none of their letters (other than by the enclosure with their first letter of the letter of protest sent on about 28 July 2005) did the solicitors refer to the views of the leaseholders expressed in the ballot of them which had been conducted in July 2005.
33.	Enclosed with the solicitors’ letter to the Deputy Prime Minister dated 23 January 2006 was a document entirely or largely in the handwriting of the Appellant, by which she purported to identify 60 residents on the estate and to record their respective complaints about the ballot and the pre-ballot consultation. Of the 60 complaints, 32 were that they had not been provided with a ballot paper and 28 were to some other effect. At around the same time the Appellant’s document was also sent to Tower Hamlets, who at once sent it to ERS for comment. The response of ERS was that one resident recorded by the Appellant as not having been provided with a ballot paper had indeed cast a vote. ERS added that ballot papers had been sent to all the tenants and indeed the leaseholders and that, while it could not prove receipt in every case, it noted that votes had been cast by residents in the same streets or blocks as those who complained that they had not been provided with a ballot paper.
34.	By letter dated 13 February 2006, the Deputy Prime Minister responded to the application of Tower Hamlets for consent to the transfer. The response took the form of a requirement for further information pursuant to para. 5(2) of the schedule. The Deputy Prime Minister recorded that he had received a large number of letters from tenants and leaseholders who contended that there should be an enquiry because of irregularities during the ballot period; and had also received a petition from tenants and leaseholders who objected to the transfer. Such was the context in which he required Tower Hamlets to produce details of the consultation  process “including all such information sent to tenants and leaseholders regarding the proposed disposal and all letters and representations received from tenants and leaseholders in addition to those enclosed with [their] application”; he also required “details of any complaints from any tenants and leaseholders received since the ballot”, details of the process of verification of the ballot by ERS and the response of Tower Hamlets to four specific allegations which the Appellant had made. In relation to the first ground of appeal Mr Wolfe was constrained to admit that, at least when that letter was written, its author clearly had in mind the leaseholders as well as the tenants. 
35.	By letter dated 21 February 2006, Tower Hamlets made a very full response to the Deputy Prime Minister’s enquiries. They recorded the results of their analysis of 850 signatures on the petition and of 962 template letters to the Deputy Prime Minister. In the light of the way in which the Appellant’s solicitors were arguing the case, namely that the Deputy Prime Minister could not reasonably consider otherwise than that a majority of the tenants did not wish the transfer to proceed, the analysis of Tower Hamlets was directed to ascertaining whether, after omitting for this purpose the objections of  a number of leaseholders and eliminating duplication of objection by tenants, it could be said that a majority did not wish it to proceed; and their conclusion, said to be upon the set of assumptions most favourable to the Appellant’s contention, was that, at most, only 42.2% of tenants did not wish the transfer to proceed. In the letter Tower Hamlets went on to allege, accurately or otherwise, that prior to the end of the ballot they had received a complaint by a purported daughter of a tenant of alleged pressure by officers of Old Ford upon the tenant to vote in favour of transfer and that the purported daughter had turned out to be the Appellant, who had admitted that she was not the tenant’s daughter at all. In the letter Tower Hamlets listed other complaints received by them about the ballot and set out their response to some of the allegations in the Appellant’s hand-written document referable to the 60 residents. They explained how their officers and the officers of Old Ford had set about their task of assisting residents to understand the proposals; and they argued that their officers had made clear to residents that the choice was theirs but that they should be sure that they were voting by reference to the facts. They reminded the Deputy Prime Minister that the ballot had been conducted by ERS rather than by themselves. They challenged the suggestion of the Appellant’s solicitors that the petition represented a groundswell of opinion among tenants against transfer in the light of which he could not reasonably conclude otherwise than that a majority of tenants did not wish it to proceed. They argued that the result of the ballot was the best evidence of the tenants’ opinion; that the petition did not record how many residents had been asked to sign it or how many had expressed a view in favour of the transfer; that the veracity of the petition was in question; and that in their view there was nothing likely to have caused a sea-change in attitudes towards the transfer during the previous few months.
