Sale of tenanted property – Purchasers declaring that a notice to complete would be challenged on grounds relating to subsisting tenancies – Vendor serving notice nevertheless – Purchasers claiming that vendor was itself unable to complete – Whether purchasers estopped from raising additional ground unrelated to tenancy issue – Vendor’s argument upheld
In July 1996 the claimant purchasers, seeking an investment property, entered into a contract with the defendant vendor for the purchase of a house in London N3 for £75,000, such purchase to be subject to and with the benefit of certain tenancies of bed-sitters (units) that were particularised in a schedule to the contract (the tenancy condition). The contract incorporated the national conditions of sale. Because the land certificate had been mislaid, it was expressly provided that the completion date would be either four weeks from the date of the contract or (if later) three working days after the vendor had obtained the certificate “and informed the purchaser thereof ” (the information condition).
In October 1996 the vendor’s solicitors informed the purchasers’ solicitors that a replacement certificate was shortly to be received from the Land Registry. The purchasers’ solicitors confirmed that they were happy to complete the following week and requested a completion statement. They later went on to request confirmation that two units that had been vacated since the contract had not been relet without their clients’ permission.
Having received no such confirmation, the purchasers’ solicitors wrote that any notice to complete would be quite invalid unless vacant possession could be given of those units. The vendor’s solicitors disagreed and served a notice to complete. The purchasers’ failed to comply with the notice and the vendor purported to rescind and forfeit their £3,750 deposit.
The purchasers sought a decree of specific performance and disputed the validity of the completion notice, on the ground that the vendor itself was at no material time able to complete, being in breach, not only of the tenancy condition, but also of the information condition. Confining himself to the latter, the High Court master ruled in favour of the purchasers, holding that the completion date could only be fixed by reference to the fulfilment of the information condition by the vendor, which no longer disputed that it had failed to comply with the precise terms of the condition. The vendor appealed.
Held: The appeal was allowed.
1. The law relating to notices to complete flowed from contractual terms that were, like any others, subject to considerations of waiver and estoppel. It was clear from the correspondence that the vendor’s solicitors understood that a notice would be likely to be challenged only on grounds relating to the tenancy condition. But for the reletting problem, the two solicitors would simply have arranged for completion to take place, neither being concerned to give or receive a formal notice under the information condition. In those circumstances, the purchasers could not raise the contractual argument that they now sought to raise, such argument being contrary to the reasoning of the House of Lords in Bremer Handel GmbH v Vanden-Avenne Izegem PVBA [1978] 2 Lloyds Rep 109: see also Mayhew v Free Grammar School of John Lyon [1991] 2 EGLR 89.
2. The question whether the validity of the notice was affected by the relettings remained outstanding.
Robert Deacon (instructed by Wallace & Partners) appeared for the claimants; Daniel Margolin (instructed by Bude Nathan Iwanier) appeared for the defendant.
Alan Cooklin, barrister
