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Wroth v Tyler

[1974] Ch 30, [1973] 1 All ER 897, [1973] 2 WLR 405, 25 P & CR 138, 117 Sol Jo 90

Court: Ch D

Judgment Date: circa 1974

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SALE OF LAND - RIGHTS AND DUTIES PRIOR TO COMPLETION - REMEDIES UNDER AN UNCOMPLETED CONTRACT - SPECIFIC PERFORMANCE - WHEN SPECIFIC PERFORMANCE WILL BE REFUSED - SPECIFIC PERFORMANCE REFUSED - AGREEMENT FOR SALE OF LAND - WITH VACANT POSSESSION - LITIGATION NECESSARY TO OBTAIN POSSESSION

Defendant lived with his wife and daughter in a bungalow the title to which was registered at the Land Registry as absolute. In or about March 1971 defendant decided to sell the bungalow and to buy one in Norfolk. The bungalow was placed in the hands of estate agents and plaintiffs visited the premises with a view to purchase. Plaintiffs eventually agreed to buy the bungalow for £6,050. On 27 May 1971 contracts were exchanged for the sale of the bungalow, defendant as beneficial owner contracting to sell with vacant possession at the agreed price, completion to take place on or before 31 October. On the same day, defendant entered into a contract for the purchase of the Norfolk bungalow. On 28 May defendant's wife, unknown to defendant, entered in the charges register against defendant's title at the Land Registry a notice of her rights of occupation under ss 1 and 2 of Matrimonial Homes Act 1967. At no time had defendant's wife given any indication to plaintiffs that she was unwilling to leave the bungalow. Neither defendant's wife nor the Land Registry disclosed the registration of the notice directly to defendant, but on 11 June the building society to which the bungalow was mortgaged wrote to defendant's solicitors enclosing a notice of the wife's rights of occupation which had been received by them from the Land Registry; and on 18 June defendant learnt of the notice for the first time when he received notification of the registration from his solicitors. Defendant instructed his solicitors to withdraw from his contract with plaintiffs and to cancel the purchase of the Norfolk bungalow. On 13 July defendant's solicitors wrote to plaintiffs' solicitors confirming that defendant would not complete the contract with plaintiffs. Plaintiffs issued a writ claiming, inter alia, specific performance of the contract and damages in lieu or in addition: Held (1) plaintiffs were not entitled to an order for specific performance of the contract with vacant possession. Although it was a vendor's duty to obtain necessary consents to a sale and, where he had sold with vacant possession, to take proceedings to obtain possession from any person in possession who had no right to be there, he would not usually be required to embark on difficult or uncertain litigation in order to secure any requisite consent or obtain vacant possession. An order in favour of plaintiffs for specific performance with vacant possession would require defendant to apply to the court, in accordance with s 1(2) of the 1967 Act, for an order terminating his wife's rights of occupation under the Act. The outcome of such application would depend on the exercise of the court's discretion. Furthermore it was undesirable to require a husband to take legal proceedings against his wife, especially while they were still living together. Since defendant had sufficiently attempted to obtain the wife's consent, short of litigation, it would, in the circumstances, be highly unreasonable to make an order for specific performance if some other form of order could do justice; (2) plaintiffs were not entitled to an order for specific performance of the contract subject to the rights of occupation of defendant's wife, with damages or an abatement of the purchase price in respect thereof. There was at least a real possibility that a decree of specific performance subject to the wife's right not to be evicted or excluded would enable plaintiffs, by taking suitable proceedings, to evict defendant, and perhaps the daughter, and thus split up the family. Those circumstances made the case one in which the court would be slow to decree specific performance if any reasonable alternative existed; (3) plaintiffs were not precluded from recovering damages for loss of bargain by the rule that only nominal damages under that head were recoverable for a breach of contract which had been occasioned by defendant's inability, without his own fault, to show a good title. The rule itself was anomalous and was not to be extended to analogous cases. The instant case did not fall within the spirit or intendment of the rule, for at the date of the contract the wife's charge was unregistered, and even if an unregistered charge under the 1967 Act could be described as a 'defect in title', it was a defect which could be removed merely by defendant completing the contract. The fact that, after the contract had been made, the wife had registered her charge should not affect the damages to which plaintiffs were entitled for breach of the contract; (4) the damages for loss of bargain were to be computed as at the date of assessment, ie at £5,500, and not as at the date of breach of contract. Since plaintiffs had a proper claim for specific performance, the case fell within Chancery Amendment Act 1858 s 2, under which the court had jurisdiction to award such damages as would put plaintiffs into as good a position as if the contract had been performed, even if to do so meant awarding damages assessed by reference to a period subsequent to the date of the breach; (5) an award of £5,500 damages for loss of bargain was not precluded by reason of the fact that, although the parties had contemplated a rise in house prices, they had not foreseen a rise of an amount approaching that which had in fact taken place. It was in principle wrong to limit damages flowing from a contemplated state of affairs to the amount that the parties could be shown to have had in contemplation. In order to establish a claim to damages for breach of contract it was only necessary to show a contemplation of circumstances which embraced the head or type of damage in question; there was no need to demonstrate a contemplation of the quantum of damages under that head or type; (6) it followed therefore that plaintiffs were entitled to damages of £5,500 in substitution for a decree of specific performance.

Semble: if a protected spouse knowingly stands by and assists while the owning spouse contracts to sell the house with vacant possession, it may be that the protected spouse will thereafter be precluded from asserting his or her rights under the 1967 Act. In the case of registered land the court has power under s 139(1) of Land Registration Act 1925 to compel a protected spouse to appear in the action and show cause why the contract should not be specifically performed.

