Sale of land – Contract – Breach – Defendant entering contract with claimant to purchase property – Defendant paying deposit but refusing to complete by specified date – Claimant seeking damages for breach of contract – Defendant counterclaiming for return of deposit – Whether defendant entitled to rescind contract – Whether claimant achieving practical completion – Claim allowed – Counterclaim dismissed
The claimant company and the defendant entered into a contract for the sale of land and buildings that were former agricultural barns. The defendant wanted to acquire the property as a retirement home for herself and her husband. The contract for sale provided for the barns to be converted into residential premises and for completion of the purchase to occur on the tenth working day following delivery to the defendant’s solicitors of the certificate of practical completion (CPC). The defendant paid a deposit. The claimant contended that it had delivered a valid CPC on 8 September 2008, that the other conditions for completion had been satisfied and that the defendant was bound to complete the purchase of the property on or before 22 September 2008.
The claimant’s service of notice to complete was met with a response from the defendant that the claimant was unable to complete the contract because the CPC was not valid and that she was entitled to rescind, which she purported to do by a letter dated 9 October 2008. She argued that, inter alia, the first requirement that the CPC had to be provided by the claimant’s supervising architect had not been satisfied.
The claimant denied the defendant’s entitlement to rescind as it had achieved practical completion, but asserted that she was in breach by her failure to complete. It then itself purported to rescind the contract in accordance with its terms. In the alternative, the claimant contended that, irrespective of the validity of the CPC, it was entitled to treat the letter of 9 October as a repudiatory breach of contract by the defendant that also entitled it to rescind.
The claimant brought proceedings for damages against the defendant for her failure to complete the purchase. The defendant resisted the action on the ground that she was entitled to refuse to complete and counterclaimed for return of the deposit.
Held: The claim was allowed. The counterclaim was dismissed.
(1) The common usage of the phrase “practical completion” meant “complete for all practical purposes”. It was not a phrase, which encompassed completion down to the last detail, however trivial and unimportant. When determining whether practical completion had been achieved, it might also be helpful to consider whether the work had been finished or done in the ordinary sense, even though part of it was defective. The existence of defects did not mean that practical completion had not been achieved. However, in assessing the significance of such defects as there might have been, it was relevant to take into account the nature of the defects and the proportion between the costs of rectifying them and the contract price: Jarvis & Sons v Westminster Corporation [1969] 1 WLR 1448 (CA); [1970] 1 WLR 637 (HL) and Menolly Investments 3 Sarl v Serep Sarl and Menolly Homes [2009] EWHC 516 (Ch) applied.
(2) The phrase “supervising architect” had to take its colour from the context in which it appeared. The contract contemplated that the person described as the supervising architect was the person able to sign a completed certificate in the form of the draft sample attached to the contract. The draft sample was the document to which the contract looked when identifying the nature of the role expected of the supervising architect. Merely because the phrase “supervising architect” might have a meaning which would not normally be limited to the role fulfilled by the signatory in the present case was not in point. What mattered for the purposes of the contract was what the person described as the supervising architect was required to do, and his only task was to do that which was necessary, by way of inspection and the like, to enable him to sign the CPC in the form attached.
(3) In all the circumstances, the document delivered to the defendant was the CPC contemplated by the contract. It was clear that the contract did not envisage that the defendant’s obligation to complete on the sale and purchase of the property should depend on the claimant providing that the certified event of practical completion had in fact been achieved. The parties had agreed to complete on provision of a valid CPC, even if the certifying architect had been wrong to sign it. The contract clearly provided that the certifying architect accepted responsibility to the defendant as purchaser and her lender and he was insured in respect of any liability to them which might arise. In such circumstances, the remedy of the defendant or her mortgagee, if either suffered loss in consequence of the CPC being provided when the works were not practically complete, would be a claim for damages against the certifying architect. That did not, of itself, entitle the defendant to refuse to complete the purchase of the property.
(4) On the facts, the perfectly sensible commercial intention behind the contract was that completion of the purchase should take place at the time the property was ready to be moved into. Any non-compliance with the terms of the planning permission and the listed building consent might amount to a breach of the contract, but it did not affect the separate question whether the issue of the CPC was justified. The defendant had neither discharged the burden of showing that practical completion had not been achieved so that the CPC ought not to have been issued, nor demonstrated that there was a manifest error on the face of the CPC. Accordingly, the claimant was entitled to forfeit the deposit and the defendant was liable to it in damages.
Nicholas Caddick QC (instructed by Nicholsons Solicitors LLP, of Lowestoft) appeared for the claimant; Simon Redmayne (instructed by Leathes Prior, of Norwich) appeared for the defendant.
Eileen O’Grady, barrister
