Vendor and purchaser–Notice to treat and notice of entry served a month before property bought at auction–Vendor still in possession held to be unable to give ‘vacant possession’ in any effective sense–Nevertheless entitled to the benefit of general and special conditions as to notices of local and other authorities–Purchaser who refused to complete held in breach of contract
This was a
claim by Mr Onnes Korogluyan against Mr Matheas Matheou for a declaration that
by reason of the breach of the defendant in refusing to complete a contract of
May 17 1973 for sale of 43 Auckland Street, Kennington, London SE11, he (the
plaintiff) was discharged from his obligations under the agreement.
Mr G A
Lightman (instructed by Harold Weston & Co) appeared for the plaintiff, and
Mr H A P Picarda (instructed by Nicholas & Co) represented the defendant.
Giving
judgment, WHITFORD J said: This case is concerned with an agreement for the
sale of a particular property. In the original pleading a large number of
points were raised, but I am now only concerned with the question of
construction and the effect which it has upon the interests of the parties in
the light of facts which are not in dispute. The purchase that was envisaged
was the purchase of a freehold property, 43 Auckland Street in London. It was
put up for sale at an auction sale on May 17 1973. From the document produced
before me, this appears to be a monthly sale carried on by some auctioneers,
and a number of properties were offered for sale, the property with which I am
concerned being lot no 10. It was described in the auction particulars as ‘part
vacant, a non-basement, end-of-terrace house.’
The accommodation is set out, with an indication that three rooms were
let at 99p per week inclusive, and in the auction particulars we see that
vacant possession will be given upon completion. It appears that before ever
the property came up for auction in May, there had been, a little over a month
before, in April of the same year, notices relating to a proposed compulsory
purchase of the property. The question which is to be decided is whether, in
the light of these notices–a notice to treat and a notice which was served
pursuant to the provisions of section 11 of the Compulsory Purchase Act 1965,
stating that the acquiring authority would be entering upon the land–the
situation had arisen by the time a notice to complete was given by the
plaintiff where it was no longer possible for him to give vacant possession,
and that in consequence the defendant ought to be discharged from his obligation
under the agreement.
As I have
said, it is now accepted that after the auction sale there was a contract upon
which, in effect, there should have been completion by June 19. A notice to
complete was given on July 11, and completion not having been effected, this
proceeding was started on September 20 1973. There were originally alternative
claims to relief, but when the plaintiff moved for judgment in November 1973 he
elected to claim a declaration that by reason of the defendant’s failure to
complete he was discharged from further performance of the agreement, and in
November 1974 the property passed to the local authority for the sum of £1,100.
Two points are patent on the plaintiff’s side. The first is that having regard
to the general conditions of sale and the special conditions of sale, in
particular two provisions to be found therein, it is not open to the defendant
to complain that because these notices were given, and the defendant possibly
knew nothing of them, he is entitled to have the agreement set aside. Secondly,
it is said on the plaintiff’s side that even if the special condition, to which
I shall shortly be coming in that part of the general conditions to which I
must refer, does not afford a shield against the assertion of the defendant, he
(the plaintiff) was still, by the date fixed for completion — indeed, during
the period after he had served notice to complete and up to the issue of these
proceedings — in a position to give vacant possession, because it stands
accepted that, although notice to enter had been given, there had never been
any entry by the local
authorities to which I shall shortly be coming, that in those circumstances the
plaintiff was in a position to complete his side of the bargain in accordance
with the condition of sale under which he had said that there would be vacant
possession on completion.
General
condition 6 is the relevant condition, and it is in these terms:
Each
purchaser shall be deemed to purchase with full knowledge of the state of
repair of the lot or lots purchased by him and of the tenancies thereof if any
and shall be responsible for all repairs including sanitary requirements and
all requirements of the lessor, local or other authorities. The properties are
sold subject to all notices, orders or requirements, whether referred to in the
particulars or not, given, made or required by the local or other authority.
Each property shall as from the date of the contract be at sole risk of the
purchaser thereof.
It is accepted
by the defendant, as was urged by the plaintiff, that condition 6 can really be
divided up into three, and the relevant part of condition 6 is the provision
that the properties are sold ‘subject to all notices, orders or requirements,
whether referred to in the particulars or not, given, made or required by the
local or other authority.’ What is said
on the plaintiff’s side is that the notices relating to the compulsory purchase,
the notice to treat and the notice relating to entry, are each quite plainly a
notice given by an authority such as is contemplated in general condition 6,
and the defendant, in the face of this condition, has to accept the position
that he must complete subject to whatever is involved in the notices which may
have been served, and whether or not this might be said to conflict with the
special provision that this sale was to be given with vacant possession. The
particular special condition relating to 43 Auckland Street is special condition
9, which is in these terms:
The purchaser
having had the opportunity of making all appropriate inquiries of the local and
other authorities shall be deemed to purchase with full knowledge of all
entries on the registers kept by them and of all their requirements or
proposals relating to the property and shall raise no objection or requisition
whatsoever in respect of or in relation thereto.
