Hare v Nicoll
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DANCKWERTS,LORD JUSTICE WINN,LORD JUSTICE WILLMER |
| Judgment Date | 20 December 1965 |
| Judgment citation (vLex) | [1965] EWCA Civ J1220-3 |
| Docket Number | 1953. H. No. 2117. |
| Court | Court of Appeal |
| Date | 20 December 1965 |
[1965] EWCA Civ J1220-3
Lord Justice Willmer
Lord Justice Danckwerts and
Lord Justice Winn
In The Supreme Court of Judicature
Court of Appeal
Appeal from Order of WALLER J. dated 25th May, 1965.
Mr LEONARD CAPLAN, Q. C., and Mr BERNARD FINLAY (instructed by Messrs Thornton, Lynne & Lawson) appeared on behalf of the Appellant (Plaintiff).
Mr D. COZENS-HARDY HIRST, Q. C., and Mr LEOLIN PRICE (instructed by Messrs Herbert Oppenheimer, Nathan & Vandyk) appeared on behalf of the Respondent (Defendant).
LORD JUSTICE WILLMER This is an appeal from a judgment given by Mr Justice Waller on the 25th May 1965, whereby he dismissed the claim of the plaintiff for damages for breach of an agreement for the purchase and sale of shares. The dispute arose in relation to an agreement under seal made in February 1963 whereby the plaintiff agreed to sell to the defendant 50,000 ordinary shares in a company called Pontinental Limited at a price of £6,265. 12s.6d. The agreement conferred on the plaintiff an option to re-purchase 25,000 of the shared for £4,687.10s. on certain terms which have been the subject of the present dispute.
The plaintiff had acquired his holding of those shares in August 1962. It appears that Pontinental Limited is, or was, a Private company, and for that reason the plaintiff's shares wereregistered in the name of the National Bank City Office Nominees limited The agreement of February 1963 provided that in consideration of the purchase price paid by the defendant, the plaintiff glared himself a trustee of the shares for the defendant absolutely, and that he would hold the shares upon trust to pay dividends, etc., as the defendant might from time to time direct, and would, if requested by the defendant, use his best endeavours to procure the shares to be transferred into the defendant's name in the books of the company. Clause 2 of the agreement provided as follows: "It is also here by declared that if the vendor shall before the First day of May 1963 give notice in writing to the purchaser of his desire to repurchase 25,000 of the said shares at the price of £4,687.10s. and on payment of the said sun of £4,687.10a. before the First day of Juno 1963 to the purchaser the vendor may at any time thereafter by deed revoke the trusts hereby declared in whole or in part and may declare fresh trusts in favour of himself or others with or without like power of revocation". It seems clear that what was contemplated was that the bank should remain for the time being as the registered shareholders. In accordance with this, the plaintiff on the 13th February 1963 wrote to the bank in these terms: "You may accept this letter as my authority to hold the shares certificate or certificates for 50,000 which arc deposited with your bank and at present being held to my order, to the order of Hoarcross Investments Limited of 10, Union Court, London, E. C.2". Hoarcross Investments Limited was a company, one of the directors of which at the material time was Mr Crossley Cook, who acted as the defendant's stockbroker.
By a letter purporting to be dated the 30th April 1963, but actually written on the 1st May, the plaintiff gave notice to Hoar cross Investments Limited that he wished to exercise his option concerning the 25,000 Pontinental Ordinary shares as set out in the deed signed by himself and Mrs Nicoll. There was an issue at the trial as to whether that notice was given in time. It was found by the learned judge that the notice was in fact given oneday late. But he vent on to find that the defendant, on the advice of Mr Crossley Cook, had waived the irregularity, and was prepared to treat the notice of Intention as properly given.
It Is not In issue that the plaintiff did not pay what was doe for the re-purchase of the shares before the 1st June. He was the course of making arrangements to raise the money, but it appears that he was encountering considerable difficulty in doing go. The money not having been paid, the defendant's solicitor wrote to the plaintiff a letter dated the 1st June, but not posted till the 4th June, recording the fact of non-payment, and informing the plaintiff that the option to re-purchase the 25,000 shares was now terminated. Within a few days, however, the plaintiff tendered the sum provided by clause 2 of the agreement, but the defendant refused to accept the payment. She had in fact disposed of her interest in the shares elsewhere, the value of the shares having risen by approximately five times since she acquired her interest in February.
