Notes and Questions 12.4

480Property Law

a different division of the Court of Appeal, proceeding on the basis that Pritchard v. Briggs was correctly decided, pointed out that there were at least three different things that could loosely be referred to as rights of pre-emption. First, a distinction has to be drawn between what is usually referred to as a right of first refusal (where, if the grantor decides to sell, the grantee has the first right to refuse an offer to purchase at the price at which the grantor is willing to sell) and a right of pre-emption (where, if the grantor decides to sell, the grantee has a right to purchase at a fixed price, or a price not chosen by the grantor). Secondly, some rights of pre-emption and rights of first refusal become options to purchase as soon as the grantor offers to sell to the grantee: these are those where the grantee has a fixed period within which it may accept the offer, and the grantor cannot withdraw the offer during that period. The right of pre-emption in Pritchard v. Briggs fell within this category. On the other hand, other rights of pre-emption and rights of first refusal do not become options to purchase until the grantee accepts the offer: these are the ones where the grantor is still given a fixed period within which it may accept the offer, but the offer may be withdrawn at any time before acceptance. This was the position in Bircham & Co. Nominees (No. 2) Ltd v. Worrell Holdings Ltd.

This brings us to the second problem. At what point must an option to purchase and a right of pre-emption satisfy section 2 of the Law of Property (Miscellaneous Provisions) Act 1989? If it is at the time when the interest is first created, this should cause no difficulties, because most options to purchase and rights of preemption are made in writing and signed by both parties. If, however, it is at the stage in the procedure when both parties would (apart from section 2) have become contractually bound to the sale, this is likely to mean that no contract will ever come into existence, because that stage is usually triggered by writing signed by only one of the parties. In Spiro v. Glencrown Properties Ltd [1991] Ch 537 (extracted at www.cambridge.org/propertylaw/), Hoffmann J decided that, in the case of options to purchase, it is the document that creates the option to purchase that must satisfy section 2 of the 1989 Act. In Bircham & Co. Nominees (No. 2) Ltd v. Worrell Holdings Ltd, however, the Court of Appeal expressed agreement with this but then held that the position was different in the case of rights of pre-emption (hence the importance of pinpointing exactly the point at which both parties became bound to proceed with the sale). The effect on this of the subsequent enactment of section 115 of the Land Registration Act 2002 is not at all clear, as we see below.

What is apparent from all these cases is that the differences between the rights that inhabit the spectrum from unconditional right to mere expectancy are analytically differences of degree rather than differences of kind. This does not mean that it is wrong to treat some as property rights and others not, but it does mean that if a line is to be drawn somewhere policy reasons ought to dictate where the line falls. As the following extracts demonstrate, however, this is not the approach that the courts (or indeed Parliament) have always adopted.