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||BAILII Citation Number:  EWHC B14 (Ch)
||Claim No. HC-2914-000606
IN THE HIGH COURT OF JUSTICE
||Royal Courts of Justice
Rolls Building, Fetter Lane
London, EC4 1NL
||25th February 2015
B e f o r e :
His Honour Judge Keyser QC
sitting as a Judge of the High Court
||MR. ROBIN SWAILES
||Harry Hodgkin (instructed by Taylor Rose Law) for the Claimant
||Richard Walford (instructed by Darbys Solicitors LLP) for the Defendant
Harry Hodgkin (instructed by Taylor Rose Law) for the Claimant
Richard Walford (instructed by Darbys Solicitors LLP) for the Defendant
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HTML VERSION OF JUDGMENT
Crown Copyright ©
H.H. Judge Keyser Q.C.:
- This is my judgment upon cross-applications for summary judgment in a dispute concerning a contract for the sale by the defendant to the claimant of residential property at 36 Glanville Road, Cowley, Oxford, which I shall refer to as "the property".
- Proceedings were commenced on 11 June 2014. The claimant, Hakimzay Limited, seeks specific performance of the contract with an award of compensation. By his counterclaim dated 10 July 2014 the defendant, Mr. Robin Swailes, seeks a declaration that he validly terminated the contract on account of repudiation of it by the claimant and that the deposit paid to him has been forfeited. Each party has applied for judgment in its favour on the entirety of the case pursuant to Part 24 of the Civil Procedure Rules 1998.
- The facts are not in dispute and appear from the documents and from the statement dated 29 September 2014 of Nicholas Charles Scutt, the claimant's solicitor, and a statement dated 28 October 2014 from the defendant. The contract was made on 28 February 2014 and incorporated the Standard Conditions of Sale, 5th Edition. It provided that the defendant would sell and the claimant would buy the property for a purchase price of £643,000. A deposit of £64,300 was paid on exchange of contracts. The property was sold with vacant possession. The completion date was 3 April 2014.
- When the contract was made the property was subject to an assured shorthold tenancy in favour of a number of tenants. In accordance with his obligation to give vacant possession of the property upon completion, the defendant took steps to end the tenancy and obtain possession. However, on 26 March 2014 his solicitor sent an e-mail to the claimant's solicitor giving warning that a difficulty had arisen with one of the tenants, who was refusing to vacate the property without a court order. Despite efforts, the defendant was unable to obtain vacant possession. On 11 April the claimant's solicitors gave notice to complete pursuant to condition 6.8 of the Standard Conditions of Sale. It is common ground that the notice to complete was validly given and that it expired on 29 April.
- On 13 April Mr. Noor Azim, whom I take to be the proprietor and owner of the claimant and is certainly the person in control of the claimant, sent an e-mail to Mr. Philip Turner of Thomas Merrifield, the estate agents acting for the defendant. It read in part: "I kindly request you to push your client to vacate the property prior to 31 April. My funds are stuck with my solicitor and I'm losing business as a result. Please get back to me and update me with the latest development on the tenant issue". That is the context in which the defendant's solicitor sent an e-mail to Mr. Scutt on 14 April acknowledging receipt of the notice to complete and continuing: "I understand that your client is concerned that his funds are tied up being lodged in your client account in order to enable you to return the funds so that they can be more productively invested. My client agrees to give a minimum of two working days' notice when completion is required." On 23 April Mr. Scutt replied, somewhat belatedly: "My client really wants to stick to his side of the bargain so looks to yours to deliver. My client is certainly reluctant to invest the money elsewhere in case he must call on it quickly. So it sits in our client account until we have better information."
- The following day there was a further exchange of e-mails. First, the defendant's solicitor e-mailed Mr. Scutt: "My client is open to a revised agreement with a completion date related to getting possession, say 10 working days, and a longstop after which either party could withdraw. The proceedings have been issued [that is, the proceedings for a possession order against the tenant] so a hearing date should be fixed soon. I suggest a longstop date of four months but if there is no dispute it is anticipated possession should be much quicker than that. If that's agreed what is the reduction your client had in mind?" Mr. Scutt replied that afternoon: "Thanks. My client has had difficulty retaining his preferred contractors who were poised to start work and use the summer months. He seeks a £10,000 price reduction if we go down this route and still expects to be put back where he was if the longstop date is surpassed with vacant possession still unavailable. Let me know if you want to draft the supplemental agreement along these lines."
