Lord Justice Rimer :
Introduction
- This is an appeal by Emma Ryan, the claimant, against an order dated 11 July 2008 made by Ms Recorder Wright in the Central London County Court. The respondent, defendant to the claim, is the London Borough of Islington ('Islington'). By her order the Recorder dismissed Ms Ryan's claims for (i) a declaration that the exercise of her right to buy her council flat was not deemed to have been withdrawn; alternatively, (ii) damages for the loss of that right. The essence of Ms Ryan's case before the Recorder and before this court is that Islington was not entitled to require her to complete the purchase before it had carried out certain underpinning works to a rear addition to the flat. The central argument in the appeal was whether Ms Ryan's request that Islington should first carry out such works was a matter 'relating to the grant' to her of the long lease to which she was entitled, those being the relevant words in section 140 of the Housing Act 1985. The Recorder held it was not. If Ms Ryan has lost her right to buy, she also asserts that the Recorder was wrong to refuse to order compensation by an award of damages. Ms Bretherton represented Ms Ryan and Mr Bhose represented Islington. Both counsel appeared at the trial.
The right to buy legislation
- The 'right to buy' is contained within Part V of the Housing Act 1985, a self-contained statutory scheme. The essence of the scheme at the material time was as follows. I set out only the material parts of the cited provisions. All section and schedule references in this judgment (apart from those to section 11 of the Landlord and Tenant Act 1985) are to the Housing Act 1985.
- A qualifying person who has been a secure tenant of a flat has the right to buy a long lease of the flat (section 118(1)(b)). A person qualifies if he has been a secure tenant for at least two years (section 119). The right is claimed by giving a notice to the landlord, one which can be withdrawn at any time (section 122). Upon the giving of such a notice, the landlord must, within a specified period, serve a notice admitting or denying the tenant's right to buy (section 124). If he admits it, he must, within a specified period (eight weeks if the interest to be conveyed is a freehold one; 12 weeks if, as here, it is a leasehold one), serve a notice under section 125, the heading to which describes it as a 'notice of purchase price and other matters'.
- Section 125 is important and the relevant provisions are as follows. Section 125(2) requires that the notice:
'(2) … shall describe the dwelling-house, shall state the price at which, in the opinion of the landlord, the tenant is entitled to have … the lease granted to him and shall, for the purpose of showing how the price has been arrived at, state –
(a) the value at the relevant time,
(b) the improvements disregarded in pursuance of section 127 (improvements to be disregarded in determining value), and
(c) the discount to which the tenant is entitled ….'
Section 125(3) requires the notice to state the provisions which, in the opinion of the landlord, should be contained in the grant. Section 125(4) provides that, where the notice states provisions which would enable the landlord to recover from the tenant (a) service charges, or (b) improvement contributions, it shall also contain the estimates and other information required by (inter alia) section 125A (estimates and information about service charges, including estimates of the tenant's likely contribution in respect of repairs, including the making good of structural defects). 125(4A) provides:
'(4A) The notice shall contain a description of any structural defect known to the landlord affecting the dwelling-house or the building in which it is situated or any other building over which the tenant will have rights under the conveyance or lease.'
Section 125(5) requires the notice to inform the tenant of (inter alia) his right under section 128 to have the value of the dwelling-house at the relevant time determined or re-determined by the district valuer; and of the effect of sections 140 and 141 (landlord's notices to complete and the effect of failure to comply with them).
- Section 126 provides that the price payable by the purchaser is the amount which, under section 127, is taken as its value at the relevant time less the discount to which the purchaser is entitled. Section 128 entitles the purchaser, within a given period after the service of the section 125 notice, to require the value to be determined by the district valuer. Section 138(1)(b) provides that 'as soon as all matters relating to the grant have been agreed or determined, the landlord shall make to the tenant … a grant of a lease …' (emphasis supplied). The duty is enforceable by injunction. In cases where the matter has not moved to completion, sections 140 and 141 come into play.
- Section 140 ('Landlord's first notice to complete') provides:
'(1) The landlord may, subject to the provisions of this section, serve on the tenant at any time a written notice requiring him –
(a) if all relevant matters have been agreed or determined, to complete the transaction within a period stated in the notice, or
(b) if any relevant matters are outstanding, to serve on the landlord within that period a written notice to that effect specifying the matters,
and informing the tenant of the effect of this section and of section 141(1), (2) and (4) (the landlord's second notice to complete).
(2) The period stated in a notice under this section shall be such period (of at least 56 days) as may be reasonable in the circumstances.
(3) A notice under this section shall not be served earlier than three months after –
(a) the service of the landlord's notice under section 125 (notice of purchase price and other matters), or ….
(5) In this section "relevant matters" means matters relating to the grant.' (Emphasis supplied)
- Section 141 provides for the service by the landlord of a second notice to complete. It provides:
'(1) If the tenant does not comply with a notice under section 140 … the landlord may serve on him a further written notice –
(a) requiring him to complete the transaction within a period stated in the notice, and
(b) informing him of the effect of this section in the event of his failing to comply.
(2) The period stated in a notice under this section shall be such period (of at least 56 days) as may be reasonable in the circumstances.
(3) At any time before the end of that period (or that period as previously extended) the landlord may by a written notice served on the tenant extend it (or further extend it).
(4) If the tenant does not comply with a notice under this section the notice claiming to exercise the right to buy shall be deemed to be withdrawn at the end of that period (or as the case may require, that period as extended under subsection (3) ….'
- Where a long lease of a flat is granted under the exercise of a right to buy, the lease must comply with Schedule 6. So far as material, paragraph 14 makes provision for the implication of covenants (although these are ordinarily replicated expressly) as follows:
'(1) This paragraph applies where the dwelling-house is a flat.
(2) There are implied covenants by the landlord –
(a) to keep in repair the structure and exterior of the dwelling-house and of the building in which it is situated (including drains, gutters and external pipes) and to make good any defect affecting that structure;
(b) to keep in repair any other property over or in respect of which the tenant has rights by virtue of this Schedule;
(c) to ensure, so far as practicable, that services which are to be provided by the landlord and to which the tenant is entitled (whether by himself or in common with others) are maintained at a reasonable level and to keep in repair any installation connected with the provision of those services. …'
- Paragraph 16B provides:
'(1) Where a lease of a flat requires the tenant to pay service charges in respect of repairs (including works for the making good of structural defects), his liability in respect of costs incurred in the initial period of the least is restricted as follows.
(2) He is not required to pay in respect of works itemised in the estimates contained in the landlord's notice under section 125 any more than the amount shown as his estimated contribution in respect of that item, together with an inflation allowance.
(3) He is not required to pay in respect of works not so itemised at a rate exceeding –
(a) as regards parts of the initial period falling within the reference period for the purposes of the estimates contained in the landlord's notice under section 125, the estimated annual average amount shown in the estimates;
(b) as regards parts of the initial period not falling within that reference period, the average rate produced by averaging over the reference period all works for which estimates are contained in the notice;
together, in each case, with an inflation allowance.
