“3.2 Within 7 days following the obtaining of a Satisfactory Planning Permission or if earlier a disposal of the Premises by the Landlord other than by way of a Permitted Disposal, the Landlord shall pay to the Tenant or to Mr Gapper at Mr Gapper's direction the Payment such sum to be paid by the Landlord's Solicitor to the Tenant's and Mr Gapper's Solicitor's Account by direct credit. The Landlord shall keep the Tenant and Mr Gapper fully informed of the progress of obtaining a Satisfactory Planning Permission and shall promptly provide the Tenant with copies of all material documentation and correspondence relating to it.”
“6.4 On payment of the Payment under clause 3.2 or expiry of the period of five years from the date of this deed (whichever is the earlier) the Tenant and Mr Gapper jointly and severally undertake to procure that the restriction mentioned in clause 6.2 is removed from the Registered Title and to assist the Landlord in achieving such removal.”
“(07.08.2015) RESTRICTION: No disposition of the registered estate by the proprietor of the registered estate is to be registered without a certificate signed by GPS Entertainment Limited and Adam Jason Gapper both of Flat 3, 40 Kellet Road, London SW2 lED and of 17 9 Bridgnorth Road, Stourton, Stourbridge, West Midlands DY7 6RY that the provisions of clause 6 of an Agreement dated8 April 2015 made between (1) CLTX Limited (2) GPS Entertainment Limited and (3) Adam Jason Gapper have been complied with or that they do not apply to the disposition.”
“3 .1. Very briefly summarised, the case advanced on behalf of the Applicant before me was as follows: 3.1.1. Mr Calif did not sign the Payment Agreement and did not authorise it to be signed. He had no knowledge of it and, hence, the Applicant is not bound by it. For that reason alone, the restriction should be cancelled. 3.1.2. Even if the Applicant is bound by the Payment Agreement, there has been no relevant disposition triggering any obligation to pay under the agreement which has now expired; and 3.1.3. Even if an obligation to pay has arisen, it is not the function of a restriction to secure payment under the agreement and the restriction should be discharged in accordance with its terms even if there has been a failure to pay under it or any other material breach of the agreement. 3.2. The Respondent contended: 3.2.1. That Mr Ori Calif had signed the Payment Agreement; 3.2.2. If he did not, that Mr Amitai had the Applicant's authority either by way of delegation or as an alternate director to bind the Applicant; 3.2.3. The obligation to pay under the Payment Agreement has been triggered by the Applicant's grant of the Charge to Perly Capital which was a disposal of the Property for the purposes of the Payment Agreement; and 3.2.4. Once the obligation to pay has been triggered the restriction ought not to be cancelled unless and until the obligations the performance of which it was intended to protect have been discharged.” 3.1.1. Mr Calif did not sign the Payment Agreement and did not authorise it to be signed. He had no knowledge of it and, hence, the Applicant is not bound by it. For that reason alone, the restriction should be cancelled. 3.1.2. Even if the Applicant is bound by the Payment Agreement, there has been no relevant disposition triggering any obligation to pay under the agreement which has now expired; and 3.1.3. Even if an obligation to pay has arisen, it is not the function of a restriction to secure payment under the agreement and the restriction should be discharged in accordance with its terms even if there has been a failure to pay under it or any other material breach of the agreement. 3.2.1. That Mr Ori Calif had signed the Payment Agreement; 3.2.2. If he did not, that Mr Amitai had the Applicant's authority either by way of delegation or as an alternate director to bind the Applicant; 3.2.3. The obligation to pay under the Payment Agreement has been triggered by the Applicant's grant of the Charge to Perly Capital which was a disposal of the Property for the purposes of the Payment Agreement; and 3.2.4. Once the obligation to pay has been triggered the restriction ought not to be cancelled unless and until the obligations the performance of which it was intended to protect have been discharged.”
