Best Beat Ltd v Mourant & Co Trustees Ltd & Anor [2008] EWHC 3156 (Ch)

[2008] EWHC 3156 (Ch)

Case No HC08C03284

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 18 th December 2008

Before

THE HON MR JUSTICE PATTEN

Between

Best Beat Ltd (IN LIQUIDATION)Claimant

Mourant & Co Trustees Ltd (1) MOURANT PROPERTY Trustees Ltd (2)Defendants

James Ayliffe QC (instructed by Howes Percival LLP) for Claimant

John Male QC (instructed by Nabarro LLP) for Defendants

Hearing Hearing date: 10 th December 2008

Judgment

[1]In this action the Claimant seeks specific performance of a contract for the sale to the Defendants of some freehold land and premises at 301-307 London Road, Camberley, Surrey which is registered at HM Land Registry under Title Number SY542612 (“the Property”). This is the hearing of the Claimant’s Part 24 application for summary judgment. The claim form includes an additional or alternative claim for damages and for the forfeiture of the Defendants’ deposit but, on this application, I am only concerned with the claim for specific performance.

[2]The Defendants resist the application on the ground that the contract has come to an end in accordance with the provisions of clause 2.6 of an agreement dated 30th May 2008 under which the original contract for sale was varied by the insertion of provisions designed to allow an extended period of completion in order that the Claimant might deal with the claims of a Mr Parminder Singh Bains (“Mr Bains”) that he had been granted a lease of the Property in 2004. The claim for specific performance, therefore, turns on the construction and application of these provisions to the events which have happened.

[3]There are, as yet, no pleadings in the action beyond the claim form itself but the Defendants have issued their own Part 24 application seeking the final determination of the construction of clause 2.6 and the issue of their own liability. This is resisted by the Claimant on the basis that there may be other factual issues relating to the reasonableness of the Defendants’ conduct which make it inappropriate to decide anything but whether the claim to specific performance succeeds on the construction of clause 2.6. The basis of this argument will become clearer when I come later in this judgment to the terms of the variation agreement and the events leading up to the postponed completion date. But in order to avoid raising unnecessary procedural arguments in advance of my decision on the operation of clause 2.6, the parties have sensibly agreed that I should first consider and decide the Claimant’s Part 24 application and then allow the Defendants an opportunity to consider whether or not to pursue their own application in the event that I decide to dismiss the Claimant’s application.

The Contracts

[4]The background to the 2007 contract and its subsequent variation is not really contentious. The Claimant company was incorporated in October 2001 as a property investment company. In April 2002 it acquired the Property with a loan from National Westminster Bank plc with a view to redeveloping the site. At the time, the Property was tenanted and steps were taken to obtain vacant possession. One of the tenants (a Mr Russell) became entitled to statutory compensation in the sum of £36,500 (presumably under Part II of the Landlord and Tenant Act 1954) on vacating the Property, which the Claimant failed to pay. He presented a winding-up petition which resulted in the company being wound up on 16th August 2006.

[5]The only significant asset available to the liquidator for the benefit of the creditors was the Property. It was then valued at some £1.5 million more than the amount secured by the charge in favour of National Westminster Bank which therefore promised a significant return to creditors. The liquidator instructed Messrs Howes Percival LLP to assist in disposing of it. In April 2007 he was contacted by Mr Bains who claimed to have a lease of the Property. Mr Bains had lodged a unilateral notice at HM Land Registry to protect this alleged interest which clearly needed to be removed before the Property could be sold.

[6]In the event, the liquidator was able to secure the release of the notice following Mr Bains’ failure to produce any evidence to support his claim to a lease and on 6th December 2007 contracts were exchanged with the Defendants in the sum of £1.8 million for the sale to them of the Property. The contractual completion date was 20th December 2007 and a deposit of £180,000 was paid on exchange of contracts. The contract provided for vacant possession to be given on completion and incorporated the Standard Commercial Property Conditions (First Edition). Before completion could take place Mr Bains produced a copy of a lease of the Property which he claimed to have been granted to him by the Claimant company in April 2004. The document is in evidence but I have not been invited to make any findings as to the strength of the claim. The result of his intervention was that the Defendants refused to complete on 20th December on the ground that the Claimant could not give vacant possession. The liquidator originally sought to deal with the problem of the lease by disclaiming it as onerous property under section 178 of the Insolvency Act 1986 but the Defendants were not persuaded that the lease fell into this category. Therefore, on 9th May 2008 he issued an application in the winding-up seeking declarations as to whether Mr Bains did have a valid interest in the Property.

