BEESLY  V.  HALLWOOD ESTATES LTD.(Full Text)

BEESLY V. HALLWOOD ESTATES LTD.(Full Text)


COURT OF APPEAL

[1959 B. No. 402.]

1960 Nov. 16, 17.

[1961] 2 W.L.R. 36


BEFORE THEIR LORDSHIPS

Lord Evershed M.R.

Harman and

Donovan L.JJ.

BEESLY

V.

HALLWOOD ESTATES LTD.

MAIN ISSUE

Deed – Escrow – Lease – Lease executed by landlord company – Delivery of counterpart – Whether landlord bound to exchange lease for counterpart.

JUDGMENT SUMMARY

By a lease dated May 21, 1938, for a term of 21 years from March 25, 1938, it was provided that, on the tenants giving at least six months’ notice in writing previous to the determination of the lease, they should have the right to obtain a further lease for 21 years on the same conditions subject to certain amendments. The option was never registered as a land charge under the Land Charges Act, 1925. On January 10, 1948, the residue of the term was assigned to the plaintiff for valuable consideration; and, in August, 1955, the freehold reversion was purchased by the defendant company for money.

On July 1, 1958, the plaintiff gave notice exercising the option. Both the plaintiff and the directors of the defendant company were then of opinion that the option was binding on the defendant company. On August 27, 1958, the defendant company’s solicitors wrote to the plaintiff’s solicitor setting out the terms of the new lease and informing them that the grant of the new lease would be subject to an undertaking being given to redecorate the property. There was some further correspondence with regard to the terms of the undertaking but it was never given. On September 11, 1958, the defendant company’s solicitors sent a counterpart lease to the plaintiff’s solicitors for execution by the plaintiff. At some date between September 13 and 26, 1958, the seal of the defendant company was attached to the new lease; on September 24 or 25, 1958, the plaintiff executed the counterpart lease. At a board meeting of the defendant company held on September 26, 1958, it was reported that a new lease had been executed, when one of the directors suggested that the position as to the registration of the option should be investigated. The defendant company were advised that the option was void for lack of registration, and on October 8, 1958, a letter was written to the plaintiff’s solicitors informing them that the defendant company had decided not to grant the new lease.

In an action in which the plaintiff claimed, inter alia, that the defendants were bound by the lease sealed by them, Buckley J. held that the sealing of the lease by the defendant company imported delivery and they were bound by that lease subject to the plaintiff handing over the counterpart which she had executed. On appeal:-

Held, that where a deed is delivered as an escrow it is not recallable, and upon the performance of the condition on which it is delivered, it becomes binding; and that, on the facts, the only condition which attended the delivery of the lease by the defendant company was that the plaintiff should execute and deliver her counterpart; the defendant company would become bound on such delivery.

The observations of Lord Cranworth in Xenos v. Wickham (1886) L.R. 2 H.L. 296 applied.

Decision of Buckley J. [1960] 1 W.L.R. 549; [1960] 2 All E.R. 314 affirmed.

MAIN JUDGMENT

APPEAL from Buckley J.1

By a lease made on May 21, 1938, the lessors, Dr. R. Collum’s Representatives Ltd., granted to the tenants, Walter Weeks and Winifred Gertrude Weeks, a lease of property known as No. 132, 132a and 132b, Ewell Road, Surbiton, Surrey for a term of 21 years from March 25, 1938. Clause 5 of the lease provided that “On giving at least six months’ notice in writing expiring previous to the determination of this demise the tenants shall have the right to obtain a further lease for twenty-one years on the same conditions subject to the following amendments:-

(a) That there shall be no right of renewal of the said term at the end of such further lease.

(b) That the yearly rentals payable during the said term shall be as follows:-

(i) £200 for the first seven years.

(ii) £225 for the second seven years.

(iii) £250 for the last seven years.

(c) The legal costs, stamp duties and other expenses attendant on the granting of such further lease shall be borne by the tenants.”

