Edna Cecilia Wilson (1) David Ellis Wilson (2) v Michael Edward Truelove (1) and Another
| Jurisdiction | England & Wales |
| Judge | Mr Simon Berry QC,Sitting as a Deputy Judge |
| Judgment Date | 21 February 2003 |
| Judgment citation (vLex) | [2003] EWHC J0221-1 |
| Court | Queen's Bench Division (Administrative Court) |
| Docket Number | Case No: HC0102319 |
| Date | 21 February 2003 |
[2003] EWHC J0221-1
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Simon Berry Qc
Sitting as a Deputy Judge
Case No: HC0102319
Andrew Cosedge (instructed by Toller Hales and Collcutt for the Claimants)
Stephen Shaw (instructed by Anthony Collins for the Defendants)
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall he taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
The Claimants who are mother and son (respectively "Mrs Wilson" and "David Wilson")
are the freehold owners of Cross Roads Farm ,Priors Marston, Warwickshire ("the Farm"). The husband and father of the Claimants ("Mr. Wilson"), was also a joint owner of the Farm but he died on 21st October 1981.
The Farm was originally part of a larger Estate another part of which was a further farm
known as The Grange. Mr. Wilson was the tenant of The Grange. A time came when he also became the tenant of the Farm, which he sublet to the First Defendant ("Michael Truelove") who is the husband of the Second Defendant ("Ruth Truelove"), she being the daughter of Mr. and Mrs. Wilson and the sister of David Wilson.
A yet further time came when the freeholds of the Farm and The Grange became available
for purchase. Mr. and Mrs. Wilson and David Wilson bought The Grange and Michael Truelove and Ruth Truelove formed M.E. Truelove (Farms) Limited ("the Company") which purchased the Farm.
An agreement in writing was made on 22nd February 1971 ("the 1971 Agreement")
between Mr. and Mrs. Wilson and David Wilson and the Company. Clause 2 of the 1971 Agreement recorded the Company's agreement to sell the Farm (or alternatively the shares in the Company) to Mr. and Mrs. Wilson and David Wilson for £37,000. It was recorded in clause 3 of the 1971 Agreement that £15,000 had already been paid in part payment of that consideration. Clause 7 of the 1971 Agreement provided as follows:
"On completion of the transfer of the said property or of the said shares as hereinbefore
mentioned or any dissolution of their farming partnership occurring after such completion
the Wilsons will give to Trueloves or their issue the sole right to re-purchase the said
property or the said shares at the price of Thirty Seven Thousand Pounds"
No time limit was prescribed for the exercise of the right to purchase.
The 1971 Agreement was never put into effect. However, a further Agreement in writing
was made on the 7th April 1974 ("the 1974 Agreement") between (i) the Company (defined as "the Vendor") (ii) Michael Truelove and Ruth Truelove (again referred to as "the True1oves") and (iii) Mr. and Mrs. Wilson and David Wilson (defined as "the Purchasers").The 1974 Agreement expressed the 1971 Agreement to be "null and void" and provided for the Vendor to sell the Farm for £20,000 with completion on 16th May 1974, which was the date of the Conveyance ("the Conveyance").
Clause 3 of the 1974 Agreement provided as follows:
"On the death of the survivor of the two first named Purchasers the third named Purchaser
shall give to the Trueloves jointly or in the event of either predeceasing to the of them or in
the event survivor of both predeceasing to Trueloves issue the right to re-purchase the
property at the price of Twenty thousand Pounds to with the benefit of vacant possession".
Again, no time limit was prescribed for the exercise of the right to Purchase.
THE ISSUES
The following questions arise for determination:
(1) Has the right to re— purchase which was granted by the 1974Agreement become void and of no effect by reason of section 9(2) of the Perpetuities and AccumulationsAct 1964 ("the 1964 Act")?
(2) If so, ought such right to re-purchase to be rectified so as to be in terms which
would not attract the rule against perpetuities?
(3) If not, ought equity to intervene so as to prevent Mrs. Wilson and David Wilson
from seeking to rely on section 9(2) of the 1964 Act?
I propose to consider these questions in turn, and in the same order.
(1) THE RULE AGAINST PERPETUITIES
Mr. Stephen Shaw, Counsel for Mr. and Mrs. Truelove, submitted that, for the purposes of section 9(2) of the 1994 Act, no
"option to acquire for valuable consideration any interest in land"
came into existence until one of the triggering events specified in clause 3 of the 1974 Agreement had occurred which thereby (and only then) required the "issue" of the right to re-purchase. Mr. Shaw also submitted that the right to re-purchase, given the need first for a triggering event, was analogous with a conditional option, in respect of which the perpetuity period did not begin until the fulfilment of the condition in question : as to which see generally Maudsley's The Modern Law of Perpetuities at p.188.
I agree with the submission of Mr. Andrew Cosedge, Counsel for Mrs. Wilson and David
Wilson, that the right of re-purchase is properly regarded as an interest in land which arose on the coming into existence of the 1974 Agreement or, at the very latest, the Conveyance. This is because the fact of the grant of the right of re-purchase constituted by the 1974 Agreement had the effect that the "right" to "take … away" the estate or interest of the Wilsons in the Farm was immediately vested in the grantees of the right to re-purchase : see London & South Western Railway Co v Gomm (1881) 20 Ch.D 562 at 581.
In my judgment, the reference to the right to re-purchase being issued later does, at most,
amount to no more than a procedural requirement. And, beyond this, the fact that there was a requirement in the 1974 Agreement for the right to re-purchase to be issued had the effect that there was an immediate requirement for such issue, albeit that the time for issue was later, with the result that, again, the "right" to "take … away" the estate or interest of the Wilsons in the Farm was immediately vested in the grantees of the right to re-purchase.
As to the submission that the right of re-purchase was analogous with or similar to a
conditional option, it seems to me that this is not correct. In my judgment, the various triggering events are, of their nature, events in respect of which it is to be expected that one will occur. Accordingly, they identify when the right of re-purchase will become exercisable. Their purpose is not to specify a condition which may or may not occur and which must first have been fulfilled.
(2) RECTIFICATION
I heard oral evidence from David Wilson and also Mr. and Mrs. Truelove. In addition, I
was taken to written statements by Mrs. Wilson and shown correspondence passing between the parties' respective solicitors. It is quite clear to me that the parties to the 1974 Agreement did intend that there should be a right to purchase which was unlimited in terms of time. The mistake which was common to the parties was that such an unlimited right was permissible in law. Notwithstanding the fact that both sides had their own solicitors acting for them in relation to the 1974 Agreement, none of the parties were aware of the rule against perpetuities as it affects options.
Accordingly, this is not a case in which the agreement which the parties did reach was not
correctly recorded in the 1974 Agreement. Nor is this a case in which rectification is being sought by way of the Court rectifying the 1974 Agreement so that it accurately reproduces what the parties, in fact, agreed. Rather, the rectification which is sought is the substitution of a right of re-purchase in different terms from those agreed or as a different creature so that it does not offend against the rule.
In my judgment, the claim to rectification which is made does not at all accord with the
most elemental principles of rectification. I, therefore, decline to order rectification of the 1974 Agreement.
As to whether rectification should be ordered by way of satisfaction of an equity, this will
only arise as a candidate order if a relevant equity has arisen. I now turn to this question.
INTERVENTION OF EQUITY
In their Defence, Michael and Ruth Truelove rely on:
"an implied, resulting or constructive trust in favour of the Defendants [that the
Farm is] to be conveyed to the Defendants upon the demise of [Mrs. Wilson], and
upon payment of...
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