[7]The parties obviously recognised that this problem would take time to resolve. The Defendants could, of course, have served a notice to complete under the original contract but, in the event, they were willing to extend the timetable for completion in order to permit the Claimant an opportunity to clear Mr Bains’ claim from the title either by obtaining a declaration from the Court that he had no such interest or by obtaining from him a release of any interest which he might have.

[8]The machinery agreed was contained in the variation agreement which the parties executed on 30th May 2008. It states in clause 1 that it is supplemental to the 2007 contract and then, in clause 1.2, sets out a series of defined terms. These include: “Buyer’s Notice” means a written notice served by the Buyer on the Seller requiring the parties to complete 14 days following service; …… “Completion Date” means the date on which the Buyer completes the purchase of the Property from the Seller in accordance with clause 2 of this agreement; “Declaration” means a declaration from a court of competent jurisdiction (pursuant to an application under section 236 Insolvency Act 1986 or otherwise) that the Tenant has no proprietary interest in the Property nor the right to claim any such interest howsoever arising; “Extended Longstop Date” means 2 December 2008; May 2009; “Longstop Date” means 2 June 2008; November 2008; ……… “Release” means a written release executed by the Tenant in a form approved by the Buyer acting reasonably confirming that the Tenant does not have nor will claim at any time for any reason any proprietary interest in respect of the Property howsoever arising; “Seller’s Notice” means a written notice served by the Seller on the Buyer requiring the parties to complete 14 days following service; ……..” means a written notice served by the Buyer on the Seller requiring the parties to complete 14 days following service; means the date on which the Buyer completes the purchase of the Property from the Seller in accordance with clause 2 of this agreement; means a declaration from a court of competent jurisdiction (pursuant to an application under section 236 Insolvency Act 1986 or otherwise) that the Tenant has no proprietary interest in the Property nor the right to claim any such interest howsoever arising; means 2 December 2008; May 2009; means 2 June 2008; November 2008; means a written release executed by the Tenant in a form approved by the Buyer acting reasonably confirming that the Tenant does not have nor will claim at any time for any reason any proprietary interest in respect of the Property howsoever arising; means a written notice served by the Seller on the Buyer requiring the parties to complete 14 days following service;

[9]Clause 2 (so far as material) then provides as follows: “The Seller and the Buyer agree that the Original Contract is varied by the following provisions:2.1 The Completion Date will be a date nominated by the Buyer or Seller in accordance with the terms set out in this clause 2.

2.2 The Buyer may serve the Buyer’s Notice at any time on or prior to 12pm on 19th May 20 October 2008, and if the Buyer does serve the Buyer’s Notice, then the Completion Date will be 14 days after service of the Buyer’s Notice. The Buyer’s Notice will not constitute notice to complete in accordance with clause 6.8 of the Standard Commercial Property Conditions (First Edition) and will not render time of the essence of the Original Contract.

2.3 The Seller will use all reasonable endeavours to procure either:2.3.1 the Declaration; and/or

2.3.2 the Release but for the avoidance of doubt it is at the option of the Seller to elect whether to seek either or both the Declaration and the Release and the Seller will not be in breach of its obligation to use reasonable endeavours if it elects to pursue one only of the Declaration or the Release

2.4 For the avoidance of doubt, if the Buyer serves the Buyer’s Notice in accordance with clause 2.2, the Seller will be released from its obligations in clause 2.3 above save that the Seller must use all reasonable endeavours to assist the Buyer in establishing that the Tenant has no proprietary interest in the Property. Any steps taken by the Seller to assist the Buyer at the Buyer’s request will be at the cost of the Buyer.

2.5 The Seller will keep the Buyer fully informed of the Seller’s endeavours to procure the Declaration and/or the Release and the Seller will respond within a reasonable time to any reasonable request for information in relation to the Declaration and/or the Release made by or on behalf of the Buyer.

