England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM HIGH COURT OF JUSTICE
CHANCERY DIVISION (HIS HONOUR
JUDGE WEEKS QC)

		Royal Courts of Justice Strand, London, WC2A 2LL
		13 May 2003

Lady Justice Arden :

1. This is an appeal with the permission of Chadwick LJ from the order of His Honour Judge Weeks QC sitting in the High Court of Justice, Chancery Division at Bristol. By his order dated 11 July 2002, it was declared that the right of pre-emption contained in clause 2(a) of the conveyance dated 25 June 1985 and made between the respondents and M W Developments Ltd ("the company") was binding on the appellant and in addition the appellant was ordered to transfer to the respondents the land known as plot 7, Fawley Court Farm, Fawley, Buckinghamshire for the sum of £11,000.
2. Plot 7 is adjacent to a property purchased by the respondents from the company in June 1985. The company (which was incorporated in Jersey) was at that time owned jointly by the appellant's husband, Mr Merer, and a Mr Warman, but by 1991 Mr Merer had bought out Mr Warman's interest and the company was wholly owned by Mr Merer. The right of pre-emption was in these terms:-

"If the vendor does not obtain planning permission for the development of plot 7 the vendor will not sell, let or dispose of in any way … plot 7 … for a period of twenty years from the date hereof without first offering the same for sale in writing to the purchaser at a fair price to be agreed between the parties hereto within one month of receipt by the purchaser of the said offer and in default thereof at the market value to be determined in writing by an independent valuer between the parties hereto or failing such agreement by a valuer appointed at the request of either party in writing by the President of the Royal Institute of Chartered Surveyors … [and it is hereby declared] that the option contained herein shall lapse once planning permission is obtained for the development of plot 7."

3. The respondents' solicitors purported to register the right of pre-emption as a land charge but it was not validly registered under the Land Charges Act 1925 because the land charge stated that plot 7 was in Oxfordshire when, in fact, it was just in Buckinghamshire. Planning permission for plot 7 was not obtained by the company. Mr Merer in due course wanted the company to be dissolved. However, he wanted to deal with plot 7 before the company was dissolved. He instructed a solicitor, Mr Henry, to advise in March 1990. When setting out the facts the judge referred to an attendance note which Mr Henry then compiled:

"Merer suggests the price of £175,000 which will be satisfied by a loan from Merer to the company being partially written off. The property is to be taken in the joint names of himself and his wife. They will be tenants in common. There is apparently an option to purchase in favour of Fisher which is only exercisable if planning permission is not granted. Merer is reasonably confident of getting planning permission. I said I would check to see whether the option had been registered."

4. In due course Mr Henry discovered that the right of pre-emption had not been registered against plot 7. The transfer was not effected until 1991, by which time the transaction had changed. The consideration was to be £80,000 and the transfer was to Mrs Merer alone. He arranged for the company to transfer plot 7 to his wife, Mrs Merer, and the conveyance to her expressed the consideration for the transfer to be the sum of £80,000, receipt of which the company acknowledged. The consideration was also stated to be £80,000 when the transfer was produced to the Inland Revenue and nothing was said in the relevant Inland Revenue form in answer to the requirement to provide details of any debt released.
5. The respondents only discovered about the transfer late in 1999 or 2000 and that discovery led them to start these proceedings. At the time of the 1991 transfer, Mr Merer owned all the share capital of the company. The company secretary was a Mr Michel. The directors of the company were apparently Mrs Michel and two residents of Sark. Mr Merer was not a director of the company.

The Judgment of HHJ Weeks QC

6. The judge gave an unreserved judgment at the conclusion of a trial lasting one day. The judge found that plot 7 had been properly valued by Mr N M Conie, B.Sc., FRICS, an independent valuer appointed by the parties to the action, and that at the time of the transfer to Mrs Merer the property had a value of £10,000 to £12,000 in accordance with that valuation.
7. The first issue before the judge was whether the right of pre-emption was enforceable against Mrs Merer. The judge rejected the argument that there was a distinction to be drawn between positive and negative covenants for the grant of a right of pre-emption. He held that it was not necessary for him to give detailed consideration to the decision of this court in Pritchard v Briggs [1980] Ch 338, because that case concerned the priority of an option as against a right of pre-emption at a time before the right of pre-emption became exercisable. In this case, even if the right of refusal was not binding until it became exercisable, it had become exercisable immediately before the transfer to Mrs Merer. Accordingly, the right of pre-emption created an estate contract. The judge observed that Mr Henry had sought to ascertain whether the right of pre-emption had been registered under the Land Charges Act 1925 as an estate contract. He accepted that this was not evidence which was admissible to construe the 1985 conveyance but it supported his intuitive approach. There is no appeal on this issue.
8. The judge then turned to the second issue, namely, whether Mrs Merer was a purchaser for the purposes of section 4(6) of the Land Charges Act 1925. This issue involves a question of fact, to which I refer below as "the question of fact", and a question of law. The appellant challenges the judge's conclusion on both points in this appeal.
9. Section 4(6) provides that an estate contract is void:

