Nessa v London Borough of Tower Hamlets

Acceptance of a later notice under Part V of the Housing Act 1985 may, by mutual agreement, discharge rights and obligations arising from an earlier notice. A tenant’s ability to withdraw or abandon a right to buy is not confined to the statutory written-notice mechanism.

A landlord may have an implied power to correct a clerical error in a section 125 notice, subject to limits including the time for correction. The Court of Appeal left the extent of any power to vary the stated price open where the tenant has not abandoned the original purchase or agreed to proceed on a later notice.

Secure tenants claimed the right to buy their flat under Part V of the Housing Act 1985. The Council first served a section 125 notice stating a net price of £159,000. It later served a revised notice stating £209,000, which both tenants accepted after receiving legal advice.

The tenants later sought to proceed at the lower price. The Central London County Court dismissed the claim, holding that the Council lacked power to amend or withdraw the first notice and that the first and third notices were nevertheless void because the valuation was understated.

On appeal, the issues were whether the Council could amend the first notice and whether the right to buy was governed by the first or second notice.

1. Appeal dismissed. The Court of Appeal reached the same result as the county court, but for different reasons. The appellant abandoned reliance on the third notice, so the fourth notice was immaterial.
2. Correction of clerical mistakes. The judge was wrong to conclude that the express provision in section 177 of the Housing Act 1985 excluded any other power to amend a section 125 notice. Section 177 was introduced after the original right-to-buy legislation and addresses mistakes resulting from an error or omission in the tenant’s notice. It therefore did not necessarily exclude an implied power to correct a landlord’s own clerical error. Given the detailed information required in a section 125 notice, the Chancellor would have had little difficulty implying a limited power to correct such an error. The landlord would be bound to notify the tenant so that the tenant was not misled. The limits of that power, including the time within which it could be exercised, were left for a future case because the issue was unnecessary to the result.
3. Effect of acceptance of the second notice. The right to buy and the landlord’s duties were statutory rather than contractual, as recognised in Bristol City Council v Lovell [1998] 1 WLR 446. However, a tenant may withdraw or abandon the right to buy by means other than the written notice under section 122(3), applying Copping v Surrey County Council [2006] HLR 307 and Martin v Medina Housing Association Ltd [2006] HLR 763. The tenants freely accepted the second notice, with legal advice and knowledge of the relevant circumstances. That acceptance discharged by mutual agreement the rights and obligations arising from the first notice.
4. Price stated in a section 125 notice. Stanley Burnton LJ, whose observations were also accepted by Wilson LJ, noted that the stated price was not necessarily immutable. It could be affected by agreed variations to lease terms or by a county court determination. Section 126 did not define the price by reference to the amount stated in the section 125 notice. The broader limits on a landlord’s power to vary the price remained open.

• Court of Appeal (Civil Division) dismissed the appeal, holding that acceptance of the second section 125 notice superseded the first notice by mutual agreement: [2010] EWCA Civ 559.
• Central London County Court, HH Judge Dight, dismissed the claim on 28 September 2009. The judge held that the Council had no power to amend or withdraw a section 125 notice, but that the first and third notices were void because the valuation was significantly understated.