Application by purchaser for summary judgment for specific performance under Order 86 — Incidental agricultural holdings point determined — Case with a number of ‘bizarre features’ including a purchaser under a subsequent conditional contract in actual occupation — Land in question consisted of two parcels of sheep farming land in the Welsh mountains and the sale included the vendor’s flock of sheep — A letter setting out what were held to be the terms of the contract provided that as two previous dates specified for completion had passed the completion date would have to be agreed and would have to be after the end of the lambing season — Rejecting a submission that the date for completion was left wholly open for further agreement and that the contract was thus void for uncertainty, the judge held that the date was to be one which covered the lambing season and a reasonable period for the removal of the sheep and lambs from the land — View expressed obiter that even if the date were left open for further agreement the law would imply a reasonable time in default of agreement — Submission considered that the purchaser in occupation under conditional contract was granted a licence which was transformed into a tenancy from year to year by virtue of section 2(1) of the Agricultural Holdings Act 1948 — Held that the licence given to the present occupier in this case was of a special and subordinate nature liable to be determined without notice and with no existence independent of the occupier’s equitable interest under a contract to purchase — The application of section 2(1) would not result merely in a ‘necessary modification’ but a radical transformation, so that it would not remain ‘recognisably the same agreement’ in the words of Pearson LJ in Harrison-Broadley v Smith — Order for specific performance granted
In this case
the plaintiffs, John Walter Richard Walters and Maldwyn Morgan (the original
purchasers) and Roy Miles Walkden, Mrs Shaun Walkden and Michael Booth
(sub-purchasers) sought a summary judgment for specific performance under RSC,
Order 86, against John David Roberts in respect of land in the parishes of
Llanfair and Llandbedr in Gwent. The application for summary judgment was made
in the action by the plaintiffs as purchasers for specific performance.
D Wood QC and
D Neuberger (instructed by Macfarlanes) appeared on behalf of the plaintiffs; A
W Simpson (instructed by Ward Bowie, agents for Gwyndaf-Williams & Roberts,
of Portmadoc) represented the defendant.
Giving
judgment, NOURSE J said: This is an application for summary judgment under
Order 86 in a purchaser’s specific performance action. The action is based on a
contract dated March 25 1974 made between the defendant, John David Roberts, as
vendor, and the original plaintiffs in the action, John Walter Richard Walters
and Maldwyn Morgan, as purchasers. The property comprised in that contract was
two parcels of sheep farming land in the Welsh mountains. The first parcel
consists of a farmhouse, some farmland and a lake in the parishes of Llanfair and
Llandbedr in Gwent, formerly Merioneth, and the second parcel of some adjoining
farmland.
The material
terms of the contract were that the purchase price should be £100,000, that
completion should be on September 30 1974 and that the defendant should give
vacant possession on completion. The sale also included the defendant’s flock
of sheep. A 10 per cent deposit of £10,000 was paid. The agreement was
expressed to be subject to certain special conditions and to the National
Conditions of Sale, 18th ed, so far as the latter conditions were not
inconsistent with the special conditions. The latter included as condition no
22 the familiar provision enabling either party to give a special notice to
complete.
Mr Wood, who
appears for the plaintiffs on this application, has described the case as
having a number of bizarre features. Perhaps the most bizarre is the fact that
the contract described the two parcels of land as having a combined acreage of
3,156 acres or thereabouts; whereas the plaintiffs later calculated it to be
rather less than half that amount. They calculated it to be 1,515 acres or
thereabouts. Not surprisingly, that caused difficulties in the completion of
the contract at that stage and negotiations took place between the parties. In
1976 the defendant, the vendor, commenced an action for specific performance
against the purchasers. That action still remains on the file, although it may
well be that it will become a dead letter as a result of this application.
Going forward
a little in time, I should mention that in April 1979 the original plaintiffs,
the purchasers, entered into an agreement to subsell the land to Roy Miles
Walkden, his wife, Shaun Walkden, and a Michael Booth, and they also are
plaintiffs in this action. There is no conflict of interest between the two
sets of plaintiffs. I shall therefore refer to them as one.
