England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY

		Manchester Civil Justice Centre 1 Bridge Street West Manchester
		1st March 2012

1. JUDGE HODGE QC: This is my extemporary judgment in the case of Mark Joseph Taylor (as claimant) and David Simon Couch (as defendant), claim number 0MA30764.
2. This case raises a novel and interesting question of law involving the application of the rule against perpetuities to what, on the claimant's case, is a right of pre-emption created before the coming into force in 2010 of the Perpetuities and Accumulations Act 2009.
3. The claimant is represented by Mr David Gilchrist of counsel and the defendant is represented by Mr Ian Foster of counsel. By a claim form issued in the Manchester District Registry of the Chancery Division on 13^th December 2010, the claimant claims declaratory and other relief in relation to his right to purchase two small parcels, comprising some 2670 square yards, of freehold land at Springfield Lane, Aughton, Ormskirk in the County of Lancaster.
4. The claim arises out of an agreement dated 14^th December 1984 made between the claimant (as purchaser and grantee) and Cobry (Import & Export) Limited (as grantor and seller). By that agreement, Cobry had agreed to sell to the claimant, and the claimant had agreed to purchase, certain freehold land adjacent to Springfield Lane at a price of £48,000. That agreement contained (in clause 17) a right in the following terms:

"The vendors hereby grant to the purchaser an option to purchase plots A and B, referred to on the plan annexed hereto, at the price of £0.6175 per square yard, such option to be exercisable by the purchaser, or his successors in title, and then it says "on" although that is clearly a typographical error for "in" the event that:

(i) the vendors have not obtained planning permission to erect a detached dwelling house on each of the said plots A and B within five years from the date of completion hereof, or

(ii) the vendors' application for such planning permission referred to in subclause (i) hereof has been refused unless the vendors shall lodge an appeal within two months of such refusal in which case the option shall be exercisable only if the appeal shall be unsuccessful, or

(iii) the vendors offer for sale the said plots A and B;

and this clause shall be registered against the vendors' interest in plots A and B as a Class (iv) land charge And, for the avoidance of doubt, it is hereby declared that the option hereby granted shall lapse on the grant of planning permission to the vendors as in subclause (i) hereof."

