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Amalgamated Investment and Property Co Ltd v John Walker & Sons Ltd

Amalgamated Investment and Property Co Ltd v John Walker & Sons Ltd

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Contract Law Cases
Contract Law Cases

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Published by: thinkkim on Apr 12, 2013
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Amalgamated Investment and Property Co Ltd v John Walker & Sons LtdCOURT OF APPEAL, CIVIL DIVISION[1976] 3 All ER 509, [1977] 1 WLR 164, 32 P&CR 278, [1976] RVR 268, 239 EG 277,[1976] EGD 166HEARING-DATES: 2nd, 3rd MARCH 19763 MARCH 1976CATCHWORDS:Contract - Mistake - Common mistake - Existence of mistake at date of contract -Building sold for development - Belief of parties at date of contract that building not listed under planning legislation as being of special architectural orhistoric interest - Provisional list prepared by officials for approval of Secretary of State - Building unconditionally included in provisional list before date of contract - List given legal effect shortly after date of contract - Whetherpurchaser entitled to rescission of contract on ground of common mistake.Contract - Frustration - Change of circumstances - Building sold for development- Building listed under planning legislation as being of special architecturalor historic interest - Building included in statutory list after date of contract and before date for completion - Agreed purchase price £ 1,700,000 - Effect of listing to reduce value to £ 200,000 - Whether change of circumstances rendering performance of the contract radically different from what had been undertaken - Whether contract frustrated.HEADNOTE:The defendants were the owners of a commercial property which they proposed to sell. The property was advertised as being suitable for occupation or redevelopment. In July 1973 the plaintiffs agreed, subject to contract, to purchase the property for £ 1,710,000. The defendants were aware at all times that the plaintiffswished to redevelop the property although they would have to obtain planning permission for that purpose. In their enquiries before contract the plaintiffs specifically asked the defendants whether the property was designated as a buildingof special architectural or historic interest. On 14th August the defendants replied in the negative. Unknown to the parties, however, officials of the Department of the Environment had included the defendants' property in a list of buildings which it was proposed should be listed under s 54 of the Town and Country Planning Act 1971 as being of architectural or historic interest. On 25th Septemberthe parties signed the contract of sale. On 26th September the Department of the Environment wrote to the defendants and informed them that the property had been included in the statutory list of buildings of special architectural or historic interest and that the list was about to be given legal effect. The list wasgiven legal effect on the following day when it was signed on behalf of the Secretary of State. In evidence it transpired that the property had been unconditionally selected for inclusion in the list on 22nd August. The value of the property with no redevelopment potential, which it would not have unless the plaintiffscould obtain listed building consent, was £ 1,500,000 less than the contract price. The plaintiffs claimed, in the alternative, rescission of the agreement on the ground of common mistake or a declaration that the agreement was void or voidable, and an order rescinding the agreement.Held - The plaintiffs' claims failed for the following reasons --(i) For the doctrine of common mistake to apply, the plaintiffs had to show thatthe mistake existed at the date of the contract. At that date the property hadnot been listed but only included in the list of buildings of special architectural or historic interest which was only an administrative step toward listing. T
he property had become a listed building on the date the list was signed which was subsequent to the date of the contract and therefore the parties had not beenunder any common mistake in believing that the property was not subject to anysuch fetter on the date they signed the contract (see p 515 e f and j, p 516 a to c and p 519 c and e, post).(ii) Listing had not prevented the defendants from carrying out their obligations under the contract according to its terms as the defendants had never warranted that planning permission could be obtained for the development of the property. There was an inherent risk, of which every purchaser should be regarded as being aware, that any property might become listed. The plaintiffs had been aware that that risk existed and it was a risk they had to bear. It could not thereforebe said that the performance of the contract that would be called for would, inconsequence of the listing, be radically different from that which had been undertaken by the contract (see p 516 g to p 517 e and p 520 c to e, post); dictumof Lord Radcliffe in Davis Contractors Ltd v Fareham Urban District Council [1956] 2 All ER at 160 applied.NOTES:For the law relating to mistake and frustration of contracts, see 9 Halsbury's Laws (4th Edn) paras 290-295, 441-470, and for cases on the subject, see 12 Digest (Repl) 456-514, 3305-3567.CASES-REF-TO:Bell v Lever Brothers Ltd [1932] AC 161, [1931] All ER Rep 1, 101 LJKB 129, 146LT 258, 37 Com Cas 98, HL; rvsg [1931] 1 KB 557, CA, 35 Digest (Repl) 102, 63.Davis Contractors Ltd v Fareham Urban District Council [1956] 2 All ER 145, [1956] AC 696, [1956] 3 WLR 37, 54 