A conveyance executed by the vendor and returned to his solicitor prima facie operates as an escrow conditional upon completion in due course–The condition imports a time-limit, and the vendor may by notice to complete in appropriate form fix a time beyond which the purchaser cannot claim to fulfil the condition and secure the conveyance
This was an
appeal by Mr John Richard William Green, of Maple Walk, Cooden, Bexhill,
Sussex, from a decision of Plowman J in the Chancery Division at Hastings on
December 20 1973 ordering the vacation of certain Class C (iv) land charges
registered in August 1967 against plots of land in Maple Walk owned by the
respondents, Mrs Florence Glessing and Mrs Pamela Catherine Ward-Jones, of
Barnhorne Road, Bexhill, and dismissing the appellant’s counter-claim for
delivery of possession of the plots in question and the title deeds thereto.
Mr G Godfrey
QC and Mr E C Evans-Lombe (instructed by Wedlake Bell, agents for Pearless, de
Rougemont & Co, of East Grinstead) appeared for the appellant, and Mr M
Nourse QC and Mr J Jopling (instructed by Payne, Hicks, Beach & Co)
represented the respondents.
Giving the
judgment of the court, SIR JOHN PENNYCUICK said that the respondent plaintiffs,
who were mother and daughter, owned three plots of land in Maple Walk, Cooden,
Bexhill, which in 1967 the defendant negotiated to buy. He offered £6,000 on
terms which included an option for the second plaintiff to repurchase should he
ever wish to sell. The judge found that there was no antecedent contract, but
solicitors were jointly instructed to prepare a conveyance. A draft
instrument containing a recital of an agreement for sale at £6,000 was signed
by the plaintiffs, who either kept it or sent it back to the solicitors. The
defendant then persuaded the legal executive dealing with the conveyance to
prepare a new draft conveyance substituting £2,000 for £6,000 as the price. The
idea apparently was that the defendant would pay £4,000 in cash on the side.
The plaintiffs fell in with his wishes, executed a conveyance in the desired
form, and returned this to the solicitors. The defendant executed the
conveyance, which was retained by the solicitors pending completion (and
ultimately destroyed). The defendant never paid anything to the plaintiffs, and
on September 4 1967 the solicitors served him with notice to complete ‘in
accordance with the terms of any agreement . . . which might subsist’ within 28
days. The notice expired, and the defendant had still made no payment at all.
Meanwhile he had registered estate contracts against the several plots. He now
said that the £2,000 conveyance, or alternatively the £6,000 conveyance,
operated as a deed effectual to pass to him the legal estate in the property
described. In the further alternative, he said that one or the other conveyance
was an escrow conditional on payment of the full purchase price, and that it
was open to him to fulfil this condition by paying £6,000 today, which he was
ready and willing to do.
The court was
wholly unable to accept that either conveyance was executed free from any
condition. Whether an instrument was executed as an escrow upon some, and if so
what, condition was a question of fact depending upon intention. In the case of
the sale of land the general practice was for the conveyance to be executed by
the vendor and entrusted by him to his solicitor with a view to its being
handed over to the purchaser on completion. The manifest intention of the
vendor in such circumstances was that the conveyance should not be operative in
advance of completion and, apart from special circumstances, the inference was
inescapable that the conveyance was executed as an escrow conditional on
completion, that was to say, against payment of the purchase price and, where
appropriate, execution by the purchaser. In this case the condition as to price
had not been performed. Their Lordships were also clear that when a conveyance
was executed in escrow there had to be a time-limit within which the implied
condition was to be performed, and that the purchaser could not insist on the
right to perform the condition free from any such limit. The matter of a
time-limit had been considered in Beesly v Hallwood Estates Ltd
[1961] Ch 105 and Kingston v Ambrian Investment Co Ltd [1975] 1
WLR 161. In the latter case the existence of a time-limit was treated as part
of the condition itself rather than as depending on equitable principles. Their
Lordships found this the more convincing approach. It seemed to them that the
time-limit was in its nature an element, and a vitally important element, in
the implied condition, and that there was no reason to call in aid some
equitable principle of imprecise application. Where there had been an
antecedent contract and after execution by the vendor the purchaser failed to
complete, and the vendor then served a notice making time of the essence, the
expiration of that notice seemed plainly the appropriate point beyond which it
could not be said that the sale would be capable of completion in due course
within the meaning of the condition. Where there had been no antecedent
contract the expiration of a comparable notice by the vendor should be treated
by analogy as the appropriate point. So here, after the expiry of the
plaintiff’s notice, it was not possible for the completion of the escrow to be
performed.
The appeal
was dismissed with costs.
