Delta Vale Properties Ltd v Mills

JurisdictionEngland & Wales
JudgeLORD JUSTICE SLADE,LORD JUSTICE STOCKER,LORD JUSTICE BINGHAM
Judgment Date08 December 1989
Judgment citation (vLex)[1989] EWCA Civ J1208-2
CourtCourt of Appeal (Civil Division)
Docket Number89/1186
Date08 December 1989

[1989] EWCA Civ J1208-2

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

BIRMINGHAM DISTRICT REGISTRY

(HIS HONOUR JUDGE MICKLEM, Sitting as a Deputy High Court Judge)

Royal Courts of Justice

Before:

Lord Justice Slade

Lord Justice Stocker

and

Lord Justice Bingham

89/1186

1987 D 30018

Between:
Delta Vale Properties Limited
Plaintiff (Respondent)
and
Eric Austen Mills
William Henry Macdonald
Gordon Charles Farnell
Defendants (Appellants)

MR. JOHN LINDSAY Q.C. and MISS RACHEL BRAND (instructed by Messrs. Herbert Wilkes & Co., Solicitors, Birmingham, B3 2RT) appeared on behalf of the Defendants (Appellants).

MR. W.D.C. POULTON and MISS C. STADDON (instructed by Messrs. David Morris & Co., Solicitors, Birmingham, B2 5NY) appeared on behalf of the Plaintiff (Respondent).

LORD JUSTICE SLADE
1

This appeal, which may be of some interest to conveyancers, raises questions as to the legal effect (if any) of an allegedly ambiguous notice to complete. The appellants are Mr. Eric Austen Mills, Mr. William Henry Macdonald and Mr. Gordon Charles Farnell, the defendants in an action. They appeal from a judgment of His Honour Judge Micklem, sitting as a Deputy High Court Judge, given on 8th March 1988. The judge thereby ordered that an agreement in writing dated 24th April 1986 ("the Contract"), and made between the plaintiffs in the action, Delta Vale Properties Ltd, of the one part and the defendants of the other part, be specifically performed and that the parties were to be at liberty to apply in chambers to the District Registrar for directions for the purpose of carrying the order into effect. He dismissed a counterclaim by the defendants.

2

The defendants are, as trustees, owners of a freehold property known as 926 and 926A Stratford Road, Sparkhill, Birmingham ("the property"). By the Contract the defendants agreed to sell and the plaintiffs agreed to purchase the property at a price of £65,000. The sale was thereby expressed (by Special Condition 7) to be subject to a lease dated 5th April 1967 for a term of 21 years from 6th May 1967 in favour of The Motorhouse (Birmingham) Ltd. When contacts were exchanged, that lease had just over two years to run and the defendants, as landlords, were faced with the possibility of a claim under Part II of the Landlord and Tenant Act 1954.

3

Special Condition 1 of the Contract provided:

"1. The property is sold subject to The Law Society's General Conditions of Sale (1984 Revision) ('general conditions') printed within so far as they are not varied by or inconsistent with these special conditions."

4

Special Condition 2 provided that, for the purposes of the following General Conditions, the contractual completion date was "within 21 days of the date hereof". The parties have treated this date as being 15th May 1986.

5

General Condition 1 contained (inter alia) the following definitions:

  • "(a) 'completion notice' means a notice served under condition 23 (2)

  • (c) 'contractual completion date' has the meaning given in condition 21

  • (g) 'working day' means any day from Monday to Friday (inclusive) other than—

    • (i) Christmas Day, Good Friday and any statutory bank holiday, and

    • (ii) any other day specified in a special condition as not a working day"

6

General Condition 21 (1) provided that "Contractual completion date shall be as stated in the special conditions……….".

7

General Condition 23 ("Condition 23"), so far as material, provided:

8

"23 COMPLETION NOTICE

  • (1) This condition applies unless a special condition provides that time is of the essence in respect of contractual completion date.

  • (2) If the sale shall not be completed on contractual completion date, either party, being then himself ready able and willing to complete, may after that date serve on the other party notice to complete the transaction in accordance with this condition………

  • (3) Upon service of a completion notice it shall become a term of the contract that the transaction shall be completed within fifteen working days of service and in respect of such period time shall be of the essence.

  • (4) If the purchaser does not comply with a completion notice—

    • (a) the purchaser shall forthwith return all documents delivered to him by the vendor and at his own expense procure the cancellation of any entry relating to the contract in any register

    • (b) without prejudice to any other rights or remedies available to him, the vendor may—

      • (i) forfeit and retain any deposit paid and/or

      • (ii) re-sell the property by auction, tender or private treaty.

