Landlord and tenant — Housing Act 1985 — Whether secure tenant entitled to enforce right to buy by injunction where landlord housing authority issues possession proceedings
By a tenancy
agreement dated August 6 1984 the plaintiff is a secure tenant of 96 Carlyle
Road, Manor Park, London E12, within the meaning of section 79 of the Housing
Act 1985. In October 1990 the plaintiff exercised her right to buy the house by
written notice to the defendant landlords under section 122 of the Act; the
defendants duly admitted the plaintiff’s right to buy and ultimately a purchase
price of £32,860 was agreed. On June 24 1991, following receipt by the
plaintiff of a notice from the landlords of their intention to seek possession,
the defendants issued proceedings in Bow County Court claiming possession of
the house on the ground that the plaintiff was in breach of the terms of her
tenancy being guilty of conduct which harassed and annoyed her neighbours,
particulars being given of a number of acts committed between April 1988 and
August 1989, being acts of an aggressive, violent, insulting and offensive
nature and being the product of hostility borne of racial enmity. The victims
of the plaintiff’s conduct were almost all, if not entirely, drawn from the local
Asian community. On July 12 1991 the plaintiff put in a defence to that claim
denying the allegations. On March 1992 the plaintiff issued the present
proceedings in Bow County Court claiming an injunction to enforce her right to
buy under section 138(3) of the 1985 Act; on April 3 1992 the defendants put in
a defence denying the plaintiff’s right and pleading the acts of annoyance,
discrimination and harassment, as set out
that the plaintiff was not entitled to exercise effectively her right to buy.
On the hearing of a preliminary issue as to whether the county court had
discretion to refuse the grant of an injunction to the plaintiff, Judge
Goldstein held that the defendants’ allegations did not give grounds upon which
they could effectively resist the injunction; he had no discretion but to grant
the injunction and ordered that the defence be struck out, that the sale of the
house be completed and that the possession proceedings be stayed pending
appeal. The defendants appealed, relying upon Dance v Welwyn Hatfield
District Council for authority that any ground which would enable a
defendant to resist an order for specific performance, in particular hardship
to third parties, or any ground which might induce a court properly to refuse
the grant of an injunction in the exercise of its discretion, will enable a
local authority to resist the grant of an injunction under section 138(3).
in Dance v Welwyn Hatfield District Council was that, once the
conditions in section 138(1) are satisfied, the tenant is entitled as of right
to an injunction to enforce the landlord’s duty to convey the property to him
on the terms agreed or determined and the court has no discretion to withhold
such an injunction. In the present case, like the Dance case, the claim
for possession had not been decided when the conditions of section 138(1) were
satisfied and therefore did not provide a ground for withholding the
injunction. It is plain, as a matter of construction, that Parliament did not
intend that general considerations of hardship should afford any ground for
refusing the grant of an injunction under section 138(3) where there is a right
to buy under section 118.
The following
case is referred to in this report.
Dance v Welwyn Hatfield District Council [1990] 1 WLR 1097; [1990]
3 All ER 572; (1990) 22 HLR 339, CA
This was an
appeal by the defendants, Newham London Borough Council, from an order striking
out their defence at a hearing of a preliminary issue into an application by
the plaintiff, Cathryn Taylor, for an injunction under section 138 of the
Housing Act 1985 to enforce her right to buy 96 Carlyle Road, Manor Park,
London E12.
David
Watkinson (instructed by the solicitor to Newham London Borough Council)
appeared for the appellants; David Brook (instructed by Kenneth Elliott &
Rowe, of Romford) represented the respondent.
Giving the
first judgment, SIR THOMAS BINGHAM MR said: The plaintiff in this action
is the tenant of a house owned by the defendant local authority. She is
entitled to buy the house under the provisions of Part V of the Housing Act
1985. The issue in the appeal is whether, on her application to enforce that
right to buy by injunction, the court has a discretion to refuse that relief.
There is further a subsidiary question as to whether on the facts here, if it
does have such a discretion, it should exercise it to deny her an injunction.
