Midill (97PL) Ltd v Park Lane Estates Ltd and another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Carnwath,Lord Justice Maurice Kay,Lord Justice Keene |
| Judgment Date | 11 November 2008 |
| Neutral Citation | [2008] EWCA Civ 1227 |
| Docket Number | Case No: A3/2008/0245 HC06C03472 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 November 2008 |
[2008] EWCA Civ 1227
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
HIS HONOUR JUDGE MACKIE QC
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Keene
Lord Justice Carnwath and
Lord Justice Maurice Kay
Case No: A3/2008/0245 HC06C03472
Mr Peter Crampin QC & Mr Adrian Davies (instructed by Messrs. Osmond & Osmond) for the Appellant
Mr Alan Steinfeld QC & Mr Steven Thompson (instructed by DWFM Beckman) for the Respondent
The facts
I shall refer to the parties as respectively Midill, Park Lane, and Gomba. Park Lane was a company wholly owned by Gomba, whose only asset was a property at 97 Park Lane, London. On 24th December 2005 Midill agreed to pay Gomba £4,000,000 for all the shares in Park Lane. The completion date was 8 th April 2006. The price was to be paid in three tranches: £400,000 as a deposit on signing the Agreement, £800,000 on 8 February 2006, and the balance on completion. The first two tranches were paid. Midill was unable to complete on 8 April. Gomba served notice to complete on 11th April, requiring completion by 27 th April. They were unable to do so. On 5th May Gomba sought to rescind. Midill responded by alleging invalidity of the notice to complete. After further abortive negotiations, on 14th September 2006 Park Lane sold the property to an unconnected company for £4,300,000.
Gomba has since repaid the £800,000. The issues before us are related solely to Gomba's right to retain the £400,000 as a deposit. The judge (Judge Mackie QC) rejected Midill's claim that Gomba had itself not been “ready, willing and able” to complete at the relevant time. He further declined to exercise his discretion under section 49(2) of the Law of Property Act 1925 to order repayment of the deposit.
By its notice of appeal Midill sought to challenge both conclusions. Permission to appeal was granted by Thomas LJ on the section 49(2) issue on 28 th April 2008. There is a dispute about the scope of his decision on the other issues.
The Agreement
The details of the agreement are set out in the judgment. It incorporated conditions 6 and 7 of the Law Society's Standard Conditions of Sale (4 th Ed), which dealt respectively with “completion” and “remedies”. By clause 6.8.1, at any time on or after the completion date, “a party who is ready, able and willing to complete may give the other a notice to complete”. By clause 7.5.2, if the buyer fails to complete in accordance with a notice to complete, the seller may rescind the contract, and if he does so “he may (i) forfeit and keep any deposit and accrued interest, and (ii) resell the property…”
Clause 5 of the agreement, which the judge described as “the provision most at issue in this case”, contained detailed provision for completion, taking account that what was involved was a sale of shares in a company, rather than a simple sale of land. It provided, for example, for the delivery by the seller of duly executed Buyer Stock Transfer Forms in respect of the Shares in favour of the Buyer, with certificates for all the Shares; for resignations of the Directors and Secretary of the Company; and for a board meeting at which nominees of the Buyer would be appointed as additional directors and secretary, and resignations of the retiring directors would be accepted
Ready willing and able
The judge's reasoning
Midill conceded that it was not ready, able and willing to complete on 8th or 11th April or on a date within the period of the notice to complete. The issue therefore was Gomba's readiness to complete on 11 April and in the period up to 27 April.
It was common ground that it was necessary for the seller to remain ready, able and willing throughout the notice period. The judge accepted, following Blackburne J in Aero Properties Ltd –v– Citycrest Properties [2002] 2 P&CR 21, that it was sufficient that the vendor should “be able within the time reasonably required to do so to set up the necessary administrative arrangements to enable completion to take place…” (para 24) He also regarded it as clear “from Aero and from principle” that the burden of proof lay on Midill, as the party seeking to establish that the other was not ready, able and willing to complete.
The judge heard evidence from a Mr Keith Gregory for Midill, but noted that he had had little involvement with efforts to complete the transaction. For Gomba he heard four witnesses, including Mr Anthony Simmons and Mr Neil Aspess, both partners in David Wineman, Gomba's solicitors responsible for the conveyancing.
