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 TELFORD COUNTY COURT
(MRS RECORDER WILSON)

		Royal Courts of Justice Strand London, WC2
		5th July 2005

1. LORD JUSTICE CHADWICK: This is an appeal from an order made on 27th July 2004 by Mrs Recorder Wilson sitting at Telford County Court in proceedings brought by the appellant, Mr David Richard Thomas, against GT Pryce (Farms) Limited for specific performance of a contract for the purchase of land. The contract was made at auction on 7th June 2002. Although the land was bought in the name of Mr David Thomas, he farms in partnership with his father, Mr Christopher Thomas, and, I think, his brother. The appeal has been presented in this court, as it was below, by Mr Christopher Thomas, who was involved at the auction. At his request, and without opposition from the repondents, we have joined him as party to the appeal.
2. The dispute between the parties is as to the extent of the land sold under the contract on 7th June 2002. The appellants, as purchasers, assert that the land purchased included some farm buildings, the land upon which those buildings stood and an area of about 0.03 of an acre. The respondent vendor asserts that the land sold did not include those buildings or land. It is the vendor's case that the buildings were sold with other land to another bidder, Mr Robert Jones, at the same auction. The sale to Mr Jones has now been completed and the land and buildings which are the subject of the present dispute have been transferred to him or his nominees. It follows that specific performance, as claimed by the appellants, of the whole of the land which they claim to have purchased would now be impossible: impossible because the vendor is no longer in the position to convey the buildings and land which it has conveyed elsewhere. The vendor, on the other hand, seeks an order for specific performance of the contract on the basis that the land sold did not include the buildings. That, in effect, was the order which the judge made.
3. The respondent, as its name suggests, is a farming company. It was the owner of some 45 acres of grazing land at the Llysty, Acton, near Bishop's Castle in Shropshire. The land in question lies to the north of the public road from Colebatch to Colstey Bank. It took that land to auction at the Castle Hotel, Bishop's Castle, on Friday 7th June 2002. The auctioneers were a local firm, McCartneys. The land was to be sold in two lots.
4. Lot I comprised three fields, having the ordinance survey numbers 1726, 0031 and 5700 in aggregate, 19.37 acres. The first of those fields, OS 1726, was described in the sale particulars as "permanent pasture and agricultural buildings" and as having an area of 9.58 acres. The agricultural buildings were referred to in those particulars as being "a range of buildings in the corner of field number 1726", suitable for agricultural use or, subject to permission, for general storage. There were two buildings: a modern 60' by 40' general purpose agricultural building and a sheep shed of the same dimensions.
5. Lot II comprised five fields, having ordinance survey numbers 3634, 5346, 5126, 6132 and part 6723. The aggregate area of those fields was stated to be 25.34 acres. They were all described in the particulars as "permanent pasture". There is nothing in the auction particulars to suggest that the agricultural buildings to which I have referred were included in Lot II or any agricultural buildings.
6. Lot I lay to the west of Lot II. Their common boundary was defined by a track, part OS 5700, which ran away from the public road in a north-westerly direction. The track was within Lot I. It ran along the north-easterly side of field OS 1726. The boundary, as shown on the copy ordinance survey map attached to the sale particulars, was on the far side of the track; that is to say it ran along the south-westerly side of field OS 3634. At the date of the auction, the whole of the land comprised in lots 1 and 2 was within the same title - Land Registry title, SL98998.
7. Unfortunately the auction particulars had been prepared without proper care. The farm buildings to which I have referred were not within field OS 1726. They were in an old quarry in the south-west corner of field OS 3634, close to the point at which the track, itself part OS 5700, joined the public road. Those buildings lay to the north-east of the track, that is to say they were on the other side of the track from field OS 1726. They were not on the land which is described by reference to OS numbers as comprised within Lot I. They were on the land which, as described by reference to OS numbers, was within Lot II.
8. It is clear (and the judge so found) that the vendor intended to sell the farm buildings with Lot I. The position was described by his farm manager, Mr Robert Tudor, in a witness statement dated 14th May 2003. At that time Mr Tudor managed Lower Heblands Farm, some 7 to 8 miles away from the land at Llysty. The land that was being sold was farmed with Lower Heblands Farm. Mr Tudor said this at paragraphs 4 to 7 of his witness statement:

"4. During the first week of March 2002 Mr G T Pryce, the Managing Director of the Company, on one of his frequent visits to Lower Heblands Farm, advised me that he intended to sell the land.

