Johnson v Agnew
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE GOFF,SIR DAVID CAIRNS |
| Judgment Date | 13 December 1977 |
| Judgment citation (vLex) | [1977] EWCA Civ J1213-2 |
| Docket Number | 1974 J No. 1787 |
| Court | Court of Appeal (Civil Division) |
| Date | 13 December 1977 |
[1977] EWCA Civ J1213-2
Lord Justice Buckley
Lord Justice Goff
and
Sir David Cairns
In The Supreme Court of Judicature
Court of Appeal
On Appeal from the High Court of Justice
Chancery Division
Group B
(The Vice-Chancellor)
MR. P. MILLETT Q.C. and MR. DIRIK JACKSON (instructed by Messrs. Ward, Bowie, Solicitors, London) appeared on behalf of the Plaintiffs (Appellants).
MR. J.H. HAMES Q.C. and MR. J.K.S. DENNISTON (instructed by Messrs, Bircham & Co., Solicitors, London) appeared on behalf of the Defendant (Appellant).
LORD JUSOJICE BUCKLEY: By an agreement in writing dated 1st November 1973 the plaintiffs agreed to sell and the defendant agreed to purchase two pieces of land at Wooburn Common, Hitcham, Buckinghamshire at a price of £117,000. Upon one of these pieces of land there stood a residence, I will refer to this piece of land as "Sheepcote Grange11. The other piece of land comprised in the contract was grazing land. The contract incorporated the Law Society's General Conditions of Sale (1973 Revision) and fixed the 6th December 1973 as the date for completion. The contractual rate of interest upon the purchase money was 17%. At the date of the contract both these pieces of land were mortgaged. Upon Sheepcote Grange there was a first legal charge for a principal sum of £15,600 and interest, a second legal charge for a principal sum of £4,400 and interest and a third legal charge in favour of the plaintiffs' bankers securing payment on demand of all monies for the time being due by them to their bankers. On the grazing land there was a first legal charge securing a principal sum of £6,000 and interest and a second legal charge in favour of the plaintiffs' bankers securing payment on demand of all monies due. On 1st November 1973, the date of the contract already referred to, the plaintiffs agreed to buy another house at a price of £34,000 which they borrowed from their bankers as bridging finance to be secured by a charge upon the new house. If the defendant had completed the purchase of the properties on or within a reasonable time after the contractual date for completion the plaintiffs would have had ample funds at their disposal to redeem the mortgages and pay the price of their new house and would have had a comfortable margin in hand. The defendant did not complete on 6th December 1973,although by that date the plaintiffs, title had been accepted, Shortly after 21st December 1973 the plaintiffs served upon the defendant a notice to complete bearing that date under Condition 19 of the General Conditions incorporated in the contract. This made it of the essence of the contract that the defendant should complete not later than 21st January 1974. She did not do so. On 8th March 1974 the plaintiffs issued their writ in the action by which they claimed specific performance of the contract with all necessary and consequential accounts directions and enquiries, damages for breach of contract in lieu of or in addition to specific performance, a declaration of lien, and alternatively a declaration that by reason of the defendant's breach of the contract the plaintiffs were no longer bound to sell the property to her. They also claimed forfeiture of the deposit and a declaration that they were entitled to resell the property and recover any loss on such re-sale under Condition 19 of the General Conditions. Although the contract required the defendant to pay a deposit of £11,700, she in fact only paid £3,000 by way of deposit. Consequently in the writ the plaintiffs also claimed payment of a sum £8,700 being the balance of the deposit.
On 20th May 1974 the plaintiffs issued a summons in the action under Order 86 of the Rules of the Supreme Court for a summary order for specific performance. On 27th June 1974 the Master made an order for specific performance of the contract. This was in the accustomed form, ordering that the contract be specifically performed, directing certain accounts to be taken, ordering that the amount. Found to be due to the plaintiffs on the taking of those accounts be certified, ordering that the plaintiffs be at libertya to execute a suitable conveyance in escrow and directing that upon the plaintiffs, at a time and place to be appointed by the court, delivering such conveyance to the defendant together with the title deeds and an acknowledgement in respect of any deeds not handed over the defendant should at the same time and place pay to the plaintiffs the amount of the certified balance.
