Francis v LB Southwark [2011] EWCA Civ 1418

This was a brave attempt to try and get something out a local authority’s mistaken denial of a right to buy application, but it was not one which the Court of Appeal had any truck with.

Mr Francis was a tenant of the London Borough of Southwark. It seems that the course of his tenancy had not been a smooth one. Rent arrears would accrue, but eviction would be staved off. In March 2003 Mr F submitted a right to buy application in respect his flat on the Acorn Estate.

Southwark responded in September 2003, with a Housing Act 1985, s.124 notice denying he had the right to buy because he had “breached the terms of a possession order”. Mr F didn’t do anything more about that application, but he had already (on the same day as he submitted his application) made an application in existing possession proceedings for an order reviving his secure tenancy, so that he would have been a secure tenant since 1999. He lost that argument at first instance.

Meanwhile, back at the Acorn Estate, Southwark wanted to knock the whole thing down, so offered Mr F an introductory tenancy of a different property, which commenced in July 2004.

Subsequently Mr F won his appeal in the county court, with HHJ Behar declaring that he had been a secure tenant of the Acorn Estate flat from 2000 until the tenancy ended (presumably thereby converting his IT into a secure tenancy a few weeks earlier than would have happened anyway). This also meant that Southwark had been wrong to deny his right to buy application.

Unfortunately for Mr F, he built up rent arrears again and Southwark commenced possession proceedings for the new flat. He counterclaimed for damages for, amongst other things, breach of statutory duty for the previous failure by Southwark to grant him the right to buy the first flat. The county court wasn’t having any of that, and made an order for possession.

Mr F’s argument before the Court of Appeal, was that either ss.118 or 124 of the 1985 Act imposed duties on local authorities, which were owed to their tenants. He said that Southwark had breached the duty and he should therefore be entitled to damages.

Carnwath LJ gave the first judgment. He noted that s.118, was as follows:

(1) A secure tenant has the right to buy, that is to say, in the circumstances and subject to the conditions and exceptions stated in the following provisions of this Part –
…
(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.

That clearly did not impose any duty on landlords.

Next, we have s.124:

(1) Where a notice under s. 122 (…) has been served by the tenant, the landlord shall, unless the notice is withdrawn, serve on the tenant … a written notice either –
(a) admitting his right, or
(b) denying it and stating the reasons why, in the opinion of the landlord, the tenant does not have the right to buy.

Now that does impose a duty, but it is not an unqualified one. It is just to state their opinion (and in a relatively short time, compare with the 6 months it took Southwark in this case).

Carnwath LJ approved Peter Smith J’s statement at [17] of Hanoman v Southwark that:

The wording of s. 124(1) could not, in my mind be plainer: they shall give a decision which is either in favour of accepting or denying the right to buy. … If the application is such that the information leads them to conclude that there is a doubt as to the authenticity of the application, there is therefore sufficient material in their minds, for them to deny the right to buy.

Landlords were entitled to “err on the side of caution” (Hanoman at [57]). If the tenant thought that the landlord had got it wrong, then their remedy was to seek a declaration under s.181. While that didn’t help Mr F, as the property had since been demolished (although s.138C now gives a right to recover the costs of legal and other fees, and other professional costs and expenses paid by the tenant in exercise of the right to buy where a demolition notice is then served), the “mere fact that, in some circumstances the remedy created by the Act is not complete, is not a justification for reading into it words which are not there.” [23]

Lloyd LJ agreed. The Encyclopaedia of Housing Law quite correctly noted that:

Notwithstanding use of the words “in the (landlord’s) opinion” [in s.124] entitlement to buy is a factual question, not dependent…on opinion-making by landlords, and it accordingly seems clear that a wrongful refusal can be challenged…

That did not, however, mean that a refusal could be challenged by way of an action for damages for breach of statutory duty. The correct route was for a declaration under s.181.

Toulson LJ agreed with both judgments.

A nice try, but the Court of Appeal weren’t going for it and, I must say, quite right too.