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15 February 2013

Taylor v Couch

Michael Fahy and Robert Hickford consider the case of Taylor v Couch [2012] EWHC 1213 (Ch) regarding a claim for the right to buy additional land from its seller, which was opposed under section 9(2) Perpetuities and Accumulations Act 1964.

Facts

An agreement for sale was made in 1984, including an option to buy additional land. This was conditional on: the Seller obtaining planning permission to build houses on its retained land; and any appeals being concluded; or 5 years, whichever came sooner. In addition, the option to buy would arise if the Seller offered the land for sale. These rights were protected by a class c(iv) land charge.

The Seller transferred the land in 1989, but the Claimant did not discover this until 2009. The Claimant asserted that his rights, granted under the 1984 agreement, were triggered by the sale in 1989. The Seller opposed the claim under section 9(2) Perpetuities and Accumulations Act 1964 (“the 1964 act”), on the grounds that the rights were void as they were granted more than 21 years ago.

Judgment

The Court made a distinction between an “Option” and a “Pre-emption”, stating that the latter is something that only arises if the seller made an active decision (in this case, to sell the Property), whereas the former does not an active decision. Therefore, the rights in the 1984 agreement had to be viewed on an individual basis. The planning permission rights were an “Option” as they required no active decision by the seller, whilst the first refusal on any sale was a “Pre-emption”.

The defendant argued that the 1964 act only applied to “Options”, and therefore the Pre-emption right was not covered by the 21 year limit in the 1964 act. However, he acknowledged that once crystallised, meaning once it was clear that a sale was being considered, the 21 year period, under the 1964 act, would begin to accrue from that point.

The Court ruled that the 1964 act was drafted to include Pre-emption rights as a sub-set of the overall category of “options”. It held that this had to be the case, as s9(2) of the 1964 act contained an exception for Pre-emption rights for Local Authorities over land that had been, but was no longer used for religious purposes – such an exception only makes sense if Pre-emption rights are included under the overall heading of options. The Claimant’s argument would have rendered the exception meaningless, and could not therefore be correct.

As a result, the Claimant’s right was void under the 1964 act, as it was granted more than 21 years ago.