Lambeth London Borough Council v Vincent and persons unknown

Vendor and purchaser — Sale by auction — Notice to complete — Leasehold interest — Purported forfeiture — Title guarantee — Form of registered title — Statutory power to sell — Whether notice to complete valid — Whether notice valid where forfeiture action commenced founded on ineffective section 146 notice On 20 February 1996 the claimant council offered for sale by auction a leasehold property in a poor state of repair. The property was knocked down to the first defendant at a hammer price of £44,500; he signed the memorandum of sale and paid the deposit of £4,450. The contract provided for full title guarantee. Completion did not take place on the contractual completion date of 29 March 1996. On 4 April the freeholder served the council with a schedule of dilapidations costed at £40,000. On 14 August the freeholder served a purported notice under section 146 of the Law of Property Act 1925. The notice, together with a draft form of transfer stating that the property would be transferred with “limited title guarantee”, was sent to the first defendant accompanied by a letter dated 18 September from the council’s legal department. The letter stated, correctly, that the section 146 notice was invalid, as it did not comply with the Leasehold Property (Repairs) Act 1938. On 16 October the freeholder issued a writ against the council claiming possession of the property and damages based on a forfeiture for breach of the repairing covenants. On 11 November the council served a notice to complete the purchase on the first defendant. On 18 November the freeholder withdrew its claim and served a new section 146 notice in the correct form. The council then wrote to the first defendant’s solicitor enclosing a copy of the second section 146 notice and warned that if completion did not take place, the council would rescind the contract and forfeit the deposit. On 28 November, the date for completion, the first defendant’s solicitor challenged the validity of the notice to complete on the ground that the council were not ready, willing and able to complete because of the breach of the repairing covenants. By a letter dated 3 February 1997, the council contended that they were entitled to treat the contract as rescinded on 28 November. In the present proceedings, the validity of the notice to complete was challenged on the grounds that: (1) the writ claiming forfeiture put the council’s title in issue; (2) the council were in breach of contract in offering a draft transfer providing for a limited rather than a full title guarantee; (3) the registered title was a good and not an absolute title; and (4) there was no ministerial consent as required by section 32 of the Housing Act 1985. Held: The notice to complete was valid. If a claim is made against a seller that is obviously unsustainable in law, a seller is still entitled to make title, notwithstanding the existence of the claim. The writ issued on 16 October 1996 claiming possession for breach of the repairing covenants, in circumstances where the statutory formalities had not been complied with, did not operate as a forfeiture. The issue of the writ did not divest the council of their leasehold title; they remained entitled to convey that that they had promised to convey. The sending of the erroneous draft of the transfer, referring to limited rather than full title guarantee, was not a breach of contract by the council, as the responsibility for drafting the transfer was the buyer’s under the contract, not the seller’s. There was nothing to show that the council had an intention not to comply with their contractual obligation regarding title guarantee. On the proper construction of the contract, the council did not contract to transfer a lease registered with a title absolute. The disposal by the council would have been made by them in exercise of their powers under the Housing Act 1985. The contract was rescinded on or shortly after the letter dated 3 February 1997. The following cases are referred to in this report. Ivory Gate Ltd v Spetale [1998] 2 EGLR 43; [1998] 27 EG 139 Lee v Olancastle unreported 8 July 1987 Naz v Raja The Times 11 April 1987 Pips (Leisure Productions) Ltd v Walton (1982) 43 P&CR 415; [1981] 2 EGLR 72; (1980) 260 EG 601 Stirrup’s Contract, Re [1961] 1 WLR 449; [1961] 1 All ER 805 This was a hearing of a claim by the claimants, Lambeth London Borough Council, for possession and other relief against the first defendant, Gregory Vincent, and persons unknown. Robert Hantusch (instructed by Steele & Co) appeared for the claimants; Elizabeth Ovey (instructed by Anthony Gold Lerman & Muirhead) represented the first defendant; the remaining defendants did not appear and were not represented. Giving judgment, Mr Kim Lewison QC said: Introduction The issue in this case is whether a notice to complete served by the seller of land was valid. Mr Robert Hantusch, who appears for Lambeth London Borough Council, says that it was. Ms Elizabeth Ovey, who appears for Mr Gregory Vincent, says that it was not. Events up to the making of the contract 10 Chestnut Road, West Norwood, London SE27, is a three-bedroom house, probably built in the 1920s. It was held by Lambeth London Borough Council (Lambeth) under a lease granted on 24 January 1929. The term of the lease was 99 years (less seven days) from 25 March 1928. The rent payable was £10 pa. Under the terms of the lease, Lambeth were obliged to keep the property in repair. The lease was assignable without the landlord’s consent, except during the last seven years of the term. It contained the usual proviso for re-entry on breach of covenant. Lambeth’s title was registered at HM Land Registry with good leasehold title. The title contained a restriction that said that, except under an order of the registrar, no disposition by the73 proprietor of the land was to be registered unless made in accordance with the Housing Act 1957 or some other Act or authority. The lessor’s title was also registered