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
CHANCERY DIVISION
(MR JUSTICE PATTEN)

		Royal Courts of Justice Strand London, WC2 Thursday, 31st October 2002

1. LORD JUSTICE ALDOUS: We have before us an appeal by the claimants Mr and Mrs Singh against part of the order of Patten J made on 15th March 2002, and an application for permission to appeal against the judge's order as to costs, with appeal to follow if permission is given.
2. The judge had before him a major dispute concerning events that happened between 1987 and 2002. As the appeal only concerns his conclusion that the Singhs were not entitled to substantial damages but only nominal damages, I will seek to extract from his detailed and careful judgment the essential facts needed to understand the dispute on damages.
3. The action was brought by the claimants, Mr and Mrs Singh, against a company called Sardar Investments Ltd ("Sardar") and two brothers Mr Davinder Virdee and Mr Amritpal Virdi. Sardar was owned jointly by the brothers. It was not in dispute in the action that for a number of years prior to 1998 relations between them had become strained. In particular they could not agree whether or not to sell the property owned by Sardar.
4. From 1996 Mr Singh ran a shop at premises, 41 -43 King Street in Southall. The freehold was owned by Sardar. In 1994 when the lease was about to expire Mr Singh approached Mr A Virdi to request a renewal of that lease. He was told that the freehold was available for sale. This appeared to him to be an attractive prospect because he would not need to pay any rent. He therefore negotiated with Mr A Virdi. Eventually a price of £315,000 was agreed. At that time he had not had contact with Mr D Virdee and he did not know of the dispute that was going on between them.
5. What emerged from the disclosure in this action was that in August 1997 Mr D Virdee had applied to the Land Registry for registration against the freehold titles to the property of an inhibition in order to prevent any dealings or registered depositions without his consent. The letter in support of the application referred to the unauthorised appointment of Mr SS Virdee as an additional director of Sardar.
6. On 7th October 1997 Mr A Virdi objected to the registration of the inhibitions and they were removed from the register. Mr D Virdee, however, created and registered cautions and went so far as to prepare and sign in 1999 and 2000 annual returns for Sardar purporting to show that Mr A Virdi was no longer a shareholder. That gives one a flavour of the dispute.
7. Drafts contracts were sent out on 5th August 1998. On 25th September 1998 contracts were exchanged for the sale by Sardar of the property to Mr and Mrs Singh. The contractual purchase price was the agreed £315,000, with the usual provision for a 10 per cent deposit of £31,500. A completion date of 6th November was specified. However, at the time when the contracts were exchanged the property was subject to an enforcement notice served by the local authority which required works of repair and improvement to be carried out before multiple occupation certificates could be granted. A special condition of the contract required Mr and Mrs Singh to be responsible for carrying out those works to the satisfaction of the local authority. That took slightly longer than was expected, but in June 1999 the necessary certificates were finally granted.
8. So far as the Singhs were concerned, the first sign of trouble occurred on or about 29th September 1998 when Mr Singh received a letter from Mr D Virdee in which he said that the intended sale of the property was illegal and could not take place without his consent. The stated reason was that the conveyance had been signed by Mr A Virdi without authority to bind Sardar. That was a position that Mr D Virdee maintained in a number of letters which he sent to the claimants right up to the date of the trial, and it was a position that he maintained in his pleading.
9. So strong was Mr D Virdee's opposition to the sale that he resorted to various tactics to frustrate it. This included the creation and registration of an option in March 1998 to purchase the property in favour of Mr Patel, who is the third defendant. It was conceded to be a sham and for that reason Mr Patel played no part in the action. Nonetheless, it created difficulties when completion was sought.
10. The dispute between the Virdi brothers as to whether the property should be sold and in particular whether Mr A Virdi had authority to bind the company was referred to arbitration as a result of pressure exerted by the priest of their Temple. The arbitration agreement was signed on 24th March 1998. There were a number of meetings and the judge heard evidence as to how they were conducted and what happened. A final award was issued in April 1999 which provided for the sale of the property to Mr Singh. However, that arbitration award has since been set aside as the arbitration was not conducted in accordance with its terms.
11. On 20th September 1999 Mr Singh's solicitors served notice to complete on Sardar's solicitors expiring on 5th October 1999. That was thought to be defective in form and a second notice was served on 14th October 1999. This expired on 29th October 1999. On 27th October 1999 Mr A Virdi wrote to the Singhs' solicitors giving notice of rescission and returning the deposit cheque. On 17th November 1999 Mr and Mrs Singh issued these proceeding seeking specific performance of the contract together with damages for delay in completion.
