OPINION

Morag Ann Cassidy and Margaret Cassidy (Applicants) v Trafalgar Housing Association Limited (Respondents)

Introduction

[1] This is an application for a finding under section 68(4) of the Housing (Scotland) Act 1987 that the first applicant (“the applicant”) has the right to purchase her house. The first applicant is a secure tenant of the respondents and has applied to buy the house. The second applicant is her granddaughter whom the first applicant has nominated as a joint purchaser as a family member within the meaning of the Act. The respondents are a registered social landlord. The issue in this case relates to the fact that the right to purchase was abolished on 1 August 2016. The statutory application form for the purchase was completed and delivered prior to 1 August, but the statutory certificate stating there were no council tax arrears was not given to the respondents until the morning of 1 August.

Procedure

[2] We held a hearing on 21 July 2017. The first applicant represented herself and the second applicant. The respondents were represented by Mr Bauld of T C Young, Solicitors, Glasgow. The first applicant gave evidence. The facts of the case were largely set out in the documents before us and there was no dispute as to the facts.

Legislation

Housing (Scotland) Act 1987 (“the 1987 Act”)

The 1987 Act provided:

“61D Limitation on right to purchase: arrears of rent, council tax etc.

(1) Subsection (2) and (3) apply where a tenant serves on a landlord an application to purchase at a time when the tenant, or any joint purchaser …

(b) has not paid any sum lawfully due in respect of—

(i) council tax in respect of the house or any other house in the local government area in which the house is situated, or

(ii) water and sewerage charges in relation to the house or any other such house.

(3) If the landlord is a registered social landlord—

(b) where the sum is a sum referred to in subsection (1)(b), the landlord shall—

(i) consult the local authority for the area in which the house is situated, and

(ii) serve such a notice (of refusal) on the tenant unless the authority agrees that such a notice should not be served.

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;

(b) a statement of any period of occupancy of a house on which the tenant intends to rely for the purposes of section 61 and 62; and

(c) the name of any joint purchaser within the meaning of section 61(6)

(1A) Where the landlord is a registered social landlord the tenant shall, when serving on the landlord the application to purchase, give the landlord a certificate issued by the local authority for the area in which the house is situated stating—

(a) whether the tenant and any joint purchaser have, as at the date of the certificate (which must be no more than one month before the date of the application to purchase), paid the sums referred to in section 61D(1)(b), and

(b) if they have not, the amount of any such sum lawfully due by the tenant or, as the case may be, the joint purchaser as at the date of the certificate.

(1B) A local authority shall, on the application of a tenant or joint purchaser referred to in subsection (1A), issue to that person free of charge a certificate as to the matters specified in paragraphs (a) and (b) of that subsection so far as relating to that person.

(1C) A certificate under subsection (1B) shall be issued not later than 21 days after the receipt of the application by the authority.

(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”) containing—

(a) the market value of the house determined under section 62(2);

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.

(3) A notice of refusal shall specify the grounds on which the landlord disputes the tenant's right to purchase …

(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.

84 Service of notices.

(1) A notice or other document which requires to be served on a person under any provision of this Part may be given to him—

(a) by delivering it to him;

(b) by leaving it at his proper address; or

(c) by sending it by recorded delivery post to him at that address.”

Housing (Scotland) Act 2001 (“the 2001 Act”)

The 2001 Act provides-

“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.”

Housing (Scotland) Act 2014 (“the 2014 Act”)

Section 1(1) of the 2014 Act repealed the right to buy provisions contained in sections 61 et seq of the 1987 Act. In terms of paragraph 2 and the Schedule to the Housing (Scotland) Act 2014 (Commencement No.1 etc. ) Order 2014/264 (SSI) (“the 2014 Order”) the appointed day for the coming into force of section 1(1) was 1st August 2016.

The 2014 Order also provided -

“4. Despite the commencement of section 1 (abolition of the right to buy) of the Act, the provisions repealed or modified by subsection (1) of that section … continue to have effect as they had effect on 31st July 2016 in relation to—

(a) any application to purchase submitted under section 63(1) of the 1987 Act before 1st August 2016;”

Interpretation and Legislative Reform (Scotland) Act 2010

The 2010 Act provides:

“3 Commencement of Acts of the Scottish Parliament and Scottish instruments: time

(1) Subsection (2) applies where an Act of the Scottish Parliament or a Scottish instrument provides for the Act or instrument to come into force on a particular day.

