Contract for sale of farm – Owners of vendor company entitled to repurchase in certain events – No time limit prescribed for exercise of option – Whether option invalidated by section 9(2) of Perpetuities and Accumulations Act 1964 – Whether commencement of period deferred until occurrence of triggering events – Option held void
In 1974, a company formed by the defendants sold the freehold of a farm to the claimants, a married couple and their son. Clause 3 of the contract provided: “On the death of the survivor of the first two named purchasers the third named purchaser shall give to the defendants jointly [or in certain events their issue] the right to re-purchase the property at the price of Twenty thousand pounds with the benefit of vacant possession”. No time limit was prescribed for the exercise of the right to purchase.
The claimants sought a declaration that the right to repurchase was rendered void by section 9(2) of the Perpetuities and Accumulations Act 1964, which prescribed 21 years as the perpetuity period in the case of “a disposition consisting of the conferring of an option to acquire for valuable consideration any interest in land”. Citing Maudsley, The Modern Law of Perpetuities, at p188, the defendants contended, inter alia, that no such option could come into existence before one of the triggering events specified in clause 3 had occurred, and that the period had accordingly yet to begin.*
Held: The claim was allowed.
The right to repurchase was properly regarded as an interest in land that arose upon the execution of the 1974 agreement or, at the very latest, the conveyance. By reason of the grant, the “right” to “take… away” the claimants’ estate or interest in the farm was immediately vested in the grantee of the right to repurchase: see London & South Western Railway Co v Gomm (1882) 20 ChD 562 at p581. No analogy could be made with a conditional option, since the various triggering events were, by their nature, events in respect of which it was to be expected that one would occur. Their purpose was not to specify a condition that might or might not occur.
*Editor’s note: Alternative contentions based upon mistake and estoppel were rejected for want of evidence.
Andrew Cosedge (instructed by Toller Hales & Colcutt, of Northampton) appeared for the claimants; Stephen Shaw (instructed by Anthony Collins Solicitors, of Birmingham) appeared for the defendants.
Alan Cooklin, barrister
