Vendor and purchaser–Law Society’s condition 10–Time for submitting requisitions–Condition 10 (3), deeming delivered abstract etc to be perfect as far as it goes, ‘hallowed by time’ but ‘avoidably obscure and uncertain in scope’ and possibly due for revision–Condition construed to mean that a solicitor must get on with the job of examining title as far as he can on the basis of the documents delivered–Purchaser in instant case nevertheless in a position to rely on waiver by vendor’s solicitors–Judgment for defendant
This was a
summons by Mr James Donald Diarmid Ogilvy and others, trustees of the Salisbury
Trust, against Mr James Hubert Hope-Davies, of Creech Hill Farmhouse,
Cranborne, Dorset, for declarations (a) that the defendant was indebted to them
in the amount of £503.60, being the interest accruing between August 30 and
October 15 1973 on the unpaid balance of the purchase-price of Creech Hill
Farm-house, alternatively (b) what sum was payable on account of such interest
and (c) that the plaintiffs were entitled to give a good receipt to the
solicitors concerned for the said £503.60 or other sum declared to be due. The
defendant counterclaimed a declaration establishing his right to the money in
question.
Mr C P F Rimer
(instructed by Frere Cholmeley & Co) appeared for the plaintiffs, and Mr S
L Newcombe (instructed by J M B Law) represented the defendant.
Giving
judgment, GRAHAM J said that the case might well not have come before the court
if the instructing solicitors on both sides had not, as the correspondence
showed, become irritated with each other shortly after the summer term of 1973.
As it was, the small amount at stake, £503, was bound to be swallowed up in
fighting the case to no one’s advantage. On August 2 1973 the plaintiffs agreed
to sell, and the defendant to buy, Creech Hill Farmhouse, completion to be on
August 30. The contract incorporated the Law Society’s General Conditions of
Sale (1973 revision), and it was said that the case raised for the first time
the question of the scope and effect of condition 10 (3) and of 10 (5), which
made time the essence of such condition. Condition 10 related to requisitions
and read:
(1) Within 14 days after the date of delivery of
the abstract or of the documents, particulars and information specified in
condition 7 (whether or not the same are respectively delivered at the time
prescribed), or within 14 days after the date of the contract if later, the
purchaser shall send to the vendor’s solicitors a statement in writing of all
objections and requisitions, if any, to or on:
(a) the title or evidence of title;
(b) the abstract or the said documents,
particulars and information; and
(c) the contract as regards matters not thereby
specifically provided for,
and subject
thereto, the title shall be deemed to be accepted.
(2) All objections and requisitions not included
in any statement sent within the time aforesaid and not going to the root of
the title shall be deemed to have been waived.
(3) The abstract or the said documents,
particulars and information, though in fact imperfect, shall be deemed to be
perfect, except for the purpose of any objections or requisitions which could
not have been taken or made on the information therein contained.
(4) The replies to any objections or requisitions
shall be answered in writing within seven days after the day of delivery
thereof, and if not so answered shall be considered satisfactory.
(5) In all respects, time shall be deemed of the
essence of this condition.
The epitome of
title was admittedly deficient, as sent on August 6, but the plaintiffs said
that they were relieved from the general obligation as to title in respect of
unregistered land, namely to deliver a perfect abstract of title, by the effect
of special condition 10 (3). They said that they delivered an abstract on
August 6 and although this was admittedly deficient in three respects,
nevertheless the purchaser was bound to make his requisitions by the time
limited, namely 14 days from that date, so far as he was able. The abstract
actually delivered, they said, must be deemed, as condition 10 (3) said, to be
perfect, and this, they said, meant, as far as it went when delivered. Though
the purchaser might have had to make further requisitions when it was in fact
completed, he could not wait to make his requisitions on that part of the
abstract which was first delivered until the second part, making the whole
perfect, was received. This second part, which included a deed of appointment
dated September 6 1972, was delivered on August 20 1973, and Mr Law made and
delivered all his requisitions on the whole abstract 10 days later on August
30, the specified date for completion.