“4.6. On balance, however, I was left with the impression, despite the Respondent's very able cross examination of Mr Calif, that I could trust the evidence which he gave me. 4.7. I am fortified in that conclusion by the evidence of Ms Floate as to the authenticity of Mr Califs signature of the Payment Agreement. It was her clear conclusion having considered the expanded sample of signatures provided by Mr Calif that there was strong evidence to support the conclusion that Mr Calif did not signed either the TR l or the Payment Agreement. Despite his failure to mention it in his initial application to HM Land Registry to remove the restriction, which I accept was for the reasons he gave, it has been his consistent position since that he did not sign those documents and that he had no knowledge of the Payment Agreement. I did not feel that the Respondent's cogent criticisms of some of the sample signatures provided by Mr Calif undermined Ms Floate's conclusions.”
“4.8. I therefore conclude, in relation to the primary factual question which I need to determine, that Mr Calif did not sign the Payment Agreement.”
“4.10.The final relevant question is whether, by its admitted instruction of Fladgate to act for it and to have conduct of the transaction in question, the Applicant company can be said now to be estopped from asserting that the Payment Agreement was not duly executed and is consequently not binding upon it. This is principally a matter of law which I shall consider below. However, it is relevant to note that, although I saw no documents to this effect, there was no suggestion that it was anyone other than Fladgate which exchanged the executed Surrender and Payment Agreement with Child & Child on8th April 2015 .”
“5.14. So, here, it seems to me that Fladgate, by exchanging the ostensibly executed copy of the Payment Agreement, represented on behalf of the Applicant and with its ostensible (if not actual) authority that it had been validly executed on behalf of its client. That the documents which they sent to the Respondent were the Applicant's deeds, not forged nullities. After all, it is impossible to think that Fladgate would have exchanged the documents on any other basis than that it believed them to be genuine. What else then could the Respondent and his solicitors reasonably have concluded upon receiving the signed copy of the Payment Agreement from Fladgate? 5.15. If I am wrong in that, I nevertheless conclude that it is the effect of s. 44(5), because the Respondent is a bona fide purchaser for value and because the Payment Agreement purports to have been validly executed by the Applicant, that it is to be deemed to be so for the reasons given by Davis J at § §98-102.”
“6.5. This seems an extraordinary submission to me. It requires an acceptance that it was the intention of the parties that even though: 6.5.1. the obligation to pay which it was the primary purpose of the agreement to create had arisen; 6.5.2. had not been satisfied so that the Applicant was in breach of its obligations under the agreement; and 6.5.3. the Applicant had expressed its intention not to remedy its breach, the Court, Registrar or Tribunal would nevertheless be required as a matter of contract, unconditionally, to make an order which might very well allow the Applicant to escape its obligation to pay the Respondent. I do not believe that was the intention of the parties. It seems plain to me: i) that no injunction or order would be made in the Applicant's favour such circumstances in the exercise of the Court's discretion; and ii) as the Respondent contends, that the opening words of clause 3.3 expressly exclude the obligation to remove the restriction if the terms of the agreement have not been complied with.” 6.5.1. the obligation to pay which it was the primary purpose of the agreement to create had arisen; 6.5.2. had not been satisfied so that the Applicant was in breach of its obligations under the agreement; and 6.5.3. the Applicant had expressed its intention not to remedy its breach, the Court, Registrar or Tribunal would nevertheless be required as a matter of contract, unconditionally, to make an order which might very well allow the Applicant to escape its obligation to pay the Respondent. I do not believe that was the intention of the parties. It seems plain to me: i) that no injunction or order would be made in the Applicant's favour such circumstances in the exercise of the Court's discretion; and ii) as the Respondent contends, that the opening words of clause 3.3 expressly exclude the obligation to remove the restriction if the terms of the agreement have not been complied with.”
“5.12.The Applicant accepts: a) that Matan Amitai was authorised by it to negotiate with the Respondent on its behalf for the purpose of securing vacant possession of the Property; b) that it appointed Fladgate to act as its solicitor in its dealings with the Respondent; and c) that it caused or permitted Fladgate to hold itself out to the Respondent and his solicitors as acting for the Applicant. Nor did it substantially dispute the Respondent's case that as a matter of fact he and his solicitors reasonably relied upon Mr Amitai's and Fladgate's representations to the effect that they were duly authorised by the Applicant to cause both the Surrender and the Payment Agreement to be completed by exchange of the executed documents and payment of the monies immediately due.”
