Contract for sale of leasehold interest — Motion by defendant purchaser to strike out as frivolous and vexatious and an abuse of the process of the court the plaintiff vendors’ statement of claim in an action originally framed as for specific performance and damages, subsequently for damages only — Contract contained a provision that both parties would use their best endeavours to complete the purchase by a named date — At the date of contract for sale of leasehold the vendors’ interest had already been forfeited, although they had still a possible claim for relief — At the date of issue of the plaintiffs’ writ and statement of claim a summons for relief from forfeiture had not yet been heard and was not yet heard when the present motion came before the Vice-Chancellor — When the defendant discovered that the plaintiffs had no title at the date of the contract she gave notice that she treated the contract as rescinded — The plaintiffs thereupon entered interlocutory judgment against her for damages in default of defence, abandoning the claim for specific performance — At the same time the defendant issued the present motion to strike out the statement of claim — It was argued by plaintiffs that time was not of the essence of the contract and that it was sufficient if they could show that there was a strong probability of their obtaining relief against forfeiture so as to perfect their title before completion — Held that time was of the essence, although not expressly so in the contract, because the lease was a wasting asset, and this was not negatived by the ‘use their best endeavour’ provision — Vendors were in breach of their obligation to complete in time, even allowing a tolerance for ‘best endeavours’ — Even if time was not of the essence, the defendant purchaser was entitled to treat the contract as repudiated as soon as she discovered that the plaintiffs had no title — She had no obligation to wait until the last day for completion — This applied both at law and equity, both to remedies in damages and specific performance — Statement of claim struck out, plaintiffs’ action dismissed and interlocutory judgment for damages set aside — An illustration of the tribulations faced by a purchaser who buys a leasehold interest which has already been forfeited
This was a
motion by Miss Martha Walton to strike out the plaintiffs’ statement of claim
under RSC Order 18, rule 19, in an action against her as defendant. The
plaintiffs’ action was commenced by writ with statement of claim endorsed on it
and sought specific performance and damages in respect of a contract by the
defendant to purchase a leasehold interest held by the plaintiffs in certain
premises.
Robert
Wakefield (instructed by Randall Sinnatt & Clarke, of Brighton) appeared on
behalf of the plaintiffs; Thomas Craven (instructed by Crutes, of Newcastle
upon Tyne) represented the defendants.
Giving
judgment, SIR ROBERT MEGARRY V-C said: This is a motion by the defendant to
strike out the statement of claim under RSC Order 18, rule 19, as being
frivolous and vexatious, or an abuse of the process of the court, and also
under the inherent jurisdiction, and for an order dismissing the action. The
facts are relatively simple, but they raise points of principle on the law of
vendor and purchaser. By a letter dated November 8 1979 the plaintiffs, a
limited company which I shall call ‘the vendors’, purported to confirm their
acceptance of an offer by the defendant (whom I shall call ‘the purchaser’) to
purchase the vendors’ lease of certain premises for £170,000, subject to the
purchaser’s references being accepted by the landlords. The letter stated that
the term of the lease was 21 years from April 30 1974; in fact, it is 21 years
from April 16 1974, though no point has been taken on this. The letter also
stated that ‘it is understood that both parties will use their best endeavour
to complete the purchase by Monday December 3 1979’. The purchaser signified
her acceptance of the terms by signing a duplicate copy of the letter. For
convenience, and without prejudice to the purchaser’s contentions, I shall call
this letter ‘the contract’.
No other
conditions of sale were stated, and the contract does not appear to be a
contract by correspondence within the Law of Property Act 1925, section 46, so
that the contract is indeed an open contract. The purchaser does not accept
that the letter is capable of constituting either a binding contract or
sufficient evidence in writing of a contract, or even if it is, that there is
an enforceable contract. However, even if this is wrong, the purchaser contends
that by reason of certain other facts, to which I shall turn shortly, the
statement of claim ought to be struck out.