That option was never registered as a land charge under the Land Charges Act, 1925.

By an assignment dated January 10, 1948, made between the tenants and the plaintiff, Phyllis Eirene Beesly, the tenants, in consideration of a payment of £5,000, assigned the demised property to the plaintiff for the residue of the term subject to the rent, covenants and conditions reserved by and contained in the lease. The assignment also comprised the tenants’ stock-in-trade and other chattels and the goodwill of the business carried on by them at the property. In August, 1955, the defendants, Hallwood Estates Ltd., purchased the freehold reversion expectant on the term for money. The defendants had notice of the option when they bought the property, and on August 13, 1955, their solicitors applied for an official search under the Land Charges Act, 1925, for entries affecting No. 132, Ewell Road, and obtained a certificate of no subsisting entries.

On July 1, 1958, the plaintiff’s then solicitors wrote a letter to the original lessors, c/o Messrs. Whiddington, estate agents, on the plaintiff’s behalf, enclosing a formal notice to exercise the option given to her by clause 5 of the lease. On August 27, 1958, the defendants’ solicitors wrote to the plaintiff’s solicitors that they had been instructed to act by the defendants. The letter continued:

“We are instructed that the term is to be for 21 years at a rental of £200 per annum for the first seven years, £225 per annum for the next seven years, and £250 per annum for the remainder of the term. In other respects the new lease will be in similar terms to the existing one and this being so, we shall be glad to know whether in the circumstances you require to see a draft. Our clients inform us that the repairing covenants have not been complied with by your client and that the granting of the new lease will be subject to an undertaking being given that the whole of the exterior and interior will be redecorated within the course of the next six months, although they understand that the work to the interior is already in hand.”

After some further letters, which are not material, the plaintiff’s solicitors wrote to the defendants’ solicitors on September 10, 1958, that “the rents are to be as set out in your letter and the terms of the new lease are to be similar to those in the existing lease. In these circumstances, we will gladly dispense with a draft, but we should be glad to know by whom the new lease is to be granted. Under the existing lease, the lessors are Dr. R. Collum’s Representatives Ltd.”

The letter also asked if the undertaking could be extended to nine months. On September 11, 1958, the defendants’ solicitors wrote to the plaintiff’s solicitors enclosing a counterpart lease for execution by the plaintiff and informing them that the lease would be granted by the defendants. On September 13, 1958, the defendants’ solicitors wrote a further letter:

“With reference to your letter to us of the 10th instant, our clients say that they are quite prepared for the period of the exterior decorations to be extended from six to nine months, and so far as the interior decorations are “concerned they understand that these will be completed shortly, and they will be glad to hear from your client that this has been done, so that they may make an inspection.”

At some date between September 13 and 26, 1958, the seal of the defendants was regularly attached to the new lease; and on September 24 or 25, 1958, the plaintiff executed the counterpart lease.

At a board meeting of the defendant company held on September 26, 1958, it was reported to the board as follows:

“132, Ewell Road, Surbiton. A new lease has been executed for the letting of this property to Mrs. P. E. Weaver [the plaintiff] for a term of 21 years from the 25th March, 1959, at a rent of £200 per annum for the first seven years, £225 for the next seven years, and £250 for the remaining seven years, the tenant to pay all outgoings.”

At this time both the plaintiff and the directors of the defendant company believed that the option was valid; but one of the directors suggested that the position as to registration of the option should be investigated. The defendants were advised that the option was void for lack of registration, and on October 8, 1958, their solicitors wrote to the plaintiff’s solicitor: “We are instructed to inform you that our clients have decided not to grant the new lease to your client.” Further correspondence followed in which the plaintiff’s solicitors called upon the defendants to execute the new lease.