“5.14. So, here, it seems to me that Fladgate, by exchanging the ostensibly executed copy of the Payment Agreement, represented on behalf of the Applicant and with its ostensible (if not actual) authority that it had been validly executed on behalf of its client. That the documents which they sent to the Respondent were the Applicant's deeds, not forged nullities. After all, it is impossible to think that Fladgate would have exchanged the documents on any other basis than that it believed them to be genuine. What else then could the Respondent and his solicitors reasonably have concluded upon receiving the signed copy of the Payment Agreement from Fladgate?”
“I cannot see upon what principle your Lordships can hold that the defendants are liable in this action. The forged certificate is a pure nullity. It is quite true that persons dealing with limited liability companies are not bound to inquire into their indoor management, and will not be affected by irregularities of which they had no notice. But this doctrine, which is well established, applies only to irregularities that otherwise might affect a genuine transaction. It cannot apply to a forgery.”
“Another ground was pressed upon us, namely, that this certificate was delivered by Rowe in the course of his employment, and that delivery imported a representation or warranty that the certificate was genuine. He had not, nor was held out as having, authority to make any such representation or to give any such warranty. And certainly no such authority arises from the simple fact that he held the office of secretary and was a proper person to deliver certificates. Nor am I able to see how the defendant company is estopped from disputing the genuineness of this certificate. That, indeed, is only another way of stating the same contention. From beginning to end the company itself and its officers, with the exception of the secretary, had nothing to do either with the preparation or issue of the document.”
“The thing put forward as the foundation of their claim is a piece of paper which purports to be a certificate of shares in the company. This paper is false and fraudulent from beginning to end. The representation of the company's seal which appears upon it, though made by the impression of the real seal of the company, is counterfeit, and no better than a forgery. The signatures of the two directors which purport to authenticate the sealing are forgeries pure and simple. Every statement in the document is a lie. The only thing real about it is the signature of the secretary of the company, who was the sole author and perpetrator of the fraud. No one would suggest that this fraudulent certificate could of itself give rise to any right or bind or affect the company in any way. It is not the company's deed, and there is nothing to prevent the company from saying so. Then how can the company be bound or affected by it? The directors have never said or done anything to represent or lead to the belief that this thing was the company's deed. Without such a representation there can be no estoppel.”
“The appellants have no doubt been grossly defrauded, but the question is whether they can shift the loss on to the shoulders of the innocent. The company has done literally nothing in the transaction, and could do nothing, because in no stage of the transaction did it come before the board of directors, which alone was' entitled to speak and act for it. It is admitted that Rowe was the proper person to deliver certificates to those entitled to them. From this harmless proposition the appellants slide into another and a very different one, that it was the secretary's duty to warrant on behalf of the company the genuineness of the documents he delivered. There is no evidence that any such 'duty or power was, in fact, entrusted to Rowe, and it is too great a strain on my powers to ask me to imply it from the mere fact of his being the secretary or the proper person to deliver documents.”
“An " apparent " or " ostensible " authority, on the other hand, is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the '' apparent '' authority, so as to render the principal liable to perform any obligations imposed upon him by such contract. To the relationship so created the agent is a stranger. He need not be (although he generally is) aware of the existence of the representation but he must not purport to make the agreement as principal himself. The representation, when acted upon by the contractor by entering into a contract with the agent, operates as an estoppel, preventing the principal from asserting that he is not bound by the contract. It is irrelevant whether the agent had actual authority to enter into the contract.”
“The representation which creates " apparent " authority may take a variety of forms of which the commonest is representation by conduct, that is, by permitting the agent to act in some way in the conduct of the principal's business with other persons. By so doing the principal represents to anyone who becomes aware that the agent is so acting that the agent has authority to enter on behalf of the principal into contracts with other persons of the kind which an agent so acting in the conduct of his principal's business has usually " actual " authority to enter into.”