"as against a purchaser for money or money's worth of a legal estate in land charged with it, unless the land charge is registered in the appropriate register before the completion of the purchase."

10. In this case the right of pre-emption was not registered in the appropriate register, and accordingly Mrs Merer would take free of it if she was "a purchaser for money or money's worth". However, despite the receipt clause in the transfer, no money had passed. Mrs Merer's case was that the parties had agreed that the consideration for the transfer of plot 7 to Mrs Merer should be the write off of all the debts which the company owed to Mr Merer. The judge was unable to accept that contention as a matter of fact. He gave five reasons. There was no written evidence of the arrangement. There was no correspondence between Mr Merer and any director of the company. Mr Merer had submitted no invoices for the debts. He did not make any return to the Inland Revenue indicating that he had been paid in that year in respect of his services to the company. Indeed, he continued to collect for his own benefit debts due to the company pursuant to an earlier assignment of debts by the company by a letter dated 13 February 1990.
11. The judge then dealt with the question of law arising on the second issue. He held that Mrs Merer was not a purchaser for the purposes of section 4(6) because the consideration was not provided by her. She did not procure the release of the debts owed to her husband and did not know about the release until two years before the trial. The appellant appeals against the judge's holding on this point. The judge also rejected the argument that in those circumstances he should treat the transaction as if it had been effected first by a conveyance to Mr Merer in consideration of the write off of the debts due to him and then by conveyance by him to his wife. The judge held that it was not open to him to re-write the transaction in that way. There is no appeal from the judge's conclusion on this point.
12. The judge then considered the third issue: the appropriate remedy. He held that the appropriate remedy was to order specific performance and that it was not "necessary to go through the rigmarole of an offer by Mrs Merer, an attempt to negotiate the price and then the appointment of an independent expert." He ordered that the transfer should be at the sum of £11,000, which was the mean price of the valuation referred to above.
13. The judge then rejected certain further arguments with which we are not concerned.