5. The sale and purchase of the land was duly completed on 4^th January 1985 as appears from entry number 2 of the property register of the title to the sellers' retained land at the Land Registry, title number LA636136. On 6^th January 1989, the sellers' retained land was conveyed by Cobry to the defendant and his sister (now deceased) Natalie Elizabeth Couch. The defendant and Natalie were the daughters of Mr Peter Couch, who had been a director of Cobry. That conveyance was duly registered at the Land Registry on 4^th January 1990. It was that conveyance which gave rise to the first registration of title to the sellers' retained land.
6. The charges register makes reference in the only entry (entry number 1) to the 14^th December 1984 agreement, which is said to relate to a right of access, an option to purchase, and the grant of a licence to occupy as therein mentioned. I infer from that entry that the rights created by clause 17 of the contract had been duly protected by the registration of a land charge of Class C (iv).
7. Regrettably, Natalie Couch died on 5^th August 2005. Title to the land conveyed by the 1989 conveyance remains vested in the sole name of the defendant. The claimant says that he was not aware of this land transfer at the time, or, indeed, at any time until after 4^th August 2009. It was on that date that a letter was sent by the claimant's former solicitors, Brighouse Wolff, purporting to exercise the option contained within clause 17 of the 1984 agreement.
8. Cobry appears to have been an Isle of Man company which has long since been dissolved. The claimant now seeks to enforce the provisions of clause 17 of the 1984 agreement. He seeks an order for specific performance of the defendant's obligation to sell plots A and B to him upon payment of the appropriate price, which he quantifies in the sum of some £1,648. That claim is resisted by the defendant on the basis that, by the time the claimant purported to exercise the option, by letter dated 4^th August 2009, the option was void for remoteness, having been granted more than 21 years earlier.
9. The claimant's answer to that is that since, at the time of the 1989 conveyance by Cobry to the defendant and Natalie Couch, Cobry had not obtained planning permission to erect a detached dwelling house on each of the two plots, nor had such an application for planning permission been refused, it is to be inferred that the claimant became entitled to exercise his option under clause 17 (iii) when Cobry first offered to sell plots A and B to the defendant and Natalie Couch, prior to the completion of that sale. It is said that that must have been some time shortly before 6^th January 1989. Consequently, it is said that the perpetuity period of 21 years, under Section 9 (2) of the Perpetuities and Accumulations Act 1964, commenced on, or shortly before, 6^th January 1989, and thus within 21 years of the purported exercise of the option by letter dated 4^th August 2009. Thus, the option was exercised within the applicable perpetuity period, and is not void for remoteness as claimed by the defendant.
10. By an order dated 22^nd November 2011, and entered on 2^nd December that year, District Judge Khan allocated the claim to the multitrack and gave directions for trial. That trial has come on before me today. The claimant's evidence comprises a single witness statement from himself, dated 15^th February 2012, to which he exhibits various documents. The defendant's evidence is contained within a witness statement that he made on 19^th January 2012, to which he, in turn, has exhibited a few additional documents.
11. There is no dispute as to the essential facts and, in consequence, neither side gave evidence, or was cross-examined, before me. This trial has proceeded on the basis of written submissions by way of helpful skeleton arguments from Mr Gilchrist, dated 22^nd February, and from Mr Foster, dated 27^th February, as supplemented by oral submissions before me.
12. The short question is whether the rights conferred by clause 17 of the 1984 agreement are still enforceable, or whether they are void as offending the rule against perpetuities. It is clear that the rights were created long before the Perpetuities and Accumulations Act 2009 came into force on 6^th April 2010. That Act abolishes the rule against perpetuities in relation to options; but it only applies to instruments taking effect on, or after, 6^th April 2010 and so has no application to the present case.
13. The relevant rights were, however, created after the coming into force of the Perpetuities and Accumulations Act 1964 which is of relevance to this case. That Act contains a number of provisions of potential relevance. I turn first to section 9, which is headed, "Options relating to land." Subsection (1) has no application because it is concerned with dispositions consisting of the conferring of an option to acquire for valuable consideration an interest reversionary on the term of a lease. It is section 9 (2) which is of application. That provides as follows:

"In the case of a disposition consisting of the conferring of an option to acquire for valuable consideration any interest in land, the perpetuity period under the rule against perpetuities shall be 21 years, and section 1 of this Act shall not apply: Provided that this subsection shall not apply to a right of pre-emption conferred on a public or local authority in respect of land used or to be used for religious purposes where the right becomes exercisable only if the land ceases to be used for such purposes."

14. I next refer to section 10 which is headed, "Avoidance of contractual and other rights in cases of remoteness." That provides:

"Where a disposition inter vivos would fall to be treated as void for remoteness if the rights and duties thereunder were capable of transmission to persons other than the original parties and had been so transmitted, it shall be treated as void as between the person by whom it was made and the person to whom or in whose favour it was made or any successor of his, and no remedy shall lie in contract or otherwise for giving effect to it or making restitution for its lack of effect."

15. I accept Mr Gilchrist's submission, founded upon subparagraph (ii) at paragraph 9-119 of Megarry and Wade: The Law of Real Property, 7^th Edition (2008), that the effect of section 10 is merely that a contract or other disposition inter vivos which creates an interest in property is void even between the original contracting parties whenever it would have been void for remoteness as against a third party. I also accept the observation in the footnote to that passage that the language of the provision is "curious".
16. The definition section in subsection 15 (2) defines "disposition" as including "the conferring of a power of appointment and any other disposition of an interest in or right over property, and references to the interest disposed of shall be construed accordingly".
17. I must now refer to certain earlier provisions of the Act contained within section 3 headed "Uncertainty as to remoteness." Section 3 (3) provides that:

"Where, apart from the [provisions of section 3 and sections 4 and 5 of the Act], a disposition consisting of the conferring of any power, option or other right would be void on the ground that the right might be exercised at too remote a time, the disposition shall be treated as regards any exercise of the right within the perpetuity period as if it were not subject to the rule against perpetuities and, subject to the said provisions, shall be treated as void for remoteness only if, and so far as, the right is not fully exercised within that period."

