Kingston v Ambrian Investment Company Ltd
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE BUCKLEY,LORD JUSTICE SCARMAN |
| Judgment Date | 22 July 1974 |
| Judgment citation (vLex) | [1974] EWCA Civ J0722-2 |
| Date | 22 July 1974 |
| Court | Court of Appeal (Civil Division) |
[1974] EWCA Civ J0722-2
The Master of The Rolls (Lord Denning)
Lord Justice Buckley and
Lord Justice Scarman
In The Supreme Court of Judicature
Court of Appeal
Revised.
Appeal by plaintiffs from judgment of His Honour Judge McDonnell on 27th July 1973 at West London Country Court.
Mr. DAVI HUNTER, Q.C., and Mr. DEREK TURRIFF (instructed by Messrs. Lovell, White and King) appeared on behalf cf the Appellant Plaintiffs.
Mr. J.E. VINELOTT, Q.C., and Mr. J.E. LINDSAY (instructed by Messrs. S. Farren & Co.) appeared on behalf of the Respondent Defendants.
In 1967 Parliament passed the Leasehold Reform Act, 1967. It came into force on 1st January 1968. It gave a tenant of a leasehold house a right to buy the freehold provided that certain requirements were satisfied, Mrs. Moreton, a widow, was the tenant of a leasehold house who satisfied all the requirements. The house was 27 Queen's Gate Mews, S.W. 7. It was owned by the Harrington Estate. She held a lease of the house for 36 years from 24th June 1950 at a rent of £30 a year. So it was a long tenancy at a law rent. The rateable value was £397. So it was under £400. She and her husband had lived in the house as their residence for 17 years. As she was clearly entitled to buy the freehold, Mrs. Moreton asked her solicitors to give the appropriate notice to the landlords. They gave a notice soon after the Act came Into force. They gave a notice on 1st February 1968; but this notice was out of order owing to a technical defect. They failed to delete some of the words in In the form. It was a defect into which many solicitors fell at that time, see Byrnlea Property Investments Ltd. v. Ramsay 1969 2 Q.B. 253. But Mrs. Moreton's solicitors soon found out the mistake and remedied it. On 7th March 1968 they gave a further notice to acquire the freehold which was a good notice. It was afterwards questioned, but, so far as I can see, it was perfectly in order. Thereupon the landlords were bound to sell the freehold to the tenant and the tenant was bound to boy it. It was just as if there was a contract for sale freely entered into between them, see section 5(1) of the Act, The landlords sought to avoid it. They applied to the Minister under section 19 of I the Aot to allow them to retain powers of management. This application failed. Thereupon the landlords admitted that the tenant had a right to buy the freehold. On 4th September 1969the landlords gave a notice in the prescribed form admitting the tenant's right, see Schedule 3, paragraph. On making this admission the landlords undoubtedly became bound to sell the freehold to the tenant Just as if there was a contract between them. The conditions of the sale were those set out in the statutory Regulations 1967, No. 1879, Schedule Part 1. The landlords accepted the position. On 18th September 1969 they asked for a deposit of £90 (three times the annual rent) in accordance with condition No. 1. The tenant duly paid that Cdeposit. In November 1969 the valuers for both sides agreed the price at £3750. (I should mention here that on 30th September 1969 Mrs. Moreton died; but under the Act all her rights and obligations vested in her executors, see section 5(1)). Thereupon the landlords and Mrs. Moreton's executors were bound, just as if there was a concluded contract of sale for £3750 on the statutory conditions. If the landlords had remained owners, the contract would have been completed without trouble. But the landlords did not remain owners. They determined to sell the freehold subject, of course, to the right of Mrs. Moreton's executors to buy the freehold.
(Now I must mention a point which was not realised by anyone until much later. In March 1968, when the solicitors for the tenant gave the notice to buy the freehold, they made a mistake. It was the early days of the Act. They overlooked this important point: they ought to have then registered the notice as if it were an estate contract, see section 5(5) of the Act. They did not do so. The result was that, if the landlords sold the house, the notice was void as against the purchaser, even though he had full knowledge of it. In this case no one realised this mistake for four years.) Meanwhile the following events took place:- In 1970 the landlords decided to sell thefreehold of the house. They entered into negotiations with intending buyers called Ambrlan Investment Co. Ltd. The landlords told the buyers in writing that they had admitted the right of the tenant to buy the freehold of No. 27 Queen's Gate Mews. In April 1970 the landlords contracted to sell the reversion to the buyers of it. That contract of sale expressly stated that the freehold was sold subject to this admitted right of the tenant. No doubt the buyers paid much less for the reversion on that account. On 31st July 1970 the reversion was conveyed to the buyers, Ambrian Investment Co. and the deposit, of £690 was credited to them.