12. It is not necessary to go into the progress of the action. It is sufficient to record that on 17th December 1999 Sardar served its defence in which it contended that Mr A Virdi did not have any authority to contract on behalf of the company. On 16th May 2001 a draft amended defence was served asserting that Mr and Mrs Singh had not been ready, willing and able to complete the contract upon the expiry of either of the notices to complete because they were not able as of those dates to tender the purchase price. Also, Mr and Mrs Singh amended their defence in order to plead an alternative claim against Mr A Virdi, namely that he had acted in breach of warranty of authority.
13. The main issues before the judge were threefold. The first was whether the claimants had repudiated the contract by failing to tender the purchase price in accordance with one or other of the notices to complete. If the contract had been terminated by such a repudiatory breach and that had been accepted by a notice of rescission which had been served, then the claim for specific performance and damages for breach of contracts had to fail. The second issue was whether Mr A Virdi had authority to exchange contracts on behalf of Sardar. The third issue that arose was whether Mr A Virdi was liable in damages to Mr and Mrs Singh for breach of warranty of authority and, if so, how much.
14. The judge rejected the claim for specific performance even if the contract had been signed with authority. He concluded that Mr and Mrs Singh were not in a position to tender the purchase price as of 29th October and that amounted to a repudiation by them of the contract, which had been accepted. The judge then went on to consider whether Mr A Virdi had authority to sign the conveyance. He concluded that the contract was unauthorised and therefore was not binding on Sardar. For that reason also the claim to specific performance and damages failed and had to be dismissed.
15. The judge then came to the part of the case which is the subject of this appeal. Having concluded that there was lack of authority, he decided that there was no defence to the allegation of breach of warranty of authority and that the only real issue was whether the breach of warranty gave rise to a recoverable loss.
16. On behalf of Mr and Mrs Singh, it was contended that they were entitled by way of damages for breach of warranty to be compensated for the loss which they had suffered by losing the benefit of the contract. That included the difference between the contractual price of £315,000 and the agreed current value of the property of £360,000, together with the rent they would have received by letting out the upper floors. On behalf of Mr A Virdi it was contended that even if the contract had been authorised the claimants would not have been able to enforce it because they would have failed to comply with the notices to complete or more generally because they had been unable to fund the purchase. In those circumstances, substantial damages should not be ordered.
17. The judge noted that he had already held that Mr and Mrs Singh were to fund the purchase from a combination of their own resources and with the benefit of a loan from the Nationwide or some other commercial lender. The difficulty faced by Mr and Mrs Singh was the time limit imposed by the service of the notices to complete. By the time specified in the notices, finance was not available to Mr and Mrs Singh as they had not and could not provide the necessary assurances to the Nationwide that they required. In those circumstances, Mr and Mrs Singh were not able to complete and the judge concluded that the claim for substantial damages for want of authority in substance failed. He held that the Singhs were only entitled to a nominal damages.
18. Mr Sheridan QC, who appeared with Mr McCue on behalf of Mr and Mrs Singh, reminded us that when a contract was repudiated on the grounds that it was made without authority, the loss was prima facie the amount of damages that could have been recovered from the principal if he had been duly authorised and subsequently refused to perform the contract, together with costs and expenses incurred in respect of any legal proceedings reasonably incurred. He submitted, rightly in my view, that the breach occurred when the warranty was given without the authority of Sardar. It followed that the cause of action was complete on 25th September 1998. The fact that, as here, the breach of warranty was disputed between the Virdi brothers and required adjudication did not shift the accrual of the cause of action to the date of judgment of the judge, nor could it operate to clothe the unauthorised contract as a valid contract. Mr Sheridan, also rightly in my view, submitted that the innocent party to a claim for breach of warranty of authority is not put to an election to accept or reject the contract. There is no contract to accept. It followed that from the date of the breach of warranty onward, Mr and Mrs Singh were relieved from the performance of their obligations under the "contract" that never was. Therefore, it was no defence to the Singhs' claim for breach of warrant for the defendants to show that if the authority had not been breached the Singhs would have been unable to perform the contract at the time fixed for the performance.
19. However, in my view the crucial question to be decided is: what was the Singhs' loss? The answer lies, in my view, in the propositions of law to which Mr Sheridan referred us. First, he cited to us an extract from Bowstead and Reynolds on Agency, 17th edn, 9 -074:

