Midwood v Morgan and another

Pre-emption clause –– Construction –– Meaning of “transferee” –– Pre-emption right granted “for so long as transferee is beneficial owner” –– Land transferred to joint transferees –– Later gift by one transferee of his whole legal and beneficial interest to co-transferee –– Whether sole owner entitled to exercise right of pre-emption –– Whether “for so long as” referred to retained beneficial ownership of both original transferees By a transfer dated 26 January 1987, the claimant transferred Calcot Cottage to the defendants, as co-owners, out of a larger parcel of land. In respect of one area of land that the claimant retained (the pre-emption land), the transfer granted to “the Transferee for so long as the Transferee is the beneficial owner” a right of pre-emption, should the claimant wish to sell the pre-emption land; the clause containing that right made several references to “the Transferee” in the singular. By a deed of gift dated 7 December 1990, the first defendant passed to the second defendant all his legal and beneficial interest in Calcot Cottage, and the second defendant thereafter became the sole registered proprietor. Following proposals by the claimant for the development of the pre-emption land, and contentions advanced by the defendants that the right of pre-emption remained valid and effective, the claimant issued proceedings, claiming a declaration that the pre-emption right had expired, as “the transferee” meant the defendants in the plural and they were no longer both beneficial owners. Held: The claim was allowed and a declaration was made that the pre-emption right had expired. There was a drafting imperfection in the pre-emption clause in its reference throughout to “the transferee”, in the singular; an earlier clause of the transfer had described the two defendants as “the Transferees”, in the plural. There was no scope for uncertainty, and “the transferee” in the pre-emption clause meant both defendants. The clause did not need rewriting. Each reference in the clause to “the transferee” referred to the defendants, or, more emphatically, both defendants or the defendants jointly. The obligations arising under the pre-emption clause in relation to the giving of notices and the paying of a deposit concerned both defendants; such considerations, taken on their own, pointed strongly to the conclusion that the phrase “for so long as the Transferee is the beneficial owner” should be read as requiring both the defendants to be the beneficial owner at the time the clause came to be implemented. A reasonable man would not conclude that, where the beneficial ownership had passed from both of the defendants to the second defendant alone, it was still the case that both defendants were the beneficial owners. The commercial purpose of the pre-emption clause was not sufficiently clear to read “transferee”, where there were two joint transferees, as extending to only one of them. The following cases are referred to in this report. Daniel’s Settlement Trusts, Re (1875) 1 ChD 375 Dear v Reeves [2001] EWCA Civ 277; [2001] 3 WLR 662 Featherstone v Staples [1986] 1 WLR 861; [1986] 2 All ER 461; (1986) 52 P&CR 287; [1986] 1 EGLR 6; 278 EG 867, CA Finch v Underwood (1876) 2 ChD 310 Hollies Stores Ltd v Timmis [1921] 2 Ch 202 Hounslow London Borough Council v Pilling [1993] 1 WLR 1242; [1994] 1 All ER 432; (1993) 91 LGR 573; 66 P&CR 22; [1993] 2 EGLR 59; [1993] 26 EG 123 Investors Compensation Scheme Ltd v West Bromwich Building Society (No 1) [1998] 1 WLR 896; [1998] 1 All ER 98, HL Liverpool City Council v Irwin [1977] AC 239; [1976] 2 WLR 562; [1976] 2 All ER 39; (1976) 74 LGR 392; [1976] 1 EGLR 53; 238 EG 879 Lloyd v Sadler [1978] 1 QB 774; [1978] 2 WLR 721; [1978] 2 All ER 529; (1978) 35 P&CR 78; [1978] 1 EGLR 76; 246 EG 479, CA James v Tallent (1822) 5 B&Ald 889Radfern v Hall (1877) LT 241 Viola’s Indenture of Lease, Re [1909] 1 Ch 244 This was a hearing of a claim by the claimant, Mr Jack Midwood, for declaratory relief in proceedings against the defendants, Anthony Malcolm Morgan and Vanessa Lilian Morgan. John McGhee (instructed by Lee Crowder, of Birmingham) appeared for the claimant; Judith Jackson QC (instructed by Morgan Cole, of Oxford) represented the defendants. Giving judgment, MR PAUL MORGAN QC said: 1. The issue in this case is as to the meaning and effect of a provision in a right of pre-emption contained in a transfer dated 26 January 1987 (the transfer) between Mr Jack Midwood (the claimant in these proceedings) and Anthony Malcolm Morgan and Vanessa Lilian Morgan (the defendants in these proceedings). Facts 2. Before the transfer, Mr Midwood was the freehold owner of three parcels of land. The first relevant parcel of land comprised the dwelling-house known as Calcot Cottage, New Lane Hill, Tilehurst, Reading, together with adjoining land. This first parcel was described in the transfer as “the Property”. The second relevant parcel of land comprised the dwelling-house known as Broomsgrove, New Lane Hill, Tilehurst, Reading, together with the land immediately adjoining it. The third relevant parcel of land comprised two areas, one of which separated the property from Broomsgrove and the other of which lay behind the property. In the transfer, this third relevant parcel of land was described as “the Pre-emption Property”. In the transfer, the second relevant parcel of land and the pre-emption property were together described as “the Retained Land”. 