England and Wales Court of Appeal (Civil Division) Decisions

P & O Overseas Holdings Ltd. v Rhys Braintree Ltd. & Anor [2002] EWCA Civ 296 (12th March, 2002)

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
MR. JUSTICE LAWRENCE COLLINS

		Royal Courts of Justice Strand, London, WC2A 2LL
		12th March 2002

The Vice-Chancellor :

1. On 5th July 2001 Lawrence Collins J gave summary judgment in favour of the claimants for specific performance of an agreement (“the Agreement”) dated 20th March 2000 and made between the claimant, amongst others, as vendor (“the Vendor”), the first defendant as purchaser (“the Purchaser”) and the second defendant as guarantor for the sale of, amongst other properties, a shopping centre at Braintree, Essex, for £13.8m. In the events which had happened the contractual date for completion was 27th September 2000. The order provided for the payment of interest at the contractual rate on the unpaid balance of the purchase price “from 27th September 2000 when the purchase ought to have been completed according to the terms of the agreement to the day on which actual completion shall take place”. The sale was completed on 28th August 2001 when the Purchaser paid the balance of the purchase price and interest thereon of £1,070,619.
2. On this appeal, brought with the permission of Aldous LJ, the only issue is the date from which interest on the balance of the purchase price started to accrue in the Vendor’s favour. The Purchaser claims that the judge was wrong to have concluded that the purchase ought to have been completed on 27th September 2000. It contends that the appropriate date was 25th January 2001. The distinction between the two lies in the fact that on the latter, but not the former, the Vendor was registered as the proprietor of the land agreed to be sold. To explain the submissions of the parties and my conclusions it is necessary to describe the terms of the contract and the factual background in more detail.
3. On 6th December 1985 Shire & City Developments Ltd, an associated company of the Vendor, concluded an agreement with the Braintree District Council for the development of a shopping centre at George Yard, Braintree, Essex. Some of the land needed for the development was already owned by the District Council and the agreement made provision for the acquisition by the District Council of the rest of it, if necessary by the use of compulsory powers. That agreement provided that on completion of the development the freehold of the shopping centre would be transferred by the District Council to Shire & City Developments Ltd.
4. The shopping centre was completed in 1990. The interest of Shire & City Developments Ltd in all or some part of it was assigned to its associated company P&O Property Holdings Ltd. In 1999 the P&O Group decided to sell the Braintree Shopping Centre and five others to Dawnay Day Properties Ltd. The latter arranged for each shopping centre to be acquired by a separate subsidiary company, the obligations of which it was to guarantee. Rhys Braintree Ltd was nominated to be the purchaser of the Braintree shopping centre.
5. The Agreement was made between P&O Property Holdings Ltd, Shire & City Holdings Ltd, the Vendor and two other companies in the P&O Group (1) the six purchasers including Rhys Braintree Ltd (2) Dawnay Day Properties Ltd then called Dalestream Investments Ltd (3). It provided (clause 3.1) for the sale of all six shopping centres for £104.5m, such sale to be completed on 17th April 2000 or such earlier date as might be agreed (clause 4.1). But it also recognised that the Braintree shopping centre might need separate treatment and included specific provisions for that purpose. It is necessary to refer to those provisions in some detail.
6. Clause 1 contained a number of definitions. “Braintree” was defined to mean the shopping centre known as George Yard, Braintree, Essex more particularly described in the first schedule to Appendix 2. In relation to Braintree “beneficial owners” meant the Vendor. “Seller” or “relevant seller” meant whichever of the P&O companies was identified as the seller in the relevant appendix.
7. Appendix 2 related to Braintree and contained three schedules. The first schedule specified three parts of Braintree. In relation to each such part it described the property and the title number or root of title in the case of registered or unregistered land respectively. In each case it specified the name of the seller as P&O Property Holdings Ltd and/or Shire & City Developments Ltd. In cases where the seller did not have the legal estate the person who did was named. Part A of the second schedule gave details of the leases and other incumbrances subject to which the property was sold. Part B of the second schedule was, in effect, an abstract of the title to each part. The third schedule contained special conditions including stipulations that the purchaser should not object to certain specified matters.
8. Clause 4.10 dealt with completion of the sale of Braintree. It provided that

“4.10.1 Braintree is sold subject to Braintree having been transferred to the relevant Seller or beneficial owner (which for the avoidance of doubt is not the date such transfer is registered at H.M. Land Registry) (the Transfer).

4.10.2 If the Transfer has not been completed by the Completion Date then completion shall be delayed in relation to Braintree until the date 5 working days after the date on which the transfer is completed (the Braintree Completion Date).

4.10.3 The relevant Seller or Beneficial Owner shall stamp the Transfer with the appropriate amount of duty. If the current legal owner of Braintree agrees, the relevant Seller and the Beneficial Owner may complete the sale and purchase of Braintree by way of transfer direct to the relevant Buyer and the relevant Buyer shall accept the sam

e.