18. Section 3 (4) provides that:

"Where this section applies to a disposition and the duration of the perpetuity period is not determined by virtue of section 1 or 9 (2) of this Act, it shall be determined as follows -

(a) where any persons falling within subsection (5) below are individuals in being and ascertainable at the commencement of the perpetuity period the duration of the period shall be determined by reference to their lives and no others, but so that the lives of any description of persons falling within paragraph (b) or (c) of that subsection shall be disregarded if the number of persons of that description is such as to render it impracticable to ascertain the date of death of the survivor;

(b) where there are no lives under paragraph (a) above the period shall be twenty-one years."

19. It is unnecessary for me to read subsection 3 (5) in full. Suffice to say that if the duration of the perpetuity period is not determined by virtue of section 9 (2) of the 1964 Act, then since Cobry, as grantor and seller, was a company and not an individual, it seems to me clear that the duration of the perpetuity period is to be determined by reference to the life of the claimant, as grantee, and no other person. That seems to me to be the clear effect of section 3 subsection (5) (b) (v) which refers, in the case of any power, option or other right, to the person on whom the right is conferred. In this case, that is the claimant.
20. Against that statutory background, I turn to the parties' submissions. It is common ground that the rights conferred by clause 17 of the 1984 agreement are not expressly limited in point of time. It is also common ground that no express perpetuity period is specified in the 1984 agreement. Thus, the "Wait and See" rule under section 3 of the 1964 Act applies; and, therefore, if the option was exercised within the applicable perpetuity period, it will be treated as if it were not subject to the perpetuity rule.
21. It is the claimant's case that any option only came into existence when, in accordance with clause 17(iii), the vendor came to offer plots A and B for sale. That must have been some time shortly before the date of the conveyance of 6^th January 1989. Accordingly, it is said that when the option was exercised on 4^th August 2009, it was still valid, because it was exercised within 21 years of January 1989.
22. Mr Gilchrist submits that the resolution of this issue depends upon whether the option is to be regarded as having had existence during the period before the applicable condition in special condition 17(iii) was satisfied. He submits that, during that period, it could not be said with certainty whether or not the claimant would ever have the opportunity of purchasing the option land. His right under the option to call for the sale of the land would only arise if the vendor either:

a) did not apply for planning permission within the five year period, or

b) having applied for it, failed to obtain planning permission.

If, during that period, the claimant had been asked whether he had an option to purchase the option land, it is submitted that the claimant's accurate response would be that he did not, but that he would have if the vendor did not get planning permission to develop it.

23. Mr Gilchrist relies upon the authoritative statement by Sir George Jessel MR in his famous judgment in London and South West Railway Company v Gomm (1882) 20 ChD 562 at page 581:

"The right to call for a conveyance of land is an equitable interest or equitable estate. In the ordinary case of a contract for purchase there is no doubt about this, and an option for repurchase is not different in its nature. A person exercising the option has to do two things, he has to give notice of his intention to purchase, and to pay the purchase-money; but as far as the man who is liable to convey is concerned, his estate or interest is taken away from him without his consent, and the right to take it away being vested in another, the covenant giving the option must give that other an interest in the land."

