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England and Wales Court of Appeal (Civil Division) Decisions


You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Alan Estates Ltd v W G Stores Ltd & Anor [1981] EWCA Civ 1 (1 July 1981)
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Cite as: [1981] 3 All ER 481, 260 EG 173, [1982] 1 Ch 511, 43 P&CR 192, [1981] 3 WLR 892, [1981] EWCA Civ 1, [1982] Ch 511

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JISCBAILII_CASE_PROPERTY

BAILII Citation Number: [1981] EWCA Civ 1

Court of Appeal

1 July 1981

B e f o r e :

Lord DENNING MR, Lord Justice ACKNER and Sir Denys BUCKLEY
____________________

Between:
ALAN ESTATES LTD
V
W G STORES LTD AND ANOTHER
____________________

Gordon Nurse (instructed by Martin Boston & Co) appeared on behalf of the appellants; Lawrence Cohen (instructed by Woolf, Seddon) represented the respondents.

____________________

  1. Giving judgment, LORD DENNING MR said: In this case we have to consider the medieval law about an 'escrow' and to put it into its modern setting.
  2. The Facts

  3. There is a lock-up shop at 32 Goldhawk Road, London W12. In September 1976 it was empty. W G Stores Ltd were keen to take a lease of it from the landlords, Alan Estates Ltd. They wanted to occupy it as soon as possible. In anticipation of the lease, the landlords allowed the tenants to have the key - so as to measure up for shop fittings. The tenants paid a quarter's rent to the landlords' solicitors, asking them to hold it as stakeholders pending completion of the lease. Inquiries were made as to title and so forth. But no preliminary contract was entered into. The solicitors got on straight away with preparing the lease, and getting it engrossed and executed. Then on Monday November 1 1976 the solicitors exchanged the lease and counterpart duly executed. But this is to be noted: both lease and counterpart were undated. Each started off:
  4. THIS LEASE is made the day of One thousand nine hundred and seventy-six BETWEEN ALAN ESTATES LIMITED . . . and W G STORES LIMITED . . .
  5. The tenants' solicitors wrote this letter to the landlords' solicitors:
  6. We now enclose the Lease duly executed by our client . . .
    As agreed on the telephone you will hold this document to our order pending receipt by us of satisfactory final searches (and various other conditions) . . .
    Pending clarification of all the above points by way of confirmation you will hold the executed Lease to our order and also continue to hold the sum of £ 937.50 (the first quarter's rent).
    Yours faithfully,
    PAUL WOOLF & CO
    (Tenants' solicitors).
    PS Our Company Agents advise us that there is an undischarged charge in favour of Northern Commercial Trust Ltd and we shall also require your undertaking in respect of this.

  7. The landlords' solicitors replied on the same day:
  8. We thank you for your letter of today's date enclosing the Lease, duly executed . . .
    We presume it is acceptable that we date the Lease today?
    We enclose herewith our Clients' part of the Lease duly executed by way of exchange . . .
    Yours faithfully,
    MARTIN BOSTON & CO
    (Landlords' solicitors).
  9. Those letters were written on Monday November 1 1976.
  10. On the following Monday, November 8 1976, the tenants' solicitors wrote to the landlords' solicitors. They took no objection to the date being inserted, November 1 1976. They simply said:
  11. Thank you for your letter of the 1st November with enclosures as therein stated.
    Unfortunately there still appears to be a problem regarding the mortgage to Northern Commercial Trust Ltd . . .
    Our Client is anxious to complete this matter and indeed we did try to telephone your Mr Boston on Friday without success.
  12. That was Monday November 8. On the next day, Tuesday November 9, the tenants decided to call off the whole thing. Their solicitors telephoned to the landlords' solicitors. They replied that they regarded the transaction as binding. The tenants' solicitors wrote this letter on Tuesday November 9 1976:
  13. As explained on the telephone today our Client has decided to withdraw from the transaction and we should be obliged if you would return our Client's cheque in the sum of £ 937.50 which, under the terms of our letter dated November 1, you are still holding to this firm's order.
    As explained on the telephone we very much regret the lateness of our Client's decision and we must confess we were surprised to hear from you that you considered the transaction to have been completed . . .
  14. So there it was. The landlords' solicitors considered that the transaction was binding. The tenants' solicitors said it was not binding.
  15. Two days later, on Thursday November 11 1976, the landlords' solicitors issued a writ claiming a declaration that the lease and counterpart were binding: alternatively, that it was an escrow. The defendants denied it.
  16. Decision of Whitford J

