Fineland Investments Ltd v Janice Vivien Pritchard [2011] EWHC 113 (Ch)

From Lawtel. Not on BAILII yet.

This is a slightly sad tale involving the exercise of right to buy by a council tenant.

Ms Pritchard had entered into an agreement with Fineland whereby she would buy her council house at a discount using money provided by F and then sell it on to them. However, they were both seeking to avoid the effects of s155 Housing Act 1985 which would have required her to pay the discount back to the Council.

To do this an arrangement was made whereby P signed an undated transfer of land which they would use in three years time and granted a 20 year lease to F and further agreed to move out of the property within a few weeks. For their part F agreed to pay P the sum of £20,000.

P then got cold feet. She began to show signs of anxiety and depression and refused to move out of the property.

F asserted that P had given up her right to occupy the property and was a trespasser, they sought possession through the Courts. P argued that she had been pressured into signing the agreement with F, that it was an unconscionable bargain against which she was entitled to equitable relief, and alternatively that she lacked capacity at the time she signed the documents.

The Court clearly lacked sympathy with P and found against her on all counts. There was no medical evidence that P lacked capacity as her correspondence at the time showed. For the deal to be set aside as an unconscionable bargain it would have to be more than merely hard or unwise it would need to be made with a party who was in a position of weakness and the party in the stronger position would need to take advantage of that strength to the extent that there was a constructive fraud. That was not the case here.

Judgement for possession and damages for use and possession were awarded to F with those sums to be set off against the monies due to P under the agreement.

As J informed me, this case would probably not occur now as s163A has been inserted into the Housing Act 1985 precisely to stop this kind of bargain. Any such arrangement which relates to the right to buy and is entered into during the discount repayment period which envisages transfer of the property after the end of that period is captured by s163A and the requirement to repay the discount in s155 is brought into effect. Hopefully, these new provisions will put an end to this sort of arrangement.