(4) The initial period of the lease for the purposes of this paragraph begins with the grant of the lease and ends five years after the grant, except that –
(a) if the lease includes provision for service charges to be payable in respect of costs incurred in a period before the grant of the lease, the initial period begins with the beginning of that period;
(b) if the lease provides for service charges to be calculated by reference to a specified annual period, the initial period continues until the end of the fifth such period beginning after the grant of the lease ….'
- Finally, matters of valuation apart, section 181 confers jurisdiction upon the county court to entertain any proceedings brought under Part V or to determine any question arising under it.
The Landlord and Tenant Act 1985
- Also relevant are the landlord's repairing obligations implied into Ms Ryan's secure tenancy by section 11 of the Landlord and Tenant Act 1985 ('LT'). That provides, so far as material:
'11. Repairing obligations in short leases
(1) In a lease to which this section applies (as to which, see sections 13 and 14) there is implied a covenant by the lessor –
(a) to keep in repair the structure and exterior of the dwelling-house (including drains, gutters and external pipes),
(b) to keep in repair and proper working order the installations in the dwelling-house for the supply of water, gas and electricity and for sanitation (including basins, sinks, baths and sanitary conveniences, but not other fixtures, fittings and appliances for making use of the supply of water, gas or electricity), and
(c) to keep in repair and proper working order the installations in the dwelling-house for space heating and heating water. …'
The facts
A. Exchange of notices
- Ms Ryan has been the secure tenant of flat C, 48 Hornsey Rise, London N19 since about June 2000. She occupies it with her twin sons, born in March 2000. It is a garden level, one-bedroom flat within a substantial three-storey terraced house with a communal entrance. The bedroom is within a single-storey, zinc-roofed rear addition to the building. The tenancy incorporated express repairing covenants by Islington and also the covenants on its part implied by section 11 LT. The flat was in disrepair from the outset of the tenancy.
- On 9 January 2003 Ms Ryan gave notice (Form RTB1) to Islington exercising her right to buy a long lease of the flat (section 122). Islington acknowledged its receipt on 13 January 2003, saying it would have to check she had a secure tenancy and that it owned the freehold.
- On 4 March 2003 Islington sent Ms Ryan Form RTB2, admitting her right to buy (section 124) and explaining that the price would be based on the flat's market value on 9 January 2003 (section 127). The covering letter said the Borough Valuer would contact her to value the flat after which she would receive a notice under section 125 offering the terms of the sale.
- On 10 June 2003 Islington recorded that specialist works were required to be carried out to the flat – filling an external crack to the back addition. The relevance of this is that although the Recorder found that, both at the time of the valuation of the flat (June 2003) and at the time of its section 125 notice (August 2003), Islington was unaware of the subsidence affecting the rear addition ('the subsidence'), this entry shows that by then it did have notice of the subsidence. Islington made an admission to that effect in paragraph 4.1a of its Defence.
- On 23 June 2003 Islington's valuer valued the flat at 9 January 2003 at £160,000. His report identified the following defects of which Islington was said to be aware: sloping and springy floors throughout, evidence of damp to ceiling and walls in bedroom. It noted various tenant's improvements that had been disregarded in the valuation. It did not refer to the subsidence.
- Islington sent Ms Ryan a section 125 notice on 20 August 2003 ('notice of purchase price and other matters'). It informed her that she was entitled to acquire a 125-year lease at a price of £122,000, being the £160,000 valuation less a discount of £38,000.
- Page 1 of the notice identified the tenant's improvements (referred to in the valuation report) that had been disregarded in the valuation. It also stated that:
'The following defects are known to exist according to the Landlord's limited records and inspection(s) and affect the dwelling or house, the building in which it is, or any other building over which you will have rights under the lease or conveyance:
Sloping and springy floors throughout.
Evidence of damp to ceilings and walls in bedroom.
YOU ARE STRONGLY ADVISED TO OBTAIN YOUR OWN QUALIFIED SURVEYOR'S REPORT ON THE CONDITION OF YOUR HOME BEFORE COMPLETING YOUR PURCHASE. FOLLOWING COMPLETION YOU WILL BE RESPONSIBLE FOR MEETING THE COST OF RECTIFYING ANY STRUCTURAL OR OTHER DEFECTS.'
The listed defects did not include the subsidence. Page 2 explained that the estimated annual service charge was £488.65 and gave the breakdown of the five items (including 'Block Repairs') making up that figure. A part headed 'ITEMISED REPAIRS & IMPROVEMENT WORKS' explained:
'(i) The reference period adopted for the purposes of these estimates commences six months after the date of this Notice and lasts 5 years.
(ii) The Council will be responsible for keeping in repair the structure and exterior of the flat or maisonette and the REST of the building. This includes not only routine repairs and maintenance, but major works such as lift renewal, roof renewal, and exterior repairs and redecoration, also boundary walls and works to remedy any structural defects.
(iii) In the case of a freehold house, the council would NOT normally be responsible for keeping in repair any part of the house including the structure and exterior. However, purchasers of houses as well as flats and maisonettes on Council estates will be subject to annual service charges where communal services are provided such as communal heating, estate lighting, estate grounds, etc. (see service charges) and will also be liable to pay a yearly sum for day to day estate repairs and maintenance.
(iv) The Council estimates the following amounts (at current prices) to be payable for the reference period specified above.' (Emphasis supplied)
Three types of work were then described: 'External Repairs & Painting; Water Tank Renewal; Damp Proofing Works'. An estimated cost was provided for each item, as was Ms Ryan's estimated contribution to them. The total figures were £22,000 and £5,500 respectively.
- Page 3, under the heading 'RIGHT TO APPEAL,' informed Ms Ryan of her right of appeal against the valuation. It explained that if she did not respond to the offer within 12 weeks, she would be sent a reminder and, if she did not respond to that within 28 days, the offer would be cancelled. Page 4 included a part headed 'COMPLETION OF THE PURCHASE' that explained:
'Once you have accepted the offer you can take all the time you reasonably need to obtain a mortgage and legal advice. If nothing is heard from you for 12 months, you will receive a Notice to Complete. Eight weeks later a final Notice to Complete will be sent to you. If you do not complete the purchase within eight weeks of getting this Notice, your application will be cancelled.'
- Islington's covering letter explained that, if Ms Ryan wished to proceed with the purchase, she must complete and return the appropriate parts of the Response to Offer form within 12 weeks from 20 August 2003. If she did, Islington would arrange for property plans to be drawn up and its solicitors would then liaise with her solicitors. If she was proposing to raise finance for the purchase on mortgage, she should await the documentation before accepting a mortgage offer, since such offers were normally only valid for 90 days and could not be held open for longer.
B. Diagnosis of the subsidence
- On 21 August 2003 Islington recorded that it had instructed its surveyor to carry out an inspection at the flat in order to locate the cause of damp appearing on the interior and exterior walls of the bedroom; the dampness was said to be causing cracks. On 29 September 2003 Islington recorded that it was to instruct a surveyor to inspect cracks to the ceiling in bedroom.