  17. The action took a year to come on. Then on November 14 and 15 1977 it was tried by Whitford J. At the end of the day it was accepted by both sides that the lease was delivered as an escrow on the terms set out in the tenants' solicitors' letter of November 1 1976. The only question was whether the various conditions had been fulfilled. It was accepted that all had been fulfilled save for the postscript requiring an undertaking about the 'undischarged charge in favour of Northern Commercial Trust Ltd'. It would have been quite easy to fulfil this but the landlords' solicitors had not done it. The tenants' solicitors submitted that it was too late for them to do it. But Whitford J held otherwise. He said:
  18. I reject the conclusion that is urged upon me by counsel on behalf of the defendants (tenants) that it is now too late for the plaintiffs (landlords) to satisfy the outstanding condition. They ought to have had a reasonable time after November 8 1976 to meet this last condition contained in that letter then outstanding, and I am prepared to give them a reasonable time to satisfy that condition and accordingly to make the transaction binding to date.
  19. The landlords did satisfy the condition on November 18 1977, so the lease became binding.
  20. At the end of the hearing before Whitford J counsel then raised the question of rent. From what date was it payable? Whitford J said: 'There is nothing about this in the pleadings in this connection at all. I am not prepared to deal with it'.
  21. These proceedings

  22. So these proceedings were commenced to ascertain the date from which rent was payable. Was it from November 1 1976 (when the lease and counterpart were exchanged)? Or from November 18 1977 (when the last condition was fulfilled)? The landlords took out an originating summons to determine it.
  23. Judge Rubin held that the rent is payable only from November 18 1977. The landlords appeal.
  24. The blank in the lease

  25. The difficulty has arisen because of the blank in the lease. No date was inserted. But the rent was to run 'from the date hereof'. So we have the problem. From what date is the rent to run? Something may turn on the wording of the document. So I will set it out. The lease was in this form:
  26. THIS LEASE is made the day of One thousand nine hundred and seventy-six BETWEEN ALAN ESTATES LIMITED (etc) and W G STORES LIMITED (etc)
    The Landlord HEREBY DEMISES unto the Tenant ALL THAT property (etc)
    TO HOLD the demised premises unto the Tenant for a term of TWENTY FOUR YEARS from the Twenty-ninth day of September One thousand nine hundred and seventy-six (determinable as hereinafter provided) PAYING THEREFOR unto the Landlord from the date hereof and throughout the said term hereby granted yearly and proportionately for any fraction of a year the several rents hereinafter referred to:
    A. Until the Twenty-ninth day of September One Thousand nine hundred and eighty the yearly rent of THREE-THOUSAND TWO HUNDRED AND FIFTY POUNDS ( £ 3,250)
    IN WITNESS whereof the parties hereto have hereunto set their respective common seals and hands and seals as appropriate the day and year first before written
    THE COMMON SEAL OF
    W G STORES LIMITED Seal
    was hereunto affixed in the presence of
    B SOLOMONS Director.
    B SOLOMONS Secretary

    If there had been no repudiation

  27. In order to solve the problem, I would ask this question: Suppose the tenants had not repudiated their obligations. What date would have been inserted in the lease? I feel sure that the solicitors would have inserted November 1 1976. I say this because of the letter of the landlords' solicitors of November 1 1976 in which they said: 'We presume it is acceptable that we date the lease today?' To which the tenants' solicitors took no objection. In addition, both lease and counterpart were exchanged on November 1 1976: and, by analogy with contract and conveyances of land, the effective date when the parties are bound is the date of exchange, see Eccles v Bryant [1948] Ch 93 and Harrison v Battye [1975] 1 WLR 58.
  28. However, no date was inserted. It remained blank. The reason was because the tenants repudiated the transaction altogether. They denied that the tenants were bound. I cannot think that they can take advantage of their own repudiation - so as to postpone the date of the deed - or the term from which rent should run. No one can take advantage of his own wrong. We should insert the date which would have been inserted had they not repudiated. That is November 1 1976. The rent should run from that date.
  29. In case this simple solution be erroneous, I must go on to deal with the law about escrow.
  30. When does an escrow take effect?

