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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> Mitchell & Anor v. Caversham Management Ltd [2009] ScotCS CSOH_26 (26 February 2009) URL: http://www.bailii.org/scot/cases/ScotCS/2009/2009CSOH26.html Cite as: [2009] ScotCS CSOH_26, [2009] CSOH 26 |
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OUTER HOUSE, COURT OF SESSION [2009] CSOH 26 |
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A800/06 |
OPINION OF LORD BRACADALE in the cause GEORGE AND ELIZABETH MITCHELL Pursuers; against CAVERSHAM MANAGEMENT LIMITED Defender: ________________ |
Act: Walker; McGrigors
Alt: Upton; Paull & Williamsons
Introduction
[1] In
this action the pursuers seek declarator that the contract for the purchase by
the defender from the pursuers of certain subjects in
The
contract
[2] The
pursuers owned the Metro Hotel and other property in
[3] By
letter dated
[4] The offer dated
"The purchaser
obtains planning permission/building warrants to convert the subjects into a
minimum of eighteen residential units on reasonable terms of which he shall be
the sole judge. He undertakes to submit
the planning application by no later than
In his evidence Mr Mitchell said that he agreed to the
change from 14 March to 14 April. Mr
Cohen had told him that things were taking a bit longer than was expected and
that he told Mr Cohen just to speed it up as much as he could.
[5] Clause
2 was in the following terms:
"Entry and vacant
possession shall be given within 45 days after the purification of the
suspensive condition clause 4, or on such other date as the parties may mutually
agree, when the price shall become payable and at least one key for all
external locks will be delivered."
Thus, on the basis that planning permission would be
obtained by
[6] In the
event, the application for planning permission was not made until about
24 May 2006. The reason for this is
not entirely clear. Mr Mitchell said
that Mr Fitzgerald, the defender's architect, had told him that he was waiting
for money from Mr Keane before he could complete the drawings. Mr Keane said that the architect's son had
died. These different explanations are
perhaps an earnest of the much more significant discrepancies in evidence which
emerged in the course of the proof and which I endeavour to address. The matter was not canvassed with Mr
Fitzgerald, who gave evidence. Mr Mitchell spoke to Mr Cohen and Mr Keane
on a number of occasions about delay. He
raised his concerns with them and asked if things could be speeded up.
The
pursuers' primary case and the 21 June letter
[7] In
their primary case the pursuers aver that the contract was varied so as to
introduce a longstop date of
"1. With regard to clause 2 this will be amended
that payment will be no later than 14 days after the purification of the
amended suspensive clause and in any event the date of entry will be no later
than
2. With regard to clause 4 the second sentence
is deleted. The time for obtaining
consent should be extended to
Mr Mitchell's evidence was that he understood from
that letter that 30 September would be the last date for everything to be
settled. Mr Cohen told him that he had
spoken to Mr Keane. Mr Mitchell
himself did not discuss the date of 30 September as a final date with
Mr Keane. According to Mr Mitchell,
Mr Cohen reckoned that timescale was what was required in order to get the
planning permission and for everything to be dealt with. It was Mr Cohen who suggested the date 30
September. Mr Mitchell had said to Mr
Cohen that he was getting "pissed off" and understood that he could walk away
at the end of September. He himself had
had a discussion with Mr Cohen a couple of days before the letter dated 21
June was issued. He said that he himself
was content on the basis that the deal would definitely be settled by 30 September. He explained that 30 September was important
because he had a VAT bill of over £100,000 to pay.
[8] In any
event, it is clear that the pursuers did not sign an acceptance of that letter
although Mr Mitchell thought that they had done so. There is a file note in Mr Cohen's file dated
[9] Mr
Keane denied knowing that the
[10] In
relation to the 21 June letter Mr Cohen said that 30 September was intended to
be the last date for payment and in Mr Cohen's view either party could have
resiled thereafter. He sent the letter
out on behalf of the defender. There had
been discussions with both parties before it was sent out; he thought that
these discussions were on the telephone.
Mr Mitchell had agreed to the new 30 September deadline which was gone
over with him. No acceptance was sent
back but by Mr Mitchell's conduct Mr Cohen believed that that was an
oversight.
[11] Mr
Cohen said that the letter of 21 June was issued with the full knowledge of
Mr Keane. He referred to production
6/12 which was an e-mail dated
"Dear Robert
In connection
with the contract for the sale/purchase of the units at Hotel Metro I attach
herewith a further amendment to the missives to keep everybody right in
accordance with my discussions.
Regards
Danny Cohen"
The e-mail bears to have an attachment. In his evidence Mr Keane denied receiving
this e-mail or a copy of the letter.
[12] Mr
Cohen reacted very strongly to the suggestion by Mr Keane that he did not know
about the 21 June letter and that he had not given the instructions for
it. He described that suggestion as "untrue"
and "very disappointing". He said that
Mr Keane never challenged his authority to send the letter dated
21 June. If he had done so Mr Cohen
would have seen a conflict which would have disallowed him from acting for both
sides. It was a nonsense to suggest that
the missive did not have Mr Keane's authority.
