Plot of land for development held in three parts–Three contracts in almost identical terms made by developers with the vendors–Right of rescission held to be available to vendors when planning permission was delayed but in only one case was the right exercised within a reasonable time
This was a
claim by Pine View Developments Ltd, of Chiltern Drive, Berrylands, Surbiton,
Surrey, against Mr Robert Napthan, of Honey Hill Lane, Wimbotsham, King’s Lynn,
Norfolk, Mr Victor Perry, of Hillcrest, Broomhill, Downham Market, Norfolk, and
St Dunstans, of Old Marylebone Road, London, for specific performance of
contracts by which the defendants undertook to sell plots constituting a site
of just under six acres at Wimbotsham. Alternatively, the plaintiffs claimed
damages. The defendants counterclaimed declarations that they had effectively
rescinded their respective contracts.
Mr J H Hames
QC and Mr B S Green (instructed by Barlow, Lyde & Gilbert, agents for
Metcalfe, Copeman & Pettefar, of Downham Market) appeared for the
plaintiffs, and Mr D M Levy (instructed by Ranger, Burton & Frost, agents
for Walton Jeffrey & Armitage, of Downham Market) represented the first and
second defendants, and also (instructed by Ranger, Burton & Frost) the
third defendants.
Giving judgment,
GOULDING J said that the plaintiffs, a property development company, wished to
buy just under six acres of land which was in three parcels, each owned by one
of the defendants. The original asking price of £12,500 for the total site was
quickly whittled down in negotiations to £11,500. Three contracts were drawn up
in almost identical terms. Each contained a special condition that read:
This contract
is conditional upon the purchaser obtaining outline planning permission for the
development of the land hereby agreed to be sold and of certain adjacent or
adjoining land now belonging to [the other vendors] being the subject of other
contracts with the purchaser of even date herewith. The purchaser shall advise
the vendor as soon as such planning permission has been obtained and this sale
shall be completed not later than three months after the date of such
permission. The purchaser shall use its best endeavours to obtain such planning
permission but if, at the expiration of six months from the date hereof, such
permission shall not have been granted, or shall have been refused, then either
party shall be entitled to rescind this contract by notice in writing to the
other, and upon such rescission the vendor shall return the deposit less the
sum of £21 as contribution towards the cost of the preparation of this
agreement.
Contracts were
exchanged on March 29 1972. Before that date the plaintiffs had applied to
Norfolk County Council for planning permission, but a number of problems arose,
with the result that by September 1972 planning permission had not been
obtained. It being apparent to the plaintiffs that they would not be able to
get the permission within the six months stipulated in the special condition,
they wrote letters to the defendants’ solicitors on September 21 purporting to
waive the special condition and treat the contracts as being unconditional.
Clearly those letters were written on the implied contention that the special
condition, in so far as it conferred a right to rescind, was inserted for the
benefit of the plaintiffs alone and therefore could be waived by them. It might
seem strange that such a view should have been entertained, because the right
of rescission was in terms given to either party, but that appeared to have
been the position. The six months’ deadline for obtaining planning permission
expired on September 29 1972 without permission having been obtained. On
November 20 the solicitors for the third defendants wrote to the plaintiffs
purporting to rescind. A similar letter from the solicitors for the first and
second defendants was dated January 25 1973. Planning permission was obtained
on January 26 1973.
The plaintiffs
made three principal submissions: (1) that on the true construction of the
three contracts in the light of the admissible surrounding circumstances, no
defendant was entitled to exercise a right of rescission except jointly with
the other two defendants–in other words, that the right of
(2) alternatively, that the right to rescind could only be exercised
immediately on the expiration of six months from March 29 1972, or very shortly
afterwards; and (3), in the further alternative, that if the right of
rescission did not have to be exercised immediately after the expiration of the
six months’ period, it could only be exercised within a reasonable time after
the due date, September 29 1972. He (his Lordship) thought that the first
submission must fail, because the language of the special condition was
perfectly clear and unambiguous and gave each individual vendor a right of
rescission under his individual contract. The second submission relied upon the
word ‘then,’ in the phrase ‘then either party shall be entitled’ etc, being
construed in a temporal rather than a consequential sense, so that it must be
taken to mean ‘at that moment in time.’
He (Goulding J) could not accept this contention; in his opinion ‘then’
meant ‘in that case’ in the context of the special condition. He did however
accept the plaintiffs’ third submission. He thought that it was good sense, and
likely to have accorded with the parties’ original intention, that the right to
rescind should be exercisable within a reasonable time after the due date. That
left the question whether or not the defendants had exercised their rights
within such reasonable time. The third defendants, St Dunstans, had served
notice on November 20, and given their need to consider and take advice upon
the plaintiffs’ purported letter of waiver on September 21, that notice had in
his opinion been served within a reasonable time after September 29 1972.
Accordingly the action against the third defendants failed, and their
counterclaim succeeded. With regard to the first and second defendants, the
position was different. They had not served notice until January 25 1973, one
day before the grant of planning permission for development of the site. He
(his Lordship) thought that this constituted unreasonable delay in the
circumstances of the present case. It followed that the action against the
first and second defendants succeeded, and their counterclaim failed.
