England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BOW COUNTY COURT
(HIS HONOUR JUDGE BARNETT QC)

		Royal Courts of Justice Strand, London, WC2A 2LL
		2nd July 2009

Sir Anthony May:

1. As long ago as September 1999, Miss Scinto, the respondent, initiated the process under the Housing Act 1985 of exercising her right to buy the house in East London,  59 Wise Road, of which she had been tenant of the appellants, the London Borough of Newham, since May 1983. Her right-to-buy claim form has not survived, but it was acknowledged by Newham in an extant letter dated 23 September 1999.
2. On 17 December 1999 Newham sent a landlord's offer notice addressed to both Miss Scinto and her son, David Scinto, offering to sell the property to them for £56,000. This represented a market value of £94,000 less a statutory discount of £38,000. The offer notice shortly identified some structural defects.
3. On 21 September 2000 solicitors instructed by Miss Scinto enclosed a surveyor's structural survey report indicating a number of serious structural problems. It was assumed in the letter that Newham's insurance would cover these. It was said that without extensive repair works Miss Scinto would be unable to obtain a mortgage. The letter therefore requested that the right to buy be held in abeyance pending investigations by Newham's insurers and any reparation work that was necessary as a result of those investigations.
4. By letter of 11 October Newham agreed to hold the right-to-buy application open pending the outcome of investigations by their technical repairs manager. Although it is contended in this appeal by Newham that the agreement was limited to the outcome of investigations, it is clearly in my view to be read as an agreement to hold the right-to-buy process in abeyance until repairs were carried out, if that was to be the consequence of the investigations.
5. Characteristically perhaps, things did not proceed quickly, and Miss Scinto was to write an anxious chasing letter on 7 January 2001 chasing some action. On 17 January 2001 Newham's technical manager wrote saying that Newham had asked for three estimates for work required to remedy the faults found. When the winner was decided, Miss Scinto would be contacted with regard to access for the works to be carried out. He apologised for the delay, which continued until 16 May 2002, when Newham notified Miss Scinto that someone would call on 31 May 2002 to carry out the works. Again, not uncharacteristically, this did not happen.
6. What this amounts to, in my view, is that Newham agreed to suspend the right-to-buy process until the identified remedial works were carried out. They had not been carried out by 26 February 2003 when Newham served a notice under section 140 of the Housing Act 1985. Section 140 of the 1985 Act provides as follows:

"Landlord's first notice to complete

(1) The landlord may, subject to the provisions of this section, serve on the tenant at any time a written notice requiring him –

(a) if all relevant matters have been agreed or determined, to complete the transaction within the period stated in the notice, or

(b) if any relevant matters are outstanding, to serve on the landlord within that period a written notice to that effect specifying the matters,

and informing the tenant of the effect of this section and of section 141(1), (2) and (4) (landlord's second notice to complete).

…

(4) A notice under this section shall not be served if -- …

(c) any relevant matter stated to be outstanding in a written notice served on the landlord by the tenant has not been agreed in writing or determined.

(5) In this section relevant matters means matters relating to the grant."

7. Although at first blush, the apparent meaning of the phrase "written notice" served on the landlord in section 140(4)(c) might be a reference back to a notice under section 140(1)(b), I do not see that it should be so read, since section 140(4) forbids the landlord from serving notice under that section if the tenant was given written notice that relevant matters are outstanding. The tenant's notice accordingly has to precede the landlord's intended notice and therefore the tenant's notice cannot be that which the operation of section 140(1)(b) would produce.
8. In her solicitor's letter of 21 September 2000, Miss Scinto had served a written notice that the repairs, arguably a relevant matter, were outstanding and those repairs, not having been carried out, were undetermined within the terms of section 140(4)(c). It is a matter for consideration whether the landlord was in a position in law to serve the first notice or not.
9. Miss Scinto did not respond to Newham's notice and they, accordingly, gave a second notice on 30 April 2003 under section 140(1) requiring Miss Scinto to complete the transaction within 56 days. She was unable to do so, no doubt because Newham had not carried out the repairs.
10. On 1 December 2004 Miss Scinto issued proceedings for disrepair against Newham. Some works were carried out to the premises and on 26 June 2006 Miss Scinto's solicitors wrote asking Newham to proceed with the right-to-buy process in accordance with the 1999 offer. On 6 November 2006 the repair proceedings were compromised without Newham admitting liability.
11. In the present proceedings Miss Scinto seeks a declaration that she is entitled to exercise her right to buy the property on the terms set out in the offer of 17 December 1999. Newham defended the proceedings mainly on the basis that Miss Scinto had failed to complete pursuant to their 2 April 2003 notice and that the notice accordingly claiming to exercise the right to buy was deemed to be withdrawn pursuant to section 141(4) of the 1985 Act.
12. HHJ Barnett QC heard the matter in the Bow County Court, giving judgment on 5 September 2008 in favour of Miss Scinto. He held, in a discursive judgment, that the repairs were a relevant matter which was outstanding at the time Newham's notices were given: that is, that Newham were not entitled to serve the first notice under section 140(4)(c). He further held that it was unconscionable for Newham to issue the notices when they did and that it would be inequitable for them now to be entitled to rely on the notice. In essence, he upheld a submission that Newham were subject to a form of promissory estoppel.
13. Newham have four amended grounds of appeal against this decision, for which Lloyd LJ gave them permission. I take them in a convenient order. The fourth ground is that the judge was wrong to hold that Newham could not rely on their notices, because it was for Miss Scinto to respond to the first notice by herself giving notice that the repairs were outstanding and she did not do so. That submission does not answer the contention that, on the facts, Newham were unable to serve their first notice, because the relevant matter previously stated in writing by the tenant to be outstanding had not been determined.
14. In a supplementary skeleton Miss Hawkes relies on the recent decision of this court in Ryan v LB Islington [2009] EWCA Civ 578. The central argument in that appeal, in which Rimer LJ gave the leading judgment, was whether Miss Ryan's request that Islington should first carry out certain underpinning works to the rear of her flat was a matter:

"'relating to the grant' to her of the long lease to which she was entitled, those being the relevant words in section 140 of the Housing Act 1985"

15. In brief outline the facts of that case, a right to buy case under this legislation, were that there were contentions on behalf of the tenant that structural repair works were necessary and it was in the context of those contentions that Rimer LJ considered the question whether those matters were outstanding matters relating to the grant. It was, he accepted, a case in which the tenant expressly raised the argument that a want of repair was a matter relating to the grant and he proceeded to consider the matter. He said, in paragraph 56, that certain comments made by Henry LJ in the case of Milne Berry v Tower Hamlets LBC [1997] 30 HLR 229 reflected sound practical sense, but were not focussed on the point for which Miss Bretherton enlisted them and did not support the proposition that a requirement by a purchasing tenant that the landlord should carry out repair works in advance of completion was an outstanding matter relating to the grant within the meaning of section 140 of the 1985 Act.
16. He held, in effect, that matters relating to the grant were conveyancing matters and did not embrace the contentions relating to repair in that particular case. Paragraph 59, however, is instructive and reads as follows:

"Thirdly, and to my mind most persuasively, it is necessarily implicit in Ms Bretherton's submission that there is an obligation on the proposing vendor to carry out repair or remedial structural works prior to completion: because, if there is not, Ms Ryan cannot have been entitled to require such works to be done. To make that argument good, it is therefore necessary to find something within the structure of the 'right to buy' legislation that imposes such an obligation upon the proposing vendor. He will, as the proposing purchaser's landlord, of course be under a continuing obligation to discharge his repairing obligations under the purchaser's secure tenancy; and it will be open to the tenant to compel the performance of those obligations. But it does not follow that there is also a right upon the tenant to insist that completion of the purchase can be deferred until all works of repair and structural rectification have been carried out by the landlord."

And he goes on to deal with a difficulty with that submission. Paragraph 60 contains this:

"Ms Bretherton made much of her point about the position that would arise if, pending completion, the premises were totally destroyed. Her submission was that it must be implicit in such a circumstance that the proposing purchaser would be entitled to have completion deferred until the premises had been rebuilt."