So the first
question is whether, as the defendant submits, the proposal to sell with vacant
possession is to be taken as overriding any of the conditions contained in
general condition 6 or in special condition 9, or whether, as the plaintiff
says, the effect of these conditions is to preclude the possibility of any
complaint that as a result of these notices it may in fact be, or might in fact
have been, impossible for the plaintiff to give vacant possession on
completion. It was said by counsel for the defendant that I must read the
‘small print,’ as he put it, in general condition 6 or special condition 9 as
if it were subject to an overriding requirement that in any event vacant
possession would have to be given upon completion; that both these conditions
should be read with, as it were, an implied exception that no notice that might
have been given should be taken as impinging upon or overriding any right to
give vacant possession; and that if any notice did do this, the mere fact that
under these particular conditions the defendant, on the face of it, appears to
be bound to accept that he will be bound by the conditions ought to be put on
one side. I think myself that the defendant’s case fails on this first limb.
True enough, if one looks at lot 10, one reads that vacant possession will be
given upon completion. However, general condition 6 and, more particularly, special
condition 9 draw the attention of the purchaser to the fact that it may be
sensible to see what the position vis-a-vis any local authority requirements
may be in relation to this particular property, and draw the purchaser’s
attention to the fact that if notice may have been served, the purchase is
going to be effected subject to such burdens as the notices given may place
upon the property in question. I think that the defendant’s argument fails at
this first hurdle, but I will just deal briefly with the not uninteresting
question which arises if this be wrong.
If this be
wrong, the defendant says that it was impossible, from the time when notice to
complete was served, for the plaintiff to give vacant possession on completion,
because the notice to enter had been given. I understood it to be accepted by
counsel for the defendant that he had to rely upon the giving of the notice to
enter to take this case outside the purview of the decision of Vaisey J in Hillingdon
Estates Co v Stonefield Estates Ltd [1952] Ch 627. Counsel for the
plaintiff made the point that if the requirement with regard to the giving of
vacant possession is to override the provisions of the general and special
conditions of sale, subtle distinctions may have to be drawn between the
various types of local authority notice that may be given. Thus the defendant
may be bound to accept with the burden of a compulsory purchase order and a
notice to treat, but is entitled, so it is suggested, if a notice to enter has
been served, to say, ‘So far as this is concerned, it is one which should have
no binding effect upon me, because it is in direct conflict with the promise
that the property would be sold with vacant possession.’ However, there are three authorities to which
I was specifically referred and on which comment was made by counsel on both
sides, dealing with the effect of service of notices of a similar general
character in relation to contracts for the sale of land. The first was Re
Winslow Hall Estates Co and United Glass Bottle Manufacturers Ltd’s Contract
[1941] Ch 503, which was a contract for a sale of land which was entered into
in 1940, and the effect of a notice given in 1941 was that it was intended that
the land should be requisitioned under the provisions of the Defence General
Regulations. That was a case where the vendors were in a position to complete
by February 1941, where in fact no possession was taken of the land until a
very much later date in 1941, and Bennett J held that, on the facts stated, the
vendors were able to give vacant possession. It was said by counsel on behalf
of the plaintiff that this supported his contention that although there had
been a notice to enter there had not been any entry, and in those circumstances
his client was in a position to sell with vacant possession at the relevant
time. In giving his judgment, Bennett J observed that in the context of the
regulation which he was considering there was no requirement for the giving of
a notice, that it was perhaps merely out of politeness that a notice of this
kind was in fact given, and that the situation under the regulation was that
anybody’s land might be requisitioned at any moment. Counsel for the defendant
said, I think perhaps rightly, that this was a particular circumstance relating
to the decision given in that case which may be of overriding significance and
upon which a distinction can undoubtedly be drawn, because so far as notices
under the relevant Act are concerned, they have to be given in accordance with
the provisions laid down in the statute.
