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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Gateway Plaza Ltd v White [2014] EWCA Civ 555 (08 May 2014) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2014/555.html Cite as: [2014] EWCA Civ 555 |
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ON APPEAL FROM THE SHEFFIELD COUNTY COURT
MR RECORDER PHILIPS
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE VOS
and
SIR TIMOTHY LLOYD
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GATEWAY PLAZA LIMITED |
Claimant Appellant |
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- and - |
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(1) JOHN DAVID WHITE |
Defendant Respondent |
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(2) KATHRYN PEACE |
Defendant but not party to the appeal |
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Paul Brook (instructed by Simpson Millar) for the Respondent
Hearing date: 15 April 2014
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Crown Copyright ©
Sir Timothy Lloyd:
Introduction
The essential facts
"On or before 28 March 2012 [Mr White] shall exchange contracts with [Gateway] for the purchase of Plot 2, Gateway Plaza on the same terms as previously agreed, save for the substitution of the new property details set out in this paragraph, at a purchase price of £92,000 … less an allowance of £17,000 … on account of deposit and reservation fee previously paid but subsequently forfeited."
The CML form
The issues in the proceedings
The judgment
"12. I do not consider that that simple view is the appropriate one in this case, and I say that for this reason. Without needing to imply terms into the contract, I have to construe it, and I have to construe particularly the expression "On or before 28 March 2012 [Mr White] shall exchange contracts with [Gateway]" for the purchase of a particular plot. What does that mean? It is not an obligation which is capable of being carried out by [Mr White] on his own. It is impossible for one person to exchange contracts with another without at least a modicum of cooperation from the other party, because the word is "exchange" and you can only exchange something if there is a contract moving from one side and its counterpart moving from the other side in the traditional way in which conveyancing has been carried out in this country for many hundreds of years. So it requires cooperation on the part of both parties, and that is the essence of the obligation which [Mr White] undertook. He undertook the obligation to do what he could towards the exchange of contracts but that was contingent upon [Gateway] doing also what they could towards the exchange of contracts."
"13. The second matter I divine from the use of this particular expression in this particular context is that when they talk about the exchange of contracts for the purchase of a piece of land (Plot 2 in this particular case), the meaning to be attached to it is the ordinary natural meaning of exchanging contracts in accordance with the normal practice of conveyancers. It does not require an implied term. It is what the words mean. If you ask your solicitor to exchange contracts with the solicitor for your vendor or your purchaser, you are asking him to do the job in the way in which it is normally done as between solicitors in ordinary conveyancing transactions, and this means doing it in a way in which neither party will be put at an irremediable disadvantage. Conveyancing solicitors are, perhaps by their nature, perhaps by their training, cautious and they will not normally engage in exchange of contracts unless everything is in place to ensure that when completion comes, completion can take place, and this is the way in which one would expect any solicitor to proceed in the exchange of contracts. It is not simply a case of posting one part off to the other side and hoping something will come back through the post from the other, or even using more modern means of communication; it is a process which does not just involve, as I say, a handing over from one to the other and back again but it involves going through the normal process that is engaged in the normal way of conveyancing."
"21. … A solicitor who is to exchange contracts needs to ensure that everything is in place for completion to take place within a relatively short period of time. One of the things he needs to be sure about is, of course, that there are no untoward charges on the property which would survive a transfer, another is that he needs to be sure that when the day comes he can hand over a banker's draft for the appropriate amount of money and, of course, he can only be sure of that in a mortgage case if he can be sure that the building society or lender will be obliged to provide him with that money, and that is the normal way in which these transactions are carried out. It is not necessary to imply any specific term about mortgages and the like. All it is necessary to do is to consider the expression "exchange of contracts" by reference to the normal way in which such transactions are conducted, and the normal way in which they are conducted is for the purchaser's solicitors to have everything right at the time of exchange because, of course, it is well known that once contracts have been exchanged then the purchaser is stuck with the need to purchase and, of course, his solicitor would face, to say the very least, a degree of criticism if he allowed that to happen when he was not sure that the purchase could take place. The CML form is a modern form but it is one which is, in practical terms, essential for a purchase transaction, except in the case of people who buy a property without a mortgage, who are necessarily comparatively rare."
