West Law Report

SIMMERS v INNES

Posted in House of Lords (case), Land Law, Westlaw Reports by mrkooenglish on May 2, 2008

Last updated: 4:14 PM BST 29/04/2008
House of Lords

Lord Hope of Craighead, Lord Scott of Foscote, Lord Rodger of Earlsferry, Lord Walker of Gestingthorpe, Lord Neuberger of Abbotsbury

April 16, 2008

Options to buy – Sale of land – Scotland – Time of the essence – Valuation – Parties disagreeing over basis of valuation – Proper approach by valuer

FACTS

The appellant (X) appealed against a decision of an Extra Division of the Inner House of the Court of Session ([2007] CSIH 12, 2007 GWD 9-159) pronouncing a decree for specific implement in favour of the respondent (S). The Extra Division had held that S had validly exercised an option to purchase certain property from X and could validly enforce that option. It concluded that, contrary to X’s assertion, time was not of the essence for completion of the purchase of the property. The parties had appointed a surveyor to value the property but they could not agree on the correct basis of the valuation. The surveyor had therefore provided valuations on alternative bases. X argued that the Extra Division had been wrong to conclude that time was not of the essence for completion of the purchase of the property. He also argued that the valuation was ineffective for the purposes of the agreement that he and S had entered into.

ISSUE

(1) Whether the Extra Division had been wrong to conclude that time was not of the essence for completion of the purchase of the property.

(2) Whether the valuation was ineffective for the purposes of the agreement that he and S had entered into.

HELD (appeal dismissed)

(1) There was no merit in either of X’s submissions.

(2) (Obiter) Where a contract provided for a payment to be made on the basis of a valuation, and the parties disagreed as to the proper basis of valuation, there was frequently much to be said for a valuer proceeding to value on each of the two alternative bases, with a view to leaving it to the parties then to decide how to proceed. In such a case, the valuer should state which basis he preferred, as otherwise there would be no definitive valuation without a subsequent agreement or court ruling. Having seen the two valuations, the parties could then decide whether to accept one valuation, to compromise, or to seek the assistance of the court as to the proper basis of valuation. It might frequently transpire, for instance, that the difference of principle between the parties would not in fact lead to a great difference in the two valuations, or that, once the two valuations were obtained, it would be easier for the parties to compromise. There might, of course, be circumstances in which it would be inappropriate for a valuer to proceed in such a way, either because of the terms of the contract or because of the nature of the dispute. However, in this case, the surveyor had proceeded in an eminently sensible way.

Christopher Haddow QC and Nick Gardiner (instructed by Brodies, Edinburgh) for the appellant. Jonathan Mitchell QC and Michael Stuart (instructed by Maclay, Murray & Spens) for the respondent.