“If the foregoing analysis of the relevant law is correct, it can be summarised by stating four conditions which must be fulfilled to entitle a contractor to enforce against a company a contract entered into on behalf of the company by an agent who had no actual authority to do so. It must be shown: (1) that a representation that the agent had authority to enter on behalf of the company into a contract of the kind sought to be enforced was made to the contractor; (2) that such representation was made by a person or persons who had "actual" authority to manage the business of the company either generally or in respect of those matters to which the contract relates; (3) that he (the contractor) was induced by such representation to enter into the contract, that is, that he in fact relied upon it; and (4) that under its memorandum or articles of association the company was not deprived of the capacity either to enter into a contract of the kind sought to be enforced or to delegate authority to enter into a contract of that kind to the agent.”
“Forgery As under apparent authority generally, 251 the company can be bound, though the agent effects a forgery in the sense of executing an unauthorised signature. But an actual counterfeit signature would simply be a nullity. 252There may, however, be an estoppel against setting up a forgery in either sense, if the elements of a holding out and reliance can be established.253 It has also been suggested, in relation to companies, thats.44 of the Companies Act 2006 might give effect to forged signatures. 254 In particular, s.44(5) provides: “[i]n favour of a purchaser a document is deemed to have been duly executed by a company if it purports to be signed in accordance with subsection (2)”
“55. My view, having regard to the evidence, was that in reality Mr Carter did not mind and was perfectly prepared to accept that Mr Jewson could sign documents in the name of Mr Carter provided that Mr Carter knew in general terms of the underlying transaction. It seems to me that Mr Carter must, for example, have known of the need of countersigned facility letters and other formal documents with regard to Barclays Bank. After all, he had initially signed one such for The Chapel property and he was content thereafter for Mr Jewson to do so on his behalf if that proved to be convenient. Likewise, for example, Mr Carter knew, as he accepted, of the need for a legal charge requiring two signatures in respect of the Mirfield transaction. I did not find his evidence that he assumed a solicitor had signed on his behalf convincing. I think that as before he simply was content, for the purposes of dealing with the bank, to leave the mechanics of signature entirely to Mr Jewson.”
“89. The decision and approach in Ruben has, as it seems to me, to be set in the context of the subsequent well-known decision of the House of Lords in Lloyd v Grace, Smith & Co [1912] A.C. 716 to which, indeed, Lord Loreburn and Lord Macnaghten were themselves party. But whilst aspects of the comments of Lord Davey in his speech in Ruben were expressly disapproved in Lloyd v Grace, Smith, the decision itself was not; see also the comments of Diplock L.J. in Morris v CW Martin & Sons Ltd [1966] 1 Q.B. 716 at 737. Since that time, it seems to be the case that by and large Ruben has, nevertheless, been represented as setting out the general position that a forgery is a nullity which cannot be validated, albeit there may be circumstances in which a party may be estopped from disputing the validity of a forged document; see Halsbury’s Laws of England, 4th edn (London: LexisNexis), Vol.13, para.72. A particularly extreme version of the purported application of the decision in Ruben can be found in the case of South London Greyhound Racecourses Ltd v Wake[1931] 1 Ch. 496 . There, even though the signatures of director and secretary on the certificate were valid and they had affixed the seal, and even though they had done so in order to defer proceedings threatened against the company, it was held that the fact that the board had not authorised the affixing of the seal rendered the certificate a forgery and a nullity: a decision which to my mind is very hard to sustain.”
“90. No doubt a forged corporate document is a nullity in the sense that no one has actual authority on the part of a company to issue a forged document. But as the exception of estoppel shows, that does not mean that the forged document can in no circumstances have any effect whatsoever: just because circumstances can arise whereby the company may be estopped from disputing its validity. But once one accepts that, then, in my opinion, that immediately opens up the prospect that such a document cannot be sidelined as a nullity for all purposes in the case of apparent authority. Indeed, the principles of apparent authority are a broad reflection of the general principles of estoppel. That that may be so is borne out by Ruben itself in my view: for, admittedly in somewhat grudging terms, Shaw was not formally disapproved as a decision but instead was distinguished as being capable on its facts as connoting that the secretary was held out as having authority to warrant the genuineness of a certificate.”