On February 6, 1959, the plaintiff issued the writ claiming [as re-amended] (1) a declaration that the defendants were bound by the further lease sealed by them; (2) an order that upon her handing over to the defendants the counterpart of the further lease they should hand over the further lease to her; alternatively (3) a declaration that the plaintiff was entitled to a further lease of the demised premises upon the terms contained in clause 5 of the original lease; (4) an order that the defendants should execute a further lease in accordance with the terms contained in the counterpart lease or otherwise in accordance with the terms contained in clause 5; in either event (5) damages. By her re-amended statement of claim she alleged that she had duly exercised the option granted to her by clause 5; alternatively, that by their execution of the new lease and by all or some of the letters dated July 1, August 27, September 10, 11 and 13, 1958, the defendants had agreed to grant and she agreed to take a further lease; and that the defendants were bound by the new lease which they had sealed.

By their re-amended defence and counterclaim the defendants denied that the plaintiff had against them any right under clause 5 of the lease and relied on section 13 of the Land Charges Act, 1925. They also denied that they had executed the further lease and that they had agreed to grant or the plaintiff to take any further lease. Alternatively they alleged that, if an agreement was constituted by the alleged execution or the letters, it was a condition precedent of the granting of the further lease that the undertaking as to repairs should be given; and, in the further alternative, that the alleged agreement was entered into under a mistake of fact or as to private right common to both parties, in that they both believed that the defendants were under a binding obligation to grant the new lease. They also denied that the further lease was binding on them, and alleged that it was delivered as an escrow and was not to take effect until the undertaking had been given and/or until the document should have been exchanged with the counterpart; alternatively, they alleged that the lease had been executed under the mistake previously alleged. The defendants counterclaimed for possession of the part of the property occupied by the plaintiff personally and for mesne profits.

It was agreed that, unless the option was unenforceable by reason of non-registration, it was exercisable by the plaintiff against the defendants, although there had been no express assignment to the plaintiff of the benefits of the option and that, if the option was valid, the notice exercising it had been effectually served on the defendants.

The facts as to the sealing of the new lease and as to what occurred at the board meeting held on September 26, 1958, were unknown to the plaintiff until one of the directors of the defendant company gave evidence at the hearing in March, 1960. On April 8, 1960, after the conclusion of the legal argument on the other points, the plaintiff was given leave to amend her statement of claim.

Buckley J. held that the option was void for non-registration as against the defendant company and that the letters passing between the parties did not constitute a contract to grant a new lease. However, he gave judgment for the plaintiff on the ground that the sealing of the lease imported delivery and that the company intended to deliver it as an escrow conditionally upon the plaintiff executing the counterpart and, accordingly, that subject to the plaintiff handing over the counterpart the defendants were bound by the lease.

The defendant company appealed on the ground (inter alia) that the lease not having been exchanged with any counterpart the defendant company was free to countermand the delivery of the alleged lease to the plaintiff and to refuse to be bound by it. The defendant company did not on appeal dispute that the sealing of the lease imported delivery.

The plaintiff gave notice of cross appeal against the decision that the option was registerable under the Land Charges Act, 1925, and that the letters passing between the parties did not constitute a contract. The cross appeal was not argued.

The following cases were referred to in argument which are not mentioned in the judgments: Eccles v. Bryant2; Foundling Hospital (Governors and Guardians) v. Crane3; Windsor Refrigerator Co. Ltd. v. Branch Nominees.4

LORD EVERSHED M.R.

I will ask Harman L.J. to deliver the first judgment.

HARMAN L.J. This is an appeal from a reserved decision of Buckley J. delivered last April. It concerns the lease of property consisting of a shop and two flats in Ewell Road, Surbiton.

The story begins in 1938 when this property was the subject of a lease by the predecessors in title of the defendants to a predecessor in title of the plaintiff. That lease was for a term of 21 years from Lady Day, 1938, and it contained an unconditional option for the lessee to exercise by notice the right which was thereby given to him or her to have a further lease of 21 years to start from Lady Day, 1959 – that is to say, when the old lease ended.