Before I reach
these facts, I must carry matters a little further. December 3 1979, the
contractual completion date (if indeed it were such), came and went without
much progress having been made. After signing the contract, the purchaser had
consulted solicitors; and on November 30 they had sent to the vendors’
solicitors a document entitled ‘Enquiries before Contract’. On December 11 1979
the vendors’ solicitors answered these. One question was ‘Has the lessor
complained of any breach of covenant?’, and the answer to this was ‘No’. The
contract seems to have continued to hang fire until on March 16 1980 the
vendors issued a writ against the purchaser with a statement of claim endorsed
upon it. This alleged that the vendors were and had been ‘at all material
times, ready and willing to complete the contract’; and specific performance
and damages were claimed.
At that stage
a striking set of facts emerged. The purchaser first had notice of these facts
in a letter of April 9; and on April 16 a letter from the lessors’ solicitors
gave the purchaser’s solicitors some details. Put shortly, what had happened
was this. On October 1 1979 the lessors issued a writ against the vendors,
claiming forfeiture of the lease and arrears of rent dating back to September
1978 and amounting to over £32,500, with mesne profits at the rate of £35,000 a
year until possession was delivered up. That writ was served on October 2 or 3
1979, and so on that date the lease was forfeited, subject, of course, to the
subsequent proceedings establishing that the forfeiture was justified. That
posed no difficulty in this case, since on November 28 1979 the landlords
obtained judgment in default of defence for possession and the sums claimed by
the writ. Over a month went by, and then on January 3 1980 the vendors issued a
summons claiming relief against forfeiture and a stay of execution; a stay for
two months seems already to have been granted. That summons had yet to be heard
when this motion came before me.
When the
purchaser had discovered this, her solicitors wrote to the vendors’ solicitors
about it on April 18. On April 21 they wrote a further letter to them. This
stated that the vendors were in breach of contract as never having been ready
and willing to make title, and it gave notice that the purchaser accepted the
vendors’ breach of the alleged contract and repudiation, ‘whereby our client
treats the alleged contract as rescinded’. The vendors’ response was to enter
interlocutory judgment against the purchaser in default of defence for damages
to be assessed, the vendors abandoning the claim to specific performance. This
was done on April 24; and on the same day the purchaser issued the notice of
motion to strike out the statement of claim which is now before me. When the
motion came on Mr Craven, on behalf of the purchaser, sought leave to add a
prayer to set aside the judgment in default of defence against the purchaser;
and in the absence of any objection by Mr Wakefield on behalf of the vendors I
allowed this amendment.
The state of
affairs is thus as follows. First, on November 8, when the contract was made,
the vendors had no lease to sell: it had been forfeited over a month earlier,
and no claim for relief had been made. Second, the answer given by the vendors’
solicitors to the inquiry by the purchaser’s solicitors as to whether the
lessors had complained of any breach of covenant was blatantly untrue. At this
stage I do not propose to comment on giving the answer ‘No’ when the true reply
must have been ‘Yes; and the lessors have issued and served a writ claiming
forfeiture for arrears of rent’. When I have concluded this judgment I propose
to afford the solicitors concerned an opportunity of explaining how this untrue
answer came to be given. Third, when the vendors issued the writ on March 16
claiming specific performance and damages, and alleged in the statement of
claim that the vendors were and had been ‘at all material times ready and
willing to complete the contract’, the lease had long been forfeited and the
summons for relief had yet to be heard. Having contracted to sell a lease, the
vendors at all material times never had more than a hope of obtaining relief
from forfeiture.
