Behzadi v Shaftesbury Hotels Ltd

JurisdictionEngland & Wales
JudgeLORD JUSTICE NOURSE,LORD JUSTICE GLIDEWELL,LORD JUSTICE PURCHAS
Judgment Date31 July 1990
Judgment citation (vLex)[1990] EWCA Civ J0731-18
Docket Number90/0936
CourtCourt of Appeal (Civil Division)
Date31 July 1990
Narges Behzadi
Appellant (Plaintiff)
and
Shaftesbury Hotels Ltd
Respondent (Defendant)

[1990] EWCA Civ J0731-18

Before:—

Lord Justice Purchas

Lord Justice Nourse

and

Lord Justice Glidewell

90/0936

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

HOFFMANN J.

Royal Courts of Justice

MR. PAUL MORGAN (instructed by Messrs S. Merali & Co.) appeared on behalf of the Appellant (Plaintiff).

MR. STEVEN WALSH (instructed by Messrs Gerard Hales & Co.) appeared on behalf of the Defendant.

LORD JUSTICE NOURSE
1

In Smith v. Hamilton [1951] Ch. 174 Harman J. held that where one party to a contract for the sale of land fails to meet the date fixed for its completion, time not being of the essence, the other party cannot thereupon serve a notice making it so; he must wait until there has been an unreasonable delay, at which point he may serve a notice requiring completion to take place within a reasonable time thereafter. In regard to completion the inconvenient consequences of that decision, which introduces an additional period of uncertain duration, have successfully been minimised by successive changes in the standard conditions of sale: cf. Re Barr's Contract [1956] Ch. 551 and Cumberland Court (Brighton) Ltd., v. Taylor [1964] Ch.29. But they can still occur where standard conditions are not incorporated in the contract or where, although they are incorporated, there has been a failure to meet an intermediate obligation, in the present case the vendor's obligation to deliver an abstract of title within the specified time.

2

In Australia these inconveniences have now been swept away by authoritative decisions in which Smith v. Hamilton has not been followed: see Winchcombe Carson Trustee Co. Ltd. v. Paul-Rand Pty. Ltd. (1974) 1 N.S.W.L.R. 477 and Louinder v. Leis (1982) 149 C.L.R. 509. The principal, although not necessarily the decisive, question which has arisen on this appeal is whether, following the lead which has been given in Australia, we should now say that the view of Harman J. ought no longer to be adopted in England.

3

Not surprisingly, this question was not argued before Hoffmann J., who held that the vendor had not been guilty of unreasonable delay by the time that the purchaser served a notice purporting to make time of the essence. The reason why the question may not be decisive is that the learned judge also held that the time specified by the notice for delivery of the abstract was in any event unreasonable. He held that the purchaser had not been entitled to rescind the contract; on the contrary, she had wrongfully repudiated it and could not recover her deposit. He also rejected an alternative claim for the return of the deposit under section 49(2) of the Law of Property Act 1925. The purchaser has now appealed to this court.

4

The vendor was the defendant, Shaftesbury Hotels Ltd. The purchaser was the plaintiff, Narges Behzadi. By an agreement in writing made between them and dated 20th June 1988 the vendor agreed to sell and the purchaser agreed to buy for £2.4m. the properties known as the Falcon and Devon Court Hotels, 9 and 11 Norfolk Square, London W.2 together with certain specified furnishings and the goodwill of the hotel business carried on thereon. The properties were described as being registered under title NGL346018. The agreement incorporated the National Conditions of Sale (20th edition), so far as they were applicable to a sale by private treaty and were not varied thereby and were not inconsistent with the express terms thereof. The material conditions will be referred to hereafter. By clause 3 of the agreement it was agreed that the purchaser should pay a deposit of £120,000, as to £25,000 on the date thereof and as to the balance of £95,000 on or before 4th July 1988. Those payments were duly made to the vendor's solicitors, who held the deposit as stakeholders. By clause 7 it was agreed that title would be deduced in accordance with section 110 of the Land Registration Act 1925. By clause 14 it was agreed that completion should take place on 31st August 1988 or within 28 days of the vendor's solicitors notifying the purchaser's solicitors in writing that planning permission or established use certificates authorising hotel user had been received for each of the properties, whichever should be the later, subject to a proviso that if by 31st October 1988 the vendor should not have obtained either of them, then the contract should become null and void and the deposit forthwith returned to the purchaser's solicitors with accrued interest.

