IN THE SUPREME COURT OF JUDICATURE.
COURT OF APPEAL.
| Royal Courts of Justice. | ||
| 23rd July 1957. |
LORD JUSTICE JENKINS,
LORD JUSTICE ROMER
and
LORD JUSTICE SELLERS.
____________________
Between:
| HERBERT CHARLES GRIFFITH |
Plaintiff, Respondent, |
|
| -and- |
||
| ETHEL ELIZABETH PELTON |
Defendant, Appellant. |
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(Transcript of the Shorthand Notes of The Association of Official Shorthandwriters, Ltd.,
Room 392, Royal Courts of Justice, and 2, New Square, Lincoln’s Inn, London, W.C. 2.)
____________________Mr. G.H. NEWSOM, Q.C. and Mr. KENNETH ELPHINSTONE (instructed by Messrs. Gregory, Rowcliffe & Co., Agents for Messrs. Risdon, Weston, Witham & Hancock, Minehead)
appeared on behalf of the Appellant Defendant.
Mr. E.I. GOULDING (instructed by Messrs. Slaughter & May)
appeared on behalf of the Respondent Plaintiff.
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HTML VERSION OF JUDGMENT
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In this case the Plaintiff (now Respondent) Herbert Charles Griffith, claimed against the Defendant (now Appellant), Ethel Elizabeth Pelton, as executrix of Aubrey John Pelton deceased, a declaration to the effect that ho had by a notice in writing dated the 22nd March, 1956, effectually exercised an option contained in a lease dated the 17th May, 1935, and made between the deceased of the one part and Winifred Martha Blaker of the other part, to purchase the property comprised therein, and consisting of No. 1, The Broadway, Mount Pleasant, Tunbridge Wells, together with a leasehold interest in a certain right of way, with consequential claims for specific performance of the agreement constituted by his exercise of the option, and further or other relief.
Upon an application by the Plaintiff for summary judgment under Rules of the Supreme Court Order 14 (a) an Order was made by consent for the setting down of certain questions of law for argument under Rules of the Supreme Court Order 34, rule 2.
The questions of law thus raised, so far as immediately material, were (shortly) whether the benefit of the option was effectually vested in the Plaintiff, either (1) by an assignment dated the 3rd August, 1948 (being an assignment of the lease by Miss Blaker to the Plaintiff), or alternatively (2) by a deed dated the 22nd March, 1956 (being an assignment, or purported assignment, of the benefit of the option by Miss Blaker to the Plaintiff).
Mr. Justice Vaisey, by his Order dated the 18th March, 1956, made a declaration answering the first of these questions in the Plaintiff’s favour, and from that Order the Defendant now appeals to this Court.
The lease of the 17th May, 1935, was, as we have said, made between the deceased of the one part and Miss Blaker of the other part. The parties were thereinafter respectively described as “‘the Lessor’, which expression shall include the estate owner or estate owners of the reversion of the premises hereby demised expectant on the term hereby granted, where the context so admits”, and “‘the Lessee’ which expression shall include her executors, administrators and assigns where the context so admits.”
The lease was for 21 years from the 25th March, 1935; (determinable as thereinafter mentioned) at the yearly rent of £450. There was a proviso that “if the Lessor survives the term hereby granted” (which event did not happen) “he will grant to the Lessee a further term of 14 years subject to the rent terms and conditions of this Lease.” There was also a proviso enabling the lessee to determine the lease at the expiration of the first 14 years of the term.
Finally, there was this proviso conferring the option which has given rise to the present litigation:-
“Provided Always and it is hereby agreed that if the Lessee shall within the period hereinafter prescribed give to the Lessor or leave at his last known place of abode in England six months’ notice in writing of the desire of the Lessee to purchase the fee simple of the demised premises and his leasehold interest in the right of way over the passageway coloured yellow on the said plan then the Lesser shall on the expiration of such notice and upon payment of the sum of Seven thousand Pounds together with interest thereon at the rate of Five pounds per centum per annum from the expiration of such notice till the completion of the purchase and of all rent hereby reserved up to such expiration assure the said premises unto the Lessee for an estate in fee simple in possession free from incumbrances except as already disclosed to the Lessee and assign his interest in the said right of way to the Lessee Provided nevertheless that this option to purchase the fee simple of the demised premises shall not be exercised during the lifetime of the present Lessor the said Aubrey John Pelton but shall be exercised within one year next after his death if he shall die during the term hereby granted and nothing herein contained shall be construed as giving to the Lessee any option to purchase the fee simple of the demised premises at any time after the expiration or sooner determination of the term hereby granted unless the aforesaid notice shall have been given by her before such expiration or determination.”
By the assignment of the 3rd August, 1948, to which we have already referred, Miss Blaker (having first duly obtained a licence so to do from the deceased as required by the lease) assigned to the Plaintiff at the price of £3,200 the property comprised in and demised by the lease for the residue of the term thereby granted, subject to the rent thereby reserved and the lessee’s covenants and conditions therein contained. This document contained no reference to the option.
