Bello v Dunelton Properties Ltd

A binding contract for the sale of land is formed when the auctioneer’s hammer falls, but the contract may incorporate printed auction conditions and special conditions. The statutory exception for public auctions in section 2(5)(b) of the Law of Property (Miscellaneous Provisions) Act 1989 removes the writing and incorporation requirements in section 2(1); it does not prevent the auction contract from incorporating additional terms. Where incorporated conditions require the buyer to provide a draft transfer and permit rescission after failure to complete, the seller may enforce those conditions and rescind in accordance with them.

The appellant bought a leasehold lot at auction for £1,300 and signed a memorandum referring to the auctioneer’s general conditions, the lot’s special conditions and the Standard Conditions of Sale. He did not provide a draft transfer despite reminders. After serving notice to complete, the seller rescinded under the incorporated conditions and proposed to resell the property.

His Honour Judge Hornby refused an injunction preventing the resale. Park J dismissed the appellant’s appeal on 14 December 2001. The appellant sought permission for a second appeal, arguing that the auction contract was complete on the fall of the hammer and that the statutory public-auction exception prevented incorporation of further terms.

1. Application refused. The appellant had no real prospect of success on appeal, and no important point of principle or practice, or other compelling reason, justified a second appeal.
2. A binding contract arose when the hammer fell. That conclusion did not determine all the terms of the contract.
3. Section 2(5)(b) of the Law of Property (Miscellaneous Provisions) Act 1989 disapplied the requirement in section 2(1) that a contract for the sale of land be made in writing and incorporate all expressly agreed terms in one document. It did not prevent a contract made at a public auction from incorporating other terms by reference.
4. The general conditions, special conditions and Standard Conditions of Sale were incorporated into the auction contract through the memorandum signed by the appellant. Phillips v Butler (1945) Ch 358; (1945) 2 All ER 258 illustrated that printed particulars and special conditions could form part of a contract made with a successful auction bidder.
5. The buyer’s failure to provide a draft transfer breached the incorporated conditions. Following notice to complete, the seller was entitled under condition 7.5.2 to rescind and resell. The seller was also entitled to insist on compliance with the conditions and was not bound to waive them.
6. The appellant’s fairness argument under the Unfair Contract Terms Act 1977 did not alter the result because the terms were available before the auction and the sale was conducted on their basis.

• Court of Appeal (Civil Division): Permission to bring a second appeal was refused.
• High Court, Chancery Division: Park J dismissed the appeal from the order of His Honour Judge Hornby dated 16 July 2001.
• Bow County Court: His Honour Judge Hornby refused an injunction preventing the proposed resale.