In 1948, the lease was assigned to the plaintiff who paid, I think, £5,000, partly for the assignment and partly for the goodwill of a hairdressers’ business carried on in the shop. The reversion was assigned to the defendants in 1955. On July 1, 1958, the plaintiff sent a notice to the defendants or their solicitors exercising the option, and there is no dispute, and never has been, that in point of form that notice was a good exercise of the option.

There was a certain amount of negotiation between the solicitors by correspondence, which does not matter, for on September 11, 1958, an engrossed counterpart of the proposed new lease was sent to the plaintiff’s solicitors. Between that date and September 26 the new lease was executed by the defendants, and of that more hereafter. About the same time, on September 24 or 25, the counterpart was executed by the plaintiff. On October 8, the defendants wrote refusing to go on with the matter. There had by then been no exchange of the two documents.

The writ was issued on February 6, 1959, and the statement of claim was delivered on February 26. By that claim the plaintiff – who is now the respondent to this appeal – asked for a declaration that she was entitled to a further lease – that is to say in pursuance of the option – and an order upon the defendants to execute. The defence was that the option was void as it had never been registered as an estate contract under the Land Registration Act, 1925. Confronted with that, the plaintiff amended her statement of claim and pleaded that, if the option was itself bad, the correspondence between the solicitors prior to September 26 amounted to a fresh contract to grant a new lease and that specific performance of that should be granted.

In June the defence was amended and it was there pleaded that there was a condition precedent to any agreement that might exist, namely, that certain repairs should be done and that the parties had never reached any consensus on that subject and, therefore, no agreement was made. Alternatively, there was a plea of mistake, and the defendants counterclaimed for possession, the former lease having run out on Lady Day of that year.

The tenant (the plaintiff) was still in occupation. There followed the usual discovery, and it is the lamentable fact that the defendants did not disclose the document of lease executed by them, nor did they disclose the minute book of the company which, as hereinafter appears, contained a most relevant entry, and the action came to trial in March of this year without the plaintiff being aware of those two matters. The minute and the lease came to light during the course of the hearing, and it is not surprising that the judge then granted an adjournment to the plaintiff and that she re-amended her statement of claim on March 31 to plead that the lease had been executed and that upon tender by her of the counterpart – which she had always been ready to do – she was entitled to have the lease handed over to her: the contract on this footing was complete and not a matter for specific performance at all.

There was a re-amendment of the defence in which it was admitted that the seal of the defendants was affixed to the document of lease, but it was apparently denied that there had been any delivery. Alternatively, it was said that if there had been delivery, it was subject to a condition, namely that there should be an agreement about the so-called decorations and that there should be exchange, which had never occurred. The hearing was resumed on April 7 on that footing.

A number of points were taken and on two of them the defendants were successful. The judge held that the option was not binding for want of registration as an estate contract: further, that the letters passing between the solicitors and the document of lease and the counterpart themselves did not constitute any new contract of which the plaintiff could obtain specific performance. One of the pleas in the defence was rejected, namely that about mistake: the judge held that the mistake, if there was one, was a mistake of law and, therefore, no defence. In the end the plaintiff succeeded on the ground added by the re-amendment that the deed had been executed as an escrow and, that being so, it was not a mere offer that could be withdrawn before acceptance but was a deed subject to a condition; and that there had been no breach of any condition to which it was subject and, therefore, it was a binding document. It is on that point alone that the defendants have appealed to this court.

There is a cross-notice whereby the questions of registration and contract are put in issue, but those questions have not been agitated before this court because they do not arise on the appeal and would only arise in the event of the appeal being successful.

The question, therefore, was, first of all: what was the nature of this document? The judge held that it was a deed delivered as an escrow – in other words, that there had been a good execution and delivery – and that matter was not put in issue before us at all.