It included, in addition to the lease, an assignment of the goodwill of a business carried on at the premises to which the purchase consideration was no doubt to some extent attributable.
The deceased died on the 2nd March, 1956, and probate of his will was granted to the Defendant on the 13th April, 1956.
By the deed dated the 22nd March, 1956, to which we have already referred, Miss Blaker gratutiously assigned (or purported to assign) the benefit of the option to the Plaintiff if and so far as not already vested in him.
On the same day the Plaintiff by his solicitors gave notice in writing of this assignment to “the personal representative or personal representatives” of the deceased.
Also on the same day the Plaintiff by his solicitors gave to “the personal representative or personal representatives” of the deceased notice in writing exercising the option.
The term granted by the lease expired on the 25th March, 1936.
On these facts Mr. Newsom, for the Defendant, contends that both the questions shortly stated above should be answered in the negative.
As to the first question, he submits that the benefit of the option cannot have been effectually vested in the Plaintiff by the assignment of the 3rd August, 1948, because the benefit of the provision in the lease whereby the option was conferred did not run with the land. He invokes the second and sixth resolutions in Spencer’s Case (5 Rep. 16), the effect of which is conveniently stated by Mr. Justice Jelf in Dewar v. Goodman (1907, 1 K.B. 612) at page 620, as establishing the proposition that neither the benefit nor the burden (as the case may be) of a lessor’s covenant runs with the land unless it touches or concerns the thing demised, or, as section 142 (1.) of the Law of Property Act, 1925, now has it, is entered into “with reference to the subject matter of the lease.” As illustrations of the application of the general principle he referred to Thomas v. Hayward (L.R. 4 Exch. 311); where a lessor’s covenant in a lease of a public house not to keep any house for the sale of spirits or beer was held not to be enforceable by an assignee of the lease against the lessor because it did not touch or concern the thing demised and therefore the benefit of it did not run with the land; and to Dewar v. Goodman (supra); and affirmed in the Court of Appeal (1908, 1 K.B. 94), and in the House of Lords (1909 A.C. 72), where an under-lessor’s covenant to perform the covenants in the superior lease as regards Land not included in the sub-demise was on like grounds held not to be enforceable by an assignee of the underlease against an assignee of the under-lessor. The general principle on which Mr. Newsom relies is, of course, well settled, and he submits that its application to the case in point of an option contained in a lease to purchase the freehold is established by authority binding on us in the shape of the case in this Court of Woodall v. Clifton (1903, 2 Ch. 257), where it was held that such an option did not touch or concern the thing demised, and therefore did not run with the land so as to be enforceable against the assigns of the lessor.
Mr. Newsom’s submissions, if well founded, would produce the surprising result that although the intention of the parties to the present lease as expressed in the document plainly was that either Miss Blaker herself as the original lessee, or her executors, administrators and assigns, who were included in the term “Lessee” by virtue of the definition to which I have referred, should be entitled to exercise the option by giving the prescribed notice and otherwise complying with the conditions laid down for its exercise, the option was nevertheless not assignable by Miss Blaker even by an assignment of the term which, expressly included the benefit of the option. This, says Mr. Newsom, necessarily follows from the principle established by Spencer’s case (supra), that where a provision does not run with the land (as in his submission the present option does not), the parties cannot make it run, even where they show by express words their intention that the burden and benefit of it, as the case may be, should pass to the respective assignees.
Mr. Goulding, for the Plaintiff, traverses Mr. Newsom’s argument and submits that the benefit of an option such as this, expressly made exerciseable not only by the original lessee but also by her executors, administrators and assigns, is an assignable interest which will pass to any assignee of the lease under a mere assignment of the term even though such assignment (like the assignment of the 3rd August 1948 in the present case) contains no express reference to the option.
Support for this view is to be found in the following authorities.
