Sudbrook Trading Estate Ltd v Eggleton
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CUMMING-BRUCE,LORD JUSTICE TEMPLEMAN |
| Judgment Date | 17 March 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J0317-2 |
| Docket Number | 81/0117 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 March 1981 |
[1981] EWCA Civ J0317-2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
GROUP B
(MR. JUSTICE LAWSON, Sitting at Bristol as an additional judge of the Chancery Division)
Royal Courts of Justice,
Lord Justice Cumming-Bruce
Lord Justice Templeman
and
Lord Justice Oliver
(not present when judgment delivered)
81/0117
1980 S No. 113
MR ROGER KAYE (instructed by Messrs Taynton & Son, Gloucester) appeared on behalf of the Defendants (Appellants).
MR GERALD GODFREY, Q.C., and MR MARTIN ROTH (instructed by Messrs Rickerbys, Cheltenham) appeared on behalf of the Plaintiff (Respondent).
I have asked Lord Justice Templeman to deliver the judgment of the court.
In these proceedings the tenants seek to enforce an option in a lease which enables them to purchase the reversion at a valuation and the landlords contend that the option is unenforceable.
The option is contained in a lease dated 23rd March 1949 and made between the respective predecessors in title of the present landlords and tenants. By the lease a property at High Orchard Street, Llanthony in the City of Gloucester was demised for a term expiring on 24th December 1997 at a yearly rent of £2,750 subject to periodical rent reviews. Clause 11 of the lease conferred on the tenants an option "To purchase the reversion in fee simple in the premises hereby demised…at such price not being less than £75,000 as may be agreed upon by two valuers, one to be nominated by the lessor and the other by the lessee and in default of such an agreement by an umpire appointed by the said valuers…".
By three further leases dated 18th November 1955, 30th August 1966 and 26th July 1968 adjoining properties were also demised by the predecessors in title of the present landlords to the predecessors in title of the present tenants for terms ending on 24th December 1997 and each lease contained an option to purchase the reversion on terms identical with the option contained in the 1949 lease, save that different minimum purchase prices are specified in the 1955 and 1968 leases, and no minimum price appears in the 1966 lease.
The tenants having exercised their options to purchase the reversions, the defendant appellants, as landlords, have declined to appoint a valuer. The tenants claim that there exists a contract for the sale of the reversion. In the court below Mr. Justice Lawson, sitting as an additional judge of the Chancery Division, made an order dated 17th November 1980 whereby he declared that the clauses in the leases to which I have referred conferred on the tenants valid options to purchase the reversions in fee simple and that the options had been validly exercised. In this court the tenants have argued that the court will direct the landlords to appoint a valuer if the landlords continue to refuse to do so and will if necessary appoint a valuer and an umpire to determine the price; alternatively if the machinery for the ascertainment of the purchase price indicated in the lease fails for any reason, because the landlords refuse to appoint a valuer or because the valuers can neither agree on a price or on an umpire or because the umpire fails to determine a price, the court will remedy the defective machinery and will carry out the original intentions of the parties by determining the fair price of the reversion which the machinery provided by the lease was obviously intended to produce.
The landlords appeal from the order of Mr. Justice Lawson and in this court claim that there is no contract for the sale of the reversion because the price has not been fixed and the court will not make a contract where none exists. If there is a contract for the appointment of valuers, which appointment might lead to a contract for the sale of the reversion, the court will not make a mandatory order or take any other step to require performance of the contract to appoint a valuer and cannot itself appoint a valuer or an umpire or determine a fair value. The court cannot decree specific performance and has no power to alter or modify the express terms of the contractual relations between the parties embodied in the lease. The tenants cannot demonstrate any damage, and are therefore without remedy. The option is unenforceable.