First issue on this appeal – the question of fact

14. On this appeal, Mr Peter Birts QC, for Mrs Merer, submits that the decision of the judge on the question whether as a matter of fact the purchase price of £80,000 was to be set against the debts owed to Mr Merer was perverse and that the judge ought to have found in favour of the appellant that in fact the consideration for the transfer consisted of the release by Mr Merer of debts owed to him by the company exceeding £80,000. Mr Birts accepts that there is no written evidence of this arrangement and that strictly speaking the judge is correct as to the factual basis of the five matters which constituted his reasons for rejecting the appellant's case on the consideration point. However, Mr Birts contends that the judge failed to make findings as to the totality of the evidence, which he submits provides overall support for Mrs Merer's case, and that his finding was accordingly perverse. In particular the judge ought to have made findings on two issues. First, there was certain documentary evidence from 1988 which supported the proposition that by the end of 1988 the company was indebted to Mr Merer. Mr Merer referred to these debts in the sum of approximately £19,000 in his witness statement but the judge was not shown documents in the trial bundle which provided some contemporary evidence of these debts. There was also the letter dated 13 February 1990 to which the judge referred. The judge should have found that this letter referred to expenses defrayed by Mr Merer on behalf of the company, and loans he had made to the company. In addition, there was also an ex post facto schedule of expenses, costs and claims against the company expunged by the transfer of plot 7, totalling £94,416. This schedule, however, was created some six years after the transaction and was produced by Mr Merer without supporting documents. Second, the judge should have made findings on the evidence of Mr and Mrs Merer and Mr Henry, the solicitor who acted for them on the transfer, which showed that the Merers had taken advice from Mr Henry on whether the release of debts constituted good consideration in law. The evidence on this was principally oral, but included an attendance note dated 19 March 1990, which was set out by the judge and which I have already set out at paragraph 3 above.
15. Mr Birts relies on a large number of subsidiary points. He relies on the statement by Mr Merer in his witness statement that, when he (as sole shareholder) instructed the directors of the company to sign the transfer on behalf of the company, what he did was tell Mr Michel (the company secretary) that all the debts of the company to himself would be expunged and that the company would be dissolved once the transfer had been made. Mr Merer also states in his witness statement that Mr Michel had no objections to this and dissolved the company after the transfer. In his oral evidence (according to the transcript) Mr Merer suggests that the instruction was received by Mr Michel as "a nominee director" and makes the point that the transfer was in any event signed by a director and a secretary of the company. However, the reference to Mrs Michel as a director would appear to be incorrect. There is, therefore, no satisfactory evidence that Mr Merer's instruction actually reached the directors.
16. Mr Birts also relies on Mrs Merer's evidence. It is clear that in 1991 she believed that one of the ways in which the consideration might be satisfied was by a release of the debts owed to Mr Merer. She also said she knew that the company owed sums in excess of £80,000 to Mr Merer, though the exact amount is not stated. In her witness statement, Mrs Merer says that the bargain was that there would be a release of all the monies owed to Mr Merer by the company by the transfer. However, she qualified this in cross-examination by saying that she only became aware that this was actually the arrangement in the two years preceding the trial.
17. Mr Birts also relies on the fact that there was correspondence with the company secretary about the write off. He also relies on the fact that an explanation was given by Mr Merer for not having raised invoices against the company. He said that this would have been pointless as there were no funds to settle the amounts due to him and the bills would have been presented to him for payment. Mr Birts also contends that Mr Merer was entitled to continue to collect outstanding monies due to the company as a result of the letter dated 13 February 1990. Mr Birts further submits that the judge failed to give due weight to this evidence and to the fact that at the time £80,000 was considered to be a genuine and fair consideration. He also contends that as Mr Merer was the sole shareholder, an element of informality was in order.
18. I pause at this point to remind myself of the principles to be applied. Mr Birts submits that this court has a duty to review the judge's findings of facts. He relies on the judgment of Clarke LJ in Assicurazioni Generali SpA v Arab Insurance Group [2003] 1 WLR 577 and that of Mance LJ in Todd v Adams & Chope (Trading as Trelawney Fishing Co) [2002] 2 Lloyd's Rep 293, and in particular the following passage:

"Where the correctness of a finding of primary fact or of inference is in issue, it cannot be a matter of simple discretion how an appellate court approaches the matter. Once the appellant has shown a real prospect (justifying permission to appeal) that a finding or inference is wrong, the role of an appellate court is to determine whether or not this is so, giving full weight of course to the advantages enjoyed by any judge of first instance who has heard oral evidence. In the present case, therefore, I consider that (a) it is for us if necessary to make up our own mind about the correctness or otherwise of any findings of primary fact or inferences from primary fact that the judge made or drew and the claimants challenge, while (b) reminding ourselves that, so far as the appeal raises issues of judgment on unchallenged primary findings and inferences, this court ought not to interfere unless it is satisfied that the judge's conclusion lay outside the bounds within which reasonable disagreement is possible. In relation to (a) we must, as stated, bear in mind the important and well-recognised reluctance of this court to interfere with a trial judge on any finding of primary fact based on the credibility or reliability of oral evidence. In the present case, however, while there was oral evidence, its content was largely uncontentious."

19. However, as that passage indicates it is well established that this court should not interfere with a judge's findings of primary fact where they are based on oral evidence unless it is satisfied that the judge was plainly wrong. In this regard, the respondents rely on the following passage from the speech of Lord Sumner in Re Hontestroom [1927] AC 37 at 47 to 48:

