Brewer Street Investments Ltd v Barclays Woollen Company Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE SOMERVELL,LORD JUSTICE DENNING,LORD JUSTICE ROMER |
| Judgment Date | 19 October 1953 |
| Neutral Citation | [1953] EWCA Civ J1019-3 |
| Judgment citation (vLex) | [1953] EWCA Civ J1019-6 |
| Court | Court of Appeal |
| Date | 19 October 1953 |
[1953] EWCA Civ J1019-3
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
LORD JUSTICE SOMERVELL
LORD JUSTICE DENNING and
LORD JUSTICE ROMER
MR GILBERT DARE (instructed by Messrs. Lucien Fior) appeared on behalf of the Appellants (Defendants)
MR MONTAGUE WATERS (instructed by Messrs. Arnold Lee & Co.) appeared onbehalf of the Respondents (Plaintiffs)
This is an appeal from a decision of Lord Justice Morris sitting as a Judge of First Instance in the Queen's Bench Division. The Plaintiffs in their Statement of Claim which was endorsed on the Writ claimed for certain moneys "paid by the Plaintiffs to the use of the Defendants at the Defendants request in respect of thecost of alterations" to certain premises. The premises to which the alleged alterations were done were the subject matter of negotiations between the parties, the basis of negotiations being that the Plaintiffs might grant and the Defendants might take a lease of those premises. On the 9th January, 1951, the Defendants were writing to the solicitors or agents for the Plaintiffs: "Further to our meeting with Mr Goodman this morning, we confirm that the following alternatives have been discussed. 1. We can have a lease of the above premises for 21 years at a rental of £2,750 per annum. 2. We can have a lease for the same period for £2,000 per annum on payment of £7,000 premium. 3. We can purchase the freehold property for the sum of £40,000. We have considered these matters carefully and would agree to take a lease at £2,750 subject to contract, the contract to include a clause to the effect that we shall have the right to purchase within 60 days of the signing there of at the price of £40,000". To that there was an answer which has "subject to contract" both at the bottom and in the body of the letter. The letter says: "We write to inform you that our clients have accepted your offer made by you in principle, for the mentioned property as follows:- That you are prepared to enter into a lease of 42 years at a rental of £2,750 p.a. exclusive on a fully repairing and insuring lease with a break at 21 years and they have agreed to embody in the contract that should our clients at any time contemplate selling the property that they will give you first refusal at an agreed figure of £40,000 for the mentioned freehold, subject to contract". Then they ask about instructions to the solicitors. It will be seen that that letter was not an agreement to the option but gave a first refusal at an agreed figure. From the Defendants point of view time was short because they had to get out of thepremises which they were in by the end of March. The architects on each side were in touch with each other because there were certain alterations which are the alterations in question here which the Defendants wanted if they become lessees. There is correspondence about that. On the 23rd January of 1951 the solicitors for the Plaintiff sent to the solicitors for the Defendants for the draft lease. So far as the draft lease was concerned at that stage the paragraph which deals with the question of first refusal was in these terms: "If within the period of two years from the date hereof the Landlords shall desire to sell the fee simple in possessim expectant on the term hereby created the Landlord hereby covenants with the Tenants that it will before proceeding to sell the same give notice of such desire to the Tenants who shall forthwith make an offer to purchase the same and if no such offer on the part of the Tenants is received by the Landlord within one month of the date of service of the said notice or if the offer received within that time is not satisfactory to the Landlord the Landlord shall be free to accept any other offer to purchase the demised premises". It will be seen that under that draft there is no mention of the £40,000 and unlike the original "subject to contract" letter the period is limited to two years from the date of the the lease. Then there was correspondence between the two architects with regard to those alterations which the Defendants wanted. On the 24th January, 1951, there is a letter from the Plaintiffs' architect to the Defendants' architect: "In reply to your letter of the 22nd January, contents of which I have noted, and I should like to have your confirmation that your clients would accept the responsibility of payment for the following items". Then various items are set-out which include the items in question here. Then there were some letters with regard to extradoors in the lift. As those arise on a subsidiary defence I will say a word or two about them. Originally the Defendants had wanted two extra doors to the lift which was under construction and they write and say they will be content with one extra door. The alterations, or most of those in question, were being done by the contractors to the Plaintiffs who were themselves at this time making alterations to the premises. The contract for the extra door was placed with a company called Messrs. Evans Lifts Limited for the sum of £48. 