"25. … If it is the obligation, as it undoubtedly is, for the vendor to provide [the CML form] in order that an exchange can take place in accordance with the normal practice of conveyancers, and if the vendor fails, in spite of being pushed and chivvied … to do something about it and fails to do so, the vendor cannot, in my judgment, turn round and say that the purchaser is at fault for failing to exchange contracts on the relevant date, or even on any later date."
"27. This was a contract which required mutual action by both parties and the reason it came to nothing was simply, as I have said, lack of action on the part of [Gateway] and/or their solicitors. Whatever remedy they may have is not a matter of concern to me. If it is necessary to put it in terms of [Gateway] being in breach of the agreement, then I would happily do so, but I do not really think it is necessary to go as far as that, it is simple enough to say that the cause of the fact that that did not materialise was entirely the inaction of [Gateway]."
Discussion
"The court has no power to improve upon the instrument which it is called upon to construe, whether it be a contract, a statute or articles of association. It cannot introduce terms to make it fairer or more reasonable. It is concerned only to discover what the instrument means. However, that meaning is not necessarily or always what the authors or parties to the document would have intended. It is the meaning which the instrument would convey to a reasonable person having all the background knowledge which would reasonably be available to the audience to whom the instrument is addressed: see Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, 912-3."
"21. The language used by the parties will often have more than one potential meaning. I would accept the submission made on behalf of the appellants that the exercise of construction is essentially one unitary exercise in which the court must consider the language used and ascertain what a reasonable person, that is a person who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract, would have understood the parties to have meant. In doing so the court must have regard to all the relevant surrounding circumstances. If there are two possible constructions, the court is entitled to prefer the construction which is consistent with business common sense and to reject the other.
…
23. Where the parties have used unambiguous language, the court must apply it."
i) Mr White was to have six weeks in which to proceed with the alternative purchase of plot 2, so that by the end of that period he could decide whether or not to proceed under paragraph 2, exchanging contracts for the substitute purchase, or not to do so.
ii) The terms of the purchase, if he chose to proceed with it, were settled by the agreement (except for the completion date). The property, the price and the parties were agreed, and the purchase was to be otherwise on the same terms as the previous contract. In any event, on the sale by a developer of a unit in a newly completed development, the terms of the sale, including those of the lease by which the sale was to be completed, would rarely be open to negotiation to any extent, because of the need for all dispositions to be on matching terms.
iii) As is usual with the sale of units on a development by the developer, there were matters within the knowledge and control of the vendor relating to the particular property which the buyer would need to know of or be supplied with; in the present case they included a cover note for a building guarantee issued by Zurich Insurance, and a certificate of completion under the Building Regulations issued by the relevant local authority.
iv) The normal practice of conveyancing is that the vendor's solicitor provides the draft contract and related documents, the purchaser's solicitor asks questions arising from the documents, some in standard form and others ad hoc according to the circumstances, which may include requests for additional or amended documents, and the vendor's solicitor answers these so far as the vendor's instructions permit. Then the intending purchaser (and, for that matter, also the intending vendor) is in a position to decide whether to proceed to exchange. Here it was for the purchaser alone to decide whether to proceed, as the vendor was committed to selling to Mr White if the latter wished to do so on the given terms and within the stipulated time. In that respect the situation was akin to an option to purchase.
v) Mr White was seeking mortgage finance to enable him to purchase the substituted property. He might or might not have been able to proceed without it, but at any rate he wanted it. If he was able to obtain the offer of a mortgage advance from a lender which was a member of the CML, the lender would require the CML form to be issued and provided by the vendor; normally that form is supplied in advance of exchange of contracts.
Conclusion
Lord Justice Vos
Lord Justice Rimer