24. It is said that if it is the fact that the grantor's estate can be taken from him without his consent which means that an interest in land is granted (as this passage suggests), then no interest was granted when completion of the sale took place in this case in 1985. The vendor's estate could only have been taken away from him if he had failed to obtain planning permission during the five year period under special condition 17. It is only after he had failed to obtain planning permission that it could be said that his estate was diminished by the rights enjoyed by the claimant under the option. Before then, the most that could be said was that there was a possibility that the claimant might be entitled to take the vendor's estate from him in the future.
25. Mr Gilchrist submits that the fact that the right to purchase was conditional prevented the obligation under special condition 17 giving rise to an interest in the option land immediately. He refers to the decision of Mr Simon Berry QC, sitting as a deputy judge of the Chancery Division, in the case of Wilson v Truelove [2003] EWHC 750 (Ch), reported at [2003] 2 EGLR 63. There it was argued that an option to repurchase was conditional and, as a result, that the perpetuity period did not commence until the condition was satisfied and the option triggered. That argument was rejected for the reason that the condition relied upon (namely, the death of the survivor of two of the purchasers) was to be treated as no more than a procedural requirement. The deputy judge decided that the condition identified when the right to repurchase arose, and it did not specify a condition that might, or might not, occur and must first be fulfilled: see paragraphs [10] and [11] of the judgment.
26. Mr Gilchrist submits that if, as Wilson suggests, the distinction is between conditions that are mere procedural requirements (where the interest comes into existence at the date of the instrument) and those that are substantive (where the interest comes into existence when the condition is satisfied), then, in the present case, the conditions are to be treated as substantive: these were conditions that might, or might not, occur and that must, therefore, first be fulfilled.
27. If the conditional nature of the option means that the claimant does not have an interest in the property while the condition remains unfulfilled, then this is said to leave a lacuna. What obligations are owed by the vendor in relation to the claimant's option while the condition remains unsatisfied? To address this, it is said that the third condition in special condition 17 gives what is, in effect, a right of pre-emption during the period while the option remains conditional. By virtue of that provision, the vendor is said to be under an obligation to offer to sell the option land to the claimant before he can sell it to anyone else.
28. Mr Gilchrist submits that subparagraph (iii) confirms the conditional nature of the option granted. Such a provision would be unnecessary, he says, had the option come into existence immediately. He submits that the argument that the option only came into existence when the conditions were satisfied does not mean that the defendant and Natalie Couch took free of the option when they purchased the option land from Cobry in January 1989. Prior to this transaction, he says that the company must necessarily have offered the option land for sale and, therefore, the third condition (in subparagraph (iii)) was satisfied, and the option was no longer conditional. Upon first registration of title, the defendant and Natalie Couch took the property subject to the claimant's option, as evidenced by the entry in the charges register.
29. Alternatively, Mr Gilchrist would rely upon the existence of an overriding interest attributable to, and derived from, the claimant's actual occupation of the option land: see section 70 (1)(g) of the Land Registration Act 1925, which then applied to the situation.
30. Mr Gilchrist developed these submissions in the course of his argument. He submitted that the real question, in so far as concerns the application of the rule against perpetuities to clause 17 of the agreement in the events which have happened, is whether the perpetuity period began running when the right was first conferred by the 1984 agreement, or when the right to exercise the rights conferred by clause 17 first became exercisable by the seller, Cobry, first offering the two plots for sale.
31. Mr Gilchrist submitted that, on a true analysis, the rights conferred by clause 17 fell into two parts. The rights conferred by subclauses (i) and (ii) were dependent upon events outside the control of the grantor and seller, namely whether or not planning permission was obtained, or was refused. The right conferred by subclause (iii), however, was solely dependent on the vendor's volition and, therefore, conferred a right in the nature, not of an option, but of a right of pre-emption.
32. Mr Gilchrist advanced alternative approaches to the construction of clause 17. The first was that the provisions of clauses 17 (i) and (ii) were of a truly conditional nature, and the fact that clause 17 (iii) had all the characteristics of a right of pre-emption meant that it would be wrong, if one was characterising clause 17 as a single whole, to characterise it as an option within, and for the purposes of, section 9 (2) of the 1964 Act.
