Tiverton Estates Ltd v Wearwell Ltd
| Jurisdiction | England & Wales |
| Judge | The Master of the Rolls,Lord Justice Scarman |
| Judgment Date | 20 November 1973 |
| Judgment citation (vLex) | [1973] EWCA Civ J1120-1 |
| Date | 20 November 1973 |
| Court | Court of Appeal (Civil Division) |
[1973] EWCA Civ J1120-1
The Master of the Rolls (Lord Denning),
Lord Justice Stamp and
Lord Justice Scarman.
In The Supreme Court of Judicature
Court of Appeal
Appeal (by leave of Mr. Justice Goulding) by defendants from order of Mr. Justice Goulding on 3rd October, 1973.)
Mr. H. E. FRANCIS, Q.C., and Mr. C. A. BRODIE (instructed by Mr. A.P.S. Huggins) appeared on behalf of the Appellant Defendants.
Mr. PETER OLIVER, Q.C., and Mr. G.A. LIGHTMAN (Instructed by Messrs. Paisner & Co.) appeared on behalf of the Respondent Plaintiffs.
On 10th April of this year this Court decided Law v. Jones (1975) 2 W. L. R.994. It caused consternation amongst the solicitors in this country. They had always understood that, on a sale of land, they could protect their clients by writing their letters "subject to contract". Law v. Jones shattered this belief. To the minds of solicitors, it virtually repealed the statute of frauds. It exposed their clients to liability, even though there was nothing, in writing which acknowledged the existence of a contract. We are now called upon to reconsider that decision. But first I must state the facts of our present case.
Tiverton Estates Ltd. are the owners of a leasehold property known as empire House, 67 to 75 New Road, Stepney. It is registered in the Land registry as a lease for 80 years, from 1934, at a ground rent with Tiverton Estates Ltd. as proprietors. On Wednesday, 4th July, 1973, there was a meeting between Mr. Israel, a director of Tiverton Estates Ltd., and Mr. Nadir, a director of a public company — Wearwell Ltd. Mr. Nadir has made an affidavit in which he says that at that meeting they orally agreed upon a sale of the property by Tiverton to Wearwell for £190,000. They made arrangements about the time when possession should be given of various parts. This being oral, they shook hands on the deal and agreed to instruct their solicitors to confirm the sale.
Each promptly instructed solicitors. On that very day, 4th July, 1973, Mr. Huggins, solicitor for the purchaser, wrote to Mr. Paisner, solicitor for the vendor, this letter:
"We understand that you act for the vendor in respect of the proposed sale of the above-mentioned property to our client Wearwell Ltd. at £190,000 leasehold subject to contract.
We look forward to receiving the draft contract for approval, together with copy of the lease at an early date"
| "Empire House" | 4th July, 1973. |
On the next day Mr. Israel (vendor) telephoned to Mr. Nadir (purchaser) about completion and wrote this letter to him:
"5th July, 1973.
Dear Mr. Nadir,
This is to confirm my telephone conversation with you this morning when you agreed that the completion of the purchase of the property can take place is soon as possible.
Tiverton estates Ltd.
H. D. Israel".
On Monday, 9th July, the vendor's solicitor wrote; to the purchaser's solicitor:
"9th July, 1973.
We refer to your letter dated 4th July, upon which we have taken our client's instructions.
We now send you draft contract for approval, together with a spare copy for your use, "together with a copy of the lease dated 30th October, 1934, and photo-copy entries on our client's land certificate.
We await hearing from you".
In that letter they enclosed a draft contract on the printed form with the National Conditions of dale, together with a few special conditions, one of which was that the "prescribed rate" of interest would be 12% per annum.
In the next few days there was a proposal that the purchasers should not buy the property but should buy the shares of Tiverton Estates Ltd. but this was not pursued. The vendors decided not to go on with the sale. On 19th July 1973, the vendor's solicitors wrote to the purchaser's solicitors:
"19th July, 1973.
We understand that the matter is not now proceeding, and shall be grateful if you would kindly return the papers".
On the next day the purchaser's solicitors replied:
"20th July, 1973.
We are most surprised to learn that your instructions are that the matter is not proceeding.
There is ample evidence that a contract was concluded between our clients.
We have, therefore, this evening sent our pipers to Counsel with a view to commencing proceedings for specific performance. In the meantime we are lording the necessary Cautions it the Land Registry to prevent dealings.
