OPINION

Douglas Davidson and Isobel Davidson (Applicants)
v
Bridgewater Housing Association Limited (Respondents)

Subjects: 122 Park Winding, Erskine PA8 7AU

Introduction and Procedure

1. This is an application under sec 65(2) of the Housing (Scotland) Act 1987 (“the 1987 Act”) for, in terms of that subsection, a determination of disputed matters relating to an offer to sell a dwellinghouse under the “right to buy” provisions of that Act. The applicants, Mr Douglas Davidson and Mrs Isobel Davidson, are tenants of 122 Park Winding, Erskine, which is owned by Bridgewater Housing Association Limited, the respondents.

2. On 28 July 2016 they submitted an application to the respondents to buy their home under the 1987 Act. After some delay, on 9 March 2017 the respondents issued an offer to sell to which the applicants’ solicitor issued a qualified acceptance on 27 April 2017. Shortly thereafter Mr Davidson verbally instructed his solicitors (Cohran Dickie, Paisley) to withdraw that acceptance, which they did by formal letter dated 2 May 2017. This was done without consultation with Mrs Davidson, either by her husband or their solicitor.

3. Subsequently, when Mrs Davidson became aware of the position she wrote to the respondents on 26 May 2017 requesting that the application be re-opened. The respondents replied indicating that they could not re-open or accept a fresh application as the right to buy had ended on 1 August 2016.

4. As a result, the applicants have brought this application under section 65(2) of the 1987 Act.

5. In response, the respondents, taking the view that the application was incompetent, have moved the Tribunal to dismiss the application with expenses in their favour. We heard submissions on that motion at Edinburgh on 6 March 2019 when Mr Davidson appeared on behalf of himself and his wife, and Mr Andrew Upton, solicitor, appeared for the respondents.

Legislation

Housing (Scotland) Act 1987, sec 65

(1) Where an offer to sell is served on a tenant and he wishes to exercise his right to purchase, but –

(a) he considers that a condition contained in the offer to sell is unreasonable; or

(b) he wishes to have a new condition included in it; or

(c) he has not previously notified the landlord of his intention to exercise that right together with a joint purchaser, but now wishes to do so; or

(d) he has previously notified the landlord of his intention to exercise that right together with any joint purchaser but now wishes to exercise the right without that joint purchaser

he may request the landlord to strike out or vary the condition, or to include the 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 the joint purchaser, as the case may be, by serving on the landlord within one month after service of the offer to sell a notice in writing setting out his request; and if the landlord agrees, it shall accordingly serve an amended offer to sell on the tenant within one month of service of the notice setting out the request.

(2) A tenant who is aggrieved by the refusal of a landlord to agree to strike out or vary a condition, or to include a new condition, or to make an 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.

(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.

Adults with Incapacity (Scotland) Act 2000, sec 1

(6) For the purposes of this Act, and unless the context otherwise requires-

“incapable” means incapable of –

(a) acting; or

(b) making decisions; or

(c) communicating decisions; or

(d) understanding decisions; or

(e) retaining the memory of decisions

Cases

Bank of Scotland v Brunswick Developments (1987) Ltd (No.2) 1997 S.C. 226
Gregor Homes Ltd v Emlick 2012 S.L.T. (Sh Ct) 5
International Sponge Importers Ltd v Andrew Watt & Sons 1911 S.C. (H.L.) 57

Submissions for Respondents

6. Mr Upton presented his arguments in support of dismissal under three headings; firstly that sec 65 was not applicable in this case (“the competency issue”); secondly that Cochran Dickie had the authority to withdraw the application on behalf of the Davidsons (“the authority issue”); and thirdly that Mr Davidson had capacity to instruct Cochran Dickie to do so on or around 2 May 2017 (“the capacity issue”).

The competency issue

7. Section 65 was not applicable as it dealt with conditions of an offer, but in this case there was no live offer and therefore the application fell at the first hurdle. Esto sec 65 was applicable (which the respondents did not accept) there were four grounds for referral to the Tribunal as set out in subsection (1) on which the tenant could request the landlord to vary the conditions of the offer.

8. If the tenant considered that any of the four grounds applied, then he was required to serve a notice in writing on the landlord setting out his request. The applicants here had failed to do this and so the application to the Tribunal was not valid.

9. Even if the applicants could get round that problem, however, the powers of the Tribunal where a referral was made under sec 65 (contained in subsection (3)) were restricted to upholding, striking out or varying the condition in question and none of them was applicable here. The applicants were asking the Tribunal to do something which the Tribunal had no power to do under sec 65(3). The application should therefore be dismissed.

The authority issue

10. This was only relevant in the event that the Tribunal did not find favour with the respondents’ sec 65 argument.

11. The applicants had instructed a firm of solicitors, Cochran Dickie, to act on their behalf. That they were acting on the express instructions of the applicants and made clear in the withdrawal letter of 2 May. Even if Cochran Dickie’s express authority was open to challenge, their actions were within their ostensible authority and therefore binding on the applicants.

12. Put another way, the applicants had represented to the respondents that Cochran Dickie had authority to act on their behalf, the respondents had been entitled to rely on that representation and had acted upon it. The applicants were therefore personally barred from denying that Cochran Dickie had authority to act as they did when they withdrew the qualified acceptance; Bank of Scotland v Brunswick Developments (1987) Ltd (No.2), Gregor Homes v Emlick, and International Sponge Importers Ltd v Andrew Watt & Sons.