2.6 If:2.6.1 the Seller has not obtained the Declaration and/or the Release on or before the Longstop Date; and/or

2.6.2 the Seller is otherwise unable to sell the Property with vacant possession on or before the Longstop Date; and/or

2.6.3 the Buyer is unable prior to completion to procure Clear Searches (having used its reasonable endeavours to do so); and the Buyer has not served the Buyer’s Notice, the Seller and the Buyer will be released at 4pm on the Longstop Date from all obligations and liabilities in the Original Contract and the Buyer will be entitled to a full refund from the Seller in respect of any deposit paid in accordance with clause 3 of the Original Contract together with all interest accrued.

2.7 If, prior to the Longstop Date, the Seller has obtained the Declaration or the Release or both and the Seller is able to complete the sale of the Property with vacant possession and the Buyer has procured Clear Searches (the Buyer using reasonable endeavours to procure Clear Searches), the Seller may serve the Seller’s Notice on the Buyer. The Seller’s Notice may be served on the Buyer at any time on or before 12pm on 19 May 20 October 2008, and if the Seller does serve the Seller’s Notice, then the Completion Date will be 14 days after service of the Seller’s Notice. The Seller’s Notice will not constitute a notice to complete for the purposes of clause 6.8 of the Standard Commercial Property Conditions (First Edition) and will not render time of the essence of the Original Contract.

2.8 Where the Buyer has not been able to procure Clear Searches pursuant to clauses 2.6.3 or 2.7 above, the Seller will have 28 days to procure at its own cost that any entries which the Buyer reasonably considers adverse are removed or remedied to the satisfaction of the Buyer (acting reasonably). For the avoidance of doubt, if such period of 28 days extends beyond the Longstop Date or the Extended Longstop Date (if the Buyer has extended its right in accordance with clause 2.10) then the Longstop Date or the Extended Longstop Date (as the case may be) will be deemed to be revised to the date on which the 28 days expire.

2.9 If neither the Buyer’s Notice or the Seller’s Notice have been served in accordance with clauses 2.2 or 2.7 above by 12pm on 19 May 20 October 2008 and the Buyer has not served the Buyer’s Option to Extend Notice (pursuant to clause

2.10 ), the Original Contract will cease and determine on the Longstop Date and the Buyer will be entitled to a full refund from the Seller in respect of any deposit paid in accordance with clause 3 of the Original Contract, together with all interest accrued.” but for the avoidance of doubt it is at the option of the Seller to elect whether to seek either or both the Declaration and the Release and the Seller will not be in breach of its obligation to use reasonable endeavours if it elects to pursue one only of the Declaration or the Release and the Buyer has not served the Buyer’s Notice, the Seller and the Buyer will be released at 4pm on the Longstop Date from all obligations and liabilities in the Original Contract and the Buyer will be entitled to a full refund from the Seller in respect of any deposit paid in accordance with clause 3 of the Original Contract together with all interest accrued.

[10]As originally drafted and typed, the dates in the definitions of “Extended Longstop Date” and “Longstop Date” were 2nd December 2008 and 2nd June 2008 respectively and in clause 2.2 and 2.7 the last day for the service of the Buyer’s and the Seller’s Notices was 19th May 2008. Prior to execution, however, these dates were amended in manuscript to 2nd May 2009, 2nd November 2008 and 20th October 2008 respectively. The evidence of the Defendants (which is not disputed by the Claimant) is that, due to delays in getting the variation agreement signed in Jersey, it was subsequently agreed that the timetable should be put back by several months. Changes made to the two Longstop Dates were simply to alter the existing dates to the corresponding dates in May 2009 and November 2008 (i.e. five calendar months later) but the final date for service of the notices was changed to 20th rather than 19th October 2008. There is no explanation in the evidence as to why the date was changed from 19th to 20th but, in the event, this has had a significant effect on the way in which the agreement has operated.

[11]By early October 2008 it had become apparent to the Claimant’s solicitors, Howes Percival, that they were unlikely to be able to obtain a declaration from the Court on the liquidator’s application before the Longstop Date of 2nd November. Mr Gordon of Howes Percival says in his witness statement that this was of obvious concern to the liquidator because it would lead to the contract lapsing under clause 2.6 of the variation agreement. By then, the decline in property values meant that the Defendants were unlikely to be willing to extend the time periods in the agreement and would, in all probability, be seeking to find ways out of a contract to buy at a price which was, by then, substantially above market value.