He dealt briefly with the position on 11 April:
“Mr Simmons' evidence was that Gomba was ready, willing and able to complete on 8 April, the contract had been complied with. The directors nominated by the Buyer had been appointed, Mr Simmons had the signed stock transfer form and share certificates ready to hand over. He also around that time saw the seal, statutory books, Memorandum and Articles, share register and share certificate. Mr Aspess said that all the formalities necessary for completion were or could have been dealt with on or before 11 April. Mr Aspess also confirmed what Mr Simmons said and emphasised, as he did with regard to the later period, that completions involving the sale of a company as opposed to the property itself tend to involve attendance by the parties or their representatives, as well as by the solicitors, with the meetings containing more negotiation, activity and interaction. Mr Gregory claims, in the most general terms, that Gomba was unable to complete on 8 April but unsurprisingly had no detailed material to back this up.
The burden is upon Midill to prove that Gomba was not ready, able and willing to complete on 11 April. Midill has failed to discharge that burden.” (paras 16–17)
The position as at 27 April, the notice completion date, required a fuller review of the evidence. For present purposes it is important to note the judge's preliminary comment:
“When looking at the period leading up to 27 April it needs to be borne in mind that as Midill were in no position to go ahead the preparations for completion were made by one side only without the conventional cooperation between solicitors. The picture of readiness or lack of it is not necessarily an accurate snapshot of what would have happened if there had been a sign of Gomba being called on to complete.” (para 18)
For example, he drew attention to the problem of securing the resignation of the current directors as required by clause 5, since they felt unable to resign until they knew the names of new directors nominated by Midill, which Midill had failed to supply.
The judge was unimpressed by concessions extracted from Mr Aspess in cross-examination, directed to his lack of direct recollection of the documentation, including the stock transfer form. He attached more importance to a memo dated 27 th April, but left by Mr Aspess before he went on holiday on 25 th April, briefing his colleague Mr Vivian Wineman to deal with a possible completion in his absence. That memo addressed specifically the completion requirements under Clause 5 of the Agreement. It confirmed that the solicitors held the statutory books and that he had a signed stock transfer form and share certificate. The judge thought it “most unlikely” that Mr Aspess did not have the relevant documents, correctly executed, at the time he dictated the memo.
He concluded:
“The issues are more complex as at 27 April. Nevertheless in my view the Claimant has failed to show that the Defendant was not ready, able and willing. As I see it Gomba would have been able, within the time reasonably required to do so, to set up the necessary administrative arrangements to enable completion to take place. It seems to me likely that all relevant documents were available other than those required from the directors. These would also have been available had the Claimant discharged its obligations to co-operate in agreeing arrangements for completion under Condition 6.2, most obviously by giving details of who the new directors were to be. It is improbable that having carefully considered preparations for completion Mr Aspess omitted to attend to important matters. I place little weight on his absence of recollection now of such routine matters compared with what he wrote at the time and with what one would assume in the ordinary way would be likely to happen in a solicitor's practice. In a situation where it seemed very likely that Midill would fail to complete and there were no signs whatever of activity on its part it is unsurprising that steps were not taken by Gomba to ensure that the documents were actually in order on the right day. I have no doubt that, in the real world, should Midill have shown signs of going ahead the minds of Gomba and its advisers would have become more closely focussed and commercial adrenalin would have taken effect. The fact that in this rather unreal atmosphere all documents were not in fact prepared to the right standard does not mean that they would not have been had Gomba been required to complete. As I see it Midill has failed to show that Gomba were not ready, willing and able to complete on either relevant date. It is not enough for Midill to point to what actually happened at the end of April where they had failed to co-operate to bring about completion and showed no signs of proceeding. That is not a true picture of what would probably...
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...any penalty, could escape the general rule which renders penalties unenforceable. 42 In a recent Court of Appeal decision, Midill (97PL) Ltd. v Park Lane Estates Ltd [2009] 1 WLR 2460, Carnwath LJ refers to this passage at para. 32 as support for the principle that: "A contractual provisio......
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