Originating summons–Vendors’ title to land–Existence of an old (1912) "suspended" contract of sale–Vendors unable to remove this incumbrance–Whether purchasers should be forced to accept a title with such an impediment–Held that vendors had not shown a good title–Purchasers entitled to rescind–Vendors’ "siren song" rejected
In these
proceedings by way of originating summons the plaintiffs, MEPC Ltd, of Brook
House, 113 Park Lane, London W1, purchasers under a contract dated April 10
1973 relating to freehold premises known as 8 Storey’s Gate, Westminster,
London SW1, at a price of £710,000, asked the court to determine whether the
defendants, Thomas Guy Christian-Edwards, solicitor, of Candlewick House, 116
Cannon Street, London, Mrs Jessie Marie Wyles, of The Clock House, Stoke Poges,
Bucks, and Miss Margaret Hornby, of Candlewick House, 116 Cannon Street,
London, as trustees of the estate of William Paul Metchim, had a good title to
the property as vendors.
Richard Scott
QC and Jonathan Parker (instructed by Simmons & Simmons) appeared for the
plaintiffs; G B H Dillon QC and E W Christie (instructed by Monro, Pennefather
& Co) represented the defendants.
Giving
judgment, GOULDING J said that the first question raised by the plaintiffs’
originating summons was whether the defendants, as vendors, had a good title to
the freehold property, 8 Storey’s Gate, London SW1. The contract to sell was
concluded at a sale by auction for £710,000 and was subject to conditions as
set out in a number of paragraphs. Paragraph 1 provided for the inclusion of
the Law Society’s General Conditions of Sale, 1970 edition; paragraph 4
specified May 22 1973 as the date for completion; and paragraph 15 provided
that documents dated more than 12 years before the date of sale should be
accepted as conclusive evidence of their veracity.
Investigation
of the title showed that the defendants had sold pursuant to a trust under the
will of William Paul Metchim, who died on December 14 1911. The plaintiffs’
inquiries also revealed a family arrangement arising out of the testator’s
dispositions and dated July 1 1912. In order to render references to that
arrangement understandable it was necessary to state that the property in that
arrangement was called Abbey Building, now known as 8 Storey’s Gate, and that
Percy R Metchim, one of the testator’s sons, had an option to purchase Abbey
Building. The deed of the family arrangement, a lengthy document, contained
certain recitals including one which read:
"whereas
the said Percy Metchim has not exercised the option to purchase Abbey Building
given to him by the said will and whereas the trustees of the said will have
granted a lease for 21 years at the yearly rental of £950 of the business
premises to the said Percy Metchim . . . and whereas the trustees of the said
will have agreed that the said Abbey Building be sold to the said Percy Metchim
at the sum of £23,750. . . ."
Accordingly,
the deed of family arrangement gave the plaintiffs notice of a recited contract
made in 1912 for the sale of the freehold property to Percy Metchim for the sum
of £23,750. Another document which appeared on investigation of title was a
deed of appointment of new trustees of the will dated March 18 1936. That also
contained some information relating to the property. It showed that the option
to purchase given to Percy Metchim by the will was not exercised and that the
original trustees had granted a 21-year lease from 1911 to Percy Metchim. The
deed also recited "that the present trustees, with consent of certain
beneficiaries, did, on January 19 1933, grant to Percy Metchim a further lease
of the premises for 21 years from Christmas Day 1932 at a progressive rent
starting at £1,300 per annum and rising to £1,400 per annum."
Having noticed
all the references to a contract for the sale of the freehold, the plaintiffs’
solicitors inquired of the defendants’ solicitors in June 1973 whether they
could produce evidence that the agreement to sell was never enforced. The
defendants’ solicitors wrote saying they could produce no evidence to show that
the contract for sale was ever rescinded and said the defendants would have to
rely upon the facts. The plaintiffs remained anxious and in August 1975 they
issued the originating summons.
However, the
question did not come for judgment simply in the form already stated because
the defendants had adduced evidence on the summons which disclosed other facts.
The most important fact was a deed of covenant produced by the defendants and
dated February 11 1930. That was made between two daughters of the testator
interested in his will and their niece. The purpose of the covenant was to give
the niece a small income arising from the Westminster property. What was
relevant for the present purpose was a reference to the position of Percy
Metchim. By a recital the covenant stated
". . .
whereas the said Percy Metchim did not exercise the option to purchase the
property given to him by the said will and whereas the trustees of the said
will granted to the said Percy Metchim a lease of the premises for 21 years and
11 days from December 1911 . . . and whereas since the granting of such lease
the sale of such premises has not been completed and, by consent of all the
parties interested, performance has been suspended. . . ."
That recital appeared
to have influenced the wording of the operative part of the deed of covenant
which, so far as was material, was as follows:
". . .
the donors do hereby covenant that the donee shall from August 1929 be
entitled, so long as she is living and the sale of the said premises shall be
incomplete, to receive and be paid out of the rent (of the said premises) the
yearly sum of £80 and further if during that lifetime the sale of the said
premises shall be completed an annuity of the sum amounting to £80 for her life
shall be purchased out of the proceeds of sale. . . ."