In cross-examination Mr Cohen
was insistent that Mr Keane was fully aware of the significance of 30 September
as the deadline. He accepted that there
was no note in his file of any telephone conversation with Mr Keane prior to
the letter being sent out but rejected the proposition that that was because it
had not taken place. He accepted that he
should have made a file note of the telephone conversation. He very strongly rejected the suggestion that
he had taken it UPON himself to write the letter dated 21 June without
reference to Mr Keane. He rejected the
suggestion that he had acted because he knew that if the 30 June deadline
passed there was a risk that the contract would fall apart and he might not be
paid.
[13] In
relation to the file note of the issue of a letter reminding Mr Mitchell to
sign the 21 June letter acceptance it was put to him that there was no copy of
that letter in the file. Mr Cohen said
that the letter may not have been filed.
They were operating a mixture of paper and electronic storage at the
time.
[14] It is
clear from this chapter of evidence that by mid June the
[15] I am driven by that analysis of the
evidence to conclude that Mr Keane was not truthful on this aspect of his
evidence. That, in turn leads me to
treat his evidence on other aspects of the case with care, though I recognise
that a witness may be untruthful or unreliable in certain parts of the evidence
but may be truthful and reliable on other aspects. I conclude that Mr Keane must have known that
he was offering to commit himself to a longstop date of 30 September. My impression was that Mr Keane was prepared
to do that confident that Mr Mitchell would in any event agree to a further
extension should that be necessary.
[16] I find, therefore, on the evidence before
me that the parties did intend to agree to the variation of the contract
contained in the 21 June letter. I also
find that the pursuers never signed the acceptance of the letter. The contract related to the transfer of land
and was accordingly subject to Sections 1 and 2 of the Requirements of Writing (Scotland)
Act 1995 ("the 1995 Act"). So far as material section 1 provides-
"(1) Subject to subsection (2) below and any other enactment, writing shall not be required for the constitution of a contract...
(2) Subject to subsection (3) below, a written document complying with section 2 of this Act shall be required for -
(a) the constitution of -
(i) a contract... for the creation, transfer, variation or
extinction of an interest in land...
(3) Where a contract... mentioned in subsection (2)(a) above is not constituted in a written document complying with section 2 of this Act, but one of the parties to the contract... ('the first person') has acted or refrained from acting in reliance on the contract... with the knowledge and acquiescence of the other party to the contract... ('the second person') -
(a) the second person shall not be entitled to withdraw from the contract...; and
(b) the contract... shall not be regarded as invalid,
on the ground that it is not so constituted, if the condition set out in sub-section (4) below is satisfied.
(4) The condition referred to in subsection (3) above is that the position of the first person -
(a) as a result of acting or refraining from acting as mentioned in that subsection has been affected to a material extent; and
(b) as a result of such a withdrawal as is mentioned in that sub-section would be adversely affected to a material extent.
...
(6) This section shall apply to the variation of a contract... as it applies to the constitution thereof but as if in subsections (3) and (4) for the references to acting or refraining from acting in reliance on the contract... and withdrawing therefrom there were substituted respectively references to acting or refraining from acting in reliance on the variation of the contract... and withdrawing from the variation".
[17] Mr Walker, on behalf of the pursuers,
accepted that in the absence of a written acceptance by the pursuers the
provisions of section 1(3) and (4) of the 1995 Act required to be met. He submitted that subsequent events did
satisfy these requirements and that, accordingly, the contract had been varied
to create the longstop date of 30 September.
He recognised that he had to demonstrate that the pursuers had acted, or
refrained from acting, in reliance on the variation of the contract; that they had
done so with the knowledge and acquiescence of the defender; that as a result
of so acting, or refraining from acting the position of the pursuers had been
affected to a material extent; and that in the event
of the defender withdrawing from the variation, the pursuers would be adversely
affected to a material extent. Both Mr
Walker and Mr Upton, who appeared on behalf of the defender, recognized that the
acting, or failure to act, relied on must post-date the agreement to vary and
be referable to the contract as varied. (Tom Super Printing Supplies Limited
& Another v South Lanarkshire Council (unreported) Lord Hamilton, 28
September 1999). Mr Walker contended
that in relation to the question of acquiescence by the defender a wide reading
should be given. The 1995 Act did not
require that the defender should know each and every aspect of the pursuers'
acting or failure to act. The defender might not know the precise way or ways in
which the pursuers were acting. It
would, said Mr Walker, be sufficient that it knew generally that they were
arranging their affairs in reliance on the fact that the contract had been
varied. Mr Upton submitted that that
approach was unsound. There was no warrant in the
1995 Act for that approach What
the first party has or has not done must be known to or acquiesced in by the
other party, or it was irrelevant to the application of the statutory
test. The relevance of conduct arose
from the fact that the other party had notice of it, which rendered it just to
proceed to the conclusion that such conduct should be a factor binding him to
the informal agreement.
