Housing Act 1985 — Right to buy — Whether the loss by a secure tenant of his status as such entitles the landlord to refuse to convey the dwelling-house notwithstanding that all matters relating to the grant having been agreed between the parties
On June 20
1980, the appellant, Muir Group Housing Association Ltd, granted the
respondents, Wilbraham George Thornley and his wife Anita May Thornley, as
joints tenants, a monthly tenancy of 23 Parrymead, Woodley, Stockport, the
respondents being secure tenants. On May 23 1989 the respondents served upon
the appellant a written notice claiming to exercise the right to buy the
freehold of the house under Part V of the 1985 Act. On June 23 the appellant
admitted by written notice their right to buy and in December 1989 the
respondents received a written notice of the appellant’s proposed terms of
sale. By July 9 1990 all matters relating to the grant of the freehold had been
agreed and completion was to take place on August 31. Towards the end of July
the appellant discovered that on August 28 1989 the respondents had moved out
of the house on taking up a three-year appointment as resident wardens of a
girl-guide establishment in Derbyshire. The appellant further discovered that
on October 12 1989 the respondents had sublet the house on an assured shorthold
tenancy in breach of a condition of the tenancy agreement. By reason of section
93(2) of the 1985 Act, the independent effect of the subletting was that the
respondents ceased to be secure tenants. On August 3 1990 the appellant
informed the respondents that because of the subletting the sale would not
proceed and on November 27 served a notice to quit, which expired on December
31. In the appellant’s proceedings for possession, the respondents
counterclaimed that the appellant became under a statutory duty to grant to
them a freehold estate in the house. In Stockport County Court, Judge Blackburn
dismissed the appellant’s claim for possession and ordered it to grant the respondents
the freehold.
in the provisions of Part V of the Housing Act 1985: the first stage is the
claim to exercise the right to buy, the fourth and consummating stage that of
grant. Between those stages are the intermediate second and third stages of the
establishment of the right and the agreement or determination on, or of, the
terms of the grant. A tenant who has ceased to be a secure tenant has no right
which he can enforce under section 138(3) of the Act. The court was bound by
its own decision in Sutton London Borough Council v Swann. The
decisions in Enfield London Borough Council v McKeon and Dance
v Welwyn Hatfield District Council were concerned with a different
question, namely at what stage in the process towards the conveyance does the
right to buy of a person, who is at all relevant times a secure tenant, become
indefeasible. In section 125(1) the word ‘tenant’ must be an abbreviation of
the phrase ‘secure tenant’ which precedes it; section 139(2) does not refer to
‘a secure tenancy’ but uses the definite article thereby presupposing
that there is a secure tenancy immediately before the grant. Section 155(1)
presupposes that the grantee is ‘the secure tenant’. Section 118(1) provides
that it is a secure tenant who is given the right to buy; throughout the stated
circumstances there is a person who is at first ‘a secure tenant’ and
matures into ‘the secure tenant’, the physical identity of that person
may change, for example on a succession, that is immaterial.
The following
cases are referred to in this report.
Dance v Welwyn Hatfield Districtg Council [1990] 1 WLR 1097; [1990]
3 All ER 572; (1990) 22 HLR 339, CA
Enfield
London Borough Council v McKeon [1986] 1 WLR
1007; [1986] 2 All ER 730; (1986) 18 HLR 330; (1987) 85 LGR 24, CA
Opoku-Forfieh
v Haringey London Borough Council October 17
1988 unreported
Sutton
London Borough Council v Swann (1985) 18 HLR
140, CA
This was an
appeal by Muir Group Housing Association Ltd from a decision of Judge Blackburn
given in Stockport County Court on January 14 1992 dismissing the appellant’s
claim for possession and on the respondents’ counterclaim, ordering the
appellant to grant the respondents a freehold estate in 23 Parrymead, Woodley,
Stockport.
John Martin QC
(instructed by Mason & Moore Dutton, of Chester) appeared for the
appellant; Jeffrey Terry (instructed by Chronnell Fitzpatrick & Jones, of
Hyde) represented the respondents.