under a separate title number. Lambeth did not comply with their repairing obligations under the lease, and, by 1996, the house was in a poor state of repair. Lambeth decided to sell the house at auction. It was included as lot 101 in a sale conducted by Andrews & Robertson on 20 February 1996. Mr Gregory Vincent has considerable experience in housing matters. He has been actively concerned in housing management, both as a board member of housing associations and also as a local government officer. He had been offered a place on the Common Professional Exam course at South Bank University, starting in September 1996 and was keen to finance his studies by buying a property to let. He had recently sold a flat that he had bought under the right-to-buy scheme. So he had some cash in hand. He was proposing to borrow the rest of the money. Mr Vincent had noticed a number of boards in the borough of Lambeth showing houses being sold by Lambeth. He read the particulars of sale in the auction catalogue, and went to see all the houses being sold by Lambeth. He decided to bid for 10 Chestnut Road. Although it was in poor condition, it was in better condition than most of the other houses being sold by Lambeth, and he knew and liked the area. When he inspected, he took his builder with him, and was told that the cost of necessary work would be about £15,000. Mr Vincent went to the auction on 20 February 1996. He collected the auction catalogue on the day. Lot 101 was described in the catalogue as a “Freehold Two-floor Semi-detached House”. That was, of course, a mistake. However, the mistake was spotted in time and a note was added on a separate sheet. The note said: The above property is LEASEHOLD and not Freehold as printed in the catalogue. The lease is for a term of 99 years from 25th March 1928 at a Ground Rent of £10.00 per annum… Mr Vincent saw the note before bidding. However, there were no documents of title available in the auction room on the day. He considered whether he still wanted to buy the house. He decided that he did, because he was aware of the provisions of the Leasehold Reform Act 1967, which would allow him to acquire the freehold relatively cheaply. He asked who the freeholder was, but no one at the auction could tell him. He says in his witness statement: No further information about title was available at auction and there was nothing to indicate whether the title would be good leasehold or absolute title. 10 Chestnut Avenue was knocked down to Mr Vincent at a hammer price of £44,500. He signed a memorandum of sale and paid a deposit of £4,450. He also initialled the note correcting the description of the house in the catalogue. Contract The contract came into being when the property was knocked down to Mr Vincent. Its terms are to be found in the general conditions of sale. Condition 2.1 says: The Entire Contract for each Lot comprises: 2.1.1 the amount of the successful bid for each Lot (“the Purchase Price”) 2.1.2 any announcement made by the Auctioneer in the auction room on the day of the sale before bidding begins for that Lot 2.1.3 any addendum to the auction catalogue available in the auction room on the day of the sale 2.1.4 the Special conditions of Sale for that Lot 2.1.5 these General conditions of Sale 2.1.6 the Notice to Bidders contained in the auction catalogue 2.1.7 the Standard conditions of Sale (3rd Edition) (“the Standard conditions”) varied as provided in the Special conditions of Sale and these Conditions of Sale 2.1.8 the Particulars of Sale for that Lot. General condition 2.2 says that if there is a discrepancy between any of the foregoing items, the item with a lower number takes precedence over any item with a higher number. Thus, for example, an addendum to the auction catalogue takes precedence over the particulars of sale, and indeed over the special conditions of sale. General condition 2.3 varies the standard conditions in a number of ways, but none of them are relevant. I have already mentioned both the bid and the addendum to the auction catalogue. Next in order of precedence are the special conditions of sale. Special condition 2 says: Title to the Freehold interest in the land is registered at HM Land Registry with Title Absolute. A copy of the entries on the registers and filed plan are available for inspection at the offices of the Auctioneer. The purchaser or his Solicitor whether or not he inspects them shall be deemed to purchase with full knowledge of them and shall not raise any enquiry or requisition in relation thereto… Special condition 3 says that the vendor will sell with full title guarantee. Special condition 6 says that the vendor is selling by virtue of its powers under section 32 of the Housing Act 1985. Special condition 13 says that the purchaser will be deemed to have full knowledge of the state of repair and condition of the property and any disrepair or dangerous structure therein. Next in order of precedence are the general conditions. General condition 5 says: The Buyer buys with full notice of and shall not raise objections in relation to… the entries on the property proprietorship and charges registers of the relevant title(s) if the Seller’s title is registered… General condition 9.2 says that the tenure and estate or interest to be sold are as stated in the special conditions. General condition 15.2 says that completion of a sale of leasehold property will be the first working day after the expiry of four weeks from the date of the auction. Had the landlord’s consent to the assignment been required, the contractual completion date might have been later. Last in order of precedence come the standard conditions. Standard condition 3.2.2 says: A leasehold property is sold subject to any subsisting breach of a condition or tenant’s obligation relating to the physical state of the property which renders the lease liable to forfeiture… Standard condition 4.1.2 sets out a timetable of events, and allocates responsibility for taking various steps. In particular, the buyer is to prepare the transfer and send a draft of it to the seller. The seller is then to approve or revise the draft, and, if the draft is returned, the buyer is to send the seller an engrossment. Standard condition 6.8 says: 6.8.1 At any time on or after completion date, a party who is ready able and willing to complete may give the other a notice to complete. 