Summary

A contract for the sale of land subject to a new lease was not void for uncertainty, despite the draft lease not having plans attached or a quantified service charge provision. The corrections that were required were clear and the court was able to make them.

Facts

The claimant (W) sought specific performance of a contract for the sale of property to sell its freehold interest in a property to the defendant (D). The contract of sale was subject to the grant by D of a lease back to W of the upper floors at a peppercorn rent. The draft lease attached to the contract referred to two plans, but did not attach copies of them. The sale was also subject to an existing lease of the ground floor to another company. The property was placed in an auction; an auction pack, including the plans, was available for inspection at the auctioneers' offices. However, it was not sold at auction; afterwards D signed the contract and delivered its deposit cheque to the auctioneers. It had not inspected the auction pack. Later, it discovered that the draft lease contained an unexpected and unusual service charge provision, by which W as tenant would be responsible for building maintenance and D as landlord would pay service charges, but with its percentage share left undefined. Consequently D stopped its deposit cheque. Meanwhile W noticed that certain parts of the property, intended to be demised under the lease, had not been. They renegotiated terms, and agreement in principle was reached and D paid a new deposit. It was common ground in the instant proceedings that that agreement was unenforceable by operation of the Law of Property (Miscellaneous Provisions) Act 1989 s.2. Completion did not take place on the contractual completion date. D served a notice to complete which W said was invalid because D was not ready, willing and able to complete, as there was no agreed form of lease. Each party made further moves to encourage the other to complete, but not all terms were agreed. D then purported to rescind the contract and sought recovery of its deposit. W sent D a notice to complete, with which D did not comply, and W issued proceedings. D submitted that (1) the absence of the plans rendered the contract void for uncertainty; (2) the absence of a percentage in the service charge provision rendered the contract void for uncertainty; (3) its notice to complete and subsequent rescission of the contract were valid.

Held

(1) The wording in the draft lease was not clear enough by itself to identify the demised premises with sufficient certainty, so it was appropriate to construe the contract as if the draft lease attached to it had included the missing plans. There was a clear mistake on the face of the instrument, in that the plans had been omitted in error. Moreover, it was clear what correction ought to have been made in order to correct the mistake: the plans had to be taken to have been attached, East v Pantiles (Plant Hire) (1982) 2 EGLR 111 CA (Civ Div) applied. A reasonable person, having all the background knowledge available to the parties, would have understood the contract to have been referring to the plans contained in the auction pack, Chartbrook Ltd v Persimmon Homes Ltd (2009) UKHL 38, (2009) 1 AC 1101 applied. Moreover, any reasonable person, knowing what D knew about property purchases, would have known that the plans were in all probability to be found in the available auction pack. Accordingly, the definition of the premises demised in the draft lease attached to the contract was sufficiently certain, once the parol evidence of the plans, contained in the auction pack, was admitted to supplement the words in the definition. (2) The situations in which a court would be able to fill in a contractual blank were limited, but the facts of the instant case were unusual. The court was able to say, with reasonable certainty, on the basis of the remaining terms of the contract and the surrounding factual matrix, including the auction pack and the commercial realities of the transaction, that the required correction was clear, Hackney LBC v Thompson (2001) L & TR 7 CA (Civ Div) and Liverpool City Council v Walton Group Plc (2002) 1 EGLR 149 Ch D applied. The draft lease ought, as a matter of pure and orthodox principles, to be construed as providing for D's share to be 36 per cent of the service charges for the property. The other possibilities put forward by the parties would not have made sense to a reasonable person with the parties' knowledge, Chartbrook and Pantiles applied. Therefore the contract was not void for uncertainty. (3) D's notice to complete referred to the original contract and, therefore, required W to complete the lease on the terms appended to the contract; it did not, on its true construction, require completion of the lease on any amended terms. From the correspondence it seemed that D had intended to make clear to W that it would only complete on amended terms. In those circumstances, it could not assert that it was ready, able and willing to complete the contract on the terms of the lease attached to the contract, Quadrangle Development and Construction Co v Jenner (1974) 1 WLR 68 CA (Civ Div) applied. Thus, it was not entitled to rescind the contract when it purported to do so. W's subsequent notice was valid and D had failed to comply with it.

Judgment for claimant