- On 20 October 2003 John Birchall, a senior building control surveyor with Islington, visited the flat and carried out an inspection of the problems in the back bedroom/extension. It was this inspection that diagnosed the subsidence. Ms Ryan and her father, Michael, were there at the time. Mr Birchall's report is dated 22 October 2003. He identified a tapering vertical crack between a flank wall of the rear addition and the main rear elevation wall. The crack was hairline at the bottom, opening to about 15mm at the top. Daylight could be seen through it. It travelled 'across the ceiling/wall junction … downwards to a lesser degree at the junction of the inner flank wall.' Ancillary horizontal cracking of about 2mm to 3mm could be seen at the junction of the ceiling/rear wall. There was also minor cracking around the windows. His conclusion was that the rear extension was
'… suffering from historic and current subsidence problems as [manifested by] the exaggerated gap between flank wall and the main rear elevation wall. The most recent movement appears to have happened since February of this year i.e. when it was rendered.'
His recommendation was that foundation stabilisation had to be considered because of the movement and frequency of repair and that the foundation to the rear addition should be underpinned to a depth of about 2.5m. He recommended that, once that was done, relatively simple superstructure repairs could be carried out, which he listed. He said that, with the onset of winter, the defects in the flat were unacceptable and he made suggestions as to filling the cracks in the short term.
- Mr Birchall sent his report to Alan Kendall, a surveyor at the Holland Walk Area Housing Office. He did not send a copy to Ms Ryan or her father. The Recorder noted in her judgment that Ms Ryan's evidence was that Mr Kendall spoke to her on the telephone on 27 October 2003 and told her that he had received a report from Mr Birchall that underpinning was needed and that it would be a six-month wait. Ms Ryan had made (and produced) her note of the conversation. Her note also referred to an earlier conversation on 22 October 2003, when Mr Kendall said he was going to get the 'foam' done as soon as possible (a reference to the short term works recommended by Mr Birchall). Ms Ryan said initially in her evidence that Mr Kendall had not told her exactly when the underpinning would be done but later she said that Mr Kendall had given her a six-month time frame for the work (her note simply said that there 'could be 6 month wait'). She said he was the only person who gave her such assurances and she believed them. She also said that, had the works been done, the valuation as at January 2003 would have been correct.
- Mr Ryan also gave evidence that Mr Kendall had told him that the underpinning works would be carried out in about March/April 2004. Mr Ryan was proposing to put his savings of £60,000 into Ms Ryan's purchase and to guarantee her mortgage loan for the balance. He told the Recorder that he would not have participated in the purchase if the underpinning work had not been carried out.
- Mr Kendall did not give evidence to the Recorder: he had died in June 2005. But his immediate superior at the Holland Walk office, Mr Damian Dempsey, did give evidence and the Recorder found him to be helpful and reliable. He gave evidence that Mr Kendall should have referred Mr Birchall's report to him together with the file in relation to the flat but that he did not do so. It was clear that the underpinning works would cost more than £5,000 and neither Mr Kendall nor Mr Dempsey had authority to authorise works in excess of that figure. The procedure for authorising the work would be for Mr Dempsey to refer the application to the Legal Repair Team. That met monthly and Mr Dempsey would have made representations to obtain the authority to subcontract the work to one of Islington's subcontractors. The Recorder found that Mr Kendall never referred the underpinning issue to Mr Dempsey so that he could obtain authority for the works. There was a record of Mr O'Connor, a builder, being asked to provide a quotation (I will come to him and that), but there was no record by Mr Kendall, or any other file record, to suggest that the underpinning works had been authorised by Islington or that they would start at any particular time. The result was that Mr Birchall's report was not actioned. All that the Recorder found that did happen was that some temporary works were done.
- I have summarised this evidence because it was an important part of Ms Ryan's case that Mr Kendall had assured her that the underpinning works would be carried out by about March 2004 and that she was entitled to rely on that assurance. As regards the alleged giving of assurances by Islington, the Recorder's finding was that Mr Kendall gave no such assurances as Ms Ryan and her father asserted. He had no authority to say that underpinning works would be carried out let alone that they would be carried out by a particular time. The Recorder said that:
'I am satisfied that the most likely explanation is that Mr Kendall did speak to Ms Ryan on 27 October 2003, as she has recorded, that he probably did say to her that the property needed underpinning, because he had just received Mr Birchall's report, which said exactly that. He may well have told Ms Ryan that could be a six-month wait, but this did not mean that works would start sometime within six months, or indeed soon after this, Mr Kendall would have known it would have taken some time for Mr Dempsey to bring the case before the panel, and thereafter approved, for works to be started. I conclude that Ms Ryan misinterpreted what Mr Kendall told her, probably because she was desperate for the back bedroom to be fixed, and that Mr Ryan was not given assurances by Mr Kendall, but his position was clear, without the underpinning work, he would not proceed with obtaining a mortgage and purchasing the property on behalf of his daughter.'
C. Acceptance of the section 125 offer
- On 3 November 2003 Ms Ryan signed and returned to Islington her acceptance of the section 125 offer at the price of £122,000. She identified her solicitors as YVA Solicitors ('YVA'). The form acknowledged her understanding that:
'… only essential repairs to maintain the property will be undertaken by the Council prior to completion and that any defects notified have been taken into account for valuation purposes.'
By this time, as the Recorder found, she knew that that there was a real prospect that the back addition required underpinning. Islington acknowledged receipt of her acceptance by a letter of 5 November 2003. It explained that once any necessary plans had been drawn up, its solicitors would forward draft sale documents to YVA; and pointed out that there was currently a delay of about 12 weeks in the production of property plans. Islington's letter included some 'Guidance Notes for Right to Buy Applicants'. Section 5 read:
'DEFECTS TO THE PROPERTY
A list of structural defects (where applicable) shown in [sic] were revealed by the Council's limited inspection(s) and/or records. No structural investigations or only a restricted survey was carried out and whilst no other structural defects were evident from the inspection and limited records, YOU ARE MOST STRONGLY ADVISED TO OBTAIN YOUR OWN QUALIFIED SURVEYOR'S REPORT ON THE CONDITION OF YOUR HOME AND BUILDING STRUCTURE BEFORE COMPLETING YOUR PURCHASE.
Following completion you will be responsible for meeting the cost of rectifying structural or other defects. A proportion to [sic] the cost of remedying defects in the building will be charged to you if you live in a flat or maisonette.'
- Like advice to the proposing purchaser to obtain his own surveyor's report on the property had been contained in the offer of 20 August 2003. It is advice of a nature of which any purchaser ought to be aware and by this stage Ms Ryan was being advised by YVA. The Recorder remarked that it was 'quite extraordinary' that, given Ms Ryan's and her father's knowledge of the difficulties about the flat, neither suggested obtaining their own report.
D. Mr O'Connor visits the flat
- On 1 December 2003 Mr O'Connor (managing director of Westgate Building Services Ltd) visited the flat. He gave evidence and said that he explained to Ms Ryan and to her father that he had been asked to provide a quote for the works recommended by Mr Birchall but could not say whether or not Westgate would get the contract. Mr Ryan acknowledged in his own evidence that Mr O'Connor did not indicate that Westgate actually had the contract or say that he would be starting it in March 2004. Mr O'Connor inspected the flat and considered the underpinning work that would be needed. He explained to Ms Ryan and her father that the best time to carry out the work would be in the spring. Ms Ryan admitted in her evidence that most of the conversation on that occasion was between Mr O'Connor and her father. The Recorder accepted Mr O'Connor's evidence and, in particular, found that he too gave no assurances to Ms Ryan or her father that Westgate would be carrying out the work or that it would commence in March 2004: he did not do so because he could not do so. In fact, Westgate did not get the contract when much later (in about November 2006) the underpinning work was carried out. There is no record that Westgate's quote was ever even recorded by Islington.