33. Alternatively, one should approach clause 17 as though it created two, quite separate, rights. The first was an option created by clauses 17 (i) and (ii); and the second was a right of pre-emption created by clause 17 (iii). He submitted that, if that analysis were correct, then different perpetuity periods would apply to each. He relied upon the decision of the Court of Appeal in Pritchard v Briggs [1980] Ch 338. He cited that case as authority for the proposition that a right of pre-emption does not create an interest in property. In that case, a conveyance of land in 1944 had conferred a right of first refusal to purchase retained lands during the lives of the parties to the conveyance. Subsequently, the grantor had created a lease of the retained lands containing an option to purchase after the deaths of the grantors. Both the right of pre-emption and the later option had been registered. There was then a conveyance in purported exercise of the right of pre-emption, and a subsequent purported exercise of the option. The issue was whether the right of pre-emption created an interest in land, and whether it took precedence over the option to purchase.
34. There was a difference of view in the Court of Appeal, although all three members of the court were unanimous in allowing an appeal from Mr Justice Walton's decision, and in holding that the grant of a right of pre-emption conferred on the grantee no right to call for a conveyance of the land unless the grantor chose to fulfil the conditions on which the right could be exercised. The difference between the majority and the minority was this: Lord Justices Templeman and Stephenson took the view that if the grantor chose to fulfil the conditions on which the grantee could exercise his right of pre-emption, then the grantee had a right to call for a conveyance and thus had an interest in land. In that event, a registered right of pre-emption would be binding on a successor in title of the grantor.
35. By contrast, Lord Justice Goff took the view that principle and logic alike required that the right of pre-emption must be, from the start, and throughout, either an interest in land capable of binding a successor in title or a mere personal contract which was not so capable. He took the view that a right of pre-emption was not, and never was, capable of being an interest in land; and that the property legislation of 1925 had, contrary to the view of Mr Justice Walton, proceeded on the mistaken assumption that it was.
36. Pritchard v Briggs was a case where the relevant instruments, and, in particular, the conveyance which granted the right of pre-emption, long pre-dated the Perpetuities and Accumulations Act 1964. No point was taken as to whether the right of pre-emption was void on the grounds of remoteness. Thus, the issue which falls for decision in this case did not arise in Pritchard v Briggs.
37. Mr Foster has pointed out that in the course of his judgment, at pages 395 letter G to 396 letter A, Lord Justice Goff did, indeed, avert in passing to section 9 (2) of the Perpetuities and Accumulations Act 1964. He commented that that indicated that the legislature regarded certain statutory rights of pre-emption as creating interests in land; but he said that it did not really add to the significance of the 1925 statutes. Reference to the report of counsel's submissions discloses that section 9 (2) was referred to in passing during the submissions of Mr Hugh Francis QC for the respondent to the appeal.
38. On the authority of that case, Mr Gilchrist submits that a right of pre-emption does not create an interest in property unless, and until, the right becomes capable of exercise. His submission was that since the right conferred, at least by clause 17 (iii), did not create an interest in land at the date of the contract, then section 9 (2) had no application, and there was no question of the right so conferred being void for perpetuity. He was prepared to accept that once the right of pre-emption mutated into an option, then the case would fall within section 9 (2); but, in that event, he submitted that the 21 year period would only commence with the date of such transmutation, and, thus, the right had, in the event, been exercised within the applicable 21 year period.
39. The thrust of Mr Gilchrist's submission was that if a condition upon which the exercise of a right to call for property is within the control of the grantee of the option, then it can fairly be said that the grantor has given up control of his estate. Therefore, in accordance with Sir George Jessel MR's observations in London and South West Railway Company v Gomm, the interest becomes an interest in property to which the rule against perpetuities applies. However, where the exercise of the option is contingent upon events outside the control of the grantee of the right, and he has no control over compliance with the conditions upon which such exercise is dependent, then the right is, effectively, to be treated as equivalent to a right of pre-emption, and no proprietary interest is created, with the consequence that the rule against perpetuities has no application. He gave, by way of an example, an option to purchase in the event that the grantor decided to emigrate. That, he said, would give rise to a right of pre-emption falling outside the scope of the rule against perpetuities.
40. His submissions, therefore, were, effectively, first, that the conditions, and contingent character, of the options created, even by subclauses 17 (i) and (ii), took the right outside the scope of characterisation as an option to which section 9 (2) applied. Secondly, if he was wrong about that, then he submitted that one should treat the rights conferred by, on the one hand, clause 17 (i) and (ii), and, on the other, the right conferred by clause 17(iii), separately; and that the latter, even if not the former, was to be treated as a right of pre-emption to which the rule against perpetuities had no application unless, and until, the right of pre-emption became exercisable.
41. In the course of his submissions, Mr Gilchrist took me to passages from the judgments in Pritchard v Briggs of Lord Justice Goff at pages 388 letter E to 390 letter C; of Lord Justice Templeman at page 418 between letters B and F; and of Lord Justice Stephenson at pages 422 letter F through to 423 letter B. Essentially, the thrust of his submission was:

