OPINION

Alec Nimmo (applicant) v City of Edinburgh Council (respondents)
Subjects: Flat 3F3, 87 Morrison Street, Edinburgh

1. The applicant has been a tenant of the respondents at Flat 3F3, 87 Morrison Street, Edinburgh, since 17 September 2001.

2. On 28 July 2016 he submitted an application to the respondents to buy his home under the Housing (Scotland) Act 1987 (“the 1987 Act”). On 12 April 2017 the respondents issued an offer to sell but because it was never received by the applicant a further offer, in all other respects identical to the original, was sent out on 10 May 2017. On 8 June 2017 the Tribunal received the present application, which is made under sec 65(2) of the 1987 Act, giving, as the particulars of dispute, that “The valuation is overstated given the condition of the property. Repairs are also sought as they were supposed to be done previously.”

3. The application was lodged without first complaining to the respondents about these matters: in other words, having received the offer to sell, the applicant came straight to the Tribunal. That, arguably, made him ineligible to bring a case under sec 65(2), the terms of which we will come to in due course. The respondents took that point to the extent of arguing that the application was premature and the case was sisted until 31 August 2017 to see if the matters complained of could be resolved between the parties. As it turned out, they could not and the case proceeded.

4. Since then various items of correspondence have come and gone between the parties and the Tribunal and parties have now agreed that the case can be determined on the basis of written submissions and without a hearing, all in terms of Rule 26 of the Lands Tribunal for Scotland Rules 2003. The applicant has conducted his own case and the final submissions for the respondents were prepared by Mr Graeme Matheson, a solicitor in their Legal and Risk Department.

5. Although much more fully elaborated on in their submissions, the position of the respondents is basically that the Tribunal has no jurisdiction in respect of either of the matters complained of.

Legislation

Housing (Scotland) Act 1987, secs 65(2), 65(3) and 71(1)
Local Government and Planning (Scotland) Act 1982, sec 55
Tenant’s Rights, Etc. (Scotland) Act 1980, secs 1, 2, 4 and 7

Cases

MacLeod v Ross 1983 SLT (Lands Tr) 5
Neri v City of Edinburgh Council LTS/TR/2017/007, 31 January 2018 (unreported decision)

The challenge to the valuation

6. When the application to buy was received the respondents instructed the District Valuer (“the DV”) to value the property. He did so at £130,000. A discount was applied based on the applicant’s period of tenancy, with the result that the price at which the property came to be offered to the applicant was £39,000. The applicant’s contention is that the DV’s valuation, and consequently the sale price, was too high. He has obtained his own valuation from Messrs Graham & Sibbald, Chartered Surveyors, who valued the property at £125,000. We understand that, as was their practice in such situations, the respondents asked the DV to review his valuation while the case was sisted but the DV stood by his figure.

7. The right-to-buy legislation has, of course, now been repealed, but the matters which an aggrieved tenant could take to this Tribunal under sec 65(2) were as follows:

“(2) A tenant who is aggrieved by the refusal of the landlord to agree to strike out or vary a condition, or to include a new condition, or to make the offer to sell to the tenant and the joint purchaser, or to withdraw the offer to sell in respect of any joint purchaser under subsection (1), or by his failure timeously to serve an amended offer to sell under the said subsection, may, within one month, or with the consent of the landlord given in writing before the expiry of the said period of one month, within two months of the refusal or failure, refer the matter to the Lands Tribunal for determination.”

8. What the Tribunal can do in respect of such a reference is set out in the following subsection:

“(3) In proceedings under subsection (2), the Lands Tribunal may, as it thinks fit, uphold the condition or strike it out or vary it, or insert the new condition or order that the offer to sell be made to the tenant and the joint purchaser, or order that the offer to sell be withdrawn in respect of any joint purchaser, and where its determination results in a variation of the terms of the offer to sell, it shall order the landlord to serve on the tenant an amended offer to sell accordingly within 2 months thereafter.”

9. It will be seen, therefore, that any power we have under sec 65(3) to interfere with the price at which a property is offered for sale under the Act depends on the price (and the valuation on which it is based) being a condition of the offer to sell.

10. This is not the first time this point has been raised. It came up in MacLeod v Ross & Cromarty District Council. Although that was a case under the Tenants’ Rights, Etc. (Scotland) Act 1980 (“the 1980 Act”) it is, nevertheless, instructive for present purposes. The jurisdiction of the Tribunal, contained in sec 2(4) of that Act was in identical terms to sec 65(2) of the 1987 Act and the provisions for fixing the price contained is sec 62 of the 1987 Act were broadly the same as the provisions of sec 1(5) of the 1980 Act. Both Acts contained provisions as to how the price is to be arrived at and in MacLeod the Tribunal held that, although in ordinary parlance the price of a property would be regarded as a condition of an offer to sell, these provisions were a stand-alone mechanism for arrival at the price at which the property was to be offered for sale and not anything with which the Tribunal was entitled to interfere, the reasoning of the Tribunal being contained in the following three paragraphs of its decision (at page 6):