I cannot see
how in any fair sense of the words the vendors could be said to have been
‘ready and willing’ to complete the contract then or at any time in the past;
for they had never at any time after the contract was made had what they had
contracted to sell (namely, the lease) or any right to obtain it or require it
to be conveyed. True, the customary word ‘able’ does not appear in the
assertion; but I do not see how anyone could honestly assert that he is ‘ready
and willing’ to do something which he knows that he is unable to do. The words
‘ready and willing’ necessarily connote being also ‘able’: see, for example, Cort
v Ambergate Nottingham etc Railway (1851) 17 QB 127 at 144. In the
words of Lord Abinger CB in De Medina v Norman (1842) 9 M&W
820 at 827, ‘The words ‘ready and willing’ imply not only the disposition, but
the capacity to do the act’. I appreciate, of course, that pleadings are not on
oath; but when I have concluded this judgment I shall listen to any explanation
that there may be about how this misleading assertion came to be made.
At the outset,
it did not seem to me that there would be much difficulty in deciding the case
within the proper limits of Order 18, rule 19, and the inherent jurisdiction.
There is a measure of impudence about an action for specific performance and
damages brought by a vendor who at no material time has had any title or any
right to acquire one. As the argument proceeded, however, I found it
increasingly difficult to regard the case as being ‘plain and obvious’, and I
began to doubt whether I ought to deal with it either under the rule or the
inherent jurisdiction. However, no point on this was taken by counsel, and in
the end, after considerable argument, I came to the conclusion, though by no
great margin, that it would be proper to deal with it in this way and
burdensome to require the case to go to trial.
Mr Wakefield’s
main contention was that the absence of any title to the lease at the date of
the contract was no bar to his success. All that he need do was to be in a
position to convey what he had contracted to convey when the time came for
completion. Time, he said, was not of the essence of the contract and the
purchaser had failed to do what she could have done, namely, to give a
completion notice which made time of the essence. He further relied on the
decision in Meadows v Clerical Medical and General Life Assurance
Society [1980] 2 WLR 639 as showing that after a lease has been forfeited,
it still retained some shadowy form of existence so long as an application for
relief against forfeiture was pending. The decision in that case was that such
a lease had not come ‘to an end by . . . forfeiture’ within the Landlord and
Tenant Act 1954 section 24(2), and so it sufficed a tenant as supporting a
claim to a new tenancy under that Act. Accordingly, the vendors were not in the
position of vendors who had no title whatever to the lease that they had
contracted to sell. It clearly sufficed a vendor if between contract and completion
he perfected his title, as by obtaining consents to assign or getting in an
outstanding legal estate, and so here it sufficed the vendor if relief against
forfeiture was obtained before actual completion.
Mr Wakefield
further contended that as it sufficed the vendor if he could show that title
could be made by a third party whom he could compel to convey the land, it
sufficed if the vendor had, as in the present case, a strong prospect of
obtaining the lease by being granted relief against forfeiture. Mr Wakefield
supported this contention by saying that where a vendor’s power to compel a
third party to convey the land sprang from the vendor’s having made a contract
with that third party to buy the land from him, the vendor’s power to convey
depended upon his right to specific performance of the contract; and as
specific performance was a discretionary remedy, and the vendor had no real
certainty of being able to compel the third party to convey the land, it was
plain that a high degree of probability, falling short of certainty, sufficed
for this purpose. Correspondingly, he said, a lessee seeking relief against
forfeiture for non-payment of rent had a high degree of probability of
obtaining relief, and so this sufficed.
I shall first
consider whether time was of the essence for the contract. As a matter of
language, plainly it was not. There was nothing in the contract to make time of
the essence, and no notice to make time of the essence had been given. Nor does
the language of the contract encourage any inference that time is to be of the
essence: the agreement is not that the parties will complete on December 3
1979, but that they will ‘use their best endeavour’ to complete it by then.
However, time may, of course, be made of the essence of the contract by force
not of the language of the contract but of the subject-matter. One instance of
this is where the property sold is a wasting asset.
In Hudson v
Temple (1860) 29 Beav 536 a lease for 30 years was sold when nearly five
and a half years had run; and a term in the contract made time of the essence.