4.10.4 [added by a further agreement made on 12th April 2000 between the same parties] If within 6 months after the date of this Agreement the Transfer is not completed and a copy of the Transfer certified by the Seller’s Solicitors produced to the Buyer’s Solicitors (or the transfer direct to the relevant Buyer as mentioned in clause 4.10.3 is not completed) the Buyer may by written notice to the Seller rescind this Agreement in so far as it relates to Braintree...”

9. In the event that clause 4.10.2 applied clause 4.6.2 provided that the balance of the purchase price should be paid to P&O on the Braintree Completion Date. In that connection it is necessary to refer to clause 25 which provided that

“Interest at the contract rate shall be charged on any amounts payable by any party under the terms of this Agreement from the time on which such amounts become payable until the time on which payment is actually received or deemed to be received under the Standard Conditions (whether before or after judgment).

10. I should also refer to clause 6.2. which provided that

“Title to each property having been deduced to the Buyer's Solicitors (as the Buyer hereby admits) the Buyer shall be deemed to have accepted such title and shall not raise any enquiries or requisitions thereon nor make any objections in respect thereof after the date hereof except where the subject matter of the enquiry or requisition is registered at H.M. Land Registry or the Central Land Charges Registry after the date hereof but before Completion.”

11. The Agreement also incorporated the Standard Conditions of Sale (third edition) subject to the deletions and modifications set out in the first schedule. The conditions so incorporated include condition 4 which lays down a timetable for requisitions and the approval of the form of transfer by reference to the date of the contract and the date fixed for completion respectively.
12. The transfer, as defined in clause 4.10.1, was executed on 20th September 2000. In consequence the Braintree Completion Date, as provided by clause 4.10.2, was 27th September 2000. The transferors were (1) Braintree DC, (2) Shire & City Developments Ltd and (3) P&O Property Holdings Ltd. The transferee was the Vendor. Clause 11 noted that the transfer was by way of sub-sale. The transfer was lodged for stamping on 29th September 2000 and an application for registration was made the same day by reference to a certified copy of the original.
13. In the meantime, on 27th September 2000, the Braintree Completion Date, solicitors for the Purchaser wrote to those for the Vendor stating

“Our client has now received a Report on Title in respect of the above from its Property Solicitors Taylor Joynson Garrett. From this Report, it is clear that your client has not deduced title to the property in accordance with Section 110 (5) of the Land Registration Act 1925. Our client is not content to accept the title that you have provided so far and accordingly requires your client to deduce title to the property in accordance with the said Section.

In the circumstances it is not possible for completion to take place until these matters have been satisfactorily dealt with.

Indeed the title that our client requires from your client also affects the form of the Transfer. We await hearing from you.”

The response of the solicitors for the Vendor, sent on the same day, was to draw to the attention of the Purchaser’s solicitors the provisions of clauses 4.6.2, 4.10.2 and 25 and claim that the balance of the purchase price was due that day and that interest would start to accrue if it was not paid.

14. S.110(5) Land Registration Act 1925 provides that

“Where the vendor is not himself registered as proprietor of the land or the charge giving a power of sale over the land, he shall, at the request of the purchaser and at his own expense, and notwithstanding any stipulation to the contrary, either procure the registration of himself as proprietor of the land or of the charge, as the case may be, or procure a disposition from the proprietor to the purchaser:”

15. I should also refer to s.37(1) and (2) Land Registration Act 1925 which, so far as relevant, provide that

“(1) Where a person on whom the right to be registered as proprietor of registered land...has...been conferred by a disposition..., in accordance with this Act, desires to dispose of...the land....before he is himself registered as proprietor,...he may do so in the prescribed manner, and subject to the prescribed conditions.

(2) Subject to the provisions of this Act with regard to registered dealings for valuable consideration, a disposition...so made shall have the same effect as if the person making it were registered as proprietor.”

16. On 11th January 2001 the Purchaser served notices to complete on Shire & City Developments Ltd and P&O Property Holdings Ltd requiring completion, in accordance with General Condition 6, on 25th January 2001. On 19th January 2001 the Revenue released the transfer in favour of the Vendor, the stamp duty thereon having been paid. On 24th January 2001 the Vendors were registered as proprietors of Braintree and office copies of the entries to that effect together with the file plan were delivered to the Purchasers on 25th January 2001.
17. On 26th January 2001 the Purchaser purported to rescind the Agreement in so far as it related to Braintree. It did so on the basis that the file plan showed that the Vendor had not been registered in respect of land, described in the correspondence as “the Gaps”, which the Purchaser considered to be part of Braintree and subject to the terms of the Agreement. The Vendor did not agree and commenced these proceedings on 22nd February 2001 seeking specific performance of the Agreement in so far as it related to Braintree. On 6th March 2001 the Vendor was registered as the proprietor of the Gaps but the action continued just the same.
18. The Vendor’s application for summary judgment came before Lawrence Collins J. There were three issues (1) whether the Gaps were included in Braintree as agreed to be sold in the Agreement, and if not (2) whether the Agreement should be rectified so as to include them, and if not (3) on what date did the purchaser’s liability to pay interest on the balance of the purchase price start. The judge resolved the first two issues in favour of the Vendor. There is no appeal against either of those conclusions. Indeed the sale of Braintree was completed on 28th August 2001.
19. As I have already indicated the judge considered that the liability of the purchaser to pay interest commenced on 27th September 2000. In paragraph 51 of his judgment he said

