Right to buy – Notices of delay under section 153A of Housing Act 1985 – Counternotices served by appellant landlords – Validity of counternotices – Date from which rent to count towards purchase price – Whether bad faith established on the part of landlords – Appeal allowed
In June 2001, the respondent gave notice, under section 122 of the Housing Act 1985, to exercise his right to buy a long lease of the flat that he held on a secure tenancy from the appellant council. The appellants admitted the right to buy and valued the premises at £145,000. Delays then ensued owing to, inter alia, a problem concerning the correct boundary of the respondent’s property with the neighbouring flat and a dispute over whether the respondent’s lease should include parking rights. In 2004, the respondent served an initial notice of delay on the appellants in form RTB6, asserting that the appellants were delaying the transaction. The appellants served a counternotice in form RTB7, stating that there was no action for them to take at that time. Although the respondent strongly disputed that in correspondence, he did not serve an operative notice of delay in form RTB8, such as to trigger the provision in section 153B for subsequent payments of rent to count towards the purchase price.
By early 2005, the boundary problem had been resolved but the issue over parking rights remained outstanding. The appellants had sent a draft lease to the respondent that did not include the parking rights that the respondent claimed and that had been taken into account as a major asset in the appellants’ own valuation. The respondent served a further RTB6 notice, which he followed with a RTB8 notice when no response had been received within the relevant period. The appellants subsequently served a further RTB7, in which they claimed to be ready to complete.
In the course of proceedings between the parties, the appellants conceded the parking rights. The judge found that: (i) the appellants’ RTB7 notices were both invalid; (ii) although the respondent had not served an RTB8 after the first RTB7, he should be treated as having done so; (iii) accordingly, all payments of rent from March 2004 should be treated as being part-payment of the purchase price; and (iv) the appellants had acted in bad faith with regard to the boundary issue and the parking rights, such that the respondent was entitled to damages of £6,168 for misfeasance in public office. He ordered the appellants to complete the conveyance by February 2007 on terms that included parking rights. The appellants appealed.
Held: The appeal was allowed in part.
(1) In order to establish that an RTB7 notice was ineffective, no finding of bad faith was necessary; the matter turned on whether, as a question of fact, there had at the time been any action for the landlord to take in order to allow the tenant to exercise his right to buy expeditiously: Guinan v Enfield London Borough Council (1996) 29 HLR 456 considered. The first RTB7 had been invalid, since, at the time of service, the appellants had to deal with outstanding matters. The second RTB7 had been valid, notwithstanding the appellants’ stand in respect of parking rights. Their position with regard to those rights was one that they were entitled to attempt to negotiate. They could properly take the view that the ball was in the respondent’s court and that they need not take any action.
(2) The invalidity of the first RTB7 notice did not entitle the respondent to the benefit of an RTB8 notice that he had not served. The respondent’s other correspondence could not be treated as an RTB8 notice since it was not in the prescribed form and did not contain the required statement that section 153B would apply to future payments of rent. That statement was a critical requirement of section 153A, and was important in putting the landlord on notice as to the consequences of further delay. No amount of deeming by the judge could supply its absence.
(3) Since the respondent had not served a further RTB8 in response to the second, valid, RTB7, the period during which he was entitled to set off payments of rent against the purchase price was from March 2005, when he had served his first RTB8, to June 2005, when the second RTB7 was served.
(4) To establish the tort of misfeasance in public office on the part of an institution, it was necessary to show dishonesty or bad faith in that one or more individuals acting on its behalf had been subjectively reckless as to the lawfulness of their acts and their consequences. The judge had gone too far in deducing reckless indifference without reference to evidence to establish which officer of the appellants had acted in bad faith and what had been his or her subjective state of mind. The evidence did not support a finding of misfeasance in public office.
(5) The judge had been entitled, under section 138(3) of the 1985 Act, to order the appellants to grant the lease to the respondent. Once the parking rights had been determined, all the matters relating to the grant of the lease were settled.
Christopher Heather (instructed by the legal department of Southark London Borough Council) appeared for the appellant; Peter Knox QC and Charles Apthorp (instructed by KSB Law) appeared for the respondent.
Sally Dobson, barrister