36.	During most of the remainder of 2006 there was further multilateral correspondence, including from the Appellant’s solicitors who came forward with further purported signatures on further petitions and other evidence of opposition collected by her or on her behalf; from Mr Galloway who, while contending that the letters to him were confidential and could not be divulged, stated that in September and October 2005 he had received 1227 replies in relation to the proposed transfer which pointed to “serious concerns” about the ballot and which by “a very clear majority” indicated a wish for an independent enquiry; from Tower Hamlets who presented the results of apparently robust examinations of the further material supplied on behalf of the Appellant; and from the office of the Secretary of State itself. By letter to Tower Hamlets dated 10 May 2006, the Secretary of State explained that the number of individuals apparently objecting to the proposals was by then so high that her department needed to undertake its own analysis of the evidence in order to clarify whether the majority of tenants were not opposed to the transfer. To that end she sought detailed further information from Tower Hamlets, some of which one of her officers collected by a visit to the office of Tower Hamlets on 24 May 2006.
37.	I come to the Secretary of State’s letter of consent dated 9 February 2007 which is the subject of challenge. The letter is divided into four sections, headed first, “SECTIONS 32 – 34 AND 43 HOUSING ACT 1985 …”; second, “LEGAL REQUIREMENTS UNDER SCHEDULE 3A OF THE 1985 ACT”; third, “CONSIDERATION”, by which the Secretary of State meant her consideration of the application for consent; and fourth, “DECISION”. 
38.	In the second section of her letter, after setting out paragraphs 2 and 3 of the schedule, the Secretary of State referred to the conclusions reached by the market research firm in June 2005 about the Stage One consultation; noted that the consultation had been overseen by the steering group comprised solely of residents of the estate; noted that the Deputy Prime Minister had received no objection to the proposal pursuant to the invitation served at Stage Two; noted the narrow result of the ballot in favour of transfer and that it had been overseen by ERS; noted that 1795 tenants had been eligible to vote in the ballot and that since then a total of 1071 template letters of complaint had been received and that petitions against transfer had borne a total of 1271 signatures; referred to the detailed analyses of template letters and petitions undertaken by Tower Hamlets in and after February 2006 and to the most recent calculation that, on the interpretation most favourable to opponents of transfer, 44.12% of the tenants eligible to vote could be said to have raised an objection of some kind at some point; and noted the claims of Mr Galloway. 
39.	In the third section of her letter the Secretary of State recorded that the level of funding required to bring the homes of the tenants on the estate up to the “decent homes” standard would not be available otherwise than by transfer; noted that she could not consent to the transfer if it appeared to her that a majority of the tenants did not wish the transfer to proceed; placed reliance in this regard upon the fact that, even of the tenants who chose to vote, those who did not wish the transfer to proceed were in a minority, albeit slim; referred again to the volume of later complaints about the conduct of the ballot and Tower Hamlets’ analysis of them; and concluded that the threshold at which she would be obliged to withhold consent had not been crossed. Then, under a subheading entitled “Discretion to refuse consent”, the Secretary of State again quoted the second limb of paragraph 5(1) of the schedule. She did not set out sections 32-34 and 43, although the heading of her first section had referred to them. She then wrote as follows:
“29. Notwithstanding that it has not been demonstrated that a majority of tenants are opposed to the transfer, the Secretary of State has considered whether it is appropriate, in light of the expressions of dissatisfaction that have been received, to exercise her discretion to refuse consent to the transfer.
30. She has decided that such a decision would not be appropriate for the following reasons.
31. The consultation process. It is relevant that the consultation process was overseen by residents of the Parkside Estate. Of the response cards returned to the authority during the Stage 1 process, 77 were in favour of the transfer, 21 were against the transfer, 8 were unsure and needed further information and 9 had no comments to make. In addition, no representations were made to the Secretary of State objecting to the proposals within the period prescribed in paragraph 3(3)(b) to Schedule 3A of the Housing Act 1985. It is therefore the Secretary of State’s conclusion that the complaints concerning the conduct of the consultation process are unsustainable.
