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Cite as: [2008] EWHC 734 (Ch)

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		Neutral Citation Number: [2008] EWHC 734 (Ch)
		Case No: HC05C02617

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL

11 April 2008

B e f o r e :

SARAH ASPLIN QC
(Sitting as a Deputy High Court Judge)
____________________

Between:

	(1) FREDDY JACOB EZEKIEL (2) MENASHI MARK DAVID EZEKIEL	Claimants
	- and -
	(1) DAVID KOHALI (2) HAIM KOHALI	Defendants

____________________

Mr Michael Michell (instructed by Kenneth Elliott & Rowe) for the Claimants
Mr Gary Blaker (instructed by Lawrence Sternberg & Co) for the First Defendant and Mr Michael Lee (instructed by Davidson & Co) for the Second Defendant
Hearing dates: 18,19 July 2007, 4,5,6,7 and 28 and 29 February 2008
____________________

HTML VERSION OF JUDGMENT
____________________

This case concerns a written agreement to purchase two plots of land forming part of back land lying between Finchley Lane, Alexandra Road, Albert Road, Nora Gardens and Hillview Gardens, Barnet, London, NW4. I shall refer to the whole of the back land as "the Site". The Claimants, Mr Freddy Ezekiel ("Freddy") and his son, Mr Menashi Ezekiel, ("Mark"), seek specific performance of that agreement dated 29 September 1999 and made between them and the Defendants, Mr David Kohali and his brother, Haim, ("the September Agreement"). The Claimants also seek an abatement of the purchase price of £300,000. In the alternative, they claim damages for breach of contract and/or pursuant to section 2(1) Misrepresentation Act 1967. The Defendants by their Counterclaim, also seek specific performance of the September Agreement.

By order of Master Price made on 30 March 2006, the trial was of liability only and therefore, I am not required to determine the extent of any abatement in purchase price, should the need arise.

In this matter, Freddy and Mark were represented by Mr Michell, the First Defendant, David Kohali ("David"), by Mr Blaker and the Second Defendant, Haim Kohali, ("Haim") by Mr Lee.

The Witnesses

(i) Freddy and Mark

Both of the Claimants are quite clearly intelligent and astute in matters of business and in particular, the purchase of land and its development in relation to which they take a very commercial attitude. Freddy, a man of 74, is highly articulate and has had considerable experience of property and development matters, having at one time, had a considerable property portfolio either personally or through at least one sizeable family property company and an estate agency. He asserted that in the past, he had exchanged contracts for the purchase of land "on the back of a cigarette packet" but that he always made sure that all points were covered. He considered himself eminently able to conclude any deal without the need for advice from solicitors.

He had clearly been and was in 1999, despite a serious illness, the driving force in the Ezekiel family property business and had a considerable reputation. He took the leading role in relation to the purchase of the plots at the Site and was the dominant force in the negotiations. He described himself as a natural leader, clearly held strong views and was a dominant personality to the extent that he appeared controlling and domineering. He has a depth of experience of commercial property deals and in particular, ones with development potential. Mark gave evidence that he deferred to his father in matters of business.

He also made much of his poor eye sight which became relevant in relation to whether he had perused office copy entries forwarded to him by his solicitors. However, he admitted that his eyesight was better in 1999 and when examined in chief in July had stated that in 1999, he read letters with a magnifying glass. He said in cross examination that in 1999 he sometimes typed letters although they were usually typed for him. In any event, it was abundantly clear from the trial bundle that in 1999, he wrote many letters in manuscript, some of which were lengthy. Despite requiring to have documents read to him at trial, as a result of the present state of his eye sight, it was clear that he had a thorough grasp of the details and documentation in this matter.

He was also clearly no stranger to litigation. His evidence was given in an arrogant, forceful and, at times, extremely aggressive manner and he was often evasive in his responses. In my judgment, his demeanour coloured his evidence to an extent that in some respects, I consider it unreliable.

Mark Ezekiel also gave evidence that he had worked with his father in their property businesses since 1986 and clearly had a wealth of property, development, business and litigation experience. He too was astute, well versed in the ways of litigation and had a thorough knowledge of the documentation in the trial bundle. At times, his evidence was also delivered in a very aggressive manner and on occasion, he too was evasive. I found some aspects of his evidence to be unsatisfactory.

In addition to the manuscript correspondence, Freddy produced a large number of letters and memoranda which he either typed himself or were typed by his daughter or Mark, which related to the negotiations for the purchase of the plots at the Site. They contain details of many twists and turns in relation to most aspects of the deal and form the bulk of the contemporaneous documentation. By comparison, there is only one short note produced by Haim, no correspondence or documentation produced by David and only a handful of letters written on their behalf by their solicitor, Mr Alexander Marks.

It was suggested that in some respects the contents of documentation produced by Freddy or on his behalf, were on occasion self serving and could not always be relied upon as true contemporaneous records. As an example, of this, a letter written by Freddy and Mark's solicitors, Landons, under Mr Ramsay's reference, to Countrywide Legal Indemnities, dated 13 January 2000, contains reference to the existence of a bollard at the southern end of the Access Strip where it meets Albert Road. It states that Landons were instructed that the bollard preventing vehicular access had been in place for some ten to fifteen years. This is contrary to the evidence of David and Haim who both say that a bollard was placed there at some date possibly in late 1999 or early 2000 and of Haim, that he had driven onto the Site on many occasions over the years before that. There is also no mention of a bollard in a letter from London Fire and Civil Defence Authority and the London Fire Brigade of 26 January 2000 written following a request from Mr Howard on Freddy's behalf. It confirms that the access from Albert Road was sufficient for fire appliances. Accordingly, in relation to the existence of the bollard for ten to fifteen years, if not the precise time at which it may have been installed, I prefer the evidence of the Defendants and as a result, approach the memoranda and letters produced by Freddy with some degree of caution.

