Summary

By a pre-emption agreement between the parties the defendant did not acquire an equitable interest in land unless the claimant accepted a purchase offer by it. In the circumstances the cautions lodged by the defendant should be vacated.

Facts

Application by the claimant ('SSL') to vacate cautions registered on its land by the defendant ('Y&M'). SSL and Y&M entered into a project management agreement after which SSL provided Y&M with a "comfort letter" that gave first refusal rights to Y&M should SSL itself decide not to develop the land but to sell it in an undeveloped state. SSL decided to sell it in such a state and gave Y&M an exclusivity period to enable it to put together the financial backing needed to make an offer. Y&M was unable to make an offer and SSL agreed to exchange contracts with a third party. Y&M contended that the proposed exchange of contracts with the third party had triggered its rights under the comfort letter, such rights being not only contractual rights against SSL but also interests in the development of the land. Y&M sought to protect its interests by registering cautions at the Land Registry. SSL submitted that: (i) while Y&M might be commercially interested in the land insofar as contractual interests were concerned this did not make it "a person interested" in the land within s.54 Land Registration Act 1925; and (ii) any rights that Y&M had were contractual and Y&M's remedy was an action for damages.

Held

It was necessary to consider the precise terms of any pre-emption agreement or first refusal agreement that was in issue in any particular case, Bircham & Co v Worrell Holdings Ltd (2001) EWCA Civ 775 considered. Here the triggering event in the comfort letter was SSL attracting an offer for its interest in the land and being minded to accept it. The effect of that was not that SSL was obliged to offer to sell the land to Y&M but rather that SSL should notify Y&M of the triggering event leaving it to Y&M to match any offer. This particular type of pre-emption agreement was not one where Y&M could acquire an equitable interest in the land unless SSL accepted a purchase offer made by it. If SSL had acted in breach of contract then Y&M might have a claim for damages and not an interest in the land that it could protect by a caution. SSL was entitled to the relief sought and the cautions lodged by Y&M should be vacated.
Application granted.