(2) The Act or instrument comes into force at the beginning of the day.”

Cases

East of Scotland Water Authority v Livingstone 1999 SC 65
McCreight v West Lothian Council 2009 SC 258
Boyle v South Lanarkshire Council 2015 SLT (Lands Tr) 189
Simpson v Hillcrest Housing Association LTS/TR/2016/17; 22 Nov 2016
Maloney v City of Edinburgh Council LTS/TR/2017/04; 5 July 2017

Background Facts and Circumstances

[3] As a Scottish secure tenant the first applicant had the right to purchase her house from her landlords, the respondents. She also had the right to nominate the second applicant as a joint purchaser.

[4] The first applicant had been aware at the time of entering into her tenancy agreement in 2000 that she had the right to purchase her house. This right was upon the preserved basis. The 2014 Act prospectively abolished the right. The first applicant had had various difficulties in her family life and had been unaware of publicity surrounding the pending abolition. Nor had the first applicant received any formal notification to this effect from the respondents. She first became aware from another source that the right to buy was about to end about a week before the repeal date of 1 August 2016.

[5] The first applicant thereupon commenced communications with the respondents. The respondents told her by letter dated 27 July 2016 that the application should be submitted before 1 August 2016. The letter also stated that the application must be accompanied by written confirmation from the local authority that there were no council tax or water and sewage charge arrears. This reflects the language of a section of the statutory application form. The first applicant completed the relevant application form. She delivered it to the respondents’ office on Saturday 30 July 2016.

[6] It turned out that there were council tax arrears. The first applicant had understood that her late husband had taken responsibility for their council tax liability in previous years, but was unaware that he had not in fact paid them. There was a substantial sum owing, although it would appear that the sum had been somewhat overstated. The first applicant paid the bulk of the amount on Wednesday 27 July and the remainder on Friday 29 July. However, despite various attempts, it was not possible for the first applicant to obtain a certificate from the relevant local authority, namely West Dunbartonshire Council, confirming that there were no arrears, before close of business on the Friday. Consequently there was no certificate submitted to the respondents along with the application delivered on Saturday 30th July. The certificate from the council appeared on the morning of Monday 1st August and was immediately forwarded to the respondents. But by this time, the respondents having opened their mail on Monday 1st August and found only the application form, indicated by telephone that they would be refusing the application on the basis that there was no certificate. This remains their position.

Submissions

[7] The first applicant suggested that the provisions of the 1987 Act might be regarded not so much as strict rules, but more guidelines giving the landlords a discretion in the matter should the procedures not be strictly complied with. She drew attention to the fact that as the local authority had a statutory period of 21 days in order to issue the certificate, she had been placed in an impossible position one week before the deadline and had done all that was humanly possible to comply with the procedures. She also drew attention to the fact that it might have been possible for her to produce a timeous certificate stating there were arrears, in the reasonable expectation that the local authority would not require the application to be turned down when those arrears were in the course of being paid off. However, she had been advised that the certificate required to state there were no arrears, which was not legally correct. In any event, the fundamental problem had been caused by the fact that she had been unaware that the right to buy was ending, and had not been told so by the landlords thus giving her insufficient time to make the application.

[8] The respondents submitted that the rules were strict as had been recognised by the Tribunal in other cases. An application to purchase was only validly served in terms of section 63 unless, in terms of subsection (1A) the local authority’s certificate was also provided on the matter of any council tax etc. arrears. This had not been done prior to the abolition date of the right to buy. It followed that an applicant would be well advised to apply for the local authority certificate more than 21 days before the expiry deadline. The Tribunal had no discretion in the matter given the language of the Act. Moreover, the respondents, as registered social landlords, had no general discretion to sell in cases falling outwith the right to buy under the 1987 Act. In terms of the Housing (Scotland) Act 2010, a disposal of land by a registered social landlord for which the Regulator’s consent is required, is void if the Regulator does not consent to the disposal before it is made. Accordingly any sale outwith the right to buy mechanism under the 1987 Act would require the Regulator’s consent, and any such consent would no doubt require the sale to be for market value; i.e. without the statutory discount. Mr Bauld did not dispute Mrs Cassidy’s position that the respondents had not informed her that the right to buy was coming to an end. However, inasmuch as any breach of section 23(5) of the 2001 Act could be pointed to, that Act gave no remedy. In particular, the Tribunal had no jurisdiction to deal with any claim that section 23(5) had not been complied with.