  31. Another way of approaching the problem is to ask: At what date does an escrow take effect? On the date when the deed is delivered? Or on the date when the conditions are fulfilled?
  32. Judge Rubin held that:
  33. . . . a deed, delivered as an escrow, takes effect from the satisfaction of the condition and not from the date of its delivery as an escrow. Applied to the present case, in my judgment both lease and counterpart took effect together on the satisfaction of the condition on November 18 1977 and, accordingly, such date is 'the date hereof', and the rent ought to be calculated from and become payable from that date.
  34. In coming to this conclusion Judge Rubin felt that he had the clearest possible authority in the judgment of Walton J in Terrapin International Ltd v Inland Revenue Commissioners [1976] 1 WLR 665 who said of an escrow (p 669):
  35. . . . although of course it contains within itself the possibility of becoming an effective deed, a deed rising phoenix-like from the ashes of the escrow, at the stage before the condition is fulfilled it is of no effect whatsoever.

  36. To the contrary, however, is the dictum of Vaisey J in Re Duke of Devonshire's Settlement (1952) ATC 405:
  37. As a rule the date properly to be inserted in a deed delivered as an escrow is the date at which it was so delivered and not the date when the condition of the delivery has been fulfilled.

    The doctrine of escrow

  38. The doctrine of 'escrow' is a relic of medieval times. It dates from the time when conveyances were made by feoffment and livery of seisin. It has survived to the present day and often operates in regard to conveyances of land or the creation or disposition of estates and interests in land such as a term of years. It has changed its features much since the days of Sheppard's Touchstone and Preston's Abstracts. We no longer speak of a first delivery or a second delivery. But it does predicate a document which is executed and delivered. The accustomed formula is 'signed, sealed and delivered'. When that formula is used in the document and it is signed by the party (or in the case of a company its seal is affixed) and attested by a witness with intent by the maker that it should be binding on him, it is conclusively presumed to be 'signed, sealed and delivered'. If it is handed over to another unconditionally, it is delivered as a deed. If it is handed over to another conditionally, it is delivered as an escrow. It only becomes a deed when the conditions are fulfilled.
  39. Thus far there can be no dispute. The question in this case is: What is the effect of an escrow before the conditions are fulfilled? One thing is clear. While the conditions are in suspense, the maker of the escrow cannot recall it. He cannot dispose of the land or mortgage it in derogation of the grant which he has made. He is bound to adhere to the grant for a reasonable time so as to see whether the conditions are to be fulfilled or not. If the conditions are not fulfilled at all, or not fulfilled within a reasonable time, he can renounce it. On his doing so, the transaction fails altogether. It has no effect at all. But if the conditions are fulfilled within a reasonable time, then the conveyance or other disposition is binding on him absolutely. It becomes effective to pass the title to the land or other interest in the land from the grantor to the grantee. The title is then said to 'relate back' to the time when the document was executed and delivered as an escrow. But this only means that no further deed or act is necessary in order to perfect the title of the grantee. As between grantor and grantee, it must be regarded as a valid transaction which was effective to pass the title to the grantee as at the date of the escrow, see Perryman's case (1594) 5 CoRep 846. But this doctrine of 'relation back' does not operate so as to affect dealings with third parties, see Butler v Baker's case (1591) 3 CoRep 25a. So far as the grantee is concerned, while the conditions are in suspense, he gets no title such as to validate his dealings with third persons. He cannot collect rents from the tenants. Nor can he give the tenants notice to quit. He cannot validly mortgage the land, though, if he purports to do so, the mortgage might be 'fed' later when he acquires the title.
  40. Such are the principles which I deduce from the very learned work of Williams on Real Property, 1901 ed at p 151 note (k) and the authorities cited therein: and from the judgment of Farwell LJ in Foundling Hospital Governors v Crane [1911] 2 KB 367 at p 377 and of Lord Cross of Chelsea in Security Trust Co v Royal Bank of Canada [1976] AC 503 at p 517. I said likewise in Cory (Wm) & Son Ltd v Inland Revenue Commissioners [1964] 1 WLR 1332 at p 1341. I realise that both Diplock LJ and Lord Reid said otherwise, see [1964] 1 WLR at p 1346 and [1965] AC at pp 1107-8. But they had not the benefit of having cited to them the earlier authorities and their observations are said in the latest textbook to be erroneous, see Emmet on Title (1978) p 650.
  41. What date is to be inserted?