The facts are
very short and very simple. The plaintiff lives at 96 Carlyle Road, Manor Park,
London E12. The defendant local authority are her landlords and own the house.
By virtue of a tenancy agreement dated August 6 1984 the plaintiff is a secure
tenant of the house within the meaning of section 79 of the Housing Act 1985.
She is a person entitled to buy the house under section 118 of the 1985 Act.
In October
1990 she claimed to exercise her right to buy the house by written notice to
the landlords under section 122 of the Act. The local authority duly admitted
the plaintiff’s right to buy under section 124. In due course, but after a
certain amount of negotiation and pressure, a purchase price of £32,860 was
agreed.
Just before
that stage was reached, on January 18 1991, the tenant received from the
landlords notice of the landlords’ intention to seek possession. That was some
months before the particulars of the offer to buy were finally agreed with the
landlords. The outcome was that on June 24 1991 the local authority issued
proceedings in Bow County Court, claiming possession of the house. The grounds
upon which that claim was made was that the plaintiff was in breach of the
terms of her tenancy. Putting the matter very shortly, it was contended that
the plaintiff herself and her family had been guilty of conduct which harassed
and annoyed her neighbours. Details were given in the pleading of a number of
acts said to have been committed between April 1988 and August 1989, being acts
of an aggressive, violent, insulting and offensive nature and being, as it was
alleged, the product of hostility born of racial enmity. Certainly, the
pleading was to the effect that the victims of the plaintiff’s conduct were
almost, if not entirely, drawn from the local Asian community.
A defence was
put in dated July 12 1991 to that claim for possession in which the right to
possession and also the facts pleaded were roundly denied. It is right to
emphasise that those allegations have not been investigated and they should be
regarded as no more than allegations which are contradicted. It is, however,
relevant to point out that at the date of the claim the events were some two to
three years old and that, at the time when the plaintiff exercised her right to
buy the house by giving notice of her intention to do so, there was no claim
for possession made against her, let alone any possession order.
The next stage
of the proceedings came on March 9 1992 when these proceedings were issued in
Bow County Court and the plaintiff in those proceedings claimed an injunction
to enforce her right to buy under section 138(3) of the Act. The defendants put
in a defence on April 3 1992 in which, in para 12, they denied the plaintiff’s
right to an injunction. They pleaded the acts of annoyance, discrimination and
harassment set out in the particulars of claim in the possession action and
they relied on section 121(1) of the Housing Act 1985 to contend that the
plaintiff was not entitled to exercise effectively her right to buy. The county
court ordered that the claim for an injunction should be heard on May 5 1992
when the possession action was also due to be heard.
Thus it was
that the parties went to Bow County Court on May 5 1992 and then, by agreement,
there was argument on a preliminary point whether the county court had
discretion to refuse the grant of an injunction to the plaintiff. Judge
Goldstein, who heard the argument, gave his judgment on May 12 1992 and it was
plainly a carefully considered judgment. I would take this opportunity not only
to acknowledge our indebtedness to the learned judge for giving such a clear
and careful judgment, but also to observe how helpful it now is when county
court judges’ judgments reach us in the form of transcripts taken from the tape
and give us a very much better idea of what the learned judge actually said
than was available in days of yore.
In his
judgment the learned judge very plainly indicated the issue which he had to
decide. He said, referring to the plaintiff on p2B:
She has now
become entitled, under Part V of the 1985 Housing Act to exercise her right to
buy that house from her landlord. Three important matters are not in dispute in
this case: first, that she is entitled in law to make her application to buy;
second, that she is not a disqualified person under section 121 of the Act from
exercising that right; last despite some delay in the matter all the
formalities for completing the transfer of the property from the landlords to
the secure tenant are now in place.
The
defendants, however, do not wish to go through with the sale. They say it would
not be equitable to force them to complete the sale of this house to this
plaintiff. Thus it is that this action has been brought on behalf of the
plaintiff who seeks to enforce the sale under section 138(3) of the same Act by
asking this court to grant her an injunction.