SPECIFIC PERFORMANCE - DEFENCES TO CLAIMS FOR SPECIFIC PERFORMANCE - PERFORMANCE BY THE DEFENDANT MADE IMPOSSIBLE - IN GENERAL - AGREEMENT FOR SALE OF LAND - WITH VACANT POSSESSION - LITIGATION NECESSARY TO OBTAIN POSSESSION

Defendant lived with his wife and daughter in a bungalow the title to which was registered at the Land Registry as absolute. In or about March 1971 defendant decided to sell the bungalow and to buy one in Norfolk. The bungalow was placed in the hands of estate agents and plaintiffs visited the premises with a view to purchase. Plaintiffs eventually agreed to buy the bungalow for £6,050. On 27 May 1971 contracts were exchanged for the sale of the bungalow, defendant as beneficial owner contracting to sell with vacant possession at the agreed price, completion to take place on or before 31 October. On the same day, defendant entered into a contract for the purchase of the Norfolk bungalow. On 28 May defendant's wife, unknown to defendant, entered in the charges register against defendant's title at the Land Registry a notice of her rights of occupation under ss 1 and 2 of Matrimonial Homes Act 1967. At no time had defendant's wife given any indication to plaintiffs that she was unwilling to leave the bungalow. Neither defendant's wife nor the Land Registry disclosed the registration of the notice directly to defendant, but on 11 June the building society to which the bungalow was mortgaged wrote to defendant's solicitors enclosing a notice of the wife's rights of occupation which had been received by them from the Land Registry; and on 18 June defendant learnt of the notice for the first time when he received notification of the registration from his solicitors. Defendant instructed his solicitors to withdraw from his contract with plaintiffs and to cancel the purchase of the Norfolk bungalow. On 13 July defendant's solicitors wrote to plaintiffs' solicitors confirming that defendant would not complete the contract with plaintiffs. Plaintiffs issued a writ claiming, inter alia, specific performance of the contract and damages in lieu or in addition: Held (1) plaintiffs were not entitled to an order for specific performance of the contract with vacant possession. Although it was a vendor's duty to obtain necessary consents to a sale and, where he had sold with vacant possession, to take proceedings to obtain possession from any person in possession who had no right to be there, he would not usually be required to embark on difficult or uncertain litigation in order to secure any requisite consent or obtain vacant possession. An order in favour of plaintiffs for specific performance with vacant possession would require defendant to apply to the court, in accordance with s 1(2) of the 1967 Act for an order terminating his wife's rights of occupation under the Act; the outcome of such application would depend on the exercise of the court's discretion. Furthermore it was undesirable to require a husband to take legal proceedings against his wife, especially while they were still living together. Since defendant had sufficiently attempted to obtain the wife's consent, short of litigation, it would, in the circumstances, be highly unreasonable to make an order for specific performance if some other form of order could do justice; (2) plaintiffs were not entitled to an order for specific performance of the contract subject to the rights of occupation of defendant's wife, with damages or an abatement of the purchase price in respect thereof. There was at least a real possibility that a decree of specific performance subject to the wife's right not to be evicted or excluded would enable plaintiffs, by taking suitable proceedings, to evict defendant, and perhaps the daughter, and thus split up the family. Those circumstances made the case one in which the court would be slow to decree specific performance if any reasonable alternative existed; (3) plaintiffs were not precluded from recovering damages for loss of bargain by the rule that only nominal damages under that head were recoverable for a breach of contract which had been occasioned by defendant's inability, without his own fault, to show a good title. The rule itself was anomalous and was not to be extended to analogous cases. The instant case did not fall within the spirit or intendment of the rule, for at the date of the contract the wife's charge was unregistered, and even if an unregistered charge under the 1967 Act could be described as a 'defect in title', it was a defect which could be removed merely by defendant completing the contract. The fact that, after the contract had been made, the wife had registered her charge should not affect the damages to which plaintiffs were entitled for breach of the contract; (4) the damages for loss of bargain were to be computed as at the date of assessment, ie at £5,500, and not as at the date of breach of contract. Since plaintiffs had a proper claim for specific performance, the case fell within Chancery Amendment Act 1858 s 2, under which the court had jurisdiction to award such damages as would put plaintiffs into as good a position as if the contract had been performed, even if to do so meant awarding damages assessed by reference to a period subsequent to the date of the breach; (5) an award of £5,500 damages for loss of bargain was not precluded by reason of the fact that, although the parties had contemplated a rise in house prices, they had not foreseen a rise of an amount approaching that which had in fact taken place. It was in principle wrong to limit damages flowing from a contemplated state of affairs to the amount that the parties could be shown to have had in contemplation. In order to establish a claim to damages for breach of contract it was only necessary to show a contemplation of circumstances which embraced the head or type of damage in question; there was no need to demonstrate a contemplation of the quantum of damages under that head or type; (6) it followed therefore that plaintiffs were entitled to damages of £5,500 in substitution for a decree of specific performance.

Semble: if a protected spouse knowingly stands by and assists while the owning spouse contracts to sell the house with vacant possession, it may be that the protected spouse will thereafter be precluded from asserting his or her rights under the 1967 Act. In the case of registered land the court has power under s 139(1) of Land Registration Act 1925 to compel a protected spouse to appear in the action and show cause why the contract should not be specifically performed.