Sharneyford Supplies Ltd v Edge
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE BALCOMBE,LORD JUSTICE KERR,LORD JUSTICE PARKER |
| Judgment Date | 14 October 1986 |
| Judgment citation (vLex) | [1986] EWCA Civ J1014-8 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 86/0883 |
| Date | 14 October 1986 |
[1986] EWCA Civ J1014-8
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL
(CIVIL DIVISION)
From: Mr Justice Mervyn Davies Chancery Div., London).
Royal Courts of Justice,
Lord Justice Kerr,
Lord Justice Parker
and
Lord Justice Balcombe
86/0883
and
MR E.W. HAMILTON, Q.C., and MR T.R. MOWSCHENSON (instructed by Messrs Rays and Vials, Northampton) appeared on behalf of the Appellants (Plaintiffs).
MR J.M. COLLINS (instructed by Messrs Godlove, Saffman, Lyth & Goldman, Leeds) appeared on behalf of the Defendant (Respondent). (Respondent in Third Party appeal).
MR PETER HORSFIELD, Q.C., and MR WILLIAM AINGER (instructed by Messrs Willey Hargrave, Harrogate) appeared on behalf of the Third Party (Respondent). (Appellants in Third Party Appeal).
This appeal—from an order dated 18th January 1985 of Mr Justice Mervyn Davies on certain preliminary issues in the action—raises once again the question of the application of the rule in Bain v.Fothergill (1874) L.R. 7 H.L. 158: In what circumstances can a purchaser of land recover damages for loss of bargain when the vendor is in breach of contract?
In 1970 the defendant Philip Michael Edge ("Mr Edge") agreed to buy a plot of land of just over half an acre at Monk Bretton, Barnsley, South Yorkshire, from a Mr Bywater. The land, with certain sheds erected on it, has at all material times been used as a maggot farm. Mr Edge went into possession, paid the purchase price over a period (as agreed) of some six years, and on 8th December 1976 was registered at H.M. Land Registry as proprietor with absolute title to the freehold of the maggot farm. Mr Edge did not find his activities at the farm profitable and in April 1976 entered into negotiations with a Mr Brian Meek (who was subsequently joined by a partner, Mr Denis Holt) for the grant of a lease of the maggot farm for a term of 10 years. The rent for the first five years was to be 30 gallons of maggots per week delivered to Mr Edge's premises at 95 Kirkgate, Leeds, where he carried on business as Kirkgate Anglers. For the purposes of these negotiations Mr Edge was represented by a firm of solicitors then called Austin & Co. (now Barrington Black & Co., the third party to the action), and the partner who at all times dealt with Mr Edge's affairs was a Mr Roger Hill. The negotiations for a lease came to nothing, but Mr Edge had allowed Messrs Meek and Holt to enter into possession of the maggot farm early in 1976, and from April 1976 they regularly supplied him with maggots and (save when he did not require the maggots, when the weather was had) this supply has continued ever since. Mr Hill knew of the position of Messrs Meek and Holt and when they (and a Mr Hughes who was then working with them) and Mr Edge were summonsed for causing a nuisance at the maggot farm, Mr Hill wrote a letter to the local council on behalf of Mr Edge referring to the other defendants (i.e. Messrs Meek, Holt and Hughes) as Mr Edge's tenants.
So matters continued until the early summer of 1979 when Mr Edge entered into negotiations with the plaintiff company (then known as Flinthall Farms Ltd.) for the sale to them of the maggot farm. For the purpose of these negotiations Mr Edge again instructed Mr Hill, and made it clear to Mr Hill (as also did the proposed purchasers' solicitors) that the sale was to be with vacant possession and that in this connection there was concern about the position of Messrs Meek and Holt. Mr Hill did not give evidence at the trial and there has been no appeal by the third party against that part of the judge's order which declared that the third party was liable to indemnify Mr Edge in respect of all sums payable as damages in the action and in respect of his costs of the action and the third party proceedings. The judge accepted Mr Edge as a witness of truth; Mr Hill's acts and omissions remain unexplained.
Enquiries before contract were duly submitted by the plaintiff's solicitors on 21st September 1979 and were answered by Mr Hill on behalf of Mr Edge on 25th September. The relevant questions and answers were as follows, all the answers being prefaced by the rubric:
"These replies on behalf of the Vendor are believed to be correct but their accuracy is not guaranteed and they do not obviate the need to make appropriate searches, enquiries and inspections".
