Jones & Anor v Forest Fencing Ltd

Terms agreed in pre-contract correspondence may be incorporated into a land-sale contract by express reference to another document, satisfying section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. Oral evidence cannot be used to identify additional, unrecorded terms through a general reference to matters agreed or discussed.

Contractual words must be construed objectively, in the light of circumstances known to the parties, without relying on evidence of prior negotiations or subjective intention. Where the wording covers both machinery and electrical apparatus, a reference to wiring being removed back to the first isolator may extend to the supply-side isolator. Fixtures passing on completion cannot subsequently be removed under a pre-completion removal right.

The purchasers acquired land and buildings formerly used as a sawmill from the respondent. The contract incorporated the Law Society's Standard Conditions of Sale and special conditions incorporating relevant pre-contract correspondence.

Before completion, the vendor removed machinery and extensive electrical infrastructure, including a transformer, distribution equipment and wiring. The purchasers claimed damages. The vendor counterclaimed for access to remove treatment tanks.

The Gloucester County Court awarded the purchasers damages and dismissed the counterclaim. The Court of Appeal considered whether the correspondence formed part of the contract, how the removal provision should be construed, and whether the vendor retained a post-completion right to remove the treatment tanks.

1. Appeal on the purchasers’ claim allowed. Lord Justice Chadwick, with whom Sir Murray Stuart-Smith agreed, held that special condition 8 incorporated the solicitors’ replies to enquiries and, by reference, the Agents’ Sale Memorandum. Section 2(2) of the Law of Property (Miscellaneous Provisions) Act 1989 permitted incorporation by reference to another document.
2. The words “all as agreed and discussed” could not incorporate an unidentified oral agreement. Section 2 permitted incorporation by reference to a document, not by oral evidence of prior discussions. The words were therefore treated as confirming that the written sentence accurately recorded the agreement.
3. The contractual wording covered the removal of sawmill equipment, electrical apparatus and wiring. The reference to wiring being taken back to the first isolator meant the isolator on the supply side of the electrical apparatus, namely the point of connection to the high-voltage supply. The vendor’s removal of the electrical infrastructure therefore complied with the contract, and the purchasers’ damages claim failed.
4. The approach in Record v Bell [1991] 1 WLR 853 did not govern the case. That decision concerned a collateral warranty which was not a term of the sale contract. Here, the relevant terms concerned the physical state of the property and were incorporated into the sale contract itself.
5. Counterclaim dismissed. The treatment tanks were fixtures attached to the land and became part of the property on completion. The vendor’s contractual right was to remove them before completion, not afterwards. The claim to ancillary equipment was also properly rejected as an unpleaded new claim.

The purchasers were awarded the costs of the appeal. The order below was set aside and costs were apportioned between the claim and counterclaim.

• Gloucester County Court: Mr Recorder Greenwood awarded the purchasers £21,168.86 damages plus interest and dismissed the vendor’s counterclaim.
• Court of Appeal (Civil Division): Appeal against the payment order allowed; appeal against dismissal of the counterclaim dismissed.