"Nonetheless, not to have seen the witnesses puts appellate judges in a permanent position of disadvantage as against the trial judge, and, unless it can be shown that he has failed to use or has palpably misused his advantage, the higher Court ought not to take the responsibility of reversing conclusions so arrived at, merely on the result of their own comparisons and criticisms of the witnesses and of their own view of the probabilities of the case. The course of the trial and the whole substance of the judgment must be looked at, and the matter does not depend on the question whether a witness has been cross-examined to credit or has been pronounced by the judge in terms to be unworthy of it. If his estimate of the man forms any substantial part of his reasons for his judgment the trial judge's conclusions of fact should, as I understand the decisions, be let alone. In The Julia Lord Kingsdown says: 'They, who require this Board under such circumstances, to reverse a decision of the Court below upon a point of this description, undertake a task of great and almost insuperable difficulty. … We must, in order to reverse, not merely entertain doubts whether the decision below is right, but be convinced that it is wrong.' Wood LJ, in The Alice, says: 'The principle established by the decision in The Julia is most singularly applicable … We should require evidence that would be overpowering in its effect on our judgment with reference to the incredibility of the statements made.' James LJ thus laid down the practice in The Sir Robert Peel: 'The court will not depart from the rule it has laid down that it will not overrule the decision of the Court below on a question of fact in which the judge has had the advantage of seeing the witnesses and observing their demeanour, unless they find some governing fact which in relation to others has created a wrong impression.'

Again, in The Glannibanta the Court of Appeal, after referring to The Julia and The Alice, say that they would not be disposed to reverse, 'except in cases of extreme and overwhelming pressure', but, being of opinion that the trial judge (contrary to what is the fact here) did not proceed at all on manner or demeanour, but proceeded on inferences, which the Court of Appeal could draw as well as he could, they formed their own view of the facts and decided accordingly. I am not aware that this rule has ever been disowned and if it has too often been neglected, still the current of authority on the subject runs all the other way."

20. In the present case the principal issue of fact was this: did the company and Mrs Merer agree that the consideration should be satisfied by the write off of all the debts, exceeding £80,000, which the company then owed to Mr Merer? At the end of the day, that issue depended on the oral evidence. Mr Birts accepts there is no written evidence of this arrangement. He rightly submits that there was written evidence which threw light on this question, such as contemporaneous written evidence as to the existence of indebtedness between the company and Mr Merer, and contemporaneous written evidence of discussions with Mr Henry about a possible write-off of debts in this manner. However, those documents could not be determinative of the principal issue just identified. In this type of case, the appellate court has to be very slow to substitute its judgment for that of the trial judge who heard the witnesses give their evidence.
21. Mr Birts accepts, as he must, that the judge was not bound to make express findings of fact on every issue. He contends, however, that the judge should have made detailed findings on the two matters identified above, and that there was no detailed or proper analysis of the evidence in the judgment and no sufficient findings of fact in the amount or detail required by the issues. In my judgment, the judge gave the reasons which weighed with him in his conclusion that the arrangement relied on was not proved. These reasons went to the nub of the case. He was not bound to make findings on all the other issues. This follows from the judgment of this court in English v Emery Reimbold & Strick [2002] 1 WLR 2409 at 2417 to 2418:

"17. As to the adequacy of reasons, as has been said many times, this depends on the nature of the case: see for example Flannery's case [2000] 1 WLR 377, 382. In Eagil Trust Co Ltd v Pigott-Brown [1985] 3 All ER 119, 122 Griffiths LJ stated that there was no duty on a judge, in giving his reasons, to deal with every argument presented by counsel in support of his case:

'When dealing with an application in chambers to strike out for want of prosecution, a judge should give his reasons in sufficient detail to show the Court of Appeal the principles on which he has acted and the reasons that have led him to his decision. They need not be elaborate. I cannot stress too strongly that there is no duty on a judge, in giving his reasons, to deal with every argument presented by counsel in support of his case. It is sufficient if what he says shows the parties and, if need be, the Court of Appeal the basis on which he has acted … (see Sachs LJ in Knight v Clifton [1971] Ch 700, 721).'

18. In our judgment, these observations of Griffiths LJ apply to judgments of all descriptions. But when considering the extent to which reasons should be given it is necessary to have regard to the practical requirements of our appellate system. A judge cannot be said to have done his duty if it is only after permission to appeal has been given and the appeal has run its course that the court is able to conclude that the reasons for the decision are sufficiently apparent to enable to appeal court to uphold the judgment. An appeal is an expensive step in the judicial process and one that makes an exacting claim on judicial resources. For these reasons permission to appeal is now a nearly universal prerequisite to bringing an appeal. Permission to appeal will not normally be given unless the applicant can make out an arguable case that the judge was wrong. If the judgment does not make it clear why the judge has reached his decision, it may be impossible within the summary procedure of an application for permission to appeal to form any view as to whether the judge was right or wrong. In that event permission to appeal maybe given simply because justice requires that the decision be subject to the full scrutiny of an appeal.

