Option to buy land for development signed by landowner, subsequently altered by addition of an extra term above his signature–Altered agreement held not to meet requirements of section 40, Law of Property Act 1925–Signature not affixed to, or recognised by words or gestures as applying to, the altered terms–Applications for planning permission not acts of part performance, option agreement accordingly unenforceable.
This was a
claim by New Hart Builders Ltd against Mr John Brindley, sued as administrator
of the estate of his father, the late John Brindley, for specific performance
of an agreement for sale of Allen’s Rough Farm, Willenhall, Staffordshire, for
£5,000 an acre.
Mr A C Sparrow
QC and Mr G W Seward (instructed by Bartlett & Gluckstein) appeared for the
plaintiffs, and Mr M J Albery QC and Mr T L G Cullen (instructed by Sharpe,
Pritchard & Co, agents for Haden & Stretton, of Walsall) represented
the defendant.
Giving
judgment, GOULDING J said that the late John Brindley, a farmer, lived at and
owned Allen’s Rough Farm between Wolverhampton and Walsall. By an agreement in
writing (the ‘option agreement’) of November 25 1966 he gave the plaintiff
company an option to buy the farm for £5,000 an acre. The option agreement
distinguished different parts of the farm by reference to a plan, the land with
which the action was concerned, something above 20 acres in extent, being edged
blue on the plan and conveniently described as ‘the blue land.’ The option agreement provided that the option
in respect of the blue land must be renewed every calendar year. The plaintiff
company claimed to have renewed the option in or about December in each year
from 1967 to 1970 inclusive, and to have finally exercised the option by letter
of October 26 1971. John Brindley died on February 6 1970, and the defendant
became his personal representative on November 16 1970. The plaintiff company
now sued the defendant for specific performance of a contract of sale of the
blue land constituted by exercise of the option contained in the option
agreement. In answer, the defendant had ultimately relied on three specific
points. He said first that the contract on which the plaintiffs sued was
unenforceable, because there was no sufficient writing to satisfy section 40 of
the Law of Property Act 1925. Secondly he alleged that the plaintiffs had
omitted to renew the option on the first occasion when renewal was required,
namely in 1967, and thirdly he said that they had failed to renew on the third
occasion, in 1969.
Section 40 of
the Law of Property Act 1925 required a contract of sale of land either to be
in writing or to be evidenced by a memorandum in writing. In either case the
writing had to be signed by or on behalf of the party to be charged. The only
signature which had been relied on for this purpose by the plaintiffs was the
late John Brindley’s signature on the option agreement, and to understand the
defendant’s first contention one must know the history of that document in some
detail. In 1966 Mr Dean, of the plaintiffs, had a number of discussions with
the late Mr Brindley and the defendant, and he introduced them to Mr Hartley,
also of the plaintiff company. No planning permission for development of
Allen’s Rough Farm having yet been obtained, Mr Dean and Mr Hartley had an option
in mind rather than an immediate purchase. A document was typed out in the
plaintiff company’s office and taken on November 25 1966 to Allen’s Rough Farm,
and after some discussion which took place mainly between Mr Hartley and the
defendant the blanks in the document were filled in so as to constitute an
option agreement for the purchase of ‘yellow’ and ‘red’ portions of the land at
£5,000 an acre, the consideration for the option to be £100. At some stage this
document, so completed, was signed by the late Mr Brindley, and after signature
it was handed to Mr Dean, who gave the late Mr Brindley a cheque for £100 in
return. A period of conversation followed, after which the defendant asked for
the option agreement and plans, saying that he wanted to check them. When he
got them, he wrote some further provisions into the agreement in the space
between the end of the typed text and his father’s signature. Using a blue
pencil, he drew the blue edging which now appeared on the plan referred to in
the document, and this area was mentioned in the added provisions, which read
as follows:
The area
edged blue extending to an area of approximately 23 acres the option on this
land to be renewed every 12 months and to run from January 1 to December 31
1967. The option on the remainder of the land will terminate December 31 1968
on any land for which planning permission has not been granted, thereafter a
new agreement will be needed.
Mr Dean was
not at all pleased with what he felt was this high-handed proceeding, but in the
end he and Mr Hartley left, taking the amended option agreement and the plans
with them. He (his Lordship) found that before they left, Mr Dean and Mr
Hartley on behalf of the plaintiff company, and the late Mr Brindley on his
side, had agreed to the document as amended. The late Mr Brindley did not sign
or initial the alterations made in the defendant’s handwriting, nor was
anything said about his signature after it was first affixed.
On these
facts, the defendant now argued that although the contract on which the
plaintiff company sued was in writing, it was not signed by the late Mr
Brindley. The signature was affixed to the option agreement as it stood before
alteration by the defendant, and the terms of the option agreement in that form
were finally agreed, and became binding, when the cheque for £100 was handed to
the late Mr Brindley. The offer contained in the option agreement as it then
stood was not accepted, because the agreement was shortly afterwards discharged
when the parties accepted the amendments made in the defendant’s handwriting.
This was an unattractive argument in the mouth of the defendant, but as a
matter of positive law to be decided on principle and not on general merits his
objection had much intrinsic force. On the evidence, the late Mr Brindley’s
signature was intended by him, at the instant when it was written on the paper,
to authenticate a different option agreement from that which the plaintiff
company claimed to have exercised. If he (his Lordship) said that in agreeing orally
or by conduct to be bound by the subsequent alteration of the document the late
Mr Brindley in effect re-executed his signature, that would be to place a
construction of law on the words of section 40. Counsel for the defendant had
conceded that in certain cases an alteration made to a document after signature
and approved by the party to be charged was sufficiently authenticated for the
purposes of section 40 by the original signature, as where the signed document
was altered to correct a mistake in the written statement of an existing
contract.
bound at all, merely to accept the altered writing was not specific enough:
appropriate words or gestures must be directed to the signature as a signature.
There were statements in the authorities which clearly supported this argument,
and he (Goulding J) thought it his duty in a matter of the kind to follow a
strong current of judicial opinion, even though it might not strictly bind him
and even though it drew what he for his part conceived to to be an illogical
distinction. He accordingly accepted the defendant’s submission that there was
here no sufficient writing to satisfy section 40 of the Law of Property Act
1925.
That raised
the plaintiff company’s alternative argument based on the well-known equitable
doctrine of part performance. The acts relied on as constituting part
performance were the planning applications made and prosecuted by the company
from December 1966 until permission was obtained in June 1970. On any view,
these applications could not rank as acts of part performance unless by their
own character they were referable to the existence of an agreement between the
plaintiff company and the late Mr Brindley. Counsel for the company had laid a
great deal of stress on the fact that the Brindleys gave assistance to the
company in pursuing the applications. However, there appeared to be nothing
improbable or unusual in the co-operation of a would-be developer and a
landowner in obtaining planning permission in the hope that both would
eventually profit, without necessarily having bound themselves by contractual
terms. Thus the planning activities did not prove the existence of a contract,
and the plaintiffs had failed to make out their allegation of part performance.
The defence under section 40 was therefore a good answer to the plaintiff
company’s claim. In addition, as a matter of construction of the option
agreement he (his Lordship) had concluded that written notice to the landowner
was required of renewal of the option, and it was common ground that no such
notice was served in 1967. Oral renewal had been relied on as the basis of an
alternative claim of promissory estoppel or quasi-estoppel, but he (Goulding J)
was of opinion on the facts that no oral renewal had been proved. On the
balance of probabilities, the plaintiffs had established that the option was
renewed in 1969, but that was of course of no avail to them in the
circumstances, and their action must be dismissed.
The defendant
was awarded costs.
