Mr Mills became the under tenant of the Radnor Tavern, 72, Chancery Lane, for a ten year term from 1861. The agreement between him and Mr. Austin, the holder of a long lease, contained an option to purchase the headlease. On 26th July 1867 Mr. Mills’ solicitors wrote as follows: ‘Mr. Mills is desirous of exercising his right to purchase the lease of the Radnor, and has instructed us to call upon you, as far as you are concerned, to complete the sale, which he is ready and willing to do. We have informed Mr. Gibbon and the National Bank of this, and if there be any other parties now representing you, be kind enough to hand them this letter.’ A draft assignment was prepared but the details were never finalised. Mr. Mills continued to pay sums by way of rent up to and after the ten year period of the option had expired. In November 1872 Mr. Austin was adjudicated bankrupt and Mr. Haywood was appointed trustee. He decided to sell the Radnor Tavern and offered it first to Mr Mills. Mr Mills took advice and pursuant to that advice claimed specific performance of the option that he claimed to have been exercised. Vice-Chancellor Hall made a decree for specific performance.
Held: The appeal succeeded. ‘If it were necessary to determine the point, there is considerable ground in the present case for holding that there had been a mutual abandonment of the contract, both sides treating the whole matter as at an end, and dealing with one another accordingly. But it is not necessary to give a decision on that point.
It is a well-established principle, as laid down by Lord Alvanley in Milward v Earl Thanet, that a party cannot call upon a Court of Equity for a specific performance unless he has shown himself ready, desirous, prompt and eager.
This rule is specially applicable where the subject-matter of the contract is of a somewhat speculative and fluctuating value, as the tavern, the subject of the present suit, must necessarily be; and the delay which has occurred in the present case from March, 1868, till May, 1873, unless satisfactorily explained, must be fatal to the plaintiff’s title to a decree for specific performance. It was contended that the delay was solely attributable to the disputes between Gibbon and Austin; but even if this were so, it was the duty of the Plaintiff, if he desired to obtain specific performance, to insist upon, and if necessary file a bill to enforce, specific performance of his contract. Then it is said that the Plaintiff has been in possession, and that a purchaser in possession does not lose by delay his right to specific performance. But possession, in order to obviate the consequence to a purchaser of delay, must be possession under the contract sought to be enforced, that is (to use the words of Lord St. Leonards in Clarke v Moore) ‘an enjoyment of the benefits given to him by the contract’, and the vendor must have known, or have been bound to know, that the purchaser claimed to be in possession under the contract. In such a case, as, eg where the purchaser in possession has no right or title to such possession except as purchaser, his possession is an assertion on his part of his right under the contract of purchase, and acquiescence in his possession is a recognition by the vendor of this right. But where a tenant in possession contracts for the purchase of his landlord’s interest the case is different. His right under the contract is to be no longer tenant of the vendor, and his possession as tenant is not an assertion of right under the contract of purchase. He may be in possession of the property, the house or land which is the subject of the contract of purchase, but, if he is, he is not in possession of, or asserting right to, the benefit or interest secured to him by the contract. …
In my opinion, the result is that the plaintiff did not, from March, 1868, till May, 1873, claim to be in possession as purchaser, and there is nothing to show that the vendors recognised or were bound to recognise his possession as being that of purchaser under the contract for sale. In my opinion, therefore, his possession was not such as to prevent the delay which has occurred being fatal to his claim for specific performance.’
Judges:
Cotton LJ
Citations:
(1877) 6 Ch 196
Contract, Landlord and Tenant
Updated: 28 April 2022; Ref: scu.180932