I should say
that on June 22 1977 the defendant entered into a second contract for the sale
of the same property to a Mr Evans and his wife. That contract was expressed to
be subject to the 19th edition of the National Conditions of Sale, which was by
then the current edition, except so far as varied by the special conditions,
one of which was in these terms:
(f) This
contract is conditional upon a prior contract dated 28th day of March, 1974 and
made between the vendor of the one part and Maldwyn Morgan and John Walter
Richard Walters of the other part regarding the property hereby agreed to be
sold being rescinded unless the Court otherwise directs. If the Court otherwise
directs then it is agreed that the purchasers will recover the purchase price
hereby agreed to be paid, but no more, and shall give up possession, if
applicable, of the property hereby agreed to be sold.
It appears that
shortly after the signing of that contract Mr Evans went into occupation of the
property. He must have done that on the terms of condition no 8 of the National
Conditions of Sale, 19th ed, to which I will have to return later.
Meanwhile the
negotiations between the defendant and the original purchasers were continuing.
In February 1979 those negotiations started to take a shape which at least for
the purposes of this application can be said to be recognisable. On February 23
1979 the plaintiffs’ then solicitors, Careless & Co, wrote a letter to the
defendant’s solicitors which, after referring to a previous telephone
conversation, said this: ‘We confirm that our clients are prepared to proceed
with the purchase of the above property’ — that is the property which I have
already described — ‘upon the following
set out. First, the price was to be reduced to £50,000, but still to include an
equivalent quantity and value of sheep as the original contract; secondly, the
plaintiffs would agree to pay the defendant’s reasonable conveyancing charges
and the VAT on those charges; thirdly, each party would bear their own costs in
connection with the defendant’s action for specific performance to which I have
referred. Paragraph 4 was in these terms: ‘The matter should be completed
within 28 days.’ Fifthly, it was
proposed that in so far as interest obtained on the deposit of £10,000 was
concerned this should belong to the plaintiffs.
It appears
that there was no answer to that letter and on March 9 and 23 1979 the plaintiffs’
then solicitors wrote two reminders. On April 19 there was an important
telephone conversation between the plaintiffs’ then solicitors and the
defendant’s solicitors. It is accepted by the defendant that the oral agreement
which was then arrived at between the two solicitors was capable of being an
enforceable agreement (no point is taken under section 40 of the Law of
Property Act 1925) and that the terms of it are fully and accurately set out in
a letter which the plaintiffs’ then solicitors wrote to the defendant’s
solicitors on the following day. I will quote that letter almost in full. It is
in these terms:
We write to
confirm our telephone conversation of yesterday when it was agreed that your
client accepted the terms set out in our letter of February 23 1979 with
exception only that in regard to paragraph no 5 the interest earned on the
deposit account should be divided equally between the vendor and purchaser.
I interpose to
say that that no doubt was to take account of the fact that if the original
purchase price of £100,000 was to be reduced to £50,000 the purchaser would
have overpaid the deposit by 100 per cent.
Then the
letter goes on as follows:
The
completion date specified in paragraph 4 is obviously not now appropriate. You
explained the position in regard to possession in that someone was lambing a
number of sheep there and could not move them on short notice. We appreciate
this point and have explained it to our clients, and a completion date will
therefore have to be agreed. We will arrange for our clients to meet your
clients to discuss the question of the sheep and to save time they can also
discuss the question of possession.
And then the
letter said that the plaintiffs’ then solicitors were preparing the draft
conveyance.
I have already
referred to the first and the major problem which arose, which was the question
of the acreage. After that letter of April 20 there was a further problem.
There was some doubt as to whether the defendant owned the sheep, or at least
whether he owned all the sheep, which had been included in the contract. That
problem, however, was sorted out comparatively quickly. On June 12 1979 the
solicitors agreed that the sum of £7,500 should be deducted from the purchase
price as being referable to the value of the flock, and it was agreed that that
sum should be paid into a stakeholder’s account pending a resolution of the
question of ownership, with the balance of £42,500 less the deposit of £10,000
being paid on completion.