Sir John Romilly MR, as reported in 29 Beav 543, said that time had not only
been made of the essence by express stipulation, ‘but the character of the
property sold would of itself make time of the essence of the contract, for
where the property is wasting, as if a man agree to take a lease of mines, or
to purchase leaseholds, time is of the essence of the contract. . .’. The
report completes the sentence with the four words ‘where it is specified’; but this
seems plainly wrong. It is contrary to the sense of the passage, and there is
no trace of these four words in other reports of the case: see 30 LJCh 251 at
254, 7 Jur (NS) 248 at 250, 9 WR 243 at 246, and 3 LT 495 at 497. The passage
in the Law Journal report, for instance, runs: ‘If a property is wasting
or running out, pending the completion, as in cases of leaseholds and mines,
equity itself makes time of the essence of the contract’. I may add that the
reprint of Beavan’s report in vol 54 of the English Reports at p 738
makes what is, after all, ‘late Beavan’, even worse, by printing ‘wasting’ as
‘vesting’.
In the case
before me, the lease was for 21 years from April 16 1974, so that over five and
a half years had run at the date of the contract. A lease for 21 years with
less than 15 1/2 years to run is even more of a wasting asset than the lease
for 30 years with over 24 1/2 years to run that was the subject of Hudson v
Temple, supra. Accordingly, apart from the language of the contract, I
would hold that time was of the essence of this contract. Mr Wakefield invited
me to refuse to follow Hudson v Temple; but he failed to persuade
me that there were any good grounds for doing so. The principle, I think, is
that time is of the essence where what is sold is property ‘which by delay will
not be of the same value as at the time of sale’: Withy v Cottle (1823)
Turn & R 78 at 80, per Lord Eldon LC. The
the essence.
It is now clearly
settled that under a contract for the sale of land with a fixed date for
completion, the contract has the same meaning in law and in equity, and that it
is broken, both at law and in equity, if completion does not take place on that
date, even if time has not been made of the essence. The intervention of equity
in cases where time was not of the essence was, first, by way of allowing
proceedings for specific performance to be brought even though the date for
completion had passed, and, second, I think, by preventing a party in
proceedings at law from treating the contract as having been determined by
repudiation merely by reason of failure to complete on that date. See generally
Raineri v Miles [1979] 3 All ER 763, affirmed by the House of
Lords as [1980] 2 All ER 145. I must therefore first determine the meaning of
the contract in this case, and then consider whether it has been broken, and,
if it has, what are the consequences of the breach.
I would
construe a contract by the parties to ‘use their best endeavour’ to complete a
purchase by a given date to mean what it says. ‘Best endeavours’ are something
less than efforts which go beyond the bounds of reason, but are considerably
more than casual and intermittent activities. There must at least be the doing
of all that reasonable persons reasonably could do in the circumstances. I
think that this view accords with Terrell v Mabie Codd & Co Ltd [1952]
2 TLR 574. The question, then, is one of the effect of the words of the
contract, thus construed, on time having been made of the essence of the
contract by reason of the nature of the subject-matter.
I do not think
that the words suffice to negative time being of the essence. Instead, I think
that they substitute a time defined not solely by the fixed date of December 3
1979, but a time defined by that date as qualified by the provision as to best
endeavours. The words do not negative the essence but alter the time; the
contract is to be completed by December 3 or so soon thereafter as the exercise
of the best endeavours of the parties would make it possible to complete. It
follows that if one of the parties does not exercise his best endeavours, at
any rate after December 3, the other party can claim that the term in the
contract as to time has been broken.
Now in this
case the vendors, knowing that the lease had been forfeited for non-payment of
rent, contracted on November 8 1979 to use their best endeavours to complete
the transaction by December 3 1979. Only by defeating the action for possession
or obtaining relief against forfeiture could they enable themselves to convey
what they had contracted to convey. After judgment for possession had been
given against them on November 28 1979 only relief against forfeiture would
suffice them: unless they obtained relief, they could not complete on December
3 or, indeed, on any date. How, then, did they discharge their obligation under
this head of using their best endeavours to complete by December 3? The short answer is ‘By doing nothing for two
months’. For the first three weeks or so, until judgment for possession was
obtained against them on November 28, they did not even seek relief against
forfeiture in the lessors’ action. Neither in the next four days before
December 3 nor in the month following did they apply for relief: they did not
issue the summons for relief until January 3 1980. It seems to me that this
delay, whether described as eight weeks from the date of the contract or five
weeks from the order of possession, could not possibly be described as anything
short of a substantial breach of the vendors’ obligation to use their best
endeavours to complete by December 3.