[12]In these circumstances, the Claimant was left with no real alternative but to obtain a release in accordance with the contract of Mr Bains’ claim to an interest in the Property. Negotiations took place with Mr Bains and an agreement in principle was reached with him by 16th October under which he would release his claim in return for the payment of £90,000. The liquidator could, of course, only fund this payment out of the proceeds of sale and Mr Bains was naturally unwilling to execute a release of his rights except upon payment of the money. This meant that the release would only become available on completion of the contract.

[13]On 16th October Howes Percival informed the Defendants’ solicitors, Nabarro LLP (“Nabarros”), that Mr Bains was prepared to grant the release and to facilitate the removal of a further unilateral notice which he had registered against the title to the Property. Howes Percival sent to Nabarros a draft of a settlement agreement between the liquidator of the Claimant company and Mr Bains under which Mr Bains agreed to sign any documentation necessary to ensure that vacant possession of the Property would be given to the Defendants on completion, including (see clause 5) a document confirming that he had no further interest in the Property.

[14]On the basis of this proposed agreement, Howes Percival indicated to Nabarros on 17th October that they proposed to amend the completion date to 31st October and to serve the Claimant’s Seller’s Notice for that date.

[15]Nabarros expressed some reservations about the draft settlement agreement and they were, therefore, invited to provide the wording of the document which they required Mr Bains to sign. This ultimately resulted in the production of a tripartite deed of release and not merely an agreement (like the settlement agreement) between Mr Bains and the Claimant that he should provide such a release on completion to the Defendants. Howes Percival understood that Mr Bains was prepared to sign almost anything provided that he was paid the sum agreed and his legal costs. The Seller’s Notice was therefore served by fax on 17th October at 4.50 pm. Earlier that afternoon Nabarros had sent an e-mail to Howes Percival asking for confirmation that the earliest date for completion on a working day would be Monday 3rd November. This was not in fact correct. The period of 14 days after service of the Seller’s Notice prescribed by clause 2.7 of the variation agreement would have expired on Friday 31st October but, because the Notice was not served until after 4.30 pm on 17th October, it fell to be treated as served on Monday 20th October as the next working day by virtue of condition 1.3.5 of the Standard Commercial Property Conditions incorporated into the original contract of sale. This meant that the 14 days expired on Monday 3rd November which was, of course, one day after the Longstop Date of Sunday 2nd November.

[16]One of the points made by Nabarros in their e-mail of 17th October was that the release to be executed by Mr Bains was expressed to be conditional on payment to him of the £90,000 out of cleared funds following completion. This, they said, meant that there would be no unconditional release as at completion which was not acceptable. This was repeated in further e-mails on 20th October after Nabarros had submitted a draft of the wording which they required to be included in the deed of release.

[17]On the same day Howes Percival forwarded the draft release to Mr Bains’ solicitors, Messrs Aston Bond, for their approval. Clause 2.1 of the draft now provided for Mr Bains to release his claim to the Property “with immediate effect”. This led to the obvious question from Aston Bond as to whether Mr Bains was being asked to execute the release immediately or whether the document was to be executed but then held to Aston Bond’s order pending completion of the sale. Howes Percival asked for Mr Bains to execute it and then for it to be held by them to Aston Bond’s order pending completion.

[18]On 22nd October Nabarros and Howes Percival exchanged e-mails about the completion date. It was agreed that this would be 3rd November. The deed of release was then executed by Mr Bains and sent to Howes Percival by Aston Bond to be held to their order. But discussions continued between Nabarros and Howes Percival about the terms of the release and further amendments were proposed. Nabarros wanted Mr Bains to confirm that he did not have and never had had any claim to the Property but there was some understandable reluctance on the part of Aston Bond to recommend that their client should agree that he had never had the claim or interest which he was to be asked to release.

[19]On 24th October Howes Percival sent to Nabarros a signed copy of Mr Bains’ application to withdraw the unilateral notice from the registered title. A final draft version of the deed of release produced by Nabarros retained the “immediate effect” and “has never held” wording but Howes Percival were content with this if Mr Bains was prepared to sign. By now they had begun to express concerns in their e-mails to Aston Bond about the tactics of the Defendants which were (they said) to try to engineer an escape route from the contract. Aston Bond were, therefore, advised to try to live with the draft and were asked to take steps to withdraw the unilateral notice before the 3rd November completion date.