For reasons
which will appear later, it is not necessary for me to deal with later events,
except to say that on September 18 1979 the plaintiffs’ solicitors journeyed to
Portmadoc and made an attempt to complete the purchase. On that occasion the
defendant’s solicitors had in their possession a conveyance of the land which
had been signed and sealed by the defendant, but the defendant claims that it
was held by his solicitors as an escrow of which one of the conditions was that
a date for the completion of the contract should be agreed. In any event, the
purchase was not completed then or afterwards and the writ in this action was
issued on October 29 1979.
Pleadings were
duly served on each side and the summons which is now before me was issued on
February 29 1980. That summons claims the following relief: first, delivery of
the conveyance already signed and sealed by the defendant on the footing that
it was duly delivered by him and that it was not held as an escrow, as he
alleges; and secondly (and necessarily in the alternative) specific performance
of the agreement. I shall explain shortly what exactly is the agreement upon
which the plaintiffs now rely.
The position
immediately before the oral agreement of April 19 was this: The original date
fixed for completion, September 30 1974, had long since passed and the new date
proposed in the plaintiffs’ solicitors’ letter of February 23 1979 had also
passed. But assuming for this purpose that the original agreement of March 25
1974 was still subsisting, nothing had occurred to prejudice the plaintiffs’
right, or indeed the defendant’s, to serve a special notice to complete under
condition 22 of the National Conditions of Sale, nor any right which either
party had to sue for specific performance of the agreement independently of the
service of any such notice.
The effect of
the oral agreement of April 19 1979 was to adopt the terms set out in the
letter of February 23 with certain exceptions. That letter had proposed that
the purchase should proceed on certain ‘amended terms’; that is to say that the
original agreement should stand subject to such amendments. And it seems to me
that the oral agreement of April 19 must be construed in the same way. In other
words, on April 19 the parties agreed that the original agreement should stand,
subject only to the amendments set out in the letter of February 23 and the
further amendments then orally agreed and recorded in the letter of April 20. I
therefore cannot accept the argument of Mr Simpson, who appears for the
defendant, that the agreement of April 19 as he put it, pushed the original
agreement off the map. In my judgment it did nothing of the kind. It preserved
the original agreement so far as not amended.
Then the
question arises: Was the original agreement amended in such a way as to leave the
date for completion open for further agreement and thereby to render the whole
agreement void for uncertainty? Although
that would, to say the least, produce a startling result, Mr Simpson says that
it was. He says that the agreement of April 19 as recorded in the letter of
April 20 did import an agreement that completion was to take place on a date to
be agreed. I must say at once that I do not think that that is a correct
construction of the agreement of April 19. It is true that the letter of April 20
states that ‘A completion date will therefore have to be agreed’; but it seems
to me that the parties were clearly not intending to leave the matter wide open
for any agreement at which they might choose to arrive. The material passage in
the letter starts with this sentence: ‘The completion date specified in
paragraph 4 is obviously not now appropriate’. That was a fixed date which had
passed some four weeks earlier, and the sentence is consistent with the notion
that the parties still had another ascertainable date in mind. This is
confirmed by the next sentence, which reads: ‘You explained the position in
regard to possession in that someone was lambing a number of sheep there and
could not move them on short notice’. That suggests that the new date for
completion was to be one which would cover the lambing season and a reasonable
period for the removal of the sheep and the lambs thereafter. In my judgment
that was the agreement at which the parties arrived on April 19 and I can see
no warrant for thinking that they intended that there should be any further
latitude in the matter. But since that completion date, although ascertainable,
was not at that date certain, it was obviously sensible that the parties
should, if possible, make it so by meeting to agree a date. That, in my
judgment, is the significance, and the only significance, of the words ‘a
completion date will therefore have to be agreed’, and the subsequent
suggestion that the clients should meet together to discuss the questions of
the sheep and possession.