3. Before the transfer, Mr Midwood had obtained planning permission to construct a detached house and double garage on a part of the pre-emption property. An outline planning permission for this development was granted on 24 October 1979 and renewed on 6 October 1982. The renewal of the outline planning permission provided, in the usual way, for an application for approval of reserved matters to be made within three years of 6 October 1982. I was not told whether that time limit had been complied with. After the transfer, on 9 August 1989, Mr Midwood was granted a full planning permission for the erection of a five-bedroom house and garage on a part of the pre-emption property. 128 4. By the transfer, Mr Midwood transferred the property to Mr and Mrs Morgan, who were duly registered as proprietors of the property at HM Land Registry. In the transfer, Mr Midwood was described as “the Transferor” and Mr and Mrs Morgan were described as “the Transferees”. 5. The transfer contained an exception and reservation in favour of Mr Midwood for the benefit of the retained land. The rights excepted and reserved included the right to build or execute any works or buildings, or alter or deal with or use any of the retained land, in such manner as the transferor or the persons deriving title under the transferor might from time to time require. 6. Clause 2 of the transfer contained covenants on the part of the transferees. The words of covenant were expressed in this way: The Transferees hereby jointly and severally covenant with the Transferor for the benefit of the Retained Land and each and every part thereof and so as to bind the Property into whosesoever hands the same may come but so that the Transferees shall not be personally liable for a breach of these covenants occurring on or in respect of the Property or any part thereof after the Transferees shall have parted with all interest therein to observe and perform the following restrictive covenants… Clause 2(1) was a covenant by the transferees not to use the property or any part thereof for any purpose other than as, or incidental to, a single private dwelling. This covenant was to continue: for so long as the Vendor or his wife Phyllis May Midwood shall live… Although clause 2(1) refers to “the vendor”, this phrase is not defined in the transfer. However, it is obvious that the reference to the vendor in clause 2(1) is a reference to Mr Midwood, who is defined in the transfer as the transferor. The other covenants in clause 2, in various ways, seek to control the use of the property. In general terms, the purpose, or one of the purposes, of the covenants in clause 2 is to control the use of the property so as to preserve the amenity of the retained land. 7. By clause 3(1) of the transfer, it was agreed that the transfer should not be construed as amounting to a grant to the transferees of any rights of light or air over the retained land. Clause 3(3) referred to “the Transferees or other trustees for the time being of this Deed”. That subclause recognised that, the property being transferred to co-owners, the property would be held on statutory trusts and the identity of the trustees under those trusts might change. 8. Clause 4 was a covenant of indemnity on the part of the transferees in relation to certain covenants referred to in the charges register of the registered title, part of which was the property. The covenant of indemnity was by the transferees “jointly and severally”. 9. Clause 5 of the transfer granted the right of pre-emption at the centre of this case. Although clause 5 is somewhat lengthy, it is appropriate to set it out in full. Clause 5 reads as follows: IN consideration of the premises: (1) the Transferor HEREBY GIVES AN UNDERTAKING to the Transferee for so long as the Transferee is the beneficial owner of the Property not to sell the land coloured blue on the plan annexed hereto being part of title numbers BK59680 and BK196972 registered at HM Land Registry (“the Pre-emption Property”) or any part thereof or agree or offer to do so to any person without first offering to sell the same by notice (“the Offer Notice”) in writing to the Transferee at a price to be determined in manner hereinafter provided for an estate in fee simple in possession subject to the entries in the Charges Registers of the said title numbers and also subject to similar restrictive covenants to those contained in clauses hereof but otherwise free from encumbrances. (2) if the Transferee within the period of one (1) month from such notice gives in turn notice (the Provisional Notice) in writing to the Transferor of the wish to exercise the right of pre-emption hereby granted and not more than one (1) month after the price is determined as aforesaid (time being of the essence) gives notice (the Pre-emption Notice) in writing to the Transferor accepting the offer so made then the Provisional Notice and the Pre-emption Notice with the Offer Notice shall constitute herewith a contract for the sale and purchase of the Pre-emption Property and the conditions known as the National Conditions of Sale (20th Edition) shall apply thereto so far as they are not inconsistent herewith save