Mr Rimer, for
the plaintiffs, said that Mr Law was at fault in so doing and that he was
responsible for the delay by holding up his requisitions as long as he did, so
that completion did not in fact take place until October 15. On the other hand,
he (counsel) admitted that if the purchaser’s solicitor was not at fault up to
August 20, when the epitome was completed by the plaintiffs’ solicitors, he
could not complain that the lapse of time after that date and until October 15
was unreasonable or due to any fault on the part of the purchaser’s solicitor.
Mr Newcombe, for the defendant, took his stand firmly on the general
requirement in respect of unregistered land that a vendor must deliver a
perfect abstract and said that Condition 10 (3) did not apply in the
circumstances of this case. Condition 10 (3), he said, related only to cases
where the abstract was on its face apparently perfect, even if it ultimately turned
out not to be so. It did not relate to a case such as the present, where the
abstract as delivered was admittedly not perfect and had some essential link in
the chain of title missing. In such a case, said counsel, the purchaser was
entitled to wait, unless the deficiency was made good.
The question
thus raised was primarily a matter of construction. At this point, he (his
Lordship) felt bound to say that he thought the Law Society might well consider
looking at condition 10 (3) with a view to revision when the next opportunity
arose. Though apparently hallowed by time, it was, in its context, avoidably
obscure and uncertain in scope, and indeed it seemed that such an authority as Williams
on Vendor and Purchaser 4th ed vol 1 p 71 also took the view that its scope
was uncertain, though the learned author’s criticism was perhaps not as harsh
as his (Graham J’s). What then did the condition mean? It should not, he thought, be construed so as
to make it necessary to deem ‘perfect’ any so-called abstract, however
deficient. That would lead to loose conveyancing with deplorable results. Nor
did he think Mr Newcombe’s argument and construction could be right. The
logical conclusion of counsel’s argument was that any deficiency, however small
or unimportant, entitled the purchaser to sit back and do nothing until the
deficiency was made good. He (his Lordship) thought that the proper
construction, which incidentally produced a commonsense result, was that the
matter must be looked at as one of substance. An abstract did not cease to be
an abstract on which a purchaser must make his requisitions within the time
specified if it was deficient only in respects which were unimportant, in that
a solicitor investigating the title would, or ought to, assume that the gaps
could be, and would be likely to be, filled in a way he would expect from the
information supplied in the abstract. In such a case he ought to get on with
it, raise what requisitions he could on the abstract submitted, and at the same
time call for the obvious gaps to be filled. Of course, when those were filled
he would be entitled to make further requisitions if such turned out to be
necessary in respect of the new material. That, as he (Graham J) thought, was
what the draftsman of the conditions must have had in mind, and without any
attempt to lay down all-embracing rules, he thought that the words ‘except for
the purpose of any objections or requisitions which could not have been taken
or made on the information therein contained’ were included to protect a
purchaser who, as a matter of substance, was baffled by some part of the
abstract and really could not guess what the true position was; or to deal with
the situation where there was some wholly unexplained defect in the title, the
existence of which there was no reason a purchaser should suspect, or where the
proper conclusion was that the abstract had so many deficiencies in it that it
could not really properly be considered to be an adequate abstract at all.
On that construction,
he (his Lordship) rejected Mr Newcombe’s argument. The abstract here was nearly
complete and there was no real difficulty in guessing what the position was.
Indeed, the most important missing link–the deed appointing the plaintiffs as
trustees of the Salisbury Trust–was in fact referred to in a schedule in the
legal charge to the Agricultural Mortgage Corporation dated October 10 1972.
If, therefore, the matter ended there, the purchaser ought to be held
responsible for some delay in making his requisitions and for the fact that
this delay was a real contribution to completion being eventually 46 days late.
