OPINION

Anna Boyle v South Lanarkshire Council

Introduction

[1] This is referral under the Housing (Scotland) Act 1987 as amended. The applicant complains that in an offer to sell under the “right to buy” provisions the respondent has not offered the correct statutory discount on the price. She claims to be entitled to the discount as originally provided under section 62 of the 1987 Act (the “preserved” right to buy), whereas the offer reflected the less favourable provisions of section 62 as amended by section 49 of the Housing (Scotland) Act 2001 (the “modernised” right to buy). The applicant has been a secure tenant of the respondent for many years. Central to the issue is the fact that the applicant’s tenancy of the house which she applied to buy commenced in July 2013, i.e. after the commencement date of the 2001 Act (30 September 2002). At the same time she intended to give up the tenancy of her existing house.

Statutory Provisions

[2] Part III of the Housing (Scotland) Act 1987 (“The 1987 Act”) as amended, provides as follows:-

“Secure tenant’s right to purchase -

61(1) … a tenant of a house to which this section applies… shall, … have the right to purchase the house at a price fixed under section 62.

(2) This section applies to every house let under a Scottish secure tenancy where …

(c) immediately prior to the date of service of an application to purchase, the tenant has been for not less than 5 years in occupation of a house … or of a succession of houses …

(10) In this section and section 62 …

(b) for the purposes of determining the period of occupation … (iv) the landlord may if it thinks fit, disregard as not affecting continuity any interruption in occupation which appears to it to result from circumstances outwith the control of the person in question.

The price

62(1) … the price at which a tenant shall be entitled to purchase a house … shall be fixed as at the date of service of the application to purchase by subtracting a discount from the market value of the house …

(3) … the discount for the purposes of subsection (1) shall be -

… up to a maximum discount of 35% (of the market value of the house) or £15,000, whichever is less.”

[3] The above sections reflect the “modernised” right to buy having been amended by sections 42 et seq of the Housing (Scotland) Act 2001. Prior to the coming into effect of the 2001 Act the qualifying condition for the right to buy was not less than two years occupation of the house and, in a case of a house as opposed to a flat, the maximum discount was 60% of market value. Section 61(10)(b)(iv) quoted above was first introduced by section 42(2)(c) of the 2001 Act.

[4] Separate provision was made in order to save the “preserved” right to buy for secure tenancies in existence at the time of the passing of the 2001 Act. The Housing (Scotland) Act 2001 (Scottish Secure Tenancy etc) Order 2002 SSI 2002/ 318, amended by SSI 2002/415 came into force on 30 September 2002. This provided:-

“Transitional provisions and savings – right to buy

4(1) - Where immediately before the conversion date, a tenant had a right to purchase under section 61 of the 1987 Act, the provisions of the 1987 Act and the 2001 Act shall, after the conversation date and until the earliest of -

(a) the termination of the tenancy (within the meaning of paragraph below) …

apply in relation to that tenancy subject to the modifications mentioned in paragraph (2) below.

(2) The modifications mentioned in paragraph (1) above are that …

(b) the qualifying period of occupation in relation to the tenant’s right to purchase shall be as provided for in section 61(2)(c) of the 1987 Act as that provision applied immediately before the conversation date;

(c) the discount in relation to the tenant’s right to purchase shall be as provided for in section 62(3) of the 1987 Act as that provision applied immediately before the conversation date; …

(3) For the purposes of this article, a tenancy is terminated if it is brought to an end under any of the circumstances listed in section 12(1) of the 2001 Act other than circumstances where —

(a) an order for recovery of possession has been made under section 16(2) of the 2001 Act and within the grounds on which proceedings for recovery of possession have been raised falls within grounds 9 to 15 of Schedule 2 of the 2001 Act; or

(b) the tenancy is terminated by written agreement between the landlord and the tenant and -

(i) the landlord has made a decision to demolish the house; and

(ii) as a result of that decision, the landlord has made other accommodation available to the tenant.”