- At all events, on 29 April the defendant was still unable to complete because he was still unable to give vacant possession of the property; the tenant had not left. That brought into operation condition 7.5 of the Standard Conditions of Sale.
"7.5.1 If the seller fails to complete in accordance with a notice to complete the following terms apply.
7.5.2. The buyer may rescind the contract and, if he does so, (a) the deposit is to be repaid to the buyer with accrued interest, (b) the buyer is to return any documents he received from the seller and is at the seller's expense to cancel any registration of the contract.
7.5.3 The buyer retains his other rights and remedies."
- By e-mail on 29 April Mr. Scutt mooted that, if the claimant did not rescind, the completion date might be extended until a date in August, "or such earlier date being five working days after your client has notified us that he has recovered vacant possession, with my client insisting the price is to go south by 10K too".
- The Claimant did not rescind the contract. The contract remained on foot after 29 April. In his witness statement Mr. Scutt states:
"I was also instructed to return the balance purchase monies to the claimant on 30 April 2014 as there was no requirement to complete in the absence of a further special notice to do so, which instruction I duly dealt with by telegraphic transfer that morning. I should, however, emphasise that my client claimant was ready, willing and able to complete at all times up to and including expiry of our notice on 29 April 2014, although there was clearly no point sending any money or calculating hypothetical interest compensation on that date as the defendant was known to be not ready…. The purchase funds remained in our client account until 30 April".
The client account ledger shows that the completion funds were received on 25 March, were repaid on 30 April, and were received again on 7 May. It is common ground that both when the notice to complete was served and when it expired the claimant was ready, willing and able to perform the contract.
- On Wednesday 30 April the defendant's solicitor wrote by e-mail to Mr. Scutt: "I have taken instructions and my client anticipates having vacant possession of the property on Thursday [1 May] in order to complete by Friday [2 May]. In any event, in light of the increase in value of the property my client is of the opinion that the increase in value would be sufficient to compensate your client for any loss and, therefore, does not agree to a £10,000 price reduction." Mr. Scutt replied: "Thanks. Please let me know when you are told it is actually vacant as my client wishes his local contact to go and check given the history of this matter. Looks like we'll soon have a happy ending though assuming the interest liability and payment of our costs on the special notice to complete is accepted."
- In his witness statement Mr. Scutt states that the requirement for inspection was to check that the claimant was not being misled after earlier hopes to achieve vacant possession were not met. In fact, there was nothing in the earlier history to indicate any likelihood that the defendant would falsely claim to have obtained vacant possession when he had not done so. All that had previously happened was that the defendant's solicitors had expressed a hope to achieve vacant possession by a given date and had subsequently been disappointed in that hope.
- On the morning of Thursday 1 May the defendant's solicitor sent an e-mail to Mr. Scutt, informing him that the tenant was in the process of vacating the property. The e-mail asked: "Would your client like to inspect this afternoon before completion tomorrow? The lock is being changed and the agent will not have a new set of keys but they can be obtained from [a stated address in Oxford]". Mr. Scutt did not reply to that e-mail. On the morning of Friday 2 May the defendant's solicitor sent another e-mail to Mr. Scurt: "My client instructs that the property was vacated yesterday. Are you able to complete today?" Mr. Scutt replied: "That's good news. My client wants his local contact to check for vacant possession, reasonable given the history of this matter. Frustratingly, the agent has just gone abroad on holiday until next Sunday 11 May… I am instructed that he is going to contact [the specified letting agent's office] on Monday 12 May. If you can kindly ask your client to expect this I hope to have further instructions immediately thereafter."
