England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEENS BENCH DIVISION
MR JUSTICE NELSON
[2005] EWHC 204(QB)

		Royal Courts of Justice Strand, London, WC2A 2LL
		21st December 2005

Lord Justice Latham :

1. This appeal arises out of the exercise by the appellants of their right to buy The Willows, Aldershot, Hampshire which has been their home for almost 20 years, under the provisions of Part 5 of the Housing Act 1985 ("the Act"). The Act entitles secure tenants, subject to certain exceptions, to buy the freehold of the property of which they have a secure tenancy, if the landlord is the freeholder, and the appropriate lease if the landlord is a leaseholder. In this case, it was declared that the respondent is the freeholder. As a result of a decision of HHJ Sleeman in the Guildford County Court a declaration was made that the appellants were entitled to acquire the freehold. The issue with which we are concerned is the date of valuation of the property for the purposes of determining the price which the appellants have to pay for the exercise of their right. The appellants say the relevant valuation date is the 21^st March 1991, when they served a notice under section 122 of the Act claiming to exercise the right to buy. The respondents says that the relevant date is the 30^th June 2001 which was the date upon which a second notice was served by the appellants claiming to exercise their right to buy. On the 28^th October 2004, HHJ Cook, in the Epsom County Court, held that the relevant date was the 21^st March 1991. The respondent appealed to the High Court. On the 29^th April 2005, Nelson J allowed the appeal. This is therefore a second appeal which comes before this court with leave of Neuberger LJ.
2. The story can by told quite shortly. The first appellant has been employed since 1981 as a countryside warden by the respondent. He was particularly concerned with the management of the Basingstoke Canal which was owned jointly by the respondent and Hampshire County Council. At first he lived at an address in Guildford which was undoubtedly occupied by him as a service occupant. However, the respondent decided to sell that property; and The Willows was purchased as a replacement home for the appellants. In 1990 as a result of a reorganisation of the management of the canal, the Basingstoke Canal Authority was set up and staff formerly employed by the respondent were retained but thereafter were employed by the Hampshire County Council. As we understand it, the first appellant remained employed by the Hampshire County Council at all relevant times. The circumstances under which the appellants came to occupy The Willows were the subject matter of the dispute before HHJ Sleeman. Both notices under section 122 of the Act, that is the notice in 1991 and the notice in 2001 claiming to exercise the right to buy had been met by notices served by the respondent denying that the appellants had the right to buy on the grounds that the first appellant was required by his contract of employment to occupy the dwelling house for the better performance of his duties. Any tenancy containing such a requirement is expressly excluded from the right to buy provisions by virtues of paragraph 2.1 of Schedule 1 of the Act. HHJ Sleeman held that that was not a term of the tenancy agreement, and, accordingly the appellants were entitled to exercise their right to buy. As there has been no appeal against that decision, there is no need to describe the details of the dispute.
3. The notice that was served on the 21^st March 1991 was, as I have indicated, followed by a notice under section 124 served by the respondent denying the appellants right to buy. No steps were taken by the appellants after receipt of the respondent's notice until the 18^th October 2000, when solicitors acting on behalf of the appellants wrote to the respondent's managing agents enquiring whether the respondent was considering any sale of the property. It would appear as though the appellants were stimulated to make that request because a fellow employee of the first appellant had purchased his property under the right to buy scheme at the appropriate discount. The respondent's Countryside Estate Manager replied on the 2^nd March 2001, the original letter apparently having gone astray, advising the first appellant that it was the respondent's policy to contest all right to buy applications. The solicitors for the appellants then wrote a letter of the 12^th March 2001 reiterating their clients' wish to exercise their right to buy, again stating that several fellow employees had recently done so. By letter of the 26^th June 2001 the Head of Estate Strategy of the respondent sent the appropriate form for making a claim under section 122 of the Act.
4. It was in these circumstances that the second notice under section 122 was served by the appellants on the 30^th June 2001, to which the respondent replied by the service of section 124 Notice to which I have already referred raising the issue as to whether or not the tenancy was a secure tenancy for the reasons to which I have already referred. On the 20^th November 2003, the appellants issued a claim under the provisions of section 121 of the Act for an order or declaration that they were entitled to acquire the freehold to The Willows. The grounds upon which the application was made included the following:

"(e) The claimants served a notice in accordance with the provisions of the Housing (Right to Buy)(Prescribed Forms) Regulations 1986 (as amended) on the defendant on 2/7/01. In the said notice the claimants claim to exercise their right to buy the dwelling house. A copy of the said notice is filed and marked "Annex 2" with this claim form.

