England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
(MR JUSTICE JONATHAN PARKER)

		Royal Courts of Justice Strand London W2A 2LL
		22nd August 1997

LORD JUSTICE MILLETT: I will ask Lord Justice Aldous to give the first judgment.

LORD JUSTICE ALDOUS: As listed, Mr Rudra seeks leave to appeal against the order of Jonathan Parker J of l8th November l996 which affirmed the order of Deputy Master Weir of 5th June l996. He also seeks leave to adduce further evidence upon the appeal.

In this action Mr Rudra alleges breach of contract by National & Provincial Building Society who, I believe, are now Abbey National Plc. The alleged contract of 2lst April l992 was for sale of a property known as 83 Fairlop Road, London Ell. That property was advertised for sale by a firm of auctioneers called Stickley & Kent (Risk Management Unit) Limited in an auction catalogue as Lot 93. The particulars of sale stated that it was being sold by order of the mortgagees in possession, who is the first defendant. Prior to the auction the defendants instructed Stickley & Kent to withdraw the property from auction. In consequence Stickley & Kent arranged for an insert to be placed in the auction catalogue informing potential bidders that the property was no longer to be included in the auction sale.

Before the auction Mr Rudra approached Stickley & Kent and they purported to agree to sell the property to him for £6O,OOO. The sale was recorded using the form of memorandum which appeared at the back of the bound auction particulars. I will return to that memorandum later. Mr Rudra paid a deposit of £6,OOO and at that stage thought that he would in due course become the freehold owner of the property. The defendant never considered itself bound by the memorandum and never considered that Stickley & Kent had authority to bind it. The result was that the cheque for £6,OOO was never cashed and the defendant sold the property to another person.

On l4th September l994 Mr Rudra began this action against the defendant claiming damages for breach of contract. In paragraph 4 of the statement of claim he alleged that on 2lst April l992 he entered into a written contract with the defendant for the sale of the property for a purchase price of £6O,OOO. The contract relied on was the document entitled "Memorandum of Contract". He alleged it was signed by Stickley & Kent on behalf of the defendant and was made "subject to Stickley & Kent's General Conditions of Sale and the National Conditions of Sale (2O edition) as expressly amended by the said General Conditions". He went on to allege that in breach of that contract the defendant had sold the property to another and he claimed damages.

The defence served in July l995 admitted that Stickley & Kent and Mr Rudra signed the document entitled "Memorandum of Contract", but alleged that the document was insufficient to constitute a contract because it did not comply with the requirements of section 2 of the Law of Property (Miscellaneous Provisions) Act l989. The defence stated that:

"In particular the Defendant will say that the document did not identify or describe the purported vendor of the property either sufficiently or at all."

The defence went on to raise a number of other defences with which this application is not concerned.

By summons of 22nd February l996 the defendant sought an order in the following terms:

"That the following question of law be determined [pursuant to Order l4(A) of the Rules of the Supreme Court] whether a document entitled 'Memorandum of Contract' dated 2l April l992 is sufficient to satisfy the provisions of Section 2 of the Law of Property (Miscellaneous Provisions) Act l989."

The summons went on to seek an order that the action be struck out pursuant to Order l8, rule l9(l)(a), (b) or (d). The summons came before Deputy Master Weir who declared:

"...that the document entitled 'Memorandum of Contract' dated 2lst April l992 is not sufficient to satisfy the provisions of Section 2 of the Law of Property (Miscellaneous Provisions) Act l989."

He therefore went on to dismiss the plaintiff's claim.

Against that order the plaintiff appealed. His appeal came before Jonathan Parker J on l8th November l996. In his judgment he set out the background facts and read the whole of the document headed "Memorandum of Contract". He then came to consider the effect of section 2 of the Act. Having considered the authorities he turned to the particular issue which arose in the appeal, which was whether the document headed "Memorandum of Contract" satisfied section 2 of the Act. He concluded that in order to establish the name of the vendor extrinsic evidence was necessary. He said:

"In order to identify the vendor extrinsic evidence would be required in order to see who in fact is doing the selling and, once again, that is precisely the process which section 2 rules out.

In my judgment, therefore, the memorandum dated 2l April l992 does not satisfy the provisions of section 2 of the l989 Act. I accordingly agree with the Master on that question."

I need not read the document called "Memorandum of Contract", which is relied upon by the plaintiff in the statement of claim. It is clear that it does not identify the vendor. It refers to Lot 93 and gives the purchase price and is signed by Stickley & Kent and Mr Rudra.

