Malhotra v Choudhury
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE STEPHENSON,LORD JUSTICE CUMMING-BRUCE |
| Judgment Date | 21 October 1977 |
| Judgment citation (vLex) | [1977] EWCA Civ J1021-2 |
| Docket Number | 1973 M No. 54 |
| Court | Court of Appeal (Civil Division) |
| Date | 21 October 1977 |
[1977] EWCA Civ J1021-2
In The Supreme Court of Judicature
Court of Appeal
On Appeal from Order of the Vice-Chancellor Blackett-Ord
Lord Justice Stephenson
and
Lord Justice Cumming-Bruce
MR. M. CASWELL (Instructed by Messrs. Maurice Smith & Co.) appeared on behalf of the Appellant.
MR. C. BEHRENS (Instructed by Messrs. Willey Hargrave & Co.) appeared on behalf of the Respondent.
This is an appeal from a decision of Vice-Chancellor Blackett-Ord dated 29th March of this year. The appeal is concerned with a dispute between two doctors practising in Kippax, Swillington, West Yorkshire.
In 1972 Dr. Choudhury, the defendant, gave Dr. Malhotra, the plaintiff, an option to purchase the house and surgery called Novar, 37 Butt Hill, Kippax; but he has not conveyed that house and surgery to the plaintiff and still lives in it himself, practises from it and will not even allow the plaintiff to use it.
The house was built for a Dr. Mathieson 11 1933. In 1969 Dr. Mathieson took into his medical practice as junior partner the plaintiff and he gave him an option to purchase Novar at the market price if and when he retired. We are not concerned with the terms of that option. Thereafter the plaintiff bought himself a house in the neighbouring village of Swillington, where the partners in this practice had, with others, a surgery, at a National Health Clinic. So the plaintiff did not need Novar and did not exercise his option to purchase it from Dr. Mathieson when Dr. Mathieson retired in 1972.
In that year the plaintiff took the defendant into the practice and into partnership as junior partner. It is not disputed that at that time Dr. Mathieson and the plaintiff saw both the defendant and his wife, but there is a dispute as to what was said when they met.
It is not disputed that in 1972 three legal documents were executed. First of all on 5th May contracts for the sale of Novar by Dr. Mathieson to the defendant and his wife for £9,000 were exchanged - "exchanged" by the same solicitor acting for both vendor and purchaser. A fortnight later, on 19th May, the plaintiff and defendant entered into a Deed of Partnershipcontaining, among more common form provisions, in clause 22 an option in favour of the plaintiff to purchase Novar in certain circumstances. Finally on 1st August a conveyance of the property to the defendant and his wife was executed for the price of £9,000 raised entirely on a mortgage from the Halifax Building Society.
Unfortunately the partnership did not work. On 30th May 1973 the plaintiff, through his solicitors, gave the defendant a written notice, which is at page 40 of Bundle A of our documents. The relevant parts of it are in these terms: "…. we do hereby give you formal notice of the dissolution of the partnership to take effect on the expiry of six months from the day of your receipt of this letter. We would add that if you wish to have the termination take effect at an earlier date Dr. Malhotra would be prepared to agree to this."
Later in the letter comes this notice: " House and Surgery at Novar Kippax. We refer you to clause 22 of the deed of partnership whereby upon dissolution of your partnership with Dr. Malhotra you are required to offer to sell the house and surgery to Dr. Malhotra. We hereby give you notice that Dr. Malhotra does require you to offer the same to him for sale. We hope that a figure for fair market price will be agreed; otherwise Dr. Malhotra will rely on the provisions contained in this clause for fixing the same."
The partnershop deed was made between the plaintiff giving his address in Swillington and the defendant giving an address in Amersham, Buckinghamshire, from which he came with his wife and children to live in Novar. By clause 1 "The partners hereby mutually agree to become Partners in the Medical Practice hitherto carried on by Dr. Malhotra with Dr. Mathieson in Kippax Swillington and District in the West Riding of the County of York as from theSeventeenth day of July One thousand nine hundred and seventy two until determination as hereinafter provided and upon the terms hereinafter expressed."
By clause 3 "Each Partner shall provide and maintain himself in a dwellinghouse suitable for his share of the Practice and pay the whole costs thereof, including surgeries, consulting rooms and waiting rooms at such dwellinghouse ….".