In the case of In re Adams and The Kensington Vestry (24 CD. 199); 27 CD. 394 (Court of Appeal)), there was a lease containing a covenant by the lessor with the lessee, his executors, administrators and assigns, conferring upon the latter an option to purchase the freehold. This option was in fact exercised by the heir of the lessee, who was also his administrator, against the devisee of the lessor. No objection concerning the right of the heir and administrator of the lessee to exercise the option against him was taken by the devisee of the lessor and a conveyance was executed accordingly. The heir and administrator of the lessee afterwards contracted to sell part of the land conveyed to him, and the question for the decision of the Court was whether he could make a good title. As the law then stood the position was that he could make a good title if the land had passed to him in his capacity as heir as part of the lessee’s real estate, but not if it had passed to him in his capacity as administrator as part of the lessee’s personal estate. The Court held that the land had passed to him in the latter capacity and consequently that he could only make a good title with the concurrence of the next of kin of the lessee. The case was heard at first instance by Mr. Justice Pearson. Amongst other arguments, it was contended for the purchasers (at page 202 of 24 CD.) that the option was void as infringing the rule against perpetuities and for the vendor that “such a covenant as this cannot be attached to a lease so as to run with it”. Mr. Justice Pearson (at page 206) assumed, without deciding, that the option was valid, i.e.,(as we understand him) that it was not invalidated by the rule against perpetuities, and later on the same page said this:
“The case was very well argued by Mr. Pownall, and ho put it in this way. He said, it is perfectly true that the lease regarded as a chattel was part of the personal estate of Ralph Adams, and was, therefore, on his death intestate divisible amongst all his children, but the covenant in question was a separate thing altogether. The covenant jiving the option to purchase created an equitable interest in real estate, which was vested in Ralph Adams as a separate interest from the leasehold interest. It therefore descended to his eldest son as his heir at law, and on the death of the eldest son it descended from him to the second son, who was therefore entitled to it absolutely for his own use. I cannot accede to that view. I think the option to purchase was an integral part of the lease and went with the lease. If the lease had been simply assigned, without any more words, the option would have passed with it, and, as on the death of Ralph Adams the lease passed to his administrator, the administrator took the lease, together with the right to enforce the option of purchase if he should think it beneficial.”
On appeal to this Court by the vendor, the decision of Mr. Justice Pearson was affirmed. Lord Justice Baggallay (at page 401 of 27 Chancery Division) said this:
“In that view of the case it appears to me, first of all, that the right of option, as one of the provisions contained in the lease, passed with the leasehold estate to the administrator upon his taking out administration to the deceased intestate, and that he alone was capable of exercising that option.”
At page 402, Lord Justice Cotton said this:
“The contract is one entered into with the lessee, his executors, administrators, and assigns, and before I go further I agree that this covenant would be one the benefit of which would pass with the assignment of the lease, because it is a covenant with the lessee, if he, his executors, administrators, or assigns shall give a certain notice, that the lessor would convey. The ‘assigns’ there must mean the assigns of the lease.”
At page 404 Lord Justice Lindley said this:
“I am of the same opinion. It appears to mo that we must deal with the question in this case with reference to the peculiar language of the covenant which is before us. Everything turns upon the language of the covenant, and I do not see how our decision in this case would be of the slightest use to anybody else any more than the decisions in the previous cases are of the slightest use to us in construing this covenant. The covenant is made by Smith, the lessor, with Adams, his executors, administrators, and assigns, and so on. Now I apprehend ‘assigns’ there must mean the assigns of the lease; the context, I think, shows that. In the event which has happened there have been no assigns, and we may leave that out. If he did not exercise the option, his administrator could.”
And at page 405 Lord Justice Lindley said:
“The right is given to the lessee, his executors, administrators, and assigns, and it is given to them in language which is very peculiar. It is ‘if they be minded and desirous of buying the fee simple’, not ‘if the heir-at-law is’. I cannot possibly construe this as meaning that the heir is to set them in motion, and that the heir is to be minded and desirous of buying: I cannot construe the covenant in that way at all.”
Of the observations we have quoted, those of Mr. Justice Pearson, Lord Justice Baggallay and Lord Justice Cotton appear to us to be directly in point and to afford clear support for the Plaintiff’s argument in the present case. Those of Lord Justice Lindley are less to the purpose, but indicate no dissent from the views of his Brethren, which as part of their ratio decidendi cannot in our opinion be dismissed as merely obiter.
We would next refer to the case of Friary Holroyd and Healey’s Breweries Ltd. v. Singleton (1899, 1 Ch. 86: 1899 2 Ch. 26l – Court of Appeal). In that case an equitable assignee of a lease containing an option to purchase the freehold given to the lessee “his executors, administrators, and assigns”, who had not perfected his title by a legal assignment, was held by Mr. Justice Romer (as he then was) not to be an assign within the meaning of the option and accordingly not to be entitled to exercise the option.
At page 89 (1899, 1 Ch.), Mr Justice Romer said this:
“The plaintiffs contend that the letter of December 14, 1896, was a good notice under the lease to purchase the freehold at the end of the term. But, apart from any question arising on the wording of that letter, it appeared on the evidence, when the plaintiffs came to prove their title, that at the time the letter was written and up to the commencement of this action they were not the legal assignees of the lease, but only the equitable assignees of the legal owners. They were not, therefore, in my opinion the persons entitled under the lease, as against the lessor, to give the notice, and the lessor did not become bound under the lease on receipt of that letter to sell or assure the freehold to the plaintiffs. The word ‘assigns’ in the option to purchase in the lease given to the lessee, his executors, administrators, or assigns, had in my opinion the same meaning as the word ‘assigns’ added to the lessee’s name in the covenants entered into by and with him in the lease. In other words, it meant the persons entitled to the term as between them and the lessor and bound by and entitled to the benefit of the covenants entered into by the lessee and lessor respectively which ran with the land demised.”