[5] The Housing Scotland Act 2001 (“the 2001 Act”) also provides:

“12. Restriction on termination of tenancy

(1) Despite anything in the tenancy agreement, a Scottish secure tenancy may not be brought to an end except …

(e) by written agreement between the landlord and the tenant or

(f) by four weeks notice given by the tenant to the landlord …

23. Tenant’s right to written tenancy agreement and information

(4) Before the creation of a Scottish secure tenancy the landlord must provide the tenant with information about

(a) The tenant’s right under part III of the 1987 Act to purchase the house which is the subject of the tenancy …

(5) Where the tenant’s right under that part to purchase the house is affected by any amendment to that Part or the exercise of any power conferred by that part, the landlord must inform the tenant of that fact and of the extent to which the tenant’s right to purchase is affected. “

The grounds of possession referred to in the 2002 Order referring to paragraphs 9 to 15 of Schedule 2 to the 2001 Act may be described as “management grounds” and include, for example, where the house has been designed or adapted for occupation by a person whose special needs require accommodation of the kind provided by the house and there is no longer a person with such special needs occupying the house. Under section 16 the court can make an order for recovery of possession where other accommodation will be available for the tenant. These grounds can be distinguished from what are described as “conduct grounds” referred to in paragraphs 1-8 of the Schedule.

[6] The 1987 Act was further amended by the Housing (Scotland) Act 2010. It is intended to restrict the right to buy further. Section 61ZA of the 1987 Act was introduced by the 2010 Act to exclude tenants who were not in continuous occupation since the coming into force of the 2010 Act except in certain circumstances. This is not relevant to present matters.

Authorities referred to

Elsden v Pick [1980] 1 WLR 898
Kildrummy (Jersey) Ltd v Calder 1994 SLT 888
Knapdale (Nominees) Ltd v Donald 2001 SLT 617
Queens Cross Housing Association v McAllister 2003 SC 514; LTS/TR/2001/05;
Young v East Dunbartonshire Council LTS/TR/2007/05;
Rizza v Glasgow Housing Authority 2008 SLT (Lands Tr) 13.
Carey v Glasgow Housing Association LTS/TR/2010/05;
Mark v City of Edinburgh Council LTS/TR/2014/03.

Textbook referred to:

Concise Oxford English Dictionary (6th Edition) for “Agreement” and “Notice”

Procedure

[7] The application to the Tribunal sought a determination in terms of section 65(2) of the 1987 Act. This provision confers a jurisdiction, amongst other things, for disputes as to whether a condition in an offer to sell is unreasonable. Parties agreed that it was more apt for the present case to proceed under section 71(1)(d) which relates to disputes as to the correct calculation of the discount and consequently for an applicant to seek a finding in terms of the related section 71(2)(b). We are content to proceed on this basis. A hearing took place on a preliminary legal point on 21 May 2015. The respondents maintained that they had no option but to make the offer to sell on the basis of the less favourable discount provided by the modernised right to buy. Both parties provided advance written submissions. At the hearing the applicant was represented by Mr Stirling, Solicitor, Hamilton and the respondent was represented by Ms Bonnar of the respondent’s Legal Services Department. Parties were also given the opportunity to make written comments upon a line of authority which the Tribunal drew to their attention after the hearing, and did so.

Factual Background

[8] The applicant has been a secure tenant of the respondents and their statutory predecessors since 1990. She has been tenant of various properties. With the passing of the 2001 Act her secure tenancy became a Scottish secure tenancy. She became tenant of her present property in Blantyre on 8 July 2013. Prior to this, and since March 2002 she was tenant of another property also in Blantyre, 57 Rannoch Court.

[9] While residing at 57 Rannoch Court the applicant made complaints about anti-social behaviour by neighbours. The applicant contends that she has a medical condition which was related to this behaviour, which resulted in the respondent giving her priority for the purposes of its housing list. Although not admitting in the Tribunal proceedings there was any causal connection with the behaviour, the respondent recognised that the applicant had a medical condition and, under its housing system, had urgently prioritised her for a transfer to her present property. The applicant completed a written “Notice of Termination of Tenancy” on 1 July 2013, addressed to the respondent, confirming that her tenancy of 57 Rannoch Court would be terminated on 8 July 2013, i.e. giving one week’s notice of termination. On 1 July 2013 she also signed a “Scottish Secure Tenancy Agreement” for the new house stating that the tenancy would start on 8 July 2013. The tenancy agreement was also signed by the respondent.

[10] The respondent produced a written “Tenancy Sign Up Check List Record”. The respondent maintains that the applicant was given certain advice as to her right to buy at the time of entering in to the new tenancy. However the applicant’s position is that only after she signed the tenancy agreement did the respondent advise her that she had lost the right to buy on the “preserved” terms. This point remains in factual dispute.

[11] We were referred to certain non-statutory guidance. Reference was made to a Scottish Government document HAR1/2001 “Right to Buy Guidance Circular”. The Circular states it is not a legal document. It discusses changes made by the 2010 Act but also refers to the preserved right to buy prior to the reforms made by the 2001 Act. On page 10 it states the following:

“Victims of Anti-Social Behaviour … Social landlords may be able to offer the victim the option of exchanging their current property for another one and allow any pre-existing preserved RTB entitlement to continue over the next property, subject to the wording of the agreement between the landlord and tenant. If the existing tenancy is expressly brought to an end by written agreement between the landlord and tenant however, preserved RTB entitlements will not continue.”