The ground is encumbered with authority, more ancient than modern. In Milnes v. Gery, (1807) 14 Vesey's Reports 400, there was a contract for sale at a price to be determined by two valuers or an umpire chosen by the valuers. The valuers were appointed but were unable to agree on the choice of an umpire. The vendors sued for specific performance and asked the court to appoint a valuer or to make a valuation. The Master of the Rolls, Sir William Grant, dismissed the action, saying at page 406 "The only agreement into which the defendant entered, was to purchase at a price, to be ascertained in a specified mode. No price having been fixed in that mode, the parties have not agreed upon any price…". And at page 409 the Master of the Rolls said "If you go into a court of law for damages, you must be able to state some valid legal contract, which the other party wrongfully refuses to perform; if you come to a court of equity for a specific performance, you must also be able to state some contract, legal or equitable, concluded between the parties; which the one refuses to execute. In this case the plaintiff seeks to compel the defendant to take this estate at such price as a master of this court shall find it to be worth; admitting, that the defendant never made that agreement; and my opinion is, that the agreement he has made is not substantially, or in any fair sense, the same with that; and it could only be by an arbitrary discretion that the court could substitute the one in the place of the other".
That was a case in which there had been no misconduct either on the part of the contracting parties or on the part of the valuers appointed by them. The machinery had broken down and the court was powerless to substitute other machinery.
In Gregory v. Mighell, (1811) 18 Vesey's Reports, a tenant had been in possession for eleven years under an agreement for a lease for twenty-one years at "a fair and just annual rent, to be fixed and ascertained by two valuers to be chosen by the landlord and the tenant respectively or their umpire. Valuers were chosen but the landlord refused to sign arbitration bonds and the valuers refused to proceed unless such bonds were signed. The Master of the Rolls, Sir William Grant, made an order for specific performance of the agreement for a lease and directed the master to ascertain the fair rent, saying at page 333 "after it was known, that the arbitrators had not fixed any rent, and that none of the other means, provided by the agreement, were resorted to, the defendants still acquiesced in the plaintiffs retaining possession of these lands. That was a case in which the failure of the arbitrators to fix a rent can never affect the agreement. It is in part performed; and the court must find some means of completing its execution;…the plaintiff is not to be considered as a trespasser. Some rent he must pay; the amount must be fixed in some other mode;…it should be ascertained by the master, without sending it to another arbitration; which might possibly end in the same way".
That was a case in which it could not be said that there was no agreement because the parties had acted for eleven years on the basis that the agreement subsisted. It was also a case in which one of the contracting parties was at fault in not performing his duty to ensure that the valuers duly valued.
In Blundell v. Brettargh, (1810) 17 Vesey Junior's Reports 232, there was a contract for sale at a price to be fixed by two valuers or their umpire in writing under seal before 1st July. The valuers agreed the valuation by 10th June, but did not complete the written award until 24th June by which time one of the contracting parties had died. The Lord Chancellor, Lord Eldon, held that on the construction of the agreement the award was required to be made during the joint lives of both contracting parties. He refused to order specific performance, saying at page 243 "there is no instance, where the medium of arbitration or umpirage, resorted to for settling the terms of a contract, having failed, that this court has assumed jurisdiction to determine, that, though there is no contract at law there is a contract in equity; and this court will specifically execute that contract, to which the parties never agreed".
This was another case in which the machinery for fixing the price agreed between the parties failed without any default on either side.
In Morse v. Merest, (1821) 6 Maddock & Geldart's Reports 26, there was a contract for sale of an estate at twenty-five years' purchase based on an annual value to be fixed by three named valuers on or before a certain day. The vendor refused to allow the valuers to enter the estate and they were therefore unable to make their valuation before the time expired. The Vice Chancellor, Sir John Leach, granted an injunction ordering the vendor to permit the valuation to be made, saying that "in equity a defendant was not permitted to set up a legal defence which grew out of his own misconduct and…this agreement was now to be acted upon as if no time were limited, or the time was not past".
This was a case where one of the contracting parties was in default and the...
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