Ryan v London Borough of Islington [2009] EWCA Civ 578 concerned Ms Ryan’s Right to Buy under Part V Housing Act 1985 and whether or not it had been deemed to be withdrawn.

Ms Ryan was the secure tenant of a an Islington property. In January 2003, she served notice of RTB and after two months Islington admitted the RTB, stating that valuation would be as of January 2003. In June 2003, Islington noted that specialist works were required – filling a crack in the rear wall, indicating subsidence. The valuer’s report of the same month noted sloping and springy floors, damp to a ceiling and walls, but did not mention subsidence. Value was given at £160,000 as at January 2003.

In August 2003, Islington served the s.125 notice, given a price of £122,000, with the £38,000 discount. It cited the floor and damp, but not the subsidence, as defects of which Islington was aware. The notice gave estimated charges (i.e the 5 year cap) on major works of £5,500 in total for Ms Ryan, £22,000 for the block. Ms Ryan was given 12 weeks to respond. The notice told Ms Ryan that she should request a revaluation by the district surveyor if there was any dispute over the defects identified (s.128).

In October 2003, Islington’s surveyor identified the subsidence and that underpinning works and subsequent structural works would be required. Ms Ryan’s case was that she was told at this time that the works would be carried out by March 2004. Islington insisted that the works had not been authorised at this time and that Ms Ryan had not formally told the works would be done.

Ms Ryan accepted the s.125 offer in November 2003 and IsIington proposed completion by July 2004. This didn’t happen and in September 2004 Islington served notice to complete under s.140. Ms Ryan’s solicitors raised the outstanding works and asked for a suspension. Islington served a further notice to complete within 56 days under s.141 in November 2004, warning that the claim to RTB would otherwise be deemed withdrawn under s.141(4). There was no completion. In May 2005, Ms Ryan began disrepair proceedings. Islington started works in November 2005, which were not fully completed by the time of the trial of the claim in July 2008.

Ms Ryan got an order for specific performance and damages for disrepair, but her claim for a declaration that her RTB application was not withdrawn and her claim for damages in the loss of the RTB claim were both dismissed. Ms Ryan appealed.

The main issue for the Court of Appeal was whether the structural defects were a ‘relevant matter’ for the purposes of s.141 Housing Act 1985 such that raising them stopped the effect of the notice to complete. Ms Ryan also disputed the Recorder’s dismissal of her claim for damages. There were a couple of disputed findings of fact, which the Court declined to interfere with.

Held:
1. Structural defects were not a matter relevant to the grant for the purposes of s.140. These were matters relating to the conveyance or to the proposed lease. Secondly, “relevant ‘outstanding’ matters in section 140(1)(b) means matters that have not been ‘agreed or determined’ within the meaning of section 140(1)(a), a phrase deriving from section 138(1), which refers to the landlord’s obligation to make a grant ‘as soon as all matters relating to the grant have been agreed or determined ….’ “. Thirdly, there is nothing in the RTB legislation that obliges a seller to put the property in repair before sale. Ms Ryan could pursue breach of s.11 L&T Act 1985 or tenancy agreement, but she could not make the repair effectively a condition of sale. (But see the discussion of the total destruction of the demise at para 60).

Assuming that the subsidence was a structural defect within the meaning of s.125(4A) – which Islington argued otherwise – then the proper point for it to be raised was at the time of the s.125 Notice, by request for a revaluation by the district surveyor.

2. The claim for damages on the basis of a lost right to purchase the flat was dismissed in the court below but without sufficient reasons being given. That said, Ms Ryan had failed to provide sufficient evidence to establish that the condition of the property prevented her from obtaining a mortgage. There was just one brief discussion with a mortgage advisor, which was not conclusive. Ms Ryan’s case that the damages were foreseeable by Islington as resulting from the failure to repair was not attractive. While Islington assumed the burden of the repairing obligations with the secure tenancy, it did not also assume an obligation to compensate her “in remote circumstances in which, because of its failure to perform its repairing covenants, Ms Ryan was unable to complete a purchase of the flat under the ‘right to buy’ provisions. Any such purchase was not in contemplation when the secure tenancy was granted, and so that could not have been the kind or type of loss for which Islington ought fairly to be taken to have accepted responsibility.” [para 73].

The appeal was dismissed.

So, apart from the familiar lesson that some local authories will not carry out repairs until disrepair proceedings have begun, if then, it is also clear that any dispute about the condition of the property and structural defects should be raised at the time of the .s125 notice, if they coudn’t be before. Disrepair is not a reason to delay the purchase process, if anything it counts only in the valuation. But also note Islington’s argument that disrepair, including subsidence, were not structural defects for the purposes of s.125(4A) as ‘structural defect’ was something inherent in the design or construction of the property from the beginning, such that they would not fall under disrepair. The Court made no finding on this argument, but it will no doubt be run again.

In this position, assuming Ms Ryan could get a mortgage, her contributions to the works would have been capped under the s.125 notice, so that she would not have had to pay a contribution for them, which might be a consideration for others.