McCausland and Another v Duncan Lawrie Ltd and Another

JurisdictionEngland & Wales
JudgeLORD JUSTICE NEILL,LORD JUSTICE MORRITT,MR JUSTICE TUCKER
Judgment Date06 June 1996
Judgment citation (vLex)[1996] EWCA Civ J0606-1
Docket NumberCHNI 95/1664/B
CourtCourt of Appeal (Civil Division)
Date06 June 1996

[1996] EWCA Civ J0606-1

IN THE SUPREME COURT OF JUDICATURE

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE CHANCERY DIVISION

(MR JUSTICE KNOX)

Royal Courts of Justice

Strand

London WC2

Before:

Lord Justice Neill

Lord Justice Morritt

Mr Justice Tucker

CHNI 95/1664/B

(1) Piers Connolly Mccausland
(2) Elisabeth Maria Rionagh Mccausland
Appellants
and
(1) Duncan Lawrie Limited
(2) Sis Securities Limited
Respondents

MR DAVID NEUBERGER QC and MR W. GELDARD (instructed by Messrs H.C.L. Hanne & Co, London SW11 5TH) appeared on behalf of the Appellants (Plaintiffs).

MR PHILIP SHEPHERD (instructed by Messrs Swepstone Walsh, London WC2A 3BP) appeared on behalf of the Respondents (Defendants).

LORD JUSTICE NEILL
1

This appeal raises a question of some importance as to the meaning and effect of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 (the Act of 1989).

2

Contracts for the sale of an interest in land have for centuries been attended by certain legal formalities. For about 250 years the proof of such contracts was governed by section 4 of the Statute of Frauds 1677, though from an early date the effects of the statutory rule were mitigated by the equitable doctrine of part performance. In 1925 section 4 of the Act of 1677 was replaced by section 40 of The Law of Property Act 1925. This section was in the following terms:

"(1) No action may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto by him lawfully authorised.

(2) This section applies to contracts whether made before or after the commencement of this Act and does not affect the law relating to part performance, or sales by the court.

3

It may be noted that the side note to the section stated "Contracts for sale, etc., of land to be in writing". But in fact a contract not complying with the section was not illegal or void. It was merely unenforceable.

4

In practice both section 4 of the Act of 1677 and section 40 of the Act of 1925 gave rise to difficulties. In particular the doctrine of part performance led to uncertainty in its application to the facts of individual cases. There were calls for reform and in 1985 the Law Commission produced a Working Paper (No. 92). The Working Paper was followed in 1987 by the Law Commission Report No. 164 which recommended that, with certain specified exceptions, all contracts for the sale or other dispositions of interests in land should have to be in writing signed by all parties in order to be valid. A draft bill incorporating the Commission's recommendations was attached to the Report.

5

The Act of 1989 gave legislative effect to a number of the reforms relating to land law which had been proposed by the Law Commission in the previous few years. Section 2 introduced the recommendations in Report No. 164, though there were some differences between section 2 and the corresponding clause in the draft bill attached to the Report.

6

So far as is material section 2 was in these terms:

"(1) A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each.

(2) The terms may be incorporated in a document either by being set out in it or by reference to some other document.

(3) The document incorporating the terms or, where contracts are exchanged, one of the documents incorporating them (but not necessarily the same one) must be signed by or on behalf of each party to the contract."

7

By section 2(6) "interest in land" was defined as "any estate, interest or charge in or over land or in or over the proceeds of sale of land." By section 2(8) it was provided that section 40 of The Law of Property Act 1925 should cease to have effect but by section 2(7) it was further provided that nothing in the section should apply in relation to contracts made before the section came into force.

8

I propose to turn next to the facts.

9

The Facts

10

I can state the relevant facts quite shortly.

11

Duncan Lawrie Ltd., the first respondent, is a bank. S.I.S. Securities Ltd. (SIS), the second respondent, is a property company. The two companies have a common parent.

12

In 1991 Mr. and Mrs. McCausland, the appellants, brought proceedings against Duncan Lawrie seeking specific performance of an alleged agreement for the sale to them of the property known as 1 Beechmore Road, London SW 11 (the property). At about the time when these proceedings were issued the appellants registered a caution in the Land Registry against the property. It is unnecessary for the purposes of this judgment to investigate the circumstances which gave rise to these earlier proceedings.