that: (a) the prescribed rate of interest shall be Four per cent (4%) above the base rate of National Westminster Bank PLC (b) Conditions 15(2) 18(4) and 21(2) and (3) of the National Conditions of Sale shall not apply thereto. (3) on a contract of sale and purchase being constituted the Transferee shall forthwith pay to the Transferor a deposit of Ten per cent (10%) of the price so soon as the price shall have been determined. (4) the right of pre-emption hereby granted is not capable of assignment by the Transferee but is binding on the personal representatives and successors in title of the Transferor. (5) the right of pre-emption shall only be valid and enforceable if the Transferee registers within a period of two (2) months from the date hereof notice thereof against the titles of the Pre-emption Property at HM Land Registry and the Transferor UNDERTAKES to lodge the Land or Charge Certificates relating to the Pre-emption Property at and comply with the requirements of HM Land Registry to achieve registration of the notice within the stipulated period. Cancellation of the registration at the instigation of the Transferee so long as no sale has taken place under the provisions of this clause shall render the right of pre-emption invalid. The Transferee UNDERTAKES at the Transferee’s own expense to cancel such registration immediately following the lapse expiry or termination howsoever occurring of the rights hereby granted. (6) completion shall be fourteen days after service of the Pre-emption Notice. (7) the Transferee shall be entitled to investigate the title of the Transferor who shall deduce a good marketable title from the date hereof the title of the Transferor having been investigated by the Transferee up to such date and deemed accepted by the Transferee who shall not be entitled to investigate the earlier title. Title shall consist of office copy entries and filed plan and an authority to inspect the Registers of the title of the Pre-emption Property at any time from the date hereof is hereby given to the Transferee. (8) the Pre-emption Property shall be sold with vacant possession. (9) at any time prior to the contract of sale and purchase being constituted hereunder the Transferee shall be entitled to copies of documents relating to the title of the Pre-emption Property and to matters referred to in this clause and information in response to the Transferee’s reasonable enquiries in respect of the Pre-emption Property insofar as such documents and information are available to or reasonably obtainable by the Transferor the cost of providing such copies and information to be borne by the Transferee. (10) the Transferee has not entered into the agreement comprised in this clause and shall not be deemed to enter into the contract for the sale and purchase of the Pre-emption Property relying upon any representations made by or on behalf of the Transferor except those made in writing by the Transferor’s solicitors or notified to them in writing as being representations upon which reliance is placed in the case of the agreement comprised in this clause prior to the date hereof and in the case of the contract for the sale and purchase of the Pre-emption Property to the date of the contract. (11)(a) the price of the Pre-emption Property shall be the value of the Property in the open market with vacant possession as between a willing vendor and a willing purchaser regard being had to all the circumstances at the time of the service of the Provisional Notice. (b) the parties shall attempt to reach agreement on the value as aforesaid and if such agreement has not been reached within 3 weeks from the service of the Provisional Notice then an independent qualified surveyor shall be appointed to make a on (sic) valuation (acting as an expert and not as an arbitrator) binding both parties such appointment to be made by agreement between the parties or in default of agreement by the President for the time being of the Royal Institution of Chartered Surveyors on application by either party. (c) if the sale to the Transferee proceeds the surveyor’s fees shall be paid equally by the parties. If the sale does not proceed the surveyor’s fees shall be paid by the Transferee. (12) if having given the Offer Notice to the Transferee a contract for the sale and purchase of the Pre-emption Property shall not be constituted in accordance with the provisions hereinbefore contained (as to which time shall be of the essence) or if the Transferee shall signify in writing to the Transferor the Transferee’s intention not to purchase the Pre-emption Property the Transferor shall thereafter be at liberty to sell or otherwise dispose of or deal with the Pre-emption Property and to whomsoever the Transferor may wish free from the right of pre-emption. 