That memorandum refers to Stickley & Kent's General Conditions of Sale and the Special Conditions of Sale, including any addendum. The General Conditions of Sale together with the Memorandum of Contract formed Exhibit GPS2 to the second exhibit of Mr Stonehouse, a solicitor acting for the defendant. He said that they had been sent to his firm by the plaintiff's solicitors as the relevant memorandum of contract. He submitted in his affidavit that they did not comply with the requirements of section 2 of the l989 Act. No evidence appears to have been filed on behalf of the plaintiff. It followed that it was those documents which were considered by the judge, and it was upon the basis of those documents that he concluded that section 2 of the Act had not been satisfied because the name of the vendor was not identified. In fact that was the pleaded case and therefore the question asked in the summons to be determined under Order l4(A) was, upon the pleadings, the correct question.

Mr Warwick, who appeared on behalf of Mr Rudra, did not suggest in his skeleton argument that the document headed "Memorandum of Contract", when read by itself or when read with the General Conditions of Sale, could satisfy section 2 of the l989 Act. However, he submitted that the relevant documents, of which the sheet entitled "Memorandum of Contract" was one, were sufficient to satisfy the section. The documents, he submitted, included that heading "Special Conditions of Sale", but to bring that before the court he needed to rely upon the further evidence which is sought to be adduced, and, as a consequence, to amend the statement of claim to plead that the contract included the Special Conditions.

In essence, Mr Warwick wishes to have leave to appeal to set aside the orders striking out his statement of claim so that he can amend it to take into account facts set out in the evidence contained in the affidavit of Mr Rudra of 2nd May l977. In that affidavit Mr Rudra set out how the memorandum came to be signed. He said that he visited the auction department of Stickley & Kent on 2lst April l992. There he was met by a representative of Stickley & Kent, to whom he showed the auction catalogue and the property in which he was interested. That representative took the catalogue to another room of the building as he said that he wanted to get the approval of the management. After a short while the representative returned and said that they had agreed to sell Lot 93 for £6O,OOO and that he should pay the lO per cent deposit immediately. Mr Rudra agreed and issued a cheque for the sum of £6,OOO payable to Stickley & Kent. He said that he was then given the Memorandum of Contract to sign, which he did. The memorandum was at the back of and formed part of the auction catalogue presented to him. He signed the memorandum. The representative also signed the same memorandum of contract. He detached the original memorandum from the catalogue and gave it to Mr Rudra. At the same time the representative gave him the General Conditions of Sale and a copy of the Special Conditions of Sale and Mr Rudra signed the General and Special Conditions where he was asked to sign. The representative took photocopies of the documents and gave Mr Rudra the originals.

The Special Conditions are exhibited to Mr Rudra's affidavit. They are headed "Special Conditions of Sale", and they reads as follows:

"Property at 83 Fairlop Road, Leytonstone, London, Ell lVE

l. The Vendor is National & Provincial Building Society of Provincial House, Bradford, West Yorkshire and the Vendor's Solicitors are c/o Conveyancing Department, National & Provincial Building Society, Bradford aforesaid.

2. The Property is all that the freehold property situate and known as 83 Fairlop Road Leytonstone London Ell lBE comprising the whole of the land registered at H M Land Registry with Absolute Title under Title Number EGL l9875l."

I need not read paragraphs 3 and 4. Paragraph 5 states:

"The Memorandum of Contract together with these Special Conditions of Sale and General Conditions of Sale shall constitute the whole of the Contract between the Vendor and the Purchaser."

If Mr Rudra's evidence is correct, then the statement of claim does not set out the case that he wishes to put forward, and therefore needs to be amended. As I understand it, what he is suggesting is that the contract consisted of the Memorandum, the General Conditions and the Special Conditions. Therefore he wishes to amend his pleading to make that clear. If that is done, the point of law decided by the court becomes irrelevant, as it was drafted and based upon the pleading as it stood, with the only contractual document being the Memorandum of Contract. If that is so, the order to strike out pursuant to Order l8, rule l9 could not stand as it was based upon the pleading before amendment which did not disclose a cause of action.

Upon that basis Mr Warwick submitted that the Court of Appeal should consider the application on the basis of the material which should have been before the court and in particular upon the basis that the relevant contract included the Special Conditions of Sale. If so, he submitted that it was clear from section 2 of the Act that the relevant documents would consist of more than one sheet of paper and that the section expressly contemplated that one document may incorporate the terms of a second by reference. That being so, the Memorandum of Contract, when read in the light of the General Conditions and Special Conditions referred to in it, was sufficient to satisfy section 2 of the Act. In particular the name of the vendor was clearly set out. At least, he submitted, it was arguable that the correct course was to set aside the order to strike out and order that the statement of claim be amended.

