Completion

This page deals with four topics.

  • The importance of being ready, able and willing to complete oneself before serving a notice to complete is demonstrated.
  • The notice to complete was invalid because the vendor demanded too much.
  • A request to extend time in a telephone conversation did not give rise to an estoppel.
  • Damages for non-completion - date of assessment

 

Ready, able and willing

Failure = repudiatory breach

Singh v Sardar Investments Ltd

[2002] EWCA Civ 1706.

A purchaser who serves a notice to complete, thereby making time of the essence for the completion, must be in a position to perform his own contractual obligations as at that date. Failure to do so amounts to a repudiation of the contract. The purchasers did not have the purchase money at the completion date.

However, a party serving a notice to complete need only be “ready, willing and able” at the time it gives the notice. There is no requirement for it to remain ready, willing and able throughout the notice period (Cantt Pak Ltd v Pak Southern China Property Investment Ltd [2018] EWHC 2564 (Ch))

 

Need to be ready, able and willing at service of the notice to complete

Cantt Pak Ltd v Pak Southern China Property Investment Ltd

[2018] EWHC 2564 (Ch).

Summary

A party serving a notice to complete need only be “ready, willing and able” at the time it gives the notice. There is no requirement for it to remain ready, willing and able throughout the notice period.

Facts

S owned the freehold of commercial land and buildings in Manchester which it originally contracted to sell to an intermediate buyer (W), with vacant possession to be given on completion of the sale. The contract was later varied to extend the completion date and W simultaneously assigned the benefit of the contract to B. The property was occupied by various third parties.

B failed to complete by the contractual completion date and S served notice to complete, making time of the essence in relation to the date for completion. Completion did not occur within the required period and S served notice of rescission on B. B subsequently applied to register unilateral notices against S's registered titles, to which S objected.

Issues

B argued that S had not been ready, willing and able to complete, either when the notice to complete was served or on expiry of that notice, as it was unable to provide vacant possession of the property.

B therefore argued that the notice to complete was invalid, B was under no obligation to complete and the contract had not been terminated. S argued that B's failure to tender payment by the deadline entitled S to rescind the contract, notwithstanding its own breach.

Decision

The judge found that, when it served the notice, S had been ready, willing and able to complete, as it was in a position to secure vacant possession on or before the completion deadline. By the time the deadline arrived, S was in repudiatory breach, but B had nevertheless chosen to keep the contract alive, meaning that it remained bound to complete. S had therefore been entitled to rescind the contract following B's failure to complete, notwithstanding its own breach.

Comment

This decision clarifies that a party serving a notice to complete need only be "ready, willing and able" at the time it gives the notice. There is no requirement for it to remain ready, willing and able throughout the notice period. This decision also demonstrates that a seller's failure to comply with its obligation to secure vacant possession will not necessarily mean it is unable to rescind, should the buyer fail to complete.

 

Demanding too much

Notices invalid

Oakglade Investments Ltd v Dhand

[2012] EWCA Civ 286

Summary

Notices to complete the purchase of properties were invalid where the sellers were requiring the buyer to pay larger amounts than he was contractually bound to pay.

Facts

The buyer agreed to buy three properties from the sellers at specified prices. The sellers alleged that the parties had orally agreed to increase the price of each property by £10,000. Completion did not take place on the contractual completion date and the sellers served notices to complete at the increased prices. The buyer did not respond. Each party alleged that the other was in repudiatory breach of contract. The buyer subsequently issued proceedings seeking the return of his deposit.

First instance

The trial Judge rejected the sellers’ evidence of the alleged oral agreement, and consequently held that the notices were invalid on the basis that the sellers were not ready, willing and able to complete. Thus the sellers were in repudiatory beach of the agreement and the buyer was entitled to the return of his deposit. The sellers appealed.

Court of Appeal

The appeal was dismissed. The notices to complete were invalid, not only because the sellers were not ready, willing and able to complete, but also, more fundamentally, because the notices related to contracts different to those binding upon the buyer. As LJ Mummery stated at paragraph 29:

    “The focus of the question whether the notices to complete were valid must turn on the object and terms of those notices construed in their contractual setting. The notices required [the buyer] to complete contracts different from the contracts that he had in fact entered into with the [sellers]. That is because the prices that the [sellers] were requiring him to pay for the Properties according to the completion statements, which were followed by the notices, were different from the prices that he had in fact agreed to pay.”

