London Borough of Southwark v Dennett

For the statutory delay consequences under Housing Act 1985 to arise, the tenant must serve an operative notice of delay in the prescribed form. An ineffective landlord counter-notice does not permit the court to deem that indispensable notice served, and correspondence which lacks the required statutory statement cannot replace it.

The validity of a counter-notice depends on whether action remained for the landlord to take. In a hard-edged factual dispute, it does not depend on the landlord’s good faith. Misfeasance in public office requires proof of identified officials’ subjective bad faith or recklessness as to legality and injury; maladministration, incompetence or delay alone is insufficient.

A secure tenant exercised his right to buy a long lease of his flat. The local authority’s handling of the transaction was substantially delayed, initially by an error in a neighbouring title plan and later by a dispute over communal parking rights.

The tenant served statutory delay notices. The Central London County Court held that two counter-notices were invalid, treated the tenant as having served an operative notice in March 2004, awarded statutory rent set-off relief and damages for misfeasance in public office, and ordered completion of the lease with parking rights.

The authority appealed. The principal issues were the validity and consequences of the counter-notices, the need for an operative notice of delay, the tenant’s parking rights, and whether misfeasance had been established.

1. Appeal allowed in part. The claim for misfeasance in public office failed. The judge was also wrong to treat the tenant as having served an operative notice of delay in March 2004, and wrong to invalidate the authority’s June 2005 counter-notice.

2. The February 2004 counter-notice was ineffective. Under section 153A, action still remained for the authority: it had to send draft conveyancing documents and resolve the plan discrepancy. Guinan v Enfield London Borough Council (1996) 29 HLR 456 concerned a genuine dispute over proposed lease terms. Its good-faith qualification did not govern the hard-edged factual question whether the authority still had action to take.

3. However, service of an operative RTB8 notice was an express statutory precondition to the rent consequences in section 153B. The court could not deem such a notice served merely because the tenant would have served one but for the ineffective RTB7 notice. The tenant’s letters did not satisfy the prescribed-form requirement or contain the statutory statement that section 153B would apply. Accordingly, rent could be credited against the purchase price only from 12 March 2005, when an RTB8 was actually served, until 22 June 2005.

4. The June 2005 counter-notice was valid. The authority was entitled to propose alternative parking terms for agreement, although it could not insist upon a lease depriving the tenant of rights to which he was statutorily entitled. By June 2005 it was awaiting the tenant’s response, so no action remained for it to take.

5. The statutory lease had to include parking rights equivalent to those enjoyed at the relevant time, namely when the right-to-buy notice was served in 2001, unless the parties agreed otherwise. Once the judge determined those rights, an injunction requiring the grant of the lease was proper.

6. Misfeasance required proof that identifiable officials acted dishonestly or with subjective recklessness about the lawfulness of their conduct and its likely consequences. The evidence permitted incompetence or overwork as explanations for the delay. It did not establish the necessary subjective bad faith.

Longmore LJ added, obiter, that an invalid counter-notice may not be a notice under section 153A(3), so that a tenant could serve an RTB8 notice despite it. Carnwath LJ reserved that issue, suggesting that the proper threshold for invalidity might instead be whether the authority had a reasonable public-law basis for serving the counter-notice.

• Court of Appeal (Civil Division): Allowed the authority’s appeal in part. It dismissed the misfeasance claim, confined statutory rent set-off to the period from 12 March to 22 June 2005, but upheld the order requiring completion of the lease with the tenant’s proper parking rights.
• Central London County Court: HH Judge Bailey found that the authority had acted in bad faith, awarded damages for misfeasance, granted statutory delay relief from March 2004, and ordered completion of the right-to-buy conveyance.