Pittack v Naviede

Under the non-commercial Standard Conditions of Sale (4th edition), a term stating that the buyer may not transfer the benefit of the contract does not, without more, prohibit a sub-sale completed by a direct transfer from the vendor to the sub-purchaser. Assignment of contractual rights and nomination of a sub-purchaser are distinct. An express prohibition on sub-sales can be included, as in the commercial standard conditions. In a leasehold sale, the vendor must obtain the landlord’s consent in accordance with the contract. Where the consent has not been received by the specified date, the buyer may rescind unless the buyer has failed to provide information or references reasonably required by the landlord.

The claimant contracted to buy a leasehold townhouse from the defendant under the Standard Conditions of Sale (4th edition). The claimant intended to sub-sell the property by a direct transfer to proposed sub-purchasers. The defendant refused to transfer the property to anyone other than the claimant and later served notice to complete after the proposed sub-purchasers withdrew.

The claimant rescinded and sought repayment of the deposit, relying on the proper construction of clause 1.5 and on the absence of a landlord’s licence to assign by the contractual deadline. The central questions were whether clause 1.5 prohibited a direct-transfer sub-sale and whether the claimant was in breach because the required licence had not been obtained.

1. The claim succeeded. The claimant was entitled to rescind and recover the deposit with accrued interest.

2. In the absence of an express or implied provision to the contrary, a purchaser may require the vendor to transfer the property on completion to a third party chosen by the purchaser. That right is distinct from an assignment of the benefit of the contract, which exposes the vendor to contractual obligations owed to an assignee. The principle applies to leasehold property, subject to any necessary landlord’s consent.

3. Clause 1.5 of the non-commercial Standard Conditions stated only that the buyer was not entitled to transfer the benefit of the contract. It did not prohibit a sub-sale completed by a direct transfer to the sub-purchaser. The commercial conditions demonstrated that an express prohibition could have been used: clause 1.5.2 prevented the seller from being required to transfer the property to anyone other than the buyer. The difference between the two forms of condition was significant.

4. The defendant’s refusal to transfer the property to a sub-purchaser was therefore an improper refusal to perform the contract. The defendant accepted that, if clause 1.5 did not exclude direct-transfer sub-sales, the claimant was entitled to rescind.

5. Under clause 8.3, the vendor had to procure the landlord’s consent, while the buyer had to provide information and references reasonably required by the landlord. The licence had to be in writing and received by 16 June 2008, three working days before the completion date of 20 June. The letter relied on by the defendant was not shown to have been received until 17 June at the earliest.

6. The claimant was not in breach of clause 8.3.2 because the Crown Estate did not require references from him and had the information needed to proceed. The absence of a timely written licence independently entitled him to rescind and recover the deposit under clause 7.2. No order was made on the unpressed claim for a lien.