5

The two adjoining hotels had been acquired by the vendor earlier in 1988, at which time they were registered at H.M. Land Registry under two separate titles. They were transferred by the previous registered proprietor to the vendor on 18th April 1988, the vendor's acquisition of them being financed with moneys advanced on mortgage. On 13th May 1988 the mortgagee's solicitors applied to the land registry for registration of the transfer against the two separate titles. Although the facts are obscure, it appears that a proposal must then have been made for the registration of the two properties under one title, for which purpose a new title number was provisionally allocated by the land registry. On 17th June 1988 the solicitors acting for the vendor in its proposed sale to the purchaser sent various documents to the purchaser's solicitors, including a draft contract in duplicate and:

"4. Photocopies of entries on both Registers prior to the Vendor's purchase.

The properties are now registered under one Title, number NGL346018".

6

On 20th June contracts were exchanged in the terms already summarised.

7

It is necessary to set out in some detail the subsequent communications between the vendor's and the purchaser's solicitors and also those between the vendor's solicitors and third parties. By a letter of 22nd June the purchaser's solicitors requested the vendor's solicitors, in accordance with clause 7 of the contract, to deduce title to them in accordance with section 110 of the Land Registration Act by supplying to them office copy entries, file plan and their authority to inspect the register. The vendor's solicitors replied on 24th June, stating that they would let the purchaser's solicitors have the office copy entries etc. as soon as they were to hand. The request was repeated by the purchaser's solicitors in a letter of 29th June enclosing a cheque for the balance of the deposit. That letter was acknowledged by the vendor's solicitors on 6th July, when they again said that they would let the purchaser's solicitors have the office copy entries as soon as they were received from the land registry.

8

Over a month then passed before any further letters passed between the vendor's and the purchaser's solicitors. Meanwhile the vendor's solicitors had received communications from the land registry in answer to applications which they had made on 27th June for office copies of the entries on the register. For some reason, again unexplained, those applications were made under the two original title numbers. They named the registered proprietor in each case as the vendor. On 11th and 13th July the vendor's solicitors received communications in standard form from the land registry stating that the vendor was not the registered proprietor in either case. They also received a communication in standard form stating that there was an application pending against one of the title numbers which had to be inspected before office copy entries could be issued. Those communications led them, on 13th July, to write to the mortgagee's solicitors asking them whether the vendor's titles had been registered or not. They also wrote to the land registry, pointing out that the applications to register the vendor had been submitted by the mortgagee's solicitors on 13th May and renewing their request to have office copies forthwith.

9

The next thing that happened was that on 10th August the purchaser's solicitors wrote to the vendor's solicitors again requesting them to deduce title in accordance with section 110 and also requesting confirmation by return that the two properties were registered under title number NGL346018. They asked for a reply without further delay in the matter. The vendor's solicitors did not at once reply to that letter, but on 16th August they wrote again to the mortgagee's solicitors, from whom they had not yet had a reply, asking to know if registration had been completed. They said that it was imperative that they obtained office copies forthwith.

10

On 23rd August a number of events occurred. The evidence suggests that they occurred in the following order. First, the vendor's solicitors received a further communication in standard form from the land registry stating that there was an application pending against one of the two title numbers which had to be inspected before office copy entries could be issued. Second, the vendor's solicitors sent a copy of the communication to the purchaser's solicitors under cover of the following important letter:

"We regret we are still unable to provide you with Office Copies of the Entries. We applied for these on the 27th of June as soon as we had the new Title Numbers from the Mortgagees of which we advised you. Our Applications for Office Copy Entries were returned on the basis that the person named in the Application was not registered as Proprietor. We referred again to the Mortgagees, following which we wrote to the Land Registry pointing out that the Applications to Register were submitted by the Mortgagees Solicitors on the 13th of May to whom the Title Numbers were advised and we...

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