OPINION

Kimberley Lee v The Highland Council

Introduction

[1] This is an application under Section 68(4) of the Housing (Scotland) Act 1987 for a finding that the applicant has the right to purchase her house. The respondents have declined to offer to sell the house because it is within an area designated as a pressured area in terms of Section 61B of the 1987 Act.

Legislation

[2] Section 61 of the Housing (Scotland) Act 1987 (“the 1987 Act”) provides for the right to buy a house for tenants in Scottish secure tenancies. This right may be suspended under section 61B which provides:

“61B Limitation on right to purchase: pressured areas

(1) A local authority may designate any part of their area as a pressured area if they consider that—

(a) the needs of that part for housing accommodation in houses provided by the authority or by registered social landlords exceed substantially, or are likely to exceed substantially, the amount of such housing accommodation which is, or is likely to be, available in that part, and

(b) the exercise by tenants of houses in that part of the right under section 61(1) to purchase such houses is likely to increase the extent by which such needs exceed the amount of such housing accommodation.

(3) For so long as an area is designated as a pressured area, section 61(1) does not apply in relation to a house in the area—

(a) let under a tenancy created on or after the date specified in relation to the landlord in an order under section 11(1) of the Housing (Scotland) Act 2001 (asp 10), …

(6) The local authority shall take such steps as are reasonable to publicise—

(a) a designation under subsection (1) and its effect,

(b) any amendment or revocation of such a designation under subsection (8) and its effect.

(7) Where a local authority landlord or a registered social landlord offers a person a tenancy of a house in an area in relation to which, on the proposed commencement date of the tenancy, a designation under subsection (1) will be in force, the landlord shall inform the person of the designation and its effect.

(8) A designation under subsection (1) may be amended or revoked by the local authority at any time.

(9) A local authority may make a further designation under subsection (1) in relation to a part of their area despite a designation under that subsection being, or having been, in force in relation to that part.

(10) Nothing in this section affects a notice to purchase served prior to the designation of an area as a pressured area in relation to any type of house to which the designation relates.”

Without quoting detailed secondary legislation, subsection (3)(a) has the effect of suspending the right to buy for Scottish secure tenancies created after 30 September 2002 where an area is designated as a pressured area. Tenancies created after this date are normally described as having the “modernised” right to buy. Section 61B as quoted above replaced an earlier version with effect from 30 June 2011. In essence the earlier version allowed Scottish Ministers (as opposed to the local authority) to make a designation for up to 5 years.

The 1987 Act further provides:

“63.— Application to purchase and offer to sell.

(1) A tenant who seeks to exercise a right to purchase a house under section 61 shall serve on the landlord a notice (referred to in this Part as an “application to purchase”) which shall be in such form as the Secretary of State shall by order made by statutory instrument prescribe, and shall contain—

(a) notice that the tenant seeks to exercise the right to purchase;

(2) Where an application to purchase is served on a landlord, and the landlord does not serve a notice of refusal under sections 68 to 70 it shall, within 2 months after service of the application to purchase, serve on the tenant a notice (referred to in this Part as an “offer to sell”)

68.— Refusal of applications.

(1) Where a landlord on which an application to purchase has been served disputes the tenant's right to purchase a house under section 61, it shall by notice (referred to in this Part as a “notice of refusal”) served within one month after service of the application to purchase—

(a) refuse the application; or

(b) offer to sell the house to the tenant under section 14, or under any other power which the landlord has to sell the house.

(2) Where a landlord on which an application to purchase has been served, after reasonable enquiry (which shall include reasonable opportunity for the tenant to amend his application), is of the opinion that information contained in the application is incorrect in a material respect it shall issue a notice of refusal within 2 months of the application to purchase.

(3) A notice of refusal shall specify the grounds on which the landlord disputes the tenant's right to purchase or, as the case may be, the accuracy of the information.

(4) Where a landlord serves a notice of refusal on a tenant under this section, the tenant may within one month thereafter apply to the Lands Tribunal for a finding that he has a right to purchase the house under section 61 on such terms as it may determine.

71.— Reference to Lands Tribunal.