On this view
of the matter it is not necessary for me to decide what would have been the
position if on its true construction the agreement of April 19 did import an
agreement that completion was to take place on a date to be agreed. But since
the point was fully argued and is one of general importance, I propose to state
briefly the view I have formed upon it.
I was referred
to a number of authorities which touched on this question, but in only one of
them did the agreement in terms provide that completion was to take place on a
date to be agreed between the parties. That was Gavaghan v Edwards
[1961] 2 QB, 220, where the county court judge had held on that ground that the
agreement was not a completed and binding contract. However, the Court of
Appeal, without calling on the respondent vendor who had served a cross notice
on that point, affirmed the county court judge’s judgment on another ground,
and it may in the circum-
judgment, said at p 224 that it was unnecessary for the Court of Appeal to
consider that point.
I think that
what Danckwerts LJ had in mind in that case was that it might have been
possible to go back to the date fixed by the material provision of the Law
Society’s Conditions of Sale. On consideration of the point I do not myself
think that that can be done, at least with condition 5(1) of the National
Conditions of Sale, which reads as follows: ‘The completion date shall be the
day mentioned for that purpose in the contract or, if none, the first working
day after the expiration of five weeks from the delivery of the abstract of
title.’ In my judgment if the contract
provides that completion shall take place on a date to be agreed that date is
the day mentioned for that purpose in the contract, so that condition 5(1) can
have no further operation.
However,
bearing in mind the invariable implication, in a case where the agreement is
silent on the point, that completion will take place within a reasonable time,
I strongly incline to the view that in a case where the date is left for future
agreement the court would imply a reasonable time in default of agreement. It
would indeed be very strange if an open contract was valid, but a far more
sophisticated agreement invalid merely because it provided that completion was
to take place on a date to be agreed. I have not been able to plumb the origins
of the species of implication which is made in a case where the agreement is
silent as to completion, but they may well be bedded in strata of an era more
remote and less frigid than that from which The Moorcock (1889) 14 PD 64
has evolved. But even if that is not so and the same principles apply, it seems
to me to be pretty clear that they would produce the same result. After all,
the date for completion is merely a part of the machinery for executing a
contract whose essential terms are all agreed. Both parties must be taken to
intend that completion will occur sooner or later, once the necessary
investigation of title and the preparation of the conveyancing documents and so
forth are done. On that footing it is not a very big step to assume that both
parties, being reasonable men, would, if asked, unhesitatingly agree that in
the event of their being unable to agree the date it should be at the
expiration of a reasonable period after the date of the agreement; cf the
recent restatement of the principles of implication by the House of Lords in Liverpool
City Council v Irwin [1977] AC 239. However, it is, as I have said,
unnecessary for me to express a concluded view on this question, and perhaps it
is better that I should not do so.
In the
circumstances I hold that the effect of the oral agreement of April 19 1979 was
that completion should take place on the expiration of a reasonable period
after the end of the lambing season, the reasonable period being that required
for the removal of the sheep and the lambs from the land. That period must have
expired on some date in 1979, and certainly before the issue of the writ on
October 29 1979. No special notice to complete was served, but that is
unnecessary because the defendant’s arguments on this summons necessarily
evince a refusal to complete. The plaintiffs are therefore entitled to have the
agreement specifically performed unless a point which has been taken by Mr
Simpson at a rather late stage, and perhaps as a result of something which I
said yesterday, is a good one.
Mr Simpson
points to the fact that Mr Evans is at present in occupation of the property
under the terms of his conditional contract of June 22 1977. He says that the
defendant may encounter very real difficulties in getting Mr Evans out of
occupation so as to be able to give the plaintiffs vacant possession on
completion of their contract, and he says that that is a sufficient reason for
the court to refuse the plaintiffs a decree of specific performance. I should
add that he does, if necessary, ask for an adjournment to file further evidence
to show the difficulties which stand, or may stand, in the defendant’s way in
this respect.
