Local authorities throughout the country will breathe a sigh of relief in the wake of a High Court ruling today in which the London Borough of Southwark warded off a potential 1.3 million pay-back to its right-to-buy purchasers of council property.
Had the decision gone the other way lawyers say other local
authorities, including Southwark, could have faced pay-back claims totalling many millions.
Southwark was not obliged to pay back to the buyers commission it had received from the Zurich Insurance Company in respect of block policies taken out under the terms of the right-to-buy deals.
The terms of the deal under which 6,046 have taken advantage of right to buy offers are contained in a standard form of lease granted by Southwark and stipulate that the Council will insure the property and charge the premiums to the lessees.
However, the Council obtained what it calls 'service commission' of
around 1.3 million on the insurance which it said it could keep but which the lessees said they should be given allowance for.
Agreement has already been reached that a percentage of the money
received by the council should be credited to the lessees. But the Council argued that it was, nevertheless, entitled to keep a further 20 per cent paid in commission. Now the High Court has backed the Council's stance.
Mr Justice Lightman said he recognised that concern might be felt by
those such as Michael and Lillian Williams of 31, Yharnfield Square, Clayton Road, London SE15, who spear-headed the case, that the Council had taken advantage of its position as a landlord to enter into the insurance deal and obtain the benefits flowing from it.
However, he continued : 'The 20 per cent payment to the Council is not in law or fact a rebate or deduction from the premium payable. It is a payment for services.