a) that this was a right of pre-emption, and

b) that section 9 (2) only applies to options and not also to rights of pre-emption.

He submitted that section 9 (2) only became engaged when the contingency in clause 17 (iii) was satisfied, and the right of pre-emption became converted, by the seller's offer of sale, into an option.

42. Mr Gilchrist submitted that the disposition was the decision to sell. Any potential problem created by the terms of section 53 (1) of the Law of Property Act 1925, which provides that no interest in land can be created or disposed of except in writing, disappeared because the interest in land constituted by the option was created by operation of law.
43. In his reply, Mr Gilchrist emphasised that the court should look to the substance of the rights created under clause 17. He submitted that the difference in the nature of the rights created, on the one hand, by sub-clauses 17 (i) and (ii) and, on the other, by clause 17 (iii) made it impossible to categorise those rights as one. The court should treat the right created by clause 17 (iii) as, essentially, a right of pre-emption.
44. Mr Foster began his submissions by making the point that the rule against perpetuities restricts the time within which future interests in property created by a disposition must either vest or take effect. At common law, a future interest in property is said to be void for perpetuity from the date that the instrument which attempts to create it takes effect if there is any possibility that the interest may commence outside the perpetuity period. For such purposes, he says, the grant of an option creates an immediate contingent interest in property which does not become vested until the option is exercised. By section 9 (2) of the 1964 Act, in the case of a disposition consisting of the conferring of an option to acquire for valuable consideration any interest in land, the perpetuity period under the rule against perpetuities is 21 years.
45. Mr Foster submits that, in the present case, clause 17 places no limitation of time as to when the claimant may seek to exercise the option after it first became exercisable. However, it was saved from being void for perpetuity at the date of the agreement by reason of the "Wait and See" provisions contained in section 3 (3). Nevertheless, Mr Foster says, it became void for remoteness when it was not exercised within the perpetuity period of 21 years from the date of the agreement. He cites a passage from Megarry and Wade at paragraph 9-119, at the top of page 368:

"As against a successor in title of the person who gave the option, therefore, the option is valid for 21 years from the date of the instrument creating it (assuming that it was duly registered) and thereafter is void."