LGR 289, HL, 12 Digest (Reissue) 507, 3518.Denny, Mott and Dickson Ltd v James B Fraser & Co Ltd [1944] 1 All ER 678, [1944] AC 265, 113 LJPC 37, 171 LT 345, HL, 12 Digest (Reissue) 500, 3495.Grist v Bailey [1966] 2 All ER 875, [1967] Ch 532, [1966] 3 WLR 618, Digest (Cont Vol B) 545, 120a.Solle v Butcher [1949] 2 All ER 1107, [1950] 1 KB 671, 209 LT 66, CA, 31(2) Digest (Reissue) 1042, 8232.INTRODUCTION:Appeal. This was an appeal by the plaintiffs, Amalgamated Investment and Property Co Ltd, against the judgment of Plowman V-C on 5th March 1975 whereby on the trial of an action by the plaintiffs against the defendants, John Walker & Sons Ltd, which had been consolidated with an action by the defendants against the plaintiffs, it was ordered that the plaintiffs' action should be dismissed and, onthe defendant's counterclaim, that an agreement dated 25th September 1973 for the sale by the defendants to the plaintiffs of certain freehold property known as33 Commercial Road, London E1 should be specifically enforced and carried intoexecution. The facts are set out in the judgment of Buckley LJ.COUNSEL:John Balcombe QC and Benjamin Levy for the plaintiffs. H E Francis QC and J M Chadwick for the defendants.PANEL: BUCKLEY, LAWTON LJJ AND SIR JOHN PENNYCUICKJUDGMENTBY-1: BUCKLEY LJ.JUDGMENT-1:BUCKLEY LJ. This is an appeal from a decison of Plowman V-C on 5th March 1975 relating to a contract for sale of some land in the Commercial Road, London E1. The property was advertised by estate agents, in particulars prepared by them, asbeing for sale 'For occupation or redevelopment'. It consisted of a site on whic
h stood a large warehouse building which had been purpose-built to be used as abonded warehouse and bottling factory for the defendant company, who are manufacturers of whisky. They had ceased to use it for that purpose, and it was for sale vacant. A company called Gladdings had written to the defendants expressing interest in the property as possible purchasers and mentioning the fact that Gladdings had an office development permit which might be used in connection with a redevelopment of the site. The property had been advertised in the press as suitable for redevelopment and occupation.On 13th July 1973 Gladdings wrote to estate agents acting for the defendants making an offer of £ 1,710,000, subject to contract, for the freehold with vacant possession. On the same day the company which is now the plaintiff company in the action made an offer of £ 1,460,000. Five days later the plaintiffs wrote to say that they had agreed to join forces with Gladdings and associated themselves withthe offer of £ 1,710,000. On 19th July the defendants' agent wrote accepting thatoffer, subject to contract.Enquiries were made before contract in the ordinary way, and amongst other questions asked was this:'Although the Purchaser will be making the usual searches and enquiries of the local and planning authorities, the Vendor is asked specifically to state whetherhe is aware of any order, designation or proposal of any local or other authority or body having compulsory powers involving any of the following...'Then there are a number of sub-paragraphs, the only relevant one being (iv), which reads: 'The designation of the property as a building of special architectualor historic interest.' A negative answer was given to that question by the vendors on 14th August.With the approval of Gladdings, it was arranged that the contract should be taken in the name of the plaintiffs, and on 25th September 1973 the contract was signed. It incorporated the law Society's General Conditions of Sale (1973 Revision), which contained, amongst other provisions, a condition that nothing in the conditions should entitle the vendor to compel the purchaser to accept or the purchaser to compel the vendor to convey (with or without compensation) property which differed substantially from the property agreed to be sold and purchased, whether in quantity, quality, tenure or otherwise, if the purchaser or the vendor respectively would be prejudiced by reason of such difference.On 26th September 1973, that is the day after the contract, the Department of the Environment wrote a letter to the defendants notifying them that the property,the subject-matter of the contract, had been selected for inclusion in the statutory list of buildings of special architectural or historic interest compiled by the Secretary of State, and that that list was about to be given legal effect.The evidence with regard to that is rather startling. It was to this effect: that a survey had been made of the neighbourhood by the Department of the Environment's survey investigators, and one of their investigators had made a report recommending what buildings in this particular area should be listed as being of architectural or historical interest. That report went to the chief investigating officer, who forwarded it to a lady, Miss Price, who gave evidence. She is a member of the staff of the Department of the Environment dealing with this sort of subject, and it was she who prepared the list of buildings to be listed in pursuance of s 54 of the Town and Country Planning Act 1971. It was her responsibilityto decide which of the buildings recommended in the report for listing should be put into the list. In the course of her evidence she was asked:'As a matter of practice -- we know when the letter goes out it is the Ministerwho signs it [That is not in fact quite accurate, because it is not the Minister; it is the head of the department who signs it on behalf of the Secretary of St

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