32. The conduct of the ballot. The ballot was overseen by the ERS which raised no concerns regarding the ballot. It is difficult in these circumstances to give more than a little weight to isolated and anecdotal evidence of the difficulties encountered by individual tenants on the day of the ballot as compared with the endorsement of the ERS, which supervised the ballot process throughout.
33. Opposition to the transfer. The Secretary of State has considered the representations of those tenants who state expressly that they oppose the transfer. The Secretary of State’s opinion is that evidence collected through campaign petitions and standard form letters is inherently less reliable than the views of the tenants as expressed in an independently conducted and scrutinised democratic ballot. In these circumstances, she considers that it is reasonable to rely on the view of the majority of the tenants, as expressed in the ballot, in accordance with the terms of the Department’s Transfer Manual.
34. The Secretary of State has also received allegations that those collecting signatures for petitions and letters expressing opposition to the transfer may have engaged in intimidating behaviour. This underlines the fact that the Secretary of State is unable to verify the process by which the signatures on petitions were obtained, and supports her conclusions that the evidence of tenants’ views as expressed in a ballot overseen by an independent organisation is likely to be inherently more reliable than evidence compiled by individuals who have a personal interest in the outcome.”
The Secretary of State then addressed the lengthy passage of time between the ballot and the date of the letter but stated that it would be inappropriate to refuse consent by reference thereto in that a substantial part of the delay had occurred because her department and Tower Hamlets had had to give proper consideration to the representations received following the ballot. 
40.	Finally, in the fourth section of her letter, the Secretary of State recorded her view of the benefits that would accrue to all the tenants in respect of improvements both to their homes and throughout the estate as a result of the transfer and that it would confer upon all of them a long-term assurance that their homes would be maintained to the agreed standard. She thereupon recorded her consent to the transfer.
41.	It will be noted that in the decision letter the Secretary of State did not refer to the leaseholders and thus not to the views as expressed in their ballot.
42.	On 16 February 2007 the appellant issued her claim for judicial review. Notwithstanding that her solicitors had been acting on her behalf for more than a year previously, public funding was not in place to support issue of the claim at that time. Thus the appellant issued it in person. She annexed a typically articulate statement of grounds. She set out eight reasons for her contention that, in granting her consent, the Secretary of State had acted irrationally. Part of her eighth reason was as follows:
“(h) It was unreasonable to conclude in the face of the mass of evidence complaining about the ballot, both collected by myself and the local MP, that there is not majority opposition to the transfer. I would argue that this evidence must be fully examined by an independent court of law.
(i)	It was unreasonable not to exercise the discretion to withhold consent in regard to the totality of the circumstances set out above and also
(ii)	The leaseholder ballot (which was against the transfer and is supposed to be taken account of in unclear circumstances) 
(iii)	 …”
Two features need to be noted about that presentation. First the appellant was clearly relying upon the ballot of leaseholders. Second, probably as a result of an accidental misnumbering, she there seems to have conflated an argument that the Secretary of State was precluded by para. 5(1) of the schedule from granting her consent with an argument that the exercise of her discretion to grant consent was flawed. For the ballot of leaseholders was clearly irrelevant to the first argument and must in my view be taken to be there alleged by the appellant to be relevant to the second.
43.	Mr Swift and Ms Rhee were obliged to draft the Grounds of Resistance on behalf of the Secretary of State at some speed. In their lengthy document they treated the appellant’s reference to the leaseholders as the basis of an argument referable to the Secretary of State’s duty to withhold consent if it appeared to her that a majority of the tenants did not wish the transfer to proceed. But, in doing so, they made the Secretary of State’s point in such a way as, in the submission of Mr Wolfe, to be highly revealing. They asserted as follows:
“the results of the leaseholders ballot was not relevant either to the Defendant’s assessment under the first limb of para. 5(1) of Schedule 3A or to the exercise of her discretion under the second limb thereof, as Schedule 3A only applies in respect of secure and introductory tenants (see s.106A(1) of the Act).”