(1) Where—

(a) a landlord who has been duly served with an application to purchase fails to issue timeously either an offer to sell… or a notice of refusal;

the tenant… may refer the matter to the Lands Tribunal by serving on the clerk to that body a copy of any notice served and of any finding or determination made under this Part, together with a statement of his grievance …”

The Housing (Scotland) Act 2001 provides as follows:

“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, and

(b) the obligations which the tenant is likely to incur if that right is exercised, including any obligation to maintain any building of which the house forms part and any common areas.

(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.”

Section 1 of the Housing (Scotland) Act 2014 repeals the right to buy provisions with effect from 1 August 2016.

Authorities referred to

Boyle v South Lanarkshire Council LTS/TR/2014/07
East of Scotland Water Authority v Livingstone 1999 SC 65
Erskine v West Lothian Council LTS/TR/2002/15
McCreight v West Lothian Council 2009 SC 258
Maclennan v Dunedin Canmore Housing Association Limited LTS/TR/2013/06

Procedure

[3] The present application bears to have been made under Section 68(4) of the 1987 Act. The application itself refers to an application to purchase dated 5 May 2015, and a letter of refusal by The Highland Council dated 6 May 2015. The respondents admit that there was an application to purchase and a notice of refusal of the application on the said dates. A hearing was held on 3 November 2015. The applicant was represented by Mr Kenneth MacLeod, solicitor, Inverness. The respondents were represented by Ms Theresa Batchelor, solicitor. The applicant herself gave evidence. The respondents did not lead oral evidence.

Background facts and circumstances

[4] The applicant is the tenant of her house at 59 Dunain Road, Inverness. The respondents are her landlords. She has a Scottish secure tenancy in terms of a written tenancy agreement which commenced on 17 February 2003. As the tenancy commenced after 30 September 2002 she has the “modernised” right to buy in terms of the 1987 Act, as amended by the 2001 Act.

[5] Paragraph 8.2 of the tenancy agreement states that the respondents will give the applicant information about her right to buy her house, and the likely consequences if she should decide to buy her house, before the beginning of the tenancy. Paragraph 10.1 states that the applicant may have the right to buy under Part III of the 1987 Act as amended by the 2001 Act and that the price and terms will be decided according to those Acts. At some point the applicant was provided with a Scottish Executive leaflet on the right to purchase. The leaflet is dated 2002. Amongst other things it explained that the modernised right to buy required a five year continuous period of occupation of a house with the relevant landlord before the right to buy could be exercised. The leaflet also referred to the possibility for Scottish Ministers to designate specific parts of that local authority’s area as a “pressured area” which could suspend the right to buy for up to five years. This reflected Section 61B as in force at the time.

[6] The applicant indicated that she had previously made an application to buy in 2008 and subsequently. We are not entirely satisfied that this was a formal statutory application at the time, since we were only shown limited correspondence, which amongst other things did not necessarily bear out that an application was made in 2008, but it is not necessary for us to make a finding on the matter. However, the correspondence indicates that the area of the applicant’s house had become a pressured area with effect from 15 November 2005.

[7] There was no dispute that the area is currently designated as a pressured area. It would appear that the area was again designated a pressured area in October 2010 by the Scottish Ministers for a period of five years. Following the amendment to the 2001 Act in 2011, the respondents themselves designated the area for a period of 10 years until October 2020. The documents before us show there had been a press release at the time, and details put up on a council website about the designation. Accordingly the right to buy will continue to be suspended and, following the introduction of the Housing (Scotland) Act 2014, the right to buy will be abolished with effect from 1 August 2016.

[8] It follows from the above that by the time the applicant had resided as a secure tenant for the qualifying period of five years, the right to buy had been suspended and, as far as we could tell from the evidence, has continued to have been suspended on account of the area’s designation as a pressured area.

[9] The applicant applied to buy her house by application to the respondents dated 5 May 2015. The application has not been produced, but the respondents admit that the application was lodged. The respondents replied by letter dated 6 May 2015 as follows:-

“Dear Ms Lee,

PURCHASE OF COUNCIL HOUSE

I refer to your recent enquiry regarding the purchase of your council house.

With effectfrom 13 October 2010, the Highland Council’s housing stock was designated as a ‘Pressured Area’ as defined in the Housing (Scotland) Act 2001. What this means is that tenants who began their current tenancy on or after 30 September 2002 have had their ‘Right to Buy’ suspended. I note from our records that you commenced your current tenancy on 17 February 2003 and therefore your right to buy has been suspended.

