Vendor and purchaser — Auction sale — House sold subject to a tenancy but ‘with vacant possession of one room on the first floor’ — Action by purchaser for damages on the ground of breach of contractual obligation to give vacant possession of this (bed-sitting) room — Meaning of ‘vacant possession’ — A purchaser is entitled to possession free from any occupation by the vendor or a third party and free from any claim to a right to possession of the premises — Vacant possession is not an abstract concept; it is a right which, in the absence of any competing legal claim, passes to the purchaser on completion — In the present case the delivery of vacant possession was not prevented by any claim of right but by the deliberate and totally unjustified obstruction of the vendor’s tenants, who had made use of the room in question without any right to it — Although a vendor is in breach of his contract to give vacant possession if at the time fixed for completion there is a third party who has a legal claim to possession, he is not in breach merely because there is a person in occupation who has no lawful claim — It is for the purchaser to seek his remedy in the county court against the trespasser — Held accordingly that in the present case the purchaser had not established that the vendor had failed to deliver vacant possession — Having so decided, the judge considered, in case he was wrong, the wider question as to what a vendor who has contracted to sell with vacant possession has to do between contract and completion to fulfil his contractual obligation — For example, if squatters have moved in is he required to take legal action to evict the squatters? — This was an area deficient in legal authority, but in the judge’s opinion the answer was no; if, however, the vendor had knowledge of the occupation he had an obligation to act reasonably as circumstances permitted in the light of that knowledge — In the present case the vendor did all that a reasonable vendor could have been expected to do — As a precaution the judge discussed the basis for the calculation of damages in case he was wrong on the issue of liability — In view of the decision he had reached, however, the action would be dismissed
The following
case is referred to in this report.
Wheeler v Mercer [1957] AC 416; [1956] 3 WLR 841; [1956] 3 All ER
631; [1956] EGD 248; (1956) 168 EG 520, HL
This was an
action by the purchaser, Javed Sheikh, claiming damages for an alleged breach
by the defendant vendor, Mr P J O’Connor, of the contract of sale of the
freehold property at 91 Henley Road, Ilford, Essex. The sale was by auction and
the property was sold subject to a tenancy held by a Mr and Mrs Hussey, but
with a provision that vacant possession would be given ‘of one room on the top
floor’.
S W Cogley
(instructed by Suriya & Co, of Ilford, Essex) appeared on behalf of the
plaintiff; B McIntyre (instructed by Sanders & Co, of Rainham, Essex)
represented the defendant.
Giving
judgment, MR MICHAEL WHEELER QC said: This dispute concerns a contract for sale
by the plaintiff to the defendant of a freehold property at Ilford, 91 Henley
Road (’91’). No 91 was put up for auction by a firm of estate agents called
Hillyers on September 1 1983. It was included in Hillyers’ catalogue for
September as lot 26 under the heading ‘Part vacant — one room’. The particulars
stated that the whole house, apart from one room on the first floor, was let to
a Mr and Mrs Hussey and was offered — and this was in prominent heavy type —
with ‘Vacant possession of one room on the first floor’. No 91 was purchased by
the plaintiff at the auction for £17,000.
First, I must
say a little about the previous history of 91 and the dramatis personae.
It was
originally acquired in 1976 by the defendant’s father. I will call the
defendant himself ‘PJ’, which is what he is generally known as, and his father
(if he will allow me) as ‘Bart’. Bart described 91 as having been bought in
trust for PJ, who was then about 16. Later in 1976 (and it matters not whether
91 was specifically bought with this in view) the Husseys and their daughter
Patricia moved into 91. Mrs Hussey was Bart’s sister. In the meantime, Bart and
his two sons had done a great deal of work on 91 to put it in order. Although
Mr Hussey disputed this, I am entirely satisfied on the evidence as a whole
that the terms on which the Husseys moved in were that Bart would retain
possession of a room at the back on the first floor (which I will refer to as
‘the bed-sit’) and also a box-room, together with the right to share the
bathroom and we facilities with the Husseys. As Bart put it in evidence, ‘I was
to keep the [bed-sit] and the box-room for myself because I needed to let them
in order to help with the mortgage which I had taken out in order to buy 91’.
