Pittack v Naviede
| Jurisdiction | England & Wales |
| Judge | Mark Herbert QC |
| Judgment Date | 24 June 2010 |
| Neutral Citation | [2010] EWHC 1509 (Ch) |
| Docket Number | HC 08 C02587 |
| Court | Chancery Division |
| Date | 24 June 2010 |
[2010] EWHC 1509 (Ch)
IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION
Before Mr Mark Herbert QC Sitting as a Deputy Judge of the Chancery Division
HC 08 C02587
Timothy Dutton (instructed by Lucas McMullan Jacobs) for the Claimant
The Defendant in person
Hearing dates: 12–14 May 2010
Approved Judgment
I direct that pursuant to CPR 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic
This is an action about property conveyancing. It raises a question of construction on the Standard Conditions of Sale (4th edition), namely whether a clause excluding the transfer of the benefit of the contract operates to exclude sub-sales. There is no doubt that the parties entered into a contract, and no doubt that the contract has been rescinded. The only question is whether it was the purchaser or the vendor who was entitled to rescind, and the answer to that question determines which of them is entitled to the deposit. Neither side claims damages.
Both parties are individuals, and the property in question is a townhouse in Regents Park held on a long lease from the Crown Estate Commissioners. The claimant is the purchaser Mr Daniel Andrew Pittack, and he appeared before me by Mr Timothy Dutton of counsel. The defendant is Mr Muhammad Maximilian Naviede, and he appeared before me in person.
On the purchaser's side I heard evidence from Mr Pittack himself, from his personal assistant Miss Sarabjeet Howard-Brown (who is also known as Sally Howard) and from his solicitor Mr Garry Stephen Lucas of Lucas McMullan Jacobs. I also read a short witness statement from Mrs Asha Narang, who was at one time intending to be a sub-purchaser of the property. On the vendor's side I heard evidence from Mr Naviede himself and also from Mr Emanuel Langley, a business associate of Mrs Narang's son. Mrs Narang is in India, and her statement was admitted under the Civil Evidence Act 1968. All the other witnesses were cross-examined. I may say that, although oral evidence took up over 5 hours of the court's time, it contained little of value which was not clear from the documents.
The facts
The basic facts are that in July 2007 Mr Pittack and Mr Naviede exchanged contracts to buy and sell a leasehold residential property, and the contractual completion date was originally in July 2008, but in the event brought forward to 20 June 2008. During 2008 Mr Pittack formed the intention to sub-sell the property, but no contracts for the sub-sale were ever exchanged, and on 16 June the sub-purchasers withdrew. Mr Pittack had no means immediately available to complete the contract himself, and he did not do so. He claims however that Mr Naviede was already in breach of contract in two ways, namely (1) that Mr Naviede wrongly refused to transfer the property to any sub-purchasers and (2) he had not received the landlord's licence to assign the lease to Mr Pittack in due time. He claims that each of these alleged breaches entitled him to rescind and recover the deposit. If Mr Pittack is wrong on both those points, it is obvious that he himself was in breach and Mr Naviede can keep the deposit.
In more details the facts are these. A lease of the property was granted by the Crown Estate Commissioners to Mr Naviede himself in 2002 for a term of over 105 years, and the lease is therefore a ‘new tenancy’ for the purposes of the Landlord and Tenant (Covenants) Act 1995. This means, amongst other consequences, that under section 5 of the Act an assignment of the lease by Mr Naviede would release him from liability under the tenant's covenants in the lease, even though he is the original lessee.
On 25 July 2007, after several months of pre-contract negotiations, Mr Pittack and Mr Naviede exchanged contracts for the sale of the property to Mr Pittack for £2.7 million. The contract incorporated the Standard Conditions of Sale (4th edition). Clause 1.5 provides:—
‘1.5 Assignment
The buyer is not entitled to transfer the benefit of the contract’.
Clause 8.3 dealt with obtaining consent where the contract was for the assignment of a lease, as was the case. For this purpose ‘consent’ means consent in the form which satisfies the requirement to obtain it, and clause 3.29.3(c) of the lease, read with clause 1.16, provides for written consent, signed by or on behalf of the landlord, such consent not to be unreasonably withheld. Clause 8.3.2 requires (a) the seller to apply for the consent at his own expense and to use all reasonable efforts to obtain it and (b) the buyer to provide all information and references reasonably required. Clause 8.3.3 provides:—
‘8.3.3 Unless he is in breach of his obligation under condition 8.3.2, either party may rescind the contract by notice to the other party if three working days before completion date (or before a later date on which the parties have agreed to complete the contract):
(a) the consent has not been given, or
(b) the consent has been given subject to a condition to which a party reasonably objects.