(ii) David and Haim

The Kohalis appeared much less sophisticated and less well educated than the Claimants. However, whilst perhaps being without detailed experience of planning issues, they were not unversed in dealing with property transactions and in the past, had through their company, Landas Limited, purchased properties for development.

Neither of the Kohalis appeared to me to have a very strong grasp of English which is their second language. This was particularly so in relation to English in written form. The only note written by either of them which was before the court, reveals a rudimentary understanding of the language and basic writing skills. Furthermore, on numerous occasions, the documentation suggests that Haim requested that Freddy compose a letter for him to take to his solicitors. This is not to say that in my judgment, they did not understand the negotiations and agreement in relation to the Site or the questions posed to them in cross examination.

Neither of the Kohalis appeared to take a detailed approach to the transaction, the extent or nature of their ownership. They had little grasp of the documentation and were not familiar with the bundle. Haim was involved in the negotiations throughout, his brother David taking a lesser role and being absent abroad for a considerable part, if not the whole of August 1999. At times, Haim's recollection was proved to be unreliable for example, in relation to the manner in which the price for Plot C as it became known, was arrived at and I found many aspects of their evidence and in particular, that of Haim to be unsatisfactory. He was evasive and at times, self-contradictory.

(iii) Mr Marks, Mr Ramsay and Mr Howard

I give much greater weight to the evidence of the professionals in this matter, Mr Marks and Mr Ramsay, the solicitors for the Defendants and the Claimants respectively and Mr Howard, the architect who drew up the plans for the planning application. They each endeavoured to assist the court and their evidence was measured and precise to the extent of their recollection.

The Site

The Kohali brothers are the owners of three plots of land comprised in registered titles MX478503, MX163531 and MX 359542 which form the greater part of the Site. The registered titles do not include the entirety of the Site, and in particular, title number MX359542 comprises only the eastern part of land forming an access way from Albert Road which became known at trial as "the Access Strip".

The Access Strip provided access to the Site from Albert Road and Nora Gardens in the south and lay between the western boundary of 1 Nora Gardens and the eastern boundary of 52 Albert Road. The entirety of the Access Strip between the two properties measured 3.9 metres at its widest and 3.5 metres at its narrowest part.

It was not in dispute therefore, that the western side of the Access Strip and at least part of the land at the northern end of the Access Strip as it abuts the remainder of the Site, and upon which garages were to be erected and turning space provided, was not comprised in the registered titles owned by the Defendants, nor were they otherwise, able to provide documentary title to that land.

It was also accepted that there was a small gap in the middle of the Site between the northern boundary of title number MX163531and the southern boundary of title number MX 478503 which does not fall within any of the three registered titles. There is also a small area of land on the western boundary of the Site at the top of what became known as Plot B which was not within the registered titles. In the event, however, Plot B was retained by Haim and was not part of the land to be sold subject to the September Agreement. In addition, there was a one metre strip on the eastern boundary of the Site over which a right of way may have been exercised by neighbouring property owners.

It was also clear that 1 Nora Gardens, the property immediately to the east of the Access Strip enjoys a right of way on foot along a strip of land three feet wide running along its western boundary which now forms title number MX359542 and is owned by the Kohalis, together with rights relating to the drains running under the Access Strip. Furthermore, title number MX359025, being 52 Albert Road, the property immediately to the west of the Access Strip, has the benefit of a right of way over the western part of the Access Strip, being that part which does not fall within the Kohalis' title. Lastly, title number MX 163531, being property owned by the Kohalis, which forms the bulk of the Site, has the benefit of rights of way over the Access Strip and over the existing passage to Alexandra Road. The office copy of the Register entries for the land comprised in the Kohalis' third title, being MX478503 which lies at the northern end of the Site and which formed the majority of what became known as Plot C, do not include any rights of way, whether over the Access Strip or otherwise.

The three registered titles had previously been owned since 1 January 1987, by Landas Limited, a company owned by David and Haim and had been purchased for the purpose of development. The titles had been transferred by Landas Limited to David and Haim in their personal capacities on 29 March 1993.

Initial planning application

On 12 April 1999, the Kohali brothers, through their architect, Mr Jeffrey Howard, made a planning application for three houses marked on the plan as plots A, B and C and an access road on the Site. For the purposes of the application, it was envisaged that both surface and foul water drains would be connected to the sewer in Albert Road and therefore, inevitably would pass under the Access Strip whether in the eastern or western part. The plan which was submitted for that application was subsequently amended to omit a small parcel of land to the north of the Site to which the adjoining owner had obtained possessory title. The application contained a certificate to the effect that nobody except David and Haim owned any part of the land to which the application related which was the entirety of the Site.

Mr Howard had queried the Kohalis' ownership of the western half of the Access Strip and the land immediately to the north and sent a plan with that area ringed around, to Haim in order to clarify the position. Haim conceded in cross examination that the phrase, "This is the land we are buying" written on the bottom of that plan may have been in his hand writing, ("the marked plan"). Mr Howard says that it was on the strength of this that he signed the certification necessary for the planning application. There was no evidence before the court that anyone else has title to the "ringed area" or gap in the middle of the Site.

Early negotiations

Freddy and Mark first became involved with the Site in early July 1999, having discovered through Mr Jacob Dinowitz, Mark's father in law, who owned a property adjacent to the Site, that a planning application had been made and that there were numerous objections to it. Freddy who had considerable experience in property and planning matters, says that he was interested in purchasing a plot in order to build a house for himself and contacted Haim.