I am sorry that this news will come as a disappointment to you.”

The letter is signed by a Customer Services Officer of the Council.

Applicant’s submissions

[10] It was submitted that the respondents’ letter of 6 May 2015 was not a “notice of refusal”, since the letter did not expressly spell out that the application was being “refused”. Reference was made to the passage of Lord Prosser in East of Scotland Water Authority v Livingstone where he said:-

“However one expresses it, if the landlord decides that he wants to turn the question of the tenant’s right to purchase into an issue, it seems to me that what s68(1) does is to require him to dispute the right in the more ordinary sense. He has to tell the tenant that he is refusing the application (or is only willing to sell by mechanisms other than the discounting mechanism under ss61 and 62). Moreover, in refusing, he must say why he is refusing: in terms of s68(3), his notice of refusal must specify the grounds upon which he disputes the tenant’s right to purchase. In other words he has to identify the issue between them. Furthermore, he has to do this within one month of the application to purchase.”

[11] In that case, the majority of the Inner House decided that the failure to serve a Notice of Refusal timeously rendered the appellants under an obligation to serve an Offer to Sell. In terms of the statutory mechanism they were unable to dispute the application to buy. Accordingly, it was submitted that here the respondents could not dispute the validity of the application.

[12] At this point in the argument, it was pointed out to the applicant’s solicitor that the application to the Tribunal in fact proceeded expressly upon Section 68(4) which, in terms of the section, presupposed that there had been a notice of refusal served on the tenant. Accordingly the applicant sought to amend the application to an application under Section 71(1)(a) which deals with the situation where a landlord had failed to serve a Notice of Refusal. By way of explanation Mr MacLeod indicated that the applicant had been a party litigant and he had only recently come into the case to represent her.

[13] It was further submitted that the right to buy was referred to contractually and, notwithstanding the designation of the area as a pressured area, the applicant still had a contractual right to acquire her house. The contract itself had not been changed and the applicant had not been informed of any change.

[14] Moreover it was submitted that the Council had failed under section 23(5) to inform the applicant of the exercise of any power conferred by the relevant part of the Act – i.e. the designation of the pressured area. Reliance was placed upon Scottish Government guidance of 2011 to the effect that landlords had a statutory duty to notify tenants directly affected by the designation, advising the landlords to write to those tenants who are directly affected. This had not been done. At most the respondents had made a press release and supplied information on their website.

Respondents’ submission

[15] The respondents had not had notice of the argument that the letter of 6 May 2015 was not a valid notice of refusal. In any event read as a whole it was clear that the letter was refusing the applicant’s application and giving a reason for the refusal.

[16] In any event in Maclennan v Dunedin Canmore Housing Association Limited, the tribunal required to reconcile Livingstone with another Inner House decision McCreight v West Lothian Council. In McCreight the Lord Jusice Clerk gave the example of a squatter making a speculative application to purchase becoming entitled to enforce the purchase because of an administrative error by the council, should the applicant’s argument be correct. Maclennan was a case where the right to buy had been suspended under section 61A(3). The Tribunal decided that despite failing to serve a notice of refusal the council could defend the application because the tenant could not have made a valid application in the first place. There could be no valid application where the right to buy had been suspended and an essential pre-condition to entitlement could not be fulfilled. In the present case section 61 was specifically disapplied in relation to the house in question. Maclennan was in point and should be followed.

[17] Under reference to Boyle v South Lanarkshire Council it was submitted that the Tribunal had no jurisdiction to provide a remedy in respect of any failure to provide information under the 2001 Act. The jurisdiction of the Tribunal is restricted to dealing with specific questions as to the statutory right to buy, and not wider claims.

Discussion by Tribunal

[18] The main argument at the hearing was that the respondents’ letter of 6 May 2015 was a “notice of refusal” in terms of section 63 of the Act. If not, then the argument was that under section 63(2) the respondents were obliged to serve an offer to sell. This argument was not foreshadowed in the application or the extensive written notes of argument which the applicant herself had prepared. The documents on her behalf appear to accept that the letter was a notice of refusal and was treated as such. The application was expressly made in terms of section 68(4) where the Tribunal has a jurisdiction to make a finding that there is a right to purchase following upon the service of a notice of refusal. So the argument no doubt came as some surprise to the respondents at the hearing.

