Option agreement describing property as freehold property known by its street address – Agreement stating wrong title number and overlooking fact that garage held under separate leasehold title – Whether permissible to adduce extrinsic evidence to show that parties intended the garage to be included
In 1985 the defendants became registered freehold proprietors of their house at 9 Graffam Close, Chichester, title number WSX 92019. At the same time they took a 99-year lease of the ground floor of 10 Graffam Close, a garage with living accommodation above, their leasehold interest being registered as title number WSX 92020. In July 1995 the defendants instructed an estate agent to put their property on the market as a house with garage at a price of £120,000 and the particulars of sale were circulated accordingly. In or about September 1995 the plaintiffs, who had heard about the property from another source, expressed interest in taking a six-month lease of the property together with an option, exercisable during the course of the lease, to buy the property for £110,000. The defendants accepted this proposal, whereupon the parties executed an assured shorthold tenancy agreement for a term of six months commencing October 21 1995.
At or about the same time the parties signed a single-page document entitled “Agreement conferring Option to purchase Freehold”, which had been drafted by the first named plaintiff without professional advice. The subject-matter of the option was described as “the property known as No 9 Graffam Close, Chichester . . . the same as is registered . . . under the number WSX 68508 for an estate in fee simple in possession”. On April 20 1996 the plaintiffs sent a notice purporting to exercise the option and enclosed a cheque for £11,000, being the deposit required by the option agreement. On November 23 1996 the plaintiffs served a 28-day notice to complete the sale of 9 Graffam Close, together with all the items, including certain contents, which had been mentioned in the agent’s particulars of sale. The defendants refused to complete save on terms that would exclude the garage and the contents in question. That issue fell to be determined by a High Court master, where the claim to the contents was dropped. The master, having found that the option agreement extended to the garage, ordered specific performance (the first order) and an inquiry as to damages (the second order). His conclusion was based primarily on the fact that the garage appeared to belong to the house and that its use by the plaintiffs had been contemplated by the contemporaneous tenancy agreement. The defendants appealed.
Held The first order was upheld. The second order was discharged.
1. It was accepted that the description of the property, though partly good, was inaccurate in so far as it referred to a wrong title number and stated the entire property to be freehold. It was also accepted that, by applying the maxim falsa demonstratio non nocet . . . (as expounded in Morell v Fisher (1849) 4 Exch 591 and Re Bright-Smith (1886) 31 Ch E 314) the court could disregard those inaccuracies, provided that the remainder identified the property with sufficient clarity. In that regard the court rejected the defendants’ contention that the master had erred in basing his conclusion on evidence not to be found in the agreement itself. Where property was described as property “known as” it was inevitable that recourse should be had to extrinsic evidence for the purpose of identification: see Spall v Owen (1981) 44 P&CR 36; Targett v Ferguson (1996) 72 P&CR 106.
2. The order as to damages could not be upheld because the plaintiffs’ notice to complete, by calling for transfer of the contents, had insisted upon something that had not been contracted for. Consequently, time had not begun to run for the purpose of putting the defendants in breach.
Charles Holbech (instructed by Maurice Hackenbroch) appeared for the defendant appellants; James Holmes-Milner (instructed by Blairs, of Portsmouth) appeared for the plaintiff respondents.
Alan Cooklin, barrister