Contract for sale of land — Completion — Subsequent variation by agreement for completion date — Defendant vendors maintaining that variation valid — Judgment for defendants — Appeal allowed
The plaintiff purchasers sought specific performance of a compromise agreement of an earlier order in full settlement of proceedings concerning 1 Beechmore Road, London SW11. The order provided that the plaintiffs would purchase the property from the defendant vendors for £210,000. The completion date was March 26 1995. The settlement contract which both parties signed and which complied with the Law of Property (Miscellaneous Provisions) Act 1989, was annexed to the order. The plaintiffs agreed to remove their caution registered against the property. March 26 was a Sunday and the vendors’ solicitors wrote to the plaintiffs’ solicitors suggesting that the completion date should be moved to Friday March 24. The plaintiffs’ solicitors agreed in writing to completion on that date.
The purchasers were not ready with their money on March 24 and the vendors on that date, as they were entitled to do, enclosed a completion notice for compliance in 10-working days not including the day of notice, ie by April 7. The plaintiffs were not ready to complete then, but wrote to say that they were able to do by April 10. The vendors refused to stay their hand and issued a notice of rescission on April 7. The plaintiffs sought specific performance and damages for repudiation. They argued that there had been no valid variation of the contractual completion date; and that accordingly there had been no valid rescission of the contract of sale. The defendants applied to the court to have the statement of claim struck out and the caution vacated. The High Court gave judgment for the defendants: see [1995] EGCS 133. The plaintiffs appealed. The question was whether the formalities required for the creation of a contract for the sale or the disposition of an interest in land were also required for its variation
Held The appeal was allowed.
1. By section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, Parliament intended to introduce new and strict requirements as to the formalities to be observed for the creation of a valid disposition of an interest in land: see First Post Homes Ltd v Johnson [1995] EGCS 137; Commission for the New Towns v Cooper (Great Britain) Ltd (formerly Coopind UK Ltd) [1995] 26 EG 129.
2. Whenever parties varied a material term of an existing contract they were in effect entering into a new contract, the terms of which had to be looked at in their entirety, and if the new contract was one which was required to be in writing but was not in writing, it must be wholly disregarded and the parties were relegated to their rights under the original contract: see Morris v Baron & Co [1918] AC 1.
3. The formalities prescribed by section 2 had to be observed in order to effect a variation of a term material to the contract for the sale or other disposition of an interest in land, but were not required for a variation which was immaterial in that respect: see Morris v Baron (supra).
4. There was no doubt that in this case the term was material in that respect as it advanced the contraction date for completion and therefore the time when either party might make time of the essence by the service of notice to complete.
David Neuberger QC and William Geldart (instructed by HCL Hanne & Co) appeared for the plaintiffs; Philip Shepherd (instructed by Swepstone Walsh) appeared for the defendants.