Bart also told me that with this in view he and his sons made the bed-sit
self-contained from the start because it would be easy to get a single man for
one room fitted out in this way.
Bart told me
that he soon found a prospective tenant for the bed-sit. This was a Mr Alan
Guymer (whom I will call ‘Alan’), who in fact worked under Bart: and he and
Alan both told me that Alan occupied the bed-sit for about four and a half
years from about June 1977 until December 1981. Among other things, 91 was
during this period shown as Alan’s address on the electoral register.
The bed-sit
was empty for some months after Alan left. There was some question of PJ
himself moving in, and with this possibility in mind, after Alan left, PJ took
out the old fridge, cooker and so on and replaced them. PJ never in fact
occupied the bed-sit. Relations between him and Hussey worsened, and in
September PJ let the room to a Mr Purcell, who knew both Bart and PJ and also
Hussey. Purcell occupied the bed-sit from September 1982 to June 1983. When he
left, he told me, he locked the bed-sit door and gave the mortice key to PJ.
As will
appear, Hussey asserts that the bed-sit was his daughter (Patricia’s) bedroom
and that it was never occupied by anyone else apart — for about two months —
from Purcell. Quite apart from the evidence of Alan and Purcell himself,
however, Bart and PJ both told me that from the outset Patricia had a bedroom
on the ground floor and that the communicating doors between her room and the
front room on the ground floor had expressly been ‘jarred up’, as Bart put it,
at the outset before the Husseys moved in in order to make this arrangement
possible.
I do not
propose to review the considerable evidence which bears on the dispute between
Hussey on the one hand and several other witnesses on the other hand as to who
occupied the bed-sitting room.
slightest doubt (a) that Bart expressly did not include it in the Hussey
letting; (b) that it was never intended to be occupied by Patricia, nor was it;
and (c) that Hussey was perfectly well aware of all this throughout. In short,
in so far as any of the Husseys may have used the bed-sit at all (or have given
that impression) they had no authority whatsoever to do so and were in fact and
in law trespassers.
After Alan
left 91, Bart had nothing to do with the property, the legal title to which had
in fact been transferred to PJ in June 1978.
At one stage,
comparatively late in the history of 91 there was a proposal that Hussey should
buy it, and it seemed that he came near to agreeing a price of £20,000 with
Bart. But PJ (who, of course, was the true owner) wanted £22,000 and Hussey
broke off the discussions.
It was against
this general background that in mid-1983 PJ decided to put 91 on the market.
The Husseys would still keep their tenancy as before (it was an oral tenancy),
but the property would be offered with vacant possession of the bed-sit. So PJ
went to Hillyers.
Towards the
end of July 1983 a Mr Latham, of Hillyers, who gave evidence before me, visited
91 and was shown round by Hussey. In a letter to PJ of July 1 1983, Mr Latham
said, among other things:
We have seen
the tenant, Mr Hussey, who conducted us round the house, and he advised us that
the room that you mentioned on the back of the instruction form being vacant
was occupied by a friend of yours for a short period, and vacated, and he
further advised us that the house is let entirely to his family and that no
rooms are offered with vacant possession.
I can well
understand that the Husseys did not relish the prospect of having an outsider
as their landlord, and in particular having someone outside the family who
would decide on future lettings of the bed-sit; and it may, I suppose, have
seemed to Hussey himself that the best way out of these difficulties was for
him to claim to be the tenant of the whole house. Whether that was so or not,
PJ told me that this letter of July 1 1983 was the first he knew of Hussey’s
assertion to be the tenant of the whole of 91, but, he said, it did not alarm
him because he knew the bed-sit had been locked when Purcell left and he had no
reason to think (as later proved to be the case) that Hussey had got into it.
Hussey, after all, was married to PJ’s aunt, and even if his own relations with
Hussey had deteriorated, he knew, he told me (and as I find), that Hussey had
always known that the bed-sit had not been let to him. In the light of this PJ
did not check with Hussey and saw no reason to do so, though it seems certain
that on receiving that letter he must have assured Mr Latham that the bed-sit
was available for vacant possession. Thus it was that Hillyers’ catalogue came
to be published in the form which I have indicated.
