Vendor and purchaser informally agreeing boundaries according to plan A – Parties formally contracting both for sale and joint development on basis of plan B – Vendor simultaneously selling adjoining plot to X using drawing consistent with plan B but not plan A – Parties mistakenly carrying out work according to plan A – Purchaser compensating X for substantial encroachment – Whether vendor estopped from setting up plan B in defence to third party claim by purchaser
By a contract made in 1991 the defendant (M) acquired an option from the third party, Bardon 22 Ltd (B Ltd), to buy an area of land (the Milner site) in Coalville, Leicestershire, on terms that, upon exercise of the option, M would construct a warehouse on the site while B Ltd would carry out infrastructure works to the boundary. In early 1992 M, accompanied on the first occasion by his architect (R), attended two site meetings with agents of B Ltd where the boundaries of the site were informally recorded on a plan thereafter called the “blob plan”. On April 3 1992 a supplemental agreement purported to define the Milner site as 3.5 acres of land as shown on a different plan (the contract plan) according to which the southern boundary ran some 22 m north of the line shown on the blob plan. On the same day B Ltd sold to the plaintiff (WB) an area of land (the WB site) lying to the south of the newly defined Milner site. On April 28 1992 M exercised his option. On June 30 1992 the WB site was conveyed to WB. On November 17 1993 R, anxious to see a prompt start on the infrastructure work, wrote to B Ltd enclosing a plan (the R plan) showing what he understood to be the boundaries of the Milner site and asking B Ltd to confirm that understanding. No such confirmation was received despite a similar request made a month later. In fact the R plan was largely based upon the blob plan, R being unaware of the change made by the contract plan. B Ltd passed the R plan to an associated company which carried out the infrastructure works, thus enabling M to start work in September 1994. In January 1995, when M had spent some £300,000, WB complained of a substantial encroachment upon the WB site. Proceedings taken by WB against M were compromised on terms that M should acquire a 0.68 acre strip from WB for £350,000. In third party proceedings against B Ltd it was held that in all the circumstances B Ltd was estopped from asserting that the sale contract was governed by the contract plan. B Ltd appealed.
Held The appeal was dismissed
1. Applying the law as stated in The Vistafjord [1988] 2 Lloyd’s Rep 343, the parties had regulated their dealings on the basis of a convention founded upon their erroneous apprehension of the effect of the supplemental agreement. The trial judge had gone on to rule that B Ltd should not be allowed to resile from that convention because it would be unjust or unconscionable for it to assert its legal rights.
2. B Ltd could not challenge that ruling on the ground that the mistake originated in the production (on behalf of M) of the R plan. While the extent to which the respective parties had brought about the situation was a central consideration (see John v George [1996] 1 EGLR 7) the judge had correctly considered the contribution of B Ltd to the perpetuation of the mistake, notably their failure to comply with requests for confirmation, the passing of the plan to the contractors without checking it against the contract and the fact that B Ltd, unlike M, were at all material times aware of the sale to WB.
Kim Lewison QC and David Stockill (instructed by Edge & Ellison, of Birmingham) appeared for the appellant; John Cherryman QC and Alice Robinson (instructed by Keely Smith Primmer Parkes, of Lichfield) appeared for the respondent.