On 13 July 1999, Mr Howard, the architect originally engaged by the Kohalis, to draw up plans for the purposes of the planning application, faxed a drawing of the Site to Freddy and on the cover sheet stated the total area including the access road to be 20,030 square feet. This was also the figure referred to in memoranda produced by Freddy in August, as the basis for his calculation of the relative sizes of the plots and their price and the base figure in the calculations annexed to the September Agreement, although in some calculations, the area of the Access Strip was deducted.

Although it is not clear from the documentation, which plan may have been forwarded to Freddy at this stage, in cross examination, Freddy stated that he had received the marked plan very early in the negotiations and that it had been received with planning information from Mr Howard. Although I accept Freddy's evidence in relation to the marked plan, I find that it is more likely than not that he also received the plan produced for the purposes of the planning application at this stage. On 15 July 1999, Freddy contacted local councillors to discuss the planning application and hand wrote a contemporaneous note of his conversation.

The Claimants plead and it is Freddy's evidence that from the start, the Kohalis orally represented to him and to his son, Mark, that they owned the entirety of the Site including the full width of the Access Strip and the land immediately at its northern end. This is denied in the Amended Defence and Counterclaim.

Despite the denial in the pleading, in his witness statement, David stated that he always believed that he and his brother owned the entirety of the Access Strip. In cross examination, both Defendants accepted on numerous occasions that they had believed throughout and certainly in 1999, that they owned the entirety of the Access Strip and may have told Freddy, if not both the Claimants that that was the case. Mr Howard also said that the Defendants had consistently assured him that they owned all of the Site and in particular, the Access Strip and he wrote to Freddy on 18 January 2000, informing him that David had assured him that the Defendants owned the entirety of the Access Strip. This is not entirely consistent with the caption on the marked plan.

Alleged Meeting on 23 July 1999

Freddy also contends that he and Mark met both Defendants at the Ohel Leah synagogue after morning prayers on 23 July 1999 and that it was at that meeting that the possibility of the sale of a second plot to Freddy's son Mark was mentioned. He also says that it was stressed on that occasion that it was essential that planting of a tree screen took place in order to increase the likelihood of planning permission being granted. In his letter to Mr Howard of 25 July, he also makes reference to Haim having telephoned to fix the price for what became known as Plot C, at £140,000, on the afternoon of 23^rd.

David and Haim deny that a meeting occurred at the synagogue that day, although Haim accepted that they may have spoken. However, the content of Freddy's letters dated 25^th and 26^th July 1999, to Mr Jeffrey Howard, are consistent with a meeting having taken place on 23^rd.

The Defendants' evidence is that rather than any matters being discussed at the synagogue on 23 July, it was at this stage at the end of July 1999, although they cannot be definite about the date, when they met with Freddy at his home at 66 Frognal, Hampstead, London NW3, ("Frognal") and discussed the purchase. They state that it was on this occasion that they showed the three registered titles of which they were the freehold owners, to Freddy. They also told me that this was the only occasion upon which they went to Frognal.

None of the contemporaneous correspondence and documentation, the vast majority of which however, was produced by or on behalf of Freddy, makes any reference to the three title documents having been revealed to Freddy and/or Mark by Haim and/or David. David mentions the production of the three title deeds prior to the execution of the September Agreement in his witness statement but without reference to Frognal. Haim's statement makes reference to a meeting at Frognal at the end of July but does not refer to the production of the title deeds on that occasion. Freddy did accept in cross examination that he recalled having been shown plans by David and Haim but vehemently denied that they were the Land Registry plans in respect of the three titles and stated that the meeting at which they were produced took place at Haim's house.

Late July and early August

By late July, it had also been appreciated that in order to obtain planning permission, it would be essential to pursue an alternative access to the north of the Site over a private road leading to Alexandra Road and part of the rear garden of 96 Finchley Lane, to be purchased from Mark's father in law, Mr Jacob Dinowitz.

Freddy wished to proceed with the purchase of the plots extremely quickly, preferably by 26^th or 27^th July and had agreed to be involved with the planning and development of the entire Site. Freddy's letters of 26^th and 28^th July, addressed to Mr Howard, also record at this early stage, that the purchase by Freddy of what became known as Plot C at the northern end of the Site, was not intended to be subject to the grant of planning permission. Subsequent letters contradict this but this was certainly the position by the time of the September Agreement.

In any event, Freddy and Mark met with Haim on the morning of 29 July 1999 to discuss arrangements which might facilitate the grant of planning permission and on that occasion, Haim told Mark that David and he were willing to sell a further plot to him. Freddy's letter to Haim of that date also refers to the delivery of a copy of the Ordnance Survey SUPERPLAN to Mr Howard to enable him to do a revised and approximate subdivision of the site and to put in hand matters which other planning consultants, the Halpern Partnership, who had been consulted by Freddy, thought appropriate. The letter records the agreement to sell the second plot to Mark and ends with a request that Haim forward the letter to his solicitors to draw up a contract to be sent to Freddy's solicitor, Mr Ramsay. The letter also states that it was still Freddy's intention that contracts be exchanged the following week.

The following day, Haim attended the offices of Alexander Marks & Co and an attendance note dated 30 July 1999 and compiled by Mr Marks, records that he was instructed on behalf of the Kohalis on the terms of a letter from Freddy which Haim produced. The attendance note sets out the bare bones of the terms under negotiation and at paragraph 9 reads as follows:

"The Legal Deeds to be drawn by AJM, to ensure right of way over plot C for plots A and B at all times from the new accessway. (Similar rights to be granted over the existing access road to the south."

It records finally, that Mr Marks was to produce a letter, to be approved by Haim. Mr Marks gave evidence that that letter was likely to have been his letter of 4 August 1999 to Freddy. The 4 August letter contains the following reference to rights of way, at numbered point 5:

"We are to deal with the conveyancing of plots A, B and C in order to ensure adequate rights of way granted over each plot so that plots C and B will have rights of way to the access road which presently exists, to the south."