The plaintiff brought the present action claiming £10,937.10s., being the difference between the market value of the shares on the lat June and the option price provided by clause 2 of the agreement. His case was that he had sufficiently complied with the conditions laid down in clause 2 of the agreement, and that the defendant was in breach of the agreement by declining to release the 25,000 shares to him. The defendant's case, on the other hand, was that the conditions laid down in clause 2 of the agreement were not complied with, in that payment for the shares was not made by the due date, so that on the 1st June the plaintiff's option to re-purchase the shares had lapsed.
At the trial, which extended over many days, there was a considerable conflict of evidence. The Issues raised, however, were resolved by the learned judge's very clear findings of fact, which Row accepted by both sides. He found as follows: "(1) Notice of Intention to exercise the option was given one day late; (2) On Crossley Cooke's advice, Mrs Nlcoll was prepared to treat thenotice of intention as properly given; (3} Mrs Nlcoll, prior to the 31st May, had no intention of giving any extension of time for payment, and Mr Hare fully understood that payment had to be made before the 1st June; (4) No extension of time was given on the 31st May; (5) No money was paid before the 1st June 1963".
It was conceded at the trial that the defendant could not rely the plaintiff's failure to give his notice before the 1st May, but it was contended on her behalf that there was equally a failure on the part of the plaintiff to perform the condition as to payment before the 1st June, that time was of the essence of the contract, and that consequently the plaintiff's option lapsed on the 1st June. The case for the plaintiff was that the option was validly exorcised by the giving of the notice of his desire to repurchase the shares, and that the time specified for payment of the purchase price was not of the essence of the contract.
The learned judge decided in favour of the defendant, on the ground that the option clause conferred upon the plaintiff a privilege, but that this privilege was subject to conditions, one of which was that payment should be made before the 1st June, Since this condition was not fulfilled, the option lapsed, with the result that the defendant was entitled to dispose of her interest in the shares elsewhere, and the plaintiff's claim that in doing so she acted wrongfully consequently failed. In reaching this conclusion, the learned judge relied on the decision of Vice-Chancellor Kindersley in Lord Ranelagh v. Melton, 2 Drewry & Smale, page 278, from whose judgment he quoted at some length.
On this appeal it has been common ground that the Issue between the parties depends in the main upon the true construction of cause 2 of the agreement of February 1863. Is the effect of that clause that a vendor/purchaser relationship was established Merely by the giving of the notice, so that all that remained to be done was to make payment for a re-purchase which had already been Made? or is the true view that a vendor/purchaser relationship did not arise unless and until notice was given and payment made with in the stipulated date?
We have had the benefit of an interesting and well-reasoned argument from Mr Caplan in support of the appeal. I hope that I do no Injustice to the argument if I summarise it as follows. (1) It contended that upon the plaintiff giving notice of his intention to exercise the option, a vendor/purchaser relationship was immediately established, and nothing was left to be done except to pay the contract price for a purchase which had already been made. The stipulation as to the date of payment should accordingly be treated the same way as such a stipulation is treated in relation to an ordinary contract for the sale of land.
It was argued that the present case is analogous to Cockwell v. Romford Sanitary Steam Laundry Limited., (1939) 4 All England Law Reports, page 370, and Mills v. Hayward, (1877) 6 Chancery Division, page 196, In both of which it was held that the giving of a notice under an option for the purchase of land constituted of itself a binding contract, and that the stipulation as to the date of payment of the purchase price was not a condition precedent to the coming into existence of such a contract. The present case, it was said, is distinguishable from Lord Ranelagh v. Kelton, on the ground that in that case there was a concurrent obligation on the vendor to convoy the property, which the vendor could not be required to implement unless the purchase price was duly paid on the stipulated date.
A vendor/purchaser relationship having been established upon the giving of the plaintiff's notice, the risk in relation to the shares Immediately passed to the plaintiff. The defendant was thereafter in the position of an unpaid vendor, that is, she would have the right, if payment was not made on the due date, to sue for the price, but would have no right to rescind the contract.
The position would only be otherwise if it could be shown that time was of the essence of the contract. But it was said that In the present case the date of...
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