John Dunleavy & others (plaintiffs) v Dun Laoghaire-Rathdown County Council (defendant)
Landlord and tenant - Local authority - Tenants' claim that expression of interest by them in the purchase of maisonettes should trigger a mechanism for sale to them - Whether breach of legitimate expectation - Whether issue of promissory estoppel - Whether tenants entitled to rely on representations from local authority as to purchase of maisonettes.
The High Court (Miss Justice Macken); judgment delivered on November 2nd, 2005.
There is a series of very helpful matters which might be taken into account when assessing whether or not the principle of legitimate expectation was infringed by the actions of a defendant. These are, firstly, that the public authority must have made a statement or adopted a position amounting to a promise or representation, express or implied, as to how it would act in respect of an identifiable area of its activity. Secondly, that the representation must be addressed or conveyed, either directly or indirectly, to an identifiable class of persons affected, actually or potentially, in such a way that it formed part of a transaction definitively entered into or that the person or group had acted on the fact of the representation. Thirdly, that it must be such as to create an expectation reasonably entertained by the person or group that the public authority would abide by the representation to the extent that it would be unjust to permit the public authority to resile from it.
The High Court so held in making a declaration that the plaintiffs were entitled to have the benefit of the purchase by them of their maisonettes, provided that they met at the time any conditions normally required to be met by a local authority tenant for the purchase of such maisonettes, at a cost which reflected a valuation as if they had been offered within a period of 12 months from the date in 1995 when the defendant adopted a model scheme for the sale of local authority dwellings.
Brian Leonard SC and Gerard Charlton BL for the plaintiffs; Carol O' Farrell BL for the defendant.
Miss Justice Macken stated that the plaintiffs were local authority tenants of the defendant who primarily sought declarations that they were entitled to purchase their respective maisonettes by reference to the market price prevailing under various sales schemes announced by the defendant between 1979 and 1995.
The plaintiffs claimed that, having regard to the invitations from the defendant to express an interest in purchasing their maisonettes and to the affirmative expressions made in that regard and notified to the defendant, and the steps taken by them, including the monies expended by them on repairs and renovations, and their decisions to forego transferring to houses which they could have purchased, they had a legitimate expectation that they would be afforded the opportunity to purchase their maisonettes by reference to prices obtaining at the relevant times. They also claimed that they had a right to purchase the maisonettes on the basis of promissory estoppel, arising from representations made by the defendant upon which they relied to their detriment. They alleged that the defendant reneged on the representations made or the arrangements entered into and/or was estopped from denying the existence of same, having renewed the invitations to the plaintiffs to confirm their interest in purchasing on further dates from the years 1980 to the middle of the 1990s and at prices pertaining in those years.
Reviewing the evidence, Miss Justice Macken said that at certain dates between 1979 and 1995, the defendant sent each of the plaintiffs circular letters in which they invited them to indicate whether they were interested in purchasing their maisonettes by reference to the market price then prevailing and, if so, to indicate that expression of interest by completing a form and returning it to the defendant. Each plaintiff expressed such an interest to the defendant. According to the plaintiffs, that notification of interest triggered the mechanism for sale of houses to tenants. They submitted that the defendant's invitation should be accepted as the same triggering mechanism for the sale of their maisonettes.
The plaintiffs argued that the case concerned the sale or lease of dwellings under section 90 of the Housing Act 1966, and in particular that the definition of "house" in section 2 of the Act of 1966 was sufficiently broad to cover maisonettes and that therefore a sales scheme for houses automatically included the plaintiffs' maisonettes as well as flats generally. The defendant accepted that "dwellings" included all local authority housing but rejected the plaintiffs' submission that maisonettes were included in the definition of a "house". It argued rather that maisonettes were properly to be considered as flats, with all the attendant difficulties attaching to the conveyance of same.
Miss Justice Macken concluded that section 90 of the Act of 1966 granted a specific power to the defendant to sell, if they thought fit, any "dwelling to which the section applies" but the combination of sections 2 and 89 of the Act of 1966 did not make it clear that a house included, in all circumstances, all flats or maisonettes. In fact, neither section 2 nor 89 provided definitions of the words "house" or "dwelling" but merely clarified that whatever they meant they should include ancillary buildings or appurtenances. If a "house" was intended by the legislature to include also a flat or maisonette, it was difficult to see the purpose of the use both of "house" and "dwelling" in the same Act, for one or other would be redundant. Accordingly, Miss Justice Macken rejected the plaintiffs' contention that in so far as there were sales schemes published in respect of "houses" these, by virtue of the definition of "dwelling" or of "house" in the legislation included automatically, and without any express reference to them, the sale of maisonettes. There was no indication that the Department of Environment was of the view that a "flat" came within the definition of a "house" from the terms of its letter sent to local authorities in 1979. Miss Justice Macken therefore, rejected the plaintiffs' argument that a sales scheme in respect of "houses" such as that of 1979 and subsequent ones up to 1989 included maisonettes.
The plaintiffs further submitted that the statutory power granted to a housing authority to sell dwellings found in section 90 of the Act of 1966 did not confer an unfettered discretion on a housing authority as it was directed and controlled by the Minister for the Environment and referred to a letter of 1979 and subsequent similar letters to housing authorities from the Minister according to which all houses completed by 1979 had to be included in tenant purchase schemes. The defendant submitted that the power of sale in section 90 was subject to conditions being complied with and was a discretionary power. They also submitted that the letters from the Minister were administrative measures and had no binding legal effect on the local authorities to whom they were sent.
