Section 9(2) of the Perpetuities and Accumulations Act 1964 had no application to a right of pre-emption, so long as it had not matured into an option.

Sir William Blackburne so held when concluding, inter alia, that the claimant, Cosmichome Ltd, had not succeeded in showing that the defendant, Southampton City Council, had lost the right to acquire the freehold of certain land by force of section 9(2) of the 1964 Act.

Section 9(2) of the Perpetuities and Accumulations Act 1964 provides: “In the case of a disposition consisting of the conferring of an option to acquire for valuable consideration any interest in land, the perpetuity period under the rule against perpetuities shall be twenty one years, and section 1 of this Act shall not apply. Provided that this subsection shall not apply to a right of pre-emption conferred on a public or local authority in respect of land used or to be used for religious purposes where the right becomes exercisable only if the land ceases to be used for such purposes.”

SIR WILLIAM BLACKBURNE said that the question was whether section 9(2) was to be understood as being confined to options as traditionally understood, namely any “disposition” which from its inception gave rise to an interest in land and did not therefore sound only in contract (as did a right of pre-emption until it was converted into an option and thus into an equitable interest in the relevant land as Templeman LJ described in Pritchard v Briggs [1980] 1 Ch 338, 418), or whether it extended further and reached a right of pre-emption even if, at inception, the right did not give rise to any interest in land. In Taylor v Couch [2012] EWHC 1213 (Ch) Judge Hodge QC was of the view that because of the proviso section 9(2) extended to rights of pre-emption. The difficulty his Lordship had with that conclusion was that, aside from the wording of the proviso, it was not evident what the statutory purpose could have been for extending the scope of the rule against perpetuities to contracts of pre-emption which did not from their inception confer on the grantee of the right any interest in the land to which the right related. The contrary case was that the proviso was explicable on the basis that Parliament assumed, and did so wrongly, that a right of pre-emption did give rise from its creation to an immediate interest in land. In Pritchard’s case Goff LJ considered, at p 396, the impact of various provisions in the 1925 property legislation on the nature of a right of pre-emption. In his view the statutory provisions to which he had referred, including section 9(2), did not amend the law but were enacted under a misapprehension. From that it followed that they had no effect on the view he had otherwise formed that a right of pre-emption was not to be regarded as creating an interest in land. In the light of the decision in Pritchard’s case his Lordship doubted that it was open to him to come to a different view, that Parliament proceeded on a wrong assumption and that it would not therefore be right to regard the legislation as amending the law by treating rights of pre-emption exceptionally as if they gave rise to an immediate interest in land. Looking at the issue more generally, there was no reason why, where the right in question sounded at the time of its creation only in contract and might never mature into a right which conferred on the grantee an interest in land, Parliament should have wanted to single it out and treat it as if, from the moment of its creation, the right had that added proprietary right. His Lordship regretted that he did not feel able to agree with Judge Hodge QC’s alternative reason for his conclusion either. That was that when a right of pre-emption was converted into an option by the seller’s offer to sell the land, thereby engaging section 9(2), the 21-year period was calculated, and could only sensibly be calculated, from the date of the disposition which conferred the right of pre-emption. What the subsection referred to was the disposition which conferred the option to acquire the interest in the land. It would seem reasonably clear therefore that the date for measuring the 21-year perpetuity period was the date when the option arose rather than the date when the right of pre-emption was conferred.