Sale of property – Specific performance – Time of the essence – Defendant agreeing to sell property to claimant – Defendant being unable to complete by specified date – Claimant serving notice to complete – Claimant deferring date for complete – Claimant seeking specific performance of contract – Whether time remaining of the essence after expiry of notice to complete – Whether defendant entitled to terminate contract – Claim allowed
By a contract dated 29 February 2014, incorporating the Standard Conditions of Sale, 5th Edition, the defendant agreed to sell to the claimant a residential property at 36 Glanville Road, Cowley, Oxford for a price of £643,000. A deposit of £64,300 was paid on exchange of contracts and the property was sold with vacant possession with a completion date of 3 April 2014.
When the contract was made, the property was subject to an assured shorthold tenancy in favour of a number of tenants. In accordance with his obligation to give vacant possession upon completion, the defendant took steps to end the tenancy and obtain possession. However, despite his efforts, the defendant was unable to obtain possession. The claimant served a notice to complete pursuant to condition 6.8 of the Standard Conditions of Sale but the defendant was not in a position to complete until several days after the deadline set by the notice had passed. The claimant decided not to rescind the contract but asked for a price reduction of £10,000 to compensate it for the delay.
The defendant notified the claimant that the tenant had vacated the property and served a notice rescinding the contract five days later on the ground that the claimant had failed to complete. The defendant argued that time had remained of the essence after the notice to complete had expired, and that the claimant’s failure to complete as soon as vacant possession became available constituted a repudiatory breach of contract that entitled the defendant to terminate the contract and forfeit the claimant’s deposit.
The claimant brought proceedings for specific performance of the contract with an award of compensation. The defendant counterclaimed for a declaration that he had validly terminated the contract and that the deposit paid to him had been forfeited.
Held: The claim was allowed
(1) If the party who was in the right, here the claimant, allowed the defaulting party (the defendant) to try to remedy his default after an essential date had passed, he could not then call the bargain off without first warning the defaulting party by fixing a fresh limit, reasonable in the circumstances. In such circumstances, the claimant could not simply pull the plug on the contract without fixing a new date that was reasonable in the circumstances. It followed that the defendant could not do so either; he could not just turn around and require completion forthwith with a threat of termination on account of the claimant’s repudiatory breach, because during the continuing period after expiration of the notice to complete time remained of the essence: Luck v White (1973) 26 P & CR 89 applied. Buckland v Farmer and Moody [1979] 1 WLR 221 considered.
(2) In the present case, there had been no attempt to specify a further date, performance by which was to be of the essence of the contract. The court considered that that would have required a new notice to complete under the contract. However, even if that was wrong, by analogy with the contractual provisions and having regard to the facts of the case, more than two clear working days’ notice by the defendant would be required in any event. Accordingly, the defendant was not entitled to serve his notice of rescission of the contract which was ineffective to bring the contract to an end.
Harry Hodgkin (instructed by Taylor Rose Law LLP) appeared for the claimant; Richard Walford (instructed by Darbys Solicitors LLP, of Oxford) appeared for the defendant.
Eileen O’Grady, barrister