 

Extension of time

No estoppel

Northstar Land Ltd v Brooks

[2006] EWCA Civ 756

In the mid-afternoon of the day fixed for the completion of the sale, the purchaser's solicitor asked the vendors' solicitor on the telephone whether time for completion could be extended for a week. The vendors' solicitor said that he would take his clients' instructions and revert back. He failed to do so. The purchaser sought to argue that the vendor was estopped from denying that the time for completion had been extended. You will not be surprised to read that the argument failed. The statement, "I will take instructions" is equivocal. So too was the silence that followed.

 

Damages for failure to complete

Date of assessment

Hooper v Oates

[2013] EWCA Civ 91

Summary

Damages for failure to complete should be assessed so as to take all relevant factors into account in order to put the innocent party into the same position as if the contract had been performed.

Facts

C contracted to sell their property to D for £650,000 with completion set for 30 June 2008. D failed to complete and C accepted the repudiation. After 14 months on the market, but no sales, C let the property for six months and by the summer of 2011 moved back in. Due to the general fall in market conditions in later 2008, the value of the property had fallen since D failed to complete.

C sued for the balance of the deposit due and for damages. At the hearing the following expert evidence was adduced in relation to the value of the property at various dates:

  • Completion - £600,000.
  • October 2008 - £545,000.
  • 13 September 2010 - £495,000.

Appeal

C was awarded damages based on the 13 September 2010 figure and awarded £110,000. D appealed that decision, maintaining that damages should be assessed at the date of breach and not at a later date. Decision The appeal was dismissed. Lloyd LJ referred to Johnson v Agnew [1980] AC 367 for the proposition that:

“The general principle for the assessment of damages is compensatory, i.e. that the innocent party is to be placed, so far as money can do so, in the same position as if the contract had been performed. Where the contract is one of sale, this principle normally leads to assessment of damages as at the date of the breach …”

However, the date of breach was not always the correct date. Since Techno Land Improvements v British Leyland (UK) Ltd [1979] 2 EGLR 27, there has been greater flexibility so that:

“The general rule does not require the court to close its eyes to matters occurring after the breach of contract or after the commencement of the action or even after a judgment has declared the defendant’s liability without quantifying it.”

In dismissing the appeal on the basis that it was correct to take a later date in this case, at paragraph 34 he stated:

“I agree that the availability of a market is a most relevant factor in relation to the date for assessment of damages for breach of a contract for the sale of land where the buyer fails or refuses to complete the purchase. It is hardly ever the case that there is a readily and immediately available market for the sale or purchase of land, in the sense that the seller can go out into the market on the date of breach, or the next day, and find a purchaser who can and will proceed to contract at once. That may be possible with commodities, with listed shares, with freight forward agreements, or with charterparties, for example. But the sale of land invariably requires time, under the procedures and legislation prevailing in England, and how long it requires will depend in part on economic circumstances at the time. The definition of market value itself, to which I have referred above, involves an assumption that the property has been exposed to the market for a reasonable time, which is likely to be for more than a month and may well be several months or longer. If the comparison sought to be made is between the contract price and the market value as at the breach date, then the assessment of that market value, by an expert valuer on established principles, would have to assume a prior period of marketing, which, by definition, will not and could not have happened.”

And at paragraphs 38 and 39:

“It seems to me that the breach date is the right date for assessment of damages only where there is an immediately available market for the sale of the relevant asset or, in the converse case, for the purchase of an equivalent asset. This is most unlikely to be the case where the asset in question is land. If the defaulting party is the buyer, much will depend on what the seller does in response to the breach…

If the vendor does not resell, and takes no steps to do so, then it may be that the date of the breach is to be taken as relevant, or a date soon after that, when he is shown, or taken, to have decided to retain the property. In the present case, by contrast, the seller only decided not to resell after taking reasonable steps to find a buyer. I can see no basis of policy or principle, in such a case, for imposing on the vendor the value as at the breach date rather than the later date when, after taking steps with a view to mitigating his loss, he finally decided to retain the property upon the failure of his attempt to mitigate.”

 

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