Giving the
first judgment at the invitation of Glidewell LJ, MANN LJ said: This is
an appeal by Muir Group Housing Association Ltd against a decision of Judge
Blackburn, which was given in Stockport County Court sitting at Oldham on
January 14 1992. By his decision the judge dismissed the appellant’s claim for
possession of the house known as 23 Parrymead, Woodley, Stockport, and, on the
defendants’ counterclaim, ordered the appellant to grant the defendants an
estate in fee simple absolute in the house. The defendants in the action were
Mr and Mrs W G Thornley, who are the respondents to the appeal.
The appeal
raised a single question under the ‘right to buy’ provisions, which are now
consolidated in Part V of the Housing Act 1985 and which were first introduced
by the Housing Act 1980. The single question is whether the loss by a secure
tenant of his status as such entitles the landlord to refuse to convey an
estate in the dwellinghouse even although all matters relating to the grant
have been agreed between the parties. The appellant contends that it does. The
judge held that it does not and the respondents support his conclusion.
The
circumstances of the case commence on June 20 1980 when the appellant as
freeholder granted to the respondents as joint tenants a monthly tenancy of 23
Parrymead. It is common ground that for the purposes of the 1985 Act the
tenancy was a secure tenancy and the respondents were secure tenants. On May 23
1989 the respondents served upon the appellant a written notice claiming to
exercise the right to buy the freehold of the house. On June 23 the appellant
served upon the respondents a written notice admitting their right to buy and,
on a date in December, the respondents received a written notice of the
appellant’s proposed terms of sale. The notice was dated
July 9 1990 all matters relating to the grant of the freehold had been agreed
and completion was to take place on August 31. It did not take place on that or
any subsequent date. It did not take place because towards the end of July the
appellant discovered that on August 28 1989 the respondents had moved out of
the house on taking up a three-year appointment as resident wardens of a
girl-guide establishment known as ‘The Children’s Inn’ at Rowarth, Derbyshire.
The appellant further discovered that on October 12 1989 the respondents had
sublet the whole of the house on an assured shorthold tenancy at a profit rent.
The subletting was a breach of a condition of the 1980 tenancy agreement,
whereby the respondents agreed not to sublet, and it had the independent
statutory effects of the tenancy ceasing to be a secure tenancy and
consequentially, of the respondents ceasing to be secure tenants (1985 Act,
section 93(2)). The judge found that the respondents had not ‘fully realised’
that subletting was a breach of the tenancy agreement or might affect the
exercise of their right to buy. However, there is no suggestion that the
respondents were guilty of a fraudulent concealment and the judge found them to
be ‘entirely straightforward people’.
On August 3
1990 the appellant’s solicitors informed those acting for the respondents that
because of the subletting the sale would not proceed. On November 27 the
appellant sent to the respondents a notice to quit which expired on December
31. The house was not vacated and proceedings for possession were commenced 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. The
defence, so far as now material, was in effect that on July 9 1990 the
appellant became under a statutory duty to grant to the respondents a fee
simple absolute in the house and that the respondents’ correlative right to a
grant defeated the claim to possession. By a counterclaim the respondents
sought the injunctive enforcement of the alleged duty. In a reply and defence
to counterclaim the appellant denied the duty on the ground that the
respondents had ceased to be secure tenants in October 1989. The rival
contentions were argued before the judge who, in a short extempore judgment
given at the end of a long day, concluded: ‘I am satisfied that the defendants’
right by July 9 1990 had crystallised in a way under section 138 which entitled
them . . . to an injunction’. He accordingly made the dispositions to which I
have referred. The significance of his reference to section 138 will hereafter
appear.
I turn to the
provisions of Part V of the 1985 Act, which of necessity are elaborate. The
whole is introduced by section 118, which provides in subsection (1) that:
A secure
tenant has the right to buy, that is to say, the right, in the circumstances
and subject to the conditions and exceptions stated in the following provisions
of this Part —
. . . to
acquire the freehold of the dwelling-house.