10. 0. On the 26th January, there is an answer from the Defendants architect — there is no question of authority raised — referring to the letter which I have read from the Plaintiffs' architect and saying: "On behalf of my client I accept responsibility for the cost of the work as mentioned and should be glad therefore if you would put this in hand as soon as possible". On the 31st January the solicitors for the Defendants say! "With reference to the above, we now return draft lease, as slightly revised in green". The green revisions delete the period of two years and first refusal and provide: "If the tenant shall desire to purchase the fee simple in possession expectant on the term hereby created and of such desire shall give notice in writing to the Landlord the Landlord hereby covenants with the Tenants that it will to sell the same give notice of such desire to the Tenants at the price of £40,000. 0s. 0d. provided always the Tenant shall not be entitled to complete the purchase ealier than 12 months from the date hereof". There it will be seen that the Defendants were seeking to insert an option in slightly different terms from their original letter and were not seeking to demand what the Plaintiffs had written in the "subject to contracts" letter which I have already read granting a first refusal.
The matter continued and estimates for thealterations were obtained. On the 6th February, there is a letter from the Plaintiffs' solicitors which says this: "The Landlords will not grant an option as they have no particular desire to sell this property. If, however, they change their minds within the next two years they are prepared to give your clients first refusal". Under cover of that letter the draft lease was sent back with alterations in purple and the effect of the alterations in purple was to reinstate the original words I have read. As a result of that the matter went off and one of the questions which may arise is the reason for the matter going off. As soon as it was clear that the Defendants were unwilling to enter into any lease on terms acceptable to the landlords or the landlords were unwilling to grant a lease acceptable to the Defendants this work with which we are concerned, so far as it was completed, was stopped. It is for the liability incurred prior to that date that this claim is brought.
The learned Judge decided that the Defendants were liable and on the claim as a whole Mr Dare who appears for the Appellants in this Court takes two points. He submits first that the contract with regard to these alterations should be read as subject to a lease being entered into. His second point is that assuming he is wrong about that the Plaintiffs could not recover unless they could show that they were at all times ready and willing to grant a lease on the terms set out in their original letter "subject to contract", namely the first refusal at £40,000 over the period of the lease and that the contract which they themselve submitted showed that they were not ready and willing to do that. They rely on the fact that the Defendants did not ask them to do that but reinserted in effect a provision for an option.
On the first point which was taken in the Pleadingsand which the learned Judge decided against the Plaintiffs, I think the learned Judge was plainly right. I cannot see any reason for implying into this contract a term that the Defendants were to be under no liability unless there was a lease, or, in other words, that the confirmation of their responsibility should be read as subject to their entering into a lease. As was pointed out by my brother Romer in the course of the argument, the whole matter of the lease being subject to contract, the Defendants could have resiled without giving any reason. It seems to me, at any rate, impossible that they could have expected the Plaintiffs to continue with this work on the basis that they would have to pay for alterations which the Defendants wanted if the Defendants entirely on their motion decided not to go on with the deal. That point I think fails.
One then approaches the question, as I think, on the basis of whether any facts are shown which would entitle the Defendants to say that they were not in the events which have happened liable to fulfil the responsibility which they undertook by the letter of the 25th January. The learned Judge approached the matter in this way. He said: "In approaching the present case it may be useful to consider two situations just to test the matter. Supposing the work had all been done, and supposing the Defendants had then said they had changed their mind and they were not going to take a lease at all. There was no binding contract, and they would have been entitled for no reason or for...
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