[19] In other cases we have been prepared to allow applications based upon an incorrect section of a statute to be amended so as to proceed upon the correct section. This is usually where it has been reasonably clear from the papers what arguments are to be advanced so the amendment should not cause difficulty. However, in this case the main argument was not foreshadowed until the hearing took place. Even making allowance for the fact that the applicant has until recently been a party litigant, the fact is that the respondents were not fully prepared to meet the point. There is no doubt useful case law as to the way in which statutory notices require to be written and how less than precise documents should be interpreted by the courts. The respondents could not reasonably have been expected to provide us with authority upon this important matter, and the applicant’s solicitor did not do so. We are conscious that in Livingstone there was in fact no notice at all. Lord Prosser was dealing with a point that in terms of the Act’s mechanisms the notice had to tell the tenant that the application was being refused. He was not seeking to prescribe, as it were, any particular words which had to be used in order to make a valid notice of refusal. Accordingly without due citation of authority the Tribunal’s processes risk being undermined. We would not have been disposed to allow the application to be amended so as to proceed under the “correct” section. But as we discuss below, we think that the notice was adequate, and thus the application has proceeded under the appropriate section, namely section 68(4). So the amendment point is academic.

[20] Absent authority on the matter, we would apply a purposive approach as to the words required to constitute a notice of refusal. The aim of the legislation is to make it clear to the tenant that the application has been refused. The letter of 6th May does not bear to have been written by a lawyer, and does not appear as a formal “notice”. Nevertheless, reading it as a whole, and accepting that it is dealing with an application to purchase, it is impossible to conclude that the letter is anything other than a notice of refusal. It is a matter of necessary implication. The applicant is being told that her right to buy has been suspended. That can only lead to the conclusion that the particular application to purchase is refused. The letter has a note of finality about it. It states the reason for the refusal, as required under section 68(3). In the circumstances, it achieves the aim of the legislation. We are fortified in this conclusion since the applicant treated the letter as a refusal of her application and proceeded to the Tribunal under section 68(4).

[21] It is therefore unnecessary for us to decide whether a failure to serve a notice of refusal prevents the respondents from challenging the application. Our only comment would be that the present facts and law are similar to the issues in Maclennan, and although the applicant sought to distinguish it, she did not argue that Maclennan was wrongly decided.

[22] Turning to the applicant’s argument that she has a right to buy based upon contract, it seems to us that the tenancy agreement does no more than refer to the fact that the applicant might have a statutory right to buy. It indicates that the respondents will give the applicant information about the right to buy before the beginning of the tenancy. The contract does not, naturally enough, give any assurance that future legislation will not impact upon the right to buy, which is what has happened here. Nothing in the tenancy agreement indicates other than that the right to buy is statutory. In any event we were shown no provision from which it might be taken that we have jurisdiction to uphold a right to buy which is said to exist independently from the relevant statute.

[23] Finally, we accept that the evidence shows the applicant did not receive direct notification of the designation that part of her property fell within a pressured area, or the consequences which this would have . Under subsection 61B(6) of the 1987 Act the local authority is required to take reasonable steps to publicise the designation and any amendment to the designation. It was not argued that the respondents had failed to comply with this requirement. Subsection (7) requires a prospective tenant to be told if a designation will be in force at the commencement of the tenancy. It was not suggested this requirement had not been complied with. The foregoing provisions stop short of requiring all tenants to be notified directly of the designation as and when the designation is made. The applicant, however, referred to the more general provision in section 23(5) of the 2001 Act. It is perhaps questionable whether “must inform the tenant” means that the landlords should write to all existing tenants in terms of the statutory guidance of 2011, and whether the provision is intended to deal with intimation of pressured area designations already expressly covered under subsections 61B(6) and (7). However, we do not propose to resolve this point since the respondents rested their position upon the fact that the Tribunal does not have jurisdiction to deal with claims based upon any failure to provide information under Section 23. This is what we said in Boyle. We are aware of no provision from which jurisdiction could be inferred.

Decision

[24] We refuse the application. We reserve any 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 13 November 2015

Neil M Tainsh – Clerk to the Tribunal