In Freddy's letter to Alexander Marks of 5 August 1999 in response, the access is described as "the access road from Albert Road as proposed in the 12/4/99 Kohali Application and which presently exists, to the south."

At this stage, Freddy had instructed Mark to negotiate with Mr Dinowitz, his father in law, for the purchase of land and garage sheds at 96 Finchley Lane in order to create an access to the northern end of the Site from Alexandra Road. An option over that land was obtained. Mr Cooper of the Halpern Partnership had also spoken to the planning authorities on Freddy's behalf and had ascertained that the concern of the planning officer was about the effect of the access road from the south which at that stage was intended to run along the ends of the back gardens of the properties in Hillview Gardens and that a second access would be necessary.

On 9 August, Mr Howard faxed to Mr Marks the drawing of the layout of the Site submitted for the purposes of the planning application and a drawing of plot sizes "agreed between Mr Ezekiel and Mr Kohali". The Defendants however, deny having agreed plot sizes with Freddy. In this case, I prefer the documentary evidence produced by Mr Howard.

On 10 August, Haim faxed a very brief note in his own handwriting to Freddy which referred to two changes which had been agreed to the terms of the letter of 4 August, one relating to the amount of the deposit and the other to the payment of Mr Marks' fees. Haim confirmed that there were no other changes to be made at that stage. A letter signed by Freddy and Mark of 11 August set out a number of further matters stated to have been agreed between Freddy, Mark, David and Haim on 30 July and concludes by stating that Freddy was ready to exchange contracts that day. However, this is followed by a manuscript note prepared by Freddy and dated the following day, 12 August which deals with the potential split of the cost of obtaining land to form the alternative access way to Alexandra Road.

Freddy then became heavily involved with planning and landscape consultants to determine the best means to clear the Site and plant a screen of trees to minimise the objections raised to the proposed development by the neighbours and visited the Site on numerous occasions. On one such occasion, he became concerned about the possible existence of encroachments by neighbouring property owners, in addition to the piece of land to the north of the Site to which possessory title had already been registered and which had been removed from Mr Howard's plans for the purposes of the planning application. As a result, Freddy says that he asked David and Haim to provide copies of their title documents and other matters relating to planning issues but received nothing.

Mr Ramsay and receipt of office copy entries

On 17 August 1999, in a letter to Mr Ramsay, of Landons, Freddy set out the nature of the negotiations with the Kohalis and requested a simple draft specimen contract which he stated would be "amended as required dependant upon the Kohalis' title and deeded covenants." Mr Ramsay faxed one to Freddy's home address at Frognal on 19 August and thereafter, Mark filled in some of the relevant details. That day Freddy and Mark had discussions about the proposed transaction with Mr Ramsay on the telephone and by a letter of 20 August 1999 addressed to Freddy and faxed to Frognal, Mr Ramsay issued the following warning:

" . . .I feel that I should place on record my advice against your signing or exchanging a contract in this form for the reason which I mentioned to you.

Without seeing the Land Registry entries which affect the property you do not know what you are binding yourself to purchase. You cannot tell whether there is a good title to the whole of the site and whether there are any covenants, rights or other matters which affect it and which may legally even preclude development for the use which you have in mind.

As the site is land-locked it is also important to be sure that you will receive rights which are adequate for access and other services in respect of the plot which you are purchasing. . . . ."

In evidence, Mark stated that his father was annoyed by this and felt that he was being told what he already knew.

However, the warning was heeded. On 20 August, Mr Ramsay, having been instructed by Mark, to make applications for office copy entries of the register in respect of the relevant parcels of land, using a plan supplied by the Claimants, did so. The plan supplied by Freddy and Mark and used for the purposes of those applications has all the markings contained on the marked plan received from Mr Howard, but for the hand written caption. It has the western side of the Access Strip and the area immediately to the north ringed round together with an arrow to the right of the marking.

In response to his applications, Mr Ramsay received two letters from the Swansea District Land Registry dated 24 August 1999 stating the registered title numbers which related to part of the land which was the subject of the applications and in both cases stating:

"The remainder however, is not registered under the Land Registration Acts and Rules and, for this reason the Department holds no records in this respect."

The applications made related to the entirety of the Site, including as I have mentioned, the entirety of the Access Strip. The registered title numbers mentioned in the Swansea District Land Registry letters in response included the three title numbers owned by the Kohalis. In cross examination, Mr Ramsay was uncertain as to whether he sent these letters to Freddy and Mark.

Office copy entries for the registered titles mentioned in the District Registry's correspondence, including the three titles owned by the Kohalis were issued by the Swansea District Registry on 25 August 1999. In addition, it appears from a fax cover sheet of the same date, that Mr Howard forwarded the original block plan for the Site, the revised plan and a plan showing plot C with access over the Access Strip from Albert Road, to Freddy that day.

On 1 September 1999, Mr Ramsay faxed the office copy entries which he had received at that stage, being twelve pages in all, to Mark at his father's address, at Frognal. The cover sheet also indicates that full entries had been put in the post. Mr Ramsay confirmed that he considered it likely that the three titles owned by the Kohalis were amongst those which were faxed. Freddy conceded that he may have received each of the plans relating to the Kohalis' three registered titles at this stage.

In his witness statement, Freddy states that the Land Registry search indicated that the Kohalis did not own the whole of the Site but that he was not so much concerned to establish their registered title as much as the existence of third party rights. He also says that he assumed that they must have gained title to the unregistered parts in another manner and that they continued to assure him that they owned the whole of the Site. He went on to add that in relation to the Access Strip, the Kohalis said that they had purchased it and were having it registered, presumably based upon the marked plan. In cross examination, Freddy accepted that having received the office copy entries, he did not speak to either David or Haim in order to clarify the position.