Discussion by Tribunal

[9] In terms of the legislative background, section 61 of the 1987 Act provides for the secure tenant’s right to purchase. Subsection (6) provides for the tenant to exercise the right to purchase along with a family member acting as a joint purchaser, as has occurred in this case. Section 61D limits the right to purchase in certain cases. This includes the situation envisaged in subsection (1)(b) where the tenant or joint purchaser is in arrears of council tax or water and sewerage charges.

[10] In terms of the statutory regime section 63 requires the application to purchase to be in the statutorily prescribed form. The present application was in the correct form. However, where the landlord is a registered social landlord, subsection (1A) states that the tenant “shall” when serving the application to purchase, give the landlord a certificate issued by the relevant local authority stating whether the tenant and any joint purchaser have paid the sums referred to in section 61D(1)(b) and, if not, the amount due as at the date of the certificate. The certificate requires to be dated not more than one month before the date of the application to purchase. As we read subsections (1B) and (1C) the tenant and joint purchaser may apply to the local authority for the certificate, which the authority must issue free of charge and not later than 21 days of the application for the certificate. Where an unpaid sum is a sum referred to in section 61D(1)(b), the registered social landlord is required to consult the relevant local authority and is required to serve a notice of refusal unless the authority agree that such a notice should not be served.

[11] Where a landlord disputes the tenant’s right to purchase under section 61, it is required to serve a notice of refusal under section 68(1) within one month of the application to purchase, or offer to sell the house. There is a 2 month period for a notice of refusal mentioned in section 68(2) (not quoted above) where the landlord is of the opinion that information in the application is incorrect. The 2 month period is not applicable in this case. Under section 63(2), where the landlord has not served a notice of refusal under section 68, it “shall” serve an offer to sell containing prescribed information within 2 months of the application to purchase.

[12] The legislation therefore envisages that it may take up to 21 days for the local authority to provide the certificate, which certificate requires to accompany, or at least be given to the landlord at the same time as the service of the application to purchase. The certificate must not be more than a month old at the time of the application. Where there are arrears the landlord requires to consult with the local authority in order to establish whether a notice of refusal should not be sent, all within the one month period from the date of the application to purchase, in order to be able to serve timeously the notice of refusal.

[13] The right to buy provisions were abolished by the Housing (Scotland) Act 2014 with effect from 1 August 2016. Article 4 of the relevant transitional provisions order saved those provisions in relation to “any application to purchase submitted under section 63(1) of the 1987 Act before 1 August 2016.” So if there was a valid application submitted on or before 31 July 2016 in any given case, the right to buy provisions would be saved.

[14] A preliminary question arises whether the certificate is needed in all cases where the applicant is required to pay council tax and water and sewerage charges, or whether the certificate is only required where there happen to be arrears at the time of the application. The substantive requirement in section 61(D), as we read it, is for there to be no unpaid sum lawfully due at the “time” of the application to purchase. However, section 63 presupposes that the certificate will come into being at a point before the exact time of service of the application, but not more than a month before the application date. It will not necessarily reflect the exact position at the point of the service of the application. What section 63(1A) requires the certificate to state is “(a) whether the tenant and any joint purchaser have, as at the date of the certificate … paid the sums referred to in section 61D(1)(b), and (b) if they have not, the amount of any such sum lawfully due …” Section 61D refers to where a tenant “… has not paid any sum lawfully due …”

[15] It seems to us that in context the words “sums referred to in section 61D(1)(b)” make more sense if read as meaning “lawfully due” sums, whether paid or unpaid, as opposed to, as it were, only “unpaid and due” sums. The words “sum lawfully due” are used in the section, and the legislation envisages that the certificate may indicate that “such” sum may, or may not, have been paid. The legislation envisages the possibility of certificates merely stating that lawfully due sums have been paid. This suggests, therefore, that the requirement for a certificate is a general one. The alternative construction, based on the words “has not paid” any sum lawfully due in section 61D(b) would mean that the certificate would only be required where there are actual arrears, thus leaving it to the landlord to verify the matter. That interpretation is inconsistent with the provisions of the Act leaving it to the tenant to provide the certificate.

