Ronald Farrage and Others (Plaintiffs) Respondents) v North Wiltshire District Council Appellants)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE NEILL,LORD JUSTICE SCOTT,LORD JUSTICE WOOLF |
| Judgment Date | 12 December 1991 |
| Judgment citation (vLex) | [1991] EWCA Civ J1212-2 |
| Court | Court of Appeal (Civil Division) |
| Date | 12 December 1991 |
| Docket Number | 91/1171 |
[1991] EWCA Civ J1212-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BRISTOL DISTRICT REGISTRY
(MR. JOHN WEEKS Q.C., sitting as a Deputy Judge of the High Court)
Royal Courts of Justice.
Lord Justice Neill
Lord Justice Woolf
Lord Justice Scott
91/1171
MR. P.S.A. ROSSDALE (instructed by Messrs. Forrester & Forrester of Chippenham) appeared on behalf of the (Plaintiffs) Respondents.
MR. D. IWI (instructed by Messrs. Sharpe Pritchard, London agents for Mr. G.C. Bettridge of Chippenham) appeared on behalf of the (Defendants) Appellants.
I will Lord Justice Scott to give the first judgment.
The main issue on this appeal is whether a local authority has power under the Local Government Act 1933 to grant a valid option to purchase land. There are subsidiary issues which depend upon the answer to the main issue. The appellant is North Wiltshire District Council, which, following the reorganisation of local government brought about by the Local Government Act 1972, became the statutory successor of the Chippenham Borough Council. The respondents are the trustees of the Chippenham Golf Club.
In 1951 the Borough Council acquired some 63 acres of land and, pursuant to its powers under section 4 of the Physical Training and Recreation Act 1937, let the land to the Chippenham Golf Club for use as a golf course. The original letting was for a term due to expire in November 1970. A new lease was negotiated between the Borough Council and the golf club and was executed on 6th August 1971.
Under this lease the land, by then an established golf course, was demised to the trustees of the club for a term of 28 years from 21st November 1970 at a rent of £400 per annum with rent reviews every seven years.
Clause 4(5) of the lease contained an option for the trustees of the club to purchase the reversion. The option provision was in these terms:
"If the Trustees shall desire to purchase from the Council the fee simple of the demised property and shall at any time during the continuance of this demise give to the Council one year's notice in writing of such desire then the Council will upon the expiration of such notice and upon payment of such sum as shall be fixed by the District Valuer (who shall act as between the parties hereto and not as agent for either party) as the purchase money for the demised property convey the same to the Trustees in fee simple free from incumbrances."
There were then provisions about delivery of an abstract title and various other conveyancing matters.
By letter dated 18th January 1989 to solicitors acting for the the golf club the council, by this time North Wiltshire District Council, expressed the opinion that the option was an invalid grant, being in excess of the powers of the Borough Council. The golf club's solicitors disagreed, and by letter to the Council dated 25th May 1989 they purported to give the requisite one year's notice exercising the option.
The Council responded by letter dated 31st May 1989 asserting in terms that the grant of the option was ultra vires the Borough Council. So the stage was set for litigation, and on 6th September 1989 the trustees of the golf club issued a writ asking for declaratory relief to establish the validity of the option and the efficacy of the golf club's purported exercise of it.
The action was tried by Mr. John Weeks Q.C., sitting as a deputy High Court judge in the Chancery Division. He held:
(1) that the power conferred on local authorities under section 165 of the Local Government Act 1933 to sell land authorised the grant of an option to purchase;
(2) that the consent of the Minister to the grant of the option contained in the 1971 lease had not been obtained, but
(3) that section 39 of the Town and Country Planning Act 1959 applied to the case, with the result that the option was not invalidated by the absence of the Minister's consent.
The deputy judge held accordingly that the option had been validly exercised.
The Council has appealed and contends, first, that section 165 of the 1933 Act does not give local authorities power to grant options to purchase. If that contention be not accepted, the Council then relies on the absence of any ministerial consent. There is a respondent's notice challenging the learned judge's finding that the Minister had not consented to the grant of the option, and raising also an alternative argument based upon provisions contained in the Local Government Act 1972.
The first question is the important one of vires. Did the Council have power under the 1933 Act to grant the option to purchase contained in clause 4(5) of the 1971 lease? The judge held that section 165 conferred the necessary power. Before us Mr. Rossdale for the golf club has relied also on section 164. Sections 164 and 165 provide as follows:
"164. A local authority may let any land which they may possess—
(a) with the consent of the Minister, for any term;
(b) without the consent of the Minister, for a term not exceeding seven years.
165. A local authority may, with the consent of the Minister,—
(a) sell any land which they may possess and which is not for the purpose for which it was acquired or is being used; or
(b) exchange any land which they may possess for other land, either with or without paying or receiving any money for equality of exchange."
The sections confer powers to let land, to sell land and to exchange land. Section 305 of the 1933 Act contains the following definitions:
"'Land' includes any interest in land and any easement or right in, to or over land;
'Sale' includes a sale in consideration of a chief rent, rent charge or similar periodical payment, and the expressions 'sell' and 'purchase' have corresponding meanings."
The deputy judge in his judgment referred to Milner v. Staffordshire Congregational Union Inc. [1956] 2 Ch. 275 in which Mr. Justice Danckwerts held that for the purposes of section 29 of the Charitable Trusts Amendment Act 1855, the predecessor of section 29 of the Charities Act 1960, a sale was made when the contract for sale was entered into. The judge concluded that for section 165 purposes too, a sale would be made when the contract of sale was entered into. I would accept that this may well be right. The judge then referred to authorities regarding the nature of an option to purchase, namely Re Button's Lease [1964] Ch. 263 and Mountford v. Scott [1975] Ch. 258, and concluded that an option to purchase should be regarded as a contract for sale and that for the purposes of section 165 a power to sell included a power to grant an option to purchase.
Mr. Rossdale has, in addition, referred us to and relied strongly on the judgment of Mr. Justice Hoffmann in Spiro v. Glencrown Properties Ltd. [1991] 2 W.L.R. 931. This case raised the question of the construction of section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. Section 2 provides:
"(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)…
(3) The documents 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."
It is evident that the draftsman of this section did not take account of options. Options will normally be exercisable by a document signed by the grantee and not by the grantor. Mr. Justice Hoffmann held that section 2 was intended to apply to the agreement which created the option and not to the notice by which it was exercised.
The alternative to that opinion would have been that section 2 had by an unintended side wind destroyed the enforceability of options. If it was the notice exercising the option which made the "contract" to which section 2(1) was referring, the contract would not comply with section 2, and as the learned judge said:
"The exercise of the option is a unilateral act. It would destroy the very purpose of the option if the purchaser had to obtain the vendor's...
To continue reading
Request your trial