However, Freddy also told the court that he did not look at the plans received from Mr Ramsay because of his eyesight and on receipt of the hard copies on 3 September, took them straight to Mr Howard so that he could consider them and incorporate them in the plans. Despite having had the marked plan from early on in the negotiations, Freddy vehemently denied having seen from the office copy entries that registered title MX359542 comprised only the eastern side of the Access Strip. His evidence with regard to the receipt of these documents was given in an extremely heated and aggressive manner which in my judgment colours the weight to be given to it. He did concede later, that he may have seen the office copies, he may have discussed them with Mark and that he may have discussed them with Mr Howard.

However, Mr Howard, who considered himself to be concerned only with the design of the houses to be built, the most likely configuration to obtain planning permission and the division of the Site, had no recollection of having discussed the plans or matters of title with the Ezekiels at this stage.

Mark on the other hand, accepted that it was his prime responsibility to consider plans in relation to the property deals in which he and his father were involved and that he had certainly seen the one metre strip over which there was concern about a right of way on the office copy entries. He also accepted that he recalled seeing the plan for title number MX163531 which delineates land forming the bulk of the Site but for an area in the north of Plot B. Otherwise, he stated in a very heated manner, that he did not look at the office copy entries because he was too busy and trusted Mr Howard to deal with them. Given his experience and role in the Claimants' business, the background to the application for the office copy entries, namely Mr Ramsay's warning, the fact that Mr Howard was an architect with whom Freddy and Mark had not dealt before and the correspondence to which I shall refer, I found this unconvincing.

Mark also accepted that he spoke again to Mr Ramsay because he needed more title deeds. It was Mr Ramsay's evidence that that he spoke to Mark on the telephone, on 2 September when Mark instructed him to apply for further office copy entries for numerous properties fronting Finchley Lane, together with title number MX359540 and parcel index searches for both the access off Albert Road and off Alexandra Road. He duly did so and forwarded the responses to Mark on 13 September 1999. He also opened a file in relation to the proposed transaction for purchase of the land on 7 September 1999.

Meanwhile, on 3 September in a letter or memorandum to Mr Howard, Freddy whilst complaining about the possible defunct right of way over the Site, stated

"Fortunately, I was appraised of it [the defunct right of way] by Mrs Shaw on Wednesday night and had it verified from copies of deeds received by Mark yesterday form Landons who he asked to apply to Land Registry after the Kohalis had repeatedly failed to produce their deeds to us . . . . . . I enclose the copies obtained by Landons from the Land Registry and suggest you get Mr Millar (sic) to define what the Kohali site is comprised of, before you respond and amend your plan of 12/4. . . ."

Freddy says that at this stage, in early September, he refused to proceed further with the deal because the Kohalis had failed to contribute to the cost of planting the proposed screen and had not instructed Mr Howard appropriately. Reference to an unwillingness to proceed as a result of a disagreement about contributions on 5 September, is referred to in a memorandum of 30 September 1999, addressed to Mr Howard and signed by Freddy and Mark.

However, it appears from the correspondence with professionals that he was still pursuing the deal. In a letter to Mr Miller, the Kohalis' then solicitor, dated 9 September 1999, Freddy states as follows:

"I had withheld my response to your letter as I awaited receipt of the 3 title deeds and site plan that defined Plot C you said would be sent out once you had arranged for the removal of an (expired) option registered on Kohalis' title. The title deed you will recall my telling you in our very first conversation had despite calls to both Kohali brothers not been obtained or produced to me . . . . ."

Meanwhile, the Claimants' solicitors, Landons had received a certificate of an official search of the index map in respect of land adjoining 80 Alexandra Road dated 8 September 1999, which revealed that part of that land which related to the proposed alternative access to the Site in the north, was not registered. The plan attached to that search also shows the extent of the registered title to the Access Strip.

On 13 September 1999, Mr Ramsay wrote to Mark enclosing copies of the two parcel index searches he had received and confirming that he had applied for entries in relation to title number MX163531 which was one of the Kohalis' three registered titles. He also wrote a detailed letter to Mark dated 15 September 1999, setting out the information gleaned from office copy entries in relation to properties in Finchley Lane.

These documents were enclosed in Mr Ramsay's letter of 13 September 1999, to Mark. In that letter, Mr Ramsay also dealt in some detail with the status of the land which was intended to provide the alternative access way from Alexandra Road and he commented that the main part of that land was not registered.

Meeting of 13 September 1999

Freddy says that on the afternoon of 13 September 1999, the Kohalis phoned him and visited his house at Frognal to ask for forgiveness over their failure to contribute to the cost of planting at the Site and to resurrect the negotiations. He says he relented because of the reference which was made to a particular religious fast day and agreed to go with them to Mr Marks' office. Reference to a meeting at Frognal on 13 September, attended by Freddy, Mark, David and Haim, is made in Freddy's letter to Mr Marks of 23 September 1999 in which he wrote:

"It is also clear that to obtain an approval, an alternate access from the North is required and that this will have to be secured for Plot C by Haim who offered to pay for the option from 96 Finchley Lane so as to retain Plot C for himself at 1/3 as David and he repeatedly proposed to Mark and I at 66 Frognal prior to they and I attending at your office."

No doubt was raised as to the reliability of the content of that letter.

This is all denied by the Kohalis who contend that they simply telephoned and arranged a meeting at the offices of their solicitors Alexander Marks & Co for the afternoon of 13 September, phoned Freddy and met him there. Mark did not attend.