  42. The question in this case is as between grantor and grantee. The counterpart lease was executed (a day or two beforehand) and delivered in escrow on November 1 1976. In exchange the lease was executed (a day or two beforehand) and delivered in escrow on November 1 1976. The date of delivery in escrow was therefore November 1 1976. The conditions were fulfilled on November 18 1977. Thereupon the title related back to the delivery on November 1 1976. That is the date to be inserted in the lease as 'the date hereof'. For this purpose we go back to Coke upon Littleton 46b:
  43. If the habendum be for the terme of twenty-one years, without mentioning when it shall begin, it shall begin from the deliverie, for there the words take effect, as is aforesaid. If an indenture of lease beare date which is void or impossible, as the thirtieth day of Februarie, or the fortieth of March, if in this case the terme be limited to begin from the date, it shall begin from the deliverie, as if there had been no date at all

    Conclusion

  44. This case has taken us back to the language and thought of the medieval lawyers. The result is that the lessees must pay the rent of the lock-up shop from November 1 1976 and not from November 18 1977. This seems to me the just result. It would not be right that the lessees - by repudiating their obligations on November 9 1976 - should thereby get out of paying any rent for a whole year - while the issue was being litigated - in which they were found to be wrong.
  45. I would therefore allow the appeal.
  46. Dissenting, ACKNER LJ said: The habendum in the lease, the subject-matter of this dispute, provides for 'A term of 24 years from September 29 1976 (determinable as hereinafter provided) paying therefor unto the landlord from the day hereof . . . the several rents hereinafter referred to'. 'The date hereof' is a reference back to the date of the execution of the lease. But the lease is not dated. The question which we have to decide is from what date did the obligation to pay rent begin. Was it November 1 1976, the date when the lease was executed by the appellant landlord in escrow, the condition being the unconditional delivery by the tenant of the counterpart, or November 18 1977 when for the first time the only outstanding term (the production of a certified copy of the transfer of the mortgage) under which the counterpart had been delivered was first satisfied?
  47. This appeal thus raises the short but by no means simple question - from what date does an escrow become operative - from the date it was delivered as an escrow or from the date when the conditions subject to which it was delivered have all been satisfied? At first instance the learned deputy judge found in favour of the second alternative. He held that the execution of a lease occurred only when it was signed, sealed and unconditionally delivered.
  48. The nature of an escrow