46. Mr Foster takes issue with Mr Gilchrist's contention that the option did not, at the date of the agreement, create an immediate, albeit contingent, interest in the plots, and that such an interest was not created until the option first became exercisable. He accuses the claimant of confusing the vesting of an interest with its creation. He says that options are frequently granted, and give rise to immediate interests in land, notwithstanding that their exercise may be subject to contingencies, for example, contingencies concerning planning permission.
47. Mr Foster addresses the observations of the deputy judge in Wilson v Truelove by pointing out that, whilst he made reference to a "conditional option", that would seem to have been a mistake on his part, and the reference should, more correctly and accurately, have been to a "conditional contract". Mr Foster says that the concept of a conditional contract is referred to in Maudsley: The Modern Law of Perpetuities, (1979) whereas a conditional option is not. He makes the point that in Wilson v Truelove, the option to repurchase was not exercised until the death of the second of the two purchasers, and yet it was held to have created an immediate interest in land.
48. For all those reasons, Mr Foster submits that when the claimant came to exercise the option on 4^th August 2009, it was already void for remoteness. In his oral submissions, Mr Foster said that the case really turned on the true construction of clause 17. He said that it constituted the grant of a single, immediate, right, in the nature of an option. In support of that submission, he placed reliance upon the language of the clause and, in particular, the use of the word "option" in the singular.
49. Mr Foster submitted that a right of pre-emption arose only where the control of the situation remained exclusively in the hands of the grantor of the right. He submitted that there could only be a right of pre-emption, as distinct from the grant of an option, if all of the circumstances upon which it might become exercisable were within the control of the grantor.
50. Those were the submissions in the case.
51. I begin by construing clause 17 of the 1984 agreement. It seems to me that clause 17 effectively granted two rights. In clause 17 (i) and (ii), it granted an option. In clause 17 (iii), it conferred a right of pre-emption. The distinguishing feature of the grant of a right of pre-emption, as distinct from the grant of an option, seems to me that the former, but not the latter, is entirely dependent upon the volition of the grantor in a way that the latter is not. That seems to me to be supported by observations in Pritchard v Briggs, first of Lord Justice Templeman at page 418 letter E, where Lord Justice Templeman likened the holder of a right of pre-emption to a beneficiary under a will of a testator who was still alive, where the holder of the right of pre-emption must hope for some future positive action by the grantor which would elevate his hope into an interest. It appears even more clearly from the judgment of Lord Justice Stephenson in that case at page 422 letter H, where he referred to "the volition of the grantor".
52. In the present case, the option would become exercisable in the event either of the vendors not obtaining planning permission within five years from the date of completion, or such an application being refused without an appeal being lodged and succeeding. Those events are entirely outside the control of the grantor of the right. As such, in my judgment, they confer an option. However, clause 17 (iii) is different in its character. Whether or not it is exercisable by the purchaser depends entirely upon the vendor offering the relevant land for sale. That is entirely within the control of the grantor of the right. The right cannot become exercisable independently of his volition. It seems to me that that creates a right in the nature of a right of pre-emption.
53. I see no difficulty in regarding the same clause in the agreement as giving rise to rights of a different nature upon a proper analysis of their character in law. However, it seems to me that the matter does not end there. One then has to consider, even if one treats the right as creating a right of pre-emption, what is the perpetuity period that applies to it. It is Mr Gilchrist's submission that there is no applicable perpetuity period at all until the right becomes exercisable, and then, and only then, does the perpetuity period begin to run.
54. I would not accept that submission. I take that view, essentially, for two reasons, both of which are founded upon my interpretation of section 9 (2) of the 1964 Act. First, it seems to me that where section 9 (2) refers to "the conferring of an option to acquire…any interest in land", the draftsman has in mind, not only the conferring of an option in the strict sense, but also the creation of a right of pre-emption. In other words, he is treating a right of pre-emption as a sub-class of an option. It seems to me that that construction follows from the proviso to section 9 (2). The proviso makes no sense at all unless the draftsman regarded a right of pre-emption as having fallen within the concept of an option to acquire an interest in land for the purposes of subsection 9 (2). In other words, it seems to me that the draftsman is treating a right of pre-emption as a species of option, and saying that the perpetuity period created by section 9 (2) applies to a right of pre-emption as a species of option.