The next paragraph states:

“Sections 61(10) of the 1987 Act (amended by the 2001 Act) and section 61ZA(2)(b) (Introduced by the 2010 Act) give all social landlords discretion to disregard any interruption in occupation that appears to result from circumstances outwith the tenant’s control. That allows the social landlord to deal with the consequences of a tenant being moved as a result of their being a victim of anti-social behaviour.”

and

“Social landlords also have discretion to sell properties outwith RTB and may consider using these contractual sales provisions to sell a property on appropriate terms to a tenant who has been a victim of anti-social behaviour.”

[12] We were provided with another version of the same circular where the above paragraphs are worded slightly differently and appear in a different section.

Respondent’s Submission

[13] The respondent submitted that the preserved right to buy could only be retained if the saving provisions of the 2002 Order were engaged. If a tenancy was terminated after the coming into effect of the Order, i.e. after 30 September 2002, and unless the termination was made on one of the grounds referred to in article 4(3)(a) and (b) of the Order, then the right to buy on the preserved terms was lost. An application could then only be made on the modernised basis. This was the import of Rizza and Carey. Here, the old tenancy had been terminated in 2013, i.e. after 2002. None of the article 4(3)(a) and (b) grounds applied to the termination, and the 2002 Order gave the council no discretion in the matter. The new tenancy having been created after 2013 meant that the applicant could not qualify under the preserved provisions.

Applicant’s Submission

[14] In her written and oral submissions the applicant advanced a new argument which had not been foreshadowed in the application to the Tribunal. This was to the effect that there was no “written agreement between the landlord and tenant” in terms of section 12(1)(e) of the 2001 Act, as required by the 2002 Order, for the termination of the old tenancy. The wording implied a written agreement signed by both parties. Here there was a notice of termination addressed to the landlord but only signed by the tenant. The new tenancy agreement said nothing about the termination of the old one.

[15] Alternatively in terms of section 12(1)(f) only one week’s notice of termination had been given by the tenant. Four week’s notice was a statutory requirement and could not be varied by consent.

[16] It was further submitted that “tenancy” in the transitional provisions meant the continuing relationship between landlord and tenant. Under reference to McAllister, which it was accepted was dealing with different legislation, in order to elide the transitional provisions saving a secure tenancy (or, in the instant case, the “preserved” right to buy) it was necessary for there to be termination of the landlord/ tenant relationship altogether; in terms of the legislation the “tenancy” was not affected by the tenant moving into another house belonging the same landlord.

[17] In any event under section 61(10)(b)(iv) the landlord had a discretion to disregard any interruption in occupation which related to circumstances outwith the control of the tenant. That section should be construed in accordance with the Circular which suggested there was a discretion in such circumstances to allow for the preserved right to buy. Here the Council had not exercised a discretion since it took the view it had none. Under reference to Young this amounted to an error in law.

Respondent’s reply

[18] It was explained that in practice the respondent did not terminate tenancies by written agreement, but by the provision by tenants of notice of termination in standard terms. In this case any lack of notice was academic and, it was stated as a matter of fact, the old property remained vacant for 4 weeks and the respondent had not sought rent for it. The applicant had accepted a new tenancy. It would be bizarre if the old tenancy had not been brought to an end. On that hypothesis it would follow that the applicant would still have a right to buy the old property on a preserved basis, and perhaps also a right to buy the new property as well. The respondent had agreed in any event to accept a shorter period of notice than that to which it was statutorily entitled. Therefore the short notice did not invalidate the termination under section 12(1)(f).

[19] Although there was no written agreement signed by both parties terminating the tenancy in a single document as such, it was accepted with some diffidence that the new tenancy agreement and the simultaneous notice of termination by the applicant, taken together and in the light of the circumstances, could be taken as a written agreement between the parties under section 12(1)(e). The circumstances surrounding the two writings necessarily implied an agreed termination.

[20] Turning to section 61(10)(b)(iv) the respondents had not disregarded any period of occupation for the purposes of calculating the right to buy or the discount. On the contrary they had considered that the applicant had a full period of occupation for both purposes. However this was not relevant to the saving provisions for the preserved right to buy.