"5. Mr Pryce explained to me that he intended to sell the ground in two lots and that he proposed that the fence that ran along the ridge should be the boundary fence between Lots I and II. This fence had been in existence from the time that the company purchased the land in May 1997 and at the top end of it, ie the end furthest from the council maintained road, there were hurdles which could be opened to enable animals to pass from one side of it to the other.

"6. In preparation for the sale the hurdles were fenced up on the 31st May 2002 using surplus material that was available at Lower Heblands Farm.

"7. The result of this was that Lot I of the land had a stream running through it and the buildings upon it and the bank lying up to the fence that I have mentioned above. There were separate accesses to Lot I and Lot II."

9. If Mr Pryce's intentions, as described there by Mr Tudor, had been carried through, the boundary between the two lots -- Lot I and Lot II -- would have run along the top of a bank which lay some distance to the north-east of the track. It is shown on an agreed plan which has been included in the bundles in this court at page G1. It lies to the east of the farm buildings and takes into Lot I a strip of land (including the land on which the farm buildings stand) comprising in all about 1.9 acres. However, that intention was not carried through by the auctioneers. It is common ground that, whatever else was sold to the appellants in this case, it was not land bounded by Mr Pryce's intended boundary along the top of the bank to the north-east of the track.
10. The mistake in the auction particulars was not noticed in advance of the auction. We have seen a copy of the auctioneer's notes which indicate that he intended to refer to "a good range of buildings in Lot I." That would accord with the description in the auction particulars.
11. Mr David Thomas did not himself attend the auction. He was represented by his father, Mr Christopher Thomas, accompanied by another son, Mr James Thomas. The Thomas family farmed in partnership over the border in Powys. They knew the land which was to be sold, in the sense that they knew where it was and what sort of land it was. Their intention, when going to the auction, was to purchase both Lot I and Lot II. But when he got to the auction Mr Christopher Thomas discovered that a neighbouring farmer, Mr Robert Jones, was anxious to acquire Lot I and, recognising that Mr Jones would be likely to pay what it took to acquire Lot I, Mr Thomas decided not to bid against him. Mr Thomas bid only for Lot II. He was successful in acquiring that lot for £50,000. At the conclusion of the auction, in the ordinary way, Mr Christopher Thomas signed a contract on behalf of his son David and paid a deposit of £5,000. The property which was the subject of the contract was described in the written agreement in these terms:

"Lot II, Llysty, Acton, Bishop's Castle, Shropshire containing 25.34 acres by estimation shown as Lot II on the plan annexed hereto."

The plan annexed to the contract seems indistinguishable from the plan that had been annexed to the sales particulars and it is not suggested that there is any material difference between the two plans.

12. The contract was subject to special conditions and to the Standard Conditions of Sale (Third edition). Special condition 12 provided that the transfer to the purchaser should include an agreement and declaration that the ownership of the boundaries of the respective lots as between lots 1 and 2 should be "as shown on the plan number 1 annexed hereto". But that would have been a plan annexed to the transfer; and it would have shown only who owned the boundary; that is to say, whose fence it was.
13. The general conditions contained, at condition 3.4.2, a provision that the seller and the buyer would each have the rights over the land of the other which they would have had if they had been two separate buyers to whom the seller had made simultaneous transfers of the property and the retained land; and, at condition 4.3.1, a provision that the seller need not prove the exact boundaries of the property nor prove who owned fences, hedges, ditches or walls further than he might be able to do from information in his possession.
14. As I have said, the contract plan was the same plan as the plan attached to the sale particulars; that is to say it showed the whole of field OS 3634 within Lot II. The contract provided for completion on 5th July 2002 or earlier by arrangement.
15. The judge explained what took place after the auction in a short passage on first page of her judgment:

"Mr Thomas senior signed a contract on behalf of David and paid the deposit, and on their way home Mr Thomas and his son, James, went to look at what they agreed to buy and found that the two buildings appeared to be on [Lot] II and not on [Lot] I as they expected.

"When Mr Thomas pointed out what he discovered to the defendants' solicitor, meetings took place in an attempt to resolve matters. No agreement, unfortunately, could be reached and, as a result, the claimant's solicitors served notice to complete on the 12th August 2002."

16. The judge went on to explain, as I have already indicated, that thereafter (and before proceedings came to trial) the defendant, Pryce Farms, conveyed away the land on which the buildings were situated to a third party, Mr Robert Jones or his wife, and that that third party title was registered at the Land Registry, so that the available remedy would be performance of the remainder with damages or compensation.
17. Proceedings were commenced by the issue of a claim form on the Brecon County Court on 21st October 2002. A defence and counterclaim was served on 19th November 2002, re-served as amended on 25th February 2003 and re-served again as re-amended on the 10th September 2003. The re-amended counterclaim included the following allegation at paragraph 1.4:

"At the date of the auction, there was a fence dividing field OS 3634 and 1726. That fence ran along the pecked line shown on the plan annexed to this defence ('the annexed plan') and divided the agricultural buildings from field OS 3634, enclosing them in field OS 1726."