[18] Mr
Walker submitted that the acting or refraining from acting on the part
of the pursuers could be summarised as follows: (i) the pursuers had agreed to
a further extension; (ii) the pursuers had refrained from seeking another
purchaser; (iii) the pursuers had refrained from resiling sooner; (iv) the
pursuers attending meetings with Mr Cohen and Mr Keane; (v) the pursuers instructing
Mr Cohen to attend meetings with Mr Keane; and (vi) the pursuers generally had
arranged their affairs on the basis that the transaction would settle by 30
September 2006.
[19] While it is true that the evidence
indicated that the pursuers agreed to the extension to 30 September, that in
itself would not post-date the agreement to vary. Accordingly, it could not constitute relevant
actings for the purpose of section 1 (3) and (4).
[20] In relation to the proposition that the
pursuers had refrained from seeking another purchaser Mr Walker relied on a
piece of evidence from Mr Mitchell to the effect that if it had been suggested
that 30 September was not a deadline he would have tried to sell
elsewhere. Mr Upton submitted that this
was no more than a single, throw-away remark which Mr Mitchell did not explain
or expand. He did not explain what he
would done in terms of any specific, practical steps. Furthermore, Mr Mitchell had said in evidence
that over the whole of
the summer until the end of September, he hoped and thought that the deal with
Mr. Keane would happen. His evidence
looked at as a whole did not bear the interpretation that the pursuers had in
mind selling elsewhere but were constrained only by a requirement to wait until
the longstop date had past. It seems to
me that this contention is well founded on the evidence. Looking at the evidence as a whole I conclude
that selling elsewhere was not in the pursuers' minds between 21 June and the
end of September.
[21] Mr Walker contended that the pursuers had refrained from
resiling sooner
because of the variation in the contract.
I am unable to find an evidential basis for this contention. Again, looking at the evidence as a whole, it
seems to me that as the summer developed and the transaction stumbled along, Mr
Mitchell was not seriously considering resiling. He became increasingly concerned and
irritated at the delays but he was still looking to completing the transaction
with the defender.
[22] Then Mr Walker relied on evidence that the pursuers
attended meetings with Mr Cohen and Mr Keane, instructed Mr Cohen to attend
meetings with Mr Keane and paid fees to Mr Cohen. It is difficult to see how these activities,
in the context of an ongoing transaction, could be regarded as acting or
refraining from acting in a manner which was referable to the variation to the
contract.
[23] In my opinion Mr Upton is well founded in
his submission that in order to satisfy the test in the 1995 Act it would not be
sufficient that the defender knew generally that the pursuers were arranging
their affairs in reliance on the fact that the contract had been varied. It seems to me that what is required is for
the pursuers to be able to point to specific actings or examples of refraining
from acting and that these must be
known to and acquiesced in by the other party.
These provisions provide relief from a failure to meet the general
requirements as to written agreement.
That would require a clear identification of the actings or refraing from
acting. Further, the actings or
refraining from acting require to known about and acquiesced in by the other
party. Accordingly, they should be
capable of clear identification in order that the relevant knowledge and
acquiescence of the other party may be ascertained.
[24] In
these circumstances I conclude that the pursuers have failed to meet the test
set out in sub-sections (3) and (4) of section 1 of the 1995 Act. I therefore hold that the contract was not
varied in terms of the 21 June letter and the pursuers' primary case must fail.
The pursuers' esto
case
[25] The first issue to be addressed in
relation to the pursuers' esto case
is whether they have pled one. In his principal
written submissions Mr Walker had presented his arguments in two chapters:
first, what he described as the pursuers' primary case, namely, that the
contract had been varied so as to make 30 September 2006 a longstop date; and,
second, what he described as the pursuers' esto
case, namely, that esto the contract
had not been varied to make 30 September 2006 a longstop date, in terms of the
unvaried original contract the pursuers were free to resile at any time after
30 June 2006, which they did.
[26] Mr
Upton contended that the pursuers had failed to plead an esto case in the pleadings as amended. He submitted that in their written
submissions the pursuers had, for the first time, introduced an alternative
argument that, esto the contract was
not varied, then the pursuers were entitled to resile, and after 30 September
gave due intimation that they were doing so.
There was, said Mr Upton, no record for that case. It failed on that basis. Accordingly, he submitted, unless the
pursuers succeeded on their primary case, the defender was entitled to
absolvitor.