E. The further course of the purchase of the flat
- In January 2004 Islington drew up floor plans of the flat in order to be able to proceed with the sale. It informed Ms Ryan of that in April 2004. Ms Hislop of Islington wrote to YVA on 20 May 2004 enclosing documentation for the purposes of the transaction. It included a counterpart lease for execution by Ms Ryan, a form of declaration as to occupancy, a form of undertaking to pay rent, notes as to the mechanics of payment on completion and a schedule of completion requirements. It explained that the title was registered at HM Land Registry under Title No NGL 182125. It explained that completions were normally arranged for Mondays, suggested Monday 5 July 2004 as the completion date and asked for confirmation that this was acceptable. I should quote paragraph (4) of the letter, which said that the enclosures included:
'For your information, a further copy of the Landlord's Offer Notice issued to your client(s). In this connection, I would draw your attention to the fact that unless the Council specifies, on the notice, works that it intends to carry out within the "reference period" stated in the notice, it cannot make any charge for such works within such period. Therefore, the Council is not prepared to answer any further enquiries with regards to any works to the property as part of the conveyancing process.'
- YVA did not reply to that letter. On 6 September 2004 Ms Hislop served Ms Ryan with a first notice to complete pursuant to section 140. The letter suggested she should contact her solicitors and asked her to inform Islington if she no longer wished to buy. The notice read:
'The Council your Landlord requires you within the period of 56 days from the date of service on you of this notice:
(a) if any relevant matters are outstanding, to serve written notice on the Council specifying those outstanding; or
(b) if all relevant matters have been agreed or determined, to complete the purchase.
If you do not comply with this notice, the Council may serve a written final notice to complete on you, giving you at least a further 56 days to complete the purchase. Failure to comply with the final notice to complete will result in your being treated as having withdrawn your claim to exercise the right to buy.'
Ms Hislop sent a duplicate to YVA, noting in the covering letter that Islington had had no response to its earlier letter of 20 May 2004.
- Those letters did produce a response. On 24 September 2004 YVA replied saying 'Can you please confirm whether [the flat] is underpinned before we start with the completion process.' Ms Hislop (in the legal services department) had no knowledge of that and raised an inquiry resulting in an internal Islington note of 4 October 2004 that Building Control had advised that the flat was underpinned in 1992. Ms Hislop so informed YVA on the same day, also inviting them to suggest a date for completion. YVA's response, on 12 October 2004, was that Ms Ryan had informed them that the front of the property had been underpinned 'some years ago' and they asked for confirmation as to 'whether the back of the property has been underpinned which was due to be done in March of this year.' That was an odd inquiry because Ms Ryan knew that it had not been underpinned. One wonders what instructions she can have given YVA. Ms Hislop dutifully followed that up as well, to be told by Building Control that there was 'nothing to indicate that work has been done.' She wrote to YVA on 22 October 2004 explaining that Islington's notes showed only that there had been underpinning in 1992 and that she could not confirm whether the back of the property had been underpinned as there were no records to indicate that such work had been undertaken. She repeated her request for a suggested completion date.
- YVA responded by a letter of 28 October 2004. They explained that Ms Ryan had been liaising with Mr Kendall who had informed her that 'the back of the property was to be underpinned in March 2004 however work was not undertaken.' That, presumably, was a reference to the assurance that Mr Kendall was alleged to have given Ms Ryan but which the Recorder had found he had not. YVA said they had also been informed that a report had been written as to why the work had not been done in March 2004 and they asked for a copy. They asked whether the underpinning would go ahead in the future and, if so, when it was likely to be done. They did not suggest that Ms Ryan was not prepared to go ahead with the purchase or that she was disputing the valuation of the property.
- On receiving that further inquiry, Ms Hislop contacted Mr Kendall on 10 November 2004 and her note recorded that he informed her that '- back edition [sic] – underpinned, getting quote – lead roof being done next week.' Ms Hislop followed that with a letter to YVA on the same day saying that she had discussed it with Mr Kendall, who had confirmed:
'… that the property does require some underpinning work however, the Council is still processing the matter. There is no definite date for when the works may be done, and as the consent has not yet been granted by the relevant Board, it appears that it may be some time before a final decision is made. I understand that your client is having improvement works done to the roof of the property next week.'
Ms Hislop's statement that the Council was 'still processing this matter' was incorrect. It was not being processed. But she anyway apparently regarded the status of the underpinning matter as irrelevant as regards the sale/purchase transaction. She also wrote that the first notice to complete had expired and her instructions were to serve a second notice to complete. She enclosed one, also sending a copy to Ms Ryan. That notice was served pursuant to section 141. It required Ms Ryan to complete the purchase within 56 days and warned her that if she did not comply with it, she would be treated as having withdrawn her claim to exercise her right to buy (section 141(4)).
- YVA's response, on 25 November 2004, was that Ms Ryan could not obtain a mortgage loan until the works had been carried out. They asked for the transaction to be suspended until they had been done so that a mortgage could be obtained. Ms Ryan herself then wrote, on 27 November 2004, to Ms Hislop in response to the letter of 10 November 2004 enclosing the second notice to complete. She said there were 'serious structural defects on the property that the Council need to carry out before completion takes place.'
F. Islington treats the 'right to buy' notice as withdrawn
- The second notice to complete expired on 6 January 2005. Completion did not take place. On 28 January 2005 YVA asked for a response to their letter of 25 November 2004. The response came from Ms Pearsall of Islington on the same day. She wrote:
'The Section 125 Offer Notice reflects the condition of the property in the valuation as at the time it is valued, i.e. 20 August 2003 in this instance. The Council does not therefore, have a duty to improve on the condition of the property, once it has been evaluated, in order to raise its value to meet the standard required by the mortgage company. If it did so, the purchase price would have to be raised to reflect the improvement made to the property. While we are sympathetic to the difficulty experienced by your client in obtaining a mortgage, this is not a ground for extending the Right to Buy period. As the Final Notice expired on 6 January 2005, this matter is now deemed to be withdrawn in terms of the Right to Buy Legislation.'
- Ms Pearsall's first sentence was inaccurate. The offer (dated 20 August 2003) was of the flat at a price reflecting a discounted valuation as at 9 January 2003, the latter having disregarded certain tenant's improvements and recording that certain identified defects were known to exist. It did not reflect its condition or value as at 20 August 2003. Her second sentence was probably also mistaken. The valuation had not apparently reflected the subsidence affecting the rear addition: the carrying out of the necessary repairs would merely bring the flat into line with its assumed condition at the date of the valuation. YVA's response, on 9 February 2005, was that the section 125 offer notice had made no mention of subsidence. That was correct but YVA did not explain the point they were making. They nevertheless asked for a six month extension of the right to buy period. Ms Pearsall replied on 15 February 2005 that the matter was 'enjoying' attention and she would respond in due course. She did so on 24 February 2005, when she wrote both to Ms Ryan and YVA that Ms Ryan's right to buy application had been deemed to be withdrawn following her failure to comply with the second notice to complete.
