Cant use the format selection in text control

I am having trouble with the formatting drop down for the text element.

It is a nightmare to select anything. I select one line to paragraph and it will change a completely different line.

I think this is a known problem as I have seen it mentioned befoee in forum but I can't find the post again.

When I hover over the format button it says [Object object] so it seems like some javascript typing error but there is no error in the console to go on. I made a screenshot to show you.

Lets say I make textbox with 10 lines. I try to make first line H1, second H2, third P, fourth H6 etc...

After I make a couple of settings it's just jumping around all over place.

I tested this one on the WPMUDev demo site and it works on demo site but on a fresh local install with no plugins then it is not working for me.

Here is video also: https://dl.dropboxusercontent.com/u/19226543/frustrationpersonified.mp4