17. Accordingly, as I read that authority, it is a decision to the effect that the existence of contended-for disrepair by itself does not entitle the tenant to defer the completion of the purchase until the repair has been carried out and that, accordingly, it is not a matter relating to the grant within the meaning of section 140(5) of the 1985 Act.
18. However, it seems to me that the facts of the present case are crucially different. In the present case, as I would hold and as I shall come to in slightly greater detail in a moment, the parties had in essence agreed that the right-to-buy process would be held in abeyance until the outcome of investigations and that the outcome of investigations embraced such repair works as those investigations indicated Newham should carry out.
19. Accordingly, the parties had in my judgment, by their own conduct, and in essence having agreed, embraced the matter of carrying out repairs as being a matter relating to the grant within the meaning of section 140 of the 1985 Act. They had done so if only because the date for completing the right-to-buy process became dependent upon the conclusion of the carrying out of the repairs and, accordingly, by their conduct they had imported these matters so as to become matters which were in effect relevant to the conveyance. Accordingly, in my judgment, and for the reasons which I have given, Newham were not able to serve their first notice under section 140 of the 1985 Act because they were forbidden from doing so by the terms of section 140(4)(c).
20. In my judgment the judge was correct, therefore, to hold that Newham's notices were invalid. This means, I suppose, that the promissory estoppel finding was not necessary to the result. Miss Hawkes would in fact, I think, put it the other way round: she would say that if the promissory estoppel argument succeeds, which, as I shall indicate, I think it does, then the argument under the statute does not arise.
21. The second ground of appeal, accordingly, is that the judge failed to make sufficient findings of fact to support the promissory estoppel case. This is linked with the submission that an agreement to hold the right-to-buy process in abeyance until investigations were carried out did not clearly and unambiguously extend to such an agreement until repairs had been carried out. Emphasis is placed by Miss Hawkes on the extended possible nature of investigations into structural movement by means, for example, of telltales. As to this latter point, in the context of the solicitor's letter the agreement is plainly, in my judgment, to be seen as extending to the carrying-out of repairs if the investigation showed that they were needed, which, in the event, they did. In any event, Newham, by their subsequent conduct, expressly agreed to carry out repairs, in circumstances where they had in substance acceded to a request to hold the process in abeyance until the repairs had been carried out.
22. As to the former submission, the judge's judgment is not one that displays the tightest reasoning, but the findings of fact which are essential to the whole case are plain and do, in my view, sustain a promissory estoppel. The judge quite clearly finds in paragraph 55 of his judgment that the impression had been created and persisted in that the works would be carried out at the defendant's expense, and the underlying facts, in my judgment, plainly sustain that finding. There was a clear and unequivocal representation by Newham that they would not proceed with the right-to-buy process until the repairs were effected. Newham plainly intended that this should affect the parties' legal relations and Miss Scinto has plainly relied on it by not taking steps to proceed with her claim. She would, I think, be entitled to say that she did not respond to the purported notices because of Newham's representation and their failure to carry out the repairs. Newham acted inconsistently with their representation by serving the purported notices.
23. It is arguable perhaps, and Miss Hawkes argues, that the agreement to suspend the process was revocable on reasonable notice. That is, I think, questionable but we do not need to decide the matter one way or the other. Newham did not purport to do so before they served their first notice. The first notice did not purport to revoke the agreement to hold in abeyance. The second notice could not do so if, as I would hold, the first notice was invalid.
24. The third ground of appeal is that it was not open to the judge to find that Miss Scinto relied on the representation in the light of her letter and a telephone call of January 2003 saying that she wished to proceed with her right-to-buy claim, but this is not, in my view, to be seen as Miss Scinto abandoning her contention that Newham should carry out the repairs first. In any event, absent the repairs, it had plainly been stated on her behalf that she would be unable to get the necessary mortgage. On the contrary, her letter of 7 January 2003 simply said that she had been waiting for further information about the situation for her right to buy. The situation included the outstanding repairs which Newham had in effect promised to carry out but had failed to do so.
25. The further submission is that there was no sufficient finding of manifest detriment but the very circumstance that she had not taken steps to find other means of proceeding and her letter of 7 January 2003 sufficiently shows that in that and other respects that she had suffered detriment.
26. The ground of appeal which is placed first relies on the fact that the offer by Newham was made to Miss Scinto and her son. It is to be inferred, in the absence of the document, that he had been joined in the claim, but it is acknowledged that he was not a person entitled to do so under section 123 of the 1985 Act because, no doubt, he had not occupied the dwelling house as his only or principal home. Miss Scinto asked the judge to sever David Scinto from the offer and the judge was persuaded to do so. It is contended that the judge had no power to do this and that, on the contrary, there was no valid offer which Miss Scinto could accept. In my judgment this error does not invalidate the entire process when Newham made the offer they did in 1999, when Miss Scinto herself was entitled to exercise her right to buy and when the parties had proceeded on the basis that the offer was a valid one for nearly a decade. It is open to Miss Scinto, with her son's agreement, to elect to have the conveyance into her name alone and it is of no consequence to Newham whether she does this or not, provided of course that she pays the agreed price.
27. It is far too late, in my judgment, for Newham now to say that the whole process is invalid by reason of the form of a notice more than ten years ago, which they have, incidentally, failed to produce. In the circumstances that David Scinto was not entitled to claim, his inclusion was ineffective and the matter can proceed on the basis that the valid claimant is entitled to proceed with her claim to be entitled to buy the premises.
28. For these reasons I would dismiss this appeal.

Lady Justice Arden:

29. I agree.

Lord Justice Jacob:

30. I also agree.

Order: Appeal dismissed