Landlord and tenant – Appellant tenant exercising right to buy – Respondent local authority serving notice valuation – Appellant accepting notice – Appellant subsequently accepting respondents’ amended valuation – Purchase not completed – Whether respondents entitled to amend original offer – Whether appellant entitled to rely on first offer – Appeal dismissed
The appellant was the secure tenant of a property owned by the respondent local authority. She served notice on the respondents, pursuant to section 122 of the Housing Act 1985, exercising her right to buy.
Following an external valuation, the respondents served the appellant with a notice under section 125 of the 1985 Act, specifying the open market value of the property as £175,000, with a net purchase price of £159,000. The appellant accepted that offer. However, following a second valuation, the respondents issued a revised section 125 notice, specifying a new open market value of £225,000, with a net purchase price of £209,000, which the appellant also accepted. Completion did not take place and the appellant subsequently brought proceedings to enforce her right to buy at the original offer price.
The county court concluded that the respondents did not have the power to withdraw or amend a section 125 notice but held that the first notice was ultra vires and void since the market value given in it had been significantly understated and the respondents could not properly sell at that price. The appellant’s claim was therefore dismissed.
The appellant appealed. She submitted that the court had been correct in finding that the respondents had no power to amend a section 125 notice, but that its conclusion that the original notice was ultra vires was wrong. The respondents challenged the judge’s finding that there was no power to amend.
Section 138 of the 1985 Act conferred rights and imposed duties on a secure tenant and his landlord that were statutory rather than contractual. Although section 122(3) entitled a secure tenant to withdraw his application to exercise his right to buy by a notice in writing served on his landlord, that did not exclude withdrawal or abandonment by other means. Consequently, a secure tenant might abandon or waive his right to buy under normal principles of common law and equity or be estopped from continuing to exercise it: Bristol City Council v Lovell [1998] 1 WLR 446, Copping v Surrey County Council [2005] EWCA Civ 1604; [2006] 1 EGLR 42; [2006] 10 EG 156 and Martin v Medina Housing Association Ltd [2006] EWCA Civ 367; [2006] HLR 40 considered.
Given the detailed information that a landlord was required to give in its section 125 notice, the court had little difficulty in implying a power to amend to correct clerical mistakes. A landlord would be bound to correct any such mistake by informing the secure tenant so that he would not be misled and act to his detriment in the absence of a correction. There was no reason why it should not do so by serving a corrective section 125 notice. That power would be limited, notably in terms of the time within which it could be exercised, but such limits would have to be explored in future cases in which the point arose since it was not necessary to do so in the instant appeal.
It was clear in the instant case that the appellant’s acceptance of the second notice discharged by mutual agreement any rights or obligations of either party arising from the first notice. The appellant had received legal advice and there was no suggestion that her acceptance of the second notice was not freely given.
Per curiam: It was clear that the price stated in a section 125 notice was not set in stone. It might be affected by the variation of terms of the proposed lease with the consent of the parties or as a result of a county court determination of a dispute between them as to those terms. Section 126, which identified the price to be paid on a conveyance or the grant of a lease, did not define it by reference to the price stated in a notice under section 125. However, the court preferred to leave open the question of whether there was any limit on a landlord’s power to vary the price stated in its section 125 notice for decision in a case in which the tenant had not abandoned the purchase originally proposed or had agreed to proceed on the basis of a subsequent section 125 notice.
Christopher Cutting (instructed by Hilcrest Solicitors LLP) appeared for the appellant; Andrew Arden QC and Christopher Baker (instructed by the legal department of Tower Hamlets London Borough Council) appeared for the respondents.
Eileen O’Grady, barrister