[20]On Wednesday 29th October they responded to Howes Percival. They wanted certain amendments to the deed of release to remove the “never has had” wording and to be able to release the form UN2 (application to withdraw unilateral notice) to Howes Percival conditional upon receiving the £90,000 on completion. The proposed amendment was forwarded to Nabarros on 29th October but rejected. Nabarros insisted upon retaining their wording.

[21]The solution to this impasse proposed by Howes Percival and accepted by Aston Bond was that the tripartite deed of release should be executed in the form stipulated by Nabarros but that the settlement agreement (which was to be executed only between the Claimant and Mr Bains) would have an additional clause 16 which states that:

“The Respondent has or will sign an Agreement and Deed of Release (“the Agreement”) prepared by Nabarros and made between Mr Bramston (1) Mr Bains (2) and the Purchaser (3), a copy of which is annexed. The Agreement states that the Respondent “has never had” any right, claim, interest, lien, encumbrance or any other interest whether past present or future and whether proprietary or personal in nature howsoever arising in respect of the Premises. Between the Applicant and the Respondent, the inclusion of the words “has never had” in the Agreement is agreed only to allow completion of the sale to the Purchaser and nothing in the Deed of Release shall prejudice Mr Bains in relation to his claims concerning the Premises.”

[22]Nabarros were not shown or asked to consent to the addition of this clause and Howes Percival were of the view at the time that they were unlikely to have approved it. But, with the addition of a suitable indemnity, Mr Bains was prepared to proceed in this way. Therefore, on Friday 31st October the unilateral notice was removed from the registered title and Mr Bains and the liquidator exchanged the settlement agreement and signed their copies of the deed of release. On the same day the executed settlement agreement was forwarded to Nabarros with a copy of the deed of release signed by the liquidator. Aston Bond also sent to Howes Percival the deed of release signed by Mr Bains but undated which was to be held to their order pending completion.

[23]On 3rd November Nabarros asked Howes Percival for confirmation that the deed of release had been executed by both the liquidator and Mr Bains. Confirmation of this was given by Howes Percival at 10.56 on the morning of 3rd November and copies of the documents in a PDF format were then e-mailed to Nabarros together with a request to complete. Nabarros were also told that the deed of release executed by Mr Bains was undated because it was held to his solicitors’ order pending completion. Their response to this was that, in those circumstances, the Claimant had failed to obtain the deed of release on or before the Longstop Date of 2nd November and, accordingly, the Defendants were released from any further obligations to complete under clause 2.6 of the variation agreement.

[24]In an attempt to forestall reliance on clause 2.6, the deed of release executed by Mr Bains was then released to Nabarros unconditionally at 4.58 pm on 3rd November but this was, of course, too late for it to be treated as delivered on that day.

Clause 2.6

[25]The argument for the Defendants can be expressed very shortly. They rely on the express terms of clause 2.6.1 which require the Seller to obtain the release (as defined) on or before the Longstop Date of 2nd November. For the deed of release signed by Mr Bains to constitute a release “for the purposes of clause 2.6.1” it has to have been executed by him in a form approved by the Defendants. The second half of this condition is satisfied but the Defendants contend that the deed of release was not, in the circumstances, executed by Mr Bains until it was delivered to Nabarros unconditionally on the afternoon of 3rd November. By then the Longstop Date had passed. Mr Male submitted that in order for a deed to be executed it has to be signed, witnessed and delivered as the act and deed of the party expressed to be bound by it. It was for this very reason that the document was held to the order of Mr Bains’ solicitors in order to prevent it taking effect before completion. None of this was seriously disputed by Mr Ayliffe nor could it be. It seems to me that the definition of a “release” in the variation agreement clearly requires there to be unconditional delivery of the appropriate deed and the reference in clause 2.6.1 to the seller having “obtained” the release on or before the Longstop Date does not alter this. To obtain the release the seller must have procured its execution by that date.

