Exercise of option — Option registered — Option later exercised — Whether additional registration of contract for sale resulting from exercise of option required to warn later potential purchaser from grantor — Master ordering that option holder entitled to specific performance of sale of option land from subsequent purchaser — High Court upholding that decision and holding that no additional registration necessary — Judgment for the plaintiffs
On October 22, 1986, H, the first defendant granted an option, to run for five years, to the plaintiffs to purchase certain land at Fullbrook, Lincolnshire, the title to which was unregistered. In the event that the option was exercised, the price was to be what the land might reasonably be expected to fetch in the open market. If there was any dispute, the price was to be determined by a chartered surveyor or an umpire. On March 22 1988 the option was registered and the plaintiffs exercised their option on October 13. He did not co-operate in fixing the price, but instead contracted to sell part of the option land to trustees of a pension fund. The conveyance was expressed to be subject to and with the benefit of the option agreement in so far as it was still subsisting and capable of being enforced. The trustees later sold the land to D, the second defendant.
On January 28 1991 the land was registered at the Land Registry in D’s name, by way of first registration. It was recorded that the land was conveyed subject to the provisions of the option agreement, but that neither “the original option agreement nor a certified copy or examined extract thereof was produced on first registration”. The plaintiffs claimed against H specific performance in so far as and to the extent that he retained any part of the option land and damages for breach of contract; and against D, specific performance in so far as and to the extent that the option land was in his ownership. Deputy Master Moncaster found in the plaintiffs’ favour, but the second defendant appealed contending that the agreement resulting from the exercise of the option had not been registered as an estate contract under the Land Registration Act 1972 to preserve priority and so was unenforceable against him.
Held The appeal was dismissed.
1. The purpose of the 1972 Act was to give notice of contracts creating interests in land. The original option created an equitable interest in land and that interest was not altered or superseded by some other and different interest on the exercise of the option, although the respective rights and obligations of the grantor and option holder changed.
2. A later potential purchaser from the grantor was sufficiently warned by registration of the option and did not require further registration of the contract of sale envisaged by the option.
3. Accordingly, additional registration of the contract of sale resulting from the exercise of the option was not required.
Michael Michell (instructed by Rutherford Wallace Mitchell, of Nottingham) appeared for the plaintiffs; Nigel Burroughs (instructed by Roythorne & Co, of Spalding) appeared for D.