55. If I am wrong in that, however, I reject Mr Gilchrist's alternative submission as to the way in which you apply section 9 (2) at the point when the clause 17 (iii) right is converted from a right of pre-emption into an option by the seller's offer to sell the land. It seems to me that when section 9 becomes engaged, so that the perpetuity period becomes 21 years, the only sensible way of measuring that period is from the date of the disposition which conferred the right of pre-emption in the first place. I cannot conceive that the draftsman had in mind a period of 21 years that would start to run from the (difficult to define) point in time at which, in the circumstances of the present case, the seller and grantor first made an offer to sell the land. It seems to me that the 1964 Act was seeking to achieve clarity in terms of the running of time for the applicable perpetuity period. Such clarity is to be achieved by having a clearly ascertainable, and definable, start date for that period. That start date, it seems to me, is the date of the disposition which conferred the right in question. It may be that it is only an offer for sale which will start the perpetuity period running; but I see no reason why the length of that perpetuity period should not be capable of being defined, and ascertained, by reference to the earlier date of the disposition which created the right in question. In this case, that date was the date of the 1984 agreement.
56. Therefore, for those two reasons, which, of course, operate independently, it seems to me that, in the present case, the perpetuity period began to run on the date of the agreement itself, 14^th December 1984. It, therefore, came to an end on 14^th December 2005. Since that predated the date of the letter purporting to exercise the "option", it seems to me that, at the date of exercise, the "option" was already void for perpetuity. It does seem to me that that is consistent with the statutory purpose underlying the relevant provisions of the 1964 Act.
57. So far as the various authorities are concerned, I have already made the point that no issue of perpetuities arose in Pritchard v Briggs. So far as Wilson v Truelove is concerned, no triggering event had occurred within 21 years of the relevant 1974 agreement. It was unnecessary, therefore, for the deputy judge precisely to identify when the applicable perpetuity period had begun to run. His decision was that the right to repurchase granted by the 1974 agreement had become void and of no effect by reason of section 9 (2) of the 1964 Act. He did not have to identify precisely when section 9 (2) had started to run.
58. I must confess that I also have difficulties with certain aspects of his judgment. In paragraph [10], he referred to "the reference to the right to repurchase being issued later". I confess that it seems to me that he may have misread the relevant clause (clause 3) of the 1974 agreement. What that clause in fact provided was that on the death of the survivor of the first two named purchasers, a third named purchaser should give to the Trueloves jointly, or in the event of either predeceasing, to the survivor of them, or in the event of both predeceasing, to Trueloves' "issue", the right to repurchase the property at the price of £20,000 with the benefit of vacant possession. I cannot see that there was any requirement to "issue" the right to repurchase. It seems to me the deputy judge has misread the relevant clause. The reference to "issue" was not being used in the sense of "issuing" a notice of repurchase, but in the sense of describing to whom the notice was to be given, namely, in the event of both of them predeceasing, to the Trueloves' "issue".
59. It also seems to me that there is force in Mr Foster's criticism of the deputy judge's reference to a "conditional option". In paragraph [8], he referred to "a conditional option, in respect of which the perpetuity period did not begin until the fulfilment of the condition in question: as to which see generally Maudsley's The Modern Law of Perpetuities, at page 188". Mr Foster is right to say that page 188 of Maudsley does not refer to "a conditional option" but to "a conditional contract". The writer is distinguishing between a conditional contract (that is to say, a contract which will become binding on the occurrence of a contingency, such as, to take a common example, a contract for the sale of land which is contingent on planning permission being obtained) and an option. It seems to me that the deputy judge's reliance upon Maudsley, in the sense in which he construed it, is misplaced.
60. A right of pre-emption is to be treated differently from an option, but that is because a right of pre-emption does not arise independently of the volition of the grantor of the right. A conditional contract is to be distinguished from an option in the sense that a conditional contract will automatically become binding on the occurrence of the contingency in question whereas, even if an option is contingent upon a certain event, it will not automatically become binding independently of the volition of the grantee. It seems to me that there are distinctions between a right of pre-emption, an option, and a conditional contract. The writer of Maudsley was addressing a conditional contract rather than a conditional option.
61. In my judgment, an option, provided that it can be triggered independently of the volition of the grantor, may, in addition to the volition of the grantee, be conditional upon external events and yet still remain an option.
62. Therefore, for the reasons I have given, I hold that the right purportedly exercised by the letter of 4^th August 2009 had become void for remoteness prior to that date; and the claim, therefore, fails.
(Discussions regarding costs followed)