[16] It is also possible that the certificate might state that there are sums lawfully due and unpaid, but which in terms of section 61D(3)(b)(ii) whose existence may not necessarily result in a refusal of an application. The local authority might still agree that the notice of refusal should not be served despite the existence of arrears. Accordingly, we think that the note in the statutory application form (p14 para 2(b)) “… however, you must obtain a certificate from your local authority confirming that you have no arrears …” is not necessarily correct, at least in the circumstances of this case. While the advice is no doubt very sound in the overwhelming majority of cases, and also appears to have been the advice given by the respondents in this case, in the heat of the moment and with hindsight it may have been questionable if the result was to prolong the time taken for the obtaining of a certificate from the local authority. Mrs Cassidy faced a fast approaching deadline while tendering payment of the arrears. It may have been preferable for her to attempt to obtain a timeous certificate stating that there were arrears, rather than a delayed certificate stating there were no arrears, in the hope that the local authority would exercise their discretion in her favour in the circumstances. However as we discuss below the point is academic and we do not seek to express an opinion on the matter.

[17] This brings us to the central question whether the right to buy provisions were saved in this case by a valid application to purchase being submitted before 1 August 2016. The transitional provisions refer to the “application” being submitted. The language of section 63 suggests that the application document (in prescribed form) is a separate document from the certificate itself. So is it enough for an application form alone to be submitted before 1 August 2016, without the certificate, in order to save the right to buy?

[18] With regret we have come to the view that the application cannot be regarded as valid unless the certificate is also given to the landlord at the same time. Section 63(1A) uses the word “shall” in relation to provision of the certificate at the time of the application. The framework of the Act only reinforces the view that the provision is mandatory. Unless and until there is a certificate, the landlord cannot consult with the local authority as to whether a notice of refusal requires to be sent on the basis of arrears. Where there are arrears the landlord cannot agree to sell until it has received the agreement of the local authority. And the landlord cannot wait for the certificate indefinitely otherwise the one month period enabling it to send a notice of refusal will have expired. So in order to make the mechanics of the Act work, the tenant requires to submit the certificate timeously. We are reinforced in this by the view of the majority of the Inner House in ESWA v Livingstone to the effect that the requirement for the landlord to state an objection within a limited time is a stringent one. That case illustrates the potentially severe consequences to the landlord if it does not comply with the time limits of the statute. The landlord’s rights to refuse would be undermined if it had to wait for an indeterminate period before receiving the certificate.

[19] So to summarise in this case the certificate was not submitted until 1 August 2016; i.e. after midnight on Sunday 31 July. By then the relevant provisions of the Act had been repealed. The previously submitted application was invalid since the statutory procedure in place up to 31 July had not in substance been complied with.

[20] We note the argument that the respondents had not provided the first applicant with information as to the abolition of the right to buy. Arguably that information ought to have been provided to her in terms of section 23(5) of the 2001 Act. She acted as quickly as she could in the circumstances to make her application within a short period of time. However, we do not seek to express an opinion on the matter. As we have pointed out in Boyle v South Lanarkshire Council and other cases, the Tribunal has no jurisdiction in cases of failure to provide information under the 2001 Act. The Tribunal is a creature of statute and only has those jurisdictions which statute has conferred upon it: McCreight v West Lothian Council, paragraph [18]. In the present case the Tribunal does have jurisdiction to determine whether or not the application is valid under the 1987 Act. This is a question of determining whether the statutory procedures were intended to be strict and have been complied with timeously. But the Tribunal does not have jurisdiction under the 2001 Act to determine whether some failure to comply with that Act on the matter of provision of information should result in a remedy. Parliament has not provided the Tribunal with jurisdiction to make such a determination. The same applies to any argument that incorrect advice has resulted in the application being defective. All the Tribunal can do is determine whether the application was valid; it has no jurisdiction to provide a remedy arising from any reason as to why the application was invalid.

Decision

[21] For these reasons we shall refuse the application.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 28 July 2017

W Douglas Ballantyne – Deputy Clerk to the Tribunal