Alan Estates Ltd v W.G. Stores Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE ACKNER,SIR DENYS BUCKLEY |
| Judgment Date | 01 July 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J0701-1 |
| Docket Number | 81/0271 |
| Court | Court of Appeal (Civil Division) |
| Date | 01 July 1981 |
[1981] EWCA Civ J0701-1
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION (GROUP A)
(HIS HONOUR JUDGE RUBIN, sitting as a Deputy High Court Judge)
Royal Courts of Justice.
The Master of The Rolls
(Lord Denning)
Lord Justice Ackner
and
Sir Denys Buckley
81/0271
1979 A. No. 1218
and
MR. GORDON NURSE (instructed by Messrs. Martin Boston & Co.) appeared on behalf of the Plaintiffs (Appellants).
MR. LAWRENCE COHEN (instructed by Messrs. Woolf Seddon) appeared on behalf of the Defendants (Respondents).
In this case we have to consider the mediaeval law about an "escrow" and to put it into its modern setting.
The Facts
There is a lock-up shop at 32 Goldhawk Road, W.12. In September 1976 it was empty. W.G. Stores Ltd. were keen to take a lease of it from the landlords, Alan Estates Ltd. They wanted to occupy it as soon as possible. In anticipation of the lease, the landlords allowed the tenants to have the key—so as to measure up for shop fittings. The tenants paid a quarter's rent to the landlords' solicitors, asking them to hold it as stakeholders pending completion of the lease. Enquiries were made as to title and so forth. But no preliminary contract was entered into. The solicitors got on straight away with preparing the lease, and getting it engrossed and executed. Then on Monday, 1st November, 1976 the solicitors exchanged the lease and counterpart duly executed. But this is to be noted. Both lease and counterpart were undated. Each started off:
" THIS LEASE is made the day of One thousand nine hundred and seventy-six BETWEEN ALAN ESTATES LIMITED…and W.G. STORES LIMITED…"
The tenants' solicitors wrote this letter to the landlords' solicitors:
"We now enclose the Lease duly executed by our client…
"As agreed on the telephone you will hold this document to our order pending receipt by us of satisfactory final searches (and various other conditions)…
"Pending clarification of all the above points by way of confirmation you will hold the executed Lease to our order and also continue to hold the sum of £937.50 (the first quarter's rent).
Yours faithfully,
PAUL WOOLF & CO.
(Tenants' solicitors).
P.S. Our Company Agents advise us that there is an undischarged charge in favour of Northern Commercial Trust Ltd. and we shall also require your undertaking in respect of this".
The landlords' solicitors replied on the same day:
"We thank you for your letter of today's date enclosing the Lease, duly executed…
"We presume it is acceptable that we date the Lease today?"—that is, the 1st November, 1976.
"We enclose herewith our Clients' part of the Lease duly executed by way of exchange…
Yours faithfully,
MARTIN BOSTON & CO"
(Landlords' solicitors).
Those letters were written on Monday, 1st November, 1976.
On the following Monday, the 8th November, 1976, the tenants' solicitors wrote to the landlords' solicitors. They took no objection to the date being inserted, 1st November, 1976. They simply said:
"Thank you for your letter of the 1st November with enclosures as therein stated.
"Unfortunately there still appears to be a problem regarding the mortgage to Northern Commercial Trust Ltd…
"Our Client is anxious to complete this matter and indeed we did try to telephone your Mr. Boston on Friday without success".
That was Monday, 8th November. On the next day, Tuesday, 9th November, the tenants decided to call off the whole thing. Their solicitors telephoned to the landlords' solicitors. They replied that they regarded the transaction as binding. The tenants' solicitors wrote this letter on Tuesday, 9th November, 1976:
"As explained on the telephone today our Client has decided to withdraw from the transaction and we should be obliged if you would return our Client's cheque in the sum of £937.50 which, under the terms of our letter dated 1st November, you are still holding to this firm's order.
"As explained on the telephone we very much regret the lateness of our Client's decision and we must confess we were surprised to hear from you that you considered the transaction to have been completed…"
So there it was. The landlords' solicitors considered that the transaction was binding. The tenants' solicitors said it was not binding.
Two days later, on Thursday, 11th November, 1976, the landlords' solicitors issued a writ claiming a declaration that the lease and counterpart were bindings: alternatively, that it was an escrow. The defendants denied it.