6.8.2 A party is ready able and willing (a) if he could be but for the default of the other party, and (b) in the case of the seller, even though a mortgage remains secured on the property, if the amount to be paid on completion enables the property to be transferred freed of all mortgages (except those to which the sale is expressly subject) If notice to complete is given, standard condition 6.8.3 requires completion within 10 working days, and time is of the essence of that date. Standard condition 7.5 provides for the consequences of a buyer’s failure to comply with a notice to complete. In short, the seller may rescind the contract and forfeit the deposit. Events after the contract In the memorandum of sale, Mr Vincent identified his solicitor as Leonard Blomstrand. Mr Blomstrand of that firm tried to contact Ms Yvonne Anderson, who was, at the time, the legal assistant in Lambeth’s legal department dealing with the sale. He left a telephone message for her on 26 February, in which he is recorded as having wanted to know whether the property was freehold or leasehold. The note says: Catalogue = f’hold OC Entries = l’hold 75 This seems to indicate that Mr Blomstrand had already obtained office copy entries. Ms Anderson wrote on 1 March 1996. She enclosed various documents, including office copy entries and a copy of the lease. The letter said that it was enclosing a “Deed of Assignment” but it was marked in manuscript “to follow”. Ms Anderson pointed out that the contractual completion date was 19 March 1996. It seems that, on 1 March, Mr Blomstrand sent a fax to CHP Management, which is the agent of the freeholder, Bickenhall Engineering Ltd (Bickenhall). The terms of his fax are not in evidence. However, from CHP Management’s reply and Mr Vincent’s evidence, I infer that he inquired on Mr Vincent’s behalf whether Bickenhall would be prepared to sell the freehold. CHP Managment replied on 14 March to the effect that, subject to contract and to terms being agreed, Bickenhall would be willing to consider the proposition that he had put forward. CHP also indicated a wish to inspect the property. It appears that Mr Vincent arranged the inspection. On the following day, 15 March, Mr Blomstrand replied to Ms Anderson’s letter, which had, by then, been awaiting a reply for a fortnight. It seems, however, that he had been in contact by telephone. He asked for a copy assignment as soon as possible and also asked for completion to be postponed until at least 29 March. He must have overlooked the point that it was for him to prepare the transfer and submit it to Lambeth for approval. On 20 March Ms Anderson sent a letter that purported to enclose what was described as a “draft Deed of Assignment”. She confirmed in a postscript that completion could be delayed until 29 March 1996. However, it seems that the draft deed was not in fact sent. It appears in the trial bundle at pp146 to 149. Ms Anderson says in her witness statement, and confirmed in her oral evidence, that she had no experience of leasehold as opposed to freehold sales, although she had dealt with the grant of leases under the right-to-buy scheme. Unfortunately, that inexperience shows. The draft takes the general form of a landlord’s licence to assign, in the sense that it contains covenants by the assignor and assignee with the landlord. But the landlord is not a party to the draft and the draft does not actually contain a licence to assign or an assignment. Had that agreement been executed in the form of the draft, it would not have passed title at all. 29 March came and went, but completion did not take place. Ms Anderson wrote a chasing letter on 2 April 1996. Two days later, on 4 April 1996, Bickenhall, by its solicitor, served a schedule of dilapidations on Lambeth. The cost of the works described in the schedule (including PC items) was more than £40,000. Bickenhall’s solicitor sent a copy of the schedule to Mr Blomstrand. He, in turn, sent a copy of it to Mr Vincent. On 9 April 1996 Mr Blomstrand wrote to Lambeth pointing out that there were serious breaches of covenants, and inquiring what steps Lambeth proposed to take to remedy them. Nothing more seems to have happened until mid-May, when there was an exchange of correspondence between Mr Vincent and CHP Management discussing the possible sale of the freehold. In July 1996 Mr Vincent suggested that he would be willing to carry out some of the work listed in the schedule of dilapidations in return for a reduction in the purchase price. On 14 August 1996 Bickenhall served on Lambeth a notice under section 146 of the Law of Property Act 1925 complaining about the failure to repair. That notice was invalid, because it did not comply with the requirements of the Leasehold Property (Repairs) Act 1938. In particular, it failed to tell Lambeth about their rights under that Act, and failed to inform Lambeth about their right to serve a counternotice. To her credit, Ms Anderson spotted the defects immediately. Through the late summer of 1996, Mr Vincent telephoned Lambeth from time to time complaining about the delay. The gist of the complaint seems to have been that he was waiting for Lambeth’s response to his offer to carry out some of the repairs in the schedule in return for a reduction in the price. On 9 September 1996 Lambeth’s valuation department wrote an internal memo in which they said that since the hammer price must have reflected the poor state of the property, there should be no further reduction in the price. This was passed on to Mr Vincent in Lambeth’s letter of 18 September 1996. It was written to him rather than to Mr Blomstrand because Lambeth had been told by Mr Vincent that Mr