Option to purchase land – Defendant seeking to exercise option – Court ordering specific performance – Completion of sale not taking place on completion date specified in order – Claimants purporting to rescind option agreement and applying to court for discharge of contract – Whether time of the essence of completion date – Whether defendant’s failure to complete amounting to repudiatory breach – Whether appropriate to order extension of time for completion – Application dismissed
The claimants granted an option to the defendant to purchase certain land to the rear of their house. The option land consisted of an access strip and an irregular plot: the claimants would retain a strip 25ft wide along the rear boundary of their property. The claimants fenced the option land to separate it from the rest of their property. The defendant later purported to exercise the option. In subsequent proceedings between the parties, the judge rejected the claimants’ argument that the option was unenforceable, or that it ought to be rectified in terms that rendered the defendant’s attempt to exercise it ineffective. The judge made an order for specific performance, as requested by the defendant, in terms that “Upon the Defendant paying to the Claimants on 20th October… the sum of £100,000… the Claimants shall… execute a proper transfer of the Property to the Defendant”.
The parties’ solicitors then engaged in correspondence regarding completion. Issues were raised concerning the defendant’s wish to inspect the land prior to completion to ensure that the fence correctly reflected the boundaries, and concerning a claim by the claimants to be entitled to an implied right of way for the benefit of their retained land. The completion date specified in the court order, 20 October 2006, passed without the sale taking place. Five days later, the claimants’ solicitor wrote to the defendant, expressing the view that time was of the essence of the order, that they had been ready and willing to complete on that date, and that the defendant’s failure to do so amounted to a repudiatory breach of contract that entitled the claimants to rescind the option agreement. The claimants then applied to the court for an order that the contract was discharged owing to the defendant’s failure to complete. At the hearing, the claimants finally abandoned their claim to an implied right of way.
Held: The application was dismissed.
As a matter of contract, time was not of the essence on 20 October 2006 and failure to complete by that date was not a repudiatory breach of contract. That failure did not give rise to any contractual right on the part of the vendor to treat the contract as at an end. The court order was not in the form of an “unless” order and there was no suggestion in it that the defendant was to lose the contract altogether just because he was a few days late in completing: Hillel v Christoforides (1992) 63 P&CR 301 distinguished. The defendant had been unable to complete since the completion date because the claimants had purported to terminate the contract only five days after that date and had thereafter refused to consider completion. The court should consider whether it was appropriate to allow the defendant further time to complete the contract, in the same manner as it would with any other application for an extension of time, having regard to the justice of the case and the overriding objective. In the instant case, it was appropriate to extend the time for completion. In the face of the claimants’ claim to a right of way, which was unwarranted and totally spurious, it had not been unreasonable for the defendant to seek to get to the bottom of that issue before completion. His request for access to check the position of the fences was likewise reasonable. An order would be made setting a new timetable for completion. A declaration would also be made that there was no right of way over the property to be transferred in favour of the claimants’ retained.
Timothy Cowen (instructed by Matthew Arnold & Baldwin, of Watford) appeared for the claimants; Paul Staddon (instructed by Keer-Keer & Co, of Hemel Hempstead) appeared for the defendant.
Sally Dobson, barrister