The decision of Mr. Justice Whitford
The action took a year to come on. Then on the 14th and 15th November, 1977 it was tried by Mr. Justice Whitford. At the end of the day it was accepted by both sides that the lease was delivered as an escrow on the terms set out in the tenants' solicitors' letter of the 1st November, 1976. The only question was whether the various conditions had been fulfilled. It was accepted that all had been fulfilled save for the postscript requiring an undertaking about the "undischarged charge in favour of Northern Commercial Trust Ltd." It would have been quite easy to fulfil this but the landlords' solicitors had not done it. The tenants' solicitors submitted that it was too late for them to do it. But Mr. Justice Whitford held otherwise. He said:
"I reject the conclusion that is urged upon me by Counsel on behalf of the Defendants (tenants) that it is now too late for the Plaintiffs (landlords) to satisfy the outstanding condition. They ought to have had a reasonable time after 8th November 1976 to meet this last condition contained in that letter then outstanding, and I am prepared to give them a reasonable time to satisfy that condition and accordingly to make the transaction binding to date".
The landlords did satisfy the condition on the 18th November, 1977 so the lease became binding.
At the end of the hearing before Mr. Justice Whitford, counsel then raised the question of rent. From what date was it payable? Mr. Justice Whitford said:
"There is nothing about this in the pleadings in this connection at all. I am not prepared to deal with it".
These proceedings
So these proceedings were commenced to ascertain the date from which rent was payable. Was it from the 1st November, 1976 (when the lease and counterpart were exchanged)? Or from the 18th November, 1977 (when the last condition was fulfilled)?
The landlords took out an originating summons to determine it.
Judge Rubin held that the rent is only payable from the 18th November, 1977. The landlords appeal.
The blank in the lease
The difficulty has arisen because of the blank in the lease. No date was inserted. But the rent was to run "from the date hereof". So we have the problem. From what date is the rent to run?
Something may turn on the wording of the document. So I will set it out.
The lease was in this form:
" THIS LEASE is made the day of One thousand nine hundred and seventy-six BETWEEN ALAN ESTATES LIMITED (etc.) and W.G. STORES LIMITED (etc.)
"The Landlord HEREBY DEMISES unto the Tenant ALL THAT property (etc.)
" TO HOLD the demised premises unto the Tenant for a term of TWENTY FOUR YEARS from the Twenty-ninth day of September One thousand nine hundred and seventy-six (determinable as hereinafter provided) PAYING THEREFOR unto the Landlord from the date hereof and throughout the said term hereby granted yearly and proportionately for any fraction of a year the several rents hereinafter referred to:
A. Until the Twenty-ninth day of September One Thousand nine hundred and eighty the yearly rent of THREE-THOUSAND TWO HUNDRED AND FIFTY POUNDS (£3,250)
…
"IN WITNESS whereof the parties hereto have hereunto set their respective common seals and hands and seals as appropriate the day and year first before written
| THE COMMON SEAL OF W.G. STORES LIMITED was hereunto affixed in the presence of | Seal. |
| B. SOLOMONS | Director. |
| B. SOLOMONS | Secretary". |
If there had been no repudiation
In order to solve the problem, I would ask this question: Suppose the tenants had not repudiated their obligations. What date would have been inserted in the lease? I feel sure that the solicitors would have inserted the 1st November, 1976. I say this because of the letter of the landlords' solicitors of the 1st November, 1976 in which they said: "We presume it is acceptable that we date the lease today?" To which the tenants' solicitors took no objection. In addition, both lease and counterpart were exchanged on the 1st November, 1976: and, by analogy with contract and conveyances of land, the effective date when the parties are bound is the date of exchange, see Eccles v. Bryant (1948) Chancery 93 and Harrison v. Battye (1975) 1 Weekly Law Reports 58.
However, no date was inserted. It remained blank. The reason was because the tenants repudiated the transaction altogether. They denied that the tenants were bound. I cannot think that they can take advantage of their own repudation—so as to postpone the date of the deed—or the term from which rent should run. No one can take advantage of his own wrong. We should insert the date which would have been inserted had they not repudiated. That is the 1st November, 1976. The rent should run from that date.
In case this simple solution be erroneous, I must go on to deal with the law about escrow.
When does an escrow take effect?
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