Blomstrand was no longer acting for him. Enclosed with the letter was a copy of the section 146 notice. But Ms Anderson pointed out that the notice was invalid because it failed to comply with the 1938 Act. She also enclosed with the letter a form of transfer. She continued: If you approve the transfer as drawn please arrange for one copy to be executed in the presence of an independent adult witness. The draft form of transfer stated: The land is transferred with Limited Title Guarantee. It will be recalled that the contract required Lambeth to transfer with full title guarantee. Ms Anderson said in evidence that she included the reference to limited title guarantee for two reasons. First, because the title was only registered with good leasehold title, and, second, because of the dispute over repairs. Both were, in my judgment, bad reasons. But, in the light of her evidence, it cannot be said that the reference to limited title guarantee was a clerical error. However, she said in her witness statement (which was not challenged in cross-examination) that had her error been pointed out, she would have amended the draft to contain a full title guarantee. On 16 October 1996 Bickenhall issued a writ claiming possession of the house and damages. The claim was based on a forfeiture for breach of the repairing covenants. That claim was doomed to failure. The right of forfeiture was not enforceable because no valid section 146 notice had been given: Law of Property Act section 146(1); Leasehold Property (Repairs) Act section 1(4). The claim for damages was also unenforceable because no valid section 146 notice had been given: Leasehold Property (Repairs) Act 1938 section 1(2). There was no response from Mr Vincent or Mr Blomstrand to the form of the draft transfer, either approving it or objecting to the erroneous form of title guarantee. On 11 November 1996 Lambeth served notice to complete on Mr Vincent. The notice was given pursuant to standard condition 6.8. The notice said that the seller was ready willing and able to complete and gave notice to complete in accordance with condition 6.8. It also drew attention to the consequences of failure to complete within 10 working days. On the following day, Lambeth served their defence to Bickenhall’s claim. The first point taken in the defence was that the section 146 notice was invalid. On 14 November 1996 Mr Vincent wrote to Ms Anderson to say that he had passed the matter back to Mr Blomstrand. On 18 November 1996 Bickenhall withdrew its claim and served a fresh section 146 notice. This time the notice was in the correct form. On 22 November 1996 Ms Anderson wrote to Mr Blomstrand. She pointed out that the notice to complete was due to expire on 28 November 1996, and she said that if completion did not take place on that date, Lambeth would rescind the contract and forfeit the deposit. She also enclosed a copy of the second section 146 notice, acknowledging that it was valid. She sent a copy of that letter to Mr Vincent. The completion notice was due to expire on 28 November. On that day, Mr Blomstrand sent a fax to Ms Anderson. He challenged the validity of the notice to complete on the ground that Lambeth were not ready, willing and able to complete. The reason for this, according to the fax, was that Lambeth were in breach of the covenants contained in the lease. On 12 December 1996 Mr Blomstrand indicated that Mr Vincent would be prepared to complete, but at a reduced price of £25,000. On 13 December 1996 Lambeth served notice on Bickenhall claiming the benefit of the 1938 Act. The legal effect of serving the counternotice was that Bickenhall could not exercise its right of forfeiture, or claim damages, without the leave of the court. 76 On 3 February 1997 Lambeth wrote to Mr Blomstrand to say that the contract was rescinded on 28 November 1996 as a result of Mr Vincent’s failure to complete. On 10 February 1997 Lambeth entered into a contract to sell their lease to Bickenhall for £44,500. Challenges to the notice to complete The validity of the notice to complete is challenged on four separate grounds. They are: 1. the outstanding writ claiming forfeiture, putting Lambeth’s title in issue; 2. the proposal in the draft transfer that Lambeth would convey with limited title guarantee, whereas the contract provided for full title guarantee; 3. the nature of the registered title, which was good leasehold, rather than absolute; and 4. the lack of any ministerial consent, as required by section 32 of the Housing Act 1985. I shall consider each of these in turn. Before turning to the individual grounds, I should say which approach I have adopted. First, the validity of a notice to complete must be judged at the date when it is served: Lee v Olancastle unreported 8 July 1987 per Millett J. Second, since the recipient of a notice to complete must decide whether to comply with it or to challenge it, its validity must be judged by reference to facts known or taken to be known by him, and without looking into the subjective intentions of the server of it. Third, if a buyer discovers that the seller has no title or a defective title, he is entitled to rescind the contract at once. Fourth, rescission is neither automatic nor compulsor; it is a right that the person entitled to rescind may choose to exercise if he wishes to. Writ The writ was issued on 16 October. The notice to complete was served on 11 November. At the date of service of the notice to complete, Lambeth had not served their defence. Ms Ovey submitted that a vendor of land must convey free from any litigation or dispute, and that if there were litigation pending relating to the property contracted to be conveyed, the seller could not force a title on the buyer. She relies on Re Stirrup’s Contract [1961] 1 WLR 449 in which Wilberforce J said at p454: It is said by the purchaser that it is not enough merely to show that in fact the document does pass the legal estate. The purchaser is entitled to have a good title and is entitled to have his requisitions