In any event, a meeting did take place at the offices of Alexander Marks & Co at short notice, on 13 September 1999. Mr Marks produced a manuscript note of the points discussed. He subsequently amended it to take account of further correspondence from Freddy the following day and had it typed up.

Although Freddy says in his witness statement that at the meeting of 13 September 1999, clearing a caution over part of the land and deducing good title were his principal concerns, he said in cross examination that there was no mention of title at that meeting. Mr Marks on the other hand, infers from the content of his note of the meeting that title must have been referred to. The particular reference is that each plot should be 1/3 "even if different to registered".

Mr Ramsay sent another tranche of Land Registry entries to Mark by letter of 27 September and a further copy relating to 80c Alexandra Road on 1 October 1999.

Meeting of 29 September 1999

Despite the wealth of Land Registry entries received by this stage, both Freddy and Mark say that the three registered titles owned by the Kohalis were not mentioned at a further meeting which took place on 29 September 1999, also at the offices of Alexander Marks & Co which was attended by Freddy, Mark, David and Haim. That meeting was lengthy and at times heated as a result of re-negotiation concerning deposits. Mr Marks himself was not present throughout but attended on the parties four or five times for short periods.

During the course of the meeting, Mr Howard faxed over a plan of the Site on which Plots A, B and C were marked. Freddy says that David and Haim confirmed that the area marked on the plan represented their freehold interest. However, Mr Marks said that he recalls being asked to confirm what land the Kohalis owned and clearly remembers saying that they owned the land in the three registered titles which he knew the Claimants had seen. He gave no assurances that his clients owned any other land. Mark accepted that he may have confirmed to Mr Marks that he had seen copies of the Land Registry entries in respect of the three titles.

The September Agreement

The notes of the meeting of 13 September 1999 were produced at the 29 September meeting and each item was referred to by Mr Marks and ticked off once it had been discussed and agreed and any necessary amendments were made in manuscript. It was then signed by each of the parties before they left Mr Marks' office. The September Agreement was therefore, no more than the memorandum produced by Mr Marks after the meeting at his office on 13 September 1999, with manuscript amendments and additions, a plan, a specification setting on the area of the land and a typed front page entitled "Heads of Agreement". The front page set out the parties and the consideration, recited the parties agreement to be bound and to take all steps necessary to give effect to the agreement and bore their signatures. It contained no express reference to title or the status of any representations and did not contain an entire agreement clause. Furthermore, it contained no precise definition of the land being sold in relation to which it was necessary to rely upon the plan and specification annexed.

The central terms of the September Agreement were as follows:

"1. Freddy Ezekiel to purchase Plot C. Will exchange as soon as possible. Price is £140,000 to be paid equally to David and Haim (£70,000 each).

2. Freddy's son Mark to purchase Plot A for £160,000. This is to go straight to David.

3. Haim to retain Plot B.

. . . . . .

6. Mark will pay on or before end October 1999 £16,000 to David. . . . .

7. Freddy pays Haim £3,500 on exchange of Plot C but nothing else and the balance goes on completion.

8. Completion of the purchase of Plot A and C to be on or before the end of December. This is not a conditional contract.

9. It was stressed that each of Plots A, B and C must be equal in size. .. .

10. There must be adequate rights of way and other easements in the deeds of Plots A and B. Not only rights of way for Plot B over Plot A's land but also for the necessary services (gas, telephones, water, sewage etc and so on).

11. Any and all alternate access for planning permission are the responsibility/liability of Freddy and Mark. . . . .

14. The planning application and the planning permission must be for the three houses. If the planning permission is turned down then there will be a planning appeal and this must be undertaken. If it is unsuccessful Freddy must still complete the deal for the land. The point being if he does not get planning permission for three houses on Plots A, B and C he must make the appeal. He must buy and so must Mark.

. . . . . . . . .

Points arising in Freddy Ezekiel's Correspondence dated 14^th September 1999 and the Matters which were not raised at the meeting on 13^th September

. . . . .

4. Whether or not planning permission is granted for the development of the three houses Freddy to complete the purchase of Plot C at £140,000 subject to it being transferred to his ownership together with the access provided by the service road to the south from Albert Road as presently exists. Completion to be on or before 31/12/99.

. . . . . . . . .

The Plans

The Plan and Specification annexed hereto."

There were other terms relating to the cost of providing plant screening for the Site and it was expressly stated that the purchase would proceed whether or not planning permission was obtained. The Specification contained calculations of the sizes of the plots based on the "registered area of the Kohali site."

Freddy and Mark say that the September Agreement makes no reference to title to the land being sold or the matter of clearing off the caution, because it was the obligation of the Kohalis to show good title, whereas the Kohalis contend that no mention was made of title in the September Agreement but the Claimants were fully aware of the extent of the land which they owned at that stage.

The two sums of £3,500 by way of deposit were paid by Freddy by delivery of cheques on 29 September 1999 and a deposit of £16,000 was paid by Mark, "without prejudice" on 7 December 1999. However, completion did not take place on 31 December 1999. Despite the payment of deposits, Freddy stated that he did not appreciate that the September Agreement was final and binding and had thought there would be further negotiation.

The Dispute

On 25 November 1999, the Defendants' solicitor, Mr Marks sent a draft contract with office copy entries and filed plans for the three registered titles to the Claimants' solicitors. In his letter of 25 November 1999 to Mr Ramsay of Landons, Mr Marks stated:

"Your client, Mr Ezekiel Senior, told us some time ago that you had already obtained your own set of Office copies. . . . . ."

This was repeated in his letter to Mr Ramsay of 1^st December 1999 written after doubts had first been raised in relation to the Access Strip. In that letter Mr Marks stated

" . . . .So far as we are aware, our clients do not own anything more than the three registered titles.