10. I make the following preliminary observations as to clause 5. First, clause 5 contains many references to “the Transferee”. Second, the words used throughout are “the Transferee” in the singular, and not “the Transferees” in the plural; the rest of the wording of clause 5 is consistent with the references to the transferee in the singular. Third, it129 seems that clause 5 is based upon a precedent; my attention was drawn to the fact that in Dear v Reeves [2001] EWCA Civ 277; [2001] 3 WLR 662, the Court of Appeal considered a right of pre-emption that appears to have been based upon the same precedent. Fourth, the provisions of clause 5(5), dealing with notice of the right of pre-emption at HM Land Registry, were complied with. 11. On 7 December 1990 Mr and Mrs Morgan entered into a deed of gift. Clause 1 of the deed of gift was in these terms: For the purpose of the release by way of gift by Anthony Malcolm Morgan of Calcot Cottage New Lane Hill Tilehurst Reading Berkshire (“the Donor”) to Vanessa Lillian Morgan of Calcot Cottage New Lane Hill Tilehurst Reading Berkshire (“the Recipient”) of all the Donor’s estate and interest at law and in equity in the land comprised in the title above mentioned (“the Property”) the Donor and the Recipient transfer the Property to the Recipient. The property referred to in clause 1 of the deed of gift was the same as the property referred to in the transfer, namely Calcot Cottage. In due course, Mrs Morgan alone became registered as the proprietor of the property at HM Land Registry. At the trial, although not at all earlier times, it was accepted on behalf of Mr and Mrs Morgan that the effect of the deed of gift was to vest in Mrs Morgan alone the beneficial ownership of the property. The background to Mr and Mrs Morgan entering into the deed of gift was not in evidence at the trial. 12. In 1998 and 1999 the parties’ solicitors corresponded on the subject of a possible development on a part of the pre-emption property. This correspondence proceeded on the assumption that the right of pre-emption continued to have effect. However, on 9 June 2000, solicitors for Mr Midwood wrote to Mrs Morgan alone in the following terms: As you are probably aware, we act for Mr Midwood whose land is currently the subject of a planning application. Part of that land was subject to pre-emption provisions contained in the Transfer. A search of the title to your property indicates that you are now the sole owner of Calcot Cottage and that your husband Mr Anthony Malcolm Morgan no longer has any interest in the property. Under the provisions of clause 5 of the Transfer, the pre-emption provision [sic] apply for so long as you and your husband are the beneficial owners of Calcot Cottage. In view of the fact that you are not both beneficial owners of the property any longer, the property having been transferred in to your sole name, the pre-emption provisions no longer apply and should be removed from the register. We would be grateful if you could let us have your solicitors’ details so that we can deal with the removal of the registration of the pre-emption provisions against our client’s title. We look forward to hearing from you. 13. Following the letter of 9 June 2000, the solicitor for Mr and Mrs Morgan contended that the right of pre-emption continued to have effect, and, on 13 September 2000, Mr Midwood commenced these proceedings against Mr and Mrs Morgan, claiming a declaration that the pre-emption right had expired and no longer had effect, and consequential relief. In their defence, Mr and Mrs Morgan assert that the right of pre-emption continues to have effect. The sole issue at the trial was as to the meaning and effect of the right of pre-emption, and, in particular, the meaning and effect of the words in clause 5(1): for so long as the Transferee is the beneficial owner of the Property There has been no suggestion that the correspondence between the parties in 1998 and 1999, which was on the assumption that the right of pre-emption continued to have effect, has created any relevant estoppel. Parties’ submissions 14. Mr John McGhee, appearing for Mr Midwood, stated that the use of the words “the Transferee” in the singular in clause 5 was an obvious error, and, in view of the earlier description in the transfer of Mr and Mrs Morgan as “the Transferees”, clause 5 should be amended so that it used the words “the Transferees” throughout, and other adjustments made to the wording to reflect the fact that the clause should refer to transferees in the plural, rather than to the transferee in the singular. If the clause is corrected in this way, it is submitted that the transferees are Mr and Mrs Morgan, or, more emphatically, both Mr and Mrs Morgan, or Mr and Mrs Morgan jointly. In respect of the phrase “for so long as the Transferee [sic] is the beneficial owner of the Property”, he submitted that following the deed of gift, Mr and Mrs Morgan were no longer the beneficial owner of the property, as Mr Morgan had no beneficial interest in the property, and Mrs Morgan was the sole beneficial owner of the property. The result was that the right of pre-emption lapsed upon the execution of the deed of gift on 7 December 1990. He described his principal submission as short and simple. In support of his construction of clause 5 of the transfer, Mr McGhee relied upon the decisions in Finch v Underwood (1876) 2 ChD 310; Re Viola’s Indenture of Lease [1909] 1 Ch 244; Hollies Stores Ltd v Timmis [1921] 2 Ch 202; and Hounslow London Borough Council v Pilling [1993] 1 WLR 1242*. In those cases, the courts had construed references to “the tenants”, “the lessees”, three named persons and “the tenant”, where the tenants or lessees comprised more than one person, as references to all of the joint tenants or joint lessees or named persons, rather than to one, or some only, of the