18. There are at heart two misstatements in that allegation. First, whatever else was it was that divided fields OS 3634 and OS 1726, it was not a fence. There was a track between OS 1726 and OS 3634, the boundary being, as I have said, on the far side of the track. Second, the pecked line, which is shown on the plan annexed to that defence, forms a rectangle round the buildings so as to carve out a rectangular portion from OS 3634. It was accepted that, although there were residual fences on part of that line, in no real sense could it be said that that line represented an effective fence at the date of the auction.
19. The plan annexed to the re-amended defence and counterclaim shows a rectangular area in the south-west corner of OS 3634 which (as alleged in the particulars) is said to have been included within field OS 1726. Paragraph 1.8 of the defence and counterclaim is in these terms:

"Upon the true construction of the contracts for the sale of Lots I and II in the light of the auction particulars and the physical state of the ground at the date for the auction:-

"1.8.1. Lot I includes the agricultural buildings referred to in the particulars and shown edged blue on the plan annexed to the defence:

"1.8.2. Lot II does not include those agricultural buildings;

"1.8.3. The boundary between Lot I as sold at the auction runs along the pecked line shown on the annexed plan."

The counterclaim is for specific performance of a contract in conformity with the true construction as alleged in paragraph 1.8. Alternatively, the counterclaim seeks rectification of the contract by:

"(a) The substitution in the description of the property of '25.21 acres' for '25.24 acres', and

"(b) The substitution of a plan showing the south-westerly boundary of Lot II as excluding any part of the agricultural buildings in place of the plan annexed to the contract."

20. The judge recorded that Mr Thomas senior and the appellant, Mr David Thomas, accepted that they knew from the particulars of sale that the buildings were to be sold with Lot I. As she put it:

"It was a delightful surprise, a windfall for them, when Mr Thomas discovered on his way home from the sale that the buildings were apparently on Lot II, which they had agreed to purchase."

She accepted Mr Tudor's evidence that the land behind the buildings was fenced off to prevent stock "falling down". In that context, "falling down" means falling down into the quarry in which the buildings were situated. In fact Mr Tudor's evidence was not that the fence was continuous; it was that the fence rounded the back of the buildings.

21. The judge addressed, first, the claim for rectification. Curiously, she thought it appropriate to ask herself whether the contract should be rectified without having first considered what the words meant. She reminded herself that the rectification would not be ordered unless there was a common continuing intention. By that, I think, she had in mind that a document would not be rectified unless it were established by convincing evidence that the document failed to give effect to the common intention of the parties as to what they had agreed, communicated to each other before the signing of the document and continuing up until the signing of the document. She said this:

"It is common ground that for rectification to be possible there must be a common continued intention. Mr De Lacy [counsel for the defendant] said that there was. He said that a bid on an offer for sale on Lot 2 by Mr Thomas as provided by the particulars was sufficient and that both parties were wrong and that there was no time between that offer being made and accepted for the parties to have changed their minds. I disagree with this because at the time Lot 2 was sold, Lot 1 had already been, and that contained the buildings in dispute. There was therefore no common continuing intention when Lot 2 came up for sale."

So she rejected the claim for rectification.

