Agreement to grant right of first refusal to owners’ son in event of owners wishing to sell farm – Prospect of grantor gifting farm to another member of the family – Whether grantee could invoke implied term requiring deed of grant extending right to dispositions other than sale
The appellant Brian Markham (Brian) was at all material times the tenant of a farm owned by his parents Mr and Mrs F B Markham. To deal with a variety of matters which had given rise to dissension within the family a professionally drawn document, the heads of agreement, was signed by Brian, his parents and others on March 11 1987. Clause 11 declared that the parents would grant to Brian a right of pre-emption relating to the farm which would be subject to that right both before and after the death of the parents. The more detailed provisions as to valuation and subsequent procedure were preceded by the words “. . . if they [the parents] wish to sell this farm . . .” and the same words appeared in a draft deed (drawn by the parents’ solicitors) intended to give effect to the agreement. Aware of plans by his parents to make a gift of the farm to another family member, Brian failed to persuade them that the right should be expressed to arise upon any desired disposal of the farm, not just sale.
In subsequent wide-ranging proceedings between Brian as defendant and his mother and his father’s executors as plaintiffs that particular point was decided in favour of the plaintiffs. Brian appealed contending that the judge had failed to apply Gardner v Coutts & Co [1968] 1 WLR 173 where Cross J had observed that “it is implicit in a grant of first refusal that the person who has to offer the property to the other party should not be entitled to give it away without offering it and so to defeat the first refusal”.
Held The appeal was dismissed.
Given that clause 11, as drafted by solicitors, referred to no transaction other than a sale the term favoured by Cross J could not be implied unless it was necessary in the business sense to give efficacy to the contract: see per Scrutton LJ in Reigate v Union Manufacturing Co [1918] 1 KB 592 at 605. Since Brian had acquired (for the 21-year perpetuity period) a not insignificant right against any donee or successor who wished to sell the farm outside the family he could not complain that the clause lacked efficacy as it stood. The judge was accordingly correct in confining the ruling in Gardner to its special facts where the grantor was free “to sell or dispose” in case of non-acceptance and the grantee acquired a straightforward option to purchase on the death of the grantor.
Glenn Campbell (instructed by Roythorne & Co, of Spalding) appeared for the appellant; Marian Egan (instructed by Chattertons, of Horncastle) appeared for the respondent.
