Beesly v Hallwood Estates Ltd

JurisdictionEngland & Wales
CourtCourt of Appeal
JudgeTHE MASTER OF THE ROLLS,LORD JUSTICE DONOVAN
Judgment Date17 Nov 1960
Judgment citation (vLex)[1960] EWCA Civ J1117-1

[1960] EWCA Civ J1117-1

Revised Judgments

In The Supreme Court of Judicature

Court of Appeal

Before:

The Master of the Rolls

(Sir Raymond Evershed)

Lord Justice Donovan

Lord Justice Harman
and
Beesly
and
Haliwood Estates, Limited

MR NIGEL WARREN, Q.C., and MR A.E. HOLDSWORTH (instructed by Messrs George C. Cartel & Co.) appeared on behalf of the Appellants (Defendants).

SIR LYNN UNGOED-THOMAS, Q.C., and MR BOWER ALCOCK (instructed by S. Sydney Silverman; appeared on behalf of the Respondent (Plaintiff).

THE MASTER OF THE ROLLS
1

: I will ask Lord Justice Harman to deliver the first Judgment.

2

LORD JUSTICE HARMAN: This is an appeal from a reserved decision of Mr Justice Buckley delivered last April. It concerns the lease of property consisting of a shop and two flats in Ewell Road, Surbiton.

3

The story begins in 1938 when this property was the subject of a lease by the predecessors in title of the Defendants to a predecessor in title of the Plaintiff. That lease was for a term of twenty-one years from Lady Day, 1938, and it contained an unconditional option for the lessee to exercise by notice the right which was thereby given to him or her to have a further lease of twenty-one years to start from Lady Day, 1959 — that is to say, when the old lease ended.

4

In 1948 the lease was assigned to the Plaintiff who paid, I think, £5,000, partly for the assignment and partly for the goodwill of a hair dressers' business carried on in the shop. The reversion was assigned to the Defendants in 1955. On the 1st July, 195S, the Plaintiff sent a notice to the Defendants or their solicitors exercising the option, and there is no dispute, and never has been, that in point of form that notice was a good exercise of the option.

5

There was a certain amount of negotiation between the solicitors by correspondence, which does not matter, for on the 11th September 1958 an engrossed counterpart of the proposed new lease was sent to the Plaintiff's solicitors. Between that date and September 26 the new lease was executed by the Defendants, and of that more hereafter. About the same time, on the 24th or 25th September, the counterpart was executed by the Plaintiff. On the 8th October the Defendants wrote refusing to go on with the matter. There had by then been no exchange of the two documents.

6

The Writ was issued on the 6th February, 1959, and the Statement of Claim was delivered on the 26th February. By that claim the Plaintiff — who is now the Respondent to this appeal — asked for a declaration that she was entitled to a further lease - that is to say in pursuance of the option - and an order upon the Defendants to execute. The Defence was that the option was void as it had never been registered as an estate contract under: the Land Registration Act, 1925. Confronted with that, the Plaintiff amended her Statement of Claim and pleaded that if the option was itself bad, the correspondence between the solicitors prior to the 26th September amounted to a fresh contract to grant a new lease and that specific performance of that should be granted. In June the Defence was amended and it was there pleaded that there was a condition precedent to any agreement that might exist, namely that certain repairs should be done and that the parties had never reached any concensus on that subject and, therefore, no agreement was made. Alternatively there was a plea of mistake, and the Defendants Counterclaimed for possession, the former lease having run out, as I say, on Lady Day of that year.

7

The tenant (the Plaintiff) was still in occupation. There followed the usual discovery, and it is the lamentable fact that the Defendants did not disclose the document of lease executed by them, nor did they disclose the Minute Book of the Company which, as hereinafter appears, contained a most relevant entry, and the action came to trial in March of this year without the Plaintiff being aware of those two matters. The Minute and the Lease came to light during the course of the hearing, and it is not surprising that the Judge then granted an adjournment to the plaintiff and that she re-amended her Statement of Claim on the 3lst March to plead that the lease had been executed and that upon tender by her of the counterpart - which she had always been ready to do - she was entitled to have the lease handed over to her: the contract on this footing was complete and not a matter for specific performance at all.

8

There was a re-amendment of the Defence in which it was admitted that the seal of the Defendants was affixed to the document of lease, but it was apparently denied that there had been any delivery. Alternatively, it was said that if there had been delivery, it was subject to a condition, namely that there should be an agreement about the so-called decorations and that there should be exchange, which had never occurred. The hearing was resumed on the 7th April on that footing.

9

A number of points were taken and on two of them the Defendants were successful. The learned Judge held that the option was not binding for want of registration as an estate contract: further that the letters passing between the solicitors and the document of lease and the counterpart themselves did not constitute any new contract of which the Plaintiff could obtain specific performance. One of the pleas in the Defence was rejected, namely that about mistake: the learned Judge held that the mistake, if there was one, was a mistake of law and, therefore, no defence. In the end the Plaintiff succeeded on the ground added by the re-amendment that the deed had been executed as an escrow and, that being so, it was not a mere offer that could be withdrawn before acceptance but was a deed subject to a condition; and that, there had been no breach of any condition to which it was subject and, therefore, it was a binding document. It is on that point alone that the Defendants have appealed to this Court.

10

There is a cross-notice whereby the questions of registration and contract are put in issue, but those questions have not been agitated before this Court because they do not arise on the appeal and would only arise in the event of the appeal' being successful.

11

The question, therefore, was, first of all: What was the nature of this document? The learned Judge held that it was a deed delivered as an escrow — in other words, that there had been a good execution and delivery — and that matter was not put in issue before us at all.

12

The learned Judge dealt with the matter quite shortly. He held that in view of section 74 of the Law of Property Act he was bound, prima facie, to hold that there had been due execution, this being a document under seal issuing from a body coporate and appearing on the face of it to be complete. On page 561 of the Weekly Law Reports for May 20, 1960, he is reported to have said:

13

"Mr Holdsworth" — that is the Appellant's Counsel — "concedes that the seal of the Defendants was regularly attached to the lease. I know nothing further about the actual circumstances of its being attached. It will be recollected that the correspondence to which I have made reference discussed an undertaking to be given by the Plaintiff relating to certain decorations", and he goes on to say on the next page: "I know that the seal is countersigned by the Chairman of the Board" and then he recites a Minute and says: "… it is, in my view, clear from" the evidence "that everybody present at the Board Meeting of the 26th September regarded the lease sealed by the Defendant Company as binding, albeit they did so with regret. Whereas this attitude of mind would, in my opinion, not be inconsistent with the binding quality of the lease being conditional on the lessee binding herself by execution of a counterpart to obligations on her part expressed in the lease, it is, in my judgment, inconsistent with any idea that it was also conditional on some matter wholly extraneous to the lease, as was the proposed undertaking as to redecoration. I, therefore, reach the conclusion of fact that the Defendants, by sealing the lease, intended to deliver, and did deliver, it as their deed, intended to bind them conditionally only upon the...

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