  49. If an instrument be delivered to take effect on the happening of a specified event, or upon condition that it is not to be operative until some condition is performed, then pending the happening of the event or the performance of the condition the instrument is called an escrow (see Norton on Deeds, 2nd ed p 18):
  50. The maker (of a deed) may so deliver it as to suspend or qualify its binding effect. He may declare that it shall have no effect until a certain time has arrived or until some condition has been performed, but when the time has arrived, or the condition has been performed, the delivery becomes absolute, and the maker of the deed is absolutely bound by it, whether he has parted with possession or not. Until the specified time has arrived, or the condition has been performed, the instrument is not a deed; it is a mere escrow.
  51. Per Lord Cranworth in Xenos v Wickham (1866) LR 2 HL 296 at p 323.
  52. This view of the nature of an escrow was accepted by Diplock LJ, as he then was, in Cory (Wm) & Son Ltd v Inland Revenue Commissioners [1964] 1 WLR 1332 at p 1346. He said:
  53. So long as it remains an escrow it is not yet executed as a deed; for delivery again as a deed is required before it becomes one. While an escrow it conveys nothing, it transfers nothing.
  54. However, a party who executes a deed of transfer as an escrow has no locus poenitentiae. It is well established that during the intervening time between the execution of the escrow and the satisfaction of the condition subject to which it was so delivered, the maker of the escrow cannot withdraw. He cannot recall it or repudiate it. He must await the event to see whether or not the condition is fulfilled (see Beesly v Hallwood Estates Ltd [1961] Ch
    105, Vincent v Premo Enterprises (Voucher Sales Ltd) [1969] 2 QB 609 and Kingston v Ambrian Investment Co Ltd [1975] 1 WLR 161 at p 166 B-D). The dicta to the contrary by Lord Reid in Cory's case [1964] AC 1088 at p 1108 is generally accepted as being perincuriam (see Emmet on Title, 17th ed, 650 referring to the decision of Walton J in Terrapin International Ltd v IRC [1976] 1 WLR 665 at pp 669-670 - a case to which I shall make a more detailed reference hereafter. While this is clearly an important characteristic of an escrow, it does not seem to me to relate to the problem we have to solve. It is, of course, common ground that all the conditions subject to which the escrow was delivered have now been satisfied. This escrow had therefore ceased, so to speak, to be in suspended animation and we are not therefore concerned with what might have been the position during the interregnum between the execution of the escrow and the satisfaction of the conditions.
  55. The doctrine of relation back

