Weston Homes plc v Henley Developments 211 Ltd and another

Sale of land – Deposit – Termination of contract – Claimant agreeing to purchase property from defendant – Claimant purporting to terminate contract and seeking return of deposit – Claimant applying for summary judgment – Whether claimant entitled to summary judgment in reliance on relevant terms of contract despite allegations of breach of contract – Claim allowed The claimant agreed to purchase from the first defendant freehold property known as RMA 2 and RMA 3 Market Centre, Alkerden Village, Ebbsfleet, Kent. The second defendant was the guarantor under the contract. The purchase price agreed in respect of the property, subject to adjustment pursuant to cause 25.1, was £14,500,000 and the deposit agreed to be paid under the contract was £870,000 to be held by the first defendant’s solicitors as stakeholders. Provision was made by clause 23.2 and clause 23.2.1 for either party to serve written notice on the other terminating the contract “if the Compliance Date”, as defined by the contract, “had not occurred by the expiry of the Relevant Period”, as defined by the contract. The claimant sought repayment of the deposit together with interest and costs and applied for summary judgment in respect of that claim, pursuant to CPR 24. The claimant argued that the compliance date under the contract had not been met by the expiry of the relevant period, as defined in the contract. The defendant contended that the claimant was not entitled to summary judgment because the delay in meeting the compliance date was due to the claimant’s own breach of contract in failing to pursue diligently the planning permissions required under the contract. The main issue was whether the claimant could terminate the contract under clause 23.2.1 and recover the deposit, despite the allegations of breach. Held: The claim was allowed. (1) The necessary starting point was to determine whether this case fell to be determined under and by reference to the “prevention principle” (namely the presumption that, where the conduct of one party to a contract, not explicitly precluded by the contract, was treated as implicitly precluded, to the extent that that conduct prevented the party in question from performing its agreed obligations); or whether the appropriate principle to be applied was the “breach of contract principle” (that, as a matter of construction, it was to be presumed that a contracting party could not take advantage of its own default, which presumption could be displaced by a sufficiently clearly expressed contrary intention).  The court was satisfied that the “breach of contract principle” had a continued existence. It was a different principle to the “prevention principle”; and it was to be applied to the question of construction raised by this case: BDW Trading Ltd v JM Rowe (Investments) Ltd [2011] EWCA Civ 458; [2011] PLSCS 12, Sainsbury’s Supermarkets Ltd v Bristol Rovers (1883) Ltd [2015] EWHC 2002 (Ch); [2015] PLSCS 218 and King Crude Carriers SA v Ridgebury November LLC [2024] 2 Lloyd’s Rep 140 considered. (2) The primary task of the court was to seek to discern and establish the objective intention of the parties by clauses 23.2 and 23.2.1 of the contract and, in particular, whether, objectively construed, those provisions were intended to be available to a party to the contract only if their availability arose otherwise than from that party’s default.  The contract was a substantial and professionally prepared document, designed to give effect to a large-scale and complex transaction. In that context and where, as here, a contract had been carefully crafted by the parties, the meaning of a particular provision, as understood by a reasonable reader, was best to be found by the language used by the parties who drafted the relevant provision.  The language used was clear and unequivocal and provided that either party to the contract might terminate the contract where, as in this case, the compliance date had not occurred before the relevant date. There was no caveat precluding reliance if the reason for the compliance date not occurring before the relevant date was the default, under other provisions of the contract, of the party seeking to terminate the contract. (3) The question was whether there was anything to suggest to the reasonable person reading the provisions in question, in context, that the parties did not mean what they said and, in accordance with the presumption, intended to limit, contrary to its express terms, a party’s right to terminate the contract pursuant to clause s23.2 and 23.2.1, where that right arose out of the party’s own breach. Clause 23.1 provided a mechanism for the seller to terminate, in respect of specified failings, including breach of contract by the buyer. Clause 23.2 had a different purpose, namely to give either party an escape route from the contract in the relevant given circumstances. The fact that there was no complete dovetailing between those provisions was, given their different purposes, irrelevant; the more so where the seller’s rights arising out of any breach by the buyer were preserved by the terms of clause 23.2. (4) The evidence showed that the parties did not intend to limit the applicability of clause 23.2.1 when its availability arose from the default under the contract of the party seeking to rely on the clause in question, but intended, rather, that the provision should apply as written. The intent of the provision, where the relevant “fact situations” applied, was to enable the parties to make a clean break from the contract rather than remaining bound by the terms of the contract, where either the contract would not come to fruition or where there was no clarity as to when the contract would either become unconditional or complete.  The provision was not intended to focus upon the reasons why a particular fact situation had arisen, but simply upon the fact of that situation, such as to enable a party in one of the envisaged circumstances to be certain that it could bring the contract to a swift conclusion. In that context and given that intent, the intention of the parties, as derived from the contract, displaced the prevention principle by the clear words used and the clear intentions of the parties, as conveyed both by the language used and an analysis of the scope and purposes of clause 23.2. Consequently clauses 23.2 and 23.2.1 should be read and applied in accordance with the clear and plain language used.    The claimant had made out its case and was entitled to the return of its deposit. Timothy Morshead KC (instructed by Nockolds Solicitors) appeared for the claimant; Clifford Darton KC (instructed by Sherrards Solicitors LLP) appeared for the defendants. Eileen O’Grady, barrister Click here to read a transcript of Weston Homes plc v Henley Developments 211 Ltd and another