It is Mr Wolfe’s argument on the first ground of appeal that her counsel’s presentation is an illuminating revelation of the false legal basis upon which the Secretary of State applied herself to the discharge of her functions under the Act. The argument is that it is clear that she wrongly understood that the second, discretionary, stage of her consideration of the application proceeded under the second limb of a paragraph of a schedule exclusively concerned with the views of the tenants; that therefore it is hardly surprising that she took no account of the views of the leaseholders; and that, had she instead realised that her discretion fell to be exercised under sections 32 and 43 of the Act, she would not have fallen into such error. 
44.	On 14 March 2007, being the day following service of the Secretary of State’s Grounds of Resistance, Ms Kirkham, Deputy Director of the division of the Department which has responsibility for the Secretary of State’s exercise of her functions under Part II of the Act, signed a lengthy witness statement in which she purported to set out the circumstances in which the Secretary of State had granted her consent to the transfer. In four paragraphs of her statement there were references to the leaseholders, including in two paragraphs references to the result of the ballot of them; but there was no assertion in her statement that the result of the ballot of leaseholders had been a factor in the Secretary of State’s consideration of the application for consent.
45.	On 21 March 2007, being the day prior to the start of the hearing before the judge, Ms Kirkham signed a supplementary witness statement. At the hearing Mr Wolfe unsuccessfully objected to its adduction into evidence; and it is part of his first ground of appeal that the judge erred in permitting its adduction. Among the matters addressed by Ms Kirkham in her supplementary statement was the attention or otherwise which the Secretary of State had paid to the views of the leaseholders in deciding whether to grant consent. On this subject she said inter alia:
“Because the statutory prohibition is concerned with majority opposition of tenants our consideration on this issue was directed to the ballot of secure tenants and the representations they subsequently made. In addition, whilst we were aware of the results of the leaseholders’ ballot and the fact that some of the signatories on the petition and on the template letters were leaseholders, no weight was given to this when it came to considering the exercise of discretion to grant consent. This was on the grounds that the terms of the lease do not change on transfer unlike the tenants who are required to sign a new tenancy agreement.
It was for this reason that leaseholders did not feature in the decision letter granting consent. In any event, the question of leaseholder objections was not an issue which had featured in correspondence between the Claimant’s solicitors and the Department after LBTH’s application for consent had been submitted.”
SECTION E: THE FIRST GROUND OF APPEAL
46.	It is convenient first to address the admissibility of Ms Kirkham’s supplementary statement. It is Mr Wolfe’s submission that, on the evidence as it stood prior to the adduction of that statement, it was clear that, in reaching her decision to grant consent, the Secretary of State had omitted even to take account of the views of the leaseholders; that such an omission would render her consent unlawful; and that the judge should not have allowed her so belatedly to make a subtle but important shift in her position to the effect that her treatment of the views of the leaseholders had been to give them “no weight”.
47.	In this regard counsel referred the judge to the decision of this court in R v. Westminster City Council ex p. Ermakov [1996] 2 All ER 302, described by Dyson L.J. in Hijazi v. Kensington and Chelsea RLBC [2003] HLR 72, at [31], as containing a “classic exposition” of the circumstances in which, in the context of a legal challenge to a decision, its maker may supplement the reasons given for it at the time when it was made. In Ermakov, at 315j, Hutchison L.J. said “that the function of such evidence should generally be elucidation not fundamental alteration, confirmation not contradiction”. This led to argument before the judge as to whether, in her supplemental statement, Ms Kirkham was purporting to elucidate or fundamentally to alter; to confirm or to contradict. The judge’s ruling was as follows:
“To the extent that Ms Kirkham deals with aspects of the Secretary of State’s reasons that are not expressly stated in the decision letter, I am satisfied that she manifestly does so by way of elucidation.”
Mr Wolfe complains that there the judge did not do proper justice to his arguments, based, as they were, not just on the absence of reference to the leaseholders in the Secretary of State’s decision letter but also on her counsel’s erroneous presentation of her discretion as arising under a schedule exclusively concerned with tenants and on Ms Kirkham’s failure to assert in her long first statement that any account had been taken of the views of the leaseholders. In my view, however, the judge was clearly entitled to admit Ms Kirkham’s supplementary statement into evidence for the following reasons.