The judge dealt with the matter quite shortly. He held that in view of section 74 of the Law of Property Act, 1925, he was bound, prima facie, to hold that there had been due execution, this being a document under seal issuing from a body corporate and appearing on the face of it to be complete. He said1:

“Mr. Holdsworth” – that is the defendants’ counsel – “concedes that the seal of the defendants was regularly attached to the lease. I know nothing further about the actual circumstances of its being attached. It will be recollected that the correspondence to which I have made reference discussed an undertaking to be given by the plaintiff relating to certain decorations … I do, however, know that the seal is countersigned by the chairman of the board”

and then he recites a minute and says:

“… it is clear from the evidence that everybody present at the board meeting of September 26 regarded the lease sealed by the defendant company as binding, albeit they did so with regret. Whereas this attitude of mind would, in my opinion, not be inconsistent with the binding quality of the lease being conditional on the lessee binding herself by execution of a counterpart to obligations on her part expressed in the lease, it is inconsistent with any idea that it was also conditional on some matter wholly extraneous to the lease, as was the proposed undertaking as to redecoration. I, therefore, reach the conclusion of fact that the defendants, by sealing the lease, intended to deliver, and did deliver, it as their deed intended to bind them conditionally only upon the plaintiff executing a counterpart, but subject to no other condition.”

It was admitted before us, and not surprisingly, that this was right, for when one looks at the minute of September 26 one finds a record of a meeting on September 26 at which all the three directors of the appellant company were present: It reads:

“132, Ewell Road, Surbiton. A new lease has been executed for the letting of this property to Mrs. P. E. Weaver” [the plaintiff] “for a term of twenty-one years from March 25, 1959, at a rent of £200 per annum for the first seven years, £225 for the next seven years and £250 for the remaining seven years, the tenant paying all outgoings.”

This, be it observed, is a report by the chairman, who was also the managing director of this company, to the board meeting and it was accepted as a fait accompli.

It was only at that meeting and after that report had been made, a general regret being expressed at the company being obliged to create this new lease – which was, of course, extremely unprofitable to them having regard to the rent – that one of the board suggested that there might be a loophole, namely, if the earlier document of lease containing the option were not registered. The company’s solicitors were consulted and they expressed the view, apparently, that it did not matter whether it was registered or no, but one of the directors, who was a solicitor (and who gave evidence), made further investigations in the matter and, as a result, it was decided to write the letter, which I have mentioned, on October 8 declining to go on with the matter.

The substantial plea is this, that as by October 8 there had been no performance of the condition as to exchange in that the counterpart had not been returned, the defendant company was entitled to withdraw from what was, in effect, an offer made subject to a condition not then accepted and, therefore, retractable at will by the offeror.

If that were the true nature of a document delivered in escrow the result might follow. The question, then, is: what is an escrow? Can a body or an individual having executed a document under seal as an escrow subject to a condition resile before the condition is accepted? That, really, is the point now taken and it is a very narrow one.

Of course, if there had been no delivery, as was pleaded, the matter would be wholly different; but that, by the time the action came to this court, had been decided as a fact by the judge and accepted by the defendants.

An escrow, then, is a type of deed which, perhaps, is best described in Norton upon Deeds, p. 15; I read from the author’s edition:

“If an instrument be delivered to take effect on the happening of a specified event or upon condition that it is not to be operative until some condition is performed, then pending the happening of the event or the performance of the condition, the instrument is called an escrow. The maker (of that deed) may so deliver it as to suspend or qualify its binding effect. He may declare that it shall have no effect until a certain time has arrived or until some condition has been performed, but when the time has arrived or the condition has been performed the delivery becomes absolute and the maker of the deed is absolutely bound by it whether he has parted with the possession or not. Until the specified time has arrived or the condition has been performed the instrument is not a deed, it is a mere escrow”

– that is a quotation from Lord Cranworth’s speech in the leading case of Xenos v. Wickham.2

In Norton, p. 17, there is a further relevant statement: “Whether the document was delivered as an escrow or as a deed is a question of what the parties intended, and that intention may appear either from their statements or the circumstances” – that is to say, the question is one of fact, and it has been so decided in this case.