  56. In Preston's Abstracts, 2nd ed, vol 3 (1824) p 65, the law is stated as follows:
  57. The rules respecting escrows are, 1st, The writing will not operate as a deed till the second delivery. 2ndly, The party deputed to make the second delivery, cannot give effect to the writing by delivering the same before the conditions are performed. 3rdly, On the second delivery of the writing, it will have relation, for the purposes of title, and not for the purpose of giving a right to the immediate rent, etc from the delivery. 4thly, So as the conditions be performed, and the deed delivered a second time, the deed will be good, not withstanding the death of either or both of the parties before the second delivery.
  58. These observations have frequently been cited with approval - see in particular Foundling Hospital Governors v Crane [1911] 2 KB 367 per Farwell LJ at p 377. The reference to a second delivery was because under the old law an escrow had to be delivered to a third party - not to the person intended to take thereunder, since otherwise there would have been a technical delivery. The limited nature of this doctrine is apparent from the following observations of Lord Cross giving the opinion of the Board in Security Trust Co v The Royal Bank of Canada [1976] AC 503 at p 517:
  59. On fulfilment of the condition subject to which it was delivered as an escrow, a deed is not taken to relate back to the date of its delivery for all purposes, but only for such purposes as are necessary to give efficacy to the transaction - ut res magis valeat quam pereat (see Butler and Baker's case (1591) 3 CoRep 25a). Thus, the fact that the grantor has died before the condition of an escrow is fulfilled does not entail the consequence that the disposition fails. If and when the condition is fulfilled the doctrine of relation back will save it, but notwithstanding the relation back for that limited purpose the grantee is not entitled to the rents of the property during the period of suspense or to lease it or to serve notices to quit (see Sheppard's Touchstone 7th ed (1820) 60, Thompson v McCullough [1947] KB 447)
  60. This doctrine does not seem to me to advance the appellant's case.
  61. I return now to Terrapin's case (cit supra), which raised for decision the correct rate of stamp duty payable upon a document originally delivered as an escrow. Walton J, to decide this question, considered that he had to go back to first principles as to the nature of escrows. Having cited from Preston's Abstracts, in the terms referred to above, he went on to say this (p 669 G):
  62. A document which is intended to take effect as a deed when conditions have been fulfilled may be executed as an escrow: that is to say, with all the formalities of a deed save that the vital unconditional delivery, which is essential for the proper execution of a true deed, is missing; it is replaced by a conditional delivery, usually express, but capable of being assumed. At this stage, the document is not a deed; and although of course it contains within itself the possibility of becoming an effective deed, a deed rising phoenix-like from the ashes of the escrow, at the stage before the condition is fulfilled it is of no effect whatsoever.
  63. Having quoted that part of the judgment of Diplock J in Cory's case, to which I have made reference above, he continued:
  64. If I may repeat the crucial passage; - 'So long as it remains an escrow it is not executed as a deed; for delivery again as a deed is required before it becomes one'. It follows in my judgment that . . . the first date on which the deed of exchange which is the subject matter of the present appeal was executed was on the day on which the conditions were fulfilled and it was in the eye of the law for the first time delivered unconditionally and thus for the first time delivered as a deed.
  65. After anxious hesitation, having had the advantage of reading in draft the judgments of my Lord, the Master of the Rolls, and Sir Denys Buckley, I agree with Walton J, as did the learned deputy High Court judge. A deed delivered as an escrow takes effect from the satisfaction of the conditions and not from the date of its delivery as an escrow.
  66. I am conscious that in reaching this decision I am not following the dicta of Vaisey J in Re Duke of Devonshire's Settlement (1952) ATC 405. The learned judge was not, however, dealing with an escrow, nor was this point apparently the subject matter of argument, and it certainly did not arise for his decision. Moreover, it is clear from the observations made by counsel at the conclusion of the judgment that for the special reasons referred to the case had been taken out of its turn and dealt with with special expedition.
  67. Thus, with all proper diffidence, I also would decide that both lease and counterpart took effect together on the satisfaction of the condition on November 18 1977 and accordingly such date is 'the date hereof'.
  68. Agreeing in the result with Lord Denning MR, SIR DENYS BUCKLEY said: It was common ground between the parties in the 1976 action that the counterpart lease was executed in escrow by the tenants. Whitford J's judgment proceeded explicitly on that basis and that judgment is undisturbed. It is common ground before us that the conditions of that escrow were fully satisfied on November 18 1977. The question for decision in the present proceedings is how in the circumstances set out in the judgment of my Lord, the Master of the Rolls, the expression 'from the date hereof' should be interpreted. The plaintiff says that it signifies November 1 1976: the defendants say it signifies November 18 1977. The plaintiff as landlord naturally contends that the former is correct: the defendants as tenants equally naturally contend that the latter is correct. The determination of the question depends in my view upon the true effect of the delivery of a deed in escrow. The law in this respect is ancient but has not become anachronistic. Deeds are not uncommonly delivered in escrow today.
