Lease — Execution — Subject to contract negotiations for grant of lease to appellant — Respondent council affixing seal to lease — Council later withdrawing offer of lease — Whether lease effected by act of sealing — Whether delivery also necessary — Section 74(1) of Law of Property Act 1925 — Appeal dismissed
The appellant entered into negotiations with the respondent council with a view to acquiring leases of several plots of land. As part of those negotiations, the parties agreed a timetable for setting up the leases, and, in the interim, the appellant occupied two of the plots. The council arranged for the leases to be sealed, but the appellant failed to carry out his part of the arrangements.
The council subsequently withdrew their offers of lease and sought possession of the plots already occupied by the appellant. The appellant maintained that he held leases of the two plots, since, by virtue of section 74(1) of the Law of Property Act 1925, a deed to which a seal had been affixed was deemed to have been executed and to have taken effect. The judge, however, held that the deed also had to be delivered before it became effective. Since delivery had taken place in the present case, he found that no lease existed, and gave judgment for the council.
The appellant appealed, contending that, under section 74(1), delivery should be deemed to have taken place.
Held: The appeal was dismissed.
The execution of a deed required not only that a seal be affixed but also that the deed be delivered; section 74(1) did not suggest otherwise. Although the sealing of a document imported delivery, a party could demonstrate a contrary intention. A corporation’s intention in sealing a document was crucial. In the present case, the council had not intended to be bound, but had merely sealed the deed in anticipation of completion. There was no reason for them to be bound at that time, when the other party was not. It would be inconvenient if a local authority conducting “subject to contract” negotiations were bound simply because they had caused a seal to be affixed at a time convenient to them. The “subject to contract” nature of the negotiations between the parties was inimical to any intention to conclude the leases: Longman v Viscount Chelsea [1989] 2 EGLR 242 applied. The signing and sealing of a lease in anticipation of normal conveyancing practice did not indicate an intention to deliver the deed as an escrow. The judge had been correct to find that no delivery had occurred in the present case.
Ian Leeming QC (instructed by Berg & Co, of Manchester) appeared for the appellant; Paul Chaisty QC and Wilson Horne (instructed by the solicitor to Bolton Metropolitan Borough Council) appeared for the respondents.
Sally Dobson, barrister
