London Borough of Bexley v London & Quadrant Housing Trust

Hearing date: 7 th November 2024

Remote hand-down: This judgment was handed down remotely at 10.30am on Wednesday, 18 ^th December 2024 by circulation to the parties and their representatives by email and by release to the National Archives.

Introduction

By a stock transfer agreement dated 3 ^rd February 1998, the Claimant agreed to sell a substantial part of its housing stock to London & Quadrant Bexley Housing Association Limited. The sale was completed by a transfer executed on 9 ^th February 1998.

By clause 7 of the stock transfer agreement ( “the STA”) the parties agreed to enter into various additional agreements by deed, on completion of the transfer. One of these deeds, executed on completion of the transfer on 9 ^th February 1998, was described as a nomination rights deed. I shall use the same expression, “the Nomination Rights Deed”, to refer to this deed.

Clause 6.1 of the Nomination Rights Deed provides as follows (italics have been added to all quotations in this judgment):

“6.1 In the event that any merger amalgamation transfer of engagements or any other transaction involving the Association would cause or require the transfer or disposal of the Property or part thereof to a third party save for a disposal under the Right to Buy or similar statutory scheme or otherwise with the consent of the Council not to be unreasonably withheld the Association shall not so merge amalgamate transfer engagements or complete such other transaction unless it has procured that the said third party undertakes directly with the Council to comply with the burden of all relevant covenants and obligations herein contained which pass to that third party subject always to a contrary direction of the Housing Corporation.”

The Defendant is the successor in title of London & Quadrant Bexley Housing Association Limited, as owner of the housing stock transferred by the Claimant in 1998. An issue has arisen between the Claimant and the Defendant as to the meaning and effect of clause 6.1 of the Nomination Rights Deed, in relation to the sale by the Defendant of individual dwellings out of the housing stock. The Claimant's case is that the sale of individual dwellings by the Defendant is caught by the terms of clause 6.1, with the consequence that no such sale can take place without the Defendant obtaining from the purchaser the direct undertaking to the Claimant which is referred to in the latter part of the clause. The Defendant's case is that the sale of individual dwellings is not caught by the terms of clause 6.1, with the consequence that there is no obligation to obtain the specified direct undertaking from the purchaser.

By application notice issued on 20 ^th August 2024 the Defendant has sought the determination of this issue of construction ( “the Construction Issue”) on a summary basis pursuant to the provisions of CPR Part 24. This is my reserved judgment on the Construction Issue.

At the hearing of the Construction Issue the Defendant was represented by Matt Hutchings KC. The Claimant was represented by Kelvin Rutledge KC and Alistair Cantor. I am grateful to all counsel for their assistance, by their written and oral submissions, in my determination of the Construction Issue.

The parties

The Claimant, the London Borough of Bexley, is and has at all times material to this dispute been a local housing authority for the purposes (amongst other purposes) of the Housing Act 1996 and, prior to the Housing Act 1996, the Housing Act 1985. In this capacity the Claimant was and remains subject to duties in relation to the provision of housing accommodation, which I will need to consider in more detail later in this judgment.

As explained above, London & Quadrant Bexley Housing Association Limited ( “L&QHA”) was the party which acquired part of the Claimant's housing stock pursuant to the terms of the STA. L&QHA was a housing association, registered with the Housing Corporation, and a registered society (registered social housing provider) within the meaning of what was then the Industrial and Provident Societies Act 1965 ( “the 1965 Act”).

The parent society of L&QHA was called London & Quadrant Housing Trust. In 2008 an amalgamation took place between L&QHA, which by then had changed its name to L&Q Bexley Homes Limited, London & Quadrant Housing Trust and other registered societies pursuant to the provisions of Section 50(1) of the 1965 Act. The Defendant is the amalgamated society which resulted from this amalgamation, known as London & Quadrant Housing Trust. The amalgamation was completed on 31 ^st March 2008, when the Defendant was registered as a registered society under the provisions of the 1965 Act. As such, the Defendant was and remains a registered provider of social housing.

As part of this amalgamation, the housing stock previously acquired by L&QHA from the Claimant was transferred from L&QHA to the Defendant. It should be noted that this transfer did not require a separate instrument of transfer. By virtue of Section 50(1) of the 1965 Act, the property of L&QHA was the subject of a statutory vesting in the Defendant, which took place without the necessity for any form of conveyance other than that contained in the special resolution which was required to give effect to the amalgamation.

On the same date as completion of the amalgamation (31 ^st March 2008), the Claimant, the amalgamating parties and the Defendant entered into a deed of novation ( “the Deed of Novation”) by which the Defendant agreed to be bound by the Bexley Agreements. The Bexley Agreements were defined in the Deed of Novation to mean the STA and the various agreements entered into between the Claimant and L&QHA in 1998 pursuant to the terms of the STA. Effectively therefore the STA and the other agreements entered into in 1998 were novated between the Claimant and the Defendant, in order to ensure that the Defendant, as successor in title to L&QHA, became subject to the same obligations as L&QHA in relation to the transferred housing stock.

The Bexley Agreements

By the STA the Claimant agreed to transfer around half of its housing stock, located in the southern part of the Borough of Bexley, to L&QHA. The remainder of the housing stock in the borough was transferred to another housing association. The housing stock to be transferred to L&QHA was defined in the STA as “the Property”. I will use the same expression ( “the Property”) to refer to this housing stock. According to the Defence filed by the Defendant in this action ( “the Defence”), the Property comprised approximately 4,123 residential dwellings. I should also make it clear that my references to the Property mean the entirety of the housing stock, as it was transferred to L&QHA and as it was thereafter constituted from time to time, first in the ownership of L&QHA and subsequently in the ownership of the Defendant. My definition therefore takes account of the fact that, as I understand the position, dwellings have been disposed of out of the Property from time to time.

The transfer of the Property by the Claimant to L&QHA was completed by the deed of transfer dated 9 ^th February 1998 ( “the 1998 Transfer”).

Under the terms of the STA, L&QHA also agreed to enter into a series of further deeds of agreement with the Claimant. These deeds of agreement included the Nomination Rights Deed.

I will use the same expression as is used in the Deed of Novation, that is to say “the Bexley Agreements”, to refer, collectively, to the STA and the various deeds of the agreement entered into pursuant to the terms of the STA.

The statutory context to the Nomination Rights Deed

As mentioned above, the Claimant is and has at all material times been a local housing authority for the purposes of the Housing Act 1985 ( “the HA 1985”) and the Housing Act 1996 ( “the HA 1996”). In this capacity the Claimant is subject to duties in relation to the provision of housing which, in broad terms, require the Claimant to have access to suitable and affordable accommodation which can be provided to those to whom the Claimant owes housing duties.

In particular, and at the time of the Bexley Agreements, the Claimant was subject to the following duty, in subsections (1), (2) and (3) of Section 193 of the HA 1996:

“(1) This section applies where the local housing authority are satisfied that an applicant is homeless, eligible for assistance and has a priority need, and are not satisfied that he became homeless intentionally. This section has effect subject to section 197 (duty where other suitable accommodation available).

(2) Unless the authority refer the application to another local housing authority (see section 198), they shall secure that accommodation is available for occupation by the applicant.

(3) The authority are subject to the duty under this section for a period of two years (“the minimum period”), subject to the following provisions of this section. After the end of that period the authority may continue to secure that accommodation is available for occupation by the applicant, but are not obliged to do so (see section 194).”

The classes of persons with priority need included households with dependent children, persons who were vulnerable due to old age, mental illness or disability or...