Hayward v Jackson

Time stipulated in a will for exercising an option is not necessarily of the essence. The question is one of construction. Where the will specifies no consequence for late exercise, contains no gift over, and the parties can be placed substantially in the same position, the court is unlikely to infer that the option is forfeited. The court will also avoid a construction requiring the option-holder to exercise blindly before the price is ascertainable, unless the will plainly requires that result. A specified period may remain relevant when determining what is a reasonable time, and the grantor may then make time of the essence.

Peter Michael Bowles gave John Hayward a personal right to buy part of his farm at the value agreed between the executors and the Capital Taxes Office for inheritance tax purposes. The will required notification within six months of death and exercise within three months of notification.

The executors did not notify Mr Hayward, and the valuation had not been agreed when Mrs Jackson, the administratrix and residuary beneficiary, later served notice. She withdrew an earlier extension and insisted that the option had to be exercised before the price was known. Mr Hayward sought declarations preserving his right, disclosure of valuation information, and consequential relief. The central issue was whether the right had lapsed when he did not exercise it within three months.

1. The claim succeeded on the principal issue. Failure to exercise the option within three months of the notice dated January 18, 2002 did not cause Mr Hayward to lose his right.

2. The construction of a will must ascertain the testator’s intention. The specified time limits were directory because the will provided no consequence for non-compliance, contained no gift over, and late exercise would leave the residuary beneficiary in substantially the same position as timely exercise.

3. The court was reluctant to construe the will as requiring exercise before the price was known. The option price was linked to a valuation agreed with the Capital Taxes Office. Mr Hayward was entitled to wait until the price became ascertainable and was notified to him, unless the will plainly required an earlier exercise.

4. The court rejected the supposed distinction between a gift subject to a condition and an option. Re Avard [1948] Ch 43 was wrongly decided. The propositions derived from it in Theobald on Wills and Williams on Wills were not good law.

5. Mr Hayward would have a reasonable time to exercise the option after the price became ascertainable. The original three-month period would be a factor in assessing reasonableness. Mrs Jackson could then make time of the essence. The question of relief from forfeiture therefore did not arise. If the form of order could not be agreed, further argument would be heard.