In the first
instance, in support of his argument on this point, Mr Simpson refers to
special condition (f) of Mr Evans’ contract. Mr Simpson says that it is not
clear from that special condition that Mr Evans will, as between himself and
the defendant, be obliged to get out if specific performance of the plaintiffs’
contract is ordered. I reject that argument. Although the wording of special
condition (f) is not perhaps as felicitous as one would have liked to see, it
seems to me to be clear that it does indeed oblige Mr Evans to get out if the
plaintiffs’ contract is ordered to be specifically performed. It that order is
made the court ‘otherwise directs’ for the purposes of special condition (f).
Then Mr
Simpson takes a point which at first blush is of a more formidable nature. He
says, correctly, that under condition 8(1) of the 19th edition of the National
Conditions of Sale Mr Evans’ status as an occupier pending the completion of
his contract is that of a licensee, and he says that he is in occupation of the
property for agricultural purposes. He then refers to section 2(1) of the
Agricultural Holdings Act 1948, which can be abstracted, so far as material for
present purposes, as follows:
Subject to
the provisions of this section, where under an agreement made on or after March
1 1948,. . . a person is granted a licence to occupy land for use as
agricultural land, and the circumstances are such that if his interest were a
tenancy from year to year he would in respect of that land be the tenant of an
agricultural holding, then. . . the agreement shall take effect, with the
necessary modifications, as if it were an agreement for the letting of the land
for a tenancy from year to year.
Mr Simpson
says that that provision may have the effect of giving Mr Evans the protection
of the Agricultural Holdings Act as against the defendant, and that the result
might be that the defendant would not be able to give the plaintiffs vacant
possession on completion. Although there is no authority on the point, he says
that it is one which might go either way, and that the defendant cannot
therefore be required to embark on litigation to get Mr Evans out of occupation
of the property. Therefore the court cannot, or should not, order specific performance
of the plaintiffs’ contract.
In this
connection Mr Simpson referred me to a passage in the judgment of Megarry J in
the case of Wroth v Tyler [1974] Ch 30 at p 50, where the learned
judge said this:
A vendor must
do his best to obtain any necessary consent to the sale; if he has sold with
vacant possession he must, if necessary, take proceedings to obtain possession
from any person in possession who has no right to be there or whose right is
determinable by the vendor, at all events if the vendor’s right to possession
is reasonably clear; but I do not think that the vendor will usually be
required to embark upon difficult or uncertain litigation in order to secure
any requisite consent or obtain vacant possession. Where the outcome of any
litigation depends upon disputed facts, difficult questions of law, or the
exercise of a discretionary jurisdiction, then I think the court would be slow
to make a decree of specific performance against the vendor which would require
him to undertake such litigation.
A little later
on the learned judge turned to consider the facts of that particular case, from
which it appeared to him to be clear that the person concerned — in that case
the vendor’s wife — had demonstrated that she was not prepared to get out of possession
short of the vendor taking proceedings to that end.
Accordingly,
the position in the present case is that if the defendant’s right to possession
is reasonably clear he must take proceedings to get Mr Evans out, should that
course become necessary. But if it does become necessary and the defendant’s
right to possession depends on a difficult question of law then I ought to be
slow to order specific performance of the plaintiffs’ contract. So I must ask
myself: Is the defendant’s right to possession reasonably clear or does it
depend on a difficult question of law?
On the one hand, it can be said that the absence of authority on the
point is an indication that the right to possession is not reasonably clear; on
the other, that if the right does depend on a difficult question of law then it
is most surprising that it does not appear to have been contested in any
reported case in the 32 years or so since the Agricultural Holdings Act was
enacted.
It seems to me
that the first thing I must do is to analyse the rights of the defendant and Mr
Evans under their contract. It is true that under condition 8(1) of the
National Conditions of Sale the quality of the purchaser’s occupation is that
of a licensee, but the licence is only granted as an adjunct to the purchaser’s
equitable interest in the land and in the expectation that that interest will
in due course mature into full legal ownership. If the contract is discharged
or rescinded the equitable interest comes to an end; likewise the licence,
either under special condition (f) or condition 8(2) of the National Conditions
of Sale — it matters not which. It follows that the licence is of a special and
subordinate character liable to be
equitable interest in the land.