If proceedings are to be avoided, please confirm that your client is willing to proceed on the agreed basis",
On 30th July, 1973, the vendor's solicitors replied:
"30th July, 1973.
".…In our view it is quite clear that no contract or effective agreement between our respective clients has been reached and that any attempt to lodge a Caution is entirely unwarranted….
We ourselves are instructing Counsel with a view to the immediate removal of any purported Caution….".
On 28th August, 1973, the purchaser's solicitors registered a Caution at the Land Registry in favour of Wearwell Ltd. It was entered in the Land Registry on that day.
On 31st August, 1973, the venciors issued a writ, together with a Statement of Claim, claiming a declaration that there was no valid and enforceable contract and asking for an -order that the registration of the Caution be vacated. On 15th October 1973, the purchasers served a Defence and Counter-action. In it they alleged an oral contract on 4th July 1973, to sell the property for 1:190,000. They said that it was intended to be and was a final and concluded contract. They said further:
"Under cover of a letter dated 9th July 1973, and signed by the Plaintiff's solicitors, the duly authorised agents of the Plaintiff, the Plaintiff's solicitors sent to the Defendant a draft for of contract which contained all the essential terms (being the terms of the oral contract expressly hereinbefore set out) of the said oral contract. The said letter and the said draft contract, when read together, constitute a memorandum or note of the said oral contract for the purposes of section 40 of the Law of Property Act 1925".
In the Counterclaim the purchasers claimed specific performance of the contract.
Meanwhile the Vendor's solicitors applied by Motion for anOrder that the entry of the Caution be vacated. On 3rd October 1973, Mr. Justice Goulding ordered that the Caution be cancelled. The purchasers appeal to this Court. The appeal was expedited especially because of the importance of the case to the parties and to the profession.
1. THE PROCEDURAL POINT
Mr. Francis for the purchasers took a procedural point. He urged that the Court could not, or at any rate should not, use a motion so as summarily to vacate an entry before- trial. He said that a party who relied on the absence of writing had to plead the statute of Frauds: and that, on discovery, a memorandum might but found sufficient to satisfy the statute. The only way of dealing with the matter was, he said, by a trial: and, if need be, speedy trial.
I reject this procedural point. The entry of a Caution casts a dark shadow on the property. It paralyses dealings in it. He one will buy the property under such a cloud. If a Caution is entered when it ought not to be, the Court can order the register to be rectified by vacating the entry, see section 82(1)(a) and (b) of the Land Registry Act, 1925: just as it can vacate a land charge under the Land Charges Act 1925, section 10(8), see Heywood v. B. D. C. Properties (1963) 1. W. L. R. 63. The party aggrieved is not confined to his remedy in damages under section 56(3) of the Land Registry Act. I know that the Rules of Court do not prescribe any summary procedure such as Order 14 does for judgment or Order 86 for specific performance. But that is no obstacle. These Courts are masters of their own procedure and can do what is right even though it is not contained in the Rules. If it is drawn to the attention of the Court, by affidavit or otherwise, that a Caution has been entered when it ought not to be, then the Court can order it to bevacated forthwith. In particular, if the cautioner does not adduce any writing sufficient to satisfy the Statute of Frauds (now section 40 of the Law of Property Act 1925), the Court can order the entry to be vacated. If the point depends on the correct interpretation of correspondence, then the Court can decide the matter then and there without sending it for trial. There is no point in going formally to trial when the discussion at the trial would be merely a repetition of the discussion on the summary procedure. We have often decide cases under Order 14 when the only point is one of construction, even though it is a difficult and arguable point. So also under Order 86 in regard to which Lord Justice Russell said in Begg v. Boyd Gibbins (1971) 1 W. L. R. at page 915: "If you have got simply a short matter of construction, with a few documents, the Judge on this summary application should simply decide what is in his judgment the true construction".
So I turn to the point of substance, which is this: Is there any writing sufficient to satisfy the Statute of Frauds, now section 40 of the Law of Property Act 1925 which says:
"No action may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action is brought, or some note or memorandum thereof, is in writing, and signed by the party to be charged, or by some other person thereunto by him lawfully authorised".
During the argument before us, it became clear that there are two lines of authority to be considered. According to the one line, in order to satisfy the statute, the writing must contain, not only the terms of the contract, but also an express or implied recognition that a contract was actually entered into.
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