22. She then turned to the question of construction. She held that she should construe the contract so as to exclude from Lot II the land and buildings in the south-west corner of OS 3634. She made an order in appropriate terms.
23. The order provides that the contract be specifically performed on the footing that on the true construction of the contract, the western boundary of the land to be transferred corresponds to the eastern boundary of the land registered under title SL149305. Title SL149305 was the title under which the land transferred to Mr Robert Jones and his wife, as purchaser of Lot I, was subsequently registered at the land registry. That title includes the buildings in the south-west corner of field OS 3634. But the boundary on the Land Registry plan is not that shown on the plan to the re-amended defence and counterclaim, and so not that for which the defendant was contending at the trial.
24. The effect was that the judge did not construe the contract in the way that the defendant had invited her to construe it. The boundary, as she found it to be, It did not followed the pecked line alleged in paragraph 1.4 of the amended defence and counterclaim, to divide the agricultural buildings from the grass land in OS 3634. What the judge did was to construe the contract by reference to the registration of title subsequently achieved by the purchaser of Lot I in respect of the land which he purchased. That, as it seems to me, is what she intended to do when, having referred to the registration boundary, she said she was construing the contract "taking all the above into account". But how she found it possible to construe the contract by reference to a registration which took place some time after the contract and which could not have been in the minds of the parties at the time and, indeed, was not the construction for which the vendor was contending does not appear clearly from her judgment.
25. The matters which the judge did take into account were these: first, she held (it is not in dispute) that Mr Christopher Thomas and his sons had received the particulars of sale and read them and so were aware that, according to those particulars, Lot I included the two buildings and Lot II did not.
26. But that begs the question: what the particulars of sale disclose is that there is a range of buildings in the corner of field OS 1726. Factually, that is incorrect. The buildings are not in the corner of OS 1726. They are on the other side of the track in the corner of OS 3634. A reader of the particulars would think that if he bought Lot I, (including OS 1726) he would get two existing buildings on that field. He would not think that he would get part of another field, OS 3634, which is not within OS 1726, which is not within Lot I, but which happens to have buildings upon it. The reader of the particulars would also think that, if he bought Lot II he would not get any buildings. But he would not think that if he bought Lot II, which included OS 3634, he would not get the whole parcel of the land within that Ordinance Survey number. He would not think that part of the land within OS 3634 would be sold to the purchaser of Lot I.
27. The construction which found favour with the judge depends on the knowledge that the buildings are not on OS 1726 but are on OS 3634. But that is not what the reader of the particulars of sale is told by those particulars and there was no evidence that Mr Thomas senior or Mr David Thomas did know, in advance of bidding at the auction, that that was in fact the true position. As the judge herself said in the passage to which I have referred already, Mr Thomas senior and his son James found that out to their surprise when they went to look at the fields that they had bought on their way home.
28. Second, the judge relied on her finding that Mr Christopher Thomas and his son James were at the auction and "were aware of the different acreage". By that she can only have meant, I think, that they were aware that Lot 1 was smaller in acreage than Lot II; so that Lot I had been sold at price per acre which was higher than the price per acre which the Thomases had to bid in order to secure Lot II. It is suggested, I think, that they must have known from the difference that they were not getting land and buildings. But it is common ground that, when they bid at the auction, they never thought that they were getting the land and buildings. The question is not whether they thought that the land which they were buying at the auction had buildings on it: the question is whether they thought they were buying the whole of OS 3634 or only part of OS 3634. Knowledge of the differential in price per acre provides no answer to that question. The answer to that question is only provided when one knows that the buildings are on OS 3634 and not on OS 1726.
29. Third, the judge held that Mr Christopher Thomas, and his sons, knew the land and must have known that the plan annexed in the contract was out of date. She relied upon the fact that, as Mr Christopher Thomas had said, he knew the land quite well. But they had not looked closely at the boundaries between Lot I and Lot II because, prior to the auction, they had intended to buy both lots. If that were their intention, the boundary between the lots was irrelevant to them. As I have said, it is not in dispute that the Thomas family knew the land in the sense of knowing where it was, what sort of land it was and should be grown on it. But there was no evidence that they knew the only fact material in this context, namely that the buildings were on OS 3634 and not on OS 1726.
30. Finally, the judge relied on the fact that the contract made no provision for access to Lot II if it had the buildings upon it by virtue of some right over Lot I. But that, too, provides no assistance. It is not clear that anyone appreciated at the time of the contract that access to the buildings over land which was not being acquired with Lot II might be required. Nor is it clear that access over other land was in fact required. But if the point had been taken it would have been met by the provision in the standard conditions of sale to which I have already referred (condition 3.4.2) which gives implied reciprocal easements over two pieces of land being sold at the same time by a common vendor.