- That provoked an irate response on 4 March 2005 from Ms Ryan. She said (wrongly) that an Islington contractor, Westgate, had been engaged to carry out structural works to the flat but they were not yet started. All that had been done was some temporary roof repairs aimed at stopping further water damage to the bedroom until the major works were done. Her point was that it was Islington's duty to rectify the serious structural defects at the flat before completion. Ms Pearsall responded on 14 March 2005, saying the matter was closed but that Ms Ryan could always lodge a fresh 'right to buy' application.
- YVA returned to the fray on 4 May 2005. They wrote a long letter. Its essence was that there was a meeting at the flat in about October 2003 between Mr Kendall and Mr O'Connor of Westgate (that was wrong: there was no such meeting). It concerned the subsidence. YVA asserted that Ms Ryan:
'… was assured by them that works would be undertaken to carry out the underpinning and the indication was that the works would probably start in March 2004. In the circumstances our client was led to believe that the required underpinning works would be completed in plenty of time with a view to her completing her right to buy. Throughout the course of 2004 our client received constant reassurances from the Local Authority that the works would be carried out promptly but even at the date of this letter we understand that the works have still not been carried out.'
YVA then rehearsed the exchanges following the service by Islington of the first notice to complete and complained that Islington had frustrated Ms Ryan's exercise of her right to buy because the failure to carry out the underpinning works had prevented the raising of a mortgage loan to enable her to complete the purchase. They then asserted their belief that:
'… our client has an action against you either with a view to forcing the underpinning works and forcing the council to re-issue the right to buy notice under the previous terms or alternatively a substantial claim for damages. It also strikes us that our client has a substantial claim against the Local Authority for disrepair since the property has been suffering from subsidence for some years and suffered from damp and springy floors.'
- Islington's letter of 9 May 2005 in response simply repeated that the matter was at an end, Ms Ryan not having complied with the second notice to complete. YVA pressed on 24 May 2005 for a full response. It does not look as if one was ever given.
G. Ms Ryan implements the Disrepair Protocol
- Ms Ryan then implemented the Disrepair Protocol with a letter of 28 June 2005 from YVA, the same day that Mr Kendall died. The letter scheduled numerous items of disrepair at the flat, said to have predominantly arisen from subsidence. Mr Bob Stone, a surveyor with Homes for Islington Limited ('HFL'), an Islington agent, was promptly instructed and he visited the flat on 11 July 2005. He commissioned his own investigation into the causes of the subsidence and made an application for authorisation for partial underpinning of the rear extension. Underpinning works were commenced in November 2005 and were completed by about Christmas 2005. Repairs and renovations were then carried out to the internal and external structure, which were completed in August 2006. Some of these works, in particular those relating to the partial insulation of the roof, were defective and further remedial works were required. Work continued throughout 2006 and decorative works commenced in March 2007. Still further works were identified as necessary in July 2007 and final, albeit minor, works were the subject of an agreed order for specific performance at the trial before the Recorder in July 2008. The Recorder's finding was that, whilst in the summer it may have been possible for Ms Ryan and her sons to sleep in the back bedroom, the situation in the flat was wholly unacceptable and, until about mid-2006, the back bedroom was unusable most of the time: I understand that to mean since Ms Ryan moved into the flat in 2000.
- Whatever the legal rights and wrongs of this case, it is difficult not to have considerable sympathy with Ms Ryan. She was living in a substandard flat that cried out for the execution of urgent remedial works which it was Islington's duty to perform. Islington was on notice of the subsidence problem by June 2003 but it took far too long to have it remedied. The explanation for that, in a witness statement of Bob Stone, is that the housing offices simply did not have the funds to deal with more than day to day repairs. The underpinning required to the back addition at the flat was a major work and his evidence was that the only department at HFL with a budget to deal with such work was his Legal Repair Team, which could and would only take on a case such as Ms Ryan's when (as she did in June 2005) she 'went legal' by invoking the Disrepair Protocol.
The issues before the Recorder
- Ms Ryan's claim included claims for damages for breach by Islington of its repairing covenants. The breaches were in respect of the subsidence affecting the rear addition, dampness, a leaking roof to the rear, defective windows and defective heating. Islington admitted the disrepair. The Recorder made an award of damages and an agreed order for specific performance and no question arises before this court in relation to those parts of her order.
- The other issue before the Recorder, upon which Ms Ryan failed, was her claim in respect of her exercise of her right to buy the flat. She challenged Islington's assertion that her right had been lost by reason of her alleged non-compliance with the notices to complete. She claimed a declaration that she was still entitled to exercise the right by way of performance of the terms of the offer in the section 125 notice of 20 August 2003. Alternatively, if she was not so entitled, she claimed damages for the loss of her right. That was advanced on the basis that Islington's failure, in breach of its repairing obligations, to remedy the subsidence prevented her from raising a mortgage loan to enable her to complete the purchase.
- Islington denied all bases of this claim. Its stance was that Ms Ryan had lost her right to buy by reason of her non-compliance with the notices to complete; and that its failure to carry out the repair work did not cost her the opportunity to buy. It is open to Ms Ryan, as Islington accepts, to serve a fresh 'right to buy' notice under section 122. But that is less attractive to her than the completion of a purchase on the terms of the section 125 notice of August 2003 because the discount rules have since changed against her.
The judgment below
- Ms Ryan asserted that Islington's claim that her notice exercising her right to buy was deemed to have been withdrawn following non-compliance with the second notice to complete was mistaken. It was said that upon service of the first notice to complete, Ms Ryan complied with section 140(1)(b) by notifying Islington of 'relevant matters' that were 'outstanding', namely the need to cure the structural defect. It was said she did so by the letters of 24 September, 12 October and 28 October 2004. As it was not cured, Islington was not entitled to serve the second notice to complete. The point was also made that the periods given by both notices were unreasonably short.
- The Recorder did not accept these arguments. As I have said, she found that Islington did not know of the subsidence either when the flat was valued in June 2003 or when Islington served its section 125 notice on 20 August 2003. The only defects of which it was then aware were those identified in the valuation report and the notice. The value as at 9 January 2003 was assessed on that basis. Ms Ryan had (and was told of) the right, within three months of the service of the notice, to have the value re-determined by the district valuer (section 128). Within that period of three months she learnt of the need for the rear addition to be underpinned. She nevertheless did not exercise her section 128 right but instead accepted the offer unconditionally on 3 November 2003. This was at a time when her father was clear that he would not proceed with the purchase until the underpinning was done. The Recorder's view was that, prior to the service of the first notice to complete, Ms Ryan had done nothing to suggest that any 'relevant matters' were still outstanding and that Islington was therefore entitled to serve it. 'Relevant matters' in section 140(1)(b) were defined by section 140(5) as matters 'relating to the grant', which the Recorder said meant relating to the lease itself. Whilst, following the service of the first notice, Ms Ryan's solicitors did raise points about the need for the underpinning works to be done, they were not 'relevant matters'. It followed that, as the first notice was not complied with, Islington was entitled to serve the second one; and, when it was not complied with either, to treat the notice claiming to exercise the right to buy as withdrawn (section 141(4)). The Recorder further held that Ms Ryan had not made good her claim for damages.