It seems to us plain that in Mr. Justice Romer’s view the equitable assignee would have been entitled to exercise the option if he had converted himself into a legal assign by taking a legal assignment of the lease.
The case could, of course, have been shortly disposed of if Mr. Justice Romer’s view had been that the option could not be exercised by any assign, whether legal or equitable. It is perhaps worth noticing that the defendant against whom the option was sought to be exercised was in fact the assignee of the reversion, and not the original lessor. Mr. Justice Romer’s decision was reversed in the Court of Appeal on the facts, but the judgment of the Court accepted his view as to the meaning of “assigns”, and expressed no dissent from his statement of the law.
We should also make some reference to the case of Batchelor v. Murphy (1925 Ch. 220 – Court of Appeal), and in the House of Lords (1926 A.C. 63). In that case it was agreed between the original lessor, the executor of the lessee, and two proposed new tenants, that an existing lease should be surrendered and that a new lease of the premises should be granted to the proposed new tenants for the residue of the term “upon the same terms and conditions in all respects” as the original lease. That lease had contained an option for the original lessor, his executors, administrators and assigns, to purchase the freehold, and the question was whether the two new tenants were entitled to a similar option. Mr. Justice Tomlin (as ho then was) held that they were not so entitled (see 1924, 2 Ch. 252), but in the Court of Appeal his decision was reversed by a majority of the Court of Appeal (Lords Justices Warrington and Sargant: Sir Ernest Pollock, Master of the Rolls, dissenting), and that judgment was upheld in the House of Lords. In the course of his dissenting judgment, Sir Ernest Pollock, Master of the Rolls, said this:
“It” – that is the option provision – “is a provision which is outside the terms which regulate the relations between landlord as landlord and tenant as tenant. It is in truth and in fact a collateral bargain. It is not one of the terms of the demise. It is incidental but collateral to the demise. In the present case — and this I think is the only outside matter which has any weight upon my mind — there is this. It is quite clear that if the Murphys had taken by assignment of the original lease of October 17, 1913, they would have acquired this option. It would have passed to them under an assignment. But it appears to me that one ought to take into account the fact that assignment was not adopted to give the Murphys the interest which they were to take in these premises.”
Lord Justice Warrington (at page 229) said this:
“Having regard to the interpretation of the word ‘lessee’ in the option, the word ‘lessee’ means Clarkson, his executors, administrators, and assigns. It is therefore quite clear, and it is admitted, that the benefit of the option, which although it is something collateral to the mere relation of landlord and tenant, still is one of the terms of the document which created that relation, would pass to the assignee by a mere assignment of the land for the term, at the rent, and under and subject to the conditions and so forth reserved by and contained in the lease of October 17, 1913.”
Lord Justice Sargant (at page 231) said this:
“Now it is to be noticed that if there had been a mere assignment by Clarkson to the Murphys, the necessary result would have been that the Murphys would have been entitled to the option of purchase given to Clarkson by the lease to him, and I should have thought that prima facie if it had been intended in any way to affect that option or prevent it being transferred in the ordinary course to the purchasers or the assigness, the persons intending to take the transfer from Clarkson, there would have been some definite bargaining to that effect. I do not want to lay too much stress on that, but it seems to me that would have been the ordinary business way of looking at the matter.”
In the House of Lords Lord Haldane said this (at page 67 of the report): “Now, my Lords, as I said, the original lease contains an option to Clarkson to purchase, and to purchase for £3,000, and be it noted that by a provision in that document, wherever Clarkson is named the document provides that Clarkson, his executors, administrators and assigns, are to be included by the word ‘Clarkson’; so that when the option to purchase is given to Clarkson it prima facie at all events means to include Clarkson’s assigns. That being so, my Lords, the question is what is meant in the document of November, 1915, by ‘the terms and conditions’ in the lease of October 17, 1913? They are to be ‘the same terms and conditions in all respects, as in the Lease.’ My Lords, we are not dealing with a more technical demise, we are dealing with a deed, the lease itself – a deed containing terms – and when you lock at the substance of this transaction I quite agree that the option to purchase is a collateral right – it is not part of the term of the demise, it is a collateral right – but it is a collateral right which is included in the document, which in substance is transferred. I say in substance is transferred, because if you look at the document, Clarkson could have done what he did by an assignment of his lease or in the way he did – namely, by surrender and a new lease to be granted. There is no difference in substance between the two methods or the rights under them; it is only a different way of carrying out the same transaction, and I am of opinion that Clarkson, in substance, transferred the rights to the respondents.”
