Contractual notices: the need to comply with contractual requirements

Failure to serve a notice to complete in accordance with the contractual provisions meant that an application for specific performance of the contract for sale failed in PJP(NE) Ltd v Philip Anthony Taylor [2022] EWHC 709 (Ch). The claim concerned the Bridge House Hotel in North Yorkshire, which was acquired by the claimant on 29 November 2013 pursuant to a contract between the parties that the defendant would acquire the property in the future. In the meantime, it was agreed to let the property for a five-year term to a company controlled by the defendant to enable him and his family to start running a hotel there. The sale to the defendant was conditional upon “the Seller serving a Seller’s Completion Notice no earlier than 6 calendar months prior to the fifth anniversary of this Agreement confirming that completion is to take place on the fifth anniversary of this Agreement”. The contract provided that notice was given when the document was actually received, and any notice received on a non-working day or after 4pm on a working day was to be treated as having been received on the next working day. Failure to serve a notice to complete meant that the contract would automatically determine. In February 2014, a fire broke out at the property rendering it uninhabitable and unusable. The insurance on the property – which had been arranged by the claimant – was avoided for non-disclosure of material facts on the part of the controlling shareholder of the claimant, including the fact that a number of fires had taken place at properties owned by him and he had been charged with environmental offences. The claimant’s attempts to sell the property were unsuccessful. Subsequently, the company holding the lease was dissolved and the Crown disclaimed the lease in October 2015. Attempts were made by the claimant to serve a notice to complete around nightfall on 28 November 2018, but when the defendant refused to sign for the notice until he had spoken to his solicitor the claimant did not leave the notice with the defendant. The court found that on the correct construction of the contract the notice to complete had to be served by 4pm on 28 November 2018 in order to avoid automatic determination of the contract. The completion notice was not served at all on 28 November 2018, and if that was wrong it could not have been served until after 4pm since the claimant’s representative did not arrive at the defendant’s home until after that time. Consequently, the contract was automatically determined. The defendant also argued that, if the contract was not determined, it was frustrated by reason of the damage to the property and the claimant’s failure to reinstate it. However, the court considered it doubtful that the doctrine of frustration could ever apply to a contract for the sale of land (Chitty on Contracts, 34th edition, para 26-057), but the fact that the property was seriously damaged by fire and not reinstated did not make the contract – which included provision for insurance against fire damage – radically different or impossible to perform. Louise Clark is a property law consultant and mediator