Meanwhile the first mortgagees of the properties had been taking steps to enforce their securities. On 14-th May 1974 the first mortgagees of the grazing land commenced proceedings for possession of that land. On 7th March 1975 they obtained an order for possession within 28 days and on 3rd April 1975 they sold the grazing land for £15,000. That sale was completed on the 11th July 1975. On 4th June 1974 the first mortgagees of Sheepcote Grange commenced proceedings for possession of that property. They obtained on order on 22nd August 1974 and sold Sheepcote Grange at auction on 20th June 1975 for £35,000. That sale was completed on 18th July 1975. A complication arose in the case of the sale of the grazing land because the plaintiffs had apparently created a grazing tenancy in consequence of which the price had to be reduced to £12,800, but this is of no significance for present purposes because the plaintiffs are content to treat the sale as having been for £15,000. The amounts realised by these two sales were less than the amount owing by the defendant to the plaintiffs in respect of the balance of the purchase price under her contract by upwards of £66,000. Moreover, they were insufficient to discharge the mortgages in full. In these circumstances the plaintiffs appear to have become heavily insolvent unless they are entitled to recover damages from the defendant. On 25th September 1974 abankruptcy petition was presented by creditors against the first plaintiff, but these proceedings stand adjourned sine die, presumably awaiting the result of this appeal.
The plaintiffs have taken no steps towards implementing the specific performance order. The reason for this is given by their solicitor as follows: "It seemed unlikely to me that the defendant would comply voluntarily with the order dated 12th November 1974 when the precise amount payable by her had been certified, and I dirt not think it prudent or feel prepared to involve my firm in the expense, for which the plaintiffs had no money to hand to reimburse it, of proceeding under the order when, as I understood the position, the exercise could be rendered fruitless at any moment by the exercise by the mortgagees of their power of sale, and the consequent inability of the plaintiffs to carry out their part of the order, It did not occur to me at that time that the plaintiffs might be able to claim the balance of the purchase price notwithstanding that they were unable to convey the contract property". So the accounts have never been taken under the order, the amount due to the plaintiffs has never been certified, no time and place have ever been appointed for completion of the sale and the plaintiffs have never tendered an executed conveyance to the defendant. It follows that the defendants' liability under the order to pay the certified balance has never arisen. In consequence of the sales by the mortgagees the plaintiffs are no longer in a position to convey the property.
On 5th November 1976 the plaintiffs launched a motion in the action which sought the following relief (stated shortly) (1) An order that the defendant should pay the plaintiffs the balance ofthe purchase price after taking the accounts directed by the specific performance order with interest at 17% thereon from 6th December 1973 down to payment hut being allowed credit against the principal sum for the amounts realised by the sales by the mortgagees as at the dates of the completions of those sales, and an enquiry as to damages; (2) Alternatively, a declaration that the plaintiffs are entitled to treat the contract as repudiated by the defendant and to forfeit the deposit of £3,000, and an enquiry as to damages occasioned by the defendant's repudiation of the contract. The relief sought in the first alternative proceeds upon the basis that the contract is still in force, and the damages as to which an enquiry is sought might be damages under Lord Cairns' Act (the Chancery Amendment Act 1858). The relief sought in the second alternative, on the other hand, seeks to have the contract abrogated on the ground of repudiation and the damages there referred to are damages at common law for breach of the contract. The Motion came before the Vice-Chancellor, who delivered judgment on 25th February 1977, Before the Vice-Chancellor counsel for the plaintiffs sought relief under the first alternative in the notice of motion; he seems to have sought no relief under Lord Cairns. Act and did not pursue the alternative relief asked for under (2), presumably on the ground that he felt inhibited from doing so by the decision of this Court in Capital and Suburban Properties Ltd. v. Swycher (1976) 1 Chancery, 319, out he reserved the right to pursue that relief in the event of an appeal. The learned Vice-Chancellor made no order on the motion except as to costs, with the consequence that the action has proved entirely fruitless for the plaintiffs, From that decision the plaintiffs now appeal. Upon the appeal counselfor the plaintiffs has asked in the first place for relief upon the lines of the first alternative in the notice of motion; alternatively, relief on the lines of the second alternative in the notice of motion; and in the further alternative, to have the...
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