Subsection (2)
makes provision for the case (as here) of joint tenants and provides for the
right to belong to all of them. Section 120 provides exceptions to the right to
buy but none was here applicable. Section 121 provides circumstances in which
the right to buy cannot be exercised. Subsection (1) provides that it cannot be
exercised ‘. . . if the tenant is obliged to give up possession of the
dwelling-house in pursuance of an order of the court or will be so obliged at a
date specified in the order’. Subsection (2) provides that the right cannot be
exercised if it belongs to a person who is (broadly put) insolvent.
Section 122(1)
provides: ‘A secure tenant claims to exercise the right to buy by written
notice to that effect served on the landlord’. It was such a notice that the
respondents gave on May 23 1989 and it is common ground that they were entitled
to do so. Section 124 provides for a landlord’s notice admitting or denying the
right to buy and it was such a notice that the appellant gave on June 23 1989.
Section 125(1) provides: ‘Where a secure tenant has claimed to exercise the
right to buy and that right has been established (. . . by the landlord’s
admission . . .), the landlord shall . . . serve on the tenant a notice’ of his
opinion as to the purchase price and of other specified matters. The
appellant’s notice dated October 6 1989 was such a notice. Section 125 and its
alphabetical additions are followed by nine sections dealing between them with
the amount and determination of the purchase price (including discount) and
with the right to a mortgage. Section 138 is important and is the section to
which the judge referred. It deals with the duty of the landlord to convey the
freehold and (omitting what is presently immaterial) it provides:
(1) Where a secure tenant has claimed to exercise
the right to buy and that right has been established, then, as soon as all
matters relating to the grant and to the amount to be left outstanding or
advanced on the security of the dwelling-house have been agreed or determined,
the landlord shall make to the tenant —
(a) if the dwelling-house is a house and the
landlord owns the freehold, a grant of the dwelling-house for an estate in fee
simple absolute, . . .
in accordance
with the following provisions of . . . [the Act].
(3) The duty imposed on the landlord by
subsection (1) is enforceable by injunction.
The date by
which agreement was reached in this case was July 9 1990 (by when the
respondents had ceased to be secure tenants) and it was by the exercise of
subsection (3) that the injunction was granted. Section 139 provides for the
terms and effect of a conveyance of the freehold and subsection (2),
particularly, provides: ‘The secure tenancy comes to an end on the grant to the
tenant of an estate in fee simple, . . . in pursuance of the provisions of this
Part relating to the right to buy . . .’. Section 155(1) further provides in
relation to the terms of a grant that where the sale is at a discount (as usually
it must be: see section 129), then the conveyance ‘shall contain . . . a
covenant binding on the secure tenant and his successors in title’ to the
effect that in certain circumstances the discount is to be repayable.
Mr John Martin
QC, who appeared for the appellant, attached importance to this provision. I
conclude my summary visit to Part V by observing that section 141(3) (as
amended) and section 142 entitle a tenant to defer completion in certain
circumstances for (now) three years after the service of the notice under
section 122.