31. I do not find the judge's reasoning in support of her conclusions as to that construction of the contract persuasive. The question of construction, as it seems to me, is, what land did the Thomases purchase under the contract of 7th June 2002? In particular, were they buying land by reference to Ordinance Survey numbers, or by reference to a plan, or by reference to description? The land which they were buying was described as "Lot II ... containing 25.24 acres by estimation shown as Lot II on the plan annexed hereto". Lot II on the contract plan plainly comprises the whole of OS 3634 with other fields. It does not exclude the south-west corner of OS 3634, where the farm buildings are situated in the quarry. Further, the contract plan itself shows field 3634 with a total acreage of 7.95 acres. That corresponds with the description of Lot II in the auction particulars. If one asks the question what were they buying, the answer must be that they were buying Lot II with the area shown in the particulars and in the location shown on the plan. Can that answer be qualified by the fact that, as described in the particulars, Lot II is said to be permanent pasture and that, if read with the description of Lot I, it is clear that the agents, when compiling the particulars, thought that the agricultural buildings were not on OS 3634 but were on in OS 1726? It is important to note that, in the particulars themselves, the agents say that, although they had made every effort to ensure the particulars are accurate, they do not constitute any part of an offer or contract and that all descriptions are given without responsibility. Intending purchasers are told not to rely on statements of fact. What particulars the purchaser can rely on, however, is the fact that the land is defined by reference to the Ordinance Survey number and its acreage. If anything has to yield, it must be the description of the land as permanent pasture, not (as it should have been) as permanent pasture with agricultural buildings.
32. As it seems to me, therefore, the Thomases are entitled to say that they entered into the contract to purchase land which included the whole of OS 3634. If, that gave them some buildings which they were not expecting to get, that is a windfall to which they are entitled. It arises from the fact that the vendor chose to sell the whole of OS 3634 with Lot II, instead of making it clear that Lot II did not include the whole of field OS 3634. No fault lies with Mr Pryce or his company. But it is clear that insufficient care was taken by the auctioneers. It may be that they did not take the trouble to go to see the land that they were instructed to sell. Had they done so, it would have been immediately obvious to them that the buildings were not on OS 1726.
33. Mr De Lacy QC, for the respondent, takes the point that the Ordinance Survey map boundary appears to pass through the corner of one of the two buildings erected on the disputed land. That, no doubt, is because the buildings were put on the land after the Ordinance Survey map was completed and no new edition had been made. But it is quite clear that, in construing the contract with the plan, it is necessary to exclude from Lot I the whole of the two buildings, including the little triangular strip which is cut off by the boundary. That would be well within the general boundaries rule. What the general boundaries rule does not permit is to treat the Ordinance Survey map boundary as if it followed a loop to the east, so as cut out the whole of the land on which the buildings are situate.
34. Having ascertained the contractual effect of the words used in the contract of 7 June 2002, it is necessary then to turn to the claim for rectification. That claim, as it seems to me, faces a number of insuperable difficulties. The first of those difficulties is: what is the common intention alleged? In the pleadings, the common intention alleged is that the boundary should run along the line shown in the plan annexed next to the pleading. That is, the alleged intention was that the boundary should cut out a rectangular section at the south-west corner of OS 3634. But it is clear, from Mr Tudor's evidence, that that was not Mr Pryce's intention. Mr Pryce's intention, which was never given effect, was that the whole of the strip comprising 1.9 acres lying to the north-east of the track should be excluded. Nor can the common intention be deduced from the existing fence because, as Mr Tudor makes clear, there was no existing fence along that line at the time of the auction. Nor can the common intention be that which was ultimately reflected in the registration of Mr Robert Jones's title.
35. Faced with those difficulties in ascertaining what the intention of vendor was, it is not surprising that Mr De Lacy had difficulty in asserting what the purchasers' intentions were. There is nothing to indicate that the purchasers had any intention in relation to the land that they were purchasing, other than it should be the land described in the auction particulars. If the effect of auction particulars is that the land there described is the same as the land comprised in the contract, there is no claim for rectification. The intention of the purchasers was that they should buy the whole of OS 3634.
36. Further, there is no evidence to suggest that there was any communication between the Thomases and Pryce Farms. Other than the auction particulars and the bid made at the auction. There was no other discussion between them in which the company explained to the Thomases that the buildings were outside Lot II. The claim that the buildings were outside Lot II depends entirely on the auction particulars. It follows that neither of the two critical elements for claim of rectification -- common intention as to where the boundary should actually be and communication of that intention to each other -- simply cannot be established. Mr De Lacy, I think, recognised the difficulties in the way of a claim for rectification.
37. For those reasons I would allow the appeal against the judge's finding as to the construction of this contract. I would dismiss the cross-appeal made by the respondent's notice seeking rectification of the contract to accord with what is said in the amended counterclaim to have been the common intention of the parties; or indeed any other alleged common intention that may have been relied upon from time to time in the course of argument.
38. Each side needs an extension of time. The appellants need an extension of time in relation to the appellant notice, which is out of time because, in the first instance, they filed it with the county court and it took some 6 to 8 weeks to find its proper destination here. The respondent needs an extension of time of one day in its respondent's notice. But both parties sensibly have agreed that this court should deal with the substance of the dispute and so the necessary extensions of time are granted.

Order: Appeal allowed. Cross-appeal dismissed. Extensions of time granted to both parties. Paragraphs 1, 2, 3 and 5 of the order to be put aside and land outside of SL149305 to be transferred to the appellant with an abatement of price. Costs to be paid to the appellant. Cost of the trial remitted to the county court.