Tribunal’s Consideration

[21] The Tribunal has previously commented in Rizza that the provisions of the 2002 Order are not entirely clear to grasp in relation to its application to successive tenancies of different subjects. In that case the Tribunal was prepared to proceed on the basis, with some caution, that the words “in relation to that tenancy” in article 4(1) of the Order could be read as if they went on to say “and any new tenancy entered into in substitution for that tenancy”. Nevertheless, in that case and in Carey the Tribunal was clear that the main effect of the Order is that existing secure tenants continued to have the benefit of the old rights until the tenancy was terminated. But tenants of new tenancies including those created as a result of transfers or exchanges are generally only able to exercise a right to buy on the “modernised” terms and conditions. Only if they fall within the limited exceptions set out in article 4(3)(a) or (b) of the Order (such as where there has been an order for possession on “management grounds”) could the tenant of a new tenancy claim a “preserved” right to buy. In those limited circumstances the old tenancy has been terminated in a way which allows for the “preserved” right to buy to continue to the new, substituted, tenancy.

[22] The most difficult point which has emerged is whether strict compliance with section 12(1)(f) of the 2001 Act is required for the purposes of the 2002 Order. Only one week’s notice was given by the tenant instead of the statutory four weeks. This point was not raised in the application and neither party cited authority upon it or on any analogous legislation. It appeared to us however that there is a line of authority in the field of agricultural law which is instructive and, after the hearing we invited parties to comment upon it. In particular, we pointed out the case of Elsden v Pick, which was a decision of the Court of Appealand was commented upon favourably in the Outer House in Kildrummy (Jersey) Ltd v Calder and Knapdale (Nominees) Ltd v Donald.

[23] In Elsden the general factual and legal background was analogous although the statutory wording was different. Section 23 (1) of the Agricultural Holdings Act 1948 stated:

“A notice to quit an agricultural holding or part of an agricultural holding shall (notwithstanding any provision to the contrary in the contract of tenancy of the holding) be invalid if it purports to terminate the tenancy before the expiration of 12 months from the end of the then current year of tenancy: …”

The landlord received a notice of intention to quit giving less than 12 months’ notice, but agreed to accept the short notice. It was held that section 23(1) did not preclude the agreement to accept the short notice. Shaw LJ said;

“A contractual provision which enures for the benefit of a party can be waived by that party albeit that his right to that benefit is reinforced by statute. There may be circumstances which might qualify this situation, as where an element of public interest is involved, but in such a case one would expect the statutory provision to speak in terms of illegality (thus: “it shall be unlawful”) rather than of mere invalidity.”

[24] In Knapdale (Nominees) Ltd v Donald Lord Kingarth said at 629H:

“… The reasoning of Brightman and Buckley LJJ in the case of Elsden appears to be securely based on the distinction between creation of a tenancy agreement shorn of some aspect of security of tenure (which is prohibited) on the one hand and, on the other, enforcement of a subsequent decision by a party who is fully protected to forego some aspect of the protection as part of a contract.”

[25] Turning to the present case it is clear from the documents and agreed facts that the respondent accepted the short notice in a case of urgency in order to allow the new tenancy to commence at the end of the one week. There was consensus that the new tenancy would commence on the day of termination of the old one.

[26] It seems to us there are a number of significant factors. In the first place a landlord cannot terminate a secure tenancy merely by the service of a notice. But a tenant can do so and sub-paragraph (f) refers to a notice given by the tenant. It seems to us therefore that inasmuch as the provision requires a period of notice to be given by the tenant, this period is generally conceived in favour of the landlord. A social landlord will no doubt need sufficient time to reallocate the subjects in question to a new tenant. As a matter of contract it is always possible for a party in whose favour a provision is conceived to waive compliance of that provision.

[27] Secondly, the reference to the terms of section 12(1) of the 2001 Act in the 2002 Order is as a prelude to specifying the exceptions which allow for the retention of the preserved right to buy. Before the preserved right to buy can be lost by termination of the tenancy, it seems what the Order is saying is that the termination requires to have been carried out in a way recognised by law, i.e. lawfully. We think this provision should be given a purposive construction. We would accordingly approach the matter on the basis whether we can be satisfied the tenancy was terminated lawfully. We think there is a strong argument that it was, or that at any rate the applicant would be personally barred by waiver from arguing the contrary. We think that the words of Lord Shaw in Elsden are apt; i.e. that a contractual provision which enures for the benefit of a party can be waived by that party albeit that his right to that benefit is reinforced by statute. We think it would be unfortunate if a landlord were to have agreed to the lesser period of notice for good reason, only to find that in circumstances such as the present it had inadvertently allowed two tenancies to exist for the same tenant simultaneously. So for the purposes of the 2002 Order we think it is very arguable that the old tenancy was lawfully brought to an end in circumstances consistent with section 12(1)(f).

