Key points

  • The courts will be reluctant to hold that a contract is void for uncertainty
  • The importance of carrying out an inspection of property to be bought or sold cannot be underestimated  

Facts

The facts in Bashir v Ali were very unusual, as neither the seller nor the buyer had inspected the property prior to exchange of contracts. The seller was an executor, and the buyer bought the property at auction as an investment without inspecting it.

The auction particulars described the property as freehold, with a shop on the ground floor and a residential flat on the first floor. The property was being sold subject to an existing lease of the shop and a leaseback for 125 years of the first floor flat.

In fact, there was a separate flat at the rear of the ground floor, which had not been mentioned in the particulars or in the conditions which applied to the sale. The flat was vacant.

Between exchange and completion, the seller discovered the existence of the additional flat. The seller argued that the sale contract was for the freehold of the shop together with a flying freehold of the first floor flat.

The buyer contended that the contract was for a transfer of the freehold of the whole of the property, subject only to the existing shop lease and the leaseback of the first floor flat. The effect of this would be that the buyer would obtain a "windfall" of the ground floor flat.

The court had to decide on the correct interpretation of the contract. Unfortunately, it found itself unable to agree with either the seller's or the buyer's proposed constructions.

Instead, it ruled that the contract should be construed as requiring the transfer of the whole of the freehold, subject to the shop lease and a 125 year leaseback of each of the first floor and ground floor flats.

Things to consider

The court rejected the flying freehold argument on the ground that flying freeholds are very unusual, and no reasonable observer would have thought that that was what the contracting parties intended.

Another alternative would have been to find that the contract was void for uncertainty. However, the courts are reluctant to do this. In this case the court gave meaning to the contract by effectively writing in extra provisions regarding a leaseback of the ground floor flat. The judge relied on Chartbrook Ltd v Persimmon Homes Ltd, in which it was held that there is no limit to the amount of "red ink" or verbal rearrangement or correction which the court is allowed.