Aribisala v St James Homes (Grosvenor Dock) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Floyd |
| Judgment Date | 14 March 2008 |
| Neutral Citation | [2008] EWHC 456 (Ch),[2007] EWHC 1694 (Ch) |
| Docket Number | Case No: HC 68/07,Case No: HC0603726 |
| Court | Chancery Division |
| Date | 14 March 2008 |
[2007] EWHC 1694 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Steinfeld QC
(Sitting as a Deputy Judge of the High Court)
Case No: HC 68/07
MR CHIMA UMEZURUIKE (instructed by Messrs Osibanjo & Co) appeared on behalf on behalf of the Claimant
MR JAMES HANHAM (instructed by Messrs Hextalls LLP) appeared on behalf of the Defendant
Approved Judgment
Tuesday, 12 June 2007
THE DEPUTY JUDGE:
What comes before me for hearing today is an application by the defendant company, St James' Homes (Grosvenor Dock) Limited (“the Vendor”), against the claimant, one Chief Ajibola Anthony Aribisala, a Nigerian businessman (“the Purchaser”), for summary dismissal of the Purchaser's claims in this action pursuant to CPR Part 24.
The application raises an important issue of law which has never, so far as the researches of counsel go, been the subject of any reported decision. The issue is whether it is open to the parties to a contract for the sale and purchase of land to agree, by a provision in that contract, to exclude the application of section 49(2) of the Law of Property Act 1925 which reads as follows:
“Where the court refuses to grant specific performance of a contract, or in any action for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit.”
The claims in the action arise from two contracts, each dated 14 July 2006, by which two leasehold properties were agreed to be sold by the Vendor to the Purchaser for an aggregate purchase price of £2.16 million. The aggregate deposit, which was payable in two instalments of 50 per cent each under the terms of the two contracts, was £216,000. The contracts were in each case in identical terms. The completion date was 9 September 2006 and the contracts incorporated the Standard Conditions of Sale (4th edition). However, by clause 1.2 of each contract, condition 7.5.2 of those Standard Conditions, which provides that the vendor is entitled to rescind the contract and forfeit any deposit if the purchaser fails to comply with a notice to complete, was amended so as to add the words “(c) section 49(2) of the Law of Property Act 1925 shall not apply”.
The Purchaser did not complete the contracts by 9 September 2006. Accordingly the Vendor, by a letter dated 12 September 2006 gave to the Purchaser notice to complete the two contracts under Standard Condition 6.8. The effect of service of that notice was to require the Purchaser to complete each contract within ten working days of service of the notice, as to which time was to be of the essence. The Purchaser did not complete the contracts within that time, owing, it is said in its Particulars of Claim, which have been verified by a statement of truth, to the fact that it had been let down by the bank that had promised to provide the finance to enable it to complete. The Vendor then elected to rescind the contracts and forfeit the deposits under Standard Condition 7.5(2).
On 12 October 2006, the Purchaser issued the claim form in this action. By it, in essence, he sought specific performance of the two contracts, or alternatively an order for the repayment of the aggregate deposit of £216,000 pursuant to the court's jurisdiction under section 49(2) to which I have already referred. Specific performance was sought on the ground that the Vendor was not entitled to serve the notice to complete because, so it was alleged, it had omitted to supply to the Purchaser certain documentation which was required to be supplied to him under the terms of the contract prior to completion taking place.
On 7 December 2006, the Vendor issued the application notice which comes before me seeking summary dismissal of the whole of the Purchaser's claims. The application is made pursuant to CPR Part 24.4 on the basis that there is no realistic prospect of either of the claims referred to in the claim form succeeding. The witness statements served in support of the application identified two aspects which, so it was asserted, were fatal to the claim.
a. As to the specific performance claim, the witness statements contained clear and indisputable evidence that the requisite documentation had been supplied to the Purchaser's solicitors before service of the notice to complete.
b. As to the alternative claim for the return of the deposit under section 49(2), the witness statements referred to the provision of the contract to which I have already referred, which purported to exclude the application of that section and which, so it was asserted, was effective for its purpose and thereby precluded the claim being made.