[27] In his
submissions in reply Mr Walker contended that throughout the action the
pursuers had always maintained two alternative arguments, namely, (i) that they
had resiled from the contract as unvaried; and (ii) that, in the alternative,
the contract was varied to introduce the longstop date leading to automatic
termination of the contract. That was
clear from a reading of the record as it stood up until the morning of the
proof. On the morning of the proof the
record was opened up and amended in terms of the defender's minute of amendment
and the pursuers' answers. The effect of
the answers was to swap the two cases over so that the argument based on the
contract having been varied, which had hitherto been the alternative case,
became the primary argument. The case
based on resiling from the unvaried contract, which had hitherto been the
primary case, became the alternative case.
He explained that that was done in order to make the pleadings more
logical in terms of timing. The change
was not designed to limit the pursuers' case to one basis, namely, that the
contract had been varied. The case had
always been, and continued to be, presented on the basis of an alternative that
the pursuers resiled from the unvaried contract.
[28] Having
read articles 4 and 5 of condescendence in their forms before and after the
amendment of the record which I allowed on the morning of the proof, I can see
what happened. Of course, it is the
record in its final form as amended which must govern what happens at the proof
and represents the case or cases pled by a party. While I consider that the answers lodged by
the pursuers on the morning of the proof left something to be desired in the
clarity of averring alternative cases, I am not persuaded that they indicated
that the pursuers were abandoning their approach of pleading alternative
cases. It seems to me that when read as
a whole the pursuers' pleadings in their amended form do give notice of the
pursuers' intention to plead an alternative case based on the pursuers having
resiled from an unvaried contract. In
addition, this was against the background that they had pled alternative cases
throughout the action. It cannot be said
that the defender did not have fair notice that the pursuers intended to rely
on alternative cases. Accordingly, I reject
Mr Upton's contention that the pursuers have failed to plead an esto case in the pleadings as amended
and his submission that unless the pursuers succeed on their primary case, the
defender is entitled to absolvitor.
[29] In
order to form a view on the merits of the pursuers' esto case it is necessary to examine certain events in August,
September and October 2006.
The 17 August telephone calls
[30] In Mr Cohen's file there is a note dated
"Attendance at
telephone with George Mitchell when he said that he had heard that the
permission was not going to be through by the end of September and that the
plans had been lodged late. He thought
that it was appropriate that George Mitchell [recte Robert Keane] should show his good faith by allowing some of
the deposit to be paid. I was asked to
speak to Robert Keane to get his view on this.
Telephoning
Robert Keane and obtaining his permission to release £8,000."
The £8,000 was paid to Mr Mitchell on 18 August
(production 7/24).
[31] Mr
Mitchell's position was that by the middle of August he had his doubts but was
still being told by Mr Cohen and Mr Keane that it was hoped to get planning
permission by the end of September. He
denied that Mr Keane told him that the application would be coming before the
October meeting of the planning committee.
[32] Mr
Mitchell agreed that he had telephoned Mr Cohen and asked if he could get the
deposit and that Mr Keane agreed to pay £8,000.
However, Mr Mitchell's position was that at that stage Mr Keane was
still adamant that the deal would conclude by the end of September. He said that he had asked for the deposit on
the understanding that it was all going through in September. Mr Mitchell said that the statement in the
file note of 17 August to the effect that he had said to Mr Cohen that he
had heard that the permission was not going to be through by the end of
September was not true.
[33] According
to Mr Keane the position was that round about 12 or
[34] A day
or so later Mr Keane spoke to Mr Cohen and told him the position. Mr Cohen said that he would discuss it
with Mr Mitchell. He called back and
said that the Mitchells were unhappy because of the financial problems and it
would help greatly if Mr Keane released some of the deposit. He agreed to release £8,000.
[35] Mr
Cohen's account of the 17 August telephone call was that Mr Mitchell had said
that he was worried that planning permission would not be through by the end of
September. However, the main purpose of
the call was to get the money. The
planning permission issue was not that significant. There was some reference to delays and things
were not going wonderfully well but he could not recall any detail on
that. The discussion did not indicate
that the payment of money was conditional on the pursuers agreeing not to
resile by October. As far as Mr Cohen
was concerned the 30 September longstop date still applied. Had the question of an extension beyond the
end of September been discussed that would have been put into the file
note. Had it been a condition of the
payment of £8,000 that Mr Mitchell would not resile after the end of September
that would have been reflected in the file note. In cross-examination Mr Cohen said that the
main purpose of the call was to get the money.
He said that the payment of the money was not specifically related to
the failure to get the planning permission.
It was a recognition that Mr Keane already had an extension to the end
of September.
[36] It seems
to me that there are difficulties in the accounts of both Mr Mitchell and Mr
Keane. I consider that Mr Mitchell's
assertion that what Mr Cohen had written in his file note was untrue is
untenable. While I accept that Mr Keane
himself knew, as a result of his telephone conversation with an official in the
Planning Department of the Local Authority, that the application would not be
heard until the October meeting, I do not accept that he communicated that
information in a straightforward way to either Mr Mitchell or Mr Cohen. It would not be consistent with the terms of
Mr Cohen's file note. If both Mr
Mitchell and Mr Cohen had been told directly by Mr Keane that the application
would not be considered until the October meeting, the entry in the file note
would make no sense. I would expect the
entry in the file note to reflect that position. In addition, it would not be consistent with
the general impression which I have formed of the way in which, as the
transaction developed and delays were encountered, Mr Keane tended to keep Mr
Mitchell going with encouraging noises as to progress. In this regard I also note a piece of
evidence given by Mr Fitzgerald, the architect for the project, who stated that
he might have tried to be optimistic and mentioned September as a possibility
at a time when he thought it likely that the application would come before the
October meeting.
