Right to buy – Section 121 of Housing Act 1985 – Right-to-buy application by appellant tenant – Suspended possession order made and breached – Secure tenancy later revived upon payment of arrears – Whether right-to-buy application reviving – Whether conditions met for grant of injunction under section 138 – Appeal allowed
The appellant applied, under the Housing Act 1985, to exercise her right to buy the property of which she was a secure tenant. The respondent landlords admitted the right under section 124 and the purchase price was fixed at £137,000 for a 125-year lease. Completion was delayed owing to the need to produce a new plan that accurately reflected the boundaries of the back garden.
In 2002, the respondents obtained a possession order against the appellant, which was suspended on terms that the appellant pay the current rent and arrears. The appellant failed to make the required payments and her secure tenancy came to an end so that she became a tolerated trespasser. Although the possession order was later discharged and the secure tenancy was revived, the appellant again fell into arrears in 2005.
In further possession proceedings, the appellant counter-claimed, under section 138 of the 1985 Act, for a mandatory injunction requiring the respondents to convey a long lease to her in accordance with her previous right-to-buy application. The county court judge awarded summary judgment to the appellant on the counter-claim, granting the injunction upon the payment by her of all arrears. The respondents’ appeal against that decision was allowed: see [2007] EWHC 1270 (QB); [2007] 3 EGLR 23; [2007] 39 EG 154. The judge held that: (i) the right to buy had ceased to be exercisable in 2002 on the making of the possession order in 2002, by virtue of section 121(1) of the 1985 Act; (ii) the right-to-buy application had fallen at the same time; and (iii) the revival of the tenancy had not revived that application. He further concluded that no injunction could be made under section 138 owing to outstanding rent and certain matters remaining undetermined regarding the extent of the demise because of the appellant’s complaints concerning the encroachment of a neighbour’s fence.
The appellant appealed. She contended that the wording of section 121(1), providing that the right to buy “cannot be exercised” if a possession order is in force, imposed a bar only for so long as the order remained in existence and did not mean that a tenant had to begin the right-to-buy process all over again once the tenancy was revived.
Held: The appeal was allowed.
(1) No distinction could be made between a tenant’s contractual rights under the tenancy and the rights conferred by statute. A tenancy and its covenants revived with retrospective effect when a possession order was discharged. That meant that both the expressly agreed covenants and those implied by statute revived and were to be treated as having been continuously in existence, even during the period of limbo: Greenwich London Borough Council v Regan [1996] 28 HLR 469 and Lambeth London Borough Council v Rogers [2000] 1 EGLR 28; [2000] 03 EG 127 considered. There was no reason why an accrued right to buy that had been established by the landlord’s admission of the right under section 124 should not be revived together with the tenancy and its covenants. The prohibition in section 121(1) related only to the taking of a step exercising the right to buy while a possession order was in existence. No further step in the process could be taken during that time, but if the secure tenancy were revived by a court order before possession was relinquished, the accrued steps taken before the period of limbo revived along with the tenancy: Enfield London Borough Council v McKeon [1986] 1 WLR 1007 considered. Accordingly, the tenant did not need to begin the process again by serving a fresh section 122 notice. Although in some situations, the revival of a secure tenancy, if accompanied by the revival of an established price under the right to buy, could give to the tenant a substantial and surprising benefit, particularly where the tenancy had been in limbo for a long period, the court had a broad discretion in respect of possession orders under section 85, including the power under section 85(3)(b), to impose “such other conditions as it thinks fit”. It might well be open to a court in an appropriate case to make the revival of the tenancy conditional upon the tenant not pursuing the existing right to buy but instead starting afresh.
(2) It was appropriate to grant an injunction under section 138. The respondents had not raised any issue of outstanding rent in their defence to the appellant’s counter-claim for an injunction and the judge had made no finding as to what rent, if any, was still outstanding. It had not been open to the judge to refuse an injunction on a ground that had not been taken before him and upon which the facts had not been established. Nor were there any “matters related to the grant” of the lease still to be agreed or determined. Complaints by the appellant regarding the encroachment of a neighbour’s fence did not put the area of the demise in doubt since the respondents had not suggested that the appellant had been wrong with regard to the encroachment and had been well aware of the area to which her right to buy related.
Adrian Jack (instructed by Wilson Barca Solicitors) appeared for the appellant; Iain Colville (instructed by the legal department of Islington London Borough Council) appeared for the respondents.
Sally Dobson, barrister