The appeal to this court
A. Were the outstanding structural repairs matters 'relating to the grant'?
- Ms Ryan advanced three grounds of appeal against the Recorder's decision. The first was that the Recorder was wrong to find that Ms Ryan had failed to comply with the first notice to complete served on 6 September 2004. That turns on whether the subsidence was a structural defect whose non-repair was an outstanding matter 'relating to the grant'. Before coming to that, I should refer to a logically prior point that Ms Bretherton made, namely that Islington was on notice of the subsidence in June 2003 yet made no reference to it in the section 125 notice and was thereby in breach of its statutory duty to do so under section 125(4A). That subsection requires the notice to 'contain a description of any structural defect known to the landlord affecting the dwelling-house ….'
- Whilst that last point may be correct, it is one that, with respect, I regard as irrelevant. I have already noted that the Recorder found that Islington was not aware of the subsidence when it served that notice, but Mr Bhose, for Islington, did not seek to defend that finding. He submitted, however, that the subsidence was not a 'structural defect' within the meaning of section 125(4A) and so did not need to be disclosed at all. He said that a structural defect is an inherent defect in a building – whether caused by defects in design or poor workmanship or a combination of both – but in any event a defect in existence from when the building was constructed, and whether or not it has also caused damage to the structure or exterior. It was, he said, intended to cover the narrow category of building defects which would or might not come with the common law scope of repair. His submission was that the cracking of the walls was a mere matter of disrepair, not a structural defect.
- With no discourtesy to the argument that Mr Bhose developed in support of that submission, I find it unnecessary for the purposes of this appeal to express any view on its correctness or otherwise and do not do so. I am prepared to assume (without deciding) that, as Ms Bretherton submitted, the subsidence was a structural defect that needed to be disclosed. Even so, and accepting that it was not disclosed in the section 125 notice, I do not understand its relevance to Ms Ryan's case. No case was sought to be made in the county court that any breach by Islington in this respect entitled Ms Ryan to repudiate the 125 notice or to have it set aside. On the contrary, when on 3 November 2003 Ms Ryan accepted the terms offered in that notice, she (i) knew that the notice had said nothing about the subsidence, (ii) knew about that subsidence, and (iii) took no steps to have the flat revalued by the district valuer, as was her right. Her case before the county court, as before this court, was and is that she remains entitled to compel Islington to grant her a long lease of the flat on the terms of the section 125 notice: her case involves an assertion of that notice, not a disputing of it. It may be that in the county court Ms Ryan advanced a claim for damages said to have been caused by the non-disclosure of the subsidence. But any such claim was rejected, and no such damages claim was developed before us in a way that I was able to follow: I can see no basis for any such claim. The only damages claim that was argued before us was a different one, and I will come to it.
- In my view, therefore, nothing turns on any breach of duty by Islington in failing to disclose the subsidence in its section 125 notice. Ms Ryan can, in my view, be regarded as having waived any right she might have had arising out of such non-disclosure. In fact, Islington's omission to refer to the defect did Ms Ryan a good turn. Had she completed the purchase, she could have required Islington to put it right (Schedule 6, paragraph 14(2)(a)), with any liability on her part to contribute to the cost being limited by the provisions of Schedule 6, paragraph 16B; whereas if Islington had referred to the defect in the notice, it could have required a larger contribution. By the autumn of 2004, Ms Ryan had had the proposed counterpart lease for several months and Ms Bretherton admitted that Ms Ryan knew that its terms included an obligation by Islington to remedy structural defects.
- I come therefore to the heart of the first ground of appeal. The first notice to complete was served under section 140. It required Ms Ryan, 'if all relevant matters have been agreed or determined, to complete' the purchase within 56 days; or, 'if any relevant matters are outstanding, to serve on' Islington within that period a written notice specifying them. Section 140(5) defines 'relevant matters' as 'matters relating to the grant'. YVA, albeit not expressly by reference to section 140, reacted to the first notice by (i) enquiring whether the remedial underpinning work had yet been done (letters of 24 September and 12 October), to which the answer was no (22 October); and (ii) asserting (on 28 October) that Mr Kendall had told Ms Ryan that the flat was due to be underpinned in March 2004 and asking when the work was likely to be done. The first notice then expired, in about the first week of November 2004. On 10 November 2004 Islington served its second notice to complete (section 141). That could only have been validly served if Ms Ryan had not complied with the first one.
- Ms Bretherton's submission was that Ms Ryan did comply with the first notice. The subsidence represented, she said, a structural defect, as I have assumed it was. Ms Ryan's stance was that she was not prepared, or did not want, to complete the purchase before the defect was remedied (although YVA did not, until their letter of 25 November 2004, go the modest distance of actually saying so). Ms Bretherton's point was that its remedying was a 'relevant matter' that 'related to the grant' and was still outstanding, as YVA's letters made sufficiently clear. Such matter having been raised in response to the first notice, it was for Islington to remedy the defect; and until Islington had done so, it could not serve the second notice or otherwise compel completion. Islington failed to take any steps to remedy the defect but simply purported to serve the second notice. That, said Ms Bretherton, was something Islington was not entitled to do.
- The correctness of the argument depends entirely upon the proposition that the remedying of the subsidence problem was an outstanding matter 'relating to the grant'. The Recorder interpreted matters 'relating to the grant' as being matters relating exclusively to the lease – that is, as relating to conveyancing matters - and so she rejected the like submission. Ms Bretherton's submission was that the Recorder was wrong. Whilst section 140(5) explains that 'relevant matters' mean 'matters relating to the grant', she said that such matters include all matters relating to the question of the grant, not just those relating to the terms of the conveyance or lease. The language of section 140(5) does not confine the meaning to the narrow one attributed to it by the Recorder. Ms Bretherton illustrated her submission by suggesting that if, following the section 125 notice, the premises were wholly destroyed by fire, there would be nothing to convey or lease. Such a circumstance must, she submitted, be one 'relating to the grant'.
- Ms Bretherton developed the submission by pointing out that the words 'relating to' are wide in range and said that there is no sound reason to interpret them as excluding the execution of outstanding structural works. She submitted that the Recorder's decision was contrary to the guidance to be derived from this court's decision in Milne-Berry v. London Borough of Tower Hamlets (1997) 30 HLR 229. With respect to that last submission, I regard it as misdirected. Milne-Berry concerned the sale of a freehold interest, not the grant of a lease. It was, I accept, a case in which the tenant expressly raised the argument that a want of repair was a matter 'relating to the grant' (the point in fact being raised in respect of like language in section 16(12) of the Housing Act 1980). The point was not decided at first instance (see (1996) 28 HLR 225), the case being disposed of on another basis, although Sir Haydn Tudor-Evans expressed, at 239, his 'tentative opinion' (but not a final view) that questions of repair did not relate to the grant. When the case came on appeal before this court, the same point was raised by a respondent's notice, but the court also did not decide it (nor did it even hear argument on it: see (1998) 30 HLR 229, at 236, 237). Milne-Berry therefore affords no assistance on Ms Bretherton's submission. Ms Bretherton recognised that Milne-Berry did not actually decide the point but she claimed to draw support for her submission from Henry LJ's following observations when explaining the facts:
'But before they completed the purchase of the freehold, it is clear that they wished to have the question of liability for the repairs to the dwelling resolved. This was sensible and reasonable, because until it was known whether the Council would do those repairs or some of them, or whether the right to buy price was to be reduced by the cost of repair if the tenants were to have to do them, the tenants could not form a proper judgment as to whether they could afford to buy, or whether to buy at that price.'