“91. Thus Ruben was to be distinguished, not in point of principle, of course, but in point of fact. In Ruben there was no ostensible authority vested in the secretary.”
“94. In my view, that approach is the correct approach and gives the answer to the present case on the facts, finding as I do that the bank was a bona fide purchaser for valuable consideration. The question of the authority, both actual and ostensible, of a company secretary has unquestionably moved on since the days of Ruben, as a number of authorities show. Moreover, there may well be cases where an officer or employee of a company can in any event be authorised actually or ostensibly by the company to warrant that procedures have been properly complied with and that documents are genuine. Indeed, the realities of modern commerce can sometimes require as much. An example can be found in the court of Appeal decision in First Energy (UK) Ltd v Hungarian International Bank Ltd [1993] B.C.C. 533. 95. Moreover, in general agreement with the comments in Gore-Browne, I can see no reason in principle why some special approach should be grafted on in the case of forgery by reciting the mantra that a forgery is a nullity which is not to be grafted on in the case of fraud. After all, while not all frauds involve forgeries, all forgeries in their own way involve a fraud. No officer or servant has actual authority to commit a fraud any more than he has actual authority to commit a forgery. But it is clear ever since the decision in Lloyd v Grace, Smith, that a principal may in appropriate circumstances be bound by the fraudulent acts of his agent in circumstances where there is ostensible authority. True it is that in contractual terms fraud may make a contract voidable, not void, but the general point still remains that something which is done with authority, actual or apparent, is capable of binding the principal. Indeed, were that not so, I do not see how the House of Lords in Ruben could have approached the case of Shaw as they did or made the comments that they made on authority. Nor, were that not so, do I see how Sir Wilfred Greene M.R., could have stated the position as he did in the Uxbridge Building Society case.”
“96. On the facts here, Mr Jewson was both director and secretary of CCH, as well as a shareholder in CCH both directly and indirectly through SGJ. But more than that, through the years of the company’s incorporation, and by consent of Mr Carter, he and he alone had had on behalf of CCH all dealings with the bank. This was not merely a self-appointed role on his part; this was the way he and Mr Carter, the other director, had on behalf of CCH agreed that things should be done. As Mr Jewson said and I accept, Mr Carter left all the bank dealings and documentation to him and was happy for him to look after it all. The bank itself had no reason to think otherwise. In matters of documentation, therefore, it was to Mr Jewson on behalf of the directors of CCH that Barclays Bank looked in its dealings with CCH, and Mr Carter had throughout been content that that should be so. Further, as I have said, on a significant number of occasions––not just with a separate bank, Denizbank, but also with the bank itself––Mr Carter had been content to leave it to Mr Jewson to communicate the appropriate signed formal documents to the bank when Mr Carter must have known that two signatories were required and that he himself had not signed and when he knew that Mr Jewson had been wont to sign bank documents using Mr Carter’s purported signature.”
“In such circumstances, I conclude that Mr Jewson had been clothed by CCH with ostensible authority to warrant to the bank that all formalities relating to approval and execution of the debenture and guarantee had been duly complied with and that the signatures could be relied upon as genuine.”
“I cannot see upon what principle your Lordships can hold that the defendants are liable in this action. The forged certificate is a pure nullity. It is quite true that persons dealing with limited liability companies are not bound to inquire into their indoor management, and will not be affected by irregularities of which they had no notice. But this doctrine, which is well established, applies only to irregularities that otherwise might affect a genuine transaction. It cannot apply to a forgery.”