I should here
mention that Hillyers’ letter of July 1 1983 came to light only after the
hearing of these proceedings had begun and had been adjourned. It was then,
very properly, made known to the plaintiff’s advisers and has since formally
been put in evidence as exhibit P4. I am satisfied that there is nothing
sinister in this.
The plaintiff
saw the catalogue probably in the first half of August 1983 and he decided to
bid for 91 as a family home for himself, his wife and his son then aged about
two. Not surprisingly, he told me that he would not have done so if he had
thought he would not get possession of the bed-sit on completion. But it was
only then or thereabouts (in the event completion was on January 5 1984) that
he visited the property. I say ‘thereabouts’ because there is some confusion on
the evidence as to whether the plaintiff visited 91 on January 5 1984 or some
days later. Some clue to this can perhaps be obtained from contemporary
correspondence. In a letter of January 5 1984 PJ’s solicitors (Sanders &
Co) wrote to the plaintiff’s solicitors (Suriya & Co) saying, among other
things, that they had received the completion money and therefore enclosed the
transfer of the property and had paid the outstanding balance on the mortgage
and in a postscript stated that the keys of 91 would shortly be available for
collection at their offices or, if the plaintiff preferred, they would send
them. That letter crossed a letter of the same date from Suriya & Co to
Sanders & Co inter alia thanking Suriya ‘for your co-operation
throughout the course of this transaction’. On January 6 Suriya wrote asking
that the keys be forwarded to the plaintiff at an address in Sprowston Road,
E7; and the keys were sent there on January 10.
What is a
little curious is that it is not until January 16 1984 that Suriya & Co,
the plaintiff’s solicitors, write complaining that
Upon our
client’s recent visit to the property [91], the tenant informed him that the
property was not part vacant as he (Hussey) occupied the whole of the premises.
PJ’s reply to
this on the following day, through Sanders & Co, was that
Up to the
completion date that one room was occupied by our client [PJ] who had his
belongings in there. Just before completion he attended the property and
vacated the room and so far as we were concerned completion took place in
accordance with the contract. If in the meantime the tenant (ie Hussey) has
occupied the room (ie the bed-sit) then we regret this is a matter for your
client to take up with him direct.
It is, I
think, clear that on (or more probably a few days after) January 5 1984 — which
is now agreed to have been the completion date — the plaintiff did have a
conversation with Hussey, introducing himself as ‘your new landlord’; and that
it was on that occasion that Hussey told the plaintiff that ‘there was no room
vacant’. Not surprisingly, this came as a considerable shock to the plaintiff.
Leaving aside,
therefore, the possibility (which I regard as unlikely) that the plaintiff and
Hussey had this conversation on January 5, I must now summarise what did happen
on that day.
As I have already
mentioned, by September 1983 PJ was at least on notice that Hussey was claiming
to be a tenant of the bed-sit, but did not take that claim seriously for the
reasons which I have outlined. Following the auction on September 1 1983 the
plaintiff put in the usual general tenancy inquiries dated September 9, the
answers to which, from Sanders & Co, dated September 12, stated inter
alia that Hussey was the tenant (though there was no written agreement) of
‘all except one room on the first floor’ (the box-room had dropped out of the
picture for reasons which I need not touch on). To Enquiry F(3), which was
Of what other
breaches of covenant by the tenant [ie other than any failure to pay rent]
continuing or past, is the vendor aware?
the answer
eventually given, in a letter from Sanders & Co to Suriya & Co of
September 16, stated:
There is no
written agreement with the tenant. We understand there have been some
arguments, but it is anticipated that there will be no outstanding problems on
completion’:
and at the end
of the same letter Sanders & Co wrote:
We understand
that the room retained by the landlord is the back room
ie what I call
the bed-sit
on the first
floor and the landlord’s furniture in this room will be removed before
completion.
While Sanders
& Co’s answer to Enquiry F(3) may well have reflected PJ’s then state of
mind, the letter as a whole was not calculated to alert the plaintiff to the
possibility of a head-on dispute by Hussey of the plaintiff’s right to occupy
the bed-sit.