We also had our attention drawn to Sheppard’s Touchstone, and I look at the second page 58 in the 1820 edition of that work and find this: “The delivery of a deed [ read writing] as an escrow, is said to be where one doth make and seal a deed [ read writing,] and deliver it unto a stranger until certain conditions be performed, then to be delivered to him to whom the deed [ viz. writing or grant] is made, to take effect as his deed. And so a man may deliver a deed, and such delivery is good,” and then two so called “cautions” are mentioned and those cautions relate to matters which are now no longer law. Then I turn to page 59 and find this: “But when the conditions are performed, and the deed is delivered over, then the deed shall take as much effect as if it were [had been] delivered immediately to the party to whom it is made, and no act of God or man can hinder or prevent its effect then, if the party that doth make it be not, at the time of the making thereof, disabled from making it.”

Lastly on this subject I quote a dictum of Farwell L.J. in Foundling Hospital (Governors and Guardians) v. Crane 3. I need not deal with the facts of that case; it was there held, as the headnote shows, that the proper inference from the facts was that the document was never legally delivered either absolutely as a deed or as an escrow and was therefore inoperative. From Farwell L.J.’s decision I read these words: “Was the deed, then, delivered as an escrow, or was there no delivery at all? I doubt if a man, by executing a deed, and handing it over to his own solicitors to be held on his behalf until he gives them further instructions, makes a delivery of it as an escrow at all. I doubt also if a deed can be delivered as an escrow at all subject to an overriding power in the grantor to recall the deed altogether.”

In other words, if you do deliver a document as an escrow it is your act and deed and is not recallable by you. If, of course, the condition be never performed, it never becomes binding, and I suppose there must come a time, if there be unreasonable delay in the performance of the condition, when, in these days at any rate where equitable principles govern the actions of the court, the person or firm that has executed the escrow would be released from its obligation. But in this case there was no refusal on the part of the plaintiff to exchange the counterpart. It is quite clear that was the condition, although some attempt was made to argue that no condition was attached. In my opinion, however, where it is the common intention of the parties – as, indeed, is almost universal in these days – to proceed by means of lease and counterpart, it is readily to be inferred that delivery of the counterpart is a condition of the escrow.

But nobody here on the defendant company’s part called on the plaintiff to deliver her counterpart. There was no unreasonable withholding of it or delay. It was merely that the company, having second thoughts or, perhaps, shrewder advice, determined to attempt to get out of what was for them in the event binding. In my judgment, that is exactly what they cannot do.

Reliance was placed on a case of Phillips v. Edwards.4 Those who rely on reports in 33 Beavan are sometimes said to be in the last ditch, but I do not complain at all here that there is anything wrong about the decision. However, it was a decision in a case about contract and it was said that the execution of the two documents without exchange did not amount to a contract. There is, in my judgment, nothing controversial about that; indeed, I ventured to express some such view in Hollington Bros. Ltd. v. Rhodes,5 a case to which the judge referred in his judgment. The statement of Romilly M.R. in Phillips v. Edwards6 and my own statement were relied upon by Mr. Warren as showing that it was necessary that there should be an exchange before the parties were bound. If the matter had lain in contract that would be right, if there had been no delivery of the deed of lease that would be right; but, on the facts here, it is quite clear that there was a delivery, but a delivery in escrow. But an escrow is no less a man’s act and deed because there is a condition outstanding than is a perfectly completed deed handed over, and, therefore, the company was at least bound to wait a reasonable time before attempting to resile from their position.

In my judgment the judge, although he did not deal specifically with that aspect of the case, did, in fact, decide it on that ground, and quite rightly, and so far as the appeal goes it seems to me that it fails and ought to be dismissed.