Lord Atkinson said this (at page 68):
“It is quite true that when there is a collateral agreement, it is not necessarily transferred by a transfer of the lease, but it is perfectly competent to the contracting parties if they are so inclined to use language which will carry in a collateral agreement just as well as any stipulation springing from the relation of landlord and tenant. In my opinion when the parties used the words that the new lease is to contain all the terms and conditions in all respects as the lease of October 17, 1913, which, of course, means contained in the lease of October 17, 1913, they could use no words that are more expressive to convey the idea that the new lease is to be a replica of the old lease save and except in the two points of duration of the time and rent.”
Lord Carson concurred without adding any reasons of his own, while Lords Wrenbury and Blanesburgh founded themselves on the construction of the agreement, without; we think, expressing any view regarding the effect which an assignment of the original lease would or might have had in relation to the option if the parties had chosen to proceed in that way.
Reference was also made in the course of the argument to In re Johnston’s Application (1950 Ch. 524), a case concerning the apportionment of War Damage in which Mr. Justice Harman held that an option to purchase the freehold contained in a lease was for this purpose an “incident” of the lessees’ proprietary interest.
In this state of the authorities, Mr. Newsom urges us to follow Woodall v. Clifton (supra), which he says concludes the present case in his favour, and to reject all observations to the contrary in the other authorities to which we have referred as made obiter or alio intuitu or on the strength of admissions. In particular, he adopts this comment by Lord Justice Romer towards the end of the judgment of the Court in Woodall v. Clifton (supra) at page 279, as disposing of what is perhaps the most difficult case from his point of view:
“There are cases where the option has been exercised by the tenant and accepted by the landlord, and subsidiary questions have had to be decided which naturally would be dealt with on the footing that what had already been done could not or need not be questioned by the Court; as, for example, In re Adams and Kensington Vestry. But such cases are really of no assistance for the decision of the present case.”
On the other hand, Mr. Goulding submits that the cases above referred to relating to options to purchase other than Woodall v. Clifton taken together afford a strong body of judicial opinion in favour of the Plaintiff’s contention by which, in preference to Woodall v. Clifton, the Court should be guided in deciding the present case.
In order to resolve this conflict it will be necessary to examine with some care the case of Woodall v. Clifton, to see what was actually decided by that authority. But before doing so, we may perhaps be permitted some general observations of an elementary kind as to the nature of options to purchase land.
It is by no means uncommon for leases to contain (as did the present lease) provisions conferring on the lessee an option to purchase the freehold. But options to purchase land are also not uncommonly granted in cases where the grantor and the grantee of the option do not stand in the relationship of landlord and tenant. Options of the latter class may conveniently be referred to as “options in gross”.
An option in gross for the purchase of land is a conditional contract for such purchase by the grantee of the option from the grantor, which the grantee is entitled to convert into a concluded contract of purchase and to have carried to completion by the grantor, upon giving the prescribed notice and otherwise complying with the conditions upon which the option is made exerciseable in any particular case. The conditional contract constituted by the grant of the option is a chose in action the benefit of which can (if the terms of the contract are such as to show that it is not merely personal to the grantor) be assigned by the grantee to anyone he chooses, subject to any restriction imposed by the contract as to the persons in whose favour assignment is permissible. The burden of the contract qua contract does not, in the absence of novation, pass to a third party acquiring the land. But inasmuch as the option creates in favour of the grantee of the option a contingent interest in the land, it may, provided that its exercise is limited to a period permissible under the rule against perpetuities, and provided that the appropriate precautions as to registration are taken, be exercised and enforced against the land in the hands of such third party. See as to the rule against perpetuities in relation to options the judgment of Mr. Justice Warrington (as he then was) in Woodall v. Clifton (supra), and Hutton v. Watling (1948 Ch. 26) at page 30 et seq., in which two cases the authorities on this matter are discussed.
An option contained in a lease for the lessee to purchase the freehold differs from an option in gross only in the respects that the grantor and the grantee stand in the relationship of landlord and tenant, and that the contract creating it is made part of the terms on which the lease is granted. But, albeit collateral to the lease, it is in itself a distinct contract possessing all the essential characteristics of an option in gross.
These general observations lead us to the conclusion that under the option provisions in the present case Miss Blaker was entitled as a matter of contract to assign the benefit of the option contained in the lease to the Plaintiff as her assignee of the term, so as to entitle the Plaintiff to enforce it against the Defendant, who, be it observed, was not an assignee of the reversion but the executrix of the original lessor, and as such bound by her testator’s contract.
Returning to Woodall v. Clifton (supra), we would observe that the plaintiff there seeking to enforce the option was an assignee of the original lessee to whom and whose heirs and assigns the option to purchase had been granted, while the defendants were assignees of the original lessor: and that the term during which the option was expressed to be exercisable was 99 years from the 24th June, 1866. The assignment of the reversion prevented the plaintiff from enforcing the option against the defendants as a matter of contract, and the plaintiff could only rely on the contingent or conditional interest in the land created by the option, because the period during which it was exerciseable exceeded the limit of time imposed by the rule against perpetuities. Mr. Justice Warrington held in those circumstances that the option to purchase was void on the ground of remoteness. The Court of Appeal apparently accepted this view so far as the Plaintiff’s claim involved the assertion that the option created an interest in the land which had devolved on him by assignment, but went on to consider an alternative contention to the effect that the burden of the proviso creating the option ran with the land so as to bind the assigness for the time being of the reversion at any distance of time.