13

The 1991 proceedings were settled on 26 January 1995. It was a term of the settlement that the property would be sold to the appellants for £210,000. The 1991 proceedings were formally compromised by a Tomlin order dated 7 February 1995.

14

By a written agreement dated 26 January 1995 SIS as seller agreed to sell the property to the appellants for the sum of £210,000. The written agreement incorporated the Standard Conditions of Sale (2nd Edition) and also contained a number of Special Conditions. The agreement provided for the payment of a deposit of £1000 and for a balance of £209,000. The completion date was stated to be 26 March 1995.

15

By the combined effect of Standard Condition 6.1.2 and Special Condition 5(b) the balance of the purchase price of £209,000 was due to be paid by 2.30 p.m. on the completion date. By Standard Condition 6.8.1 it was provided that at any time on or after the completion date a party who was ready able and willing to complete might give the other a notice to complete. By Special Condition 6 it was provided that if the buyers did not complete on the completion date the balance of the full 10% deposit would become payable.

16

A few days after the contract was signed the solicitor acting for Duncan Lawrie and S.I.S. realised that 26 March 1995 was a Sunday. I shall call the two companies "the bank". He therefore wrote the following letter to the appellants' solicitors dated 3 February 1995:

"…I note that the completion date in the contract is 26th March which is a Sunday, and I therefore suggest that completion be re-arranged for Friday the 24th March.

I await your confirmation."

17

A few days later the appellants' solicitors replied:

"Thank you for your letter dated 13 February 1995 [I understand that this letter was a reminder of the letter of 3 February] and I have now received instructions that completion can take place on 24 March 1995."

18

On Friday 24 March 1995 the bank's solicitors sent a fax to Mr. Grimes a partner in the appellants' solicitors' asking him to confirm that the completion moneys had been transmitted to the bank's account that morning. The balance of the purchase price was not so transmitted, however, and accordingly later that day the bank's solicitors sent a completion notice to the appellants and to their solicitors. The accompanying letter was in these terms:

"As completion did not take place today, and in accordance with the agreement dated 26th January 1995 made between S.I.S. Securities Limited (1) and Piers Conolly McCausland and Elizabeth Maria Rionagh McCausland (2), I enclose a Completion Notice pursuant to the above agreement and look forward to receiving £20,000 in accordance with Special Condition 6 of the agreement.

If the above sum is not payable forthwith my clients will be applying for summary judgment and your clients should also be aware that interest is payable at the contract rate from exchange of the agreement until actual payment is received by my clients.

I look forward to hearing from you by return."

19

I should also refer to the first part of the Notice to Complete which was addressed to the appellants and headed by the name of the property. The Notice continued:

"We the undersigned as solicitors for and on behalf of S.I.S. Securities Limited…(the seller):

1. Refer to the contract dated 26th January 1995 (`the contract') by which you agreed to buy from the seller the property known as 1 Beechmore Road, Battersea, London SW 11;

2. State that the sale of the property has not been completed on the day fixed in the contract for completion and the seller is ready, able and willing to complete;

3. Give you notice under Condition 6.8 of the Standard Conditions of Sale (2nd Edition)…to complete the transaction in accordance with that condition.…"

20

On 3 April 1995 the appellants' solicitors wrote to the bank's solicitors:

"We write further to our telephone conversation with your Mr. Eliades this afternoon concerning the request for additional time in which to complete this transaction. We appreciate that the notice to complete expires this Friday. The request is for an additional four working days to expire on Thursday 13 April before Good Friday, to enable our client to raise the finance to complete."

21

The bank, however, was unwilling to grant an extension and on 5 April the bank's solicitors wrote to say that completion had to take place on or before 7 April in accordance with the Notice to Complete.

22

Mr. Grimes made a further attempt on Friday 7 April to obtain an extension to Monday 10 April, but this attempt failed. On 7 April 1995 the bank's solicitors sent a Notice to Rescind the contract of sale.

23

On 18 April 1995 the bank issued proceedings claiming the balance of the deposit together with interest. Those...

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