Pitt v P.H.H. Asset Management Ltd
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PETER GIBSON,LORD JUSTICE MANN,THE MASTER OF THE ROLLS |
| Judgment Date | 29 June 1993 |
| Judgment citation (vLex) | [1993] EWCA Civ J0629-2 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | No. CCRTF 92/1321/E |
| Date | 29 June 1993 |
[1993] EWCA Civ J0629-2
THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COLCHESTER AND CLACTON COUNTY COURT.
(His Honour Judge Brandt)
Before: The Master of the Rolls Lord Justice Mann and Lord Justice Peter Gibson
No. CCRTF 92/1321/E
MR. D. PUGH (instructed by Messrs. Steed & Steed, Sudbury) appeared on behalf of the Plaintiff (Respondent).
MR. R. A. PAYNE (instructed by Messrs. Townsends, Wiltshire) appeared on behalf of the Defendant (Appellant).
)
Tuesday, 29th June, 1993.
This is an appeal by the defendant, PHH Asset Management Limited, from the order of his Honour Judge Brandt with his leave, the order having been made on 2nd October 1992 at the trial of an agreed preliminary issue. That preliminary issue was whether the defendant and Mr. Pitt, the plaintiff, entered into a contractual relationship on 3rd October 1991. The judge held that they did and he gave judgment for the plaintiff for damages for breach of contract to be assessed in default of agreement.
The facts are these. In August 1991 the defendant acting as the undisclosed agent on behalf of mortgagees in possession of property known as "The Cottage", Parsonage Lane, Chelsworth, Suffolk, placed the property on the market at an asking price of £205,000. Mr. Roberts of G.A. Property Services acted as the selling agent of the defendant. There were two contenders who were interested in purchasing the property. On 11th September 1991 a written offer of £185,000 was made on behalf of one of the contenders, Miss Buckle. On 23rd September the plaintiff submitted an offer of £190,000 and that was accepted by Mr. Roberts subject to contract. The memorandum of sale showed the vendor to be the defendant.
On 24th September Miss Buckle increased her offer to £195,000. The acceptance of the plaintiff's offer was withdrawn in the light of that. On 30th September in response to encouragement to make a full and final offer the plaintiff increased his offer to £200,000. Miss Buckle promptly matched that offer but the plaintiff's offer was the one accepted subject to contract.
On 1st October Miss Buckle increased her offer to £210,000. The next day Mr. Roberts told the plaintiff that the acceptance of the plaintiff's offer was again withdrawn. Not surprisingly the plaintiff was annoyed.
The next day, on 3rd October, he spoke on the telephone to Mr. Roberts. He made three points. He said that he would seek an injunction to prevent the sale to Miss Buckle. He said that he would go to Miss Buckle, tell her that he was withdrawing and that would leave her alone in the field and she should then lower her offer in the absence of a rival. He also said that he was in a position to exchange as quickly as Mr. Roberts wanted. Mr. Roberts then spoke to his principals and reached an oral agreement with the plaintiff. That oral agreement is reflected in a letter from the plaintiff to Mr. Roberts of the same day. That reads as follows:
"Following our telephone conversation of today, I write to confirm the main points discussed.
(1) Your client has decided it is in his best interest to stay with my offer of £200,000 (Two hundred thousand pounds), subject to contract for the above property.
(2) The Vendor will not consider any further offers for the property on the basis that I will exchange contracts within a period of two weeks of the receipt of that contract.
(3) The Vendor will be writing to me to confirm the above."
The same day the defendant wrote to Mr. Roberts in the following terms:
"Further to our recent telephone conversation, we confirm our instructions to continue with the sale to Mr. Pitt, for the sum of £200,000, subject to exchange of contracts within fourteen days of receipt of draft contracts.
We would be grateful if you could inform both parties of our decision and if exchange of contracts do not take place within the required time, we will then reconsider the second offer."
That is a reference to the offer of Miss Buckle.
That letter to Mr. Roberts was copied to the plaintiff in compliance with what is recorded in paragraph (3) of the letter from the plaintiff to Mr. Roberts.
The understanding of the defendant in this matter is shown from a letter which Mr. Roberts wrote the next day, 4th October, to agents acting on behalf of Miss Buckle. In it Mr. Roberts said:
"We are sorry to have to advise you that our clients have chosen to continue negotiations with the other prospective purchasers and will only consider issuing a contract to your clients if exchange does not take place within 14 days of receipt of the draft."
There then occurred a delay before the defendant or its principals issued a draft contract. On 7th November a draft contract was sent to the plaintiff's solicitor, thus starting the fourteen day period.
On 12th November the plaintiff raised two queries. One of them was answered two days later. On 15th November the plaintiff indicated that he was ready to exchange immediately. This was prompted by the plaintiff learning that there might be a problem over the prospective sale to him. That day the defendant's principals wrote to the plaintiff's solicitors, expressing their intention to proceed with Miss Buckle's offer of £210,000; but they gave the plaintiff the opportunity to exchange contracts that day at the increased price. The plaintiff refused and on 18th November 1991 the draft contract with the plaintiff was withdrawn and the property was subsequently sold to
Miss Buckle for £210,000.
On 30th March 1992 these proceedings commenced. The plaintiff sued for breach of the agreement which he said was reached on 3rd October 1991 and he claimed damages. At the trial of the preliminary issue before Judge Brandt the plaintiff gave oral evidence. Three points were argued by Mr. Payne on behalf of the defendant. The first was that what was agreed on 3rd October 1991 was subject to contract, being part and parcel of the subject to contract negotiations for the sale of the land. Therefore, it was said that there was no enforceable agreement. The second point taken was that no consideration was given by the plaintiff for the agreement. The third point was that the agreement was one to which section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 applied and was unenforceable. The learned judge rejected all three points, holding that there was a valid enforceable contract.
Before us the same three points are put forward by Mr. Payne. It is common ground that if there were a contract for the sale of an interest in land then the correspondence of 3rd October 1991 does not satisfy the terms of section 2 and accordingly such a contract would be unenforceable. Section 2, as is well-known, is the section that implemented the recommendations by the Law Commission in its 1987 report, Transfer of Land: Formalities for Contracts for Sale etc. of Land (Law Com. No. 164), although the section enacted did not follow precisely the form of the clause appended to the report. In short what it did was to replace the requirement of section 40 of the Law of Property Act 1925 that a contract for the sale of land must be evidenced by a memorandum in writing by the requirement that a contract for the sale of an interest in land must be made in writing and by incorporating all its terms in one document or, where contracts are exchanged in each or must be signed by or on behalf of each party.
Mr. Payne argued that if one looked at what was agreed on 3rd October 1991 it was plain that this was simply part of the continuing negotiations between the plaintiff and the defendant,...
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