(a)	This was not a situation, as was that in Ermakov itself, in which statute required the decision-maker to give reasons for the decision; or even to identify the matters which had been taken into account in reaching it.
(b)	Counsel’s temporary misapprehension about the source of the Secretary of State’s discretion was highly unfortunate. But it is the decision which matters and in the decision letter there was nothing to indicate that the Secretary of State had laboured under the same misapprehension. On the contrary, the letter had contained a headline reference to ss. 32 and 43 of the Act.
(c)	It was not surprising that the exposition in the decision letter of the Secretary of State’s reasons for exercising her discretion to grant consent should have omitted reference to the views of the leaseholders in circumstances in which in the protracted prior exchanges the appellant’s solicitors had themselves made no reference to them.
(d)	The references to the leaseholders in four paragraphs of Ms Kirkham’s first statement, including to the result of their ballot, were entirely consistent with her later assertion that the Secretary of State was aware of opposition to the transfer on the part of some of the leaseholders, as reflected in the ballot and otherwise, but gave no weight to it.
(e)	It must, as a matter of common sense, be easier for a decision-maker to secure permission to make a belated assertion that she took into account a factor to which she had not previously referred but gave it no weight than that she gave weight to a factor to which she had not previously referred; for in the former case the lack of previous reference would be inherently less significant.
48.	Mr Wolfe describes the judge’s decision to admit Ms Kirkham’s supplementary statement into evidence as “critical” and, once the conclusion is reached that his decision should stand, there is not much left in the first ground of appeal. Its full despatch does, however, require attention to be given to whether, in making her decision, the Secretary of State was obliged in some way to take account of the views of the leaseholders; and thereafter it may prove easy to determine whether she has discharged any such obligation.
49.	It is the submission of Mr Wolfe, with which I agree, that the manual gives rise to an obligation on the Secretary of State not to be oblivious of the views of the leaseholders. For in my view the manual must be regarded as containing in this regard a statement of her policy. I appreciate that the manual, which lacks statutory genesis, is described as guidance to local authorities and as of interest to tenants and to prospective landlords. Nevertheless the statement, for example, in section 10.34 of the manual that the Secretary of State “will take … into account” objections communicated to her by leaseholders can in my view not realistically be treated as other than a statement of policy; and, although Mr Swift draws a distinction between a reasoned objection communicated to the Secretary of State by one leaseholder and an unexplained negative vote cast by another leaseholder in a ballot conducted on behalf of a local authority, the distinction in my view relates only to the different weight which the Secretary of State may choose to place on the two opinions thus expressed. In my view the suggestion in section 10.37 of the manual that the local authority may ascertain the views of the leaseholders by conducting a separate ballot of them, coupled with the “requirement” in section 16.5.e that, in applying to the Secretary of State for consent, the local authority should submit details of any representations made by leaseholders, can mean only that it is her policy to take account of the result of such a ballot as well as of objections communicated directly to her by leaseholders.
50.	If, then, the manual contains a statement of policy, what is its legal effect? It is described as follows in the well-known words of Woolf J. in Gransden & Co. Ltd v. SS for the Environment (1985) 54 P and CR 86 at 94:
“the body determining an application must have regard to the policy … the fact that a body has to have regard to the policy does not mean that it needs necessarily to follow the policy. However, if it is going to depart from the policy, it must give clear reasons for not doing so …”
51.	In a passage of which Mr Wolfe complains, the judge in the present case said:
“Mr Swift submitted (correctly, in my view) that the Secretary of State is not required to follow the guidance contained in the Manual rigidly and that any departure from it can only by impugned on traditional grounds of review or on the basis of any legitimate expectation to which it may have given rise.”
Mr Wolfe is no doubt correct to deny that he submitted that the guidance was required to be followed “rigidly”; in my view the judge did not intend to imply otherwise. More importantly, however, I agree with Mr Wolfe that the second part of the sentence is arguably too narrow a formulation of the legal effect of a statement of policy, as explained, for example, in Gransden.