That is not
all. If a vendor contracts to use his best endeavours to complete by a given
date, I think that the purchaser is entitled to assume that the endeavours are
to be endeavours which relate to a normal conveyancing transaction on the facts
known to the purchaser. If a vendor contracts to sell land without revealing
that he has no title to it, and no right to compel it to be conveyed, I do not
think that he can claim that the time while he is using his best endeavours to
acquire the land is time which can be added on to the given date before he will
be in breach of contract. Time taken while the vendor is doing his best to
arrange for mortgages to be discharged or necessary consents to be obtained or
inquiries or requisitions to be answered is one thing; time taken by his
efforts to obtain the title which the purchaser justly assumed that the vendor
was already entitled to convey is very much another. If a vendor wishes to be
allowed the time taken in the latter type of best endeavours, he must disclose
his lack of title in time for his agreement to use his best endeavours to be
understood and construed in relation to it by the purchaser.
In the result,
I consider that this was a contract in which time was of the essence, and that
long before the purchaser sent her letter of rescission on April 21 the vendors
were in breach of their obligation to complete in time; for they had not used
their best endeavours to complete on December 3 or, for that matter, reasonably
soon thereafter, and they could not rely on any endeavours of theirs to obtain
relief from forfeiture as extending their time. If it is necessary to specify a
precise date by which completion should have taken place, I would, for the
reasons that I shall give later in this judgment, allow not more than 28 days
from December 3, thereby making December 31 the last day for completion.
I turn to the
other main issue between the parties. If I am wrong in holding that time was of
the essence of the contract, and in holding that the vendors were in breach of
their obligation to complete, even though no completion notice had been served
on them, was the purchaser nevertheless entitled to treat the contract as
having been repudiated by the vendors when she discovered that the vendors had
no title to the lease? Plainly the
purchaser acted promptly enough, for her letter treating the contract as being
rescinded was sent on April 21, written a fortnight after the first warning of
the vendors’ lack of title. But if, contrary to my view, the vendors were still
in time to complete then, it is open to a purchaser to treat the contract as
being at an end, both at law and in equity, on discovering that the vendor
cannot make title or compel someone else to make it? Or must the purchaser wait until the last day
for completion has gone by?
The principle
was laid down by Sir John Romilly MR in Forrer v Nash (1865) 35
Beav 167 at 171. ‘When a person sells property which he is neither able to
convey himself nor has the power to compel a conveyance of it from any other
person, the purchaser, as soon as he finds that to be the case, may say, ‘I
will have nothing to do with it’. The purchaser is not bound to wait to see
whether the vendor can induce some third person (who has the power) to join in
making a good title to the property sold.’
That was a case in equity where specific performance was claimed; it was
not a claim for damages at law. In Bellamy v Debenham [1891] 1 Ch
412 the principle was applied where the purchaser had treated the contract as
being rescinded before the time for completion had expired. There was an
alternative claim for damages in that case which failed because the vendor had
not got in the title even by the date when completion was due; but Lindley LJ,
at pp 420, 421, suggested that the vendor might have been able to claim
damages, despite the purchaser’s rescission, if the vendor had thereafter
completed his title before completion was due. In Halkett v Earl of
Dudley [1907] 1 Ch 590 at 596, Parker J expressed the view that the
principle applied only to the remedy of specific performance and did not apply
to damages at law. As appears from what Harman J said in Elliott v Pierson
[1948] Ch 452 at 455, 456, the principle is an exception from the ordinary
rule that a man may validly contract to sell what he has not got, arising out
of the peculiar difficulty of making title to land in England: and see Price
v Strange [1978] Ch 337 at 355.