joint tenants or joint lessees or named persons. He drew attention to the fact that these authorities showed that in relation to the giving or the receiving of a notice under clause 5, a notice to the transferee or the transferees must be given to both Mr and Mrs Morgan and a notice by the transferee or the transferees must, again, be given by both Mr and Mrs Morgan. * Editor’s note: Also reported at [1993] 2 EGLR 59; [1993] 26 EG 123 The submissions of Miss Judith Jackson QC, for Mr and Mrs Morgan, were more elaborate. Her principal submissions were as follows: 15. (1) It should be inferred from the facts as to the layout of the property and the pre-emption property (which facts emerged from a perusal of the plans attached to the transfer) that the purpose behind the grant of the right of pre-emption in clause 5 of the transfer was to preserve the amenity of the property as a residence. (2) The purpose behind the words “for so long as the Transferee is the beneficial owner of the Property” was to prevent a situation arising where Mr and Mrs Morgan transferred the property to a third party without the benefit of the right of pre-emption and themselves continued to enjoy the right of pre-emption; it was clear that the words quoted above ensured that the right of pre-emption did not remain available to Mr and Mrs Morgan when they had transferred the property in this way. (3) Clause 5 had been drafted for the case of a single transferee; in such a case, the right of pre-emption would only lapse when that single transferee transferred beneficial ownership of the property to a third party. (4) The fact that clause 5 was drafted for the case of a single transferee whereas, in fact, there were two transferees, Mr and Mrs Morgan, obscured the position as to precisely how and when the right of pre-emption was to lapse; was it to lapse when Mr and Mrs Morgan caused the property to be vested in Mrs Morgan alone, or was it to continue thereafter until a later date when Mrs Morgan transferred the beneficial ownership of the property to a third party? (5) Clause 5 contained a significant error in using the words “the Transferee” in the singular when clause 1 of the transfer described Mr and Mrs Morgan as “the Transferees”; that error needed correction and the appropriate correction in relation to the relevant part of clause 5(1) was to read the words as if they had said: For so long as the Transferees or either of them is or are the beneficial owner or owners of the Property… this correction of the error gave effect to the purpose of the provisions. (6) The ascertainment of the intended meaning of clause 5(1) was assisted by considering what would happen if there had not been a deed of gift, but at some time Mr or Mrs Morgan had died; in that event, the legal title to the property would vest in the survivor; if the property was owned by Mr and Mrs Morgan as joint tenants in equity then the130 beneficial ownership of the property would vest in the survivor; the survivor of Mr and Mrs Morgan would in that event be the sole beneficial owner of the property; although the right of pre-emption could not be assigned under clause 5(4), the right of pre-emption could vest in the survivor by survivorship; in such an event the single survivor would be the person who had the benefit of the right of pre-emption and that person would be “the Transferee” within clause 5; the requirement that the transferee be the beneficial owner of the property would be satisfied and the right of pre-emption would not lapse; if this was the position in the event of the death of Mr or Mrs Morgan, then there was no sensible or commercial reason why the position should be any different when Mrs Morgan had become the sole beneficial owner by reason of an inter vivos gift. (7) The latent ambiguity caused by the erroneous use of the words “the Transferee” in the singular should be cured by rewriting the words to give effect to their commercial purpose as described above; Miss Jackson drew attention not only to the well-known principles as to the interpretation of contractual documents in the speech of Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society (No 1) [1998] 1 WLR 896 at pp912-913, but also to the particular wording being construed in that case, to the fact that Lord Hoffmann held that something had gone wrong with the wording (see at p912B) and to the way in which the difficulties created by the wording were overcome. (8) In the alternative to her submissions as to the appropriate construction of clause 5, Miss Jackson also submitted that the present was an appropriate case to imply into clause 5 the extra words, quoted above, that referred to “the Transferees or either of them”; she submitted that in view of the error that was made in using the words “the Transferee” in the singular, when the Transferees were Mr and Mrs Morgan, there was a gap or a failure to provide for necessary circumstances, which gap could be filled in the way described by Lord Wilberforce in Liverpool City Council v Irwin [1977]* AC 239 at p254A-B; in the alternative, it was necessary to imply the same words to make clause 5 work in a way that had business efficacy. * Editor’s note: Also reported at [1976] 1 EGLR 53; (1976) 238 EG 879 (9) In support of her first submission as to the implication of a term, Miss Jackson