The next case
that was referred to was Cook v Taylor [1942] Ch 349. This was
another case dealing with the effect of a requisitioning notice under the same
Defence Regulations. It was a case which came before Simonds J in which he
reached the conclusion that, a notice having been served, the appropriate
government authority had in fact entered into possession, because there had
been what he described as the symbolic handing over of the keys of the property
in question. He referred to the decision of Bennett J in Re Winslow Hall
Estates, and drew a distinction between that case and the case before him,
holding that on the date fixed for completion the vendor was not in a position
to complete because the parting with the keys of the property was, as he put
it, equivalent to symbolic delivery of the property to the requisitioning
authority. That case again is not, on its facts, the same as the case before me
in this respect, that apart from the fact that the notices with which I am
concerned are given
handing over of a key or anything of that sort.
The third case
to which I was referred was the case of James Macara Ltd v Barclay
[1945] 1 KB 148, which came before the Court of Appeal. This again was a case
concerned with the effect of a notice of requisition under the same Defence
Regulations. It was a case in which both Re Winslow Hall Estates Co and Cook
v Taylor appear to have been referred to in argument but not to have been
dealt with in the judgment of the Court of Appeal, a single judgment read by
Uthwatt J. That was a case where a letter had been written relating to
requisitioning, and of this case it was said in the judgment that a formal
question was not whether possession was taken, but whether the power to take
possession was exercised. It was a case in which, apparently, it had been
argued by the vendor that the power had not been effectively exercised until
there had been an actual entry, and that this power could not be exercised by a
mere giving of a notice. On the construction of the regulation in question the
Court of Appeal in that case came to the conclusion that an actual entry on the
land was not necessary for the exercise of the power. They pointed out that
there was not in fact any particular provision so far as the regulation was
concerned which would determine the way in which the power to take possession
might be exercised. They took the view that the regulation was directed to
this, that it was considered that it was a power which it was necessary to give
to the Crown to enable it, as a matter of national interest, to acquire an
interest in possession in land, and an immediate interest, as opposed to any
future interest, which would carry with it all rights which the Crown might
wish to exercise in relation to the land in question as a matter of immediacy.
Accepting that actual entry would be no doubt one way of establishing
possession and effecting the rights conveyed by the regulation, the Court of Appeal
took the view that actual entry was not in any way necessary for the exercise
of the power. The judgment said this:
If actual
entry be not necessary, there can, we think, be no doubt that the power is
effectively exercised by notice which fairly brings to the mind of the person
affected that the power is being exercised. A present intention stated to be
exercised and communicated to the persons concerned is sufficient.
That, of
course, was a particular case decided in the context of the particular regulation,
and counsel for the plaintiff draws a sharp distinction between the approach
made by the Court of Appeal in the context of that regulation and the
circumstances of the particular case now before me. What he says is that so far
as any question of notice to enter is concerned, it is not really in any way
comparable with the exercise of the power under the Defence Regulations. It is
more akin to the polite indication referred to by Bennett J, and in effect,
until there was an entry, the plaintiff was still in a position to give vacant
possession. Counsel observed that if the local authority should have desired to
withdraw from this enterprise up to the time when the notice to complete was
served, the arrangements between the parties would then have been in the
position that the whole matter could have been effectively completed with
vacant possession, the threat to compulsorily purchase having been removed. It
is, I suppose, improbable that anybody could imagine that at the state which
had been reached the compulsory purchase order procedure would not have been
followed through to the end. What was urged by counsel on behalf of the
defendant was that, in effect, once the notice to enter was given, that
effectively precluded the possibility of the plaintiff giving vacant possession
in any sense in which this word ought sensibly to be construed.
Whatever the
position in law might be–and no doubt in law the purchasing authority was not
in possession–it can, I suppose, be said that in a context such as this the
word ‘possession’ should be considered in what might perhaps be described as
its popular rather than its technical sense. If one considers the position of a
person buying a property of this kind, and buying it upon the basis that he is
expecting to get vacant possession when the purchase is completed, it would be
distorting language to suggest that if it was in fact being sold to him in
circumstances where there had been a compulsory purchase order and a notice to
treat and a notice to enter, he was getting anything which could sensibly be
described as ‘vacant possession.’ Were
it not for the fact that I think the defendant’s case fails on special
condition 9 and general condition 6, I would have come to the conclusion that
at the relevant time the plaintiff was not in a position to sell with vacant
possession in the sense in which I feel that those words ought sensibly to be
construed in the context of the whole transaction. However, in the result, for
the reason I have indicated, the plaintiff in my view succeeds and is entitled
to the declaration which he seeks, which is that, because of the breach of the
defendant in failing to complete, he is discharged from further performance of
the agreement.