“Section 2(2) lists the matters which must be contained in any offer under that section, including in para (c) the price and para (d) any conditions which the landlord intends to impose in terms of s. 4. The price on the one hand is distinguished from conditions on the other, and this distinction is repeated in para (e). Section 2(3) allows a tenant who considers that a condition contained in the offer is unreasonable to request the landlord to strike it out or vary it and it is only if the landlord refuses to do so that the tribunal has power to consider the condition under subs (5) of s. 2. In our view, a condition which the tribunal may be asked to strike out or vary under that subsection relates back to the conditions which the landlord intends to impose, i.e. the conditions referred to in subs (2)(d) and not to the price which in that subsection is separately referred to. Had Parliament intended the tribunal to have power to vary the price, we would, standing the separate references to price and conditions in subs (2) have expected to see the price specifically referred to in the succeeding subsections of s. 2.

Furthermore, under subs (4) and (5) of s. 2, it is only the aggrieved tenant who may apply to the tribunal. It would be inequitable if the tribunal could re-examine the price or market value under subs (5) for the tenant alone is the only person who can bring a condition before us under that subsection; yet the selling authority which has no control over the determination of market value might equally be aggrieved at the figure determined either by a qualified valuer or the district valuer.

Although the “condition” which the applicants are asking that we should vary is that relating to the purchase price, it is in effect the market value which they are questioning and a statement of which must be contained in the offer to sell (s. 2(2)(a)). We are certainly not persuaded that the statement is a condition for the purposes of s. 2. Section 1(5) lays down the rules for determining the market value. In our view a market value so determined is final and the tribunal is not entitled to re-examine a value so determined. Express provision to this effect would have been necessary had it been intended that we should have power to make such a review. The applicants’ approach to the tribunal on market value must therefore fail and we uphold the landlords’ first plea-in-law.”

11. The same reasoning can be applied to secs 62 to 65 of the 1987 Act. Section 62 lays down how the price is to be arrived at. Section 63 sets out the right-to-buy process. Subsection (2) lists the things which an offer to sell must contain, specifying, in para (c) that the price is to be the price fixed under sec 62(1), and refers separately, at para (d), to “any conditions which the landlord intends to impose under sec 64”. Section 64 says what these conditions are. In terms of sec 64(1) they must be “such conditions as are reasonable”. As we have seen sec 65(2) sets out the scope for challenge available to an aggrieved tenant. It talks of “refusal (by the landlord) to agree to strike out or vary a condition, or to include a new condition” and we take that to be, as the Tribunal in MacLeod did in relation to the relevant provision with which it was dealing, a reference back to the conditions imposed under sec 64. There is no suggestion that these are to be taken as including the market value determined by the DV or the price.

12. MacLeod was decided by reference to sec 2(4) of the 1980 Act. The 1980 Act also contained, at sec 7, power to a tenant to refer matters to the Tribunal where (a) a landlord failed to issue timeously either an offer to sell or a notice of refusal to sell, (b) a landlord had failed to issue an amended offer to sell having been directed to do so by the Tribunal or (c) where a landlord had failed to issue an offer to sell following on a Tribunal finding that the tenant was entitled to buy. None of these applied to MacLeod but by virtue of sec 55 of the Local Government and Planning (Scotland) Act 1982 (“the 1982 Act”) a fourth ground of referral was added in the following terms:

“(d) where a landlord has served an offer to sell whose contents do not conform with the requirements of paragraphs (a) to (e) of section 2(2) of this Act (or where such contents were not obtained in accordance with the provisions specified in those paragraphs)”

13. These powers of referral became sec 71(1) of the 1987 Act and in the recent case of Neri v City of Edinburgh Council the Tribunal (Mr Smith QC and Mr Oswald FRICS) required to consider whether sec 71(1)(d) extended the jurisdiction of the Tribunal in such a way as to allow a challenge to the DV’s valuation. What was being alleged there was that the DV had erroneously taken a tenant’s improvements into account, a matter specifically excluded under sec 62(2).

14. In continuing consideration of this aspect of the case for the provision of a supplementary report from the DV, the Tribunal said this:

“28. At this point we should mention that the respondents queried - we put it no higher than that – whether the Tribunal’s jurisdiction extended to an assessment of market value. Reference was made to MacLeod v Ross and Cromarty District Council. That case decided that under the Tenants’ Rights, Etc. (Scotland) Act 1980, the Tribunal did not have jurisdiction to re-examine market value as determined by an agreed valuer or the district valuer in terms of a provision very similar to section 62(2) of the 1987 Act. In particular it was held that “market value” specified in an offer was not a “condition” for the purposes of the 1980 Act which could be challenged under certain provisions also similar to those in the 1987 Act.