answered or any defects put in order. The answer to that argument is that a purchaser is entitled to be satisfied that his vendor is seised of the estate which he is purporting to sell, in this case the fee simple, and that the vendor is in the position, without the possibility of dispute or litigation, to pass that fee simple to the purchaser. In my judgment it is quite immaterial to a purchaser whether a particular form, name or description of document is used as long as it shows beyond doubt that his vendor is in possession of the estate and that he is in a position to convey it without any blot or possibility of litigation to the purchaser. Any observation of Wilberforce J is, of course, of high authority. But I do not consider that it can be taken literally. If a claim is obviously unsustainable in law, it seems to me that a seller is still entitled to make title, notwithstanding the existence of the claim. This approach is supported by Emmett on Title (19th ed) para 5.001A. It must, in each case, be a question of degree. In Pips (Leisure Productions) Ltd v Walton [1981] 2 EGLR 172 the parties had entered into a contract for the sale of a lease. The contract was made on 8 November 1979. It was agreed that the parties would use their best endeavours to complete by 3 December 1979. However, on 1 October 1979 the landlords had issued a writ (served a day or two later) claiming forfeiture of the lease and arrears of rent. On 28 November 1979 the landlords obtained judgment in default of defence. On 3 January 1980 the sellers issued a summons for relief against forfeiture. When the buyer discovered this in April 1980, she claimed to rescind the contract. Megarry V-C held that the buyer was entitled to rescind. There were a number of grounds for his decision. First, he held that time for completion was of the essence of the contract. Second, he held that the sellers were in breach of contract in having failed to use their best endeavours to complete on the contractual completion date. Third, he held that if a seller of land has no title to the land, nor any enforceable right to acquire title, the buyer is immediately entitled to rescind. Fourth, he held that the seller’s lack of title at the date fixed for completion gave the buyer a complete defence both to an action for specific performance and to a claim for damages. In the course of his judgment, Megarry V-C said at p175F: 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. In my judgment, this case is very different. First, I consider that it is necessary to distinguish between the claim for forfeiture and the underlying fact upon which the claim was based, namely the disrepair. But under the terms of the contract, the buyer bought with full knowledge of the physical condition of the property. The clearest statement of this is in standard condition 3.2.2, which specifically refers to the lease being liable to forfeiture. It follows, in my judgment, that the point originally taken by Mr Blomstrand was a bad one. His ground of objection, therefore, is entirely dependent upon the issue and service of the writ. But the writ claiming possession was bound to fail, since the section 146 notice on which it was based was invalid. A writ claiming possession for breach of covenant in circumstances where statutory formalities have not been complied with does not operate as a forfeiture. This is not a question of fact; it is a pure question of law. Until such time as a notice under section 146 had been served in the proper form, neither the landlord’s right of forfeiture nor its right to claim damages was enforceable. Thus, the issue and service of the writ did not divest Lambeth of its leasehold title. It remained entitled to convey that which it promised to convey. In fact, the writ was withdrawn a few days after the notice to complete was served. But I accept that that cannot affect the validity of the notice. Mr Robert Hantusch, counsel for Lambeth, submits that since the writ related to matters to which the sale was subject, the buyer could not object to the notice to complete on this ground. He submits that the issue and service of a writ claiming possession is not a forfeiture; it is merely the landlord’s election to treat the lease as forfeit. He supported his submission by reference to Ivory Gate Ltd v Spetale [1998] 2 EGLR 43. In that case Sir John Vinelott, giving the judgment of the Court of Appeal, said at p46C: It is unnecessary to refer to the many other cases in which the court has approved the principle that service of a writ claiming forfeiture and possession of demised premises does not by itself bring the lease to an end. It operates as an unequivocal election by the landlord to rely on a breach of covenant or condition as a forfeiture. However, in the words of Sir Robert Megarry V-C, the lease “has a trance-like existence pendante lite; none can assert with assurance whether it is alive or dead”. If it is subsequently held that there was no breach of the covenant or condition or that a notice given under section 146 was defective, it will be seen that the lease was never forfeited; similarly, if an application for forfeiture succeeds the lease will be restored to life as from the date of forfeiture. If the defence and any counterclaim for relief both fail, the forfeiture will take effect retrospectively from the date of service of the writ. The position is the same if there is a re-entry which is at first contested and is later held to have been lawful. 