- According to Mr. Scutt's statement, it was his e-mail that prompted a telephone call from the defendant's solicitor, which is briefly noted on Mr. Scutt's printed e-mail chain. It seems more probable that the telephone call was prompted by something slightly different, though it may have been prompted by both. At all events, Mr. Scutt's evidence is that the defendant's solicitor said that she was taking instructions, that the defendant had paid off the tenant—that is, given him money to go quietly—and that the defendant was fairly relaxed but would not be agreeing to any compensation beyond what was specified in the contract. Probably before that conversation, on Friday 2 May Philip Turner of the estate agents sent an e-mail to Mr. Azim: "I have been to 36 Glanville Road and can confirm that the property is now vacant. I assume you will be proceeding to completion today." Mr. Azim replied: "I will have to send my cousin to inspect the property who will be inspecting property on 12 May. He is on holiday now. Also, completion will only take place once your client agrees to reduce the price by a reasonable figure as my funds have been stuck with my solicitor for more than a month. Due to this tenant issue I missed several investment opportunities. I have instructed my solicitor to recover the losses and then we will complete." The attendance note of the defendant's solicitor records a telephone conversation between her and Mr. Scutt shortly before 5.30pm on 2 May. According to the note, Mr. Scutt said that he was not aware of his client's e-mail to Philip Turner and explained that the client, being a Muslim, felt unable to accept compensation by way of interest as being against Sharia law and was, therefore, seeking a reduction in the purchase price. The note reads in part: "Nick Scutt said that if my client offered a sweetener of £1,000 to complete on 12 May, the only date the buyer has available in order to inspect the property, then this should be okay." I am told—and for present purposes I accept—that "£1,000" is a typographical error for "£10,000". It might be noted that it is at least questionable whether the compensation under the contract is itself an interest payment, although it is calculated by reference to an interest rate; perhaps that is an immaterial distinction.
- At all events, there then followed the Bank Holiday weekend, 3 to 5 May. On Tuesday 6 May the defendant's solicitor sent to the claimant's solicitor a letter headed "Notice to rescind". It was received on 7 May. So far as material, the letter read:
"We refer to your notice to complete dated 11 April 21014. We note that your client did not exercise its right to terminate the contract following 10 working days of service of that notice when we failed to complete on 29 April 2014. Therefore, time remains of the essence under the contract. We have been ready, able and willing to complete since 2 May and, despite our requests to complete, your client has failed to do so. Therefore, our client is exercising his right to terminate the contract and retain your client's deposit."
The notice went on to say that it did not affect either the claimant's right to interest under the contract for the period when the defendant was unable to complete or its right to £200 plus V.A.T. in respect of its costs for preparing the notice to complete.
- On receipt of the notice to rescind, Mr. Scutt sent an -email to the defendant's solicitor contending that the notice was invalid and making clear that the claimant regarded the contract as still on foot. However, the defendant's solicitor maintained the stance that the contract was at an end. On 9 May 2014 the claimant registered a unilateral notice against title to the property. Proceedings were commenced on 11 June 2014. On 19 June the claimant filed an application for an injunction to restrain disposal or dealing with the property pending determination of the Claim. That came before Asplin J on 26 June 2014, when she dismissed the application. The claimant's application for summary judgment was filed on 9 October 2014 and the defendant's cross-application on 29 October 2014. On 3 November 2014, Barling J gave directions, pursuant to which the matter came to be listed before me.
- Leaving aside a matter that arose by way of a proposed amendment to the defence and counterclaim, to which I shall return, the pleadings raise a short and specific issue on which the case turns. After the expiry of the notice to complete on 29 April 2014, did time remain of the essence of the contract, so that the failure of the claimant to complete on 2 May constituted a repudiatory breach of contract that entitled the defendant to terminate the contract? To the extent that that is an inelegant way of putting the issue, the inelegance arises from a difficulty that seems to me to exist in explaining what an affirmative answer to that question would involve.
- Certain matters are not contentious. First, the notice to complete made time of the essence for both parties, so that a failure by either party to be ready, willing and able to complete by 29 April would constitute a repudiatory breach of the contract giving the other party the right to terminate (or, in the language of the Standard Conditions, to "rescind"; but that is not rescission ab initio) for breach of contract. Second, the claimant was ready, willing and able to complete by 29 April. Third, the defendant was not ready, willing and able to complete by that date and was, therefore, in repudiatory breach of contract. Fourth, the claimant at no time accepted that repudiation and terminated the contract.
- For the defendant it is said that, while the contract remained on foot after 29 April and for a reasonable time after that date, time remained of the essence of the contract. That contention is said to be supported by the decision of the Court of Appeal in Buckland v. Farmer and Moody  1 W.L.R. 221.