That was the contention which Lord Justice Romer, in delivering the judgment of the Court, was concerned to repel, and he did so by holding that the burden of the proviso did not run with the land so as to make the option enforceable against the assigness of the reversion. He did not hold that if there had been no assignment of the reversion the plaintiff as assignee of the term could not as a matter of contract have enforced the option against the original lessor or his personal representative. We think it is reasonably plain that he was deciding nothing of the sort. This sufficiently appears from the opening passage of his judgment at page 278 of the report, where he said:
“A contract in a lease giving an option to purchase might be good, without regard to the provisions of the statute of Henry VIII, as binding the land in the hands of the heirs or assigns, provided it did not infringe the law as to perpetuities. It would not be the less a binding contract because it was contained in a lease. But in the present case it is clear that the plaintiff cannot succeed on such a ground. Unless the covenant or proviso giving the option of purchase can be said to run with the land by virtue of the provisions of the statute, then the plaintiff must fail.”
If it had been his view (as Mr. Newsom now would have us hold) that the plaintiff could not enforce the option because he was an assignee of the term, but not the original lessee, that would have been a short answer to the whole case and his discussion of the question whether the assignees of the reversion were bound would have been wholly otiose. The same may be said of Mr. Justice Warrington’s full and careful discussion of the rule against perpetuities in its application to options to purchase land.
We would add that Friary Holroyd and Healey’s Breweries v. Singleton (supra) was referred to in argument in Woodall v. Clifton (supra, at page 269), when Lord Justice Romer said of it: “In that case the question was, assuming the validity of the covenant, who was the person entitled to give notice to exercise the option.” That comment does not appear to us to cast any doubt upon the correctness of the view he had expressed in the former case on the point now in hand.
In our view, therefore, there is nothing in Woodall v. Clifton (supra) to prevent us from holding that it was competent to Miss Blaker to assign the benefit of the option to the Plaintiff so as to make it exercisable and enforceable by him against the Defendant as executrix of the deceased original lessor. We agree with Mr. Justice Vaisey (as indeed was hold in In re Adams and The Kensington Vestry (27 CD. per Lord Justice Cotton at page 402, and per Lord Justice Lindley at page 404, and Friary Holroyd & Healey’s Breweries v. Singleton (supra)) that the reference to the assignees of the lessee imported by definition into the option provision must be construed as referring to assigns of the term, and consequently as limiting the assignability of the benefit of the option to assigns of that description. But so far as assigns of that description are concerned, the language of the proviso conferring the option expressly entitles them to exercise it.
The first of the two questions stated above therefore seems to us to come down to the narrow issue whether the assignment of the 3rd August, 1948, being on the face of it a mere assignment of the term, without any reference to the benefit of the option, operated, in view of the terms of the proviso, or in other words, the contract, creating the option, as an assignment of the benefit of the option; or whether an express reference to the benefit of the option in the assignment of the term was necessary to produce that result. We think that upon the true construction of the proviso, including the definition to be read into it of the term lessee as including the lessee’s assigns, the original parties to the lease Bust be taken to have agreed that the option should be exercisable by Miss Blaker herself or by any assignee of the term to whom she might assign the benefit of the option, and that a mere assignment of the term should operate as an assignment of the benefit of the option to the assignee of the term. On this point we find ourselves in complete agreement with the following passage from the judgment of Mr. Justice Vaisey:
“I now come to what seems to me to be the main point of the case, which is whether the benefit of the option passed by the assignment of 1948, or, if not, then by the assignment of 1956. Taking the assignment of 1948 first, it seems to me that the benefit of the option did pass by it to the Plaintiff notwithstanding the omission of any reference to it. Admittedly it was a collateral contract, independent in some respects of the main contract between the parties as lessor and lesse. I think the point is covered by the case of In re Adams and the Kensington Vestry, 24 Chancery Division, page 199; see per Mr. Justice Pearson at page 206″-.
Then he reads part of what I have already quoted from the judgment of Mr. Justice Pearson, including
“If the lease bad been simply assigned, without any more words, the option would have passed with it.”
Then the learned Judge continues:
“In the same case in the Court of Appeal, 27 Chancery Division, page 394; the decision of Mr. Justice Pearson was affirmed.”
Then Mr. Justice Vaisey quotes Lord Justice Cotton’s observations on page 4O2, and goes on:
“To the same effect is Batchelor v. Murphy, 1925 Chancery, page 220.”