Now in this
case there is no question of specific performance, since the vendors have
abandoned any claim to it and have instead entered interlocutory judgment for
damages alone. Does the principle apply to such a claim? The dicta that I have mentioned suggest that
it does not. However, I am not sure that all the authorities have been duly
considered. In Brewer v Broadwood [1882] ChD 105, which was not
cited in Halkett v Earl of Dudley [1907] 1 Ch 590, Fry J applied
the principle to a case in which the only claim was for damages for breach of a
contract which had been made less than six days before the repudiation. In Roper
v Coombes [1827] 6 B & C 534, a contract was made in March to
grant a lease for 21 years from Michaelmas, with the lessee paying £10 down and
£90 in April. The lessor demanded the £90 in April but refused to show his
title to
the contract and, without waiting for September, sued for the return of his
£10. The Court of King’s Bench held that he was entitled to it, and also to
refuse to pay the £90, since the contract had been validly rescinded by the
time that the action had been commenced. This case shows, I think, that as soon
as a vendor with no title seeks to enforce the contract against the purchaser,
the purchaser may thereupon terminate the contract at law even if the time for
completion has not arrived. In the case before me, on March 16 1980 the vendors
commenced their action to enforce the contract, and this, if no more, entitled
the purchaser to terminate the contract on April 21. Again, in Re Hucklesby
and Atkinson’s Contract (1910) 102 LT 214 at 217, on a vendor and purchaser
summons not involving any question of specific performance, Eve J stated the
principle, in perfectly general terms, as being the purchaser’s right to
repudiate the contract as soon as he discovers the vendor’s lack of title.
I find some
difficulty in the concept of a right of rescission which operates in equity but
not at law as relieving the purchaser from specific performance, but leaving
him exposed to an action for damages if the vendor obtains a proper title
before the last day for completion. Contracts for the sale of land differ from
most other contracts for sale in that they contemplate a period between
contract and completion which will suffice, inter alia, for the investigation
of title. If the day after the contract is made the vendor tells the purchaser
that he, the vendor, has no title, but that he has hopes of getting title in
time for completion, so that until he has got it he cannot deduce title, I
cannot see much justice in telling the purchaser that he can rescind the
contract forthwith so as to escape from specific performance, but that if he
does so he will remain at risk of damages in case the vendor succeeds in
obtaining a title in time. Of course, properly drawn conditions of sale may
well obviate the difficulty; but as this case shows, not all contracts have
such conditions. The vendor is often said to be under a duty to disclose any
latent defects in his title; and on this footing it would be strange if, having
failed to disclose a complete but latent absence of any title at all, he were
to be held able to recover damages if he obtains a title by the time for
completion. His so-called duty of disclosure may instead be regarded more of a
warning to him that if he does not disclose latent defect of title he will not
be able to require the purchaser to take such title as he has as constituting
compliance with his obligation to convey what he has contracted to convey. But
however it is put, I would, despite some hesitation in view of the state of the
authorities, hold that upon discovering that a vendor has no title or power to
convey what he has contracted to convey, the purchaser may thereupon treat the
contract as at an end, both at law and in equity. In saying that, I speak only
of defects such as the absence of title in this case, and not of minor
deficiencies, removable defects and so on. In the end Mr Wakefield accepted the
view that I have tried to express as being the position at first instance,
while reserving his right to challenge it on appeal.
How, then,
does this apply to the facts of this case?
At the date of the alleged rescission the vendors plainly had neither
the power to convey the leasehold interest nor the power to compel anyone else
to convey it, so that on the face of it the case falls within the principle of Forrer
v Nash, supra. Mr Wakefield’s escape from this conclusion was that
the vendors, with their pending application for relief against forfeiture, had
as great an expectation of being able to convey the leasehold as a vendor who
had to rely on the specific performance of his contractual right to compel a
third party to convey it: I summarise briefly the argument that I have already
set out.