Miss Justice Macken stated that before considering whether the plaintiffs' claimed legitimate expectation was justifiable and whether the defendant owed them a statutory duty and whether they were entitled to claim damages therefore, it was necessary to set out the defendant's approach to the sale of maisonettes. In that regard, the defendant submitted that there were difficult legal and policy issues which justified it in exercising its discretion against selling maisonettes, at least until 1999 and referred to various reports and opinions commissioned by it and the Department of the Environment to the effect, inter alia, that section 90, as amended, was deficient in respect of the sale of maisonettes as, inter alia, housing authorities were not empowered at the time to sell the reversionary interest in premises which comprised two or more self-contained flats. It was the defendant's case that its decision, which was discretionary in any event, not to sell maisonettes was based on appropriate advices and founded on a reasonable apprehension of the legal difficulties and disadvantages in selling such premises.
Miss Justice Macken said that the court did not have to consider whether the defendant was correct in the view it took in relation to the scale of difficulties in question but rather whether there were reasonable concerns and whether the decision not to include maisonettes in the various sales schemes was not arbitrary or without foundation. Up until 1995 at least, the defendant had such reasonable concerns and acted reasonably in that respect.
However, Miss. Justice Macken said that did not fully resolve the issues arising from the plaintiffs' claimed legitimate expectation to be entitled to purchase their premises at prices prevailing in 1979 or subsequent dates prior to 1999, when their premises were finally offered to them, arising from the course of dealings which they had with the defendant, notwithstanding that the defendant had a bona fide reason to exclude the maisonettes from its sales schemes. A series of matters which could be taken into account in assessing whether the principle was infringed by the actions of the defendant were outlined by the Supreme Court in Glencar Explorations plc v. Mayo County Council (No. 2) 1 IR 84, in particular, whether the defendant made a statement or adopted a position amounting to a promise or representation, express or implied, as to how it would act in respect of an identifiable area of its activity ("the representation"), addressed or conveyed, directly or indirectly, to an identifiable class of persons affected, actually or potentially, in such a way that it formed part of a transaction definitively entered into or that the person or group had acted on the fact of the representation. Thirdly, it had to be such as to create an expectation reasonably entertained by the person or group that the public authority would abide by the representation to the extent that it would be unjust to permit the public authority to resile from it.
Addressing those matters to the facts before her, Miss Justice Macken said that the defendant's November 1979 letter to its tenants did not constitute a representation, express or implied, that the defendant would sell the maisonettes to those of its tenants who indicated a desire to purchase. However, recalling that a lengthy series of notifications of purchase schemes were thereafter sent to its tenants up to the mid 1990s, inviting them to record their agreement to proceed further with purchases, Miss Justice Macken said that it was a clear indication that the matter was proceeding. Further, there was nothing indicative of the defendant's reservations about legal difficulties preventing the sale of maisonettes included in those communications. Therefore, from 1983 onwards there was a representation that maisonettes were being offered to the plaintiffs, who were a specific and identifiable class of persons.
Miss Justice Macken was further satisfied that they acted on faith of those representations, by expending monies on the maintenance and improvement of their maisonettes and by foregoing the opportunity of transferring to a house as tenants of the defendants where they would have had an opportunity to purchase those houses. However, on the last of the matters identified in Glencar Explorations plc v. Mayo County Council (No. 2), namely, that it would be unjust to permit the public authority to resile from the representation, there was another factor which had to be addressed, specifically in relation to price. It was neither logical nor legally sustainable that the proposition that the maisonettes could be purchased in 1999 by reference to prices prevailing in 1979. Miss Justice Macken recalled that the 1979 scheme closed on the December 31st, 1979, and with it, the possibility of purchasing at the prices fixed at that time. When the plaintiffs expressed an interest in purchasing pursuant to the various schemes, it could only have been by reference to that extant scheme and not by reference to prices prevailing under any earlier scheme upon which the plaintiffs could have relied. Nor could any representation made by the defendant under subsequent schemes be considered to have been ones made by reference to prices obtaining under earlier schemes.
Miss Justice Macken concluded, therefore, that until 1995, when the plaintiffs had continued throughout the years to express an interest in purchasing pursuant to a series of sales schemes with increasing prices, they had waived any right which they had to purchase pursuant to prices prevailing under any of the earlier schemes which they might have had by reason of the qualifying period expiring and the adoption of subsequent schemes, being supplanted.
However, between 1995 and 1998 the position of the defendant appeared to alter. By that time, the Housing (Sale of Houses) Regulations 1995 had been passed dealing with the apparent deficiency in the power to transfer the maisonettes. At first it was intended to establish a pilot scheme. Then, in 1997, it was decided that the pilot scheme would not be proceeding. In 1998, without indicating why, the plaintiffs were notified that the pilot scheme was again being considered. Offers to sell the maisonettes were finally made in 1999. Nothing in the evidence persuaded Miss Justice Macken that the period of delay between 1995 and 1999 was justified. In those circumstances, she was satisfied that, as of a reasonable period of time after the coming into effect of the Regulations of 1995 and the adoption of a pilot scheme by the defendant, the plaintiffs had a legitimate expectation that the maisonettes would be sold to them at the prices appropriate to that period, which they relied on. Allowing for a reasonable period for legal advices and drafting in such circumstances would be nine to 12 months.
For the same reasons, the right to invoke the doctrine of promissory estoppel only arose in the post 1995 period when it became clear that the maisonettes would, or could, be sold.
In those circumstances, Miss Justice Macken made a declaration that the plaintiffs were entitled to have the benefit of the purchase by them of their maisonettes, provided that they met at the time any conditions normally required to be met by a local authority tenant for the purchase of such maisonettes, at a cost which reflected a valuation as if they had been offered within a period of 12 months from the date in 1995 when the defendant adopted a model scheme for the sale of local authority dwellings.
Solicitors: Brophy (Dublin) for the plaintiffs; Edward C. Hughes for the defendant.
Paul Christopher, Barrister