Vendor and purchaser entering contract for sale of property – Completion to be made when property was ‘substantially completed’ – Roadways not in accordance with requirements of highway authority – Vendor refusing to complete – Purchaser claiming contract had been rescinded and applying for removal of caution from register – High Court ordering removal of caution
The plaintiff was the owner of a property known as Plot 25, Quarndon Heights, which was part of an estate it was developing. The plaintiff entered into a contract with the defendant dated October 27 1993 for the sale of the property. The contract allowed for the vendor to require completion when the property was ‘substantially completed’. It specifically provided that substantial completion did not require the completion of ‘all external works’. Clause 4 required the developer to procure that the roadways were built in accordance with the requirements of the local authority, and that they were to be left ‘in a state fit to be taken over’. The contract was sold subject to the Law Society’s Conditions of Sale 1994 edition and condition 7(4) stated that the vendor could not compel the purchaser to accept the property if the property differed substantially from that agreed to be sold.
During 1994 the defendant became increasingly dissatisfied at the plaintiff’s lack of progress towards completion and registered a caution over the property. In April 1995 the plaintiff gave notice that the property would be completed that month, and accordingly gave notice under clause 5 to complete before April 28. The defendant asserted it would not be prepared to complete until the roadway met the highway authority’s requirements. The plaintiff asserted that its failure to secure the visibility splays as required did not prevent the house being ‘substantially completed’ in accordance with the agreement. Subsequently the plaintiff informed the defendant that it was treating the failure to complete as a repudiation of the contract which had been accepted. The plaintiff applied to the court for a declaration that the contract had been validly rescinded and for the removal of the caution from the register.
Held The application was allowed.
1. There were a number of arguable points on which the defendant had a reasonable chance of success. In particular, if the highway authority refused to take over the responsibility of the roadways on the grounds that they had not been left in a fit state to be taken over, that could fairly be regarded as a matter of importance or, in terms of condition 7(4), one which resulted in the property ‘differing substantially’ from that which was contracted for.
2. However, unless the defendant affirmed that he wished to purchase the property and was able to give a cross undertaking in damages, the proper course was for the caution to be vacated subject to the plaintiff’s cross undertaking in damages: see Tucker v Hutchinson (1987) 54 P&CR 106.
Geoffrey Zelin (instructed by Flint Bishop & Barnett, of Derby) appeared for the plaintiff; Gerard Van Tonder (instructed by Ashley Bean & Co, of Ilford) appeared for the defendant.