A process in
four stages can be identified in the sections to which I have referred. The
first stage is the claim to exercise the right to buy. The fourth and
consummating stage is that of grant. The intermediate second and third stages
are those of the establishment of the right and the agreement or determination
on or of the terms of the grant. In Enfield London Borough Council v McKeon
[1986] 1 WLR 1007, a decision of this court, it was important to determine
at what stage in that process the right to buy is exercised. The case arose
under the predecessor provisions of the 1980 Act as amended by the Housing and
Building Control Act 1984, but it will be convenient if I refer to the
provisions of the 1985 Act. The defendant in an action for possession brought
by the appellant authority was by succession the secure tenant of a house owned
by the authority. She had on August 30 1984 served a notice under section 122
and on September 26 the plaintiffs had served a notice under section 124
admitting the defendant’s right to buy. On November 29 the plaintiffs served a
section 125 notice but on October 10 they had served a notice of their
intention to seek possession of the house on ground 16 in Part III of Schedule
2, namely that the accommodation was more extensive than was reasonably
required by the tenant. In January 1985 the plaintiffs commenced proceedings
for possession. The defence was on the ground that the right to buy the house
had been exercised and established, and that the plaintiffs’ resultant duty to
convey the freehold overrode any right they might have to possession. The
defendant’s argument in particular was that her right had been ‘exercised’ by
the service of a notice under section 122 and that section 121 therefore could
no longer bite. The argument was rejected by Slade LJ who said (at p 1015G):
In my
judgment, the short answer to the defendant’s point of law is that, for the
purpose of applying section 2(4)(b) . . . [21] (on the true construction of
which her case depends) the Act of 1980 [1985] treats a tenant as purporting to
exercise his right to buy at any time and from time to time when he takes steps
towards implementation of that right, up to and including completion of the
purchase. If, therefore, any of the circumstances set out in Part II of Sched 1
[section 121] subsist at any time between the time when he serves his section
[122] notice and completion, his right to buy ceases to be exercisable.
Eastham J, who
was the other member of the court, agreed with that conclusion. In reaching it,
Slade LJ expressed himself as influenced by three considerations (see
p1015A-G). The first was the linguistic contrast between a claim to exercise
the right and the exercise of the right which is found in the opening words of
sections 125(1) and 138(1). The second was that, especially where completion is
deferred, it can hardly have been the intention of Parliament that a landlord
should be deprived before completion of his ordinary powers including those of
obtaining possession on the statutory grounds. The third consideration was that
if the defendant had been correct none of the events in section 121, including
insolvency, could prevent completion.
The decision
in the McKeon case was considered by this court in
the later case matters had proceeded to the third stage, that is to say, the
stage of the agreement contemplated by section 138 of the 1985 Act, but the
landlord refused to complete and sought possession of the house on ground 10 in
Part II of Schedule 2, namely that the landlord intended on obtaining
possession to demolish the building. The plaintiff tenants sought an injunction
pursuant to section 138(3). The defendant landlord asserted its right to
possession and contended that under section 121(1) the right to buy is not
further exercisable if an order for possession is made. It asked that the claim
to possession be heard first. The county court judge thought McKeon’s case
constrained him to decide that the tenants’ right to buy was still in the
process of being exercised and that a further exercise in the form of a claim
to a grant would be inhibited by the making of an order for possession. The
tenants’ appeal was allowed by this court. The leading judgment was given by
Nourse LJ, who pointed out that the facts in McKeon’s case differed from
those before the court in ‘an important respect’, that is to say the stage of
agreement on terms had not there been reached ([1990] 1 WLR 1097 at p1103A).
He said (the
same at G):
Mr Haines,
for the defendants, submitted that the decision in Enfield London Borough
Council v McKeon [1986] 1 WLR 1007 is binding on this court and,
moreover, that it is decisive of this case. He relied particularly on the view
of Slade LJ that the Housing Act 1985 treats a tenant as purporting to exercise
his right to buy at any time and from time to time when he takes steps towards
implementation of that right, ‘up to and including completion of the purchase’.
Although others might have preferred the simple view of section 121(1) which
had been urged on Slade LJ and Eastham J by the tenant, we must certainly
accept that their decision is binding on us. I do not, however, think that it
is decisive of this case. Although the words of Slade LJ on their face apply
here, the decision is only a binding authority for cases where the facts are
the same. As I have already pointed out, the facts of this case are different.
Indeed, the facts of Enfield London Borough Council v McKeon [1986]
1 WLR 1007 were such that it never became necessary to consider section 138, to
whose effect on the facts of this case I now turn.
Nourse LJ
analysed the effect of the coming into operation of section 138(3) and
concluded (at p1105A) that as from the date of the agreement contemplated by
section 138(1):
. . . the
plaintiffs, being entitled to enforce the defendants’ duty by injunction,
became the equitable owners of the freehold in the property. At that stage, if
not beforehand, they must, on any natural use of language, have ‘exercised’
their right to buy for the purposes of section 121(1) of the Act of 1985.
