Hayward v Jackson
| Jurisdiction | England & Wales |
| Judge | (Mr Justice Lawrence Collins),Mr Justice Lawrence Collins |
| Judgment Date | 18 February 2003 |
| Neutral Citation | [2003] EWHC 253 (Ch) |
| Court | Chancery Division |
| Date | 18 February 2003 |
| Docket Number | HC 02 C 02007 |
[2003] EWHC 253 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand
London WC2A 2LL
Mr Justice Lawrence Collins
HC 02 C 02007
In The Matter of the Estate of
Peter Michael Bowles (Deceased)
Mr Nicholas Asprey (instructed by Parker Bullen) for the Claimant
Mr David H B Holland (instructed by Battens) for the Defendant
I direct that pursuant to CPR PD 39 para 6.1 no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic
Mr Justice Lawrence Collins:
I Introduction
In this case Peter Michael Bowles ("the testator") by his will gave the claimant ("Mr Hayward") the right to buy part of his farm at the figure agreed between his executors and the Capital Taxes Office ("the CTO") as its value for inheritance tax purposes. The will provided that his executors were to notify Mr Hayward of his right within six months of the testator's death, and further provided that if Mr Hayward should wish to exercise his right he should inform the executors within three months of their notifying him. The defendant ("Mrs Jackson") lived with the testator for many years. The executors renounced probate and she is the administratrix and entitled to the residuary estate.
The testator died in July 2000, and even now there has been no agreement with the CTO as to the value of the land. After the time for exercise of the option had been extended by agreement between the solicitors for Mr Hayward and for Mrs Jackson, the agreement was revoked by Mrs Jackson, and Mrs Jackson's solicitors gave formal notification of Mr Hayward's right and required him to exercise the right within the three month period in the will.
Mr Hayward claims (inter alia) a declaration that time was not of the essence and that he can exercise the option at any time until the expiry of a reasonable period after the value of the land has been agreed with the CTO and notified to him. Mrs Jackson claims that time was, or has been made, of the essence, and that Mr Hayward has lost his right to buy the land.
According to Theobald on Wills, ed Martyn et al, 2001, para 25–05, an option in a will lapses if the grantee fails to exercise it within the time limit, and Williams on Wills, 8 th ed Sherrin et al, 2002, para 92.4, is to similar effect. Both texts rely on Re Avard [1948] Ch. 44, and this Part 8 claim raises the question, among others, whether there is any such rule and whether that case was rightly decided.
II Background
By clause 3(a) of his will dated 20 September 1993 the testator gave Mr Hayward the right to buy his freehold land situate at Upper Burgate near Fordingbridge comprising 39 acres or thereabouts and shown edged red on the plan referred to therein ("the land") at the figure agreed between his executors and the CTO as its value for inheritance tax purposes. By clause 3(b) he directed his executors to notify Mr Hayward of his right under clause 3(a) within six months of his death. By clause 3(c) he provided that if Mr Hayward should wish to exercise that right he should inform the executors within three months of their notifying him. Clause 4 contained the usual trusts for sale and administration, and by clause 5 he gave his residuary estate to Mrs Jackson.
The full terms of clause 3 are as follows:
"3. (a) I GIVE to JOHN ALBERT DAVID HAYWARD of Knoll Farm Damerham near Fordingbridge aforesaid the right to buy from my Executors my freehold land situate at Upper Burgate near Fordingbridge aforesaid comprising thirty nine acres or thereabouts as the same is edged in red on the plan thereof which will be found with my Will at the figure agreed between my Executors and the Capital Taxes Office as its value for inheritance tax purposes:
(b) my Executors shall notify the said John Albert David Hayward of his right under this clause within six months of the date of my death;
(c) if the said John Albert David Hayward wishes to exercise his right under this clause he shall inform my Executors within three months of their notifying him of his right;
(d) the right given by this clause is personal to the said John Albert David Hayward;
(e) the said John Albert David Hayward shall pay the costs of the Conveyance and any mortgage."
The background was that Mr Hayward and the testator were friends from childhood and owned farms a few miles apart. The land was part of over 700 acres of farmland which the testator and his brother William acquired from their father in around 1971.