"Where a contract is repudiated by the person on whose behalf it was made on the ground that it was made without his authority, [his] loss is prima facie the amount of damages that could have been recovered from the principal if he had duly authorised and subsequently refused to perform the contract, together with costs and expenses (if any) incurred in respect of any legal proceedings reasonably taken against him on the contract."

To similar effect was this extract from McGregor on Damages at paragraph 1311:

"Enforceable contract

Had the agent had authority and given a solvent principal, the damages will be based on the measure of damages that the plaintiff could have recovered in an action for breach of contract against the principal had the principal been bound and this will generally give him damages for the loss of his bargain. The particular measure falls to be judged in accordance with the particular type of contract the defendant had warranted his authority to negotiate and illustrations in the cases range over a variety of contract types."

20. Mr Sheridan also referred us to other authorities, but to my mind the most relevant is the Banque Bruxelles case, which we have reported in [1996] 3 WLR 87, and in particular the speech of Lord Hoffmann at page 97. There Lord Hoffmann was comparing the measure of damages in an action for breach of duty with that in an action for breach of warranty. He said:

"The measure of damages in an action for breach of a duty to take care to provide accurate information must also be distinguished from the measure of damages for breach of a warranty that the information is accurate. In the case of breach of a duty of care, the measure of damages is the loss attributable to the inaccuracy of the information which the plaintiff has suffered by reason of having entered into the transaction on the assumption that the information was correct. One therefore compares the loss he has actually suffered with what his position would have been if he had not entered into the transaction and asks what element of this loss is attributable to the inaccuracy of the information. In the case of a warranty, one compares the plaintiff's position as a result of entering into the transaction with what it would have been if the information had been accurate. Both measures are concerned with the consequences of the inaccuracy of the information but the tort measure is the extent to which the plaintiff is worse off because the information was wrong whereas the warranty measure is the extent to which he would have been better off if the information had been right."

21. Adopting that last passage from the speech of Lord Hoffmann, we are concerned with the extent to which the Singhs would have been better off if the information had been right.
22. The answer to that, on the findings of the judge, is they would not have been better off. They acted upon the basis that the contract was a valid contract and that the authority was right. Upon that basis they served their notices of completion. The result was, as found by the judge, they were not in a position to complete as of the date of completion.
23. A similar view can be taken by adopting the passage cited by Mr Sheridan from Bowstead. Prima facie, their loss is the amount of damages that could have been recovered from the principal if he had authorised the contract but had refused to perform it. In this case the judge held that the principal, Sardar, had been entitled to rescind the contract as the Singhs could not fund the purchase at the time of completion. It follows therefore that the judge was right to conclude there was no damages.
24. Mr Sheridan had a fallback argument. He submitted that the analysis based upon the facts that the Singhs had not been able to complete was not based upon the complete facts. If all the facts were to be traced through, then the court should take into account the facts that would have occurred if the authority had been correct.
25. In the present case, upon the assumption that the authority had been properly given, there would, Mr Sheridan submitted, have been a valid arbitration award which would have swept away the option. In effect, the option would have gone and completion would have taken place in the proper way. In my view that submission disregards the facts as found by the judge. Rescission of the contract was only possible as the Singhs were not able to fund the purchase. As the judge held:

"There is no evidence that either Mr Singh or Mr Dhaliwal [Mr Singh's solicitor] was at all affected by the letter of 27th October or that it in any way impeded their attempts to obtain finance. As I have already found the sole source of mortgage finance in October 1999 was the Nationwide Building Society. None of the private lenders had been approached. The Nationwide loan was obstructed not by the letter of 27th October but by the failure of Mr DS Virdee to produce a copy of the option. Moreover the response of Simon & Co to the letter of 27th October was to reject at once the basis on which it was written and to insist on the performance of the contract."