“(1) Under the law of England and Wales or Northern Ireland a document is executed by a company– (a) by the affixing of its common seal, or (b) by signature in accordance with the following provisions. (2) A document is validly executed by a company if it is signed on behalf of the company– (a) by the affixing of its common seal, or (b) by signature in accordance with the following provisions. (a). by two authorised signatories, or (b) by a director of the company in the presence of a witness who attests the signature. (3) The following are “authorised signatories” for the purposes of subsection (2)– (a). every director of the company, and (b) in the case of a private company with a secretary or a public company, the secretary (or any joint secretary) of the company. (4) A document signed in accordance with subsection (2) and expressed, in whatever words, to be executed by the company has the same effect as if executed under the common seal of the company. (5) In favour of a purchaser a document is deemed to have been duly executed by a company if it purports to be signed in accordance with subsection (2). A “purchaser” means a purchaser in good faith for valuable consideration and includes a lessee, mortgagee or other person who for valuable consideration acquires an interest in property. (6) Where a document is to be signed by a person on behalf of more than one company, it is not duly signed by that person for the purposes of this section unless he signs it separately in each capacity. (7) References in this section to a document being (or purporting to be) signed by a director or secretary are to be read, in a case where that office is held by a firm, as references to its being (or purporting to be) signed by an individual authorised by the firm to sign on its behalf. (8) This section applies to a document that is (or purports to be) executed by a company in the name of or on behalf of another person whether or not that person is also a company.”
“99. As may be gathered from some of my earlier comments, I see much force in the submission that it has. Such a conclusion would by no means be lacking in purpose or sense. On the contrary, it might be said in modern times to be promotional of the interests of commerce––notwithstanding, for example, the current position with regard to bills of exchange––and to be an acknowledgement of the difficulties for banks and other third parties (provided, crucially, they are purchasers as defined) realistically making enquiries as to the validity of signatures and so would be a further protection in addition to those offered by, for example, s.161 of the 2006 Act. Further, such a conclusion at least reflects the actual wording used and would give rise to a degree of certainty. “Purport” is a word of wide ambit and it is rather difficult to see why as a matter of language it should, for example, extend to the genuine signature of a person having no authority as director but not extend to the forged signature in the name of a person who is a director. In other words, why, as a matter of language, “purport” should be taken to cover some defects but not others is not obvious. Putting it another way again, the argument that s.44(5) does not extend to forgeries in effect requires a starting presumption that the decision in Ruben is taken as still to be intended to apply and thus then requires a notional writing in of such an exception into s.44(5). But it is not at all obvious why or how such a proviso could or should be so written in as a matter of statutory implication: and that is so even assuming, which itself may be a matter of debate, that the word “forgery” is itself sufficiently precise.”
“102. Since any view I express on this point would necessarily be obiter in the light of my prior conclusions, I think on the whole it would be better if I did not express any concluded view on this particular point. All I would say is that having regard to the actual wording of s.44(5), the matter is to my way of thinking by no means concluded by the points advanced in the Law Commission Consultation Paper or the Report itself.”
“Forgery As under apparent authority generally, 251 the company can be bound, though the agent effects a forgery in the sense of executing an unauthorised signature. But an actual counterfeit signature would simply be a nullity. 252 There may, however, be an estoppel against setting up a forgery in either sense, if the elements of a holding out and reliance can be established. 253It has also been suggested, in relation to companies, thats.44 of the Companies Act 2006 might give effect to forged signatures.254 In particular, s.44(5) provides: “[i]n favour of a purchaser a document is deemed to have been duly executed by a company if it purports to be signed in accordance with subsection (2)”
“Where an Act operates in the context of a particular area of law, such as property, tort or contract, the assumption is that it is intended to be informed in its construction and otherwise operate in the context of existing rules and principles making up that area of law. Similarly, the interpretation of an Act may be informed by relevant general legal principles such as agency.”
“There are also many instances where the general law operating in a particular area will impliedly qualify the operation of an enactment expressed in absolute terms. Legislation takes much for granted.”
“Presumption against changes to the common law (1) In accordance with the doctrine of parliamentary sovereignty, the Parliament of the United Kingdom may abolish, modify or displace any existing common law rule. A devolved legislature may do likewise, within its competence. (2) But there remains a general presumption that the legislature does not intend to make changes to the common law.”
“The influence of the presumption against changes to the common law is apparent in the many of the examples considered elsewhere in this chapter. But its importance should not be overstated. It is clear that an Act may abolish, modify or displace existing common law rules, expressly or by implication. The overriding consideration is, as always, to ascertain the legislative intention.” “Presumption of minimum change to common law Where some change is clearly contemplated by an Act but the presumption is not entirely rebutted, the courts will seek to minimise the degree of legislative interference, for example by preferring to treat an Act as regulating rather than replacing a common law rule. As Lord Reid said in Black-Clawson International Ltd v Papeirwerek Waldhof-Aschaffenburg AG, Parliament “can be presumed not to have altered the common law farther than was necessary.”