Next I must
deal with such authority as there is which bears on the point. Mr Wood has
referred me to the judgment of Pearson LJ in Harrison-Broadley v Smith,
[1964] 1 WLR 456. There the facts were rather different. I need not refer to
them, except to say that that was a case where the Court of Appeal held that
section 2(1) could not apply to a licence granted by someone who remained in
occupation with the licensee. At p 467 Pearson LJ started his judgment by
saying this: ‘The main question here is: How should section 2 of the
Agricultural Holdings Act 1948 be construed and applied in relation to the
situation which has arisen in this case?’. Then he called attention to the most
material words in section 2(1) and proceeded as follows:
It is to be
observed that ‘the agreement’ under which a person is granted a licence to
occupy land for use as agricultural land is to ‘take effect, with the necessary
modifications, as if it were an agreement for the letting of the land, for a
tenancy from year to year’. That which is to take effect is the original
agreement, with the necessary modifications. It is not permissible to
substitute for the original agreement a radically different agreement and make
that take effect instead of the original agreement.
Then he
referred to a passage in the judgment of Lord Evershed MR in Goldsack v Shore
[1950] 1 KB 708 and went on as follows:
Of course, it
must be recognised that any modification of an agreement must be in a sense
inconsistent with its own terms. But I understand that passage to mean that the
agreement must remain, so to speak, recognisably the same agreement after the
necessary modifications have been made. This section is not applicable to an
agreement which is not capable of taking effect, with the necessary
modifications, as an agreement for the letting of the land for a tenancy from
year to year. The necessary modifications have to be distinguished from a
transformation of the agreement into something radically different.
Mr Wood submits
that if a licence for a purchaser to occupy pending completion of the purchase
were to be transformed into a tenancy from year to year that would be a
transformation into something radically different. I agree with that
submission. It would be the transformation of a licence of a special and
subordinate character liable to be determined without notice and with no
existence independent of the purchaser’s equitable interest in the land into an
agreement for a tenancy determinable only on six months’ notice and with an
independent existence of its own. In my judgment that must be a transformation
of one thing into another radically different. I should add that it would
indeed be a most remarkable state of affairs if the Agricultural Holdings Act
did catch an arrangement of this kind and afforded a protection which was
clearly never intended.
Broadly
speaking, the object of that Act is to extend the rights of a person who is
contractually entitled to no more than the right to occupy land for
agricultural purposes. It is not its object to extend the rights of a person
who has contracted to purchase the land, who is let into occupation pursuant
only to that contract and whose occupation was never intended to survive its
extinction. I do not think it would be right for me to say that the point is
one which is beyond argument, because, as Mr Simpson points out, the wording of
the subsection itself does allow an argument to be advanced. Nevertheless, I do
not myself have any hesitation in concluding that the defendant’s right to
possession as against Mr Evans is reasonably clear and that it does not depend
on a difficult question of law.
In those
circumstances it is unnecessary for me to consider whether I should grant Mr
Simpson an adjournment to file further evidence because I have assumed that Mr
Evans might indeed adopt the attitude that he was not going to get out without
an order for possession, and I have nevertheless concluded that the objection
to a decree for specific performance is not a good one.
Mr Wood
suggests the following course of action, which I propose to adopt. I propose to
make an order for specific performance in terms which I will discuss with
counsel. One thing which the order will certainly not do at this stage is to
fix a date for completion. If, when the master has fixed that date, it turns
out that there are any difficulties in the defendant’s giving vacant possession
on completion, then the matter should be referred to me for further
consideration. If necessary, and if so requested by both parties, I will retain
the case accordingly. That states in general terms the sort of order I propose
to make.
This makes it unnecessary
for me to deal further with the plaintiffs’ alternative plea for delivery of
the executed conveyance. I will only say that on the evidence as it stands at
present it would in my view be impossible for me to make such an order on an
application for summary judgment. It is for this reason that I have found it
unnecessary to deal in any detail with events subsequent to June 12 1979.
