Ryan v Islington London Borough Council

Landlord and tenant – Right to buy – Notice to complete – Section 140 of Housing Act 1985 – Appellant tenant claiming unable to complete until respondent landlords carrying out underpinning to remedy subsidence – Whether underpinning an outstanding matter relating to the grant such as to prevent respondents insisting on completion – Whether damages available for loss of right to buy consequent on respondents’ failure to comply with repairing covenants – Appeal dismissed In 2003, the appellant sought to exercise her right to buy, under the Housing Act 1985, in respect of the flat of which she was a secure tenant. The respondent local authority landlord admitted the right to buy and, by a section 125 notice, offered a 125-year lease at a cost of £122,000, representing a valuation of £160,000 less a discount of £38,000. The notice identified specified defects in the property. The respondents’ surveyor subsequently inspected the flat and discovered subsidence in the rear extension, in respect of which he recommended underpinning. The appellant was informed of the need for the works and , in November 2003, she accepted the respondents’ section 125 offer.By April 2004, the respondents had forwarded to the appellant the relevant documentation for the sale, suggesting a completion date in May. Having received no response, they served a first notice to complete under section 140 of the 1985 Act. The appellant raised enquiries about the underpinning. The respondents served a second notice to complete, pursuant to section 141, requiring the appellant to complete within 56 days, failing which she would be treated as having withdrawn her claim to exercise the right to buy. In response, the appellant contended that the respondents had to carry out the underpinning works before completion could take place; she would otherwise be unable to obtain a mortgage. The notice to complete expired without completion having taken place and the respondents treated the appellant’s claim as being withdrawn. The underpinning works were eventually carried out in November 2005.The appellant claimed for: (i) a declaration that her right-to-buy claim was not withdrawn; or (ii) damages for the loss of that claim, on the ground that the respondents’ failure to perform their repairing obligations had prevented her from raising a mortgage to complete the purchase. She submitted that the underpinning works were an outstanding matter “relating to the grant” of her lease within section 140, such that the respondents had not been entitled to require her to complete. That claim was dismissed in the county court, although a claim for damages for breach of the respondents’ repairing covenants was allowed. The appellant appealed.Held: The appeal was dismissed. (1) The issue concerning subsidence was not an outstanding matter “relating to the grant” within the meaning of section 140. That term referred to conveyancing matters relating to the conveyance or lease by which the premises were to be transferred to the purchaser on completion. It did not embrace the physical condition of the premises or any disrepair or structural deficiency affecting them: O’Byrne v Secretary of State for the Environment, Transport and the Regions [2001] EWCA Civ 499; [2002] 30 HLR 566 applied. “Outstanding” matters were those that had not been agreed or determined within the meaning of section 140(1)(a); it was not a natural use of language to refer to the due performance of repair obligations as something that had been agreed or determined. Moreover, it was implicit in the appellant’s submissions that the proposed vendor obliged to carry out repair or remedial structural works prior to completion. No such obligation was imposed by the right-to-buy legislation. Although the vendor would, as landlord, be under a continuing obligation, enforceable by the tenant, to discharge its repairing obligations under the secure tenancy, there was nothing in the 1985 Act that entitled the tenant to insist that completion should be deferred until all such works had been carried out. Consequently, there was no basis for regarding such a matter as falling within the meaning of section 140(1)(b).(2) There was no other basis on which the appellant’s claim could succeed. On the evidence, she had failed to prove that the non-performance of the underpinning works had prevented her from raising a mortgage loan. Moreover, the damages available for losses flowing from the breach of the respondents’ repairing covenants under the secure tenancy did not cover financial losses arising from the loss of the right to buy. The appellant had not proved that such losses were foreseeable by the respondents. In any event, regardless of foreseeability, such losses were not of a type for which the respondents could fairly be said to have accepted responsibility at the time the secure tenancy was entered into. In assuming the burden of the repairing covenants, the respondents had an obligation to compensate the appellant for the kind of loss that their failure to perform those covenants was likely to occasion to her, in the ordinary course, as an occupying tenant. A right-to-buy purchase had not been contemplated when the secure tenancy was granted.Kerry Bretherton (instructed by Percy Short & Cuthbert) appeared for the appellant; Ranjit Bhose (instructed the legal department of by Homes for Islington) appeared for the respondents.Sally Dobson, barrister