relied additionally upon James v Tallent (1822) 5 B&Ald 889, Re Daniel’s Settlement Trusts (1875) 1 ChD 375 and Redfern v Hall (1877) 37 LT 241; in each of those three cases, the court read in missing words. (10) In her written submissions, Miss Jackson had relied upon section 81(1) of the Law of Property Act 1925 in so far as it referred to covenants being made with joint parties and each of them; however, in the course of her oral submissions, she accepted that section 81(1) did not help with the meaning of the words of qualification “for so long as the Transferee is the beneficial owner of the Property”; I should also add that Mr McGhee had made a persuasive submission that section 81(1) did not apply to the undertaking in clause 5(1) of the transfer, which did not impose an obligation to do an act, but imposed a negative obligation not to sell the pre-emption property save in the specified circumstances. (11) Miss Jackson also relied upon Lloyd v Sadler [1978] QB 774* in the way that I will later describe. * Editor’s note: Also reported at [1978] 1 EGLR 76; (1978) 246 EG 479 16. In reply, Mr McGhee’s principal submissions were that one could not deduce from the material before the court that the purpose of, alternatively the only purpose of, clause 5 of the transfer was to preserve the amenity value of the property. Mr McGhee furthersubmitted that it would not be right to hold that the commercial purpose of the qualification on clause 5(1) was solely to deal with the circumstances in which Mr and Mrs Morgan had parted with their interests to a third party. In relation to the case where Mr or Mrs Morgan had died and the beneficial ownership of the property had vested in the survivor, Mr McGhee submitted that in such a case, the right of pre-emption would lapse because it would no longer be the case that both Mr and Mrs Morgan were the beneficial owner of the property. Decision 17. As has been pointed out more than once, clause 5 of the transfer refers throughout to “the Transferee” in the singular. That is a drafting imperfection, in view of the fact that clause 1 of the transfer described Mr and Mrs Morgan as the transferees, in the plural. It may not matter whether it is right to call that imperfection an “error” or not. The task of the court is to derive from the words used by the parties, in particular in clause 5, the meaning that the parties are to be taken to have intended. Leaving aside the provision at the heart of this case (“for so long as” etc), there is no scope for uncertainty as to the meaning of the words “the Transferee” in clause 5. The transferee is Mr and Mrs Morgan. One does not need to make any correction to clause 5 to reach that conclusion. It is not particularly unusual in a case of joint parties to refer to them in a capacity expressed in the singular, such as “the landlord” or “the tenant” or “the grantee”. For my part, notwithstanding the fact that Mr McGhee was minded to accept that clause 5 should be rewritten in the plural sense, I do not see any particular need to rewrite clause 5. However, if one did rewrite clause 5 so that it referred throughout to “the Transferees” in the plural, and made the other consequential amendments to clause 5, there would again be no scope for uncertainty (apart from the case of the provision “for so long as” etc) in knowing who was intended to be referred to as “the Transferees”; the transferees are Mr and Mrs Morgan. 18. If one did analyse clause 5 of the transfer as involving an error that required to be corrected, in my judgment, the only correction that is needed is to convert the transferee in the singular to the transferees in the plural (together with the consequential amendments of clause 5). The “error” in clause 5 is not comparable to the problems with the wording identified in Investors Compensation Schme Ltd v West Bromwich Building Society, and the court need not be quite so creative, as in that case, in correcting the “error”. 19. Because clause 5 refers to “the Transferee” in many places, it is useful to consider the meaning of the words in those places before considering the meaning to be given to the words “the Transferee” in the phrase “for so long as” etc. In my judgment, in every other place in clause 5 where “the Transferee” is referred to, the words refer to Mr and Mrs Morgan, or, to put it more emphatically, both Mr and Mrs Morgan or Mr and Mrs Morgan jointly. The undertaking in clause 5(1), given to the transferee, is given to both Mr and Mrs Morgan. The notice to be given to the transferee under clause 5(1) must be given to both Mr and Mrs Morgan. The notices to be given by the transferee pursuant to clause 5(2) are to be given by both Mr and Mrs Morgan. The obligation pursuant to clause 5(3) to pay a deposit is the obligation of both Mr and Mrs Morgan. The intention of the transferee referred to in clause 5(12) is the intention of both Mr and Mrs Morgan. These considerations, taken on their own, point strongly to the conclusion that the phrase “for so long as the Transferee is the beneficial owner of the Property” should be read as requiring both Mr and Mrs Morgan to be the beneficial owner of the property; such a requirement is not satisfied when Mrs Morgan alone is the beneficial owner of the property. Although other provisions in the transfer were analysed in the course of the argument, I do not find the other provisions throw any real light on the meaning of “the Transferee” in clause 5. 