The first hearing of this application was before the Master on 26 January 2007. At that hearing, the Purchaser abandoned altogether his specific performance claim, accepting, as he had to on the basis of the evidence that had been adduced, that the missing documentation upon which he had relied had in fact been duly supplied to his solicitors. Accordingly, the Vendor was entitled to serve the notice to complete.
The Master understandably was reluctant to deal with the application so far as it related to section 49(2) and referred the application in that respect for the decision of a judge. It is that which accordingly comes before me.
In his skeleton argument in support of his application, Mr Hanham, who appears for the Vendor, argued that the claim under section 49(2) was hopeless for two reasons:
a. because that section had been effectively excluded by the terms of the contracts; and
b. because, even if it had not, on the facts pleaded by the Purchaser, there was no realistic possibility that a court would grant to the Purchaser any relief under that section.
At the outset of this hearing, Mr Umezuruike, who appears for the Purchaser, objected to the Vendor being allowed to take the second of these two points on the ground that no notice to take it as an issue to be determined on this application had been given to the Purchaser as required by CPR rule 24.4(3). That rule provides that :
“Where a summary judgment hearing is fixed, the respondent … must be given at least 14 days' notice of —
(a) the date fixed for the hearing; and
(b) the issues which it is proposed that the court will decide at the hearing.”
Mr Umezuruike submitted to me that no notice to take this second point was given until receipt by him of Mr Hanham's skeleton argument last Friday, which is far less than the 14 days required by the rule. Had notice been given, his client, the Purchaser, would have wanted to put in further evidence to deal with this point.
I accepted this objection and accordingly ruled that I would only deal today with the first of the two points taken on behalf of the Vendor, that is to say whether section 49(2) has been validly excluded by the contracts, leaving over for a further hearing the second point, namely whether, assuming that it has not been excluded, the Purchaser has any realistic possibility of being able to obtain relief under that section. At the same time as I so ruled, I expressed some doubt as to whether, on the material presently before the court, it would be possible for the court to conclude that, if section 49(2) did apply, there was no realistic prospect of the Purchaser obtaining relief under that section.
In the event, therefore, the only issue before me is whether clause 1.2 of the contracts is effective to disenable the Purchaser from applying for relief under section 49(2).
The Purchaser takes three points:
a. clause 1.2, so far as it attempts to exclude section 49(2), is void and of no effect as amounting to an agreement to exclude the jurisdiction of the court and accordingly, on well-established authority, is void on the ground of public policy;
b. the clause falls foul of regulation 8 of the Unfair Terms In Consumer Contracts Regulations 1999; and
c. the clause should be regarded as of no effect insofar as it infringes certain of the Purchaser's rights under the Human Rights Act 1998.
In the event I have heard argument only in relation to the first point, that is to say the point that the clause is void on the ground of public policy, on the basis that, should I determine that point in favour of the Purchaser, the other two points fall away and become redundant.
I turn then to consider the issue raised by that point, that is to say: is it open to the parties to a contract for the sale of land by agreement between them to oust the application of section 49(2) of the Law of Property Act 1925? This is an issue which, as it seems to me and obviously seemed to the Master, is one of significant importance in relation to contracts for the sale of land. It is, however, somewhat surprising that, given the fact that the section was enacted over 80 years ago, there has been no decided authority on the point. That may in part be because, until relatively recently, it was thought that the section was of limited application.
The section itself was new to the Law of Property Act 1925. The chief draftsman of the 1925 Act was, as is well known, Sir Benjamin Cherry. In his well known work with Mr Wolstenholme which was published shortly after the Act came into effect and the notes of which appear in the last, albeit 1972 edition, the section is described in the following terms:
“This subsection overrules Re National Provincial Bank of England v Marsh [1895] 1 Ch 190, Re Scott & Avery Contract, Scott v Avery [1895] 1 Ch 596 on this point.”
The cases to which that note refer were cases where the court had refused to...
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