Mr Justice Vaisey then, after briefly stating the nature of that case and quoting a passage from the judgment of Mr. Justice Warrington at page 228 of the report to which we have already referred, continues:
“And the authority of that decision is enhanced and certainly in no way diminished by the report of the same case in the House of Lords, 1926 Appeal Cases, page 63, and support is given to the same view by In re Johnston’s Application. 1950 Chancery, page 524-“
For these reasons we are of opinion that the first of the two questions raised should be answered in the affirmative, that is to say, in the sense that the assignment of the 3rd August, 1948, did, as Mr. Justice Vaisey held, effectually vest the benefit of the option in the Plaintiff.
That conclusion makes it strictly unnecessary to answer the second question, concerning the efficacy of the deed of the 22nd March, 1956, which purported to assign the benefit of the option to the Plaintiff, if and so far as not already vested in him by the assignment of the 3rd August, 1948, and Mr. Justice Vaisey did not deal with it.
But in case we are wrong in holding the assignment of the 3rd August, 1948, to have included the benefit of the option, we should perhaps briefly indicate our view on this second question also.
If the assignment of the 3rd August, 1948, did not pass the benefit of the option to the Plaintiff, then in cur view the benefit of the option remained vested in Miss Blaker. True it is that by the terms of the option provision Miss Blaker could only assign it to an assignee of the term, but we fail to see why it should not have been competent to her to assign it to the Plaintiff who was in fact the assignee of the term.
Mr. Newson contended that the benefit of the option if, contrary to his submission on the first question, it was assignable at all, was only assignable along with and by the same instrument as the term; and accordingly that by assigning the term without including the option, Miss Blaker destroyed the option, which thus became incapable of assignment to the Plaintiff or anyone else.
We find it impossible to accede to this argument and are clearly of opinion that the deed of the 22nd March, 1956, must have constituted an effective assignment of the benefit of the option to the Plaintiff if the assignment of the 3rd August, 1948, did not.
Mr. Newsom raised a subsidiary contention to the effect that the notice of the 22nd March, 1956, purporting to exercise the option was bad because on the true construction of the option provision the six months notice required for its exercise must, in order to be effective, expire with or before the expiration of the term. He relied on the condition requiring payment of all rent up to the expiration of the notice as showing that the provision contemplates that rent should be accruing down to the date of such expiration, which could only be so if the lease was still on foot. We can attach no weight to this point. There is nothing in this condition as to rent which can as a matter of language be regarded as inconsistent with a notice expiring after the end of the term, as in that case the condition would be literally complied with by payment of all rent due down to the end of the term. It is true that there would then be a hiatus in the shape of the period from the expiration of the lease down to the expiration of the notice during which no rent would be in terms reserved. But the parties appear, very sensibly, to have acted on the footing of an implied obligation on the lessee to continue to pay rent during this period, as it seems that rent since the 25th March, 1956, has in fact been paid and accepted.
Moreover, we think Mr Newsom’s contention is quite plainly negatived by the latter part of the provision which is to the effect that: –
“nothing herein contained shall be construed as giving to the lessee any option to purchase the fee simple of the demised premises at any time after the expiration or sooner determination of the term hereby granted unless the aforesaid notice shall have been given by her before such expiration or determination.”
That language expressly allows for a notice given before but not expiring till after the end of the term.
Various other arguments and authorities were touched upon in the course of a long and highly technical discussion, but we have we think dealt sufficiently with the essential points.
For the reasons we have endeavoured to state we think that Mr. Justice Vaisey came to a right conclusion in this case, and we would dismiss this appeal.
Mr GOULDING: My Lord, I ask your Lordships to dismiss the appeal with costs.
LORD JUSTICE JENKINS: Yes. Well, that follows, does it not, Mr. Newsom?
Mr NEWSOM: Yes, my Lord, I cannot resist that.
LORD JUSTICE JENKINS: Then appeal dismissed with costs, and Mr. Justice Vaisey’s declaration stands.
Mr GOULDING: Yes, my Lord. The costs below arc reserved by the Judge, because, of course, he was not disposing of the action.
LORD JUSTICE JENKINS: This is only the application on points of law?
Mr GOULDING: Yes, my Lord; I think I shall have to restore my summons for judgment. Unless my friend can make any concession in the matter, I think I shall have to restore my summons for judgment. The costs below were reserved by Mr. Justice Vaisey.
LORD JUSTICE JENKINS: They will be reserved below in the action; but so far as this application for determination of points of law is concerned, the appeal fails on that; Mr. Justice Vaisey’s determination of those questions stands, and the costs of the appeal follow the event, I should have thought.
Mr GOULDING: The costs of the appeal must fellow the event.
LORD JUSTICE JENKINS: The costs of the appeal must follow the event. The costs below are to be dealt with there.
LORD JUSTICE ROMER: The costs of this appeal are quite separate from the costs of the action?
Mr GOULDING: Yes. As I understand it, your Lordships will simply dismiss the appeal with costs.