“(ii) “Conveyance” includes a mortgage, charge, lease, assent, vesting declaration, vesting instrument, disclaimer, release and every other assurance of property or of an interest therein by any instrument, except a will; “convey” has a corresponding meaning; and “disposition” includes a conveyance and also a devise, bequest, or an appointment of property contained in a will; and “dispose of” has a corresponding meaning;”
“Upon the first point, it seems to me to be clear that a covenant in a lease against assigning the demised premises, in the absence of any context shewing that the covenant is to have an extended meaning, covers only a legal assignment. The covenant against assignment is, therefore, not broken by anything short of a legal assignment. In my opinion such a covenant is not broken by the lessee executing a declaration of trust of the demised premises. With all respect to my brother Ridley, s. 24, sub-s. 4, of the Judicature Act, 1873, has no application to the present case. Before the Judicature Act the Court of Chancery would never have regarded the cestui que trust as a lessee for the purposes of the lease as between the lessor and the lessee, nor would the Court have regarded a declaration of trust by the lessee of the demised premises as a breach of the lessee's covenant against assignment.”
“6.3. However, the Respondent contends primarily that the obligation to pay under the agreement has been triggered by the Applicant's grant of the Charge to Perly Capital within the period of the agreement and that the Applicant has, admittedly, refused to pay the sum which he contends is due. It follows, he says, that unless and until payment in accordance with the agreement has been made the restriction is required because the performance by the Applicant of its obligations under the agreement which it was manifestly, given the wording of the restriction, registered to protect has not been achieved. 6.4. The Applicant in response says that, properly construed, clauses 3.3 and 6.4 create a mandatory contractual obligation upon the Respondent to procure or assist the removal of the restriction upon the occurrence of the relevant event, i.e. the sooner of payment pursuant to clause 3.2 or the expiry of the five-year term.”
“6.5. This seems an extraordinary submission to me. It requires an acceptance that it was the intention of the parties that even though: 6.5.1. the obligation to pay which it was the primary purpose of the agreement to create had arisen; 6.5.2. had not been satisfied so that the Applicant was in breach of its obligations under the agreement; and 6.5.3. the Applicant had expressed its intention not to remedy its breach, the Court, Registrar or Tribunal would nevertheless be required as a matter of contract, unconditionally, to make an order which might very well allow the Applicant to escape its obligation to pay the Respondent. I do not believe that was the intention of the parties. It seems plain to me: i) that no injunction or order would be made in the Applicant's favour such circumstances in the exercise of the Court's discretion; and ii) as the Respondent contends, that the opening words of clause 3.3 expressly exclude the obligation to remove the restriction if the terms of the agreement have not been complied with.” 6.5.1. the obligation to pay which it was the primary purpose of the agreement to create had arisen; 6.5.2. had not been satisfied so that the Applicant was in breach of its obligations under the agreement; and 6.5.3. the Applicant had expressed its intention not to remedy its breach, the Court, Registrar or Tribunal would nevertheless be required as a matter of contract, unconditionally, to make an order which might very well allow the Applicant to escape its obligation to pay the Respondent. I do not believe that was the intention of the parties. It seems plain to me: i) that no injunction or order would be made in the Applicant's favour such circumstances in the exercise of the Court's discretion; and ii) as the Respondent contends, that the opening words of clause 3.3 expressly exclude the obligation to remove the restriction if the terms of the agreement have not been complied with.”
“6.4 On payment of the Payment under clause 3.2 or expiry of the period of five years from the date of this deed (whichever is the earlier) the Tenant and Mr Gapper jointly and severally undertake to procure that the restriction mentioned in clause 6.2 is removed from the Registered Title and to assist the Landlord in achieving such removal.”