19. It follows that, if the appellate process is to work satisfactorily, the judgment must enable the appellate court to understand why the judge reached his decision. This does not mean that every factor which weighed with the judge in his appraisal of the evidence has be to identified and explained. But the issues the resolution of which were vital to the judges' conclusion should be identified and the manner in which he resolved them explained. It is not possible to provide a template for this process. It need not involve a lengthy judgment. It does require the judge to identify and record those matters which were critical to his decision. If the critical issue was on one of fact, it may be enough to say that one witness was preferred to another because the one manifestly had a clearer recollection of the material factors or the other gave answers which demonstrated that his recollection could not be relied upon.

20. …

21. When giving reasons a judge will often need to refer to a piece of evidence or to a submission which he has accepted or rejected. Provided that the reference is clear, it may be unnecessary to detail, or even summarise, the evidence or submission in question. The essential requirement is that the terms of the judgment should enable the parties and any appellate tribunal readily to analyse the reasoning that was essential to the judge's decision."

22. The question on this appeal is, therefore, whether the evidence on which the judge did not make findings, expressly or by implication, demonstrates that the judge's conclusion on the question as to the existence of the arrangement was plainly wrong. As I see it, it is not enough for the appellant to show any less than that.
23. The appellant contends that the judge should have set out findings as to the contemporaneous evidence as to the debts due to Mr Merer from the company. However, as I have explained, these amounted to merely some £19,000. There is no contemporaneous documentary evidence as to the balance. The judge was apparently not shown the contemporaneous written evidence supporting the £19,000 and it is, therefore, not surprising that he does not refer to it. But even if he had seen it, in my judgment it was not essential for the judge to say that there was contemporaneous documentary evidence supporting the £19,000. Nor did he need to refer to the fact that Mrs Merer said in her oral evidence that she knew that Mr Merer was owed more than £80,000. I do not consider that he was obliged to refer to this evidence, since Mr Merer himself gave evidence but nonetheless did not produce any further documentary evidence. The fact that some monies were owed by the company to Mr Merer does not inevitably mean that the company was indebted to him in the sum of £80,000 or more.
24. There is the schedule of expenses, which the judge did see, which records indebtedness of £94,416. This figure was slightly reduced in the course of the trial. This schedule was, as I have said, produced some years after the transaction and was therefore not contemporaneous. Moreover, it includes sums totalling £17,500 paid in respect of the transaction with Mr Warman (see paragraph 2). It is not clear how on any basis this could constitute a liability of the company. The schedule also includes estimated architect's fees and management fees of £44,000 earned by Mr Merer, for which there is no documentary evidence.
25. Mr Merer's case was that it was pointless for him to send invoices to the company because the company had no funds with which to pay his fees and the fee notes would simply be returned to him for payment. This is a point relied on by Mrs Merer. However, it was open to the judge to reject this as a satisfactory reason for there not being any contemporaneous evidence whatever. There is not even evidence from Mr Merer's own records that he performed any of the services in question.
26. The re-amended points of claim (paragraph 11A) took the point that Mrs Merer gave no consideration for the 1991 transfer and was, therefore, not a purchaser of plot 7 for money or money's worth. The amended defence subsequently served does not refer to this allegation. Mrs Merer contends that this should be read simply as an allegation as to the source of the payment. Mr Birts takes the point that the reamended points of claim were not served until one week before the trial. However, the point had been raised by the appellants' own witnesses in their witness statements and therefore the appellant had had time to consider the position on any basis and if appropriate apply for an adjournment.
27. As I have said, Mrs Merer relies on the assignment by the company, by letter dated 13 February 1990, of all monies due to her husband which preceded the transfer. The judge regarded this as a point against her case, no doubt because if all sums due to her husband were released by the 1991 conveyance there could not continue to be any collection of monies by him on behalf of the company. I can see Mr Merer might have regarded it as convenient for him to collect monies due to the company, but the answer he gave to the judge was that he was entitled to these monies. Even on the basis of ignorance as to the legal effect of dissolution, that answer is not on the face of it consistent with the case that debts were written off in 1991 unless that is, debts subsequently arose. However, there is no evidence of that.
28. The appellant also contends that the judge misdirected himself in taking the view that the appellant changed her case as to the form of consideration to be given for the transfer. Her case was all along that the consideration might be provided either in cash or by means of a release of debts. Reading the judgment as a whole, I do not think the judge can be said to have fallen into any material error by having taken the view that Mrs Merer had changed her case. Her defence does not make explicit reference to the defence on which she relied on this point since it merely avers that she "purchased the freehold to plot 7 … for £80,000 …".
