Holwell Securities Ltd v Hughes [1974]

Holwell Securities Ltd v Hughes [1974]
‘Post Office’ by David Gilmour Blythe

Conveyance of property and the requisite methods of notice when accepting an offer are clearly defined under s.196 of the Law of Property Act 1925, so when a buyer elected to take advantage of an option to purchase, they did so in a way that flirted with the prescribed method yet failed to secure the bargain despite arguments to the contrary.

Having decided to sell his home the respondent wrote to the appellants setting out an option to purchase which expired within a six-month period, while the specific terms of the offer outlined in clause 2 stated clearly that:

“The said option shall be exercisable by notice in writing to the intending vendor at any time within six months from the date hereof…”

Contrastingly s.196(4) of the Law of Property Act 1925 also explains that:

“Any notice required or authorised by this Act to be served shall also be sufficiently served, if it is sent by post in a registered letter addressed to the lessee, lessor, mortgagee, mortgagor, or other person to be served, by name, at the aforesaid place of abode or business, office, or counting-house, and if that letter is not returned through the post-office undelivered; and that service shall be deemed to be made at the time at which the registered letter would in the ordinary course be delivered.”

And so on this occasion the appellants solicitors drafted a written acceptance of the offer before hand delivering it to the respondent’s solicitors while noting within the correspondence that a copy of the written notice of acceptance and a deposit cheque had also been posted to the respondent’s home. 

After receiving the letter the solicitors telephoned the respondent to advise him they had received the notice, and that a copy of it was on its way to him, whereupon he explained that he had already made travel plans, and so having been instructed by his solicitors to leave despite the expected letter, he vacated his home for a number of days.

After being franked and handed to the post-office, the letter ultimately failed to arrive at the respondent’s home, thus the appellants sought legal action to secure the purchase on grounds that a contract for both sale and purchase had been executed irrespective of whether the posted letter had arrived, while it was also argued that the oral communication between the solicitors and the respondent further confirmed acceptance of the offer when factoring in the solicitors possession of the letter.

In the first instance the appellants relied upon Henthorn v Fraser, in which the Court of Appeal had held that:

“Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted.”

However the court ruled against them, before the Court of Appeal overruled and distinguished Henthorn in light of an absence of expressed postal methods expressed within the purchase option, and so dismissed the appeal on grounds that failure of the respondent to physically take receipt and read the notice became fatal to any claim of right to buy, while clarifying that:

“If a notice is to be of any value it must be an intimation to someone. A notice which cannot impinge on anyone’s mind is not functioning as such.”

Author: Neil Egan-Ronayne

Author and foodie...

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