“I am satisfied that the vendor's construction is correct. The contractual Completion Date was September 27, 2000, namely 5 working days after the transfer of the whole of the property to the vendor. As at that date the vendor was able and willing to make title pursuant to section 37(2). Even if the purchaser validly exercised its option under section 110(5) on that date, that did not affect the contractual Completion Date as defined, or the contractual date for payment and the commencement of interest. I do not need to decide whether, in the light of condition 4 of the National Conditions and clause 6 of the Agreement, the option was validly exercised. I am satisfied that a requirement for the payment of interest from a particular date is not a "stipulation to the contrary" for the purposes of section 110(5). Consequently in my judgment there is no real prospect of any successful defence to the claim to interest from September 27, 2000.

20. In oral but not the prior written argument, the Purchaser had also contended that it was entitled to refuse to complete on 27th September 2000 on the ground that the transfer to the Vendor had not been stamped. In giving permission to appeal Aldous LJ noted that the judge did not appear to have dealt with this argument. Thus the issue for our determination is whether the balance of the purchase price was, for the purposes of clause 25 of the Agreement, payable by the Purchaser on 27th September 2000, notwithstanding the facts that (a) the transfer to the Vendor had not been stamped, and/or (b) the Vendor was unable on that day to comply with the request of the Purchaser made under s.110(5).
21. Counsel for the Purchaser points out that it has been well established for more than 100 years that in unregistered conveyancing at least a purchaser is entitled to insist that all documents forming links in his title are properly stamped. The reason is not because an unstamped conveyance is void but because it cannot be adduced in evidence in the event that the purchaser has to prove his title, s.14(4) Stamp Act 1891. These propositions are clearly established by the decision of this court in Whiting to Loomes (1881) 17 ChD 10 and of Luxmoore J in Re Spollon and Long’s Contract [1936] 1 Ch.713 and the dictum of Millett LJ in Parinv (Hatfield) Ltd v IRC [1998] STC 305, 309. The fact that an unstamped document may be received in evidence if a solicitor gives an undertaking to the court to stamp it thereafter does not affect the right of the purchaser to refuse to complete, though it may mitigate the consequences to him if he does.
22. Though the effect of an unstamped link in a title may be more long lasting in the case of unregistered conveyancing when compared to registered conveyancing the distinction between the two systems does not justify a different conclusion. S.88 Land Registry Act 1862 precludes registration of an unstamped transfer and s.17 Stamp Act 1891 subjects the Registrar to a penalty if he does. Thus, subject to the terms of the Agreement, I would accept the argument of counsel for the purchaser.
23. Clause 4.10.3 specifically provided that the Vendor should stamp the transfer. This stipulation is in the context that by clause 4.10.2 only five working days will elapse between registration of the transfer and completion of the sale. Moreover, so far as I am aware, contracts for the sale of land do not normally contain such a provision because the remedy of the purchaser is to refuse to complete unless and until the link in the title has been properly stamped.
24. As counsel for the Vendor pointed out, until the transfer has been executed by all parties there is nothing to stamp. Emmet on Title para 31.015. But thereafter 30 days are allowed for that purpose. S.15A Stamp Act 1891. He contends that clause 4.10.3 deals with who is to stamp the transfer to the Vendor but does not say when. He submits that it is practically impossible to stamp the transfer within five working days. He invites us to conclude that the obligation to stamp did not have to be performed before the Braintree Completion Date.
25. Counsel for the Purchaser suggested that it is possible to stamp a transfer for a stated consideration within five days. He contended that it required clear words to justify an implication which allowed stamping of the transfer to the Vendor after completion of the sale to the Purchaser.
26. I prefer the submissions of counsel for the Vendor. First, the very fact that there is, unusually, an express stipulation about who is to stamp the transfer to the Vendor suggests that the parties recognised that the normal remedy of a purchaser, that is to refuse to complete, would not be sufficient protection in this case. Second, it is noticeable that no time is specified within which the requirement that the transfer be stamped at the expense of the relevant seller or beneficial owner is to be satisfied. The implication of a requirement that the transfer be stamped before the Braintree Completion Date would not be justified because if that had been intended there would be no need for the stipulation at all. Third, there are no grounds for concluding that the parties envisaged that the transfer could be stamped in the five days which would elapse between the completion of the transfer to the Vendor and the Braintree Completion Date. The nature of the transaction was such as to lead to the obvious inference that five days was most unlikely to be sufficient. In the event it took four months. For all these reasons I conclude that the obligation to stamp did not have to be performed before the Braintree Completion Date. It has not been suggested that the time actually required, that is until 19th January 2001, exceeded that allowed by the Agreement.