- Neither party contends that the claimant elected to accept the repudiation by the defendant and treat the contract as terminated. There are, therefore, two possibilities. The first possibility is that the claimant had not by 6 May exercised its election whether to affirm or to terminate the contract. If that is right, it was not open to the defendant to offer performance that did not comply with the contract, that is to offer late completion (see the remarks of Lord Hoffmann as a member of the Privy Council in Union Eagle Limited v. Golden Achievement Limited  AC 514 at 518B-D). The alternative possibility is that the claimant had by its conduct affirmed the contract, that is elected not to terminate for repudiatory breach. In that case the position would be that, if extensions of time were given for compliance with the notice to complete, time would remain of the essence; but if there were negotiations leading to a new date time would not generally be of the essence unless it were specifically stated to be so. An example of the former case is the decision of Maugham J in Lock v. Bell  1 Ch 35. An example of the latter situation is the decision of the Court of Appeal in Chancery Lane Developments Limited v. Wades Departmental Stores Limited (30th July 1986, unreported); I refer in particular to the judgment of Slade LJ. For present purposes I need not go into the distinction between those two cases. This is a case in which no new date was fixed. It is said on behalf of the defendant that time remained of the essence for a reasonable period after expiry of the notice to complete and that in context the claimant failed to complete within a reasonable time and was, therefore, in repudiatory breach of contract.
- I am bound to say that the defendant's argument seems to me to rest on a misunderstanding of the decision in Buckland v Farmer and Moody. That case involved a claim for damages for professional negligence, but it required consideration of the contractual position in respect of which allegedly negligent advice had been given. The relevant facts may be summarised as follows. The contract was for the sale of land by the defendant to the plaintiffs. It incorporated the National Conditions of Sale. The completion date was agreed, after the contract had been made, as 31 October 1973. The plaintiffs had not got their funding in place and as a result they were served with a valid notice to complete, which expired at the latest on 1 December 1973. It was common ground that the effect of the notice to complete was to make time of the essence of the contract for the purpose of completion not later than 1 December 1973. The plaintiffs did not complete by 1 December 1973. So far as the plaintiffs are concerned, at least vis-à-vis the defendant, there the matter rested until February 1974. Meanwhile, however, in an attempt to get out of their predicament, the plaintiffs made some sort of agreement with a Mr. Miani; the thrust of the agreement, in the end, was that he would, as between them, take over the benefit of the contract and indemnify the plaintiffs. Mr. Miani reached agreement with the seller (the defendant) for an extension of the date for completion to 6 December 1973. When that date did not come off he made another agreement with the defendant for an extension of the time for completion to 28 January 1974. There was a finding of fact in the case that the plaintiffs were not privy to those agreements and did not know anything of them and that there had been no communications between them and the defendant in the meantime. At all events, on 7 February 1974 the defendant served a letter purporting formally to rescind the contract.
- At 230-1 Buckley LJ said:
"In the present case nothing transpired between the vendor and the plaintiffs between December 1, 1973, and February 7, 1974, except silence and inactivity on the part of the vendor. …
It is conceded by the plaintiffs that inactivity on the part of a vendor (who has made time of the essence of the contract) for a reasonable period would not make time cease to be of the essence of the contract. The length of the time which elapsed here was not, in my opinion, sufficient of itself to deprive time of its character of being essential; but it is said that the case falls within the formulation of the principle which I have read from the judgment of Goulding J [in Luck v. White 26 P. & C.R. 89], that if the party who is in the right allows the defaulting party to try to remedy his default after an essential date has passed, he cannot then call the bargain off without first warning the defaulting party by fixing a fresh limit; and it is said that here the vendor, who was the party in the right, allowed the plaintiffs to try to remedy their default after December 1 had passed.
I do not think that that contention is right. Mr. Miani was in no sense the plaintiffs' agent in this matter; he was a third party as the result of whose intervention the plaintiffs hoped to escape from their difficulties. It is true that the vendor gave Mr. Miani two extensions of time, first for a week and thereafter until January 28, 1974; but those were indulgences given to Mr. Miani and not, I think, in any sense to the plaintiffs. There was no act or conduct by the vendor vis-à-vis the plaintiffs to suggest that the vendor had waived any rights resulting from the plaintiffs' default in complying with the completion notice."
The Court of Appeal proceeded on the basis of the findings of fact made by the trial judge, but Buckley LJ also considered alternative possibilities concerning the position of Mr. Miani.
"It is common ground between the parties that if a vendor has once made time of the essence of the contract and then allows a further extension to a fixed date, the time remains essential. There seem to me to be only two views possible of the effect on the plaintiffs of Mr. Bowl's dealings with Mr. Miani. If in some way or other the plaintiffs are to be taken as being affected by the extensions of time granted to Mr. Miani and are to be treated as having constructive notice although in fact they knew nothing about those extensions, then the extensions of time were extensions to fixed dates and did not counteract the effect of the completion notice in making time of the essence of the contract. If, on the other hand, the plaintiffs were not affected in any way by the extensions of time allowed to Mr. Miani, the position between the vendor and the plaintiffs was that the vendor merely held his hand and did nothing. In that case his conduct was not, in my judgment, such as to amount to a waiver of the strict requirements of the notice to complete. Accordingly, in my judgment the plaintiffs remained on February 7 and thereafter in default under the notice to complete, and there was no negligence on the part of Mr. Moody in failing to advise them otherwise."
