Bolton Metropolitan Borough Council v Torkington

A corporation’s valid sealing of a deed does not, under section 74(1) of the Law of Property Act 1925, dispense with the separate requirement of delivery. Delivery depends on words or conduct showing an intention that the instrument should operate as the maker’s deed, whether immediately or conditionally as an escrow. In subject-to-contract conveyancing, sealing a lease in readiness for completion ordinarily shows preparation for completion, not an intention to be bound. The appeal therefore failed because the sealed lease had not been delivered.

Bolton Metropolitan Borough Council sought possession of Council-owned land occupied by Geoffrey Torkington and damages for use and occupation. Lloyd J held that Torkington had no enforceable agreement, estoppel or concluded lease, and dismissed his counterclaim for breach of the covenant for quiet enjoyment and derogation from grant. Torkington appealed, principally arguing that the Council’s sealed lease was duly executed and delivered by virtue of section 74(1) of the Law of Property Act 1925, or that delivery should be presumed or inferred. The central issue was whether sealing by a corporation under section 74(1) made delivery unnecessary or established delivery on the facts.

1. Appeal dismissed. The order for possession and damages was upheld. The counterclaim remained dismissed. The appeal was dismissed with costs, subject to the stated stay and payment conditions, and permission to appeal to the House of Lords was refused.
2. Section 74(1) of the Law of Property Act 1925 deems a qualifying corporate deed to have been duly executed, but execution and delivery are separate requirements. The subsection concerns the formal validity of corporate sealing and does not dispense with delivery.
3. Delivery occurs when words or acts sufficiently show that the instrument is intended to operate as the maker’s deed presently binding on it. A deed may be delivered conditionally as an escrow. For a corporation, intention remains central. The court left open whether describing sealing as a rebuttable presumption improperly places a burden of proof on the corporation.
4. The Council’s letter stated that the lease would be sealed in readiness for completion on or before 1 October 1990, in subject-to-contract negotiations. That showed no intention to be bound before completion. The sealing process and retention of the lease in the Council’s custody therefore did not establish delivery.
5. The reasoning in Longman v Viscount Chelsea (1989) 58 P&CR 189 applied: signing and sealing in anticipation of exchange, where negotiations are subject to contract, do not disclose delivery as an escrow. The alternative escrow arguments and remaining grounds did not require determination.

• Court of Appeal (Civil Division) — [2003] EWCA Civ 1634 : appeal dismissed with costs. A 28-day stay of possession was granted subject to payment conditions, and permission to appeal to the House of Lords was refused.
• Queen’s Bench Division, Manchester District Registry — Lloyd J ordered possession of the Council’s property and damages for use and occupation. He rejected the claims based on agreement, estoppel and a concluded lease, and dismissed the counterclaim.