27. I turn then to the second point. I have quoted s.110(5) in paragraph 14 above. In Urban Manor Ltd v Sadiq [1997] 1 WLR 1016 this court concluded that a contractual requirement that the request permitted by that subsection should be made, if at all, within the period after the conclusion of the contract permitted for requisitions on title was not a stipulation to the contrary invalidated by the subsection.
28. In this case Clause 6.2 recognised that title had been deduced and accepted by the Purchaser before the Agreement was made. Thus requisitions were excluded except insofar as they related to matters arising from a registration made after the Agreement but before completion. To that extent the provisions of General Condition 4 would, necessarily, be modified. Nevertheless time for requisitions prescribed by Condition 4.1.1 would commence on the making of the Agreement and expire long before the Braintree Completion Date. Similarly by condition 4.1.2 the form of transfer had to be submitted by the buyer to the seller and approved at least five working days before completion. In cases where the time between contract and completion was less than 15 working days then times for requisitions and approval of transfer were proportionately reduced.
29. The Purchaser contended that the judge was wrong, in the penultimate sentence in the passage from his judgment I have quoted in paragraph 19 above, to conclude that the requirement for the payment of interest is not a stipulation to the contrary for the purposes of s.110(5). Counsel for the Purchaser submitted that a liability to pay interest in consequence of a request under s.110(5) has such a deterrent effect as to be avoided by the subsection. I do not accept that submission. The obligation to pay interest is not linked to the request under s.110(5) for each may exist without the other. Nor is it triggered by the request so much as by the time at which the request is made. Nor, even if it provides an economic disincentive, is it a stipulation to the contrary. See Urban Manor Ltd v Sadiq [1997] 1 WLR 1016, 1022.
30. Nevertheless the rejection of that submission does not appear to me to conclude this appeal. Liability to interest arises if amounts “payable” under the terms of the Agreement are not paid when they should be. If the request made on 27th September 2000 was validly made then the Vendor was unable on that day to complete the sale of Braintree in accordance with the terms of the Agreement for he was neither the registered proprietor nor had he procured a transfer from the registered proprietor direct to the Purchaser. The consequence, as it appears to me, would be that the balance of the purchase price would not have been payable on 27th September 2000.
31. Counsel for the Vendor contended, in the alternative, that the Purchaser’s request was too late to be valid. Counsel for the Purchaser protested that this point had not been taken in the court below and was not the subject matter of a respondent’s notice. We gave permission to serve a respondent’s notice out of time on terms that counsel for the Vendor limited his argument to three specific points. Those points were that a request under s.110(5) should be made, if at all, by way of requisition on title, if so made it was later than General Condition 4.1.1 allowed and in any event it was made at a time when General Condition 4.1.2 could not be complied with.
32. I do not accept that the request must be made by requisition. All the subsection requires is a request. It can take any form. It is unnecessary to decide whether it must be made, as in the case of Urban Manor Ltd v Sadiq [1997] 1 WLR 1016, within the period permitted for requisitions on the title deduced in accordance with s.110(1) and General Condition 4.2.1. when clause 6.2 precludes requisitions anyway. But I would accept the third submission.
33. Compliance with s.110(5) necessarily affects the form of transfer. Although preparation of the transfer would not preclude the right of a purchaser to raise further requisitions (general condition 4.5.1) it cannot be left to the day fixed for completion so as to justify both a refusal to complete and a refusal to pay interest. Such a request is necessarily inconsistent with the timetable laid down by the conditions of sale. There are, in my view, two possible solutions. The first is to imply a general condition limiting a request under s.110(5) to a time before the form of transfer has to be approved under General Condition 4. The second is to recognise that the balance of the purchase price remains payable notwithstanding the request for completion in accordance with s.110(5) because the vendor was in fact capable of transferring the title he contracted to give pursuant to the provisions of s.37 Land Registration Act 1925. The latter is, in substance, the solution adopted by the judge. In my view he was right to do so whether or not he might also have adopted the former solution.
34. For all these reasons I would dismiss this appeal.

Mantell LJ:

I agree.

Tuckey LJ:

I also agree.

Order: Appeal dismissed; order made in terms of draft minute agreed by the parties. (Order does not form part of the approved judgment)