  69. The tenant's argument is to the effect that a document delivered as an escrow does not acquire any of the characteristics of a deed until the conditions of the escrow have been fulfilled. Thereupon unconditional delivery of the document as the deed of the maker takes place, and the document is then for the first time effective as a deed. Since the essential characteristics of a deed are that it is a written instrument which has been signed, sealed and delivered, an escrow cannot rank as a deed until there has been unconditional delivery.
  70. The landlord's argument on the other hand is to the effect that as soon as the instrument is delivered in escrow it has all the characteristics of a deed save in one respect which is that, although the instrument is binding on the maker from the moment when it has been signed, sealed and delivered in escrow, so that he cannot resile from it, it has otherwise no operative power or effect until the condition of the escrow has been fulfilled. It is consequently a deed ab initio, but subject to a temporary restriction on its operative effect. It is a deed the operative effect of which, but not its binding quality, has been suspended by the maker until a certain event or time by the manner in which he has delivered it.
  71. Over the ages the books contain many authoritative statements of what constitutes an escrow. It is not easy to reconcile all of them. They can be found collected in Norton on Deeds, itself a work of great authority (Norton on Deeds, 2nd ed p 18 et seq). The difficulty in reconciling some of these statements derives, I think, from a difficulty in being sure in precisely what sense the various writers use the word 'deed'. Norton starts his work with a discussion of how difficult it is to give a satisfactory definition of a deed. His own definition is at p 3 of the second edition. Three of its essential requirements are (1) writing, (2) sealing and (3) delivery. Since January 1 1926 an individual executing a deed must sign it or put his mark upon it (Law of Property Act 1925, section 73). It is universally accepted that to constitute a deed a written instrument must have been 'delivered' by the maker of it.
  72. 'Delivery' for this purpose is not to be confused with any form of exchange of documents or of physical delivery of the instrument to someone other than the maker. 'No particular form of words or acts is necessary to render an instrument the deed of the party sealing it. The mere affixing of the seal does not render it a deed: but as soon as there are acts or words sufficient to show that it is intended by the party to be executed as his deed presently binding on him it is sufficient': Xenos v Wickham (1866) LR 2 HL 296 per Blackburn J at p 312. 'It is a question of intention and fact to be tried by the jurors': ibid per Pigott J at p 309. The maker of the deed may retain it physically in his own possession and yet 'deliver' it so long as he makes clear that he intends it as his deed presently binding on him. Anything which shows that he treats the instrument as his deed will suffice (Tupper v Foulkes (1861) 9 CB (NS) 797 per Williams J at p 809). If, however, an instrument intended to take effect as a deed be delivered with the intention that it shall operate only at some future time or on the happening of a specified event, or upon condition that it shall not be operative until some condition is performed, it is said to be delivered as an escrow.
  73. The maker may so deliver (the instrument) as to suspend or qualify its binding effect. He may declare that it shall have no effect until a certain time has arrived, or till some condition has been performed, but when the time has arrived or the condition has been performed the delivery becomes absolute and the maker of the deed is absolutely bound by it, whether he has parted with the possession or not. Until the specified time has arrived, or the condition has been performed, the instrument is not a deed. It is a mere escrow.
  74. (Xeros v Wickham, supra, per Lord Cranworth at p 323). Again no special form of words is necessary to constitute delivery of an instrument delivery as an escrow: it is a question of intention, however, that intention may be displayed.
  75. After the happening of the event or the performance of the condition upon which delivery of an escrow was made, the instrument operates as a deed without any further delivery.
  76. It has been accepted as common ground by the parties in this case that, once the maker of an instrument has delivered it as an escrow, he cannot by any means withdraw from it or alter it: see Beesly v Hallwood Estates Ltd [1961] Ch 105 and Kingston v Ambrian Investment Co Ltd [1975] 1 WLR 161, 166. It may perchance never take effect because the condition or event upon which the instrument is intended to become operative never occurs, but otherwise it will certainly take effect upon the satisfaction of that condition or the occurrence of that event. The maker, having delivered the instrument, has lost all control and dominion over it. It is as binding upon him as if he had delivered it unconditionally.
  77. I am much disposed to think that the effect of delivery upon a deed is the same as the effect of delivery upon an escrow. Each renders the delivered instrument inescapably binding upon the deliverer. The difference between a deed and an escrow lies not in the binding quality of the instrument but in the time and circumstances at and in which the obligation can be enforced. For my part I should be prepared to hold that an instrument delivered in escrow is as much a deed as is a precisely similar instrument delivered unconditionally in the first instance save that the operative effects of the instrument are suspended while it remains in escrow. In Xenos v Wickham in the passage I have already cited Lord Cranworth used language suggesting that, until the time specified for the maturity of the escrow has arrived or the condition of the escrow has been satisfied, the instrument is not a deed: it is a mere escrow. And in Foundling Hospital Governors v Crane [1911] 2 KB 367 Farwell LJ at p 377 said: 'Now an escrow or script is not a deed at all; it is a document delivered upon a condition on the performance of which it will become a deed and will take effect as from the delivery, but until such performance it conveys no estate at all.' Lord Cranworth, it seems to me, was clearly using