Hussey’s
claim, as notified to PJ in Hillyers’ letter of July 1, clearly worried PJ,
because in October 1983 PJ, on his own evidence, decided (as he put it) to face
up to Hussey and went to 91, partly to see if there was any mail for him and
partly to look at the bed-sit. It appears to have been a very unsatisfactory
meeting. PJ said that Hussey (I quote from his evidence) ‘threw a bag of mail
at me and punched me when I said that I wanted to see the bed-sit, and he shut
the door in my face’, whereupon (either then or later) he (PJ) went to the
police.
By this time
at least PJ must have realised that he might have a fight on his hands with
Hussey, however unjustified he may reasonably have considered Hussey’s claim to
be.
What happened
thereafter is not entirely clear, but at some time between October 1983 and
January 1984 PJ found that he could not get in at the front door of 91, so that
on the date eventually fixed for completion (January 5 1984) he went to 91,
taking with him a carpenter, Alan Barnett, whom he had known for some five or
six years, with a view to changing the lock on the front door of 91 so as to
ensure that the plaintiff would be able to get into 91 on completion. When they
found that in order to get in they would have to remove a glass panel in the
front door, Mr Barnett, very sensibly, suggested that they should call in the
police — which they did. This changing of the lock may well be thought as
emphasising PJ’s determination to give the plaintiff entry to 91 in order that
he might obtain the vacant possession of the bed-sit of which he had contracted
to become owner.
However, when
PJ and Mr Barnett succeeded in gaining entry to 91, PJ went upstairs and found
to his surprise that the door of the bed-sit was unlocked and open. He had
expected to find it locked as Mr Purcell had left it. He therefore instructed
Mr Barnett to put a new lock on the door of the bed-sit as well, which Mr
Barnett then
belonging to Patricia which were clearly (and I suspect deliberately) intended
to give the impression that the room was occupied.
Following PJ’s
lock-changing visit to 91 with Mr Barnett, Hussey put the original locks back
in the bed-sit and on the front door. I should add that when, on January 5
1984, PJ attempted to give his aunt a set of the new front-door keys, he says
that she threw them at him.
It is clear
beyond doubt, in my judgment, that PJ and the plaintiff’s contract of September
1 1983 was that PJ would give the plaintiff vacant possession of the bed-sit:
and it is equally clear that what the plaintiff got on completion, no doubt
largely due to the obstinacy and unjustified opposition of Hussey, was not, in
one sense, what he had bargained for.
The crucial
question then arises — and it must, I think, be answered in the light of the
actual facts of the present case — what was the ‘vacant possession’ which PJ
contracted to sell to the plaintiff, and what, if anything, should he have
done, but failed to do, between the contract date (September 1 1983) and
completion (January 5 1984) to fulfil his contractual obligation regarding
vacant possession?
I can well
understand that if giving vacant possession was prevented because of some third
party right (whether actually sought to be enforced or merely available
to be enforced), the vendor should not be excused. But that is not the position
here. Here, what prevented the plaintiff from getting vacant possession (in the
sense of being able physically to move into the bed-sit with his wife and son)
was Hussey’s deliberate and totally unjustified obstruction, an obstruction
which PJ, rightly or wrongly, did not think would be pressed because he thought
that he (PJ) had the sole access to the bed-sit.
What, then,
was the ‘vacant possession’ which PJ had contracted to give to the
plaintiff? I should emphasise at the
outset that in my judgment ‘vacant possession’ is not an abstract concept; it
is a right, and it is a right which, in the absence of some competing legal
claim, passes to the purchaser on completion.
I was very
properly referred to Emmet on Title 19th ed at para 6.012 for the
meaning of ‘vacant possession’:
An
undertaking that vacant possession will be given is usually taken to mean that
possession will be given free from any occupation by the vendor or a third
party and free from any claim to a right to possession of the premises.
and a number of
cases, starting with Cleadon Trust Ltd v Davis (1944) 143 EG 611,
are given as examples.
On the face of
it, the passage quoted is wide enough to cover the present case, because PJ did
not give possession ‘free from any claim to a right to possession’ of the
bed-sit in view of Hussey’s claim.
