SSJ Properties Ltd v Omorinsola Osinaike
| Jurisdiction | England & Wales |
| Judge | Mr Martin Griffiths |
| Judgment Date | 30 March 2017 |
| Neutral Citation | [2017] EWHC 1454 (Ch) |
| Court | Chancery Division |
| Date | 30 March 2017 |
| Docket Number | Case No: CH-2016-000188 |
[2017] EWHC 1454 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
7 Rolls Buildings
Fetter Lane
London
EC4A 1NL
Mr Martin Griffiths QC
Sitting as Deputy High Court Judge of the Chancery Division
Case No: CH-2016-000188
Mr Russell Stone (instructed by Jaswal Johnston LLP) appeared on behalf of the Claimant
Mr Janaka Siriwardana (instructed by Marsh & Partners) appeared on behalf of the Defendant
THE JUDGE: This is an appeal from an order of Master Price, which he made on 6 July 2016. He found in favour of the claimant in the action, the respondent to the appeal, on the true construction of a settlement agreement, dated 23 December 2015 ("the Settlement Agreement"), and ordered specific performance of the terms of that agreement. The appeal is brought with the permission of Warren J.
The hearing before Master Price was made more difficult because the appellant, unfortunately, lost the benefit of legal representation and was, therefore, not represented at the hearing itself, although it seems she had been represented right up until that hearing. Warren J, when giving permission to appeal, expressed the hope that the appellant would be able to obtain legal representation before the appeal, because he was concerned that she could not be expected, as a lay person, to understand and formulate the arguments that might have open to her without legal assistance. I want to pay tribute to Mr Siriwardana, who has come in today as her legal representative, and who has greatly assisted me, and strengthened his client's case, by his submissions, by his command of the material and by his ability to respond to my questions to him.
The background to the dispute begins with a contract of sale ("the Contract of Sale") between the appellant as the owner of a property and the respondent as the proposed purchaser. The property was a flat at 79 Wimborne House, Dorset Road, London SW8 1AG. The Contract of Sale was dated by hand 15 October 2014. I have been shown two versions of it: one signed by or on behalf of the appellant and one signed by or on behalf of the respondent. I am told, and I accept, that those two counterparts are in identical terms, although the layout is slightly different and there are one or two lines which, it was suggested, should be seen as lines of deletion in one of the versions. Since the Contract of Sale was subsequently superseded by settlement documentation on both sides' case, I do not, perhaps, need to go into much detail, except to note that it provided for transfer of the property on a completion date which was to be defined in an interpretation clause at clause 1.1 of the Contract of Sale. In fact, the completion date is not typed into that definition clause, but a hand written reference has been added which says "See clauses 17 + 18 of this contract". When one turns forward to clauses 17 and 18 of the Contract of Sale, one sees that clause 17 provides that "Completion will take place 3 months after the date of this agreement": that is to say, in January 2015, which is three months after the date of the Contract of Sale, which is 15 October 2014. There are then provisions for the release of keys and consequential provisions.
Disputes arose. On 27 April 2015 proceedings for specific performance of the Contract of Sale were issued by the claimants in the action, the respondents to the appeal.
The next key date is 23 December 2015. On that date, three documents were executed by both parties, or agreed to by both parties. First of all, there was a Settlement Agreement (the Settlement Agreement which was the subject matter of the application for specific performance which succeeded before Master Price). On the same date, there was a Deed of Variation, which is referred to in the Settlement Agreement, which changed the completion date provided for in the Contract of Sale, so that, instead of falling in January 2015, it was varied to fall on 14 April 2016. Thirdly, and finally, there was a Tomlin order ("the Tomlin Order"). The Tomlin Order was referred to in the Settlement Agreement and the Settlement Agreement was referred to in the Tomlin Order. The Tomlin Order, like the Settlement Agreement and the Deed of Variation, is dated 23 December 2015.
The difficulty in the case is that the Settlement Agreement contains two critical definitions, which, unfortunately, appear to work inconsistently with each other in the operation of the Settlement Agreement. The Settlement Agreement defines "Completion Date" as "14 April 2016, the completion date of the Contract". That reference is accurate, in the sense that, as I have said, the Deed of the Variation did indeed change the completion date provided for by the Contract of Sale to 14 April 2016. The definition section also defines the expression "Permitted Period" as "the period commencing on the date of this agreement and terminating six calendar months after the date of this agreement". Since the Settlement Agreement was dated and executed 23 December 2015, the Permitted Period, if it was to terminate six calendar months after the date of the Settlement Agreement as stated in the definitions section, would end in June 2016.
Both parties agree that those two provisions are inconsistent with each other. The question that the Master was asked to decide was whether he felt able and willing, either to construe the Settlement Agreement so that the two provisions were brought into alignment with each other, or to rectify the Settlement Agreement in order to achieve the same effect.
The difficulty is that, although both parties say that the two definitions should be brought into alignment with each other, they take opposite positions on which of the definitions should prevail over the other.
Both parties have asked me to consider the question, first of all, as a question of construction. That was also the position that was adopted by the claimants, the respondents to the appeal, before Master Price, because, although the application sought both rectification and a declaration about their preferred construction, I am told by Mr Stone (who appeared before me and also appeared before the Master, although the transcript mistakenly misnames him), and I accept from what he says, that the argument that he ran was primarily one of construction. In addition, Mr Siriwardana before me has in the course of argument made it plain that his primary case, and I think by the end he was saying his sole case before me, was that the reconciliation should be performed in the way that he prefers as a matter of construction rather than as a matter of rectification.
I will, first of all, therefore, consider the question of construction. In doing that I will apply the principles set out in well-known authorities, including Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896, in the House of Lords, Chartbrook v Persimmon Homes Limited [2009] UKHL 38, [2009] 1 AC 1101, also in the House of Lords, and Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900, in the Supreme Court.
The judgment of Lord Hoffmann in Chartbrook deals, in particular, with the suggestion, which is made by both sides in this case, that a particular construction should be put on the Settlement Agreement because a mistake was made which is so obvious that it can be corrected by construing the document as a whole and in the context in which it was agreed. At paragraph 14 of Chartbrook Lord Hoffmann says:
"There is no dispute that the principles on which a contract (or any other instrument or utterance) should be interpreted are those summarised by the House of Lords in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912–913. They are well known and need not be repeated. It is agreed that the question is what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. The House emphasised that 'we do not easily accept that people have made linguistic mistakes, particularly in formal documents' (similar statements will be found in Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251, 269, Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2005] RPC 169, 186 and Jumbo King Ltd v Faithful Properties Ltd (1999) 2 HKCFAR 279, 296) but said that in some cases the context and background drove a court to the conclusion that "something must have gone wrong with the language". In such a case, the law did not require a court to attribute to the parties an intention which a reasonable person would not have understood them to have had."
He goes on to say at paragraph 15:
"It clearly requires a strong case to persuade the court that something must have gone wrong with the language …"
At paragraph 22 of his judgment Lord Hoffmann said:
"In East v Pantiles (Plant Hire) Ltd (1981) 263 EG 61 Brightman J stated the conditions for what he called 'correction of mistakes by construction':
'Two conditions must be satisfied: first, there must be a clear mistake on the face of the instrument; secondly, it must be clear what correction ought to be made in order to cure the mistake. If those conditions are satisfied, then the correction is made as a matter of construction.'"
At paragraph 23 Lord Hoffmann says:
"Subject to two qualifications, both of which are explained by Carnwath LJ in his admirable judgment in KPMG LLP v Network Rail Infrastructure Ltd [2007] Bus LR...
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