52.	Thus, in her determination of the application for consent, the legal obligation of the Secretary of State was either to take account of the views of the leaseholders, as expressed primarily in the ballot but also in the petitions and the template letters, or clearly to explain why she was not doing so. On all the evidence it is clear that she took the former course: she took account of their views, in particular, no doubt, that in the ballot 80.6% of those voting had voted no, but, by contrast, that only 18.7% of those eligible to vote had voted no (from that perspective, hardly the “overwhelming leaseholder objection” pressed upon us by Mr Wolfe). But, having taken account of them, the Secretary of State resolved to give them no weight. It is at this point that Mr Wolfe’s limited forensic progress comes to an end; for, wisely, he hardly even attempts to show that such a resolution was perverse or Wednesbury unreasonable. The scheme of the Act provides for elaborate focus on the views of the tenants: Stages One and Two represent a sequence of consultations with tenants; it is the opposition of a majority of tenants which precludes consent; and, if such be not precluded, it is the support or otherwise of tenants which is expressly flagged in paragraph 5(1) of the schedule as a factor which may inform exercise of the ensuing discretion. There is no reference in the Act to the views of the leaseholders. Although, as the manual in effect recognises, it would go too far to claim that leaseholders are unaffected by the identity of their freeholder, their rights remain in principle defined by their leases irrespective of the identity of their freeholder, including their rights to the provision of services and their concomitant obligation to pay reasonable charges for them. So in my view it was not perverse or Wednesbury unreasonable of the Secretary of State to resolve to attach no weight to the clear, albeit in effect unreasoned, objections of some of the leaseholders, particularly in circumstances in which, prior to the decision, the appellant’s solicitors had not seen fit even to argue that they were deserving of weight.
SECTION F: THE SECOND GROUND OF APPEAL
53.	To the second and third grounds of appeal, which relate to the consideration or otherwise given by her to the adequacy both of the pre-ballot consultation with tenants and leaseholders conducted by Tower Hamlets and of their overall consultation with them, including by the ballot itself, and to the numerous complaints in that regard, the Secretary of State brings a preliminary objection. It is the argument which found no favour with the judge but which she resurrects by a Respondent’s Notice.
54.	The Secretary of State’s argument is that the second and third grounds of appeal represent a complaint of “a failure on [her] part or that of the local authority to comply with the requirements of” the schedule and thus, by virtue of paragraph 6 thereof (set out at [11] above), that her consent to the transfer cannot thereby be invalidated. Indeed, slightly to my surprise, the Respondent’s Notice refines the argument to be that the grounds represent a complaint of failure on the part of the Secretary of State (rather than of the local authority) to comply with the requirements. But, without objection, the argument has ranged more widely than that; and undoubtedly the initial focus of the grounds is upon alleged failures on the part of the local authority.
55.	Mr Swift’s argument is that it is the schedule which, by its heading and its content, provides for consultation on the part of local authorities with tenants prior to transfer; and that all requirements cast upon local authorities and upon the Secretary of State referable to consultation are either contained in the schedule or directly flow from what is there contained and so are “requirements of” the schedule for the purposes of paragraph 6.
56.	Mr Wolfe’s response, upheld by the judge, is that a paragraph which precludes the attachment of invalidating consequences to unlawful actions should not be loosely construed; that his second and third grounds are properly characterised as complaints not of a failure to comply with the requirements of the schedule but of a failure lawfully to exercise the discretions conferred by sections 32 and 43 and, in that regard, in part of a failure on the part of Tower Hamlets to follow the guidance in the manual.
57.	In my view the judge’s ruling on this point was correct. I have been exercised by Mr Swift’s demonstration that the ruling creates an anomaly; but, on balance, the anomaly does not lead me to favour the contrary argument. The anomaly is created by the fact that the central “requirement” imposed by the schedule on the Secretary of State is not to give consent if it appears to her that a majority of tenants do not wish the transfer to proceed; and that, as was held by Schiemann J. in R v. S.S. for the Environment ex p. Walters (1997) 30 HLR 328 at 342, paragraph 6 would save a failure to satisfy that requirement from invalidating the consent. The anomaly which in my view we have to tolerate is that an ostensibly fundamental default of that character does not invalidate the consent but that other defaults further down the line in the decision-making process may do so.
