Sale of land – Completion – Rescission – Respondents contracting to purchase apartment in development being constructed by appellant – Completion to take place 10 days after appellant notifying respondents that apartment built – Completion delayed beyond originally anticipated date – Respondents purporting to rescind contract for appellant’s unreasonable delay – Whether delay amounting to repudiatory breach of contract entitling respondents to rescind – Appellant’s claim for damages for breach of contract dismissed – Appeal allowed
In January 2007, the respondents contracted to purchase, for £172,950, a 125-year lease of a two-bedroom apartment in a development being constructed by the appellant in Sheffield. The respondents paid a deposit of £17,295. The contract did not specify a completion date for the sale; instead, the appellant was to send written notice to the respondents when the apartment was finished and completion was to take place within 10 days thereafter. The contract incorporated the Standard Conditions of Sale (4th ed), so far as they were not varied by or inconsistent with its terms, including standard condition 6.8 dealing with notices to complete.
At the date of contracting, the appellant envisaged that the development would be finished by December 2008. In November 2007, as a result of various delaying factors, the target date was revised to February 2009. Meanwhile, the respondents’ mortgage offer, for 90% of the purchase price, expired at the end of December 2008; the lender refused to renew it since it was ceasing to 90% loan-to-value products in light of the downturn in the property market.
The respondents wrote to the appellants in March 2009, purporting to terminate the contract for unreasonable delay. The appellant did not accept that the contract was at an end. It finally completed the development in July 2009 and thereafter gave notice of that fact to the respondents as provided by the contract. Completion did not follow and, in September 2009, the appellant served a notice to complete requiring completion in 10 days.
The appellant brought a claim against the respondents for damages for breach of contract. Allowing the claim, the judge held that it was an implied term of the contract that the development would be completed within a reasonable time. He found that the overall delay, by the date of the respondents’ letter of March 2009 or by the time the appellant served its notice to complete in September 2009, was such as to amount to a repudiation of the contract by the appellants so as to entitle the respondents to refuse to complete. He ordered the appellant to return the respondents’ deposit. The appellant appealed.
Held: The appeal was allowed.
Where a contract for the sale of land did not specify a date for completion, then, subject to any contractual indication to the contrary, a term would be implied that completion would take place within a reasonable time. What was a reasonable time was a mixed question of fact and law. By virtue of such an implied term, and of the express terms of the contract, completion of the sale of the respondent’s apartment was to occur, at the latest, 10 days after a reasonable time for building the apartment had elapsed. It was important to identify the contractual completion date and the judge had erred in failing to do so. In the event of delay in completing on the contractual completion date, the contract could thereafter be brought to an end on the service and expiry of a notice to complete.
Where the contractual completion date had passed, the contract-breaker would still be entitled to specific performance of the contract unless it would be inequitable to grant that relief. The service of a valid notice to complete would bring to an end the possibility of equity intervening by the grant of specific performance to the contract-breaker. However, where no notice to complete was served, the breach of the implied term, which was in the nature of an innominate term, would not entitle the other party to terminate the contract unless that breach was repudiatory, in that it went to the root of the contract and deprived that party of substantially the whole benefit that it was intended to receive under that contract: Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 applied.
Accordingly, since the respondents had served no notice to complete, they would be entitled to terminate the contract only when: (i) it ceased to be equitable to grant specific performance to the appellant; (ii) which was probably the same date, the delay became such as to deprive the respondents of substantially the whole benefit that they were intended to have under the contract; or (iii) the appellant was in anticipatory breach by showing that it had no intention of carrying out the contract, or that it would only to do so in a manner substantially inconsistent with its contractual obligations, so as to deprive the respondents of substantially the whole benefit that they were intended to have under the contract.
The appellant had not unreasonably delayed completion of the apartment by the time of the respondents’ March 2009 letter purporting to terminate the contract. On any footing, the appellant had not unreasonably delayed completion prior to February 2009. Completion of the contract had not been due until the expiry of a 10-day notice thereafter. Where the respondents were to receive a 125-year lease, a delay of one month, at most, between the earliest possible date for contractual completion and the respondents’ purported termination of the contract in March 2009 could not be said to have deprived them of a substantial part of the benefit of the contract, let alone substantially the whole of the benefit. Although the delay beyond the end of 2008 had caused the respondents to lose their 90% mortgage, without which it was impossible for them to finance the completion, the loss of the opportunity to secure a 90% mortgage had occurred before the contractual completion date, at a time when the delay in completing the construction of the apartment was not unreasonable. There was no evidence of any other prejudice to the respondents. Nor was there any question of the appellant being in anticipatory breach as at March 2008 since it was, throughout, attempting to complete the development and hold the respondents to the contract. It followed that the respondents were not entitled to terminate the contract by their letter of March 2009: Ampurius Nu Homes Holdings Ltd v Telford Homes (Creekside) Ltd [2013] EWCA Civ 577; [2013] PLSCS 117 applied.
Even if a reasonable time had elapsed by September 2009, the judge had erred in holding that the appellant was in repudiatory breach by that date so as to justify the respondents in refusing to complete in accordance with the appellant’s notice to complete. The judge had not considered whether the delay by September 2009 had effectively deprived the respondents of substantially the whole benefit of the contract. Further, the respondents had not purported to accept any repudiatory breach by the appellant after March 2009; consequently, if the respondents were not entitled to terminate in March 2009, the contract always remained on foot until after the expiry of the notice to complete served by the appellant. Accordingly, the respondents were themselves in breach of contract by failing to complete in September 2009. The appellant was entitled to damages for that breach.
Stephen Howd (instructed by Chadwick Lawrence, of Wakefield) appeared for the appellant; the respondents appeared in person.