By clause 18 "Either Partner may retire from the Partnership upon giving to the other six months previous notice in writing of his intention so to do. Upon such retirement the Partner so retiring shall be entitled to receive his share of the profits up to the time of such retirement."
There follows clause 19 which provides for what shall happen if the partnership is determined apart from retirement under clause 18; and it may be determined by, among other things, either partner giving notice to the other with the intention so to do, if such other partner be guilty of gross neglect or any breach of these articles and so on. The notice to which I have referred, purported to be given not under clause 19 but under clause 18 which I have just read.
By clause 20 "The partners hereby mutually agree that if one Partner ceases to be bound by this Agreement the party so ceasing to be bound shall not for a period of three years from the date on which he so ceases to be bound practise within a distance of five miles from any premises at which the times (sic) of such cesser the Partnership practice is being carried on."
Then I come to clause 22: "If Dr. Choudhury shall cease to be a Partner under any of the provisions hereof, or while remaining a Partner cease; to reside at Novar, Kippax he will further offer to sell such house, surgeries and grounds to Dr. Malhotra at a fairmarket price (to be fixed in the absence of agreement by a valuer) (to be appointed by Hartley & worstenholie solicitors Castleford) and Dr. Malhotra shall have one month from the date of such offer in which to accept and if he does not so accept shall be deemed to have refused."
That partnership deed containing clause 22 was signed, sealed and delivered by both parties in the presence of the same Castleford solicitors.
There followed the conveyance of the 1st-August, and it is only necessary to refer to the fact that in clause 2(a) there is an express trust to sell: "The Purchasers shall hold the said property upon trust to sell the same with power to postpone the sale thereof and shall stand possessed of the net proceeds of sale and of other money applicable as capital and the net rents and profits thereof until sale upon trust for themselves as joint tenants."
The break-up of the partnership and the service of the notice of 30th March 1973 led to the first dispute which has brought these two doctors to Court, It was a dispute as to whether the option was exercisable against the defendant on the true construction of clause 22, in the events which had happened. The defendant said it was not. But on 6th November 1973 the Vice-Chancellor decided against him and held that the option was exercisable, and that decision was affirmed by this Court on 4th June 1974, with one variation to which I shall refer later.
The defendant's attitude to this purported exercise of the option is relevant to the present dispute which divides the parties and which came before the Vice-Chancellor much later, so I must go into the history of the matter between 30th March 1973 and the present dispute in 1977.
The plaintiff's solicitors naturally wished to go ahead with the exercise of the option, the valuation of the property and so on. But the defendant refused from the start and, as the Judge rightly found, showed a marked lack of enthusiasm in carrying out the order of the Court after it was made; indeed it is not too much to say that he obstructed it at every turn. On 3rd May 1973 his solicitors wrote to the plaintiff's solicitors as follows: "With regard to the house and Surgery at Novar Kippax as your client is aware out client has spent considerable sums of money in renovating and making the property suitable for his own and his families (sic) personal occupation and it is felt that your client has terminated the partnership to enable his to endeavour to get hold of this property." That shows his attitude before the matter was taken to Court and in that attitude he persisted.
On 24th May his solicitors wrote "Our Client is not bound by the option conferred by Clause 22 as he has not ceased to be a partner under any of the provisions of the Agreement. As we have considered the Notice you have given is an effective notice under Clause 18 of the partnership Deed."
On the 30th of the same month the defendant's solicitors wrote to the plaintiff's solicitors: "With regard to the house 'Novar' the question of negotiations for the sale of this property to your Client does not arise as our Client has not given Notice of Retirement. We contend that as your Client has exercised his right to resign your Client is not entitled to invoke Clause 22 of the Partnership Deeds (Sic).
"We observe that you intend writing to Messrs. Hartley & Worstenholme asking them to appoint a Valuer to fix a fair market price. As Messrs. Hartley & Worstenholme prepared the partnership Deed no doubt they will consider the Notice served by your Client prior to appointing a Valuer on your behalf."
The next month the plaintiffs solicitors tried to get hold of the title deeds of the property and they wrote on 15th June: "We have, as promised, asked Messrs. Hartley and Worsterholme to appoint a valuer and they have today written us aid we enclose a cppy of their letter for your information.
"We are today writing Mr. Dickinson and hope to receive a...
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