You did tell us that you had obtained office copy entries on behalf of your clients previous to the exchange of Agreements in September."

In December 1999, correspondence ensued as to the adequacy of the right of way and title to the Site with particular emphasis upon the Access Strip which continued until at least August 2000. None of the correspondence between solicitors at this stage, makes any reference to the Kohalis having shown their title documents to Freddy and/or Mark, prior to the execution of the September Agreement. The planning application was refused on 11 April 2000 and notification of the decision was given on 17 April 2000.

Despite the difficulties in relation to title, an appeal was pursued by the Claimants which was also refused on 4 April 2001. A caution had also been registered by the Claimants, against the three registered titles on 19 January 2000 and on 13 January 2000, Landons on behalf of the Claimants, had written to Countrywide Legal Indemnities seeking indemnity insurance in relation to claims which might be made were drainage pipes and other services to be laid in the Access Strip and were it to be used as a vehicular access. The response was that insurance would only be available if planning permission were granted. Freddy accepted that had planning permission been obtained, he would have completed the purchase.

Despite the tone of the correspondence between solicitors and the failure of the planning appeal in 2001, a claim form was not issued until 26 September 2005, very shortly before the expiration of the limitation period.

The Issues

Freddy and Mark say that David and Haim contracted to sell the entirety of Plots A and C to them, that Plot A included the entirety of the Access Strip and that it was agreed that Plot C would have vehicular access over the Access Strip. They contend that David and Haim are clearly unable to show good title to all of the land they contracted to sell and in particular, the western side of the Access Strip and cannot grant the appropriate easements. As I have mentioned, they say that throughout the negotiations which culminated in the September Agreement, David and Haim orally represented to them that they owned the entirety of the Site and of the Access Strip and that they relied upon those representations when executing the September Agreement. Their primary claim for relief is specific performance with an abatement of price and only if that relief is denied do they seek damages for breach of contract and/or misrepresentation.

David and Haim on the other hand say that they showed their three registered titles to Freddy at an early stage in the negotiations and that therefore, the Claimants were aware of the limited extent of the title which was being sold. They also say that Freddy and Mark had actual or constructive knowledge of the extent of their title, office copy entries in relation to the Site having been obtained by their solicitors and forwarded to them and to Mr Howard, the architect working on the project, prior to the execution of the September Agreement. Accordingly, David and Haim say that the Claimants knew what they were buying and therefore, cannot complain. They also seek specific performance of the September Agreement but without any abatement.

The issues in dispute therefore, are:

(i) Whether Plot A included the entirety of the Access Strip;

(ii) Whether the Kohali brothers contracted to sell Plot C to Freddy together with a vehicular right of way and easements for services over Plot A, including over the Access Road;

(iii) If so, whether the Kohalis have title to grant a vehicular right of way and an easement for services in favour of Plot C over Plot A;

(iv) Whether the Kohalis represented to Freddy and/or Mark that they owned all the Site, including the Access Road and whether Freddy and/or Mark relied on that representation when entering into the September Agreement;

(v) Whether the Kohalis were under an obligation to show good title to all the land contracted to be sold or whether that implied obligation had been negated by:

(a) an express oral agreement between the Claimants and the Defendants made in about July 1999, that the Defendants were only able to show good title to the three registered titles, MX 478503, MX163531 and MX 359542, and not to the entirety of the land contracted to be sold; and/or

(b) the Claimants' knowledge whether actual or constructive that the Defendants were only able to show good title to the areas of land comprised in registered titles MX 478503, MX163531 and MX 359542 and not the entirety of the land contracted to be sold;

(vi) Whether the court should order specific performance with an abatement of the purchase price, leave the Claimants to their remedies in damages or award specific performance in favour of the Defendants.

Obligation to show good title and effect of representations

It is not disputed that the obligation to show good title is the central term of a contract for the sale of land: Lysaght v Edwards (1876) 2 Ch 499 at 507 per Jessel MR and that where the contract is silent, the obligation is a matter of legal implication. In order to show good title one must either be the registered proprietor of the freehold estate with an absolute title: Re Stone and Saville's Contract [1963] 1 WLR 163 or where the land is unregistered, be seized of the fee simple and be in a position to convey it without the possibility of dispute or litigation: Re Stirrup's Contract, Stirrup v Foel Agricultural Cooperative Society Ltd [1961] 1 WLR 449 at 454. Furthermore, in order to be able to grant the rights of way and easements agreed, it is necessary to be able to show good title to all of the land over which they are to be granted.

The Claimants also rely upon Hill v Buckley 17 Ves Jun 395 at 401 in which it was held that where there was an innocent misrepresentation as to the area of the land to be sold, the purchaser is entitled to whatever the vendor is able to sell with an appropriate abatement of the purchase money for so much as the quantity falls short of the representation made.

Equally, the Claimants concede that the obligation to show good title in every respect is rebutted by proving that the purchaser entered into a contract with knowledge of particular defects in the title: Timmins v Moreland Street Property Co Ltd [1958] 1 CH 110. That case was concerned with whether a memorandum for the purposes of section 40 Law of Property Act 1925, sufficiently described what had orally agreed to be sold. The memorandum recorded the sale of a freehold whereas in fact, it was a freehold reversion subject to a lease which was being sold. Jenkins LJ stated at 119:

"In a word, on the assumption that the memorandum relied on was sufficient in other respects, I think that by virtue of their knowledge at the time of entering into the oral contract that the plaintiff's interest was subject to the lease, the defendants were precluded by implication of law from objecting to take the property subject to the lease, whether it was or was not described in the memorandum as being so subject."

He also quoted with approval at 121, the following passage from the judgment of Fry J in In re Gloag and Miller's Contract (1883) 23 Ch D 320:

"When the contract is silent as to the title which is to be shown by the vendor, and the purchaser's right to a good title is merely implied by law, that legal implication may be rebutted by showing that the purchaser had notice before the contract that the vendor could not give a good title."