the term 'deed' to describe an instrument binding on the grantor and immediately enforceable against him. Farwell LJ was considering whether the instrument in question in his case was capable of having conveyed a legal estate, ie was a deed in the full sense. In the event, however, the document was held not to have been delivered at all. Norton does not deal with the point, but more modern writers seem to favour the view that an escrow, while it remains in escrow, is not a deed. See eg Halsbury's Laws of England, 4th ed, vol 12, para 1334. It is perhaps merely a matter of semantics whether an instrument which is delivered as an escrow should properly be described as a deed, the operative effect and so the enforceability of which are temporarily suspended, or as a document delivered upon a condition on the performance of which (and not before) it will become a deed. The substantial point, I think, for the purposes of this question of construction, is that the maker cannot resile from the terms and effect of the document which he has 'delivered', notwithstanding that he may have delivered it in circumstances which for the time being deprive it of operative effect and enforceability.
  78. I have laboured this point perhaps at undue length because it seems to me to have an important bearing upon the meaning to be attributed to the words 'the date hereof' in the present case. The date was left blank in both the lease and the counterpart: the dates which are now to be found there were inserted later and not by agreement. So we are left to discover the date of the lease from extrinsic evidence. We must surely look for the date when the lease first had some legal effect. That was when the lease and counterpart were delivered in escrow, ie November 1 1976. True it cannot then have vested a legal term in the tenants but it created a state of affairs in which the landlord could do nothing with the property inconsistent with his ability to implement his grant upon the instant of the fulfilment of the conditions attached to the escrow. On the facts the lease and counterpart were both in my opinion delivered in escrow on November 1 1976.
  79. I agree with the Master of the Rolls that if the tenants had not repudiated the bargain, it is likely that the solicitors would have inserted the date November 1 1976 in both the lease and the counterpart; but for my part I prefer to base my decision on the reasons contained in the last preceding paragraph of this judgment rather than upon the first ground adopted by my lord.
  80. When the conditions of an escrow are fully satisfied, so that it becomes an immediately operative deed, that effect relates back to the date of its delivery in escrow, but not for all purposes; only for such purposes as are necessary to give effect to the transaction (Security Trust Co v Royal Bank of Canada [1976] AC 503 per Lord Cross at p 517 at F), which I take to mean all the terms and provisions of the instrument which remain capable of being given effect to implement the bargain between the parties. A grant in escrow of a lease, or an assignment in escrow of the reversion to a lease, falling within the Law of Property Act 1925, section 52(1), cannot while it remains in escrow convey or create any legal estate which did not previously exist. It cannot, accordingly, while the instrument remains in escrow create the legal relationship of reversioner and tenant. So during the subsistence of the escrow the intended reversioner is not at law the reversioner upon a term vested at law in the tenant. Accordingly the grant or assignment, while it remains in escrow, will not entitle the intended reversioner to demand the rents nor to serve notices to quit (Security Trust Co v Royal Bank of Canada, supra, at p 517G). But if the intention of the parties was that, upon the escrow ceasing to be such the rights and liabilities of the parties shall be treated as being those which would have arisen if the instrument had been delivered absolutely, and not as an escrow, in the first place, the lease, when it ceases to be an escrow and becomes an effective deed, is, it seems, to be given effect as between the parties so far as practicable as though the term had vested in the tenant and the reversion in the reversioner when that would have occurred if the instrument had been originally delivered unconditionally. Certainly for the purpose of ascertaining the date when the term will expire it must be calculated from the date, if any, specified in the lease. (Where no such date is specified, see Coke on Littleton, folio 46b.) In this case that period is specified as '24 years from September 29 1976'. The term will expire on September 29 2000. Similarly the periods by reference to which instalments of rent are to be calculated must, I think, be ascertained as though the lease had not been delivered in escrow but unconditionally. In this case that period runs 'from the date hereof and throughout the said term hereby granted'. It is of course perfectly possible that a lease should reserve a rent to be calculated as from a date anterior to the date on which the lease takes effect. There is nothing here to make November 1 1976 an inappropriate date to treat as 'the date hereof' when construing the redendum of the lease.
  81. As a matter of construction there can, in my opinion, be only one 'date hereof'. If the lease dates back for any purpose to the original delivery, that date must in my judgment be the 'date hereof' within the meaning of the lease.
  82. For these reasons I am of opinion that, according to the true construction of the lease in the events which have happened 'the date hereof' means November 1 1976. I would accordingly allow this appeal.
  83. The appeal was allowed with costs in the Court of Appeal and below, the appellants being granted a declaration that the obligation to pay rent commenced on November 1 1976. The date from which interest should be calculated on the amount due was to be agreed by the parties, with liberty to apply. Leave to appeal to the House of Lords was refused.

The electronic text of this judgment was provided by Estates Gazette, whose assistance is gratefully acknowledged.


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