“The Applicant’s interpretation of clause 6.4 is inconsistent with the main purpose of the agreement and it would allow the Applicant to profit from its own wrong, as it has refused to pay the debt.”
“6.4 On payment of the Payment under clause 3.2 or expiry of the period of five years from the date of this deed (whichever is the earlier) the Tenant and Mr Gapper jointly and severally undertake to procure that the restriction mentioned in clause 6.2 is removed from the Registered Title and to assist the Landlord in achieving such removal.”
“3.3 Subject always to the Landlord's compliance with the terms of this agreement in the event that the Landlord has not obtained a Satisfactory Planning Permission within five years of the date of this agreement the Payment shall be no longer payable to the Tenant (or Mr Gapper) and the Landlord's Solicitor shall be entitled to return the Payment to the Landlord.”
“that if for any reason due to the wilful default of the tenant the development shall remain uncompleted by29 September 1983 the lease shall forthwith be completed…”
“My Lords it is well established by a long line of authority that a contracting party will not in normal circumstances be entitled to take advantage of his own breach as against the other party.”
“Even if it were appropriate to imply the provision of clause 3(b) into any lease to be granted under the proviso to clause 4, and I make this assumption without deciding the matter one way or the other, there remains the question whether in the words of Lord Diplock in the Cheall case [1983] 2 A.C. 180, 189 the agreement contains clear express provisions to contradict the presumption that it was not the intention of parties that either should be entitled to rely on his own breach in order to obtain a benefit. I find no such clear express provision. Although the proviso refers specifically to the wilful default of the tenant it does not state that the tenant should be entitled to take advantage thereof. It is one thing for wilful default of a party to be made the occasion upon which a provision comes into operation but it is quite another thing for that party to be given the right to rely on that default. Furthermore it is not disputed that a lease granted under the proviso which contained no covenant to build would render the whole scheme unworkable. In that situation it is reasonable to assume that if the parties had intended in this extraordinary proviso to displace the presumption they would have expressly imported clause 3(b) into any such lease rather than leaving it to possible but uncertain implication. All in all I have no doubt that the terms of the proviso were not apt to displace the rule of construction and I consider that the Vice-Chancellor and the Court of Appeal were correct in concluding that the appellants were not entitled to invoke the proviso to clause 4.”
“It only remains to refer to the respondents' argument that there is an absolute rule of law and morality which prevents a party taking advantage of his own wrong whatever the terms of the contract. My Lords I do not find it necessary to deal with this. For my part I have no doubt that the weight of authority favours the view that in general the principle is embodied in a rule of construction rather than in an absolute rule of law. However, that is not to say that there cannot be situations such as self-induced frustration, to which Lord Diplock referred in the Cheall case, where an absolute rule exists. It is neither necessary nor would it be profitable to explore the matter further in this case.”
“17. It is a general principle of construction that prima facie it will be presumed that the parties intended that neither should be entitled to rely on his own breach of duty to obtain a benefit under a contract, at least where the breach of duty is a breach of an obligation under that contract: see Chitty on Contracts, cit sup, vol. 1 at para. 12-082. This is sometimes presented not as a matter of contractual construction but an implied contractual term that a right or benefit conferred upon a party shall not be available to him if he relies upon his own breach of the contract to establish his claim: Chitty on Contracts, cit sup, vol. 1 at para. 13-012. However analysed, the principle is not inflexible or absolute: it may be displaced by express contractual provision or by the parties’ intention to be understood from the express terms: Richco International Ltd v Alfred C Toepfer International GmbH [1991] 1 Ll Rep 136, 144.”
“31. Although there has been a certain amount of academic discussion as to whether the principle has the status of a rule of law which is imposed upon the parties to a contract almost regardless of what they have agreed, it is now clear as a matter of authority that the application of the principle can be excluded or modified by the terms of the contract and that its scope in any particular case will depend upon the construction of the relevant agreement.”
“7 .1.6. In order to be required to cancel the restriction the Chief Land Registrar must be satisfied that it is no longer required. 7 .1. 7. The restriction is still required because the Applicant has refused to comply with its obligation pursuant to clause 3.2 to make the payment due under the Payment Agreement.”