Purchaser entitled to recover its deposit following termination of contract

When construing a contract, the starting point is the language of the provisions themselves. The High Court has considered this principle in Weston Homes plc v Henley Developments 211 Ltd and another [2024] EWHC 3286 (Ch). The case concerned a contract of 21 June 2022 whereby the claimant agreed to purchase from the first defendant freehold property at Alkerden Village, Ebbsfleet, Kent, for £14.5m with an agreed deposit of £870,000. The contract provided that either party could serve written notice on the other terminating the contract if the “compliance date” had not occurred by the expiry of the “relevant period” and the seller should repay the deposit to the buyer within 10 business days of termination. The compliance date was the date when various conditions precedent had been wholly fulfilled when the sale and purchase of the property became unconditional. One condition precedent required grant of a satisfactory planning permission pursuant to a joint application in agreed form for the approval of matters reserved by a pre-existing outline planning consent granted in March 2018. The relevant period was the shorter of six months from the date when the application was submitted to the local planning authority and the period between the application date and the cut-off date of 31 December 2023. The application was submitted on 4 November 2022, so the relevant period expired on 4 June 2023. By that date the application had not been determined so no satisfactory planning permission had been obtained, the conditions precedent had not been wholly fulfilled, and the compliance date had not occurred. Weston served notice of termination on 13 June 2023 and sought the return of its deposit. Henley claimed that Weston was in breach of its obligations regarding the fulfilment of the planning conditions precedent and could not rely on its own default to terminate the contract. Weston argued that even if it was in breach, which it denied, its right to terminate was not precluded by the relevant clause. The contract was a substantial and professionally prepared document designed to give effect to a large-scale and complex transaction. The language used was clear and entirely unequivocal: either party could terminate the contract where the compliance date had not occurred before the relevant date. There was no caveat to preclude reliance in the case of a party’s default and nothing to suggest that the parties did not mean what they said. Other indicators showed that they intended the provision to apply as written. Weston was entitled to the return of its deposit. Louise Clark is a property law consultant and mediator