(f) The defendant has served upon the claimants a notice dated 26.7.01 denying the claim and setting out reasons for its denial which reasons are incorrect in fact and insufficient in fact to amount to a justification for its denial…."

5. We have been told that the notice of the 21^st March 1991 first emerged in the list of documents served by the respondent. It undoubtedly forms part of the history of the matter put before HHJ Sleeman as it was mentioned expressly in his judgment. However, no application was made to amend the appellants' claim. And accordingly the declaration which HHJ Sleeman granted was based upon the claim as originally drafted.
6. As will be seen from the statutory materials which I set out hereunder, the respondent was then under an obligation pursuant to section 125 of the Act to serve a notice stating the price at which in its opinion the appellants were entitled to have the freehold conveyed to them. Matters were delayed whilst an unsuccessful attempt was made to appeal. When that had been resolved, the respondent made it clear that it was proposing to comply with the requirements under section 125 on the basis that the relevant date for valuation of the property was the 2^nd July 2001. The appellants took immediate issue with that, asserting that the relevant date was the date of the first notice, namely the 21^st March 1991. As a result of that dispute, the appellants made a further claim under section 181 of the Act for a declaration that the relevant date was the 21^st March 1991 which was the date of the first notice under section 122, which had never been withdrawn. This is the claim which was determined by HHJ Cook on the 24^th October 2004, and the subject of the appeal in which Nelson J gave his judgment which is now under appeal to us.

The Statutory Provisions

7. The Act gives effect to one of the more important social polices of the Conservative Government at the time. It was intended to and did, enable a large proportion of those in what can loosely be described as social housing to purchase their own properties. The right is expressed in section 118 in the following terms:

"(1) A secure tenant has the right to buy, that is to say, the right, in the circumstances and subject to the conditions and exceptions stated in the following provisions of this Part –

(a) if the dwelling house is a house and the landlord holds the freehold, to acquire the freehold of the dwelling house…"

8. Section 119 provides for a qualifying period of occupation; and sections 120, 121 and 121A provide for exceptions, circumstances in which the right to buy cannot be exercised, and circumstances in which the right to buy may be suspended. Sections 122 onwards deal with the procedural matters determining the way in which the right to buy may be exercised.
9. Section 122 provides:

"(1) A secure tenant claims to exercise the right to buy by a written notice to that effect served on the landlord.

(2) In this Part "the relevant time", in relation to an exercise of the right to buy, means the date on which that notice is served.

(3) The notice may be withdrawn at any time by notice in writing served on the landlord."

10. Section 124 provides:

"(1) Where a notice under section 122 (notice claiming to exercise right to buy) has been served by the tenant, the landlord shall, unless the notice is withdrawn, serve on the tenant within the period specified in sub-section(2) a written notice either –

(a) admitting his right or

(b) denying it and stating the reasons why, in the opinion of the landlord the tenant does not have the right to buy.

(2) The period for serving notice under this section is four weeks where the requirement of section 119 (qualifying period for the right to buy) is satisfied by a period or periods during which the landlord was the landlord on which the tenants notice under section 122 was served, but eight weeks in any other case"

11. Section 125 provides:

"(1) Where a secure tenant has claimed to exercise the right to buy, and that right has been established (whether by the landlord's admission or otherwise) the landlord shall –

(a) within eight weeks where the right is that right mentioned in section 118(1)(a) (right to acquire freehold) ….

serve on the tenant a notice complying with this section….."