Later on he said this:

"It is clear as I have found that there was a repudiation by the Claimants due to their inability to tender the purchase price by 29th October. But I should make it clear that had the option and the other entries been vacated then Mr and Mrs Singh would in my judgment have been able to fund the purchase from a combination of their own resources and with the benefit of a loan from the Nationwide or some other commercial lender. Mr Singh had some £80,000 available to him on deposit and had obviously satisfied the building society about his ability to service the proposed loan of £225,000. His real problem was one of timing. If the Claimants had been given the opportunity to apply for specific performance and as part of those proceedings to obtain the vacation of the cautions I am satisfied that they would have obtained a clear title which would have opened the way to a commercial loan. No resort to friends and family would have been necessary. Mr DS Virdee is likely to have agreed in the face of litigation to the removal of the entries on the register just as he has done in the present proceedings. The difficulty faced by the Claimants was the time limit imposed by the service of their notices to complete. The question which therefore has to be answered is whether in assessing the liability of the Fourth Defendant for breach of warranty of authority I am obliged to take into account the fact that on 29th October 1999 the Claimants repudiated the contract."

26. The judge went on to conclude that he was bound to take into account that the Singhs repudiated the contract. The fact of an arbitration award did not in any way conclude the dispute between the Virdis. The reason for the repudiation was the timing of the letter, as the judge held. The offer for finance from the Nationwide Building Society ended at the end of October. By that time there was no hope that the dispute between the Virdis would have been resolved and the Singhs could not satisfy the building society.
27. In my view the result is as the judge has held. The measure of damages, as Lord Hoffmann pointed out, is the extent to which the Singhs would have been better off if the information had been right. The answer is they would not have been any better off, because the events that had happened would have happened. In my view, the appeal must fail.
28. I turn next to the question of costs.
29. Mr Wood QC, on behalf of the second defendant Mr D Virdee, seeks permission to appeal out of time the order of the judge which was given on 15th March but was not entered until, I think, April.
30. Mr D Virdee's application for permission to appeal was considered by the single Lord Justice on paper and was rejected. It was ordered that if the application was renewed then it should be listed to be heard together with the appeal to follow. Although the application is out of time and the reasons for the failure are not comprehensive, I do not believe it right to refuse an extension of time. I think Mr Wood is right that there has been no prejudice to the parties nor to the administration of justice. In those circumstances it is convenient and right to extend the time. I also believe it right to grant permission to appeal and therefore turn to the merits.
31. The judge ordered:

"As to costs

4. The Claimants do pay the First Defendant's costs of the action.

5. The Claimants do pay the Fourth Defendant's costs of the action.

6. The Second Defendant do pay the Claimants' costs arising out of the issues pleaded in the Second Defendant's defence (prior to its amendment) and in the Third Defendant's defence.

7. The Fourth Defendant do pay 30% of the Second Defendant's costs of the action, save insofar as those costs are referable to matters in relation to the Caution or the Option in favour of the Second or Third Defendants."

32. Mr Wood took us through a chronology to establish that from the very beginning his client had made it clear to the Singhs that the property was not for sale and could not be sold without his consent. I do not propose to go through all the letters. But just to give some flavour to that submission, I will refer to some. Firstly, the letter of 28th October which was written by Mr D Virdee to the claimants. That stated the property was not for sale. The claimants, the Singhs, say they never received that letter.
33. On 10th March 1997 the options were registered. In March the arbitration proceedings started. On 11th May Mr D Virdee wrote to the Singhs stating that the property belonged to Sardar and could not be sold without his consent and signature. The judge held that the Singhs saw that letter.
34. On 28th September 1997 Mr D Virdee wrote again to the Singhs stating that the property could not be sold without his consent. That letter asked the Singhs to tell their solicitors.
35. He wrote again on 1st December to the Singhs, this time asking the Singhs to put their solicitors in contact with him.
36. On 7th December he wrote to the Singhs' solicitors, stating that the contracts which had been exchanged were unauthorised. He continued to write such letters right through 1999 and also right up to the date of trial.
37. Mr Wood also referred us to his client's defence to show us that his client had always made it clear that Mr A Virdi did not have authority to sign the contract. In those circumstances Mr Wood submitted that paragraph 6 of the order was unjustifiable. It seems that that submission was not made to the judge when the costs application was made. The transcript shows (at page 18) that the judge said this:

"It seems to me that your client ought to pay the Claimant's costs incurred in relation to the Third Defendant. My current feeling is that he also ought to pay the costs of the Claimant in relation to his own joinder."

Mr Davies (counsel who then appeared for Mr D Virdee) said:

"My Lord, it would be difficulty to resist that in circumstances where we accepted that the option was a sham document, and as to the cautions which presently subsist those relate not to the option but to the claim for beneficial interest.

MR JUSTICE PATTEN: I know, but all that was abandoned and the option was accepted to be a fraud, and it seems to me the costs consequences of that are obvious.

MR DAVIES: They do appear to be, my Lord, yes. The position, however, as between the Second and Fourth Defendant is very different."

Mr Davies then went on to make submissions as to the position between the second and fourth defendant.

38. The judge in his judgment on costs said:

"However, in relation to the other parties the costs position is in my judgment different. The Second Defendant, Mr DS Virdee, was joined in these proceedings solely in order to deal as part of the claim for specific performance with the removal of the cautions which he registered against the title to the property. Shortly before the trial the caution in relation to the option was vacated by order of the court and the allegation that a purported beneficial interest in the property which he had was a bar or should be a bar to the claim for the enforcement of the contract was dropped. In those circumstances it seems to me that the Claimants have been in reality entirely successful so far as these proceedings are concerned in relation both to the Second and Third Defendants. The Third Defendant, as indicated in my judgment, is no more than a nominee for the Second Defendant so far as the option is concerned. In those circumstances I intend to make an order that the Second Defendant, Mr DS Virdee, should pay the costs of the Claimant incurred in relation to his defence of these proceedings and also in relation to that of the Third Defendant."

39. In my view, the judge was entitled to come to that conclusion on the submissions that were made to him after hearing counsel. The order in paragraph 6 was within the ambit of his discretion. I therefore would dismiss the appeal in respect of that paragraph of his order.
40. The appeal in respect of paragraph 7 of the order is in my view more troublesome. Firstly, because Mr A Virdi appeared before us in person and had not obtained the relevant papers from his previous solicitors so as to be able to formulate in advance his submission. We therefore adjourned for a short time to give him the opportunity to consider the relevant papers. Secondly because of the substance of Mr Wood's submissions.
41. Mr Wood submitted that when the position of the second and fourth defendants was considered, the second defendant, Mr D Virdee, had been right throughout save as to the issues of the caution and option. The judge was entitled to conclude that the trial had been wrongly extended by those issues and to make some deduction. However, the order made resulted in a double deduction. He had excluded the costs relating to those issues and reduced the payment of costs for the same reason by 70 per cent. That, Mr Wood submitted, was unjustifiable and amounted to a double deduction.
42. The judge in his judgment dealt with this at page 36. He said this:

"That leads me to deal with the position of the costs of the Second Defendant so far as they are referrable to the participation in the trial of that Defendant to argue in effect on behalf of the company that the contract was entered into without authority. It seems to me that in the absence of the company and having regard to the way in which to save unnecessary argument I allowed all the arguments on behalf of the company both ways to be put by the Second and Fourth Defendants, it would be wrong to deprive Mr DS Virdee of his costs of participating in the trial simply because there had not been a representation order made prior to the trial in relation to the conduct of the company's defence. It therefore seems to me right in principle that the Fourth Defendant should pay the costs of the Second Defendant in so far as those costs are referrable to the defence on behalf in effect of the company of the authority issue. In reality that comes down to the costs of the trial itself."