58.	So I turn substantively to the second ground. The first question which it raises relates to the extent if any to which the Secretary of State is obliged to ensure that the local authority has followed the guidance in the manual. In this regard Mr Wolfe strongly relies on the decision of Munby J. sitting in the Administrative Court in R (on the application of Beale) v. Camden LBC [2004] HLR 917. The judge was there addressing Camden’s proposed transfer of management functions to an Arms Length Management Organisation, for which, analogously to the present case, the approval of the Secretary of State was required (by s.27 of the Act); and a degree of prior consultation with tenants was provided for (in s.105), in relation to which the Deputy Prime Minister had issued guidance. The judge held that it was premature to challenge the adequacy of the local authority’s consultation in advance of the Secretary of State’s decision whether to approve the transfer. The headnote to the report of the decision, at [2] on 921, records the judge as having held that it was for the Secretary of State to decide whether an authority’s consultation process complied with the terms of the guidance; and Mr Wolfe thus presses upon us that in our case the Secretary of State was obliged to determine compliance on the part of Tower Hamlets with the guidance in the manual. But it is important to place Munby J.’s statement, which I will italicise, in its context as follows, at [20] and [21]:
“20. … The ODPM Guidelines are not legal principles or statements of law: they are merely statements of the factors that the SoS will take into account in deciding whether or not to give his approval under s.27 of the 1985 Act and of the prerequisites that have to be met if he is to be persuaded to give his approval. Failure to comply with the ODPM Guidelines may imperil or even fatally prejudice a local authority’s application for s.27 approval. I fail to see, however, how such a failure – even if established – can, of itself, invalidate the consultation process as a matter of law or make it, as the claimants assert, unlawful.
21.   There is another reason why I cannot agree with the use [counsel for the claimants] seeks to make of the ODPM Guidelines. Parliament, as I have said, has chosen to confer the relevant power of approval under s.27 of the 1985 Act on the SoS, not on the court. It is for the SoS, at least in the first instance, to decide whether or not Camden has complied with the ODPM Guidelines. Were I at this stage of the process to be drawn into deciding whether or not Camden has done so, I would, as it seems to me, be usurping a power which Parliament has chosen to confer on the SoS.” 
The sentences which precede and in particular follow that on which Mr Wolfe relies show that Munby J. was not holding that a specific duty lay upon the Secretary of State to determine compliance with the guidance. The true position is that the Secretary of State is likely to wish to take into account, as relevant to the adequacy of the local authority’s consultation exercise and thus to her grant of consent, the extent to which it has in any significant way failed to follow the guidance.
59.	What, then, is the appellant’s substantive complaint about the nature of the pre-ballot consultation conducted by Tower Hamlets which is said to have represented such a departure from the guidance in the manual as the Secretary of State should have taken into account? Here, adroit advocate as he is, Mr Wolfe chooses, as he did to the judge, to sketch his case to us only in outline. He reminds us that, by paragraphs 10 and 37 of Annex N to the manual, local authorities are urged to use their consultation documents in order not to present only the pro-transfer arguments but, rather, to provide neutral information. He points to the fact that, in their letter sent to Tower Hamlets on about 28 July 2005, the four tenants had complained that the presentation to tenants by Tower Hamlets had been “distinctly one-sided”, a complaint subsequently reiterated by or on behalf of the objecting constituency, albeit not by the appellant’s solicitors. And he complains that, in the part of her decision letter in which she appraised the consultation process conducted by Tower Hamlets, the Secretary of State did not expressly address the complaints of one-sidedness. Further, however, Mr Wolfe is reluctant to go. Although he briefly adverts to the content of Tower Hamlets’ proposal document, part of which I have set out in [22] above, Mr Wolfe declines to identify the anti-transfer arguments which, in the interest of neutrality, should have been included in it. Instead he stresses that it should not be for the court, but, rather, should have been for the Secretary of State, to survey neutrality. Here, in my view, Mr Wolfe is too glib: for the court has to be satisfied that there is an underlying point, not in legal theory but arising on the facts of the case, which required the attention of the decision-maker.