The capacity issue

13. The third issue which Mr Upton drew to the attention of the Tribunal was what he described as the “capacity issue”. This arose from a suggestion in correspondence from Mrs Davidson that her husband was suffering from stress causing him to make irrational decisions when he instructed Cochran Dickie to withdraw the qualified acceptance.

14. Mr Upton made reference to the definition of “incapable” contained in the Adults with Incapacity (Scotland) Act 2000 sec 1(6):

“incapable” means incapable of –

(a) acting; or

(b) making decisions; or

(c) communicating decisions; or

(d) understanding decisions; or

(e) retaining the memory of decisions

15. There was no suggestion that any of those definitions applied in the circumstances of this case and the fact that Mr Davidson’s actions in instructing Cochran Dickie to withdraw the application might be viewed as rash or even irrational did not amount to incapacity. On the contrary, Mr Davidson was a man who was capable of acting and of making, communicating, understanding and remembering decisions.

16. Accordingly Mr Upton contended that the withdrawal letter must stand and that the application should be dismissed.

Submission for Applicants

17. It is no criticism of Mr Davidson, as a lay person, that he made no attempt to address any of Mr Upton’s legal submissions. Instead he set out some of the events leading up to his decision to withdraw from the right to buy process in early May 2017.

18. From the time of the initial application on 28 July 2016 he had felt that the requirement to prove that council tax payments were up-to-date was unduly onerous and not common practice among housing associations.

19. He felt that the surveyor from the Valuation Office Agency who was instructed to prepare a market valuation had not been sufficiently diligent in his survey of the property. In particular he highlighted his failure to fully inspect the property and identify various roof leaks.

20. He also highlighted the poor condition of the roof which he felt was not properly reflected in the market valuation of £112,000.

21. These issues combined with the letter from his solicitor dated 27 April 2017 caused him, in his words, “to blow up” and tell his solicitor to “knock it (i.e. the whole right to buy application) on the head”.

Tribunal’s consideration

22. This case comprises an unfortunate set of circumstances. Both parties had been seeking to proceed with the transaction which seems likely to have concluded until the events around 2 May 2017 when Mr Davidson, in a state of some stress, instructed his solicitor to notify Bridgewater Housing Association Limited of the applicants’ withdrawal from the “right to buy” process.

23. In questioning by the Tribunal, Mr Davidson admitted that he had hidden subsequent correspondence from his wife to avoid her discovering he had withdrawn the application. Consequently, Mrs Davidson had been unaware of the position until she opened a letter from the proposed mortgage provider on 11th May and discovered the truth. Although that had been, as Mr Davidson put it in submissions, “when all hell broke loose”, it was not until 26th May that Mrs Davidson wrote to the respondents requesting that the application be re-opened. At that point the respondents took the view, which they were undoubtedly entitled to take, that the original application having been withdrawn, and the “right to buy” having been abolished from 1 August 2016 (by sec 1 of the Housing (Scotland) Act 2014), there was no scope to accept any fresh application or issue any fresh offer to sell.

24. This application has been brought under sec 65(2) of the 1987 Act which provides a course of action where the parties are unable to agree on conditions which form part of an offer to sell. We agree with the respondents that in this case, as there is no live offer, the grounds of referral and the remedies available to the Tribunal under sec 65 are not relevant or applicable in this case. Mr Upton therefore succeeds on the competency issue.

25. On the question of authority it is not disputed that Cochran Dickie had been instructed to act for Mr and Mrs Davidson. The withdrawal letter clearly states “On behalf of and as instructed by our clients Douglas Davidson and Isobel Davidson…” and the respondents treated this as authority to withdraw the Davidsons’ right to buy application which they did, issuing a confirmation letter on the same day. Even if Cochran Dickie did not have actual authority, and we heard no evidence to suggest that that was the case, the two key elements of ostensible authority in the law of agency, namely representation and reliance, were present. Cochran Dickie therefore had ostensible authority to act as they did. As to whether they ought to have taken instructions from Mrs Davidson as well as from her husband, that is a matter between them and their clients. The respondents were entitled to believe that they had authority from both.

26. On the issue of capacity we heard no evidence to suggest that Mr Davidson temporarily met the definition of “incapable” as set out in the Adults with Incapacity (Scotland) Act 2000. As we have already said, on the contrary, the facts of this case indicate that Mr Davidson was capable of making, communicating and understanding his decision to withdraw from the right to buy process.

27. We fully accept Mr Davidson’s evidence regarding the stress which the process caused him, and his decision to discontinue the process to avoid further stress is quite understandable. The fact that subsequently the applicants had a change of heart and came to regret that decision, does not invalidate the withdrawal letter.

Decision

28. In conclusion, the respondents succeed in respect of all three arguments advanced in support of their motion for dismissal and we have given effect to that in our order.

29. The respondents moved that they be awarded expenses in the event of their success. That motion remains to be decided. The applicants will now be given the opportunity of lodging a brief written response to that motion, if so advised. They should respond within 14 days from the issue of this decision. The matter will be dealt with without a further hearing.


Certified a true copy of the statement of reasons for the decision of the Lands Tribunal for Scotland intimated to parties on 4 April 2019

Neil M Tainsh – Clerk to the Tribunal