To that claim
the defendants have put in and put forward the defence, discussion of which has
formed the preliminary issue in this trial. If I could just summarise the
defence — I hope doing it no injustice — what is being said is to grant an
injunction is of course to exercise a discretionary remedy which the court may
or may not so exercise. That the court should exercise the discretion in the
defendant’s favour and not enforce the sale for the following reasons: first,
it would be a hardship to the defendants if the injunction were granted;
second, the defendants owe a duty to third parties and in all the circumstances
of this case it would be unreasonable if the court were to act in such a way as
to prevent the defendant landlords from discharging its duty to those third
parties.
The real
basis for putting forward such a claim arises in this way. In the defence, and
indeed in another separate obviously linked matter, the defence outline an
alleged claim for possession which they say they have against the defendant
based upon what is basically one act of alleged racial harassment in 1989,
proceedings of which were only commenced in June 1991.
The learned
judge then reviewed the Act and in particular the authority Dance v Welwyn
Hatfield District Council [1990] 1 WLR 1097 (to which I shall come) and
then at p10B of his judgment he said:
It seems to
me here that what these defendants are seeking to do is one of two things. They
are either seeking to circumvent the principle of the right to buy, which the
court obviously cannot and will not condone, or they are seeking to impose some
form of condition that any proposed purchaser must be a person of whom the landlords
approve and nowhere in the legislation can I find support for that proposition.
He accordingly
held that the landlords’ allegations did not give grounds upon which the
landlords could effectively resist the injunction and, that being so, he did
not go into the allegations. He did, however, add that, even if the complaints
were made out and even if he did have a discretion to withhold an injunction,
he thought it very doubtful if he could make a possession order in the local
authority’s favour in all the circumstances. That question, however, did not
arise for decision since he ruled that the defence of April 3 1992 disclosed no
reasonable defence. He accordingly ordered that the defence be struck out, that
the sale of the house be completed and that the possession proceedings be
stayed pending appeal. He also gave leave to appeal.
It is not
necessary for the purposes of this judgment to go at great length into the
provisions of the Housing Act 1985 Part V. It suffices, I think, to refer to
section 118(1)(a) which provides:
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 —
(a) if the dwelling-house is a house and the
landlord owns the freehold, to acquire the freehold of the dwelling-house;
Section 120
sets out exceptions to the right to buy by reference to cases specified in
Schedule 5, and section 121 defines the circumstances in which the right to buy
cannot be exercised. So far as material it reads:
(1) The right to buy 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.
(2) The right to buy cannot be exercised if the
person, or one of the persons, to whom the right to buy belongs —
(a) has a bankruptcy petition pending against him
. . .
(c) is an undischarged bankrupt, or
(d) has made a composition or arrangement with
his creditors the terms of which remain to be fulfilled.
There follow a
series of sections outlining the procedure to be followed when the right to buy
is exercised and dealing with the right to a mortgage and ascertainment of the
purchase price. Then one comes to section 138, which is the relevant section
for present purposes. 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 . . .
in accordance
with the following provisions of this Part.
(2) If the tenant has failed to pay the rent or
any other payment due from him as a tenant for a period of four weeks after it
has been lawfully demanded from him, the landlord is not bound to comply with
subsection (1) while the whole or part of that payment remains outstanding.
(3) The duty
imposed on the landlord by subsection (1) is enforceable by injunction.
It is that
last provision which founds the plaintiff’s claim in this action.
In submitting
in this court that the learned judge below erred in holding that he had no
discretion, Mr Watkinson, who argues the case on behalf of the defendant local
authority, relies principally on a recent authority of this court in Dance v
Welwyn Hatfield District Council [1990] 1 WLR 1097, to which I have
already referred. In that case the tenants sought to exercise their right to
buy, but they wanted to leave part of the purchase price outstanding and
accordingly made arrangements to defer their purchase for a period of three
years. The council acknowledged that the tenants had chosen to defer the
purchase. The council also accepted a deposit towards the purchase price, and
the council confirmed that there was no compulsory purchase scheme which
affected houses in the area of that which the plaintiffs wished to buy.