- As I understood his submissions, Mr. Walford reads this passage as meaning that, on the second of the scenarios mentioned by Buckley LJ, time for completion remained of the essence of the contract on an ongoing basis: that is, not merely that the time fixed by the completion notice was of the essence, but that completion at all times for a reasonable period thereafter was of the essence of the contract. With respect that is manifestly wrong. At 231B Buckley LJ said: "There was no act or conduct by the vendor vis-à-vis the plaintiffs to suggest that the vendor had waived any rights resulting from the plaintiffs' default in complying with the completion notice", that is, in completing by 1 December. The same point appears also from the end of that passage, where he said that the vendor's conduct "was not, in my judgment, such as to amount to a waiver of the strict requirements of the notice to complete". When it is said that time has not ceased to be of the essence of the contract, or when it is said that the plaintiffs remained in default under the notice to complete, what it means is that the plaintiffs remained in their position and condition of being defaulters in respect of the requirements of the notice to complete; the question concerning waiver is simply the question whether or not a vendor has waived the entitlement to treat the expiry date of the notice to complete as being of the essence of the contract. If that were not clear enough from Buckley LJ's judgment, it is clear from the analysis of the plaintiffs' argument in the judgment of Goff LJ at 233 to 236.
- Mr Walford also sought to rely on the remark of Goff LJ at the foot of 236: "In my judgment, therefore time remained of the essence of the contract". Those words do not support his argument. When they are read in the context of what had preceded them, it is clear that what is meant is that the time of the expiration of the notice to complete remains of the essence of the contract because the vendor has not by its conduct waived its entitlement to rely on it as being such.
- Not only does the Buckland case lend no support to the position contended for by Mr Walford; that position does not make sense. To say that time is of the essence of a contract is not to make a metaphysical statement. It is to identify the fact that a failure to comply with a contractual requirement as to time of performance, whether that requirement be a provision of the contract itself or arise pursuant to a valid notice making time of the essence, will itself amount to a repudiatory breach. For time to be of the essence of the contract requires conceptually that the time be fixed; that is the purpose of a notice to complete. To say that time remains of the essence of the contract for a reasonable period after the expiration of the notice to complete, in the sense that the further time after the expiry of the notice is itself of the essence, even though no new time has been fixed, is not only to misunderstand Buckland v. Farmer and Moody but to say what is literally nonsense. It rests on a conceptual confusion.
- It may also be noted that the claimant appears to have been allowing the defendant to seek to remedy his default as shown by Goulding J's dictum in Luck v. White, referred by Buckley LJ, in Buckland v. Farmer and Moody: "If the party who is in the right allows the defaulting party to try to remedy his default after an essential date has passed, he cannot then call the bargain off without first warning the defaulting party by fixing a fresh limit, reasonable in the circumstances." Therefore, in such circumstances the claimant could not simply pull the plug on the contract, so to speak, without fixing a new date that was reasonable in the circumstances. It must follow that the defendant could not do so either; he could not just turn round and say, "I require you to complete forthwith. If you cannot, I shall terminate on account of your repudiatory breach, because during this continuing period after expiration of the notice to complete time remains of the essence."
- Insofar as the judgments in the Buckland case were concerned with the effects of the lapse of time, they were talking about a situation of complete inaction. Insofar as Buckley LJ considered the alternative scenario of extensions of time, the point was that the dates were fixed dates and were, on this alternative scenario, of the essence of the contract. In the present case no new date was fixed at all. There was no attempt, let alone a successful attempt, to specify a further date, performance by which should be of the essence of the contract. I should incline to think that that would have required a new notice to complete under the contract, but even if that were not right then, by analogy with the contractual provisions and having regard to the facts of the case, I should consider that more than two clear working days' notice by the defendant would be required in any event.
- In conclusion, the defendant was not entitled to serve his notice of rescission of the contract, which was accordingly ineffective to bring the contract to an end.