The solicitors for the buyers, Ambrlan Investment Co. Ltd., the new landlords, were Lee & Pembertons, a firm of high standing. They treated the notice as good and binding upon the new landlords. They admitted the price of £3750. They acknowledged the receipt of the deposit. The solicitors for the tenants submitted a draft transfer for approval. Lee &. Pembertons returned it duly approved. On 15th March 1971 Lee & Pembertons wrote to the tenant's solicitors saying:
"We look forward to receiving from you; as soon at possible, the engrossment for sealing by our clients."
Now we come to an important point of the case. It is the execution of the transfer. In April 1974 the tenants' solicitor had the transfer engrossed. He got it signed, sealed and delivered by the tenants (the two executors) in the presence of witnesses. Then on 5th April he sent it to Lee & Pembertons. On 19th April 1971 Lee & Pembertons wrote acknowledging the receipt of "the engrossment of the transfer which we are now having sealed by our clients." They sent it to their clients, Ambrlan Investment Co. Ltd, They advised them that they werelegally bound to convey the freehold of the premises to thetenants. On 21st April 1971 the new landlords, Ambrian Investment Co, Ltd., executed the transfer. It showed on the face of it that it had already been duly executed by the tenants (the two executors, David Kingston and John Rossdale). The Ambrian Investment Co. Ltd. affixed on it their common seal in the presence of a director, Mr. David Kirch, and the secretary of the company. Then Mr. Kirch sent it back to Lee & Pembertons with this covering letter dated 21st April 1971:
"I return herewith the Transfer… I suppose all that you are entitled to collect up until completion la the ground rent on this property… They should of course pay your costs in connection with this purchase and you should therefore be in a position to remit the full proceeds of £3,750 to the Bank."
So Lee & Pembertons held the transfer duly executed by both sides. Then there was much delay in completion. It seems to have been largely due to the tenants (the two executors). They wanted to delay payment of the price of £3750 until they sold some other property. The landlords became restive and said that, in view of the delay, they wanted to be paid interest. On 3rd June Mr. David Kirch spoke to the solicitor for the tenants and it was agreed that the tenants should pay interest at 8% (2% over Bank Rate) from 15th February 1971. Eventually in November 1971 the tenants said they wished to complete and asked for a completion statement. On 15th November 1971 Lee & Pembertons sent this statement:
Sale price £3750
Less deposit 90
3660
Interest on balance purchase price at 2% above Bank Rate from 15th April 1971 to 23rd November 1971 £220 78
Our costs 46 00
£3926 78
On 17th November 1971 the tenants' solicitor agreed the Completion figures. So all was ready for completion en 23rd November 1971.
There was, however, further delay. In December 1971 the tenants asked for a variation. They asked that the transfer should be varied so that the property should not be transferred into their own names but into the name of one of the beneficiaries, Mr. de Segundo. Lee & Pembertons sought to get the instructions of the new landlords, Ambrlan Investment Co. Ltd. But Ambrlan never gave instructions to Lee & Pembertons. On the contrary, in April 1972 they changed their solicitors. They took the work sway from Lee & Pembertons and entrusted it to another firm of solicitors, S. Farren & Co. These new solicitors enquired into the matter. They asked for a sight of the original notice to buy the freehold. By mistake the tenants sent a copy of the notice of 1st February 1968, which was out of order; and did not send the notice of 7th March 1968, which was entirely in order. The new solicitors for Ambrlan Investment said that the notice of 1st February 1968 was of no effect. They refused to go on with the sale.
Faced with this refusal, the solicitors for the tenants brought these proceedings for specific performance against the new landlords, Ambrian Investment Co. Ltd. They relied atfirst on the notice of 1st February 1968 (mistakenly describing It as 1st February 1969). The landlords' solicitors pleaded that the notice of 1st February 1969 was not valid. The tenants' solicitors then replied that they had referred to the wrong notice. They amended their claim so as to rely on the notice of 7th March 1968. The landlords' solicitors questioned the validity of that notice too. They gave several reasons. On that issue the case came on for hearing in the County Court in July 1973. The Judge thought that the notice of 7th March 1968 might well have been good; but he did not find it necessary...
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