In that event it would be necessary to attribute responsibility for the delay
having regard to factors for which the plaintiffs were responsible, such as
their failure to deliver the epitome until August 6. As matters stood, however,
on the view he (Graham J) took it would be wrong to lay the blame for the delay
which took place wholly on the purchaser. The correspondence showed that on
August 14, Mr Law wrote asking for the indulgence of Frere Cholmeley & Co,
since he was going on holiday ‘next week’ and would not be in a position to
complete by the due date. He made it clear, however, that the epitome was not
complete, and that other solicitors besides himself were involved on behalf of
his client’s bankers. On August 15 Frere Cholmeley & Co replied, enclosing
death certificates of two former trustees and stating that the title was now
complete. They did not apparently appreciate, or had forgotten, at that time
that the deed of appointment of the plaintiffs as trustees was also missing.
Then, after saying that they appreciated Mr Law’s difficulties, they reminded
him of the defendant’s obligation to complete by August 30. Were that all,
there would have been something in the plaintiffs’ contention that the delay to
date was, as a matter of substance, the fault of the purchaser. But they went
on to say in the last paragraph:
Finally, we
observed that you have sent us some inquiries but, with respect, we feel
inquiries should have been made before contract so that if the selfsame
questions are to be asked now they should be raised as requisitions on title.
However, we would prefer that all your requisitions on title are raised at the
same time since if we have to refer any matters to the mortgagees they can all
be dealt with at the same time. We await hearing from you further.
By this last
paragraph, in spite of their earlier reference to the completion date, it
seemed to him (his Lordship) that the vendors’ solicitors were accepting the
position that in the circumstances the purchaser should hold up making his
requisitions until he could do so comprehensively, and their reference to ‘the
mortgagees’ was no doubt intended to apply to the AMC, who held the charge over
the property already referred to. At this time, although Frere Cholmeley seemed
to have thought otherwise, the epitome still lacked the deed of appointment of
September 6 1972. This was specifically referred to by Mr Law in his letter of
August 16 1973, and a photocopy of it was in fact sent with the letter of
August 20 1973. This letter, one assumed, was delivered on August 21, the next
day. It seemed to him (Graham J) that the proper view was that by reason of
their letter of August 15, in spite of their reference to the necessity for
completion by the due date, Frere Chomeley must be deemed to have waived the
date for the requisitions until a reasonable time after the delivery of the
deed of appointment, and that the strict provisions of conditions 10 (3) and 10
(5) ought not to be applied. In fact Mr Law did deliver his requisitions by
letter of August 30, and thereafter the matter proceeded with normal dispatch
on both sides, except that strictly it might well be that the plaintiffs were guilty
of some unnecessary delay in the ensuing period, possibly because their
representative in his turn went on holiday. Legally, the position was governed
by the principles of waiver or promissory estoppel, however it might be
classified, which were set out, for example, in the judgment of Lord Denning
in W J Alan & Co Ltd v El Nasr Export & Import Co [1972]
2 QB 189 at 213. There the Master of the Rolls said:
The principle
of waiver is simply this. If one party, by his conduct, leads another to
believe that the strict rights arising under the contract will not be insisted
upon, intending that the other should act on that belief, and he does act on
it, then the first party will not afterwards be allowed to insist on the strict
legal rights when it would be inequitable for him to do so. . . . He may on
occasion be able to revert to his strict legal rights for the future by giving
reasonable notice . . . or otherwise making it plain by his conduct that he
will thereafter insist upon them. . . . But there are cases where no withdrawal
is possible. It may be too late to withdraw: or it cannot be done without
injustice to the other party. In that event he is bound by his waiver. He will
not be allowed to revert to his strict legal rights. He can only enforce them subject
to the waiver he has made. . . .
In his (Graham
J’s) judgment, it would be inequitable in all the circumstances to allow the
vendors here to insist on the strict legal rights to which they would have been
entitled if they had not led the purchaser to believe that they were not
insisting on them. Time was in fact getting very short when the vendors wrote
the letter of August 15. This, coupled with the failure to deliver the deed of
appointment until August 20, entitled the purchaser to assume that completion
by August 30 would not be possible. Any question of withdrawal of the waiver
was impossible before August 30 because the time was far too short. The vendors
therefore failed, and the purchaser was entitled to judgment for a declaration
that he was able to give a good receipt for the sum of £503.60.
The defendant
was awarded his costs.
