Islington London Borough Council v Honeygan-Green
| Jurisdiction | England & Wales |
| Judge | Lord Justice Keene,Lord Justice Maurice Kay,Lord Justice Pill |
| Judgment Date | 22 April 2008 |
| Neutral Citation | [2008] EWCA Civ 363 |
| Docket Number | >Case No: B5/2007/1271 |
| Court | Court of Appeal (Civil Division) |
| Date | 22 April 2008 |
[2008] EWCA Civ 363
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
The Honourable Mr Justice Nelson
CC/2006/APP/0337
ON APPEAL FROM THE HIGH COURT OF JUSTICE
The Honourable Sir Michael Wright
CC/2006/APP/00788
Lord Justice Pill
Lord Justice Keene And
Lord Justice Maurice Kay
>Case No: B5/2007/1271
B5/2007/0279
Mr Adrian Jack (instructed by Messrs Wilson Barca LLP, N19 3TD) for the Appellant
Mr Iain Colville (instructed by London Borough of Islington) for the Respondent
Hearing date: Wednesday 5 th March 2008
Introduction:
What is the effect on a secure tenant's right to buy under Part V of the Housing Act 1985 (“the 1985 Act”), and on any progress made under Part V towards acquisition, of the “revival” of the tenancy as a result of the court discharging an order for possession under its section 85(4) powers?
Under Part V, a secure tenant in certain circumstances enjoys the right to buy the freehold of his dwelling house or in some cases, such as those where the dwelling-house is a flat, a lease. A series of steps or stages in the process of acquisition is prescribed by the 1985 Act, beginning with the tenant serving a written notice on the landlord under section 122, proceeding (if appropriate) to the ascertainment of the purchase price, and culminating eventually in a conveyance of the freehold or a grant of a lease. However, by section 121, the right to buy “cannot be exercised” in a number of situations. One of those is where the tenant is or will be obliged to give up possession at a specific date under a court order: section 121(1). Indeed, the tenancy by virtue of section 82(2) “ends on the date on which the tenant is to give up possession in pursuance of the order”, with the result that a failure to make payments as required by the possession order if it is to remain suspended will normally terminate the tenancy.
The termination, however, is not final. The court has the power under section 85(4), even after the order has become effective but before its execution, to discharge or rescind the order for possession. If it does so, the tenancy and its covenants revive “Lazarus–like” (per Ward LJ in Greenwich London Borough Council v. Regan [1996] 28 HLR 469), and the tenancy is treated as having merely been in limbo prior to the revival. There is no dispute between the parties to this appeal that the tenant's right to buy likewise revives in such a case and that his “qualifying period” under section 119(1) is to be assessed on the assumption that the tenancy has continued throughout. The substantive issue in this appeal is whether, on such a revival, the tenant has to begin the Part V process afresh, with a new notice under section 122, or whether the stages previously accomplished before the possession order temporarily terminated the tenancy, such as the ascertainment of the purchase price, revive along with the tenancy and its covenants. Depending on what has happened to the housing market in the interim, the answer to the question may mean a significant difference in the price to be paid by the tenant.
This is the substantive issue, which arises on an appeal from a decision of Nelson J dated 25 May 2007, which was itself made on an appeal from His Honour Judge Marr-Johnson at the Clerkenwell and Shoreditch County Court. There is also a “procedural appeal” concerning the destination of the appeal from Judge Marr-Johnson. That procedural appeal comes to this court from a decision of Sir Michael Wright dated 19 January 2007. The facts of that appeal are complicated and have no relevance to the substantive appeal, which I shall deal with first.
The Statutory Context:
(a) The Right to Buy:
The right of a secure tenant to buy the freehold or a lease is to be found in section 118 of the 1985 Act, subject to a qualifying period as tenant and to certain exceptions which are irrelevant for present purposes. Section 118(1) provides:
“ 118 The right to buy
(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 owns the freehold, to acquire the freehold of the dwelling-house;
(b) if the landlord does not own the freehold or if the dwelling-house is a flat (whether or not the landlord owns the freehold), to be granted a lease of the dwelling-house.”
By section 122(1),
“A secure tenant claims to exercise the right to buy by written notice to that effect served on the landlord.”
Unless that notice is subsequently withdrawn, the landlord must then serve within a specified period written notice on the tenant either admitting the right to buy or denying it and giving reasons for such a denial: section 124(1).
The next stage concerns the purchase price and related matters. By section 125(1)
“(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 mentioned in section 118(1)(a) (right to acquire freehold), and
(b) within twelve weeks where the right is that mentioned in section 118(1)(b) (right to acquire leasehold interest),
serve on the tenant a notice complying with this section.”
Such a notice must state, amongst other things, the price at which, in the landlord's opinion, the tenant is entitled to buy: section 125(2). Once such a notice has been served by the landlord, the tenant must, under section 125D(1), within a specified period serve a notice on the landlord, stating either that he intends to pursue his claim “to exercise the right to buy” or that he withdraws the claim. Alternatively he may serve a notice claiming to exercise the right to acquire on “rent to mortgage terms”. If the tenant fails to serve a notice under section 125D(1) within the required time, the landlord is entitled to take certain steps which may result in the deemed withdrawal of the section 118 notice: section 125E.
If the tenant is unhappy with the price stated by the landlord, he may seek a determination by the district valuer. Completion of the transaction is dealt with by section 13That provides as follows:
“(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, or
(b) if the landlord does not own the freehold or if the dwelling-house is a flat (whether or not the landlord owns the freehold), a grant of a lease of the dwelling-house,
in accordance with the following provisions of this Part.
(2) If the tenant has failed to pay the rent or any other payment due from him as a tenant for a period of four weeks after it has been lawfully demanded from him, the landlord is not bound to comply with subsection (1) while the whole or part of that payment remains outstanding.
…
(3) The duty imposed on the landlord by subsection (1) is enforceable by injunction.”
The landlord is also entitled to require the tenant to complete, by serving notices under section 140 and 141, the sanction for non-completion then being the deemed withdrawal of the notice claiming the right to buy.
It will be seen that the statutory scheme follows a familiar pattern of notices and counter-notices, taking the parties through a process step by step until, if all is in order, completion is ultimately achieved. This is the context in which the provision central to this case, section 121(1), is to be seen. Section 121 in full reads as follows:
“ 121 Circumstances in which the right to buy cannot be exercised
(1) The right to buy cannot be exercised if the tenant is obliged to give up possession of the dwelling-house in pursuance of an order of the court or will be so obliged at a date specified in the order.
(2) The right to buy cannot be exercised if the person, or one of the persons, to whom the right to buy belongs-
(a) has a bankruptcy petition pending against him,
(b) …
(c) is an undischarged bankrupt, or
(d) has made a composition or arrangement with his creditors the terms of which remain to be fulfilled.”
(b) Orders for possession:
Part IV of the 1985 Act contains provisions defining secure tenancies and regulating their termination. In particular, section 82(1) provides that a secure tenancy of the kind with which this appeal is concerned cannot be brought to an end by the landlord without a court order. Section 82(2) states:
“Where the landlord obtains an order for the possession of the dwelling-house, the tenancy ends on the date on which the tenant is to give up possession in pursuance of the order.”
The court is only empowered to make a possession order in such cases on certain grounds. One of those, relevant in the present cases, is the non-payment by the tenant of rent, but in such a case the court shall not make an order for possession
“unless it considers it reasonable to make the order” (section 84(2)(a)).
Section 85 confers a wide discretion in such cases on the court to adjourn the proceedings for such period or periods as it thinks fit. Subsection (2), (3) and (4) of that section are important. They read as follows:
“(2) On the...
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