But, on
examination, Cleadon Trust and the other cases all in fact relate to
situations where the third party makes a legal claim to possession: and
I can quite see that if I contract to give my purchaser vacant possession, I do
not fulfil my obligation if at the time fixed for completion there is a third party
who has a legal claim to possession. For example, in Cleadon Trust
itself the tenants had stayed on with the consent of the landlords, so that
they were there as licensees.
If, therefore,
on January 5 1984 Hussey had (as I find) no lawful claim to occupation or
possession of the bed-sit, the right of possession passed from PJ to the
plaintiff and it was for the latter (not PJ) to remove the trespasser. This
was, as it seems to me, one of the consequences of completion. I appreciate
that Hussey is not a party in these proceedings, but he has given evidence
which I find to be wholly inconsistent with the evidence (which I accept) of
other witnesses, and accordingly, as between PJ and the plaintiff, I have no
hesitation in concluding that (at the very least) the plaintiff has failed to
establish that PJ did not give him ‘vacant possession’ as that expression ought
to be construed in the light of the case as a whole.
I confess that
at one stage I was uneasy lest this conclusion be thought to be so hard on the
plaintiff as to put it in doubt. After all, the plaintiff had bid for 91 in the
belief (as supported in Hillyers’ particulars) that he would be able to move
into the bed-sit with his family: and when, following completion, he attempts
to take possession, he is refused by Hussey. In one sense, therefore, the
plaintiff manifestly did not get what he bargained for. Put another way, he
found that he was being obstructed by Hussey and prevented from enforcing his
newly-acquired right to possession. But the truth of the matter, in my
judgment, is that, hard as it may seem at first sight, the plaintiff had a
quick and effective remedy in county court proceedings against Hussey for
possession: and in the light of the evidence which I have heard I cannot see
what effective defence Hussey could have put up. Moreover, Hussey would, prima
facie, also be liable to the plaintiff for any damages or expenses to which
the plaintiff had been put as a result of this wrongful assertion of
possession.
I should here
mention that in the present proceedings (a) the plaintiff originally claimed
rescission of the contract of sale but subsequently abandoned the claim, which
is now limited to a claim for damages: and (b) also claimed that the
representation in Hillyers’ particulars regarding vacant possession was known
to PJ to be false and was made fraudulently. As to that, it is fair to say that
Mr Cogley, for the plaintiff, did not press this point and, as I indicated
towards the end of the hearing, I entirely acquit PJ of this allegation.
The argument
regarding the meaning of ‘vacant possession’ with which I have just dealt was,
of course, the main plank in the defence which Mr McIntyre put forward on
behalf of PJ: and if I am right in upholding (as I do) the contention that on
the facts of this case PJ did fulfil his contractual obligation to give
vacant possession, that is an end of the matter.
But in case
that is wrong, I will consider briefly the wider question which then arises
(and I pose it in general terms because it is not limited to the facts of the
present case), namely what does a vendor who has contracted to sell with vacant
possession have to do between contract and completion to fulfil his contractual
obligation?
A simple
example will illustrate the ambit of this question. Suppose that a vendor (V)
contracts to sell property to a purchaser (P) with completion fixed for, say,
March 1, that at some time prior to completion squatters break in, unknown to V
or P, that on March 1, without visiting the property, the parties complete, the
balance of the purchase price is paid and keys are handed over, and that on the
following day P visits the property and discovers that the squatters have been
there for several days. Is P then entitled to claim rescission or
damages on the ground that V has failed to give vacant possession? In my view, the answer is ‘No’.
Does it make
any difference, then, if V had at least constructive notice prior to completion
that squatters were on the property or were threatening to go into it? And, if so, is the position any different
according to the length of time prior to completion that V learnt about the
squatters? I suggest not. But I confess
that this seems to be entirely new ground, and neither Mr McIntyre nor Mr
Cogley has been able to produce any authority which deals with it. At most, I
am inclined to think, V’s knowledge puts him under an obligation to act
reasonably as circumstances permit in the light of that knowledge. But this
would not, in my judgment, extend to requiring him to take legal action to
evict the squatters, though he might at least be wise to put P in the picture.
