Sale of land – Contract – Completion – Parties entering into agreement for sale of commercial property conditional on appellant vendors obtaining emergency lighting certificates prior to completion date – Delay in obtaining certificates resulting in delay in completion – Whether appellants in breach of contract – Whether contract requiring provision of certificates prior to contractual completion date or merely before actual completion – Appeal allowed
By a contract dated December 2013, the respondents agreed to purchase the King Edward Court shopping centre in Windsor from the appellants. It was a pre-condition to completion that the appellants should supply the respondents with emergency lighting certificates (ELCs), certifying that the emergency lighting at the centre had been tested and found to be in good working order, “as soon as practicable and in any event prior to the date of Actual Completion”. Actual completion was defined to mean completion of the sale and purchase of the centre, whether or not it occurred on the contractual completion date.
The sale was not completed on the completion date specified in the contract owing to a delay in obtaining the necessary ELCs. The ELCs were finally provided, and the sale was completed, a month later in January 2014.
The respondents brought a claim for damages against the appellants for the delay in completion, contending that: (i) the appellants were obliged to provide the ELCs and complete the sale on the contractual completion date; or, alternatively (ii) if the appellants were not obliged to provide the ELCs by the contractual completion date, they were still required to provide them as soon as practicable and had failed to do so.
Allowing the claim, the deputy judge held that the pre-condition requiring the provision of ELCs had been included in the contract for the respondents’ benefit and did not relieve the vendors of their obligation to complete on the contractual completion date: [2014] EWHC 802 (Ch); [2014] PLSCS 97. The appellants appealed. They contended that the pre-condition operated to postpone the obligation of both parties to complete on the contractual completion date and that no liability in damages could arise from the appellants’ failure to complete on that date unless that due to a failure to obtain the ELCs “as soon as practicable”.
Held: The appeal was allowed.
The reference in the contract to a “pre-condition” meant what it said. The obligation to complete in December 2013 was conditional on the appellants, as vendors, obtaining the ELCs by that date. The pre-condition therefore imposed a qualification on both parties’ obligation to complete by the contractual completion date. It was not limited in terms to the obligation to complete of the purchasers alone. The deadline for the provision of the ELCs was not the contractual completion date but “Actual Completion” which could include, but was not limited to, that date.
Even if the pre-condition was inserted for the benefit of the respondent purchasers alone, the appellants were still entitled to rely on the pre-condition as a reason for not completing in December 2013 unless the respondents had waived reliance on it. They had not done so. They had neither insisted on completion, nor waived reliance on the pre-condition, at any time prior to January 2014 when completion actually took place; in fact, they had positively refused to complete without the ELCs. Unless waived, the condition continued to take effect according to its terms. In those circumstances, the vendors were not in breach of the obligation to complete as at December 2013. The obligation to complete the contract was postponed until after the ELCs were provided.
The appellants would not be liable unless it would have been practicable to provide the ELCs by December 2013. If the delay in completion was due to a failure by the appellants to obtain the ELCs “as soon as practicable”, then the purchasers had a remedy in damages to that extent; otherwise, the failure to obtain them by December was not a breach of contract by the appellants. Whether the appellants had failed to obtain the ELCs as soon as practicable was an issue that remained to be tried.
Timothy Fancourt QC and Mark Sefton (instructed by Olswang LLP) appeared for the appellants; Rupert Reed QC and Robert Ashdown (instructed by CMC Cameron McKenna LLP) appeared for the respondents.
Sally Dobson, barrister