Unhappily, however, the housing committee of the council had resolved to
demolish houses including the plaintiffs’. Accordingly, eight months later the
council informed the tenants that they proposed to demolish the house and
offered to return the deposit. The tenants, however, wrote a letter on
September 2 1988 in which they required the council to complete the sale of the
property to them and specified a date by which completion was to take place.
The council did not comply with that notice and instead served a notice of
their own, seeking possession on the grounds that they proposed to demolish the
house. At that stage the tenants issued proceedings, claiming an injunction
under section 138(3) of the 1985 Act. The council for their part counterclaimed
for possession and said that the right to buy was defeated by section 121(1),
which is the section already referred to, which makes the existence of a
possession order a ground of defence. The council also issued separate
possession proceedings. The learned judge in that case acceded to a request by
the council that the tenants’ claim for an injunction should be adjourned until
the merits of the claim for possession had been investigated. Against that
decision the tenants appealed and the appeal in this court was allowed.
There were
observations in the course of the first judgment given by Nourse LJ in this
court on which Mr Watkinson principally founds his submissions now. He points
out that in the opening sentences of his judgment Nourse LJ made reference to
the similarity between the right to buy provided by the Act and an option to
purchase. He also draws attention to Nourse LJ’s statement on p1104 of the
report below E that:
The right to
an injunction in a case where there is no contract cannot be any different in
its incidents from the right to an order for specific performance in a case
where there is a contract;
And he draws
attention to the passage on p1105 below F where Nourse LJ says:
The
comparison may or may not be exact, but the injunction cannot be less readily
available than an order for specific performance, which, although it is a
discretionary remedy, is refused only on well settled grounds, for example
hardship to the party against whom it is granted.
In reliance on
those observations in a judgment with which the Vice- Chancellor agreed, Mr
Watkinson submits that any ground which would enable a defendant to resist an
order for specific performance, in particular hardship to third parties, or any
ground which might induce a court properly to refuse the grant of an injunction
in the exercise of its discretion, will enable a local authority to resist the
grant of an injunction under section 138(3). Accordingly, he submits that the injury
to third-party neighbours of the plaintiff’s is a legitimate consideration to
which attention should be given in considering whether the statutory remedy of
an injunction should be granted.
Approaching
the matter at this stage purely on the basis of this authority, I find myself
wholly unpersuaded by that argument. In drawing attention to the possible
analogy with an option to purchase or with specific performance Nourse LJ was
doing what any lawyer tends to do when confronted by a new statutory animal,
which is to consider and reflect on what analogies there are to that statutory
animal in the existing law. Thus it was natural for Nourse LJ to consider
options to purchase and specific performance, both of which clearly have some
resemblance to the statutory animal created by the 1985 Act.
What, however,
I feel sure that Nourse LJ did not intend was that the analogy in the general
law should wag the statutory dog. He was dealing with a case in which the right
to an injunction was quite clear. There was no question of hardship and I find
no reason whatever to suppose that Nourse LJ was intending to introduce into
this straightforward statutory remedy doctrines which have grown up around both
the grant of specific performance and the grant of an injunction. I would,
however, observe, in case there should be any doubt about it, that various
grounds which do enable a court properly to resist an order for specific
performance such as mistake, misrepresentation or fraud would unquestionably
afford a reason for not making an order under section 138(3) because they would
be grounds for saying that the conditions in section 138(1) had not been
fulfilled.
It is not,
however, necessary to confine one’s consideration of the reasoning in Dance to
the judgment of Nourse LJ alone since my lord, McCowan LJ, was also a member of
that court and gave a judgment with which the Vice-Chancellor also agreed. I
draw attention in particular to what McCowan LJ said at p1106C:
From receipt
of the letter of 2 September 1988 the defendants were under a duty to convey
the house to the plaintiffs on or before 26 September 1988. It follows that
from that date the defendants were in breach of their statutory duty to convey
the house, and the plaintiffs were entitled to an injunction to enforce that
duty. It would, in my view, be very regrettable if the defendants could, by
refusing or failing to carry out their statutory duty, improve their position.
Therefore, unless I am obliged by the words of the statute or by
September 1988 had passed, it was too late for the defendants to take steps to
defeat the plaintiffs’ entitlement to completion.