Accordingly,
section 121(1) could no longer bite.
McCowan LJ
said (at p1106G) that the plaintiffs were by the date of the hearing in the
county court indefeasibly entitled to completion and that this circumstance
distinguished McKeon’s case. Sir Nicolas Browne-Wilkinson V-C (as he
then was) agreed with both judgments.
The decision
in Dance’s case compels some modification of Slade LJ’s phrase ‘up to
and including completion of the purchase’ because the right must now be
regarded as exercised at the conclusion of the third rather than of the fourth
of the four stages. The necessity for this modification was perceived by Judge
Blackburn when he put McKeon’s case to one side (as he expressly did)
and regarded the respondents’ right as ‘crystallising’ on July 9 1990. However,
necessary as the modification is, it reduces (perhaps eliminates) the weight of
the second and third considerations to which Slade LJ attached importance in
coming to his conclusion. What Nourse LJ referred to as the simple view which
‘others might have preferred’ could seem the more attractive in consequence.
However, McKeon’s case remains binding on this court for precisely what
it decided, which is that the achievement of neither stage one nor two
constitutes an exercise of the right to buy.
I have
examined the cases of McKeon and Dance because they were
discussed in the court below and before this court. However, it must be
observed that in both cases the tenant throughout remained a secure tenant and
accordingly neither addresses the situation where the secure tenant has lost
his status.
Mr Martin
submitted that the loss of status prevents there being an enforceable right in
favour of the erstwhile secure tenant because the statute premises that the
grant of an estate under Part V is a grant to a secure tenant. If this argument
is correct then the loss of status must have the same effect whether it occurs
before or after stage three, although the landlord will doubtless refuse to
agree terms if he knows of the loss. In the present case he agreed terms in
ignorance.
There are two
cases in this court where a secure tenant had lost his status after a claim
under section 122 and an admission under section 124. In Sutton London
Borough Council v Swann (1985) 18 HLR 140 the defendant sought to
resist a reference to an exercise of his right to buy. The plaintiff council
had followed their admission of the right to buy by a notice under section 125,
but the defendant allowed the matter to lapse and he moved out of the premises
thereby ceasing to be a secure tenant. Ackner LJ (as he then was) delivered a
judgment with which Parker LJ and Sir David Cairns agreed. In the quotation
from that judgment which follows I have substituted references to the 1985 Act
for those in the 1980 Act, but I have retained the reference to section 16(11)
of the 1980 Act for it is in somewhat different terms to the successor section
139(2). Ackner LJ said ((1985) 18 HLR 140 at p144):
In my judgment
this case is simply dealt with by the following propositions.
In March 1982
Mr Swann was entitled to serve a notice under section 5 of the Housing Act
1980, claiming the right to buy, because he was a secure tenant, and this was admitted
by the notice in reply served by the respondents. The respondents provided Mr
Swann with a perfectly straightforward offer for him to accept so the matter
could proceed. He took no further step. The matter did not proceed.
Accordingly, the offer which the respondents were obliged to make under the
statute lapsed by efflux of time. When Mr Swann returned to the charge a year
or more later, that offer, as I have indicated, having lapsed, he was no longer
a secure tenant and therefore he no longer was entitled to apply under section
[122] of the Act to buy the premises.
Mr Swann
takes a point, which in fact is dealt with by the learned judge, and in my view
properly dealt with by the learned judge. He submits that, given that he was a
secure tenant and as such made a claim as a secure tenant in March 1982 to buy,
thereafter he has a right to purchase which cannot be defeated by any change in
his status; ie by his thereafter ceasing to be a secure tenant.
In regard to
this, the learned judge said: ‘Section[s 138 to 142] set out the steps to
completion of the right to buy. Section [138(1)] uses the term ‘secure tenant’.