29. The appellant seeks to meet a number of points made in cross-examination or by the judge. First, the point was made that Mr Merer did not file any accounts with the Inland Revenue. The explanation given is that, in fact, he incurred a loss and therefore did not think it necessary to claim the loss. For my own part I have difficulty in following this reason since the receipt of fees constituted income which should have been declared. So far as company accounts are concerned, he again says that there was no point in requiring these because he was the only shareholder and that he left it to the directors to see to any statutory requirement. He did not ask to see the accounts. This does not seem to me to answer the point entirely since there was no evidence that there were no accounts. If there had been accounts, they would probably have thrown light on the effect of the 1991 transfer.
30. Another point which Mr Birts seeks to meet is that the transfer was stamped late. The judge failed to appreciate that this arose because of an error in the solicitor's office, because the form originally lodged was returned by the Inland Revenue with a query and was misfiled. However, I do not think that this was a material consideration in the judge's conclusion. It was not one of his five reasons.
31. As regards the statement of consideration in the transfer, Mrs Merer contends that there was no need for the transfer deed to record the fact that £80,000 was paid by the release of Mr Merer's claims against the company. She also contends that the difference between £80,000 and £94,416 is immaterial in the circumstances. I would accept that the statement of the consideration in the transfer does not prevent Mrs Merer from asserting that the consideration was, in fact, something different. However, the judge was entitled to take the view that, as it was stated to be the sum of £80,000, the receipt of which was acknowledged, he should in all the circumstances look critically at the argument that the consideration took the form of the release of debts for £94,416 or thereabouts.
32. Mr Birts places considerable reliance on Mr Henry's evidence, but in my judgment it is not as clear as Mr Birts suggests. The attendance note is helpful to the appellant's case but is not determinative, even when taken with the other documentary evidence not referred to by the judge. It certainly shows that some discussion took place about a possible write-off. However, Mr Henry at no point states that he was instructed that the 1991 transfer was to be in consideration of the write off of debts. Moreover, the 1990 proposal was for a different transaction. I accept that the value of land with development value can fluctuate, but the judge may well have found surprising, without explanation, that the debt appeared to have fluctuated in quite the same way from £175,000 to £94,000 or thereabouts without any evidence of part payment or reduction. The discussion of the valuation in the attendance note and the reference to £80,000 in the transfer suggests that the primary focus was establishing the value of plot 7 and not securing the company's agreement that sufficient indebtedness to Mr Merer existed and was to be written off. I would add that it is not suggested that it would have been sufficient if the debts written off were £19,000 only.
33. Mr Henry accepted that the consideration could be given in the form of a release of debts but said in cross-examination that if the release of debts was to a greater value than the value of the consideration he would be put on enquiry. He stated that this would be "a quite bizarre" transaction and that he would "have to sit down and think about it and probably take advice". This evidence too provides some support for the judge's view that there was no discussion at the time that the consideration should take the form now relied on. I would add that, while Mr Henry's witness statement suggested that if there had been a release of an equivalent amount of debt he might have drafted the consideration clause differently, he stated the contrary in his oral evidence.
34. Finally, in my judgment, the consent of the company to the write off of debts is not shown simply by showing that all along Mr Merer intended that the company should receive a release of all the debts it owed him as consideration for the transfer. He was the sole beneficial owner of the company's share capital and as such he could override the decisions of the director. He could also do so informally, viz. without passing a special resolution (Re Duomatic [1969] 2 Ch 365). However, the transaction was entered into by the company acting by its directors, and thus Mr Merer would have to have communicated his intention or instruction to the directors before the transaction was entered into. There was no contemporaneous documentary evidence that this occurred, and the oral evidence of Mr Merer did not resolve the issue. The judge was thus entitled to conclude that he was not satisfied that the necessary communication occurred.
35. Taking all these factors into account I have come to the conclusion that the evidence on which the judge did not make findings does not demonstrate that his conclusion on this factual issue was plainly wrong. No doubt if he had had more time he could have made findings on all these issues but for the reasons already given I do not consider that he was bound to do so. Accordingly, his decision on the question must stand and it is not necessary for me to deal with the question of law which the judge decided on section 4(6) of the Land Charges Act 1925.