77 In the light of these observations, Mr Hantusch submits that the lease was merely “liable to forfeiture” with the meaning of standard condition 3.3.2, both before and after service of the writ. I do not agree. There is, to my mind, a difference between the underlying facts on which the claim to forfeit is based and a forfeiture itself. In my judgment, whatever may be the technical position in the law of landlord and tenant, standard condition 3.3.2 is directed to the physical condition of the property and not to the action which the landlord takes. If, therefore, the lease had been validly forfeited on the ground of breach of the covenants to repair, I consider that the buyer would have been entitled to object to the notice to complete. Nevertheless, this ground of objection fails. Proposal to covey with limited title guarantee The terms of the contract required Lambeth to convey with full title guarantee. The draft transfer sent by Ms Anderson to Mr Vincent contained a clause that said that the land was transferred with limited title guarantee. Mr Hantusch submits that the form of the transfer is a matter of conveyance rather than title, and that a seller does not have to have fulfilled all the obligations that have to be fulfilled when completion takes place. He relies in support of this submission on the decision of the Court of Appeal in Naz v Raja The Times 11 April 1987. That case concerned the validity of a completion notice given under condition 22 of the national conditions of sale. In that case, Dillon LJ, with whom Stocker LJ agreed, said: The question for consideration is whether the vendor is at the time of serving a notice to complete, ready and willing to fulfil his own outstanding obligations under the contract. Plainly he does not need to have fulfilled all the obligations which would have to be fulfilled when completion takes place. He is not bound to have tendered a transfer of the property or to have evicted persons in occupation who have arranged to leave before completion takes place. He is not bound to have discharged outstanding mortgages which are intended to be discharged in the usual way out of the purchase money on completion. Mr Hantusch naturally relies on the observation that the seller is not bound to have tendered a transfer at the time when he serves notice to complete. The terms of national condition 22 and standard condition 6.8 are different. National condition 22 expressly refers to the “outstanding obligations” of the person giving the notice. Plainly, therefore, under that form of words it cannot have been envisaged that all obligations, whenever arising, have to have been performed at the date of the notice. Standard condition 6.8 allows a notice to be given by a person who “is ready and willing to complete”. Taken literally, a person is not ready to complete if there are matters to be done under the contract, which are his responsibility, which have not been done at the date of the notice to complete, unless they are matters to be done on (ie simultaneously with) completion. Thus, in the case of a discharge of a mortgage, that would be done on receipt by the seller (or the seller’s bank) of the purchase price, and so it would not have to be done in advance. This is expressly provided for in standard condition 6.8.2, which might be said to encourage a literal interpretation of standard condition 6.8.1. However, in my judgment, the responsibility for drafting the transfer was not the seller’s; under standard condition 4.1.2, it was the buyer’s. The contract, being one for the sale of land, could not have been varied except in writing. So, the sending of an erroneous draft was not a breach of contract by Lambeth. In addition, the covering letter said that if the transfer was approved, Mr Vincent should arrange to have it executed. That form of words contemplates that the transfer might not be approved. If the sending of the draft transfer in the form I have described was not a breach of contract at all, then, unless it can be said to be an anticipatory repudiation, I do not see how it can invalidate the notice to complete. Bearing in mind that no objection was taken to the form of the draft, I cannot read the correspondence, coupled with the draft transfer, as evincing an intention by Lambeth not to comply with their contractual obligation to transfer with full title guarantee. I might also add that Mr Vincent says in his witness statement that Ms Anderson told him that she was unsure what to put in the transfer. If I am entitled to look at Ms Anderson’s subjective state of mind, I reach the same conclusion. Ms Ovey submitted that Ms Anderson drafted the transfer and its reference to limited title guarantee deliberately, in the sense that she thought that limited title guarantee was the more appropriate title guarantee to give. That is correct, so far as it goes. But Ms Anderson was clearly unsure of her ground in dealing with leasehold conveyancing, and her unchallenged evidence is that if asked, she would have amended the draft to provide for full title guarantee. This ground of objection therefore fails. Nature of the registered title The question here is what title Lambeth promised to convey. Both counsel are agreed that if, as a matter of construction of the contract, Lambeth promised to transfer a leasehold registered with title absolute, then they were not in a position to make title. If, on the other hand, Lambeth made no such promise, this ground of objection must fail. The original description of the house was freehold. That would have fitted with special condition 2, which said that title to the freehold interest was registered with title absolute. But the memorandum attached to the sale catalogue said that the property was leasehold. It said nothing about the class of title with which the lease was registered. Nor did it expressly refer to the special conditions at all. Ms Ovey submits that in relation to lot 101 one must cross out “freehold” and write in “leasehold” wherever the former expression appears. She says that general condition 2.1 carried through the correction to the catalogue to the special conditions themselves. Alternatively, she says that it is a necessary implication that the special conditions must be taken to have been modified in the same way as the catalogue. She submits that if a person who puts property into auction wishes to correct any part of the material supplied to prospective bidders, he must take care to correct everything that he wants to correct. I do not disagree with the last submission, but it begs