  • (5) If on any such re-sale contracted within one year after contractual completion date the vendor incurs a loss and so elects by notice to the purchaser within one month after the contract for such re-sale, the purchaser shall pay to the vendor liquidated damages….

  • (6) If the vendor does not comply with a completion notice, the purchaser, without prejudice to any other rights or remedies available to him, may give notice to the vendor forthwith to pay to the purchaser any sums paid by way of deposit or otherwise under the contract and interest on such sums at the contract rate from four working days after service of the notice until payment..

  • (7) Where after service of a completion notice the time for completion shall have been extended by agreement or implication, either party may again invoke the provisions of this condition which shall then take effect with the substitution of 'seven working days' for 'fifteen working days' in sub-condition (3)."

9

On 29th April 1986, the plaintiffs entered into sub-contracts for the sale of the property unincumbered by the lease at an enhanced price, completion to be "within three weeks from the date hereof". The plaintiffs had no assets and were therefore wholly dependent on the purchase moneys to be provided by the sub-purchasers in order to complete their purchase from the defendants.

10

In the event, the Contract between the plaintiffs and the defendants was not completed on or before that contractual date, (15th May 1986). On 20th May 1986, the defendants' solicitors served on the plaintiffs at the address of the plaintiffs' solicitors a notice ("the first notice") in the following form:

"WE, STODDARD TAYLOR & CO., the undersigned, Solicitors for and on behalf of ERIC AUSTEN MILLS, WILLIAM HENRY MACDONALD and GORDON CHARLES FARNELL (hereinafter called 'the Vendors')

  • A. Refer to the Contract dated 24th April, 1986 by which you agreed to buy from the Vendors the property known as 926 and 926A Stratford Road, Sparkhill, Birmingham.

  • B. State that the sale of the property has not been completed on the date fixed in the Contract for Completion (namely the 15th of May, 1986) and that the Vendors are ready and willing to fulfil their outstanding obligations under the Contract.

  • C. GIVE YOU NOTICE under Condition 23 of The Law Society's General Conditions of Sale (1984 Revision) (to which the Contract was made subject) requiring Completion of the Contract in conformity with that Condition.

  • D. Draw your attention to the consequences set out in the said Condition which will attend your failure to complete the Contract within twenty eight days after service of this Notice (exclusive of the date of service).

11

DATED THIS 19TH DAY OF MAY 1986"

12

At that time the plaintiffs and their solicitors failed to observe that the period of 28 days specified in paragraph D of the notice to complete bore no relation to the period of 15 working days specified in Condition 23 (3). At that stage they took no point on that discrepancy. Instead, the only point taken on behalf of the plaintiffs, on receipt of the notice, was that it was invalid on the grounds that at the time of its service, the defendants had not made title free from the incumbrance of the lease. As the judge held, that point was a thoroughly bad one. Nevertheless, it was persisted in by the plaintiffs' solicitors in correspondence over the succeeding weeks. The strong impression which I derive from the correspondence is that over the period May to August 1986, the plaintiffs and their legal advisers were deliberately stalling in a somewhat disingenuous manner because the plaintiffs needed completion of the sub-purchases to put themselves in funds for completion of their own purchase and the sub-purchasers were not yet willing and able to complete. Things came to the point when, in July 1986, the defendants' solicitors alleged breaches of personal undertakings by the plaintiffs' solicitors to complete. We do not have to decide whether those particular allegations were justified. It is, however, fair to record the judge's general finding (at p. 26A) that "for nearly four months the plaintiff put off the defendants with a thoroughly bad point as to title and repeated broken promises of an early completion".

13

As has already appeared, between June and August 1986 various extensions of time to complete had been agreed between the parties, but eventually the defendants lost patience. On 13th August 1986, their solicitors delivered (by hand) a notice to the plaintiffs' solicitors ("the second notice") in the following form:

"Further to our letter of the 7th August, we now have instructions from our Clients that they are prepared to wait no longer for completion of this matter.

Will you accordingly please take this letter as Notice under General Condition 23(7) of the Contract requiring you to complete this matter within seven working days of the date hereof."

14

By a letter of 10th September 1986, the defendants' solicitors informed the plaintiffs' solicitors that unless completion took place within 24 hours from...

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