"8. Adverse Rights". To the general question whether the vendor was aware of any adverse rights affecting the property, or of any other overriding interests under section 70(1) of the Land Registration Act 1925, Mr Hill gave the answer: "No".
"13. Completion. How long after exchange of contracts will the Vendor be able to give vacant possession of the whole of the property?". Answer: "Hopefully four weeks".
Additional Enquiry "7. We believe that the premises are at present occupied. Vacant possession must be given at completion. Can you please say what steps the Vendor will take to obtain vacant possession and whether the present occupants come within the protection of Part II of the Landlord and Tenant Act 1954?" Answer: "The Vendor is already arranging for the property to be vacated and we are informed that the tenants cannot rely on the protection of the Act". The learned judge held— [1986] Ch. 128, 139–C—that this answer was untrue in the sense that Mr Edge was not then arranging for a vacating of the property. No evidence was given to suggest that the second part of the answer was any more correct than the first part.
In due course on 14th November 1979 contracts were exchanged between Mr Edge and the plaintiff. The contract was in the form of the Law Society's Contract for Sale (1973 Revision) and provided for the sale of the maggot farm by Mr Edge to the plaintiff at a price of £8,500 and for a covenant on the part of the purchaser to supply Mr Edge free of charge with 30 gallons of maggots every week for 20 years, determinable in certain circumstances. The judge found that the retail price of maggots was £3.25 a gallon in 1979, so that this part of the contract was worth about £100 per week to Mr Edge. A deposit of £850 was paid by the plaintiff. The date fixed for the completion was 12th December 1979 or earlier by arrangement. Under General Condition 3(1) the property was sold with vacant possession on completion.
When Mr Hill informed Mr Edge that contracts had been exchanged he asked him, in a letter dated 14th November 1979, to let him know "the position regarding the tenants at the property". This surprised Mr Edge. He had supposed that Mr Hill was getting the occupants out. Mr Edge spoke to Mr Holt. Mr Holt told him that he and Mr Meek were not leaving the farm. So Mr Edge again spoke to Mr Hill. Mr Hill said: "Leave it to me". So Mr Edge took no steps himself towards securing removal of the occupants. However, on 19th November 1979 Mr Edge telephoned Mr Hill's office and left a message which was recorded in the following terms:
"Can you write to people on…maggot farm as Mr E. has had a word with them and they say they won't move out".
On 10th December 1979 Messrs Ray and Vials, the plaintiff purchaser's solicitors, inquired what steps were being taken to remove the occupants of the farm. On 11th December 1979 Mr Edge again tried to speak to Mr Hill. The completion date of 12th December 1979 came and went without completion and with Mr Meek and Mr Holt still in possession. On 28th December 1979 Mr Hill wrote to Mr Edge saying that he had sent papers to counsel for proceedings to be. settled, and that the purchaser's solicitors had agreed to await the outcome of the proceedings. Papers were in fact sent to counsel on 2nd January 1980. On 6th February 1980 Mr Hill wrote to Mr Holt in the following terms:
"We understand that you and a Mr Meek occupy the property as licensees of our client and have done so on an informal basis for some time. We believe you are aware that our client now requires possession of the property and have already written to you in this respect without having any reply from you. Will you please indicate as quickly as possible the earliest date on which you will be able to give vacant possession".
The judge said that he did not see the letter said to have been written "already". Shaw and Ashton, solicitors acting for Messrs Meek and Holt, replied with a letter dated 15th February 1980, setting out what had happened in 1976 and since, and claiming that their clients were tenants and entitled to the protection of the Landlord and Tenant Act 1954. This letter was followed by an opinion of counsel dated 28th February 1980, in the course of which counsel said:
"I have settled pleadings but I hold out no hopes whatsoever for their success".
The substance of counsel's opinion was that there existed a business tenancy of the maggot farm.
No proceedings were launched, but attempts were made to negotiate a removal of the occupants of the farm. On 29th February 1980 Mr Hill wrote to Shaw and Ashton. It was stated that Mr Edge was willing to consider reimbursing the occupants with a sum of £1,000 said to have been spent by them on repairs and there was talk of a payment as well of twice the rateable value of the farm, a sum between £200 and £300 a year. The letter then itemised five complaints against the occupants for the purpose of suggesting that even if a tenancy existed there were grounds for having the tenants removed. (On this last point the Judge commented that Mr Edge said in 'chief that he did not complain about the...
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