Section[s 138(2) to 142 use] the term ‘landlord’ and, or ‘tenant’. She then
came to section 16(11), and I set that out in full. It reads as follows:
‘On the grant
to ‘a secure tenant’ of an estate in fee simple or of a lease in pursuance of
this Chapter the secure tenancy of a dwelling-house shall come to an end and,
if there is then a sub-tenancy, section 139 of the Law of Property Act, 1925
shall apply as on a merger or surrender’
That section
proceeds in my judgment on the assumption that, at the end of the procedure,
when the various investigations have been made, the various terms spelt out and
accepted, and the time for the grant comes, that grant has to be made to a
secure tenant. Accordingly the status of ‘secure tenant’ has 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. If during the period between claim and grant the tenant has
ceased to be a secure tenant, he is not entitled to that grant.
Mr Martin
relied upon this passage and submitted that the change in the language of what
was section 16(11), and is now section 139(2), during the process of
consolidation, did not affect the assumption upon which the provision
proceeded. Mr Jeffrey Terry, who appeared for the respondents, submitted that
the observations of Ackner LJ in regard to the assumption of the statute were,
first, obiter in that the basis of the decision was the lapse of the
procedure and, second, were inconsistent with the decision in Dance’s
case. I cannot dismiss the observations as obiter (even as such they
would be highly persuasive) because they were directed to what was apparently
an independent ground of defence which required a separate disposition. Nor can
I accept that the observations are inconsistent with the decision in Dance‘s
case. Swann‘s case was cited in the court in Dance although it
was not referred to in the judgments. The two cases are different in the most
material respect that Mr and Mrs Dance had remained secure tenants throughout.
The second
case where a secure tenant had lost his status after a claim under section 122
and an admission under section 124, is Opoku-Forfieh v Haringey
London Borough Council unreported (1988), but of which we were given a Lexis
transcript. In that case the defendant sought to defend possession
proceedings by reference to a right to buy which had been established prior to
the termination of his secure tenancy, but which does not appear to have
proceeded to the stage of an agreement as to terms. The leading judgment was
given by Ralph Gibson LJ with whom Croom-Johnson LJ agreed. Ralph Gibson LJ
treated McKeon‘s case as determinant, but said that the same result
could be achieved by the application of Swann’s case. The judgments in McKeon
and Swann he regarded as ‘entirely consistent in their analysis of
the relevant provisions of the Housing Acts’. Mr Terry submitted that the
observations in regard to Swann’s case were obiter. I agree, but
they obviously have persuasive force.
It was Mr
Terry’s argument that the status of secure tenant had to exist at the
time of claim and of admission but that its loss thereafter was irrelevant save
that it exposed the tenant to the risk of a possession order which, by reason
of section 121, would prevent the
of Part V of both the phrase ‘secure tenant’ and the word ‘tenant’. Mr Terry
submitted that the phrase and the word were employed deliberately and not
interchangeably. He sought to demonstrate that the phrase ‘secure tenant’ was
employed in importing a requirement only to the stage of establishment and that
thereafter it is used either as descriptive of what has occurred before and at
that stage or as dealing with a contingency. For example, in section 138(1) the
prefatory words ‘where a secure tenant has’ are narrative but the only
requirement is that the grantee must be a ‘tenant’. An example of the suggested
contingent usage is section 139(2), which Mr Terry suggests is to provide for
the case where there happens to be a secure tenancy.
In my
judgment, and with respect to him, Mr Terry’s argument is ingenious but
unconvincing. My reasons are five in number. First, in for example, section
125(1) the word ‘tenant’ must be an abbreviation of the phrase ‘secure tenant’
which precedes it and the draftsman must be expected to have a consistent
usage. Second, section 139(2) does not refer to ‘a secure tenancy’ but
uses the definite article, thereby presupposing more strongly than the
provision relied upon by Ackner LJ that there is a secure tenancy immediately
before the grant. Third, section 155(1) presupposes that the grantee is ‘the
secure tenant’. The fourth, under section 118(1) it is a secure tenant who is
given the right to buy and the right is described as being ‘the right, in the
circumstances . . . stated in the following provisions of this Part . . . to
acquire the freehold of the dwelling-house’. These words seem to me to enact
the assumption that throughout the stated circumstances there is a person who
is at first ‘a secure tenant’ and who matures into ‘the secure tenant’.