[26]If completion had taken place on 31st October none of these difficulties would have occurred. The deed of release would have become unconditional on that date upon completion and would therefore have precluded reliance by the Defendants on clause 2.6. Had they refused to complete on that date and so prolonged the exercise beyond the Longstop Date it would not, I think, have been open to them (without more) then to seek to rely on clause 2.6 as entitling them to withdraw from the transaction. The satisfaction of the conditions assumes compliance by both sides with their contractual obligations. But, by opting for a completion date of 3rd November, the Longstop Date would, on a literal construction of the contract, have passed before completion could take place. On the Defendants’ argument, this meant that Mr Bains would have had to have executed the deed of release unconditionally before 4.00 pm on 2nd November for the effects of clause 2.6.1 to be avoided.

[27]The Defendants’ objections to the claim do not, however, end there. Although not foreshadowed in Counsel’s skeleton argument, Mr Male further submitted that the Seller’s Notice served on 17th October was invalid for essentially the same reasons. Clause 2.7 allows the seller to serve the Seller’s Notice “if, prior to the Longstop Date, the Seller has obtained … the Release ...”. The clause goes on to state that the Seller’s Notice may be served at any time on or before 12 pm on 20th October. In this case the notice was, of course, served before that deadline but not before the seller had obtained an executed release from Mr Bains. The Defendants say that the notice served on 17th October was therefore invalid and of no effect.

[28]Mr Ayliffe, for the Claimant, contends that by 31st October all of the conditions specified in the variation agreement had been satisfied. The requirement in clause 2.6.1 for the Claimant to have obtained a release on or before the Longstop Date is, he says, not to be construed as requiring the delivery of an unconditional release before completion. It was enough that Mr Bains should have committed himself to the release on completion. This was achieved by the settlement agreement which, in terms, required him to execute on completion a detailed release in a form approved by the Defendants and by the signing of the deed of release for that purpose. Mr Bains was therefore committed to granting the release, assuming that completion took place. The intention of the parties was to make the Longstop Date the last possible date for completion and the provisions of clauses 2.6 and 2.7 should be construed in this way.

[29]Even if right, this would not, of course, meet the Defendants’ alternative argument based upon the conditions necessary for the service of a valid Seller’s Notice. The notice was served on 17th October, some two weeks before the settlement agreement and deed of release were signed by Mr Bains. But Mr Ayliffe submits that, upon a proper construction of clause 2.7, the conditions specified in the opening words of the clause should also be treated as required to be satisfied not upon the service of the Notice but rather upon completion.

[30]In support of this argument, he referred to what he says is the tension between the first sentence of clause 2.7 and the requirement which follows for the Notice to be served “at any time” on or before 12 pm on 20th October with completion to follow 14 days after service. If the Longstop Date conditions under clause 2.7 are to be satisfied before the service of the Seller’s Notice (which has to take place on or before 20th October) then the reference to the conditions being satisfied by the Longstop Date in clauses 2.7 and 2.6.1 become, he submits, otiose. He argues that the conditions in the first sentence of clause 2.7 are directed to the position on completion. One of them in terms refers to the seller being able to complete the sale of the Property with vacant possession. Their satisfaction or not and consequently the validity of the Seller’s Notice falls to be judged by the circumstances on completion and not at the date of service of the notice.

[31]This construction of clause 2.7 obviously depends on being able to elide the Longstop Date with the completion date which would follow from the service of a Seller’s Notice on the last possible date for service: i.e. on 20th October. If the Longstop Date can occur before completion in accordance with a notice served on 20th October then the argument that reliance on the conditions requires to be judged at completion becomes more difficult. It would follow that even if it is still possible to read the first sentence of clause 2.7 as being tested at completion this will not prevent the operation of clause 2.6.1 on the Longstop Date. The release will need to be executed by then even if satisfaction of the other clause 2.7 conditions can wait until completion. On the facts of this case that is potentially fatal to the claim if the “Release” requires the execution of the deed of release rather than merely the settlement agreement.

[32]To overcome this difficulty Mr Ayliffe therefore submits that the provisions of clause 2.6 and 2.7 should be read so as to make the Longstop Date coincide with the date for completion in accordance with a Seller’s Notice served on the last possible date: i.e. 20th October. Read in this way, the Longstop Date can be the same but not earlier than the last possible date of completion under a Seller’s Notice and the opening conditions of clause 2.7 can all be given effect to on the same date.