Remedy

36. That leaves only the question of remedy. I have already explained the order which the judge made above. The issue on this point is a short one. The parties had agreed to the appointment of a joint expert to give expert evidence in the proceedings as to the value of plot 7 at an early stage in the proceedings. The particular expert was, in fact, chosen by the appellant. The remedy which the respondents sought was specific performance of the pre-emption right. The appellant contends that the judge had no jurisdiction to take the valuation prepared by the joint expert. The respondents disagree and rely on Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444. In that case, the grantors of an option, which contained a machinery for fixing the price, had refused to appoint a valuer and that made it impossible for the contractual machinery for the valuation of the option price to work. The House of Lords held that the machinery for fixing the price was merely a subsidiary part of the agreement, and that the fact that the grantors refused to operate the machinery did not render the agreement unenforceable on the grounds that no price was fixed. The court could substitute a valuation made by the court following an inquiry. At page 478 to 479, Lord Diplock, with whom the majority of the House agreed, said this:

"Why should the presence in the option clause of a convenient and sensible machinery for ascertaining what is a fair and reasonable price, which the lessors, in breach of their contractual duty, prevent from operating, deprive the lessees of the only remedy which would result in justice being done to them? It may be that where upon the true construction of the contract the price to be paid is not to be a fair and reasonable one assessed by applying objective standards used by valuers in the exercise of their professional task but a price fixed by a named individual applying such subjective standards as he personally thinks fit, and that individual, without being instigated by either party to the contract of sale, refuses to fix the price or is unable through death or disability to do so, the contract of sale is thereupon determined by frustration. But such is not the present case. In the first place the contract upon its true construction is in my view a contract for sale at a fair and reasonable price assessed by applying objective standards. In the second place the only thing that has prevented the machinery provided by the option clause for ascertaining the fair and reasonable price from operating is the lessors' own breach of contract in refusing to appoint their valuer. So if the synallagmatic contract created by the exercise of the option were allowed to be treated by the lessors as frustrated the frustration would be self-induced, a circumstance which English law does not allow a party to a contract to rely on to his own advantage. So I see no reason why, because they have broken one contractual obligation the lessors should not be ordered by the court to perform another contractual obligation on their part namely to convey the fee simple in the premises to the lessees against payment of a fair and reasonable price assessed by applying the objective standards to which I have referred."

37. In my judgment, this case is not analogous to that there considered by Lord Diplock. In the Sudbrook case, the grantors' defence rested on a line of authority, binding on the Court of Appeal, to the effect that the court would not grant specific performance of a contract to appoint a valuer. It was a necessary step in rejecting that defence that some other machinery for fixing the price had to be substituted (see the passage from the speech of Lord Diplock cited above). Here, however, there was a substantial dispute between the parties as to whether consideration was duly given. The appellant was entitled to have the question whether the right of pre-emption was binding on her determined in these proceedings. There is no suggestion that, having lost that issue, she will fail to comply with the court's order for specific performance. For my own part I do not consider that the court can in these circumstances say, as it did in the Sudbrook case, that the contractual machinery has failed and that it is now necessary to impose some other method of valuation on the appellant, at least at this stage. The judge's order would doubtless save costs, but there has also to be a principled basis for making it. In my judgment, the judge's order on this point must be set aside for the reasons that I have given and an order made for specific performance of the terms of the contract.

Lord Justice Mummery: I agree.

Lord Justice Potter: I also agree.

Order: Appeal dismissed on the first issue and allowed on the third issue; the second issue does not arise; the appellant to pay the respondent's costs of the appeal, to be subject of a detailed assessment; the costs judge do determine the extent of the appellant's liability to contribute to the costs; section 11 order against legal Services Commission; set-off any unpaid costs against the sum of the money paid under the right of pre-emption when purchase takes place; counsel o lodge a draft minute of order. (Order does not form part of the approved judgment)