Mr Wood relies upon that part of the judgment. He draws attention to the fact that the judge is saying that his client should have in effect the costs of the trial. However, the judge continued:

"Mr Hamlin I think does not seriously resist that as a question of principle, but he asks me to take into account two matters, which I do. First of all, he says that Mr DS Virdee's stance in these proceedings, which involved raising a number of issues, did considerably increase his client's costs and in relation to a number of matters such as the cautions I have mentioned that was without any real necessity. Secondly, so far as the matter is concerned more generally he says I ought to visit upon Mr DS Virdee in terms of the costs order I make the disapproval of the court in relation to his conduct generally which I have referred to in my judgment. I am, I think, entitled to take both those matters into account, but the consequence of that is not in my judgment to deprive Mr DS Virdee of the entirety of his costs incurred in attending and participating in the proceedings. It seems to me that an adequate reflection of those points will be made by my ordering the Fourth Defendant to pay 30 per cent of the Second Defendant's costs. Those costs will not of course include costs that are solely referrable to his position in relation to the caution and option."

43. That is the passage which Mr Wood criticises.
44. The conduct of the Virdis were such that, upon reflection, I suspect they would not wish to repeat what they did. Mr DS Virdee's action as to the option was not one which I suspect he is proud of. It may have obtained the result in the end, but it is not one which he should feel was correct. Mr A Virdi's actions signing the contract is probably another one which he is not particularly proud of.
45. It is therefore best, in my view, to arrive at an order for costs applying the usual principles. The judge concluded that the fourth defendant should in effect pay the costs of the trial, subject to deductions. In that respect he was right. After a trial like this one it is not possible to estimate accurately what those deductions should be. However, he did go on to make those deductions twice. Not only did he exclude from the costs that should be paid the issues relating to such matters as the caution and the option, but he also reduced the costs payable by 70 per cent for the same reason. In my view, that was not logical nor correct.
46. My view is that paragraph 7 of the order should be set aside. The order should provide that the fourth defendant should pay the second defendant's costs, save in respect of the issues which were wrongly put into play. We have been told about three matters. Firstly, the caution; secondly, the option; and thirdly, a contention that Mr D Virdee claimed to have a beneficial interest in the properties. To support those contentions certain witness statements were put in and it seems that the other parties to the action had to consider their position. Ultimately, the third matter was not an issue that came before the judge, but it was certainly something upon which costs were incurred. I therefore would make that a deduction as well.
47. In those circumstances, the issues as to caution and the option and to the claim for a beneficial interest should not be included in the payment of costs to be made by the fourth defendant.
48. However, I would go further and say that the second defendant should in fact pay the fourth defendant's costs of those issues. That is the order that I would substitute for paragraph 7 of the judge's costs order.
49. I therefore would dismiss the main appeal. I would allow the appeal on costs in relation to paragraph 7 alone.
50. LORD JUSTICE DYSON: The general principle applicable to the measure of damages for breach of warranty of authority is not in doubt. It is accurately summarised at paragraph 9 -072 of Bowstead and Reynolds on Agency, 17th edn, in these terms:

"The cause of action for breach of warranty of authority being classified as contractual, the damages are those required to put the plaintiff in the position in which he would have been had the warranty been good viz. had the representation of authority been true."

In the present case this means that the claimants are entitled to damages to put them in the position in which they would have been if the contract purportedly made on 25th September 1998 had been authorised by the first defendant.

51. For the reasons explained by the judge and my Lord, if the contract had been authorised the claimants would not have been able to complete and the contract would have been rescinded. Accordingly, the claimants have suffered no loss as result of the breach of warranty of authority. On the face of it that is a complete answer to the claim for damages against the fourth defendant. The principal way in which Mr Sheridan QC seeks to escape from this apparently complete answer is to submit that (a) the warranty was that the contract had been authorised by the arbitral committee; (b) if the arbitral committee had authorised the making of the contract, the option to purchase would have been removed as part of its ruling; (c) once the option to purchase had been removed from the register, there would have been nothing to stop the claimants obtaining the necessary finance to complete the transaction; and (d) therefore the claimants have suffered substantial damages as a result of the breach of warranty.
52. In my judgment there are two answers to this argument, either of which is sufficient to dispose of it. First, the fourth defendant did not warrant that the contract had been authorised by the arbitral committee, or indeed give any warranty as to how the contract came to be authorised. He merely impliedly warranted that he had authority to make the contract on behalf of the first defendant.
53. In this connection I would refer to what Devlin J said in Heskell v Continental Express Ltd [1950] 1 All ER 1033, at 1043E:

"An agent who warrants that he has authority need warrant no more than the bare fact. In the absence of special circumstances, he makes no warranty or representation about how he got his authority, whether it is express or implied, specific or general. Still less does he warrant that an event, on which the proper exercise of a general authority may depend, has in fact taken place."

It seems to me that this passage is of direct application here.

54. Secondly, I am not persuaded that even if the arbitral committee had authorised the contract before 20th September 1998, the option to purchase and the caution would have been removed by 29th October 1999 when the second notice to complete expired. Mr Sheridan relies on what the fourth defendant said in cross -examination at the trial, which was apparently to the effect that authorisation of the contract by the arbitral committee would have led to the removal of the option to purchase and caution. As recorded at paragraph 20 of Mr Sheridan's skeleton argument, the fourth defendant said:

"I agree that the question of the validity of the Option and the Cautions was before the Committee on 19th September ... The option was to be removed by the Committee as part of the ruling ..."

It is to be noted that this was the evidence of the fourth defendant and not the second defendant. But in any event, it is quite clear that the judge took the view that the second defendant would not have agreed to remove the option or caution save as a result of the intervention of the court. At paragraph 16 of his judgment the judge said:

"The option was not intended to have any legal effect but was intended to frustrate any possible sale by Mr AS Virdi whether to Mr Singh or to anyone else."

And a little later:

"The importance however of the option is that it illustrates how determined Mr Virdee was and is to prevent a sale."

And then the passage at paragraph 57, which my Lord has already read, but I will repeat the relevant short passage from it:

"If the Claimants had been given the opportunity to apply for specific performance and as part of those proceedings to obtain the vacation of the cautions I am satisfied that they would have obtained a clear title which would have opened the way to a commercial loan. No resort to friends and family would have been necessary. Mr DS Virdee is likely to have agreed in the face of litigation to the removal of the entries on the register just as he has done in the present proceedings."

The reference to "in the face of litigation" is significant. As the judge said, that is precisely what happened. The claimants joined the second defendant in these proceedings for the sole purpose of claiming the removal of the cautions from the title to the property and the removal of the entry of the option to purchase from the Charges Register. The proceedings were started on 17th November 1999. It was not until 25th June 2001 that the second defendant agreed to the removal of the option from the register. That was the date on which the trial was due to commence. In fact it was adjourned.

55. The judge was entitled to hold that the second defendant would only have agreed to remove the option in the face of litigation. It follows that the factual premise on which Mr Sheridan's argument is based is ill -founded.
56. For these reasons, as well as those given by my Lord, I would hold that the judge was right to conclude that the claimants had suffered only nominal damages as a result of the breach of warranty of authority, and I would dismiss the appeal.
57. As regards the appeal on costs, I agree that the appeal should be allowed to the extent indicated by my Lord, and for the reasons that he has given.

ORDER: Appeal of claimants dismissed; extension of time to the second defendant to apply for permission to appeal the judge's order of 15th March 2002 granted; the second defendant's application for permission to appeal that order granted; appeal as to paragraph 6 of the order of 15th March dismissed; appeal as to paragraph 7 of the order allowed; paragraph 7 of the order set aside and an order that the fourth defendants do pay the second defendant's the costs of the action, save as to the costs of the issues relating to the caution, the option and the claim for a beneficial interest substituted; the second defendant do pay the fourth defendant the costs of those issues; the claimants to pay the fourth defendant's costs of the claimants' appeal; the fourth defendant to pay 50 per cent of the second defendant's costs of the appeal against the order of 15th March.

(Order not part of approved judgment)