12. The section goes on to prescribe the contents of such a notice which should include, by subsection (2) the price at which, in the opinion of the landlord, the tenant is entitled to have the freehold conveyed " …. and shall for the purpose of showing how the price has been arrived at state (a) the value at the relevant time…"
13. Section 125D provides:

"(1) Where a notice under section 125 has been served on a secure tenant, he shall within the period specified in subsection (2) either –

(a) serve a written notice on the landlord stating that he intends to pursue his claim to exercise his right to buy, or that he withdraws that claim,….

(2) The period for serving a notice under subsection (1) is the period of twelve weeks beginning with whichever of the following is the later –

(a) the service of the notice under section 125, and

(b) where the tenant exercises his right to have the value of the dwelling house determined or re-determined by the district valuer, the service of the notice under section 128(5) stating the effect the determination or re-determination."

14. Section 125E provides:

"(1) The landlord may, at any time after the end of the period specified in section 125D(2) or, as the case may require, section 136(2) serve on the tenant a written notice –

(a) requiring him, if he has failed to serve the notice required by section 125D(1) to serve that notice within 28 days …….

(4) If the tenant does not comply with the notice under this section, the notice claiming to exercise the right to buy shall be deemed to be withdrawn at the end of that period"

15. Section 126 provides:

"(1) The price payable for a dwelling house on a conveyance or grant in pursuance of this Part is –

(a) the amount which under section 127 is to be taken as its value at the relevant time, less

(b) the discount which the purchaser is entitled under this Part…."

16. Detailed provisions are thereafter made in relation to the valuation and other matters. Section 138 then provides:

"(1) Where a secure tenant has claimed to exercise the right to buy and that right has been established, then, as soon as all matters relating to the grant … have been agreed or determined, the landlord shall make to the tenant –

(a) If the dwelling house is a house and the landlord owns the freehold, a grant of the dwelling house for an estate in fee simple absolute …

in accordance with the provisions of this Part."

17. Section 181 provides:

"(1) A County Court has jurisdiction –

(a) to entertain any proceedings brought under this Part,…..

(b) to determine any question arising under this Part….

(2) The jurisdiction conferred by this section includes jurisdiction to entertain proceedings on any such matters mentioned in sub-section 1(b) notwithstanding that no other relief is sought than a declaration."

Judgments below

18. HHJ Cook gave a short judgment in which he concluded that the right to buy was, as he put it, "totally independent of any notice purporting to exercise that right". He treated the notice of June 2001 as being superfluous. The notice of the 21^st March 1991 had remained valid despite the passage of time. He said "I am not concerned with any theory of abandonment or estoppel: there is no mention of them in the Act."
19. Nelson J in a careful and full judgment concluded that HHJ Cook was wrong to hold that the right to buy was independent of any notice and that the concepts of abandonment, withdrawal, waiver or estoppel had no part to play in the statutory procedures. He was quite satisfied that the court should conclude that the appellants had abandoned their 1991 claim to the right to buy, and that if they had intended to rely on it for any purpose, it was their obligation to raise it in the proceedings before HHJ Sleeman. In the final paragraph of his judgment he said:

"I conclude that Deputy Judge Cook's decision that the 1991 notice was still extant and that the tenant was entitled to rely on it for the purposes of ascertaining the relevant time of the exercise of his right to buy was wrong for the reasons that I have set out. In my view the issue was in fact determined by Judge Sleeman who was only asked to make a declaration on the basis that the valid and relevant notice was the 2001 notice. In the circumstances the appeal should be allowed and this Court should declare that the relevant time the Claimants exercised their right to buy was by the written notice served on 2 July 2001."

The appellant's arguments

20. Mr Wilcox who has acted on behalf of the appellants throughout, submits that HHJ Cook was correct. Once the appellants had served their notice in March 1991, they had, as he put it, an "an indefeasible right" to buy, and the relevant date for valuation purposes was the date of that notice. He submits that concepts of abandonment, waiver or estoppel play no part in the determination of statutory rights such as the ones in question. He relies in that respect on the decision of this court in Collin –v- Duke of Westminster and Others in [1985] 1QB 581, a case concerning the provisions relating to leasehold enfranchisement contained in the Leasehold Reform Act 1987.

