Vendor and purchaser–A vendor who elects to pursue specific performance cannot, on continued default by the purchaser, claim on the basis of non-compliance with a preceding notice to complete
This was an appeal
by Capital & Suburban Properties Ltd from an order of Foster J in the
Chancery Division on November 18 1975 in so far as it declared that the
respondents, Sonia Swycher, Dennis David Swycher, Frank Joseph Kershaw and
Adrienne Shaw Kershaw, owners of Savile House, 74-90 Savile Street, Sheffield,
were entitled, should the property be resold before November 12 1976 for less
than the price contracted to be paid for it by the appellants, to receive the
difference (after giving credit for the deposit) as well as the expenses of
resale.
M Miller QC
and M Reynolds (instructed by Stowe & Co) appeared for the appellants, and
D J Nicholls QC and M Hart (instructed by Bower, Cotton & Bower, agents for
Kershaw, Tudor & Co, of Sheffield) represented the respondents.
Giving a
reserved judgment, BUCKLEY LJ said that on March 25 1974 the respondent vendors
agreed to sell Savile House to the appellants, the sale to be subject to the
Law Society’s General Conditions of Sale (1973). The purchase price was
£150,000 with certain additional sums as and when the property should be
substantially let. The date fixed for completion was July 25 1974. On August 16
1974 the vendors served notice to complete expiring on September 17 1974. The
purchasers did not complete by that date, but on September 12 issued the writ
in the action. On March 6 1974, not long before the contract of sale, Sheffield
Metropolitan District Council passed a resolution under section 17 of the
General Rate Act 1967 taking power to impose a general rate on unoccupied
property. The vendors did not know of this at the date of the agreement, the
resolution not being gazetted until April 1 1974. The purchasers’ writ alleged
that the vendors had by an agent falsely represented that the local authority
had passed no such resolution, and that the purchasers had contracted in
reliance on that representation. They claimed specific performance with an
abatement of the price by £27,000. The vendors counterclaimed specific
performance and other relief, and applied for summary judgment. An order was
made for completion on November 12 1975 on terms as to the amount in dispute.
When the purchasers failed to comply with that order, Foster J directed that
the deposit be forfeited, that the vendors be at liberty to resell, and that
should the property be resold before November 12 1976 for less than the
contract price the purchasers pay the difference, after crediting the deposit,
together with the costs of the resale. The purchasers appealed from the order
as to payment of any difference arising on resale.
It was
unfortunate that the judge had given no reasons for his decision. That was a
most unsatisfactory practice. The order evidently treated general condition 19
(4) of the Law Society’s form as applicable to the circumstances of the case as
if the ‘date fixed for completion’ for the condition’s purposes were November
12 1975, the date fixed under the court’s order of November 5 1975. The
condition, so far as relevant, provided that on non-compliance by the purchaser
with the terms of an effective notice to complete, the vendor might forfeit the
deposit and resell the property, and if on resale within one year from the date
fixed for completion the vendor incurred a loss, the purchaser should be liable
for that loss as liquidated damages, including costs and expenses of the resale
but subject to credit for the amount of the deposit. The argument for the
purchasers was that by counterclaiming specific performance and electing to
pursue that remedy, the vendors had abandoned their right to proceed on the
basis of a repudiation. He (his Lordship) thought it would be useful for him to
state explicitly his own view of the principles involved. Where time had been
made of the essence of a contract and the purchaser failed to complete within that
time, the vendor might (a) treat the purchaser as having repudiated the
contract and sue for damages, or (b) seek specific performance. He might seek
both remedies in one writ, but must elect at the trial which road he proposed
to travel. If he chose specific performance, and the purchaser still failed to
complete, he could forfeit the deposit and claim any other monetary relief that
might be available to him under the terms of the contract, and it was not in
dispute that he could, if he chose, seek an order of the court rescinding the
contract at this stage. Here the word ‘rescind’ did not import treating the
contract as though it had never been made; the rescission order would mean that
the vendor was entitled to retain the land in consequence of the purchaser’s
repudiation. If the vendor took this course, he could not also seek damages.
Rescission was useful to a vendor where the land had risen in value, but could
not benefit him otherwise; there would therefore be no virtue in allowing him
both to rescind and to claim damages. Foster J’s order should be amended by
deletion of the declaration relating to resale on or before November 12 1976
for less than the purchase-price.
SIR JOHN
PENNYCUICK gave a concurring judgment, and ORR LJ agreed with both the
judgments delivered. An order was made in the terms proposed by Buckley LJ, and
the purchasers were awarded the costs of the appeal. Leave to appeal to the
House of Lords was refused.
