Option to purchase — Contract of sale — Testamentary condition — Time for completion — Specific performance — Whether time of the essence — Claim allowed
Under the terms of a will, the claimant had an option to purchase the testator’s house for £50,000, a figure substantially below its market value. Clause 9 of the will stipulated that the claimant had one month following the testator’s death in which to accept the offer, which he did. The purchase was then to be completed within three months of the date of acceptance. In the event, the purchase was not completed within that period. The issue was whether, despite the non-compliance with that term, the claimant was entitled to compel the transfer of the house to him for £50,000.
The first defendant was the testator’s executor. He neither appeared nor was represented before the court. The second, third and fourth defendants were the siblings of the testator and his residuary beneficiaries. If the claimant were to lose his right to enforce the option, the house would fall into residue. The defendants contended that, under the option clause, time was of the essence, and that, because the claimant did not complete within the three-month period, he had lost the benefit of the option.
The main question was whether, on the true interpretation of clause 9, the condition that the sale should be completed no later than three months after the day of the acceptance of the offer was one under which time was of the essence.
Held: The claim was allowed.
Clause 9 did not expressly provide that the time for completion was to be of the essence, nor was there anything in the nature of the obligation created by the acceptance of the offer, or in the surrounding circumstances, inferring that the testator had intended this.
It was well established that, in order to be valid, the exercise of an option to acquire a property interest had to be performed strictly in accordance with its prescribed terms: di Luca v Juraise (Springs) Ltd and others [1998] 2 EGLR 125 referred to.
An option constituted an irrevocable offer that matured into a bilateral contract only upon its due exercise. Unless the offer had been accepted in accordance with its terms, a purported acceptance would be ineffective to create a binding bilateral contract or to entitle the grantee of the option to enforce the right that its due exercise would have given him.
The fixing of the time for completion was analogous to the provision in an ordinary sale and purchase contract for the completion period. Ordinarily, the time for such contractual completion would be of the essence only if the contract expressly so provided, or if the nature of the subject matter of the contract or the surrounding circumstances showed that time should be of the essence: United Scientific Holdings Ltd v Burnley Borough Council [1977] 2 EGLR 61 referred to.
In all the circumstances, the claimant was entitled to enforce his clause 9 option and the court would make an order for what would, in effect be specific performance of the clause 9 obligation.
Michael O’Sullivan (instructed by Marsons, of Bromley) appeared for the claimant; the first defendant did not appear and was not represented; Penelope Reed (instructed by Parrott & Coales, of Aylesbury) appeared for the second, third and fourth defendants.
Eileen O’Grady, barrister