[37] I do
not consider either Mr Mitchell or Mr Keane to be reliable in their accounts of
the events on and surrounding
[38] I accept the evidence of Mr Cohen as to the nature and effect of the
telephone conversation on 17 August. Had the question
of an extension beyond the end of September been discussed I would have
expected Mr Cohen to include that in the file note.
[39] Further support for Mr Cohen's position that the payment of the
deposit was a gesture of goodwill and not in consideration of an agreement to
an extension until the meeting of the Planning Committee in October is to be
found in the evidence of what happened towards the end of September. As far as Mr Cohen was concerned as the end
of September was approaching it was necessary to take some action. He did so.
He met Mr Mitchell and thereafter Mr Keane and drafted the letter of 29
September specifying a new agreement. He
was proceeding on the basis that the longstop date was 30 September. Had it been the case that in August there had
been the kind of agreement for which the defender contends, it would have been
unnecessary for these steps to be taken.
Furthermore, had there been such an agreement in August I would have
expected Mr Cohen to have reflected that in missives, as he did in the 21 June
and 29 September letters.
[40] The
question arises as to the effect of the events of 17 August. Mr Upton submitted that the evidence
demonstrated that the payment of the deposit was in
consideration of the pursuers' agreement not to object to determination of the
application taking until the October meeting of the Planning Committee. Mr Upton submitted that the telephone conversation
should be interpreted as an operation of the clause 4(a) "permission" or,
alternatively, a basis for holding that the pursuers were personally barred
from resiling or had waived their objection to an extension. Mr Walker submitted that
the deposit was paid to the pursuers as a gesture of goodwill and without any
condition.
[41] Mr Upton submitted that clause 4(a) of the missives
did not require the purchaser's option to extend time to be exercised in
writing. The exercise of the option was
not a variation of the contract but the implementation of that agreement. Accordingly,
writing was not required by the Requirements of Writing Act 1995. The defender therefore did not need to prove
that what was said on 17 August was succeeded by facts which met the criteria
in sub-sections 1(3) & (4) of the 1995 Act.
All that was necessary was a unilateral exercise of the option by the
purchaser. He accepted that exercise of
the option had to be made known to the sellers.
Mr Upton went on to submit that a bilateral agreement to extend time constituted
an exercise of the option. The option
could be validly implemented unilaterally by the purchaser intimating as much
to the seller; or by both agreeing to implement it; or by the seller
representing that he so agreed so as to waive his right to object to the buyer
taking the time, or so as personally to bar himself from objecting.
[42] I
accept Mr Upton's contention that the exercise of the option in clause 4(a) would not constitute
a variation of the contract but would be an implementation of the agreement. It would not therefore be necessary to meet
the criteria in sub-sections 1(3) & (4) of the 1995 Act. However, I find it very difficult, on any
view of the effect of the 17 August telephone call, to interpret it as an
exercise of the option in clause 4(a) to extend the deadline for obtaining
planning permission. It seems to me to
be a valiant, but strained and ultimately untenable effort to deal with the
issue of why, once the application for planning permission was made, the
defender did not simply exercise the option in clause 4(a) and give notice to
the pursuers that it was doing so.
[43] In the light of the view that I have formed of the
basis of the discussion about the deposit in the telephone call it does not
seem to me that the discussion could on any view be interpreted as an exercise
of the option under clause 4(a). Accordingly, whatever may have been in the mind of Mr Keane, I am
satisfied that there was no agreement in August as suggested by Mr Upton.
[44] Mr
Upton further submitted that if it was not agreed on 17 August that time would be
extended, Mr. Mitchell and, on his behalf, Mr. Cohen, had represented that the
pursuers had no objection to further time being needed to obtain planning
permission, that the time for that purpose would be extended to include
October, and the pursuers thus represented that they would not object to the
defender not settling sooner. This, he
submitted, provided a foundation for personal bar or waiver. Mr Upton referred
to the following passage in the speech of Lord Chancellor Birkenhead in Gatty v Maclaine 1921 S.C. (H.L.) 1 at
p.7:
"The rule of
estoppel or bar, as I have always understood it, is capable of extremely simply
statement. Where A has by his words or
conduct justified B in believing that a certain state of facts exists, and B
has acted upon such belief to his prejudice, A is not permitted to affirm
against B that a different state of facts existed at the same time."