the question; what needed to be corrected? Mr Hantusch submits that once the correction to the catalogue had been made, the first sentence of special condition 2 simply became irrelevant. The remainder of the special condition could stand. It seems to me that if the first sentence of special condition 2 is notionally deleted as being irrelevant to the sale of lot 101, the remainder of that special condition does not make much sense. But, in my judgment, Lambeth are rescued by general condition 5. That deals with the position “if the Seller’s title is registered”. In this case, the seller’s title was registered. So general condition 5 provides that the buyer buys with full notice of the entries on the register. I do not, therefore, consider that the memorandum can be taken as having implicitly modified special condition 2. Since the matter was covered by general condition 5 there is no necessity for the implication. At best, it seems to me that there was a discrepancy between special condition 2 and the memorandum. In accordance with general condition 2.2, the memorandum takes precedence over the special condition. In my judgment, despite Ms Ovey’s very persuasive submissions to the contrary, Lambeth did not contract to transfer a lease registered with title absolute. I take some comfort from the fact that this is how Mr Vincent himself interpreted the information he was given. This ground of objection therefore fails too. Lack of ministerial consent Lambeth were selling in exercise of a power under the Housing Act 1985. Section 32 of that Act provides: – (1) Without prejudice to the provisions of Part V (the right to buy)… a local authority have power by this section, and not otherwise, to dispose of land held by them for the purposes of this Part (2) A disposal under this section may be effected in any manner but, subject to subsection (3), shall not be made without the consent of the Secretary of State. (3) No consent is required for the letting of land under a secure tenancy or under what would be a secure tenancy or an introductory tenancy but for any of paragraphs 2 to 12 of Schedule 1 (tenancies, other than long leases and introductory tenancies, which are not secure). 78 Section 34 of that Act says that any consent of the Secretary of State may be given either generally to all local authorities or to any particular local authority or any description of authority and either in relation to any particular land or in relation to any particular description of land. Section 44 of that Act provides: (1) A disposal of a house by a local authority made without the consent required by section 32… is void, unless — (a) the disposal is to an individual (or to two or more individuals), and (b) the disposal does not extend to any other house (2) Subsection (1) has effect notwithstanding… section 128(2) of the Local Government Act 1972 (protection of purchasers dealing with authority). Section 128(2) of the Local Government Act 1972 provides that where a local authority purport to dispose of any land, then in favour of any person claiming under the authority, the disposal is not to be invalid on the ground that any consent of a minister that is required has not been obtained, and that a person dealing with the authority is not concerned to see or inquire whether any such consent has been given. Under section 128, a disposal is not void for lack of a required ministerial consent. Hence, a purchaser is not concerned to see whether a required consent has been given. However, in general terms, a purchaser from a local authority that are selling under section 32 of the Housing Act 1985 will be concerned to see that any necessary consent has been obtained, otherwise the disposal will be void. There is one exception to that general proposition; namely where the disposal is to an individual or to two or more individuals. Thus, it is argued that, since the sale was to an individual, namely Mr Vincent, the disposal would have been valid even if no consent had been obtained. This clearly gives rise to practical difficulties for local authorities that wish to sell property at auction. Until the hammer falls, nobody knows whether the successful bidder will be an individual or a company. However, where the successful bidder is an individual, the disposal will not be avoided. Ms Elizabeth Ovey, counsel for Mr Vincent, submits that the mere fact that the disposal was not void is not enough. Section 44 of the Housing Act 1985 does not, she submits, deal with the problem of obtaining registration of the title despite the restriction. The buyer is entitled to be registered as proprietor as of right. The restriction requires a disposition under statutory authority. Even though the disposal might not have been void because of the provisions of section 44, it was still a contravention of section 32(2). It is not enough, she said, to show that the registrar might have exercised his power to make an order permitting registration. Before considering this submission, I should, I think, refer to the practice of the Land Registry. It is set out in Ruoff & Roper on Registered Conveyancing (looseleaf ed) at para 19-23. The editors say: When a local authority is registered as the proprietor of housing land and ministerial consent is required for a disposition, the Chief Land Registrar will not call for evidence of that consent if the purchaser or other disponee is not concerned to see or enquire whether consent has been given. However, if relief from such an enquiry is not provided, evidence of any necessary consent must accompany an application to register a disposition by an authority. In the case of housing land, a disposal is void if it is made without consent unless it is a disposition of a house or flat to an individual, or two or more individuals, and does not extend to any other house or flat. Evidence of consent must therefore be produced with any application to register a disposition which would be void without it. The clear implication of that passage is that if a disposition