Dwelling-house — Secure tenant — Right to buy — Tenant serving written notice claiming to exercise right to buy — Tenant receiving proposed terms of sale — Tenant subletting in breach of condition of tenancy agreement — Tenancy ceasing to be secure tenancy — Whether loss of status as secure tenant entitled landlord to refuse to convey estate in house even though sale otherwise agreed — County court holding that landlord not so entitled — Landlord’s appeal allowed
M was the freeholder of a property known as 23 Parrymead, Woodley, Stockport, Cheshire. On June 20 1980 M granted to T and his wife a monthly tenancy. For the purposes of the Housing Act 1985 the tenancy was a secure tenancy. On May 23 1989 T served on M a written notice claiming to exercise the right to buy the freehold of the house. On June 23 M served on T a written notice admitting their right to buy and subsequently gave written notice of its proposed terms of sale. By July 9 1990 a sale had been agreed and completion was to take place on August 31.
At the end of July, M discovered that T and his wife had moved out of the house on August 28 1989 and on October 12 1989 had sublet the whole of the house on an assured shorthold tenancy at a profit rent. The subletting was in breach of a condition of the tenancy agreement whereby T agreed not to sublet. As a result, T and his wife ceased to be secure tenants. On August 3 1990 M informed T that because of the subletting the sale would not proceed and subsequently served a notice to quit which expired on December 31.
When the house was not vacated, M brought proceedings for possession on the grounds that the secure tenancy had ceased in October 1989 and that the contractual tenancy had been effectively determined by the notice to quit. A question arose whether the loss by a secure tenant of his status as such entitled the landlord to refuse to convey an estate in the dwelling-house even though all matters relating to the grant had been agreed between the parties. Judge Blackburn, sitting in Stockport County Court, held that it did not. M appealed.
Held The appeal was allowed.
1. The cases of Enfield London Borough Council v McKeon [1986] 1 WLR 1007 and Dance v Welwyn Hatfield District Council [1990] 1 WLR 1097 were concerned to determine at what stage in the statutory process the right to buy was exercised. In both those cases, the tenant throughout had remained a secure tenant and so did not address the situation where the secure tenant had lost his status. In Sutton London Borough Council v Swann (1985) 18 HLR 180, on the other hand, it was held that “the status of secure tenant had to exist not only at the time when the claim to buy is made, but also at the time when the grant comes to be made”.
2. In the statutory provisions, the word “tenant” had to be an abbreviation of the phrase “secure tenant”. Under section 118(1) of the Housing Act 1985, it was a secure tenant who was given the right to buy, and the right was described as being “the right, in the circumstances … stated in the following provisions of this Part … to acquire the freehold of the dwelling-house”. Those words seemed to enact the assumption that throughout the stated circumstances there was a person who was at first “a secure tenant” and who matured into “the secure tenant”. The physical identity of that person might change, for example on a succession (see section 136), but that was immaterial.
3. The decision in Swann’s case actually decided in favour of that assumption.
4. The wording of the provisions in Part V of the 1985 Act dealing with the right of a secure tenant to acquire the freehold of the dwelling-house indicated that that right was available only to the secure tenant: a person who ceased to be a secure tenant ceased to have that right.
5. A tenant who had ceased to be a secure tenant had no right to force the landlord by injunction to carry out his duty to transfer the freehold to the tenant under section 138(3) of the 1985 Act. It would be surprising if Parliament had enacted right to buy provisions which enabled a person to acquire a house at a discount when he no longer occupied it as his only or principal home.
6. The statutory regime gave the secure tenant considerable benefits — not merely to require his landlord to sell him the freehold, but also to sell it to him at a discount — which resulted in corresponding disadvantages for the landlord. Therefore, the provisions of the statute should be strictly construed so as to preclude a person who had ceased to be a secure tenant from being able to claim the advantages.
7. The judge had found that the notice to quit was properly served upon T and his wife and the court ordered that they should give up possession.
John Martin QC (instructed by Mason & Moore Dutton, of Chester) appeared for Muir Group Housing Association Ltd; Jeffrey Terry (instructed by Chronnell Fitzpatrick & Jones, of Hyde) appeared for Mr and Mrs Thornley.