He also referred to the opinion of Lord Nimmo Smith in Wm. Grant & Sons Ltd. v. Glen Catrine Bonded
Warehouse Ltd. 2001 SC 901 at p. 938 paragraphs
[3] & [4] where in the context of acquiescence it was pointed out that B's reliance must be
reasonable.
[45] In the light of my conclusions as to the
content and circumstances of the 17 August telephone call outlined above, I do
not accept that Mr. Mitchell and Mr. Cohen represented that the pursuers had
no objection to further time being needed to obtain planning permission, that
the time for that purpose would be extended to include October, and that the
pursuers thus represented that they would not object to the defender not
settling sooner. In any event, on the
view that I have reached on the evidence, I do not accept that the evidence
supports Mr Upton's contention that in reasonable reliance on the
representations of the pursuers, the defender acted to its prejudice in three
specific ways. Firstly, he contended
that it released the deposit irrevocably to the pursuers. The evidence from Mr Keane on this issue
seemed to me to indicate that he had not really addressed the question at
all. He said that he would not have
expected return of the deposit because he expected the deal to go through
anyway. Secondly, Mr Upton submitted, Mr
Keane did not instruct Mr. Cohen to invoke the option in clause 4(a). I did not find the evidence on which Mr Upton
relied in support of this proposition to be reliable. It emerged in response to leading questions
and was not consistent with Mr Keane's evidence at another point that he simply
assumed that Mr Cohen would deal with those kinds of issues. Thirdly, Mr Upton submitted, the defender did
not do what it would otherwise have done had the pursuers expressed objection
to further time being needed, namely to have offered to settle the transaction
forthwith, waiving the need for planning permission. Again, I am not persuaded that Mr Keane had
addressed this issue. It was only with
hindsight that he said that he would have completed the deal regardless of
whether planning permission had been granted.
The inference which I draw from the evidence as a whole is that Mr Keane
assumed that the pursuers would put up with anything because of their financial
difficulties and that they would simply go along with whatever delays
developed. Accordingly, I reject the
contention that the pursuers were personally barred from resiling from the
contract. For similar reasons I reject
the contention that the pursuers had represented themselves as having waived
the right to object to the defender not settling earlier.
Events
in September and October 2006
[46] As
before in the history of this contract, in relation to events towards the end
of September there are significant differences of recollection between Mr
Mitchell, Mr Keane and Mr Cohen. Mr
Mitchell's position was that as the end of September approached he realised
that the contract was not going to be completed. There was now talk of October for planning
permission and money being paid at the end of December. By this stage Mr Mitchell had lost
confidence in both Mr Cohen and Mr Keane.
He described his reaction to the suggestion of October for planning
permission as being "shattered". He was
in financial trouble; he had domestic problems at the time and felt let down by
Mr Keane and Mr Cohen.
[47] Mr
Mitchell did meet Mr Cohen on 28 September but said that he left being upset
with Mr Cohen. He said to Mr Cohen
that he could walk away and Mr Cohen agreed but said that he would try to get
some extra money. Mr Mitchell had said
to him that he could do what he liked.
He said that he told Mr Cohen that 30 September was the final date and
he was not going to sign any extension. In
relation to Mr Cohen's file note dated
[48] Mr
Keane claimed that in August Mr Cohen had suggested to him that it might be
better to say to the Mitchells that they would have their money in November or
December. Mr Keane had said there was no
point in that because the money would be paid in October. Between 17 August and 30 September Mr Keane
met Mr Mitchell as usual. There was
discussion about selling additional premises on the ground floor. At this stage this was more the issue of
conversation than the planning permission question.
[49] Under
reference to the meeting with Mr Cohen on 28 September Mr Keane said that
he agreed to increase the price by £5,000 on this occasion. He regarded it as paying a token amount. Mr Keane had said that he would settle
on 31 October whether planning permission was granted or not. Mr Cohen had said that they had better
say to Mr Mitchell that it could be December. Mr Keane had said "No" to that
suggestion because he was prepared to pay whether planning permission was
through or not. The 30 September
deadline was not discussed.
Mr Keane had assumed since 17 August that an extension would
be agreed. Mr Cohen said that he did
not see it as being a problem with Mr Mitchell to grant an extension. Mr Keane left Mr Cohen's office
thinking that everything was in order.
He understood that Mr Cohen had extended the contract and had had a
discussion with Mr Mitchell who had been in his office that morning.