20. I have considered the rival submissions as to the operation of clause 5 in a case where there had been no deed of gift and Mr or Mrs Morgan had died. The right of pre-emption, being, apparently, a right to Mr and Mrs Morgan jointly, would vest in the survivor, by survivorship. A vesting of the right of pre-emption in the survivor is not contrary to the prohibition on assignment in clause 5(4). If the beneficial interests in the property were held by Mr and Mrs Morgan as joint tenants in equity immediately prior to death, then beneficial ownership of the property would vest in the survivor, by survivorship. If the right of pre-emption vests in the survivor, then the benefit of the right of pre-emption is no longer vested in two persons jointly, but is vested in one person solely.131 If one had to apply clause 5 to the case where the right is vested in a single person, the reference in clause 5(1) to an undertaking to “the Transferee” could be read as an undertaking to that single person. A notice given to or by that single person would be a notice to or by the transferee for the purposes of clause 5(1) and 5(2). If the words “the Transferee” in clause 5(1) are read in these various ways as referring only to the single person, it becomes possible to read the phrase “for so long as the Transferee is the beneficial owner of the Property” as also referring to the single person; if that person is the beneficial owner of the property, then the right of pre-emption does not lapse. Although the point is not necessary for my present decision, I incline to the view that clause 5 of the transfer is capable of being read in the circumstances described above, so that the reference to the transferee is a reference to the survivor of the original joint transferees. It should be noted, however, that the above discussion as to the operation of clause 5 deals only with the case where, prior to the relevant death, beneficial ownership of the property was vested in Mr and Mrs Morgan as joint tenants in equity. If beneficial ownership were vested in Mr and Mrs Morgan as tenants in common, then, on the death of one of them, that person’s share would form part of his or her estate and that share might not pass in due course to the other. In such a case, the right of pre-emption might lapse because the survivor in whom the right of pre-emption was vested might not be the sole beneficial owner of the property. The fact that there is no answer that applies in all cases in the event of the death of Mr or Mrs Morgan makes the discussion of this possibility of less use as a guide to the meaning and effect of clause 5 in the events that have actually happened. 21. In Investors Compensation Scheme Ltd v West Bromwich Building Society at pp912-913, Lord Hoffmann stated that documents should be interpreted by judges in the common-sense way in which any serious utterance would be interpreted in ordinary life. His statement of principle refers to the way in which the language of a document would be understood by a reasonable man. I have therefore considered whether it might be said that in the events that have happened, namely where beneficial ownership of the property has passed from Mr and Mrs Morgan to Mrs Morgan alone, a reasonable man would say that it is still the case that “Mr and Mrs Morgan are the beneficial owners of the Property”. After all, it might be argued, one of Mr and Mrs Morgan is the beneficial owner of the property, and no third party has any beneficial interest in the property. In my view, to conclude that Mr and Mrs Morgan are the beneficial owners of the property, because Mrs Morgan alone is, involves much too loose a use of language to be acceptable to a reasonable man. 22. In view of the fact that Mr McGhee placed reliance upon a number of landlord and tenant cases involving joint tenants, and in view of the result contended for by Miss Jackson, involving the reading in of words “or either of them”, I invited submissions from the parties on Lloyd v Sadler. That case concerned section 3(1)(a) of the Rent Act 1968. That subsection is in these terms: After the termination of a protected tenancy of a dwelling-house the person who, immediately before that termination, was the protected tenant of the dwelling-house shall, if and so long as he occupies the dwelling-house as his residence, be the statutory tenant of it;… The Court of Appeal considered the various cases in which words in a statute, such as “the tenant”, when applied to a case of joint tenants, referred to all of the joint tenants, and not just one or some of them. This was described by Megaw LJ at p783A as “the ordinary law as to joint tenancy, as it affects rights of property” and at p786G as “the strict application of the doctrine of joint tenancy”, and he added that where such a strict application led to unreasonable results, or results that the legislature is unlikely to have intended, it is permissible for the court to conclude that the legislature did not so intend, but that, instead, the phrase “the tenant”, where there is a joint tenancy, is to be read as meaning “the joint tenants or any one or more of them”. This illustrates a possibility that the reference in clause 5(1) to “the Transferee”, at any rate in the phrase “for so long as” etc in clause 5(1), could be read as “the joint Transferees or one of them”. Miss Jackson submitted that Lloyd v Sadler assisted her argument, whereas Mr McGhee stressed that the expanded reading of the words “the tenant” in Lloyd v Sadler was justified only because of the need to give effect to a clear statutory purpose. In my judgment, while it is possible, in some circumstances, to read a reference to, say, “the Transferee” in a case where there are joint transferees as meaning “the joint Transferees or one of them”, this is not usually appropriate, and would be justified only where necessary to give effect to a clear commercial purpose behind the provision. This view is supported by the many cases that were distinguished in Lloyd v Sadler and by the later decision in Featherstone v Staples [1986] 1 WLR 861*. * Editor’s note: Also reported at [1986] 1 EGLR 6; (1986) 278 EG 867 23. The parties’ submissions differed as to the commercial purpose of clause 5 as a whole. On the material before me, I am not able to conclude that the only purpose of clause 5 was to preserve the amenity value of the property. It may be that that was a significant part of the purpose. It may be that the purpose of clause 5 is self-evidently to obtain a right of value, the right being capable of being valuable in a number of different ways. Further, I am not clear that an attempt to identify the purpose of clause 5 assists very much in identifying the purpose of the phrase “for so long as” etc. As regards the purpose of that phrase, Miss Jackson may be right that the principal purpose of the phrase was to ensure that when Mr and Mrs Morgan transferred the property to a third party, they could not assert that they continued to enjoy the right of pre-emption enabling them, in the future, to become the owners of the pre-emption property. However, on any view, the relevant phrase is not confined to a straightforward outright disposal of the property to a third party. Both counsel accepted that the reference in the phrase to “the beneficial owner” meant “the sole beneficial owner”. Therefore, if Mr and Mrs Morgan declared a trust under which a beneficial interest, even to a modest extent, was vested in someone else, even a family member, then the right of pre-emption would lapse. It can also plausibly be argued that one of the purposes of the phrase was to prevent a mismatch between the persons who had the benefit of the right of pre-emption and the persons who were the beneficial owners of the property. There would be a mismatch here if Mr and Mrs Morgan enjoyed the benefit of the right of pre-emption and Mrs Morgan alone was the beneficial owner of the property. Applying the approach in Lloyd v Sadler, and accepting that a non-strict interpretation of the words “the Transferee” is a possibility, I am not able to conclude that whatever is the commercial purpose of the phrase is sufficiently clear so as to require the court to do what is not normally appropriate and read a reference to the transferee, where there are joint transferees, as extending to one only of them, particularly in a case where the reference would be read differently in every other place in clause 5 where the same words are used. 24. So far, I have dealt with the various submissions as to the true construction of clause 5(1). It remains to consider the arguments as to the implication of words into clause 5(1). Miss Jackson’s preferred approach was based upon there being a gap or a failure to provide for the fact that the transferee comprised two persons jointly. For the reasons given in para 17 above, I do not detect any gap or any failure to provide. In relation to Miss Jackson’s alternative submission that it is necessary to imply words to give business efficacy to clause 5(1), or in order to make clause 5 “work”, in my judgment, clause 5 works if one reads all the references in clause 5 to “the Transferee” as referring to both Mr and Mrs Morgan. Of course, the clause would work in a different way if the relevant phrase were construed as referring to Mr or Mrs Morgan, but it is not necessary to imply words into the clause in order to make it “work”. I also do not accept that the clause can have business efficacy only if words are implied to produce the result contended for by Miss Jackson. 132 25. In my judgment, when clause 5 refers to “the Transferee”, it refers to Mr and Mrs Morgan or, to put it more emphatically, both Mr and Mrs Morgan or Mr and Mrs Morgan jointly. In the phrase “for so long as the Transferee is the beneficial owner of the Property”, the words “the Transferee” again refer to Mr and Mrs Morgan, or, more emphatically, both Mr and Mrs Morgan. In the events that have happened, following the deed of gift, Mrs Morgan alone was the beneficial owner of the property, with the result that the qualifying phrase was not satisfied and the right of pre-emption lapsed. Conclusion 26. In my judgment, Mr Midwood is entitled to a declaration that the pre-emption right contained in clause 5(1) of the transfer has expired and no longer has effect. I will hear counsel on the need for, and the form of, any consequential relief concerning the registration of the benefit of clause 5(1) against the registered titles to the pre-emption property. Claim allowed.