[28] Thirdly it does not seem to us there is reason of public policy why a social landlord should not be able to accept a lesser period of notice. As the present case demonstrates, this ability may be in both parties’ interests in order to allow a move in cases of urgency. It was argued that public policy would not be served by penalising the applicant, as it was put, for the move. However, that is a different issue, distinct to the means of bringing the old tenancy to an end. On this analysis the applicant would have been prejudiced whether one week or four weeks’ notice was given. In any event, as we discuss below, it seems to us that this argument is countered by the fact that as a matter of law landlords such as the respondent require to give advice as to the right to buy under the 2001 Act.

[29] However we prefer to base our decision in this case on the simpler question whether there was a “written agreement” between the parties bringing the tenancy to an end in terms of section 12(1)(e). The two writings - the notice of termination and the new tenancy agreement – are clearly linked when one considers the background and actings. The only sensible implication is that there was consensus that the old tenancy is at an end. Accordingly in this broader sense there is “written agreement between the landlord and the tenant” of the termination notwithstanding the notice of termination was only signed by the applicant. That notice was “accepted” by the landlord as evidenced by the landlord’s simultaneous signing of the consecutive agreement. It seems to us there is no meaningful distinction between a “written agreement” signed by both parties bringing a tenancy to an end; and a written agreement for a new tenancy in which the overall transaction includes a notice of termination of the old tenancy by one party, which notice is accepted by the actings of the other.

[30] Turning to the other arguments of the applicant it is clear that the reference in the 2002 Order to “termination” of a “tenancy,” at least in article 4(3), is not referring simply to a break in the relationship of landlord and tenant between the parties. We would take the natural meaning of “tenancy” to refer to a landlord/ tenant relationship over a particular property. And in context it necessarily has that meaning. That is because article 4(3) sub paragraphs (a) and (b) are referring to the ways in which a landlord may have recovered possession of a particular property on a particular occasion – e.g. on certain management grounds. The statutory language is very different to the language in McAllister where the more natural meaning of the words enabling the secure tenancy to survive the transition was that only the landlord and tenant need remain the same. But here the meaning is that the preserved right is lost on termination of the tenancy of a particular property.

[31] We are also of the view that the reference to section 61(10)(b)(iv) of the 1987 Act is of no relevance to the saving of the preserved right to buy. The saving provisions are contained in the 2002 Order and there is no link between that section and the Order. There are just no words to provide such a link. Section 61(10)(b)(iv) is designed to give discretion to the landlord in certain circumstances in the calculation of the entitlement to buy, and the discount. However it does not assist in determining whether the preserved right to buy has been saved in any given case. It would be odd for the 2002 Order to provide for the strict circumstances in which the preserved right to buy can be retained, but for section 61 to introduce a discretion to the landlord. In this connection we think it is unfortunate, as it was very fairly conceded, that the Scottish Government Guidance Circular HAR 1/2011 appears to imply that the opposite is the case, at least to someone who has not studied the legislation in detail. This is due to the reference to an apparent discretion for landlords to allow for the preserved right to buy in cases of victims of anti- social behaviour, and in the very next paragraph to refer to a certain discretion under section 61(10)(b)(iv) in cases involving such victims. Nevertheless the document is only a guide and we are required to apply the statute.

[32] Finally there is a question of public policy. This matter arose in McAllister in the interpretation of transitional provisions. The Inner House was concerned about the possibility of a tenant, as it were, sleepwalking into the loss of an existing right to a secure tenancy. Where for example by reason of infirmity, the tenant wished to be in a ground floor flat or by reason of changes in family circumstances wished to have a smaller flat, such a change would be convenient to both landlord and tenant. It would be unfortunate that such a change would result in the loss of the secure tenancy (as would have occurred had the appellant housing association’s interpretation been correct), since the landlord had no obligation to advise the tenant of the consequences of the change. This can be contrasted with the instant case where, under the 2001 Act, landlords do have an obligation to give certain advice in terms of section 23 of the 2001 Act. That includes providing information as to the extent (our emphasis) to which the right to purchase may be affected by any amendment to Part III of the 2001 Act. Had there been a serious issue of interpretation in the present case, this point might have been relevant to our approach. However, as appeared in the case of Mark, the Tribunal has no jurisdiction in cases of failure to provide information under this section and the applicant, correctly in our view, did not seek to press a case before us on this issue.

Decision

[33] In these circumstances we dismiss the application. We have reserved the question of expenses.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 26 June 2015

Neil M Tainsh – Clerk to the Tribunal