Whether the true analysis in such a situation is that the purchaser has waived his right to insist on the production of good title or that it will not be implied that the vendor must show it, what is required therefore, is for it be found that the purchaser knew or possibly, had notice that the vendor could not make out good title to the property agreed to be sold. I shall return to the issue of notice to the extent that it is relevant here.

Mr Michell also submitted that the court should not find that it was a term of a contract that the vendor only sells such interest as he has unless that term is made clear and unambiguous to the purchaser: Southby v Hutt 2 My&Cr 207,212, and Fry: Specific Performance (3rd ed) at para 1323. He also put the matter another way by submitting that where good title cannot be shown because the vendor can deduce no title at all to part of the land, the court should be slow to find that the obligation to show good title does not arise. In my judgment, this must be correct.

Applying the principle in Timmins v Moreland Street Property Co Ltd, if Freddy and Mark can be shown to have had actual knowledge of the extent of the Kohalis' title prior to the execution of the September Agreement, whether by means of the oral agreement pleaded at paragraph 23(i) of the Amended Defence and Counterclaim, or by the other means pleaded at paragraph 23(ii), they cannot rely upon the implied obligation to show good title to the entirety of the Site.

I am urged by Mr Blaker on behalf of the First Defendant, to hold that it would be sufficient to displace the implied obligation to prove good title, if Freddy and Mark had constructive knowledge of the limited extent of the Kohali's title. Mr Blaker relies in this regard, upon a passage in Emmet and Farrand on Title at paragraph 4.030 and Faruqi v English Real Estates Ltd [1979] 1 SLR 966. The usual concept of constructive knowledge is knowledge that a person would have acquired if he had made all usual and proper enquiries. It is submitted therefore, that as Freddy and Mark received office copy entries in respect of the Kohalis' three registered titles prior to the execution of the September Agreement, the implied obligation is displaced, whether they studied them or not.

At paragraph 4.030, the editors of Emmet and Farrand on Title state that a purchaser's knowledge whether actual or constructive will rebut the implication that the vendor must show good title and reliance is placed upon Timmins v Moreland Street Property Co Ltd. However, that authority was concerned solely with circumstances in which there was actual knowledge and no reference is made to the application of the principle in circumstances where the knowledge is merely constructive.

The editors go on to suggest that the practice of sending office copies of the register could be argued to be sufficient to create constructive knowledge of any defects in title sufficient to rebut the vendor's obligation to show good title. No authority is quoted for this proposition.

Furthermore, Faruqi v English Real Estates Ltd [1979] 1 WLR 966, on which Mr Blaker also relied, is in fact, concerned with a different situation. Land was sold at auction expressly subject to the entries on the register of title. One entry referred to restrictive covenants in a deed not produced on first registration. Requisitions on title were answered by stating that no copy of the deed could be produced. Walton J held obiter that on a true construction of the contract, the purchaser would have been bound at law to take the property subject to the entries on the register of title, whatever they might have been. I do not consider it to be of much assistance in this case.

In addition, although reference is made in the quotation which I have set out from In re Gloag and Miller's Contract (supra), to notice rather than knowledge which might be taken as an indication that constructive knowledge was sufficient to rebut the implied obligation, on the facts of that case there was actual knowledge of the relevant defect in title.

Other than the inconclusive passage in Emmett, therefore, Mr Blaker has been unable to refer me to any express authority in support of the proposition that constructive knowledge is sufficient for this purpose.

Mr Blaker also referred me to Strover & Ors v Harrington & Ors [1988] 1 Ch 390, a case in which damages for misrepresentation pursuant to s2(1) Misrepresentation Act 1967 were claimed. The purchasers had agreed, subject to contract to purchase a house at an agreed price. The vendor's estate agents then wrote to the purchaser's solicitor to inform them of a mistake in the particulars of sale relating to drainage. The solicitors acknowledged the letter but failed to inform their clients. Misrepresentations were made as to drainage in the pre-contract enquiries and to the surveyor when he attended the property. The contract was completed and the defect soon came to light. However, it was held by Browne Wilkinson VC at 409H as follows:

"In this, as in all other normal conveyancing transactions, after there has been a subject to contract agreement the parties hand the matter over to their solicitors who become the normal channel of communication between vendor and purchaser in all matters relating to that transaction. In so doing, in my judgment the parties impliedly give actual authority to those solicitors to receive on their behalf all relevant information from the other party relating to that transaction. The solicitors are under an obligation to communicate that relevant information to their own clients. At the very least the solicitor has ostensible authority to receive such information. Whether there be express or ostensible authority, the purchaser is in my judgment estopped from denying that he received the information which has been communicated to his solicitors acting in the same transaction. In my judgment, such knowledge should be imputed to the principal"

This case proceeds therefore, not on the basis of constructive but imputed knowledge. The principle was explained by Lewison J in In Meretz Investments NV & Anor v ACP Ltd & Ors [2007] Ch 197, at paragraph 324:

"The knowledge of one person may, in certain circumstances, be attributed to another person. This is generally known as imputed knowledge. However, it is not the same as constructive knowledge. The concept of imputed knowledge does not bear on the kind of knowledge possessed by one person that is attributed to another. The general rule of agency is that where in the course of any transaction in which he is employed on his principal's behalf, an agent receives notice or acquires knowledge of any fact material to that transaction, under circumstances in which it is his duty to communicate it to his principal the principal will be precluded from relying on his personal ignorance of that fact; he will be taken to have known of it (or have had notice if it) as from the time when his agent ought to have communicated it to him if he had performed his duty with due diligence."