That deed of
covenant made between certain beneficiaries
completion was suspended "by consent of all the parties interested."
On January 19
1933 the trustees of the will executed a further 21 years’ lease of the
premises in favour of Percy Metchim. The defendants’ researches had shown that
Percy died at the age of 65 on November 6 1942. One child certainly, two
probably, survived and so far as could be discovered they were still alive,
although no grant of representation of Percy’s estate had been discovered. The
records of the solicitor and the estate agent who conducted the business of the
trustees of the testator’s will had been searched but no further information
had come to light about the 1912 contract.
On those facts
the plaintiffs’ case was simple. According to the plaintiffs the contract of
1912 was an incumbrance not disclosed by the defendants in the contract of 1973.
It was an incumbrance which the defendants had been unable to remove and would
require, claimed the plaintiffs, a special condition and, in the result, would
be likely to discourage resale or would depress the price. It was also said
that the existence of the incumbrance would make the property a less attractive
security for a lender of money. So, claimed the plaintiffs, it was not the good
title for which they contracted. Mr Scott said, and rightly said, that where a
purchaser bought on conditions that contained no reference to matters which
were afterwards discovered and which appeared to be an impediment to title the
court should not force him to take such a title.
The
defendants’ answer was that Percy Metchim was never in a position to complete
the contract, nor was anyone now in a position to enforce that contract. Mr
Dillon, in support of these contentions, submitted that courts were slow to
order specific performance after a long delay, particularly where the market
had changed. In the present case, said counsel, 65 years had passed since the
1912 contract and 47 years since the last evidence of it as an obligation. It
was inconceivable, he claimed, that any court would now, at the suit of a
personal representative of Percy Metchim, compel the trustees to sell at the
price of £23,750. Any sale of land, claimed Mr Dillon, had to be completed
within a reasonable time. Delay beyond that reasonable time meant there was a
chance that parties seeking to enforce a contract would not be given specific
performance but left to their remedy in damages. It was also argued that the
contract of 1912, having been suspended "by consent of all the parties
interested," could be revived only by consent of all parties, and those
would include the plaintiffs.
The whole of that
group of arguments seemed to be mistaken. The real difficulty was that he (his
Lordship) could not infer from the mere statement that "by consent of all
the parties interested" the contract was suspended what the terms of such
suspension were. Clearly the deed of 1930 treated the contract as alive though
suspended. It was merely speculating to guess whether Percy Metchim was guilty
of delay or not. It was a family situation and when the contract was suspended
Percy Metchim might not have been in an easy financial situation. If that were
so it was possible, although one was only guessing, that the family might have
agreed that while Percy should retain the benefit of his contract he, or those
following him, should not be bound or entitled to complete or not until the
trustees desired to complete the sale. Of course, if specific performance were
sought, by or against Percy’s personal representatives or their successors, of
an arrangement of that sort there might be difficulties arising under the rule
against perpetuity as formerly stated. As for the argument that a contract
suspended with the consent of all parties could only be revived with the
consent of all parties, that depended upon the terms upon which the parties
agreed at the time of suspension. It was by no means obvious that they would
all have to agree. Accordingly the lack of further evidence of what happened to
the contract of 1912 and the obscurity which surrounded the recital of the deed
of covenant of 1930 made it impossible for the defendants to rely upon that
group of arguments.
For the
defendants it was argued that the plaintiffs had shown undue nervousness about
the 1912 contract. Even if it was still in existence in 1930 it could not have
been preserved much longer. One of the arguments was that the deed of covenant
of 1930 was not a very reliable source of information. Percy Metchim was not a
party to it nor were the trustees. It was executed by two beneficiaries and
their niece. There was some force in that argument but the deed was produced
from the custody of the family solicitors and the probability was that it was
prepared by them. In any case it was conceded that when the plaintiffs, as
purchasers, were given notice of the facts they could not have been advised
simply to forget them. Another point raised by the defendants was that it was
inconceivable that anyone claiming specific performance of the contract would
be able to get the claim on its feet even assuming there had not been a long
delay. That argument did not convince his Lordship.
It was also
said that, whatever might be the position between someone claiming on behalf of
Percy and the trustees, a court would never order specific performance at a
price of £23,750 against the purchaser more than half a century later. That
point had no conviction at all. If the purchaser completed with notice of the
1912 contract then a court would be bound to grant specific performance against
the purchaser. The final suggestion was that a declaration that a sufficient
title had been adduced under the contract would be of practicable conclusive
value to the plaintiffs as a protection against any future claim. That was a
siren song against which the court could only plug its ears.
The key to the
case was to be found in examining the purpose for which a decision was needed
on the evidence at present before the court. It was not a claim for specific
performance of the 1912 contract. Nor was the court being asked to examine what
was material under section 13 of the Land Registration Act of 1925. What the
court had to decide was whether the defendants had provided the plaintiffs with
a title in accordance with the contract. There was a complete absence of
evidence as to the true terms upon which completion of the 1912 contract was
suspended. It was quite impossible for the defendants to say what the true
facts were.
Accordingly
the answer to the question, had the title to the property been shown in
accordance with the contract, was in the negative.
As the
plaintiffs elected to rescind, judgment was entered in their favour on the
originating summons with costs.
