Sale of land – Contract – Rescission – Claimants agreeing to purchase leases on hotel rooms in development from defendant company and paying deposits – Claimants subsequently seeking declarations that no contracts existed or rescission and return of deposits – Whether parties entering into valid and binding contracts – Whether contract being void for uncertainty – Application dismissed in part
In October 2005, the six claimants attended a sales fair held to launch the sale of a large development of flats by securing concluded contracts on the same day. The claimants agreed to purchase a 999-year lease of four rooms (“aparthotels”) in the Park Plaza Westminster Bridge Hotel in London. Documents were exchanged between the parties, including a letter and a draft lease. The documents included a particulars page, which required the word “applicable” to be inserted next to the words “rent guarantee”. The documents were signed by the parties and the claimants paid their initial deposits. However the claimants subsequently applied to the court seeking declarations that there had been no contract or no enforceable contract, alternatively rescission of any contract found to exist for the purchase of the leases and for the refund of their deposits. The defendant counterclaimed for declarations that there had been valid and binding contracts, that the deposits had been forfeited, and for damages.
The proceedings gave rise to a number of issues, including: (i) whether the insertion of the word “yes” into the contract by some claimants when the word “applicable” was required, made the document invalid; (ii) whether the contract was void for uncertainty; (iii) whether the claimants’ solicitors had been correctly identified; (iv) whether the third claimant had known that the second claimant (her husband) had entered into a contract on her behalf and whether he had had the authority to do so.
Held: The application was dismissed in part.
(1) There was no doubt that the agreement required the use of the word “applicable” but it did not follow that “yes” was of no effect. Whether failure to use a prescribed word or formula invalidated the agreement was a question of construction. Where a statutory notice or contract term provided that a non-compliant notice would be invalid or ineffective, that would be the end of the matter. Where it did not, the court had to assess the statutory or contractual intention by the usual objective criteria, including the background and purpose of the provision and the effect, if any, of non-compliance. Where the notice was provided for by a statute or by a professionally drafted contract, and the draftsman had not provided, either way, for the consequence of non-compliance, one might reasonably assume that that was deliberate, and that it had been left to the court to decide. While it might go too far to say that there was a presumption, it was natural to conclude that it was intended that the notice ought, at least in some circumstances, survive non-compliance: Yates Building Co Ltd v RJ Pulleyn & Sons (York) Ltd [1976] 1 EGLR 157, Petch v Gurney (Inspector of Taxes) [1994] 3 All ER 731, R v Soneji [2006] 1 AC 340, Rennie v Westbury Homes (Holdings) Ltd [2007] EWCA Civ 1401 and Newbold v The Coal Authority [2013] EWCA Civ 584; [2013] PLSCS 115 applied.
In the present case, the parties could not sensibly be taken to have intended that “applicable” was an essential magic word that alone could open the box containing the income guarantee. So long as it was made clear on the particulars page that it was intended the income guarantee was to apply, it could make no difference to the parties what precise word was used; were it otherwise, there would be a readily available remedy under section 2(4) of the Law of Property (Miscellaneous Provisions) Act 1989.
(2) The court was reluctant to hold that a contract was void for uncertainty and, on the evidence in the present case, there had been no uncertainty. Any reasonable observer of the scene would have concluded that the solicitors attending the sales fair intended the draft lease enclosed with the letters supplied to the claimants on the day of the fair to be the operative draft. Parole evidence was admissible to identify the property that was the subject matter of the contract: Westvilla Properties Ltd v Dow Properties Ltd [2010] EWHC 30 (CH; [2010] PLSCS 19.
(3) There was nothing in the argument that none of the solicitors at the sales fair could be described as the “purchaser’s solicitor” because they all only began to act for a purchaser when approached at the sales fair itself. Both versions of the contract included the relevant contract term, identifying the draft lease as the one supplied to the purchaser’s solicitor. Both parties to the contract would be able to identify the firm from their common background knowledge without anything further being stated in writing. In any event, even if the solicitor’s identity was to be regarded as omitted, that could be corrected. Accordingly, there had been valid contracts between the first, fourth, fifth and sixth claimants and the defendant.
(4) On the evidence, the second claimant had lacked authority to enter into the contract on behalf of the third claimant and there was no contract unless and until there was ratification. The extent of the knowledge of the circumstances required for ratification might in some cases be debatable. However, in the absence of any evidence that the third claimant knew even that the second claimant had entered into a contract purportedly on her behalf, it could not be said that she had knowledge of the act that it was claimed she ratified. Accordingly there was no contract between the defendant and the second and third claimants because the third claimant never became a party to the proposed contract: Suleman v Shahsavari [1989] 1 EGLR 203 and Commission for New Jersey v Cooper (Great Britain) Ltd [1995] 2 EGLR 113 applied.
Michelle Stevens-Hoare QC and Lina Mattsson (instructed by Berry & Berry LLP) appeared for the claimants; Philip Rainey QC and Carl Fain (instructedd by Howard Kennedy Fsi LLP) appeared for the defendant.
Eileen O’Grady, barrister