- Those comments reflect sound practical sense but were not focused on the point for which Ms Bretherton enlisted them and do not support the proposition that a requirement by a purchasing tenant that the landlord should carry out repair works in advance of completion is an outstanding matter 'relating to the grant' within the meaning of section 140 HA.
- In my judgment Ms Bretherton's submission is incorrect and I do not accept it. First, the 'grant' referred to is the conveyance or lease by which the premises are to be assured to the purchaser on completion and the interpretation of the words 'relating to the grant' does not naturally embrace the notion that they are concerned with the physical condition of the flat or any disrepair or structural deficiency affecting it. There is the potential for some complication in relation to the terms of the grant (particularly in relation to a lease) and the more natural sense of the words is that they are referring to conveyancing matters relating to the grant and to such alone. That, I observe, was apparently the view of Laws LJ in O'Byrne v. Secretary of State for the Environment, Transport and the Regions v. Croydon London Borough Council (2002) 30 HLR 566, where he said, at paragraph 78:
'The phrase "all matters relating to the grant" [in section 138(1)] must surely refer to conveyancing matters (cf "relevant matters" in section 140(1) and (4), defined by section 140(5) to mean "matters relating to the grant");'
- Secondly, relevant 'outstanding' matters in section 140(1)(b) means matters that have not been 'agreed or determined' within the meaning of section 140(1)(a), a phrase deriving from section 138(1), which refers to the landlord's obligation to make a grant 'as soon as all matters relating to the grant have been agreed or determined ….' Whilst I would not wish to overstate the point, that phrase would appear to be inapt to cover the question of whether repair or remedial structural works have been carried out. Is it a natural use of language to refer to the due performance of repair obligations as something which has been 'agreed or determined'? It may not be an impossible use, but it is not a natural one.
- Thirdly, and to my mind most persuasively, it is necessarily implicit in Ms Bretherton's submission that there is an obligation on the proposing vendor to carry out repair or remedial structural works prior to completion: because, if there is not, Ms Ryan cannot have been entitled to require such works to be done. To make that argument good, it is therefore necessary to find something within the structure of the 'right to buy' legislation that imposes such an obligation upon the proposing vendor. He will, as the proposing purchaser's landlord, of course be under a continuing obligation to discharge his repairing obligations under the purchaser's secure tenancy; and it will be open to the tenant to compel the performance of those obligations. But it does not follow that there is also a right upon the tenant to insist that completion of the purchase can be deferred until all works of repair and structural rectification have been carried out by the landlord. The difficulty with a submission to that effect is that there is nothing in the provisions of Part V of the Housing Act 1985 that suggests any such thing. On the contrary, the inference is that any items of disrepair and any structural defects disclosed in the section 125 notice will or may only be remedied after completion, with the tenant (by then a long lessee) being required to make the contributions to the cost prescribed by Schedule 6, paragraph 16B. Had Islington disclosed the subsidence in its section 125 notice, the same would have applied to that matter. In my judgment, Part V contains no warrant for any inference that a purchasing tenant is entitled to insist on having any structural defects or items of disrepair remedied before completion. If so, there is no basis for regarding such a matter as a 'relevant' one that is 'outstanding' within the meaning of section 140(1)(b).
- Ms Bretherton made much of her point about the position that would arise if, pending completion, the premises were totally destroyed. Her submission was that it must be implicit in such a circumstance that the proposing purchaser would be entitled to have completion deferred until the premises had been rebuilt. I do not, for my part, derive any help from that hypothetical example in resolving the different question which this case has thrown up. It may perhaps be that the total destruction of the subject matter of the transaction would enable the proposing purchaser to say that there was, pending reconstruction, nothing to 'grant' (suppose, for example, it were a fourth floor flat in a destroyed building). There may also be a question as to whether, in such a case, the landlord would in fact be under an obligation to reconstruct the building: the section 11(1) LT repairing obligation does not extend to an obligation to reconstruct in such circumstances (section 11(2)(b) LT). Ms Bretherton's example is, therefore, an extreme one and the likely practical consequence in most cases would be that the proposing purchaser would simply withdraw the notice by which he had exercised his right to buy. I derive no help from it for present purposes. It does not assist the submission that a matter of disrepair affecting the premises is a matter 'relating to the grant'.
- I would accordingly reject the first ground of appeal. In my judgment the Recorder came to the correct conclusion on this issue.
B. Was the Recorder wrong to find that no assurance was given?
- That disposes of the first ground of appeal but I must also deal with a point relating to it raised by the third ground. That ground complains of miscellaneous matters in the Recorder's judgment, including in sub-paragraph (2) that the Recorder was wrong not to find that Mr Kendall had in October 2003 given an assurance on behalf of Islington to Ms Ryan, on which she was entitled to rely, that works to remedy the subsidence would be carried out within about six months. If this ground of appeal could be made good, it might enable an argument that it was not open to Islington to dishonour such assurance but still insist on compliance with the notices to complete. The argument in support of that ground of appeal was that the Recorder's judgment in relation to this was internally inconsistent and that she ought to have found that an unequivocal assurance was given, its giving being said to have been corroborated by YVA's repetition of it in their letter of 28 October 2004.
- I propose to deal with this argument shortly. The written arguments covered several pages relating to this issue, although the oral argument was not of matching extent. Ultimately, what this ground of appeal amounts to is an invitation to this court to re-try this question of fact and substitute a different one for the finding made and explained by the Recorder. Whilst I have considered the opposing arguments, I regard the invitation as one that it is impossible for this court to accept. The Recorder had the benefit of seeing and hearing the witnesses and of hearing the like arguments and came up with her reasoned conclusion earlier quoted. That conclusion is a coherent and rational one and there is no basis on which this court can or should step into the factual arena and substitute a different finding of its own. I would dismiss this ground of appeal.
C. Were the periods given by the notices to complete unreasonably short?
- Ms Ryan's second ground of appeal was that the Recorder was also in error in finding that the periods specified in either or both of the notices served under sections 140 and 141 were reasonable. That ground of appeal has to be considered against the rejection of Ms Ryan's case that she was entitled to have completion deferred until the structural repair works had first been done. The main ground on which it is said that the notice periods were too short is because, so it is said, Islington served the notices on the basis of errors of fact, being those reflected in certain internal Islington emails of 15 and 23 February 2005 which emerged on disclosure. Those emails of course post-dated both notices. Ms Bretherton made the point that they reflect that Islington had assumed that the subsidence problem had been taken into account when the flat was valued, whereas it is said that it was not; and that Islington also assumed that corrective works to put the problem right would be works of improvement not of repair. It is said they also show that Islington believed that Ms Ryan had delayed in reporting the matter of the disrepair, whereas it is said she had not.