In 1993 the testator and Mr Hayward went into partnership growing strawberries and spent money on the land. The partnership came to an end in 1997 when the supermarkets decided to import strawberries from Spain, but the friendship continued. According to Mr Hayward, the testator gave him the option on the land in consideration for his investment in the land. Between 1998 and his death the testator kept free range chickens and two egg units were built on the land. Before he died the testator sold 3 acres of the land leaving some 36 acres to which the right to buy now applies.
The testator died on July 12, 2000, and Mrs Jackson's evidence is that he took his own life. The executors were Mr Dixon and Mr Wyatt of Dixon & Templeton, a firm of solicitors. Mr Hayward was given the relevant extract from the will by Mr Dixon shortly after the testator's death. The executors renounced probate without having given Mr Hayward notice under clause 3(b), and on July 19, 2001 letters of administration with the will annexed were issued to Mrs Jackson.
In a letter dated September 12, 2000 Mr Hayward's solicitors, Parker Bullen, asked Dixon & Templeton for information about the land, including whether the value had been agreed with the CTO; whether the free-range egg units formed part of the property; and whether there was any lien or charge on the land or units. No reply was received to this letter.
Shortly afterwards, the executors renounced probate and in October 2000 Mrs Jackson instructed Messrs Ellis Jones to act. In a letter dated October 10, 2000 they confirmed that no steps had been taken to value the land or agree a figure with the CTO and that they would be taking instructions on the enquiries in the letter of September 12, 2000. Mr Hayward's solicitor suggested that the time for exercise of the pre-emption rights should be extended to the later of six months or one month after the enquiries of September 12, 2000 had been dealt with, and this was agreed on October 13, 2000.
Ellis Jones then ceased to act and Mrs Jackson instructed Mess Battens in their place. Mr Hayward's solicitor drew their attention to the agreed extension of time, and asked them on March 26, 2001 for an answer to the letter of September 12, 2000 and the request was subsequently repeated in a telephone conversation on August 9, 2001 when Mr Hayward's solicitor was told by Mrs Jackson's solicitor that Strutt & Parker had advised on the value and that a figure of £250,000 had been returned to the CTO. Despite further requests in October, November and December, the information was not given.
But by a letter of January 18, 2002 Battens gave notice to Mr Hayward through his solicitors under clause 3(b). They confirmed that the value had not been agreed with the CTO, asserted that Mrs Jackson was not obliged to answer enquiries, and withdrew her agreement to the extension of time. Mr Hayward's solicitors appear to have accepted the withdrawal of the agreement to the extension of time. On January 23, 2002 they wrote:-
"For the avoidance of doubt we write to confirm that your notice is taken as being a notice under clause 3(c) of the Will of the Deceased, which now gives our client three months to exercise his right under clause 3.
As the figure under clause 3(a) has not been agreed with the Capital Taxes Office do you wish our client to propose a figure for agreement or shall the parties appoint an independent valuer?"
Battens replied on February 4, 2002 as follows:
"Your client, if he wishes to proceed, must exercise his right by 21 st April irrespective of whether a value has been agreed with the Capital Taxes Office. We appreciate that this may mean that he will be committing himself to a price still to be ascertained. There is therefore no question of appointing a valuer."
In a letter dated February 14, 2002 Mr Hayward's solicitors indicated that Mr Hayward had in mind a price of £85,000, and asked what indications had been received from the CTO as to the value of the land and whether the District Valuer had become involved. No reply was received to that letter. Mr Hayward's evidence is that the land is basically agricultural land and he believes it to be worth about £85,000 as grade 3 land.
In an attendance note of Mr Hayward's solicitor of April 5, 2002, Mrs Jackson's solicitor is recorded as saying that his instructions were not to co-operate. On April 17, 2002 Parker Bullen wrote to Battens pointing out that her conduct was intended to make it impossible for Mr Hayward to exercise the option within the three-month period and that she was in breach of her duties. They referred to the previous requests for information and demanded specific information by 5.00 pm the next day. Her solicitors extended the option period for seven days but on April 25 in effect refused further information. They indicated that they expected the value to be £500,000 and stated that Mrs Jackson was not prepared to grant any further extension.
Mrs Jackson says that the valuation process has been complicated by two factors: (i) the use of the land at the date of death as a free range egg production unit; and (ii) the proximity of the land...
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