The Gazette 1964/67

exchanged contracts for the sale of these securites. Completion should take place within LI short period and we undertake to hold the leases to your sole order and to account to you for the proceeds, £13,000." Mr. Lincoln himself was said to have written a personal confirmation of that to the bank manager. The bank said that on the faith of these letters they ad vanced £15,000, part of which had been lost and that there was a duty on Mr. Lincoln and his clerk to take reasonable care in writing these letters, having regard particularly to the recent decision of the House of Lords in Hedley Byrne & Go. Ltd. v Heller (1964. AC. 465). Mr. Lincoln in his affidavit alleged that the bank were money lenders, not registered as such, and he denied the misrepresentations alleged and the interpretation put on these letters by the bank. The Court of Appeal held that the question of damages and liability were so interconnected that they could not be dealt with separately and accordingly granted leave to defend unconditionally. (National Union Bank Ltd. v Lincoln, Times newspaper, 10/11/66). Vendor and Purchaser : Clause Excluding Objections to Title By an underlease dated 28th December, 1963, S. who had an assignment of a lease of three floors of a London house, sublet the second floor flat to P ("the vendor") for a term ending in July, 1972. Despite his right at law to call for the lease out of which his underlease was granted, P did not do so, but his solicitors accepted in stead an assurance from the husband of S that no consent was required for the underlease. In fact the lease required consent in writing to any under letting. By an agreement made on 26th October, 1964, the vendor agreed to sell and B ("the purchaser") agreed to buy the residue of his underlease, completion to take place on 23rd December, 1964. Clause 3 provided that "The vendor's title which has been accepted by the purchaser shall commence with an underlease dated 28th December, 1963 and the purchaser shall raise no requisition or objection thereon.1' The purchaser went into possession on 26th Octo ber. Two days later, on 28th October, the pur chaser's solicitors were informed by the reversioner's solicitors that the rent under the lease was over due and that there were outstanding breaches of covenant. After further correspondence and in quiries the purchaser, on 8th January, 1965, in formed the vendor that the contract must be treated as discharged; and proceedings were started for rescission of the agreement and return of the purchase money on the ground, inter alia,

that as no consent had been obtained, purchaser was bad as

to

the vendor's underlease title accepted by the

the

liable to forfeiture. The vendor by his defence claimed, inter alia, that even if there were defects in his title, cl. 3 of the agreement precluded objections; and he counter-claimed for specific performance. The County Court Judge (Sir Alun Pugh) dismissed the claim for rescission and ordered specific per formance and consequential relief. The purchaser appealed. Danckwerts, L.J., giving the reserved judgment of the Court, said that the vendor's failure to inspect the lease out of which his own underlease was granted was a terrible mistake. As a result of that, he was affected by constructive notice of the requirement of consent to the underletting to him and the consequent liability to foretiture. Though no steps to enforce forfeiture had been taken, the superior landlords were alive to the point; and if an interest in leasehold was subject to deter mination for breaches of covenant which had already been committed, the title was not good. The important question was whether the pur chaser was precluded from taking objections by reason of cl. 3. Assuming that that clause pre cluded objection to the vendor's title, the pur chaser having discovered by other means a vital defect in that title which meant that the pur chaser was being asked to accept something which might be made worthless, could the clause pre vail? There was no doubt that by a clearly drawn special conditions in a contract put in by a vendor who acted in good faith, and dis closing a possible defect in the title, the purchaser might be compelled to accept the title offered by the vendor. But the vendor must have disclosed the defects of which he knew. In this case the vendor did not know the breaches which would give rise to forfeiture. But he ought to have known that such breaches might exist. His solicitors ought to have insisted on seeing the underlease assigned to S out of which his own underlease was to be created, as they were en titled to by law. The vendor's solicitors accepted instead an untrue statement by the husband of S, who was not a lawyer anyway. The position was covered by the decision in Re Haedicke & Lipski's Contract (1901) 2 Ch. 666, that a pur chaser had a right to assume, when a condition of this kind was inserted, that the vendor had dis closed what it was his duty to disclose. The vendor could not rely on this clause in this case, and the purchaser was entitled to rescind. Appeal allowed. (Becker v Partridge I.L.T.R. & S.].—Journal, Vol. C., page 373).