Seeking to
apply this train of thought to the present case, the position seems to me to be
this. PJ knew, at least from July 1 (exhibit P4) that Hussey was claiming tenancy
of the whole house but, rightly or wrongly, he discounted this, for reasons
which I have stated earlier. To that extent he may be said to have taken a
risk. But equally by September 16 1983, when Sanders & Co wrote to PJ’s
solicitors dealing, among other things, with the outstanding tenancy inquiries
(a letter from which I have quoted earlier in this judgment), although the
letter as a whole was not calculated to make the plaintiff’s solicitors think
that the ‘arguments’ there referred to were about possession of the bed-sit or
that the arguments would still be outstanding on completion, a wise purchaser
(at least with the benefit of hindsight) would surely have checked up on the
position prior to completion: and as I have indicated earlier, the first
complaint on behalf of the plaintiff that PJ had failed to give vacant
possession is not made until Suriya & Co’s letter to Sanders & Co of
January 16 1984, that is more than 10 days after completion.
As Mr Cogley
put it, is ‘vacant possession’ given if the purchaser cannot enjoy the right of
possession without first taking legal action?
I have
sympathy with this approach, but I do not see, on the facts of this case, what
PJ could reasonably have been expected to do in the light of such actual or
constructive knowledge as he had: and, as I have indicated, once completion had
taken place on January 5 1984 the right to vacant possession had passed
to the plaintiff and it was he, and he alone, who was entitled to assert that
right against Hussey. I should add that neither counsel was able to refer me to
any authority which threw light on this problem.
Mr McIntyre
further contends that there is no reliable evidence that Hussey was wrongfully
occupying the bed-sit on the completion
it is worth) that he put back the original locks on the evening of January 5.
‘Completion’ is, in my experience, a somewhat variable beast with no set
pattern or procedure, and I strongly suspect that by the time that Hussey
changed the locks back (whether on the evening of January 5 or later) the
technical formalities of completion had already taken place.
It follows, in
my judgment, if I am wrong in acceding to Mr McIntyre’s primary submission,
that on the facts PJ did all that a reasonable vendor could have been expected
to do as a matter of law given such knowledge as he had, and that in any event
the evidence as a whole is insufficient to warrant my holding that Hussey was
in occupation of the bed-sit by the time that the sale from PJ to the plaintiff
was completed.
Finally, if
only as a precaution, I should say a brief word about damages in case I am
wholly wrong on the question of liability. Here I have the advantage of a
report by Mr Latham of Hillyers dated March 6 1987. The purchase price which
the plaintiff paid for 91 was £17,000 on the basis of vacant possession of the
bed-sit. In my view, the measure of damages (on which, of course, the
plaintiff, if successful, would also be entitled to interest) is the difference
between the value of 91 with vacant possession — which is what the
plaintiff paid for — and the value of 91 totally occupied by the Husseys. I do
not propose to burden this judgment with a mass of figures. Suffice it to say
that, working upon a percentage basis of the vacant possession value of the
whole of 91, the damage to the plaintiff would seem to lie between 40% and 50%
of the vacant possession value if 91 were totally occupied and 60% of that
value if there were vacant possession of the bed-sit. The result would seem to
lie somewhere between £2,833 (which was Mr McIntyre’s choice) and £5,566, for
which Mr Cogley contended, plus interest in each case. Mr Cogley argued for
additional damages for the costs incurred by the plaintiff in having to house
himself and his family because of his inability to obtain possession of the
bed-sit: but I am inclined to agree with Mr McIntyre that the loss to the
plaintiff of the value of the bed-sit must be regarded as covered by the
general damages mentioned above and that Mr. Cogley’s argument would come
perilously close to double recovery. But on the view which I have formed on the
case as a whole, the question of damages does not arise; nor do I propose to
comment on the further submission which Mr McIntyre made, and to which Mr
Cogley objected, just before I started this judgment on the question of
damages.
Accordingly, I
propose to dismiss the action.
The action
was dismissed with costs. Leave to appeal given if necessary.
For further cases on this subject see p 167