29. We note that the 1980 Act did not have an equivalent to subsections 71(1)(d) and (2)(b) of the 1987 Act. This is a significant difference to the legislation which the Tribunal were considering in MacLeod. In particular, section 71(1)(d) and its reference to section 63(2)(a) and “the provisions specified in those paragraphs” – i.e. section 62(2) referring to determination of market value - do appear to give the Tribunal a certain jurisdiction. It is true that the overall wording does not easily lend itself to the possibility of the Tribunal’s substituting their own view of market value for that of the District Valuer. On the other hand, it seems clear enough that the Tribunal has jurisdiction to ensure that the calculation of market value was carried out correctly and in accordance with section 62(2). This makes provision as to the ignoring of any increase in value for work which would qualify for reimbursement under section 29 of the 2001 Act. While we would reserve our position on jurisdiction lest the matter requires to be fully argued, we are provisionally satisfied that we are able to continue to deal with the case for the purpose discussed above.”

15. In the present case no error of the kind complained of in Neri is being attributed to the DV. Instead his valuation is being challenged on the basis of another valuation obtained by the tenant. That is an important distinction in our view. We do not see sec 71(1)(d) as giving us power to interfere with the DV’s assessment of open market value where no error or flaw in his approach is averred. The legislation does not seem to us to have afforded, at any stage, a mechanism whereby the tenant could challenge the DV’s valuation on the basis of another valuer’s report. Accordingly, although we do not dissent from the provisional view expressed in Neri in relation to the circumstances of that case, we are of the view that our jurisdiction under sec 71(1)(d) does not extend far enough to assist the applicant in this case.

16. Accordingly the challenge to the DV’s valuation is rejected.

Condition re repairs

17. Despite the fact that some nine months have passed since this application was lodged, during which there have been frequent emails between the applicant and the Tribunal, the applicant has never specified what condition to do with repairs he wishes the Tribunal to order the respondents to include in their offer to sell. But he has referred (for instance in his e-mail of 15 December 2017 to the Tribunal) to promised repairs and upgrades relating to electrical wiring, kitchen and bathroom fittings and the fitting of a new front door and he has followed up on that by lodging a sheaf of documents from the respondents or their contractors to do with those intended repairs. So it is clear enough that he wants us to order the respondents to include in their offer a condition that all outstanding repairs will be attended to.

18. The respondents say that they do not know anything about outstanding repairs. In that situation this is not something we can deal with. It would involve us in deciding whether the respondents have a legal duty to carry out such repairs, whatever, precisely, they might be. That is a matter of the law of landlord and tenant and one for the Sheriff Court, not for us. Accordingly we are unable to accede to the applicant’s request in this regard also.

Inclusion of a lock-up

19. This was not a matter included in the original application. It was raised for the first time by email dated 16 February 2018. Apparently there are some lock-up facilities (presumably storage cupboards) in the basement of the building of which the property forms part. No mention of this is made in the offer to sell. The applicant himself appears not to be clear as to whether any of them is his: in his email he says “The offer to sell document does not state which lock-up, if any, in the building basement, belongs to 3F3” (emphasis added). The respondents argue that it is far too late to raise this matter but have promised to look into it.

20. We agree with the landlords that it is too late to raise this matter under sec 65(2). That provision, so far as relevant for present purposes, allows a tenant who is aggrieved by the refusal of the landlord to agree to strike out or vary a condition, or to include a new condition, to refer his grievance to this tribunal within one month, or, with the landlord’s consent given before the month expires, within two months of the refusal. The applicant in this case did not ask the respondents to include a lock-up in their offer to sell, so he can hardly be said to be aggrieved by their failure to do so. The fact that he has brought an application to the Tribunal raising other matters does not, in our view, open the door for the introduction of other grievances while the application to the Tribunal is pending. In our view the provisions of the subsection operate as a time bar: anything not brought to the Tribunal for a determination within the time limit is past praying for.

21. Matters of this kind have, however, usually been raised as a referral under what is now sec 71(1)(d), as complaints that the landlord has served an offer to sell which does not conform to the requirements of paras (a) to (e) of sec 63(2). Hannan v Falkirk District Council 1987 SLT (Lands Tr) 18 and Morrison v Stirling District Council 1987 SLT (Lands Tr) 22, brought under its statutory predecessor, sec 7(2)(d) of the 1980 Act as amended, are examples. There appears to be no time limit for such applications and it may be that the applicant can return to the Tribunal under that provision if matters are not resolved between the respondents and him by agreement. For present purposes, however, given that it is not even positively being asserted that the applicant is entitled to occupy a lock-up as part of his tenancy, we do not think we should delay disposal of the application while that is being investigated.

Decision

22. Our determination is, therefore, (a) that we do not have jurisdiction to challenge the DV’s valuation on the basis contended for by the applicant, (b) that we do not have jurisdiction to adjudicate between the applicant and respondents on the question of liability for repairs, and (c) that the application for the inclusion of a condition relating to a lock-up is time-barred by the provisions of sec 65(2) of the 1987 Act.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 19 April 2018

Neil M Tainsh – Clerk to the Tribunal