Mr Arden submitted to the contrary. He submitted that, even upon the basis of the introduction of the fresh facts and upon the assumption that the statement of claim was amended, Mr Warwick's submissions were unarguable. He submitted that extrinsic evidence was needed to identify the special conditions as being those referred to in the Memorandum of Contract.

In my view, Mr Warwick's submissions as to the effect of section 2 are arguable and are fit to be heard by the Court of Appeal. It will be up to the court hearing those submissions to decide whether, upon the facts before it, the proposed amendment could in any way save this action.

Mr Arden took a further point. He submitted that, before the court could consider the question as to whether the Special Conditions formed part of the contract, the court had to decide whether to admit the further evidence so as to enable the order striking out the action to be set aside. He submitted that there was no prospect of that evidence being admitted. First, he submitted that the appeal was from a judgment after a hearing on the merits and therefore fresh evidence was only admissible if the plaintiff satisfied the Ladd v. Marshall criteria. That, he submitted, was not possible. Second, his fallback position was that, even if the appeal was not from a judgment after a hearing on the merits, the court's discretion should not be exercised in favour of the plaintiff's application to admit fresh evidence, because, he submitted, there was no satisfactory explanation as to why the Special Conditions had not been produced earlier. He submitted that there would be no possibility of fresh evidence being admitted upon the facts as they stood at the moment as the inference was that the plaintiff failed to give his solicitors the documents. If so, it was his fault. He should not now be allowed to introduce the evidence or to amend his pleading.

Although we did not hear full argument upon the point, it appears to me that the Ladd v. Marshall criteria may not have to be satisfied, having regard to the judgment of Williams v. Attridge, Court of Appeal, unreported, 7th July l997, in which Brooke LJ gave the leading judgment, holding that those criteria did not have to be satisfied in an application to admit fresh evidence where a case had been struck out pursuant to Order l8, rule l9.

However, that is not really the issue which is before this court. This court has to decide whether it is reasonably arguable that this court would give leave to amend and admit the evidence in support of that application. The evidence of Mr Rudra is not completely clear as to why these documents were not produced before. Despite the lack of explanation there is, in my view, a reasonable chance the court would consider the evidence, as to refuse to do so could result in a good claim being stifled without a hearing on the merits.

Further, the evidence is sought to be introduced in support of an application to amend. Normally, amendment, even in this court, is allowed provided that the defendant (in this case) would not be prejudiced and could be compensated by award of costs. Upon the evidence before this court that would seem possible. Therefore, amendment would enable the court to do justice and consider the true case between the parties. No doubt the court would consider what was the appropriate order to be made on costs.

I cannot accept Mr Arden's submission that the court would necessarily look first at the application to set aside the order striking the action out. In my view the application to amend and the application to set aside the order striking out the action are really one and the same.

I have, therefore, come to the conclusion that leave to appeal should be granted with the application to adduce evidence adjourned to the court hearing the leave to appeal.

Further, I believe that this is a case where the appellant should make clear in his notice of appeal, when served, the true case that is to be argued. In my view it would be helpful that, if further evidence is going to be sought to be admitted, the evidence should be clear. Therefore I would lay down time limits in which the parties should file their evidence, which could then be considered by the Court of Appeal hearing the case. It can then decide whether it should be admitted and upon what terms.

I therefore would allow this application and give leave to appeal.

LORD JUSTICE MILLETT: I agree. The vendor is, I think, identified sufficiently only in the Special Conditions of Sale. As the case is presently pleaded, these are not alleged to form part of the contractual document. It is not clear to me whether the plaintiff wishes to amend the pleadings in order to allege that the Special Conditions, the General Conditions and the Memorandum of Contract were physically bound up with the auction catalogue at the date of signature so as to form a single composite document, or whether he accepts that the Special Conditions were a separate document not bound up with the auction catalogue, but alleges that they were sufficiently referred to in the auction catalogue to enable them to be incorporated by reference in the auction catalogue and so in the Memorandum of Contract, which was allegedly bound up with the auction catalogue.

It appears to me that the plaintiff has an arguable case for contending that on either basis the requirements of section 2 have been complied with. It is obviously desirable that this court should consider that question in the light of the facts as the plaintiff wishes to allege them to be.

Accordingly, I agree that we should give leave to appeal. We will adjourn the plaintiff's application to adduce further evidence to the court which hears the appeal. We give leave to the defendant to prepare evidence in answer, if so advised, and seek leave to adduce it if necessary. We direct the plaintiff to file with his notice of appeal a draft amended statement of claim, and to include in his notice of appeal an application for leave to amend the statement of claim in accordance with the draft.

Order: Application allowed; directions as per judgment, l4 days for applicant to file and 2l days for respondent's reply; costs be in the appeal.