[50] Mr
Keane denied that the meeting on 28 September was because the longstop date of
30 September was looming. By mid-August
it had been clear that the planning application would be considered at the
October meeting and everyone knew that the target date of 30 September was not
going to be achieved. If the longstop
date had been in place as 30 September then a meeting would have been held
earlier in September. He denied the
evidence of Mr Cohen that when Mr Cohen had been trying to contact him he had
not been responding. Production 6/6 is
the letter dated
[51] The
file notes prepared by Mr Cohen on 26 and 28 September are of
significance. The first is dated
"I was being pressed
by George Mitchell to arrange a meeting with Robert Keane so that a proper
formal extension could be given before the time limit specified in the missives
of
There are two file notes dated 28 September. The first is as follows:
"George Mitchell
came in before the scheduled meeting with Robert Keane and asked me to deal
with it on his behalf. He stated at this
time that it was his intention to grant the extension beyond
The second file note dated
"Meeting with Robert Keane
around
I asked for more money on
George Mitchell's behalf if the entry was going to be beyond
He stated that it was his
firm intention to pay before the end of October but asked in connection with a
new longstop date to keep it before Christmas.
On the strength of the meeting I had had with George Mitchell in the
morning I said that I thought all this would be in order.
I then sent out on the same
day a letter strictly advising George Mitchell that in my opinion he did not
have to extend the period for obtaining planning permission."
In evidence Mr Cohen explained that as 30 September
approached he thought that date very important.
Parties needed to speak to each other through him and something formal
would be required. If Mr Keane needed a
further extension that should be done before 30 September. A meeting was scheduled for 28 September in
the afternoon. Mr Mitchell did not
attend that meeting but came in and spoke to Mr Cohen in the morning. He did not wish to attend the meeting. Mr Cohen understood his instructions to be that
as long as something was certain he did not mind giving an extension. Mr Cohen put it thus: "The strong
probability, and even greater, was that he was ready to give even more time for
completion of the contract."
Accordingly, Mr Cohen took the view that a further change to the
missives would be required. Mr Cohen
asked Mr Mitchell if he would like more money and Mr Mitchell said that it
was not about money. He said that he was
not a happy man because of difficulties in his personal life. At that stage he preferred not to meet
Mr Keane. He did not give the
impression that he was ready to walk away from the contract. Mr Cohen felt that Mr Mitchell was in a
strong negotiating position and could ask for more money to extend the missives
again as he would be doing a favour to Mr Keane. Mr Cohen's impression was that Mr Mitchell
wanted to get the matter resolved and have a definite date on which he could
rely.
[52] Mr
Cohen had the meeting with Mr Keane who put forward his final extension
arrangement. He would pay as soon as
possible. He expected to pay before the
end of October but the very last date would be 20 December.
[53] Mr
Cohen then wrote a letter dated 29 September because he wanted something in
place before the 30th. The
letter, so far as material, is in the following terms:
"As discussed with you the
purchasers are due to fulfil their contract and pay for the flats by
However, you are aware that
there have been delays in obtaining planning permission.
After discussion with Mr
Keane of Caversham Management Limited, this letter confirms that his proposal
is that he will make payment by 31st October if at all possible and
is willing to pay an extra £5000 (that is raise the price to £365,000) if
payment goes beyond that date. He wishes
to have in the contract a final payment date of no later than
In order to recognise the
terms of this arrangement I have prepared a letter re-opening the contract for
you and Betty to sign if you are happy.
Please return this to me at your earliest..."
In evidence Mr Cohen explained that it was not the
position that at the meeting with Mr Keane on 28 September he had already
bound the pursuers to the proposal. The
terms of the letter were not consistent with that suggestion. The letter was framed on the basis that Mr
Keane was making a new "proposal".
[54] I am
unable to accept Mr Mitchell's account of his meeting with Mr Cohen on 28
September. It is flatly contradicted by
Mr Cohen's file note. I find that at
that meeting Mr Mitchell was still contemplating the possibility of some
further extension, though he was doing so against a background of increasing
frustration and dissatisfaction with both Mr Keane and Mr Cohen. Nor am I able to accept Mr Keane's evidence,
particularly in relation to the proposed longstop date of 20 December. His position on that issue is not borne out
by the entry in Mr Cohen's file note or the terms of the letter sent by Mr
Cohen to the pursuers. According to Mr
Cohen, the new longstop date had its provenance in Mr Keane. In addition, the extra £5000 would only
become payable if there was no settlement by 31 October. I also reject Mr Keane's evidence that when
he left the office the extension was in place.
In his file note Mr Cohen had include the paragraph quoted above, "I then sent out on the same day a letter
strictly advising George Mitchell that in my opinion he did not have to extend
the period for obtaining planning permission."
In his letter to the pursuers dated
Events
in October
[55] Mr
Mitchell explained that his brother John had helped him out in the past. In early October Mr Mitchell spoke to his
brother John about John Mitchell buying the hotel. John said that he was going to come in and he
started taking people into look at it in early October. Mr Mitchell said that he felt bitter about the
defender and that Mr Keane had led him up the garden path. He described the letter dated 29 September
as "the final straw". He did not sign or
return the acceptance letter. Instead, in
early October he telephoned Mr Cohen and told him that he was walking away from
the deal.
[56] Mr
Mitchell said that he spoke to Mr Keane early in October and told him that he
had done a deal with his brother John Mitchell.