- In my judgment there is nothing in these points. The reasonableness of the length of the two notices was a matter for objective assessment at the time they were served; and a consideration of Islington's later thought processes, as expressed in internal emails composed weeks after the expiry of the second notice, is no guide as to how that assessment should be made. The answer to this ground of appeal is (i) that, as the Recorder found, Islington had given Ms Ryan no assurance that the remedial works would be done either within any particular time-frame or indeed at all; (ii) that Ms Ryan must be taken to have appreciated, as at 3 November 2003, when she accepted the terms of the section 125 notice, that she did not have the benefit of any such assurance; (iii) many months then passed, with nothing positive being done by Ms Ryan in relation to either the purchase or pressing Islington about doing the work: remarkably, YVA did not even acknowledge Islington's letter of 20 May 2004 proposing arrangements for completion of the purchase; (iv) not surprisingly, given such silence by YVA Islington served its first notice to complete on 6 September 2004. It gave a period of 56 days, to which the only response was one that was misplaced, namely that the repair works must be done first; and (v) the first notice was then followed by the second notice, served on 6 November 2004, giving another 56 days, during which (by YVA's letter of 25 November 2004) the request was made that the right to buy should be suspended because 'our clients cannot obtain a mortgage until the works have been carried out.' The Recorder in fact found that statement to be incorrect, by which she meant, I understand, that there was no evidence at the trial supporting the assertion that no mortgage could be obtained until the works were done. Whilst one might of course expect a mortgagee to be considerably concerned about the subsidence problem, it was not a matter of unanswerable inevitability that no mortgage could be obtained until it was cured, since a mortgagee would know that Islington would be under an obligation to remedy the problem after completion.
- The notices gave a total of 112 days to complete, on top of over three months' unexplained delay on the part of Ms Ryan following the letter of 20 May 2004. Ms Ryan's stance that she was not required to complete until the underpinning was done was wrong in law. Her point that she could not obtain a mortgage until it was done was not proved to be right in fact. She therefore advanced no cogent reasons during the currency of the two notices as to why the notices were unreasonably short. I can see no basis for a conclusion that they were. In my judgment the Recorder was right to hold that they were not and I would dismiss this ground of appeal as well.
D. The appeal against the dismissal of the damages claim
- Ms Ryan's third ground of appeal includes the complaint that the Recorder gave no reasoned conclusion for the dismissal of Ms Ryan's damages claim. That claim was advanced on the basis that, contrary to her primary case, Ms Ryan had lost her right to compel the sale to her of the flat. The basis of the damages claim was that the reason she had lost her right was because Islington, in breach of its express (or section 11(1) LT) repairing obligations under the secure tenancy, had failed to remedy the structural defect affecting the back addition and had thereby prevented her from being able to complete the purchase.
- The criticism that the Recorder gave insufficient reasons for rejecting this claim is, with respect, well-founded. Ms Ryan's pleaded case was (in effect) that Islington's failure to remedy the subsidence prevented her from raising a mortgage advance to enable the completion of the purchase (Particulars of Claim, paragraph 14). Particulars of that were sought and provided. Their essence was not that any potential mortgagee had said expressly that it would not make an advance unless the underpinning work was done, but that Mr Ryan was told that an application for a loan could be made as soon as the works were done. That was explored in Mr Bhose's cross-examination of Mr Ryan, which revealed that the only inquiry made of a potential lender (Halifax Plc) was in January 2004, when Mr Ryan told the branch manageress that major works to the flat were required, in response to which he was told that if the works were done she 'didn't see any reason why I couldn't get the mortgage ….' Mr Ryan made no inquiry as to whether a mortgage could be granted if the works were not done; and nor did he do so when he later learnt that the works were not going to be done before the expiry of the notices to complete. His explanation for that was that 'I wouldn't have completed unless the works were started. There wouldn't have been any point in it. … Nobody would have bought that property in that condition, nobody. I'm not going to invest my life savings into something that's crumbling around me.'
- The outcome of the evidence was, therefore, that Ms Ryan failed to prove that the non-performance of the works prevented a mortgage loan being raised. It might have prevented it, but (for reasons given) it did not inevitably follow that it would have done; and Ms Ryan and her father made no inquiry as to the matter. The reason they did not was because Mr Ryan was not prepared to put his own money into the purchase of the flat in its unrepaired state; and that was why the purchase was not completed. That reason emerged for the first time at the trial: Islington had been given no prior notice of Mr Ryan's attitude. The only point of which Ms Ryan had (via YVA) given them notice was the unproved assertion that she could not obtain a mortgage.
- Ms Bretherton's submission was that Islington was in breach of its repairing covenants (either its express covenants or those implied by section 11(1) LT) and that Ms Ryan was entitled to recover all losses flowing from the breach. That, she said, could include financial losses arising from the loss of the right to buy if, as a matter of fact, those losses flowed from the breach. Her submission, as I followed it, was that provided there came a point when Islington could foresee that the breach of its repairing covenants would cause an inability on Ms Ryan's part to complete the purchase, Ms Ryan could recover damages flowing from such inability. Ms Bretherton relied on the notice given to Islington by the letter of 25 November 2004, although that only asserted the unproved inability to raise a mortgage.
- If Ms Bretherton is right that the damages claim depended upon proof of foreseeability by Islington that its non-repair of the subsidence would prevent completion of the purchase, I consider that Ms Ryan did not make good her case on the evidence; and that the Recorder was right to reject it.
- I have, however, considerable difficulty with Ms Bretherton's way of putting the damages case. In my judgment the focus on what Islington could, did or might foresee at and following the time when (as is admitted) it fell into breach of its repairing obligations is immaterial. The damages claim did not depend on matters such as that. It depended upon whether, looking at the position at the time when the secure tenancy was entered into (about June 2000), the loss of a future exercise of the right to buy was loss of a kind or type for which Islington ought fairly to be taken to have accepted responsibility when it assumed the burden of its repairing covenants: see, for example, Transfield Shipping Inc c. Mercator Shipping Inc [2008] UKHL 48; [2008] 3 WLR 345.
- In assuming the repairing obligations that it did in Ms Ryan's secure tenancy, it is obvious that Islington was, inter alia, assuming an obligation towards Ms Ryan to compensate her for the kind of loss likely to be occasioned in the ordinary course to her as an occupying tenant in consequence of any failure to perform those obligations. It is, I consider, equally obvious that Islington was not thereby also assuming an obligation to compensate her in remote circumstances in which, because of its failure to perform its repairing covenants, Ms Ryan was unable to complete a purchase of the flat under the 'right to buy' provisions. Any such purchase was not in contemplation when the secure tenancy was granted, and so that could not have been the kind or type of loss for which Islington ought fairly to be taken to have accepted responsibility. In my judgment it is on that basis that Ms Ryan's damages claim should be assessed. So assessing it, there is nothing in it. I would dismiss this ground of appeal as well.
- Ms Ryan's third, miscellaneous ground of appeal raises certain other, essentially collateral, complaints about the Recorder's conduct of the trial, but none appears to me to begin to add up to matters of arguable substance. I do not propose to extend this judgment by referring to them. There is, with respect, nothing in them.
Disposition
- I would dismiss Ms Ryan's appeal.
Lord Justice Aikens :
- I agree.
Lord Justice Waller :
- I also agree.
