Ezekiel and another v Kohali and another

Land – Agreement for sale – Title – Defendants failing to sell with good title – Both parties seeking specific performance – Claimants seeking abatement of purchase price – Whether claimants knowing extent of title – Whether claimants relying upon defendants’ misrepresentation – Claimants’ application dismissed – Defendants’ application grantedThe defendants owned two plots of land (the site) in North London that the claimants, who were property developers, wanted to purchase. In September 1999, the parties entered into a written agreement for the sale of the site, but there was no express reference to title or to the status of any representations. Furthermore, the agreement did not contain a precise definition of the land being sold and therefore it was necessary to rely upon the annexed plan and specification. The claimants carried out searches, which showed that the registered titles did not include the entire site; in particular an access strip to the plots. The claimants argued that: (i) the defendants had contracted to sell the entirety of the two plots; (ii) the first plot included the access strip; and (ii) it had been agreed that the second plot would have vehicular access over the strip. However, they contended that the defendants were unable to show good title to all the land that they had contracted to sell, particularly the access strip, and could not grant the appropriate easements. They argued that throughout the negotiations, which culminated in the September agreement, the defendants had orally represented their ownership of the entire site, including the strip, and that the claimants had relied upon those representations when executing the agreement. They sought specific performance but with an abatement of the £300,000 purchase price. In the alternative, they claimed damages for breach of contact and/or misrepresentation pursuant to section 2(1) of the Misrepresentation Act 1967.The defendants claimed that they had shown their registered titles to the first claimant at an early stage in the negotiations and that the claimants were aware of the limited extent of the title being sold. The defendants counterclaimed for specific performance but without abatement. Held: The claimants’ application was dismissed; the defendants’ application was granted.The obligation to show good title was the central term of a contract for the sale of land. Where the contract was silent, the obligation was a matter of legal implication. In order to show good title, one had to be either the registered proprietor of the freehold estate with an absolute title or, where the land was unregistered, be seized of the fee simple and be in a position to convey it without the possibility of dispute or litigation. Furthermore, in order to be able to grant the rights of way and easements agreed, it was necessary to show good title to all the land over which they were to be granted: Lysaght v Edwards (1876) LR 2 Ch D 499, Re Stone and Saville’s Contract [1963] 1 WLR 163 and Re Stirrup’s Contract [1961] 1 WLR 449 applied.However, where there was an innocent misrepresentation as to the area of land to be sold, the purchaser was entitled to whatever the vendor was able to sell with an appropriate abatement of the purchase money for the area that fell short of the representations. Equally, the obligation to show good title in every respect was rebutted by proving that the purchaser had entered into a contract with the knowledge of particular defects in the title: Timmins v Moreland Street Property Co Ltd [1958] Ch 110 applied.On the evidence in the instant case, it was more likely than not that the claimants had been aware of the extent of the defendants’ title before the September agreement was executed. Consequently, it followed that their implied right to good title was rebutted and that they were unable to show reliance upon a misrepresentation as to title at that time. Therefore the claimants claim for specific performance or damages failed and the defendants’ claim succeeded in the light of the claimant’s knowledge of the extent of their title.Michael Michell (instructed by Kenneth Elliott & Rowe, of Romford) appeared for the claimants; Gary Blaker (instructed by Lawrence Sternberg & Co) appeared for the first defendant; Michael Lee (instructed by Davidson & Co) appeared for the second defendant.Eileen O’Grady, barrister