The argument
is ingenious; but I think that it is unsound. Contracts for the sale of land
are based on ownership and rights, and not on mere hopes or expectations,
however well founded. A vendor whose contract is supported by an enforceable
right to compel a third party to convey the land has a right in support of his
contract; and this is so even if in the event his right proves, exceptionally,
not to be specifically enforceable but sounding only in damages. A vendor who
has no more than the benefit of an unenforceable promise to give him the land,
or a claim to relief against forfeiture, has no right which supports his
contract, however well-founded his expectations. If disappointed, he has no
claim to specific performance or damages, but only his feelings of regret. In
my opinion, a vendor who lacks any title to the land that he has contracted to
convey, and also lacks any rights to compel a third party to convey it, cannot
escape from the principle of Forrer v Nash, supra, by pointing to
his prospects of obtaining a title by being given relief against forfeiture,
however excellent those prospects are. He has power neither to convey the land
nor to compel anyone else to convey it, and that is the end of the matter. As
for the Meadows case, supra, I do not think this does more than
show that for the purposes of the Landlord and Tenant Act 1954, Part II, a
subsisting claim for relief against forfeiture prevents a lease from having
‘come to an end by . . . forefeiture’; and that is very different from holding
that such a claim gives a vendor any title or right to compel the conveyance of
the leasehold interest. In the result, I hold that when the purchaser rescinded
the contract, the vendors’ subsisting claim for relief against forfeiture did
not take the case out of the principle of Forrer v Nash, supra,
and so did not prevent the rescission from being effective.
There is one
other aspect to be considered if I am wrong in holding time to be of the
essence. If a vendor has no title at the contractual date for completion, that
provides the purchaser with a complete defence to an action by the vendor for
damages at law for breach of the contract: see Bellamy v Debenham [1891]
1 Ch 412 at 421, per Lindley LJ, and at p 422 per Lopes LJ. In the case before
me, the vendors had no title either on December 3 1979 or at any reasonable
time thereafter. If a further 28 days is allowed as a reasonable tolerance to
take account of the provision for best endeavours, then still the vendors had
no title: they had not even applied for relief against forfeiture. If a
contract fixes no date for completion, there is an implied term that completion
is to take place within a reasonable time, to be measured by the time needed
for the legal business connected with investigating title and preparing
documents: see Simpson v Hughes (1897) 66 LJ Ch 334; Johnson v
Humphrey [1946] 1 All ER 460 at 463. Where, as here, the contract states
a date for completion which is qualified by words of best endeavour, I would
readily imply a reasonable limit to the time by which the best endeavours may
postpone completion; and on the facts of this case 28 days seems ample.
Accordingly, at the end of the 28 days, if not before, the purchaser had ‘a
complete defence to an action at law for damages’: I borrow the words of
Lindley LJ in Bellamy v Debenham, supra, at p 421. I cannot see
that anything has deprived her of that defence.
It has taken a
little while to get there, but in the end the result is clear. The purchaser’s
contentions are right, and the contract was duly terminated. I say this on
three grounds. First, time was of the essence, and the vendors were unable to
complete in time. Second, if, contrary to my view, time was not of the essence,
the purchaser validly rescinded the contract on discovering that the vendors
had no title. Third, in any case the vendors’ lack of title at the date fixed
for completion provided a complete answer to the vendors’ only remaining claim,
namely, for damages. Accordingly, I set aside the interlocutory judgment for
damages obtained by the vendors on April 24 last, strike out the statement of
claim, and dismiss the action. I shall now hear any explanation that may be
offered as to the answer to the inquiries before contract that I have
mentioned, and as to the assertion in the statement of claim that the vendors
were ‘ready and willing’ to complete the contract.
Judgment was
given for the defendant with the costs of the present application and, so far
as occasioned to the defendant, of the previous proceedings.
