Singh v Sardar Investments Ltd and others
Signatory to sale contract misrepresenting his authority to act for vendor company — Purchaser serving notice to complete — Prospective mortgagee withdrawing shortly before expiry date — Purchaser claiming specific performance or damages against signatory for breach of warranty of authority — Whether purchaser in position to complete — Order for specific performance refused — Effect of refusal upon alternative claim
A freehold property in West London was, at all material times, registered in the name of the first defendant (the company), which was controlled by the second defendant (DS) and his brother, the fourth defendant (AS), who had equal voting power. The claimant was keen to buy the property, but was aware that DS was opposed to any sale and that the authority of AS to proceed depended upon the outcome of an arbitration agreed to by the brothers and other members of their family. In September 1998, AS informed the claimant that the arbitration had gone in his favour, following which contracts were exchanged for the sale of the property for £315,000 — the vendor’s part being signed by AS on behalf of the company. Thereafter, DS and others engaged in various delaying tactics. On 14 October 1999, the claimant served a notice requiring completion not later than 28 October (the expiry date). However, as was subsequently established, the claimant itself was unable to complete on the expiry date because its prospective mortgagee had withdrawn its offer shortly beforehand. The company purported to rescind.
In November 1999, the claimant brought proceedings, claiming: (i) as against all the defendants, specific performance of the contract for sale (the main claim); (ii) alternatively, as against AS, damages for breach of his warranty of authority to act on the company’s behalf (the alternative claim). At the trial, the judge found that AS had given the claimant an inaccurate account of how the arbitration proceedings stood at the date of the contract.*
Signatory to sale contract misrepresenting his authority to act for vendor company — Purchaser serving notice to complete — Prospective mortgagee withdrawing shortly before expiry date — Purchaser claiming specific performance or damages against signatory for breach of warranty of authority — Whether purchaser in position to complete — Order for specific performance refused — Effect of refusal upon alternative claimA freehold property in West London was, at all material times, registered in the name of the first defendant (the company), which was controlled by the second defendant (DS) and his brother, the fourth defendant (AS), who had equal voting power. The claimant was keen to buy the property, but was aware that DS was opposed to any sale and that the authority of AS to proceed depended upon the outcome of an arbitration agreed to by the brothers and other members of their family. In September 1998, AS informed the claimant that the arbitration had gone in his favour, following which contracts were exchanged for the sale of the property for £315,000 — the vendor’s part being signed by AS on behalf of the company. Thereafter, DS and others engaged in various delaying tactics. On 14 October 1999, the claimant served a notice requiring completion not later than 28 October (the expiry date). However, as was subsequently established, the claimant itself was unable to complete on the expiry date because its prospective mortgagee had withdrawn its offer shortly beforehand. The company purported to rescind.
In November 1999, the claimant brought proceedings, claiming: (i) as against all the defendants, specific performance of the contract for sale (the main claim); (ii) alternatively, as against AS, damages for breach of his warranty of authority to act on the company’s behalf (the alternative claim). At the trial, the judge found that AS had given the claimant an inaccurate account of how the arbitration proceedings stood at the date of the contract.*
Held: (1) The main claim failed. (2) No damages were recoverable in respect of the alternative claim.
The main claim failed not only because of the lack of authorisation, but also because of the claimant’s inability to complete on the expiry date. As regards the latter reason, it was a strict rule that equity would not intervene in relation to a failure to complete a contract where time was of the essence, unless the other party had either waived the contractual term, or acted so as to estop himself from relying upon the completion date: see Union Eagle Ltd v Golden Achievement Ltd [1997] AC 514. Nothing said or done by the defendants had gone that far.
The alternative claim succeeded on liability, but, because of the claimant’s inability to complete within the time limit, albeit a limit imposed by their own notice, they were unable to show that they would have had the benefit of the contract even if AS had been duly authorised: see Fay v Miller, Wilkins & Co [1941] Ch 360. Nor could the claimant, in the context of a claim for breach of warranty of authority, invoke the principle that a party who repudiates a contract cannot pray in aid the other party’s inability to perform: see Bowstead & Reynolds on Agency (17th ed) paras 9-76. Chiemgauer Membran und Zeltbau GmbH v New Millennium Experience Co Ltd (No 2) The Times 16 January 2001 was accordingly distinguished.
* Editor’s note: The arbitration committee, drawn from the membership of a Sikh temple, had reached only a provisional conclusion.
Peter Sheridan QC and Donald McCue (instructed by Gulbenkian Harris Andonian) appeared for the claimant; Adrian Davies (instructed by Virdee & Virdee) appeared for the second defendant; Patrick Hamlin (instructed by Penningtons) appeared for the fourth defendant.
Alan Cooklin, barrister