Sally Dobson, barrister
Sale of land – Completion – Rescission – Respondents contracting to purchase apartment in development being constructed by appellant – Completion to take place 10 days after appellant notifying respondents that apartment built – Completion delayed beyond originally anticipated date – Respondents purporting to rescind contract for appellant’s unreasonable delay – Whether delay amounting to repudiatory breach of contract entitling respondents to rescind – Appellant’s claim for damages for breach of contract dismissed – Appeal allowedIn January 2007, the respondents contracted to purchase, for £172,950, a 125-year lease of a two-bedroom apartment in a development being constructed by the appellant in Sheffield. The respondents paid a deposit of £17,295. The contract did not specify a completion date for the sale; instead, the appellant was to send written notice to the respondents when the apartment was finished and completion was to take place within 10 days thereafter. The contract incorporated the Standard Conditions of Sale (4th ed), so far as they were not varied by or inconsistent with its terms, including standard condition 6.8 dealing with notices to complete.At the date of contracting, the appellant envisaged that the development would be finished by December 2008. In November 2007, as a result of various delaying factors, the target date was revised to February 2009. Meanwhile, the respondents’ mortgage offer, for 90% of the purchase price, expired at the end of December 2008; the lender refused to renew it since it was ceasing to 90% loan-to-value products in light of the downturn in the property market.The respondents wrote to the appellants in March 2009, purporting to terminate the contract for unreasonable delay. The appellant did not accept that the contract was at an end. It finally completed the development in July 2009 and thereafter gave notice of that fact to the respondents as provided by the contract. Completion did not follow and, in September 2009, the appellant served a notice to complete requiring completion in 10 days.The appellant brought a claim against the respondents for damages for breach of contract. Allowing the claim, the judge held that it was an implied term of the contract that the development would be completed within a reasonable time. He found that the overall delay, by the date of the respondents’ letter of March 2009 or by the time the appellant served its notice to complete in September 2009, was such as to amount to a repudiation of the contract by the appellants so as to entitle the respondents to refuse to complete. He ordered the appellant to return the respondents’ deposit. The appellant appealed.Held: The appeal was allowed. Where a contract for the sale of land did not specify a date for completion, then, subject to any contractual indication to the contrary, a term would be implied that completion would take place within a reasonable time. What was a reasonable time was a mixed question of fact and law. By virtue of such an implied term, and of the express terms of the contract, completion of the sale of the respondent’s apartment was to occur, at the latest, 10 days after a reasonable time for building the apartment had elapsed. It was important to identify the contractual completion date and the judge had erred in failing to do so. In the event of delay in completing on the contractual completion date, the contract could thereafter be brought to an end on the service and expiry of a notice to complete.Where the contractual completion date had passed, the contract-breaker would still be entitled to specific performance of the contract unless it would be inequitable to grant that relief. The service of a valid notice to complete would bring to an end the possibility of equity intervening by the grant of specific performance to the contract-breaker. However, where no notice to complete was served, the breach of the implied term, which was in the nature of an innominate term, would not entitle the other party to terminate the contract unless that breach was repudiatory, in that it went to the root of the contract and deprived that party of substantially the whole benefit that it was intended to receive under that contract: Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 applied.Accordingly, since the respondents had served no notice to complete, they would be entitled to terminate the contract only when: (i) it ceased to be equitable to grant specific performance to the appellant; (ii) which was probably the same date, the delay became such as to deprive the respondents of substantially the whole benefit that they were intended to have under the contract; or (iii) the appellant was in anticipatory breach by showing that it had no intention of carrying out the contract, or that it would only to do so in a manner substantially inconsistent with its contractual obligations, so as to deprive the respondents of substantially the whole benefit that they were intended to have under the contract.The appellant had not unreasonably delayed completion of the apartment by the time of the respondents’ March 2009 letter purporting to terminate the contract. On any footing, the appellant had not unreasonably delayed completion prior to February 2009. Completion of the contract had not been due until the expiry of a 10-day notice thereafter. Where the respondents were to receive a 125-year lease, a delay of one month, at most, between the earliest possible date for contractual completion and the respondents’ purported termination of the contract in March 2009 could not be said to have deprived them of a substantial part of the benefit of the contract, let alone substantially the whole of the benefit. Although the delay beyond the end of 2008 had caused the respondents to lose their 90% mortgage, without which it was impossible for them to finance the completion, the loss of the opportunity to secure a 90% mortgage had occurred before the contractual completion date, at a time when the delay in completing the construction of the apartment was not unreasonable. There was no evidence of any other prejudice to the respondents. Nor was there any question of the appellant being in anticipatory breach as at March 2008 since it was, throughout, attempting to complete the development and hold the respondents to the contract. It followed that the respondents were not entitled to terminate the contract by their letter of March 2009: Ampurius Nu Homes Holdings Ltd v Telford Homes (Creekside) Ltd [2013] EWCA Civ 577; [2013] PLSCS 117 applied.Even if a reasonable time had elapsed by September 2009, the judge had erred in holding that the appellant was in repudiatory breach by that date so as to justify the respondents in refusing to complete in accordance with the appellant’s notice to complete. The judge had not considered whether the delay by September 2009 had effectively deprived the respondents of substantially the whole benefit of the contract. Further, the respondents had not purported to accept any repudiatory breach by the appellant after March 2009; consequently, if the respondents were not entitled to terminate in March 2009, the contract always remained on foot until after the expiry of the notice to complete served by the appellant. Accordingly, the respondents were themselves in breach of contract by failing to complete in September 2009. The appellant was entitled to damages for that breach.Stephen Howd (instructed by Chadwick Lawrence, of Wakefield) appeared for the appellant; the respondents appeared in person.Sally Dobson, barrister