The physical identity of that person may change, for example on a succession
(see section 136), but that is immaterial. My fifth reason, and of itself
decisive in this court, is that the decision in Swann’s case actually
decided in favour of the assumption which I have identified.
I,
accordingly, conclude that a tenant who has ceased to be a secure tenant has no
right which he can enforce under section 138(3). The conclusion accords with my
belief that most people would find it 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. I emphasise that
the question which my conclusion answers is quite different from the question
as to when the right to buy is exercised by a secure tenant. Upon that
question, which primarily arises under section 121, the law is stated in the
cases of McKeon and Dance. They have a reconcilable relationship,
but the reasoning in the earlier case is damaged by the conclusion in the
latter.
For the
reasons which I have now formulated, we decided, at the conclusion of argument,
that this appeal should be allowed. The judge found that the notice to quit
sent on November 27 was properly served upon the respondent before November 30
1990 and accordingly the appropriate order is one dismissing the respondents’
counterclaim and ordering possession as claimed by the appellant.
Agreeing, LEGGATT
LJ said: Since the judge did not develop his reasoning, I need not say in
words of my own why I agreed that for the reasons given by Mann LJ this appeal
should be allowed, the counterclaim dismissed and an order for possession made
in favour of the appellant.
Also agreeing,
GLIDEWELL LJ said: I agree with the reasons given in his judgment by
Mann LJ for our decision, announced at the conclusion of the argument, that
this appeal should be allowed. I add some short observations of my own, because
we are differing from the learned judge.
My main reason
for concluding that a tenant who has ceased to be a secure tenant has no right
which he can enforce under section 138(3) is that, in my view, the relevant
sections of the statute clearly have this effect. Thus under section 118(1) it
is ‘a secure tenant’ who is given the right to buy, ie in this case, ‘to
acquire the freehold of the dwelling-house’. It follows that a person who
ceases to be a secure tenant, ceases to have that right. In section 125, in
this context, the words ‘the tenant’ clearly mean ‘the secure tenant’, the full
phrase with which the section starts.
As Mann LJ
points out, in section 139(2) the phraseology used, ‘The secure tenancy comes
to an end on the grant to the tenant,’ etc can only mean that there is to be a
secure tenancy until the grant. I note also the point that section 155(1)
presupposes that the conveyance was to a secure tenant. For those reasons, I
agree that the meaning of section 138 is that the landlord shall make a grant
to the secure tenant, a right which only a secure tenant can enforce by
injunction.
If, however, I
had any doubt about the meaning of the statutory provisions, I should take into
account the fact that the statutory regime gives 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 result in corresponding
disadvantages for the landlord. It would follow, therefore, that the provisions
of the statute should be strictly construed so as to preclude a person who has,
for whatever reason, ceased to be a secure tenant from being able to claim the
advantages.
Finally, I
agree that we are bound by the decision of this court in Sutton London Borough
Council v Swann (1985) 18 HLR 140 to conclude that a person who was
no longer a secure tenant was no longer entitled to the right to buy. The
decisions in Enfield London Borough Council v McKeon [1986] 1 WLR
1007 and Dance v Welwyn Hatfield District Council [1990] 1 WLR
1097 were concerned with a different question, namely at what stage in the
process towards a conveyance does the right to buy of a person who is at all
relevant times a secure tenant become indefeasible? There is therefore nothing in those two
decisions which prevents us from arriving at the decision we have announced.
For those
reasons, which do no more than emphasise some of the reasoning of Mann LJ, with
all of which I agree, I conclude that this appeal should be allowed. It follows
that the respondents’ counterclaim is dismissed and an order that they should
give up possession of the dwelling-house must follow.
Appeal
allowed with costs, application for leave to appeal to the House of Lords
refused.
