1. Land sale agreement — failure to pay and request transfer within fixed period — supervening land transfer regulations requiring permits. (Para 2 , 3 )
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1947 Supreme(SC) 50
Privy Council At Palestine
Mr. James Stratford, Lord Normand, Justice Lord Roche, JJ.
Paul Couvreur and another -Appellant
Versus
M.G. Shapiro -Resopndent
Privy Council Appeal No. 56 of 1945
Decided On : 24-07-1947
Advocates Appeared:
Gluckstein, Bartlett, Piper, Piper Smith, Hugh Goitein, W.S. Parnell Kerr
Gluckstein, Bartlett, Piper, Piper Smith, Hugh Goitein, W.S. Parnell Kerr
In a land sale contract where the purchaser is responsible for all transfer formalities and time is of the essence, the duty to obtain necessary government permits rests with the purchaser, and no automatic extension of time is granted beyond the fixed contractual deadline.
Headnote:(A) Land Transfer Regulations - Prohibition of transfer - Duty to obtain permit - Where a contract expressly stipulates that the purchaser is responsible for preparing and following up the transaction of sale and transfer in all respects, the duty to obtain any necessary permits required by supervening regulations rests with the purchaser. (Para 7)
(B) Contract Law - Time of the essence - Fixed period - In a contract where performance is required within a fixed period and time is of the essence, the vendor is not required to allow a reasonable extension of time beyond that period to enable the purchaser to fulfill obligations, as this would amount to creating a new contract. (Para 7)
(C) Frustration of Contract - Supervening regulations prohibiting land transfer do not necessarily frustrate a contract if the parties could have obtained a permit. (Para 6)
Facts of the case:
A vendor and purchaser entered into an agreement for the sale of land. The purchaser was required to pay a specific sum by a fixed date and was responsible for all steps to effect the transfer at the land registry. Supervening regulations prohibited land transfers without a permit. The purchaser failed to make payment or take steps toward transfer within the stipulated time. After the deadline, the purchaser obtained a permit and sought damages for breach of contract or return of money, claiming the contract was frustrated or that the vendor should have obtained the permit.
Findings of Court:
The court found that the purchaser was never willing or able to carry out the contract during its currency, while the vendor remained ready. Time was of the essence. The duty to obtain the permit fell on the purchaser based on the contract's wording.
Issues: Whether supervening land transfer regulations frustrated the contract; whether the duty to apply for a transfer permit rested with the vendor or the purchaser; and whether a reasonable extension of time should be granted for obtaining such a permit when time was of the essence.
Ratio Decidendi: The court held that the contractual obligation on the purchaser to "prepare and follow up in all respects the transaction for sale and transfer" included the duty to obtain necessary permits. Furthermore, since the contract had a fixed completion date and time was of the essence, the purchaser could not claim a reasonable extension of time to obtain the permit.
Result: Appeal allowed.
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2. Appeal allowed and cross-appeal refused — Supreme Court judgment set aside and District Court judgment restored. (Para 8 )
3. Does a supervening regulatory prohibition automatically frustrate a contract?
Not necessarily; the court held that the specific land transfer regulations in this case did not have the effect of frustrating the contract. (Para 6 )
Lord Normand-
This is an appeal from a judgment of the Supreme Court of Palestine allowing an appeal from a judgment of the District Court of Jerusalem and inter alia decreeing for payment of £3,100 against the appellants. There is also a cross - appeal by the respondent, the purpose of which is to enable him to claim a larger sum than that awarded by the Supreme Court.
[2] By an agreement dated 22 - 12 - 1934. as modified by subsequent letters of 12 and 24 - 1 - 1935, the appellant Father Couvreur (hereinafter called the appellant) on behalf of the second appellant agreed to sell to a nominee of the respondents certain land at Latrum in two parcels, one of 863 dunams or thereby at a price of £P.13,823 or thereby, and the other of 148 dunams or thereby at a price of £p.2,371 or thereby. A deposit of £2.000 was paid by the respondent, and the appellant agreed to accept the balance as follows: - £p.5,000 on 1 - 6 - 1935, and £p.1,000 monthly thereafter. The respondent was not able to fulfil his undertakings under the agreement and various concessions were made to him by subsequent agreements. Finally on 12 - 1 - 1938, by which time the respondent had paid in all £P.9,500 and had received a transfer of 148 dunams, a new agreement was made. It cancelled the contract of 22 - 12 - 1934, and all its supplements. It declared that 148 dunams had already been transferred to the respondent and by cl. 3 the appellant undertook, when requested by the respondent, to transfer to the respondent 100 dunams, adjacent to the 148 dunams already delivered, as paid for and without further consideration. By cl. 4 the respondent agreed to pay £3 100 by 12 - 1 - 1941. By cl. 5 the appellant agreed to transfer the remaining 763 dunams on payment of the £3, 100. By cl. 6 the respondent undertook to prepare the transaction of transfer at the Land Registry at his own expense and to call upon the appellant to appear at the Land Registry and effect the transfer. He also undertook to pay the fees of transfer. Clause 7 provided that the respondent might call on the appellant to transfer the 763 dunams in lots of not less than 60 dunams each. It also provided that the transaction for sale and transfer should be prepared and followed up by the respondent at his expense in all respects. No part of this agreement was ever carried out by the respondent: he paid no more money: be did not request the appellant to transfer the 100 dunams: he did not call upon the appellant to attend at Land Registry, nor did be take any step towards preparing the transaction of sale and transfer during the three years ending 12 - 1 - 1941.
[3] On 28 - 2 - 1940, the Palestinian Land Transfers Regulations, 1940, were published. Regulation 2 divided Palestine into two zones, A and B. The lands with which this appeal is concerned are in Zone A. Regulation 3 inter alia provided :
''The transfer of land situated within Zone A save to a Palestinian Arab shall be prohibited :
Provided that the Commissioner may, if he considers it desirable so to do-
(a) permit of the mortgage of such land to such companies or societies as he may approve :
(b) permit the transfer of such, land by Palestinian Arabs to religious or charitable institutions;
(c) permit the transfer of such land to persons not being Palestinian Arabs if in his opinion such transfer is necessary for the purpose of consolidating existing holdings, or of effecting the parcellation of village musha within the meaning of the Land (Settlement of Title) Ordinance;
(d) in the case of land within the said Zone owned by persons not being Palestinian Arabs, by general or special order, permit the transfer of such land to persons not being Palestinian Arabs."
The appellant took no step at any time to obtain a permit from the High Commissioner, but the respondent made an application for a permit on 17 - 3 - 1941, and it was granted on 17 - 10 - 1941.
[4] The appellant regarded the contract as at an end, so far as the 763 dunams were concerned, on 12 - 1