would not be void without a consent, then the registrar does not require evidence of consent. In such a case, he will simply register the applicant as proprietor. That seems to me to be right. The registrar’s concern is simply with the effective transfer of title. If the statute says that a disposal to an individual is not void despite the lack of consent, why should the registrar look any further? In practical terms, therefore, Mr Vincent would have been registered as proprietor had he applied for registration. It seems to me, therefore, that short of an enforceable right to be registered as proprietor, Mr Vincent had as high an expectation of being registered as it is possible to have. However, as Megarry V-C said in Pips (Leisure Productions) Ltd v Walton, an expectation, however strong, is not enough. The answer to Ms Ovey’s point is, I think, that that Mr Hantusch gave in the course of his reply. The only power to dispose of land under the Housing Act 1985 is that contained in section 32(1). If a disposal is saved from being void because of section 44, it must be a valid disposal. It can only be a valid disposal if it is made in exercise of a statutory power. The only statutory power is that contained in section 32(1). Thus, although there may have been a contravention of section 32(2), there was nevertheless a disposal under section 32(1). It follows that the disposition by the registered proprietor was made in accordance with an Act of Parliament. Mr Vincent would, therefore, have been entitled to be registered. However, there is another point. As I have mentioned, section 34 of the Housing Act 1985 enables the Secretary of State to give general consents. The general consent in force in 1996 (and still in force) was that given by the Department of the Environment’s letter of 31 August 1994. Section A of that letter contains the General Consent for the Disposal of Part 11 Dwelling Houses, that came into force on 12 September 1994. The part of that consent that is potentially relevant is the following: A3.2A A local authority may… dispose of a vacant dwelling-house to any person for a consideration equal to its market value, if the purchaser (alone or with others) has not acquired another dwelling-house from the authority within a period of three years ending with the date of the disposal. This part of the consent was introduced by amendment in March 1995. Although Mr Vincent had previously acquired a dwelling-house from Lambeth under the right-to-buy scheme, that acquisition was more than three years before the auction. So, on the face of it, Mr Vincent would have been covered by the consent given by para A3.2A. Ms Ovey submits that the consent does not extend to sales by auction. First, she points to the consideration I have already mentioned, namely that it is impossible for the seller at auction to know in advance who the buyer will be. There are other parts of the consent that apply only to particular categories of buyer (eg one who intends to use the house as his only or principal home). If the application of the consent is a matter of chance, depending on who is the successful bidder, it must be taken not to apply in such circumstances. I see the force of this submission, but the fact remains that the consent does not expressly exclude sales by auction and Mr Vincent in fact falls within the required category of buyer. Second, she points to the provisions of the consent that deal with market value. She says that they contemplate an assessment of market value by reference to a sale to a known and ascertained buyer. I do not accept this construction of the consent. The assessment of market value may be made up to three months before any application or acceptance of an offer to buy. So at the time when the assessment is made, there may well be no ascertained buyer. One might also think that exposure of a property to sale by public auction is itself an assessment of its market value. Although, therefore, there are practical risks to a local authority in putting up property for sale by auction without having obtained a specific consent, I have come to the conclusion that, on the facts of this case, the sale would have been within the general consent. It follows, in my judgment, that the disposal by Lambeth would have been made by them in exercise of their powers under the Housing Act 1985. That has the result that no order of the registrar would have been needed. Mr Vincent would have had the right to be registered as proprietor. This ground of challenge therefore fails too. Rescission In the light of my conclusion on all four grounds of challenge, the notice to complete was validly served. The consequence is that when the notice to complete expired on 28 November 1996, Lambeth were entitled to rescind the contract. 79 On 3 February 1997 Ms Anderson wrote a letter in which she set out Lambeth’s position, and concluded: In our opinion the contract for sale dated 20th February 1996 was rescinded on 28th November 1996, due to your clients failure to comply with the Notice to Complete dated 14th November 1996. That letter assumed that the contract was automatically rescinded on expiry of the notice to complete. That was not correct as a matter of law. However, the acceptance of a repudiation need not take any particular form. Any unequivocal overt act that is inconsistent with subsistence of the contract communicated to the party in breach will suffice. Ms Ovey accepts (rightly in my judgment) that the fact that Lambeth may have given a bad reason for asserting that the contract was at an end does not detract from their statement that the contract was rescinded. In my judgment, therefore, the contract was rescinded on or shortly after 3 February 1997. Counsel agree that if I reach this conclusion, it follows that Lambeth are entitled to an order for possession against Mr Vincent. It is agreed that any money claims are to be stood over to an inquiry. It only remains for me to thank both counsel for their clear and concise arguments. Claim dismissed.