[33]This approach to construction is said to give effect to the obvious commercial purpose of the variation agreement: i.e. to allow the Claimant to sort out the problems created by Mr Bains and to give a clear title and vacant possession on completion. The requirement to provide the release; or to give vacant possession and to procure clear searches of the title before completion is said to be inconsistent in terms with that objective.

[34]The modern approach to construction is, of course, to pay less attention to the actual language and grammar of a document if the admissible evidence supports some alternative meaning which the parties, using the terms in question, can reasonably be taken to have intended them to bear: see Investors Compensation Scheme Ltd v West Bromwich Building Society

[1998] 1 WLR 896

[35]But, as Lord Hoffmann recognised in that case, the starting point is to assume that the parties to an agreement and their legal advisers do not ordinarily make linguistic mistakes and that there must therefore be something in either the language or the background to the agreement to suggest that something has gone wrong.

[36]Although (as Mr Ayliffe did) it is possible to construct a symmetrical model of the agreement in which the fulfilment of all the pre-conditions to completion come to be fulfilled on the completion date, there is, I think, a danger in attributing too easily to the parties a different intention from the one expressed in the language used in the interests of arriving at what (with the benefit of hindsight) may appear to be a commercially fair solution.

[37]In this case, there is really little or no evidence as to the admissible background beyond what I have referred to earlier in terms of the difficulties caused by Mr Bains in relation to the completion of the original contract. The variation agreement was therefore a compromise between the rights of the purchasers to demand an early completion date and the wish of the sellers to have time to resolve the problems they faced.

[38]Under the terms of the variation agreement as originally drafted, the Seller’s Notice had to be served by 19th May 2008 and the Longstop Date was 2nd June 2008. This was in fact 14 days after service of a Seller’s Notice on 19th May so that, on this basis, the Longstop Date could not be earlier than the latest date for completion. But when the dates were changed before exchange of the agreement the Longstop Date became 2nd November 2008 and the last date for service of the Seller’s Notice 20th October. The change from 19th May to 20th October created the disparity between the Longstop Date and the last date for completion which became 3rd November. It could have been avoided by making the last date for service of a notice Friday 17th October but, for the Longstop Date and the last possible completion date to coincide, the last date for service of the Notice would have had to be 19th October which was a Sunday. It is therefore reasonable to assume that this was avoided for obvious reasons and the next working day chosen even though it could produce the difficulties encountered in this case. There is no evidence as to whether this was apparent to the parties at the time but, equally, there is nothing to indicate that the choice of 20th October was in any sense a mistake.

[39]I am not therefore satisfied that on a Part 24 application I can safely conclude that I should ignore the express terms of the variation agreement and opt for the construction put forward by Mr Ayliffe. Radical surgery is required to achieve that. The terms of clause 2.6 are, I think, clear in their meaning and required the release to be executed by 2nd November 2008. It was not. Although the arguments on clause 2.7 are perhaps less clear, they do not assist the Claimant unless they result in reading the completion date under a notice served on 20th October as 2nd November or in reading the Longstop Date as 3rd November rather than the 2nd as stated. At the moment, I can see no basis for doing this. There is nothing to suggest that the dates were not chosen deliberately and the meaning of “14 days after service” is not in doubt. The Claimant also faces the difficulty that even if the Longstop Date can be read as 3rd November, the deed of release was not in fact delivered unconditionally until Tuesday 4th November as a result of the operation of the conditions of sale. On this part of the Claimant’s argument the Defendants have, in my judgment, a seriously arguable defence.

[40]That leaves Mr Ayliffe’s submission that the release was in fact obtained by the Longstop Date with the execution of the settlement agreement. The problem about this is that the Defendants were not party to the settlement agreement and, as mentioned earlier, insisted upon a deed of release to which they were parties and which contained provisions drafted and approved by them. By contrast, the settlement agreement in its final form was not submitted for their approval. Given the definition of “release” in the variation agreement, it is difficult to see how it is satisfied by the settlement agreement alone. If the Claimant wishes to contend that the Defendants acted unreasonably in refusing to approve it without the need for a direct deed of release it will have to face the obvious difficulty that the Defendants’ consent was not sought to the execution of the settlement agreement in its final form. In any event, the question of whether they acted reasonably is not something which I can decide on an application for summary judgment.

Conclusion

[41]For these reasons, the Claimant has not established that there is no real defence to the claim and the Part 24 application will therefore be dismissed.