In that case, neither party is to be treated as in breach of contract and condition 7.2 applies.’
Clause 7.2 provides:—
‘7.2 Rescission
If either party rescinds the contract:
(a) unless the rescission is a result of the buyer's breach of contract the deposit is to be repaid to the buyer with accrued interest
(b) the buyer is to return any documents he received from the seller and is to cancel any registration of the contract.
There were also special conditions, including the following:—
(a) The contractual date for completion was fixed at 25 July 2008, a whole year after the date of the contract, but the vendor was given the right to bring the completion date forward by serving 3 months’ notice.
(b) The deposit was to be held by the solicitors as the vendor's agent, so that the vendor had the use of it straight away.
(c) Against those conditions, which were of benefit to the vendor, he agreed not to increase the borrowing secured on the property without the buyer's consent.
(d) Special condition 9 provides:—
‘The Buyer will join in any Licence to Assign issued by the Landlord and will enter into any covenants and adhere to any conditions reasonably required by the Landlord. The Buyer will also produce to the Landlord such references as the Landlord shall require.’
On 31 July 2007, soon after exchange, Lucas McMullan Jacobs asked Mr Naviede's solicitors Zatman & Co whether they were contacting the landlords’ agents to find out their requirements in relation to the licence to assign. Zatman & Co responded rather slowly, perhaps understandably so in view of the long completion date. On 21 September 2007 they did indeed write to Crown Estate, and on 28 September 2007 Cluttons responded on their behalf enclosing a printed form of application incorporating a request for the information required from an assignor. Some 12 weeks later, on 17 December 2007, Zatman & Co forwarded that to Lucas McMullan Jacobs, and on 2 January 2008 the latter replied that they were obtaining the references and information required, and that they would forward these when they were to hand. In the end that did not literally happen, as will appear.
Some weeks after exchange of contracts Mr Pittack considered that he might wish to borrow money to effect the purchase, and through his PA Miss Howard asked Mr Naviede for a surveyor to have access to the property for the purpose of an inspection. This was refused, despite Miss Howard speaking on several occasions to Mr Naviede himself and also his associate Mr Steve Lavin. Mr Pittack then began considering selling the property on to one or more sub-purchasers.
One potential sub-purchaser, though not the first, was Mrs Narang. By the beginning of April 2008 Lucas McMullan Jacobs were in correspondence with Goldkorn Matthias Gentle, who wrote that they were instructed by Mrs Narang and Mr Langley as co-purchasers. The proposal was that the sub-purchasers would buy the property for the same price which Mr Pittack had agreed to pay, £2.7 million, and Lucas McMullan Jacobs intended that the two contracts would be completed by a single transfer from Mr Naviede to the sub-purchasers. They did not however inform Mr Naviede or his solicitors of that intention at that time.
On 20 March Mr Naviede's solicitors duly gave notice bringing the contractual date for completion forward to 20 June 2008.
From that point matters moved somewhat more quickly. During May there was correspondence between Goldkorn Matthias Gentle and Lucas McMullan Jacobs in regard to the proposed sub-purchase, and references were obtained for Mr Langley, as was a bank reference for Mrs Narang. On 6 June Lucas McMullan Jacobs sent a draft transfer to Zatman & Co for approval, but this was for a transfer to Mr Pittack alone. But Lucas McMullan Jacobs had also been communicating with Cluttons, as agents for the Crown Estate, and by 10 June a draft licence to assign to Mrs Narang and Mr Langley was in its final form, and Pemberton Greenish, acting for the Crown Estate, had written that they did not expect the Crown to want Mr Pittack to be a party to the licence.
On 11 and 12 June 2008 there was a comparative flood of correspondence which is not easy to analyse, because it does not all appear in strict chronological order in the trial papers. First, Cluttons must have given Zatman & Co the names of the intended sub-purchasers, and Mr Naviede's view about potential sub-sales was revealed to those acting for the Crown Estate. On 11 June Zatman & Co wrote to Cluttons and Pemberton Greenish to say that it had come to their attention that Lucas McMullan Jacobs had been corresponding directly with them in connection...
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