Section
121(1) of the Housing Act 1985 could not assist the defendants at the hearing
before the judge because at that date it was not possible to say that ‘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’.
McCowan LJ
then distinguished an earlier authority of this court which had been considered
in argument and continued at H:
Before us, Mr
Haines for the defendants put the matter in this way: ‘I accept the judge had a
discretion to grant the plaintiffs the injunction they sought. Had he done so,
I could not have complained, but he chose to exercise his discretion by
adjourning the application in order to hear at the same time the defendants’
claim for possession. Unless it can be said that that exercise of discretion
was wholly wrong, this court should not interfere.’ In my judgment, the judge had, in the
circumstances of this case, no discretion to refuse the plaintiffs an
injunction, and no question therefore arose, as the judge thought, of a
‘balancing exercise required to exercise the discretion either to grant or
refuse an injunction and consequently to grant or refuse an order for
possession.’ Accordingly, I do not
consider that he had a discretion to adjourn the matter to allow the defendants
to get their claim for possession before the court.
This was, I
repeat, a judgment with which the Vice-Chancellor agreed and plainly McCowan LJ
was holding in robust terms that there was no discretion and that the learned
judge was obliged to make the order which was asked in favour of the tenants.
I understand
the upshot of that judgment as being that, once the conditions in section
138(1) are satisfied, the tenant is entitled as of right to an injunction to
enforce the landlord’s duty to convey the property to him on the terms agreed
or determined and the court has no discretion to withhold such an injunction.
In this case,
like Dance’s case, the claim for possession had not been decided when
the conditions of section 138(1) were satisfied and therefore did not provide a
ground for withholding the injunction. It may be going too far, and
unnecessarily far, to hold that there is no conceivable situation in which
there could be any discretionary ground for withholding an injunction but, for
my part, I find it almost impossible to imagine circumstances in which such a
discretion would arise or be properly exercisable.
As a second
string to his bow Mr Watkinson relied on the general law, and in particular a
passage drawn from Spry on Equitable Remedies (4th ed 1990) at pp435 to
436. The passages to which he particularly drew our attention were these.
First, a sentence to this effect:
And even if
the subject matter is new in the sense that rights are being created that had
no prior equivalents that were protected by injunctions ordinary equitable
considerations may be expected to apply unless a statutory intention to the
contrary is established.
The second
passage was:
However all
these matters involve questions of construction, and care should be taken to
ensure both that preconceptions by reference to the general practices of courts
of equity do not cause legislation conferring special powers to be misapplied
and also that in the exercise of widely expressed powers a desire to assist an
inferred legislative policy does not cause discretionary considerations such as
hardship to be overlooked.
Those
observations occur in a passage dealing with statutory injunctions and I do not
for a moment question that it is the duty of any court, considering and
construing a provision providing for the grant of an injunction, to construe
the provisions in question and endeavour to give them their correct effect.
What, however, seems to be crucial in the present situation is that section 118
creates what is described as a right to buy, and section 138, setting out the
landlords’ duty to convey to the tenant, expresses it in equivocal and
unqualified mandatory terms. It seems to be quite plain as a matter of
construction that Parliament did not intend in this instance that general
considerations of hardship should afford any ground for refusing the grant of
an injunction under section 138(3).
That
consideration is in my mind greatly strengthened when one recalls the history
of this particular right. It was introduced for the first time in 1980 at a
time when a number of local authorities strongly resisted parting with the
ownership of publicly-owned accommodation to those who then lived in it, and it
seems to me that we should be doing great violence to the obvious intention of
Parliament if we did not recognise that it was Parliament’s intention to block
to the maximum the opportunities open to reluctant landlords to obstruct the
acquisition of title by their tenants.
For all those
reasons I consider that the learned judge in the court below reached an
entirely correct decision. There was no discretion to refuse the injunction for
which the plaintiff asked and, accordingly, I would dismiss the appeal.
McCOWAN and HIRST LJJ agreed and did not add anything.
Appeal
dismissed with costs; leave to appeal to the House of Lords refused;
application for a stay of the injunction refused.
