Specific performance–Six months’ option to purchase house for £10,000 obtained by purchaser’s agent for £1–No reason in law or equity why option should not be exercised and contract so constituted specifically enforced–It is the contract of sale that is specifically enforced, not the option agreement
This was an
appeal by Mr Calvin Scott, of 49 Enmore Road, London SE25, from a judgment of
Brightman J in the Chancery Division on May 24 1973 awarding the respondents,
Mr Frederick Mountford and his wife, Mrs Hilda Mountford, of Woodbastwick Road,
London SE26, specific performance of a contract of sale of 49 Enmore Road
constituted by the exercise on March 29 1972 of an option contained in an
agreement of December 12 1971.
Mr H G Narayan
(instructed by Suriya & Co) appeared for the appellant, and Mr I H Maxwell
(instructed by Hancock & Willis) represented the respondents.
Giving
judgment, RUSSELL LJ said that the plaintiffs were nominees of a small property
development and building company called H & L Cronk Ltd, and Mr Mountford
was the accountant. The defendant, a West Indian housepainter, was totally
illiterate, although he spoke and understood English well. His Italian wife
could not read English. At a meeting on December 12 1971 with the plaintiffs’
agent, the defendant signed an agreement giving the plaintiffs a six months’
option to purchase his house for £10,000 in return for £1. The agreement was
read over by a friend of the defendant who was present at the meeting. A month
later the defendant purported to withdraw the offer, but the plaintiffs’
solicitors told him he was not entitled to do so, and two months later, on
March 29 1972, the option was exercised. The defendant’s first argument was
that the option agreement was vitiated by the plaintiffs’ agent’s
representation that he (the defendant) could withdraw from the agreement up to
six weeks after signing it. This was a hopeless contention, as the judge had
come to the clear conclusion that no such representation had been made. Next it
was said that the agreement was an unconscionable bargain. But there was no
evidence that £10,000 was not a reasonable price, and there was nothing
remotely approaching the circumstances in which equity was prepared to
intervene. Finally, the startling proposition that the law would not regard £1
as valuable consideration for the option appeared to be based on a misreading
of a Canadian case, Gilchrist Vending Ltd v Sedley Hotel Ltd
(1967) 66 DLR (2d) 24, which suggested only that possible future obligations
avoidable by payment of $1 were illusory as consideration. The position was,
therefore, that the option agreement here was valid and effective and that a
contract of sale was constituted when the option was exercised. There was no
justification for the proposition advanced on behalf of the defendant that the
contract so created ought not to be specifically enforced, but that the
purchaser should have only been awarded damages. He (his Lordship) would add
that in circumstances of the kind the court was asked to order specific
performance of the contract of sale, not of the promise in the option agreement
not to withdraw the offer for the period in question. Provided the option was
valid and for valuable consideration and duly exercised, it was irrelevant to
the issue of remedy under the contract of sale that the valuable consideration
could be described as a token payment. So also if the option agreement was
under seal with no payment, which was what he (his Lordship) took Brightman J
to be referring to when discussing a ‘gratuitous option.’ While, therefore, he (Russell LJ) agreed that
a valid option to purchase constituted an interest in the land affected, he did
not think, as the judge appeared to have done, that that fact was necessary to
their common conclusion as to the appropriate remedy. For all these reasons, he
would dismiss the appeal.
CAIRNS LJ
delivered a concurring judgment in which he observed that in so far as there
was a difference in approach between the trial judge and Russell LJ, he agreed
with Russell LJ. SIR JOHN PENNYCUICK agreed with both the judgments delivered.
The appeal was dismissed with costs.