60.	In that Mr Wolfe largely confines his argument on the second ground to generalities, so (I suggest) might this court do so in response to it. My response is as follows:
(a)	If a local authority reasonably forms the view that because of financial constraints the only way of providing its tenants with “decent homes” in accordance with the government standard is by way of transfer of the housing stock to a Housing Association, it is absurd to consider that the “neutral” information which it must provide to tenants should be information which suggests that the arguments pro and con transfer are evenly balanced.
(b)	In accordance with section 10.42 of the manual, Tower Hamlets had in March 2005 forwarded to the Deputy Prime Minister a draft of the proposal document so as to give him an “opportunity to comment”; the Deputy Prime Minister had considered the document but had made no adverse comment.
(c)	By letter dated 16 January 2006 Tower Hamlets, pursuant to paragraph 2(1) of the schedule, enclosed with its application for consent a copy of the proposal document as served on the tenants.
(d)	“We reviewed this documentation”, said Ms Kirkham in her first statement, “and were satisfied that the material was presented in an appropriate manner and gave the tenants sufficient information to enable tenants to make an informed decision as to whether or not to vote in favour of the transfer. Nevertheless … we felt it appropriate to ask for further information in relation to the consultation exercise.” (Italics supplied.)
(e)	By its letter, and enclosures, dated 21 February 2006, Tower Hamlets provided in detail the further information which had been requested.
(f)	In September 2006 Tower Hamlets forwarded to the Secretary of State a copy of the positive survey dated June 2005 conducted by the market research firm into the quality of its pre-ballot consultation. “These findings”, said Ms Kirkham in her first statement, “were consistent with our view that there had been proper and effective consultation.”
(g)	In the above circumstances there is no ground for concluding that, before granting her consent, the Secretary of State failed to have regard both to the adequacy of the pre-ballot consultation of tenants conducted by Tower Hamlets and, in particular, to the extent to which it had failed to follow (or, put rather more fairly, had followed) the guidance in the manual.
SECTION G: THE THIRD GROUND OF APPEAL
61.	The third ground swims to a significant extent in the slip-stream of the second; and encounters similar problems. It relates to the alleged failure of the Secretary of State to take into account, firstly, not only alleged deficiencies in the pre-ballot consultation of Tower Hamlets with tenants but also in the actual balloting process and, secondly, the vociferous complaints brought to her attention in those twin respects.
62.	In my view the Secretary of State did more than enough lawfully to fulfil her functions in this regard. There was a period of more than one year between the application for consent and its grant, during which a protracted dialogue took place between Tower Hamlets and the Secretary of State in relation to the consultation process and the ballot, the subject-matter of which was driven by the complaints which had been made by the appellant and the other objectors. In my view that dialogue, summarised in [34] to [36] above, afforded the Secretary of State an adequate platform upon which to found a conclusion both that the pre-ballot consultation had been adequate and that the ballot, conducted by a reputable independent body, had been satisfactory. I cannot associate myself with the suggestion of Mr Wolfe that her consent was invalidated by her failure to require Tower Hamlets further to explore with the 60 purported complainants the complaints attributed to them in the appellant’s document enclosed with her solicitors’ letter dated 23 January 2006. In my view all the complaints brought to her attention were treated by the Secretary of State with a degree of attention at least equivalent to (and in my view greater than) that which the law requires as a condition of the validity of her consent. 
SECTION H: RELIEF
63.	This judgment is already long. It suffices to say that, had he established to my satisfaction that the Secretary of State’s consent to the transfer was unlawful, Mr Wolfe would, by reference to any (or even to all) of the particular grounds of invalidity canvassed in these proceedings, have faced formidable difficulties in persuading me that it would have been a proper exercise of the court’s discretion to quash the consent.
SECTION I: CONCLUSION
64.	I would dismiss the appeal.
Lord Justice Lloyd:
65.	I agree.
Lady Justice Smith:
66.	I also agree.