Mr NEWSOM: As your Lordships have had to resolve some very difficult questions, will your Lordships give me leave to appeal to the House of Lords? In my submission, it is a matter of great importance.
(The Court conferred.)
LORD JUSTICE ROMER: It might be a question of terms.
LORD JUSTICE JENKINS: What do you say, Mr Goulding?
Mr GOULDING: I do not, of course, deny that your Lordships have had to deal with substantial and difficult questions of law where the authorities are not perfectly satisfactory; I concede that; but in my submission it is a highly technical point. Mr. Newsom in his submission did not pretend that it was of any strong merits. It would be a hardship on my client if your Lordship should simply give leave to appeal. I submit it would be better to leave my learned friend to apply to the House of Lords for leave to appeal, where he could be put on terms, I apprehend, with a wider discretion than your Lordships could exercise.
LORD JUSTICE JENKINS: Yes; it is a tempting prospect to have two or three new pages on this aspect written into Woodfall and the other textbooks, but there is no particular reason why your client should pay for that conveyancing feat, so to speak.
Mr GOULDING: My Lord, so I submit, because my clients are merely seeking to stick to the letter of a plain bargain, and it was submitted against them that the law did not allow the parties’ intention to be carried out. Under those circumstances it would, in my submission, be something of a hardship to my clients to be taken to the House of Lords.
LORD JUSTICE ROMER: What terms could you get more favourable from the Appeal Committee?
Mr GOULDING: If the Appeal Committee were so minded, I apprehend they could make an Order as to costs whatever the event.
LORD JUSTICE ROMER: Well, they do not very often do that, do they?
Mr GOULDING: No, my Lord, not very often.
LORD JUSTICE ROMER: I mean, this Court has power to impose conditions as to costs.
LORD JUSTICE JENKINS: We can impose conditions, such as that the intending appellant undertakes not to disturb the Order as to costs already made and not to ask for costs in the House of Lords. I think we are allowed to do that.
LORD JUSTICE ROMER: We are allowed to do that.
LORD JUSTICE SELLERS: We are dealing with property of some substantial value. The Plaintiff here is seeking to get the benefit of this, and it will give a good profit to the Plaintiff if this appeal is upheld in the House of Lords. This is not a case of great poverty. I should have thought that where there is property of this kind, it is undesirable to make any Order as to the costs of the appeal to the House of Lords.
LORD JUSTICE JENKINS: Yes, I think there is very great force in what my Brother says. You do not have here that great disparity of means such as you have in a Revenue case between the means of the Treasury and the means of the taxpayer.
Mr GOULDING: Well, my Lord the difference between the option price and the real price is something of the order of £10,000; it is a substantial matter.
Mr NEWSOM: There is no evidence of that.
LORD JUSTICE SELLERS: But it is substantial: it is of the order of some thousands of pounds.
LORD JUSTICE ROMER: After all, Mr. Newsom, you have four judgments against you.
Mr NEWSOM: Yes, my Lord, but, if I may very respectfully say so, the Court of Appeal has had to examine very closely into superficially contradicting decisions of this Court.
LORD JUSTICE JENKINS: In the House of Lords the whole thing would then be open.
Mr NEWSOM: The whole thing would then be open, yes, my Lord.
(The Court conferred.)
LORD JUSTICE JENKINS: On the whole, Mr Newsom, we have considered this and we think we should not grant leave, but leave it to you, if so advised, to apply to the Appeal Committee and see what they think about it.
Mr NEWSOM: If your Lordship pleases.
LORD JUSTICE JENKINS: Mr Newsom and Mr Goulding, the learned
Registrar points out that there are certain verbal slips in the form of Mr Justice Vaisey’s Order of the 18th March, 1957, deciding the points of law. It reads at the moment, in the schedule to the Order:
“Whether the benefit of the option of purchase contained in the lease dated l7th May 1935 and made between Aubrey John Pelton of the one part and Winifred Martin Blaker of the other part being the said Exhibit HGG1”
—. Well, that is a wrong reference, because when they put this into the schedule instead of into the recital, the reference got mis-stated. It ought to be “Exhibit HGG1 to the affidavit of the Plaintiff filed on the 29th November, 1956”.
And then the same thing later on: -“the assignment dated” so and so, “and made between” so and so, “being the said Exhibit HGG2 to the said affidavit”.
There is a similar correction in (2):
“If the answer to the preceding question is in the negative whether the said Deed dated 22nd March”-.
That should be “whether the deed dated the 22nd March, 1956, being the Exhibit HGG4 to the said affidavit”.
Those are purely formal points and I should think we might give a direction for them to be put right under the Slip Rule. It does not go to the effect of the Order at all.
LORD JUSTICE JENKINS: It is merely the form. Then we will direct that the Order be amended in that way, in order to make it read.
LORD JUSTICE JENKINS: Very well.
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