Payne & Anor v London Borough Of Barnet

Under the statutory right-to-buy scheme, a landlord must describe structural defects known to it. The duty concerns defects affecting the structure that require making good, rather than every repair or maintenance item or a mere suspicion. The scheme principally enables the tenant to identify maximum liability during the reference period and creates no wider obligation to volunteer information or a new common-law duty of care. A claim should be struck out only where it is clear and obvious that it cannot succeed. Allegations that a council knowingly concealed structural defects, together with questions of discovery, causation, inducement and limitation, were arguable and required disclosure and trial. The negligence claim failed because no duty was arguable, but the statutory-duty and misrepresentation claims survived at this stage.

The appellants were secure tenants who exercised the right to buy and acquired a 125-year lease of a maisonette from the respondent local authority. They alleged that the authority’s statutory purchase-price notice failed to disclose known structural defects and misrepresented the property’s condition, value and resale prospects. Claims were pleaded in misrepresentation, breach of statutory duty and negligence, with reliance on sections 32 and 14A of the Limitation Act 1980.

The Assistant Recorder struck out the action as time-barred, while accepting that a negligence claim was arguable. The authority supported the order by a Respondent’s Notice. The central issues were the scope of the disclosure obligation under the Housing Act 1985, the availability of the limitation provisions, and whether any common-law duty of care was arguable.

Appeal allowed. The court allowed the appeal against the strike-out of the statutory-duty and misrepresentation claims, but ordered that the common-law negligence claim and consequential pleadings be struck out.

1. The right-to-buy provisions required the landlord to give notice of structural defects known to it under section 125(4A) of the Housing Act 1985. Structural defects meant defects affecting the structure which required making good. They were distinct from ordinary repairs and maintenance. Knowledge of an actual defect was required; suspicion of a possibility was insufficient.
2. The statutory scheme was designed to inform the tenant of maximum potential liability for service charges, ordinary external repairs and the making good of known structural defects during the reference period. It did not impose a wider obligation to disclose all information about repair costs, maintenance burdens or resale difficulties. The ordinary principle of caveat emptor otherwise applied.
3. The court declined to impose a new common-law duty of care on a local authority in the landlord–tenant or vendor–purchaser context. The statutory scheme was carefully constructed, and any additional duties were matters for Parliament. The reasoning was consistent with Caparo Industries plc v Dickman [1990] 2 AC 605, White v Jones [1995] 2 AC 207, Spring v Guardian Assurance plc [1995] 2 AC 296 and X (Minors) v Bedfordshire County Council [1995] 2 AC 633. It was common ground that an actionable misrepresentation could support a claim under section 2(1) of the Misrepresentation Act 1967.
4. For limitation purposes, deliberate concealment required concealment of a relevant fact by a person who could be treated as the council’s directing mind. The pleaded case that known structural defects had been deliberately concealed, and that they could not reasonably have been discovered earlier, was arguable. Discovery had to remain within reasonable bounds and could not become an historical trawl through papers predating the compulsory right-to-buy scheme.
5. Applying the strike-out approach in X (Minors) v Bedfordshire County Council [1995] 2 AC 633, the court could strike out only where it was clear and obvious that the claim could not succeed. Questions under sections 32 and 14A of the Limitation Act 1980, including knowledge, inducement, causation and damage, required evidence at trial and should not be tried as a separate preliminary issue. The court did not decide the section 14A issue in relation to the misrepresentation claim.

The order was varied accordingly. The form of the consequential order was left for agreement or further submissions.

• Court of Appeal (Civil Division): allowed the appeal from the order of Miss Assistant Recorder Simmons QC, sitting in the Willesden County Court on 3 May 1996. The statutory-duty and misrepresentation claims were not struck out at that stage, but the common-law negligence claim was struck out.