They had a meeting and at this stage Mr Keane offered to buy the
whole place for £1.3 million. Mr Mitchell agreed that by the time Mr John
Mitchell was involved any decision would be between Mr Keane and John Mitchell.
[57] In
cross-examination Mr Mitchell stated that he had not put his decision to walk
away from the contract in writing he agreed that that was so but added "I let
the parties know", by which I understood him to refer to Mr Keane and Mr Cohen.
[58] John
Mitchell said that he wanted an asset for bailing out his brother and the
premises were the asset. He said that he
said to George that if "this guy" pulled out or let him down, he, John, would step
in. Production 7/42 was a document dated
[59] Mr
Keane's account of events in early October was that in the first week in
October he received a telephone call from Mr Cohen to say that there was a
problem. He said that Mr Mitchell
had been on the phone and he had been ranting and raving about the delays. He was talking about his brother and his
financial situation and his personal life.
He suggested that Mr Keane should speak to Mr Mitchell. Mr Keane contacted Mr Mitchell at
the beginning of the following week.
Mr Mitchell said that his brother did not want him to go through
with the deal and told Mr Keane that his brother had lent him money. Mr Keane told him that he was legally
bound to conclude the contract. They
arranged to meet and when they did Mr Mitchell told Mr Keane that he
owed his brother money. He told him that
things were now out of his hands. He was
being pushed by his brother into making a decision that he did not want to
make. This was the message which he got
across to Mr Keane. Mr Keane's
impression was that he was being bullied by his brother. He said that he would speak to his brother
and hopefully get it resolved. He would
go back and try to persuade his brother to allow him to move forward as they
had agreed. Ten days later
Mr Mitchell phoned and suggested that Mr Keane should talk to his
brother John. Mr Keane contacted
John Mitchell and they had a meeting.
John Mitchell was clear that he was not prepared to deal and there was
nothing to discuss. Mr Mitchell was
out of the picture by this stage.
[60] Mr
Keane denied that when he had the meeting with Mr Mitchell, Mr Mitchell
had told him that his brother John was interested in buying the property. When he met John Mitchell he, John Mitchell,
did not tell him that he was buying the property. John Mitchell was concerned as to whether the
amount of money that Mr Keane was paying was enough for the debt owed by Mr
George Mitchell to Mr John Mitchell.
[61] Mr
Cohen said that in October things went awry.
Mr Keane told him that Mr Mitchell had told him that he was not going
ahead. Mr Keane was the first person who
told him that Mr Mitchell did not agree to the extension. Mr Cohen spoke to Mr Mitchell. This would be no later than the second week
in October. Mr Cohen said that he was
astonished at Mr Mitchell's decision. He
advised Mr Mitchell that he ought either to go ahead or renegotiate. Mr Mitchell told Mr Cohen that it was too
late to go on with the transaction because he had done a deal with someone else
who turned out to be his brother.
[62] Mr
Cohen described Mr Keane's reaction to Mr Mitchell's decision to resile as
disappointment and desperation. Mr Cohen's
impression was that Mr Keane knew that 30 September was the longstop date and
he knew that he had not complied with that.
Mr Keane spoke to Mr Mitchell direct and tried to persuade Mr Mitchell
to keep to the deal by offering more. Mr
Keane panicked and then went to other lawyers.
[63] I am
unable to accept Mr Keane's evidence that Mr Mitchell did not communicate to
him that he, Mr Mitchell, was resiling from the contract. That evidence is not consistent with the
evidence of Mr Mitchell himself. It is
not consistent with the evidence of surrounding circumstances spoken to by John
Mitchell. Nor is it consistent with Mr
Cohen's evidence that Mr Keane himself
told him that Mr Mitchell was not going ahead or Mr Cohen's evidence as
to Mr Keane's reaction to that news. I
reject the evidence of Mr Keane on this matter.
I accept the evidence of Mr Mitchell which fits in with the rest of the
evidence in this chapter. I am satisfied
that Mr Mitchell did communicate to Mr Keane directly that he was resiling and
also communicated that to Mr Cohen who was still acting as solicitor for Mr
Keane at that stage. I am satisfied that
he did so early in October and, in any event, before 24 October when the defenders'
new agents sent the letter (production 7/29) to the pursuers' agents, Cohen
& Co., withdrawing the unaccepted letter of 21 June, and intimating the exercise
the option to extend time in clause 4(a) until the planning authority had made
their decision.
[64] In the
light of the view of the evidence at which I have arrived on the basis of the
analysis set out in this opinion, I conclude that in terms of the unvaried
contract the pursuers were entitled to resile and did give adequate notice that
they were doing so. Accordingly, in my
opinion the pursuers have succeeded in proving their esto case. In these
circumstances I shall sustain the pursuers' fourth plea-in-law, repel the
defender's pleas-in-law and grant decree of declarator as concluded for. I shall reserve meantime the question of
expenses.