Conclusions

21. Whilst much of the argument before Nelson J was directed to the questions of abandonment, waiver and estoppel, they do not, it seems to me, have any part to play in the solution to the present case. Although section 118 of the Act grants a right to buy, that is expressly subject to the conditions set out in Part V of the Act. Section 138, which is the section intended to give effect to the right granted by section 118 expressly requires the right to be established before the duty to convey arises. It follows that the procedural provisions of sections 122 and those following have to be complied with before the right can be effective. That includes in particular, the requirement that the right has been "established". Section 125(1) provides that this can be by way of a landlord's admission or "otherwise", which must mean, or at least include, by proceedings taken under section 181.
22. In the present case the appellants' right was established by the section 181 proceedings before HHJ Sleeman. Those proceedings were based, and based solely, on the claim made under the section 122 notice of the 30^th June 2001. The procedure required by the Act accordingly flowed from that notice and no other. When determining "the relevant time" for the purposes of establishing the price pursuant to section 126, it seems to me inevitable that it was the date upon which that notice was served. On that simple and straightforward basis, which was clearly the basis upon which Nelson J formulated the final paragraph of his judgment, this appeal must be dismissed.
23. Mr Wilcox's submissions, if correct, would have surprising, and wholly unsatisfactory results. Taken at its broadest and Mr Wilcox did not flinch from such a submission, a secure tenant whose claim had been denied could wait for as long as he wished, before resurrecting his claim even if that might cause considerable prejudice to a public authority and loss to the local tax payers. Bearing in mind that the Act prescribes strict time limits if a claim is either accepted or established, such a result would appear to be wholly contrary to the way Parliament intended this procedure to work. Mr Wilcox's reliance on Collin (supra) is in my view misconceived. The relevant provision in the Leasehold Reform Act is contained in section 8(1) which provides:

"Where a tenant of a house has under this Part of this Act a right to acquire the freehold, and gives to the landlord written notice of his desire to have the freehold, then except as provided by this Part of this Act the landlord shall be bound to make to the tenant, and the tenant to accept, (at the price and on the conditions so provided) a grant of the house and premises for an estate in fee simple absolute, subject to the tenancy and to tenant's incumbrances, but otherwise free of incumbrances."

24. That provision makes it clear that the giving of the notice is what creates the right to the grant of the property under that Act. The Act with which we are concerned is in significantly different terms. In those circumstances, and because of the way in which I consider that this appeal should be determined, it would not be helpful to examine the extent to which this decision affects the arguments on abandonment, waiver and estoppel which occupied much of the time before Nelson J.
25. Mr Wilcox's further point that since a notice has by section 122 to be withdrawn in writing, and provision is made expressly for withdrawal elsewhere, the Act must clearly have envisaged that if a claim under section 122 is denied, but not withdrawn in writing, it should remain effective is unattractive. It seems to me to ignore reality. Section 122(3) is really directed to ensuring that the tenant can bring the procedure to an end at any stage that he wishes, in particular before the landlord has served his notice under section 124. And as far as the deemed withdrawal pursuant to section 125 E(4) is concerned, that is clearly necessary in order to ensure that a landlord who has expended considerable effort in producing information required by the Act can close the file. It says nothing about the continuing life of a notice which made a claim which has been denied, where no further steps have been taken and which a landlord could sensibly take as meaning that the tenant had decided not to proceed. That is precisely what happened in this case.
26. Had I come to a different conclusion as to the effect of the claim determined by HHJ Sleeman, I would have doubted, therefore, how a notice could have been resurrected more than 12 years after it had been served. The whole emphasis of the Statutory Scheme is that the parties should act promptly. I would in any event have questioned the appellants' entitlement to rely on it as they did not include it in the claim. But for the reasons I have given it is unnecessary to determine those questions.

Lord Justice Carnwath:

27. I agree.

Lord Justice Mummery:

28. I also agree.