DONOVAN L.J. It is, of course, the case that a deed may be delivered subject to a condition that it shall not take effect until some other event happens or some condition is fulfilled; in other words, it may be delivered as an escrow. But if I purport to deliver a deed, and at the same time indicate that I am to be free to undo it at any time before it passes to the grantee, I am not delivering a deed subject to a condition, I am not delivering a deed at all; because delivery in this context indicates an intention to be bound presently by the deed, albeit in some cases subject to a condition. I doubt whether Lord Romilly M.R. intended to say anything different in the case of Phillips v. Edwards6 to which Harman L.J. has referred.

In the present case the only condition which, in my view, could be spelt out of the facts attending the delivery of the lease by the defendant company is, as the judge held, that the plaintiff should execute and deliver her counterpart, which she did. If there were the further condition that, having done this, she should send that counterpart to the defendants, she has at all times been ready and willing to do so.

I agree, accordingly, that the appeal should be dismissed.

LORD EVERSHED M.R. I am also of the same opinion and only add a very few words to what has been said by my brethren out of respect to the arguments of counsel before us in a case which is somewhat unusual in its nature, raising, as it does, a short but strict point of law.

It was conceded by Mr. Warren that the sealing of the lease in question shortly before September 26, 1958, by the defendant company operated as execution and delivery, but it was said that the lease was delivered as an escrow; that is to say, that its effect was suspended or qualified pending the performance of the indicated condition.

The condition suggested was that there must be first an exchange, in accordance with ordinary conveyancing practice, of the lease on the one hand and in counterpart on the other. As Sir Lynn Ungoed-Thomas pointed out, there is substantial ground at any rate upon the evidence, for the view that the sealing of this deed was not at the time intended to be, still less expressed to be, conditional. Buckley J., however, held upon the facts that the lease was delivered as an escrow, subject to the condition that the counterpart should be executed and delivered by the plaintiff lessee. I am certainly prepared to accept that conclusion, and since, as is always so in the case of a lease, there are substantial obligations put upon the lessee, such a condition would be the natural, and I venture to think the only natural, condition to the delivery of the lease as an escrow.

As Harman L.J. has pointed out, there is an important distinction in this respect between an instrument in writing, which may be executed conditionally, and a deed. For in the case of the former, until the condition is performed, there is nothing at all. The position is not the same in the case of an instrument under seal executed and delivered, for in the latter case, as pointed out in the passage which Harman L.J. has cited in Xenos v. Wickham7 when the time has arrived or the condition has been performed the delivery becomes absolute and the maker of the deed is absolutely bound by it whether he has parted with its possession or not.

The real basis of Mr. Warren’s argument is that pending the performance of the conditions – that is to say, execution and delivery of the counterpart by the plaintiff – the defendant company were entitled, for any reason they thought good, to resile altogether from the effects of their deed; and that, in my judgment, is inconsistent with the fundamental character of delivery of the lease as an escrow. No doubt if performance of the condition is long enough delayed the party who has delivered the deed might be relieved in equity from any further consequences; but like my brethren, I am of opinion that where a lease, such as the lease in this case, has been executed and delivered as an escrow he who has executed and delivered it cannot thereafter, pending performance, resile from it altogether and do so on an entirely novel ground. I mean by that last expression that when the execution and delivery was reported to the board of the defendant company there had been a suggestion that the option was unenforceable. At the time, the advice given to the board was that such suggestion was unfounded and so the matter was left. At a later date other advice was given which led the defendant company to suppose that – as, indeed, Buckley J. held – the option was unenforceable by reason of want of registration, and what the defendant company here has sought to sustain is that having discovered afterwards that fact, they can on that ground altogether resile from the deed at any time before the actual performance of the condition.

For the reasons which have already been given by Harman L.J. – with which I entirely agree – I cannot accept that submission, and I, like my brethren, therefore think that the appeal fails and must be dismissed.

Appeal dismissed with costs.

Nigel Warren Q.C. and A. E. Holdsworth for the defendant company.

Sir Lynn Ungoed-Thomas Q.C. and F. Bower Alcock for the plaintiff.

Solicitors: George C. Carter & Co.; Sydney S. Silverman.