- Mr. Walford's skeleton argument raised a new and distinct point. In the course of argument I made it clear that I regarded it as a point that would have to be pleaded, and Mr. Walford made an oral application for permission to amend the defence, having rather impressively produced a draft of the proposed amendment over the luncheon adjournment. By paragraph 10A it would be averred that by his e-mails of 1 and 2 May the defendant requested the claimant to complete on 2 May, and that the claimant did not do so. By paragraph 10B it would be averred that by the e-mail from Mr. Azim to Mr. Philip Turner on 2 May the claimant evinced the intention not to be bound by the original terms of the contract; the matters relied on were those set out in the existing paragraph 8, namely the requirement for inspection, the requirement for reduction of the price (it is said, by £10,000), and the requirement to recovered losses. Paragraph 10C would aver that the claimant's conduct was in repudiatory breach of the contract and that the defendant was entitled to accept and did accept that repudiation by the notice of rescission dated 6 May; this brought the contract to an end, entitling the defendant to forfeit the deposit and disentitling the claimant to specific performance. It is also said that the conduct of Mr. Azim for the claimant was against good conscience and should preclude a decree of specific performance.
- I indicated at the time that I would refuse the proposed amendment and state my reasons more fully later. I do so now.
- I reject the application for permission to amend for two basic reasons. First, in the context of this case, the application is too late and gives rise to material disadvantage to the claimant and inconvenience to the administration of justice. I have regard to the overriding objective in Part 1 of the Civil Procedure Rules 1998. I also have regard to the authorities dealing with the correct approach to applications for permission to amend, including late applications; see in particular Cobbold v Greenwich LBC (August 1999, unreported), Worldwide Corporation Ltd v GPT Ltd  EWCA Civ 1894, and Swain-Mason v Mills & Reeve (a firm)  EWCA Civ 14,  1 WLR 2735. As the Court of Appeal has recently indicated, lateness is a relative concept and must always be considered in the context of the particular facts of a case; see Hague Plant Ltd v Hague  EWCA Civ 1609, per Briggs LJ at  to . To that extent it falls to be considered a part of the balancing exercise that must always take place.
- It might be said that this is only hearing of cross-applications for summary judgment. But the plain fact is that this case has proceeded on the basis that, one way or the other, the applications would be dispositive of the proceedings; indeed, that is the very way that Mr Hodgkin opened the matter. As one would expect in this sort of case, the hearing is not merely an attempt to take a short cut on issues that otherwise are heading for trial; the expectation is that the applications will dispose of the case. The matter has been case-managed with a view to these applications and, in respect of what is a relatively simple contract of sale, the resolution is still awaited after several months. In that context the application for permission to amend seems to me to be particularly late.
- Mr. Hodgkin said, and I accept, that he was not in a position to deal properly with the matter raised in the proposed amendment. No doubt he could have made a stab at it, but that is a different matter and his caution seems to me entirely reasonable. In those circumstances, to permit or countenance the amended case would involve either an adjournment of this hearing, so that the point could be dealt with as part of the cross-applications under Part 24, or a simple refusal of summary judgment for the claimant on the basis that it was impossible to say at present whether the point was a good one. Either way, the proposed amendment would significantly affect the course of the proceedings, unless Mr. Hodgkin were forced to deal with it in circumstances where he justifiably felt unable to do so properly. That is, in my judgment, a sufficient reason for refusing the application.
- My second reason for refusing the application to amend is that I consider the proposed amendment to be without substantial merit. The application seeks to raise a point that clearly occurred to Mr. Walford in the course of preparing his skeleton argument; it had not been raised before. That in itself does not mean that it is a bad point; perhaps it could and should have been raised before. But this seems to me to be a case where first thoughts were best.
- The new point concerns repudiation in the sense of evincing an intention no longer to be bound by the contract; this is what some, including Professor McKendrick, the editor of the relevant part of Chitty on Contracts, prefer to call renunciation. At paragraph 24-018 Chitty says:
"A renunciation of a contract occurs when one party by words or conduct evinces an intention not to perform or expressly declares that he is or will be unable to perform his obligations under the contract in some essential respect. The renunciation may occur before or at the time fixed for performance. An absolute refusal by one party to perform his side of the contract will entitle the other party to treat himself as discharged."
Paragraph 24-019 begins:
"The renunciation must be made quite plain. In particular where there is genuine dispute about construction of the contract the courts may be unwilling to hold that an expression of an intention by one party to carry out the contract only in accordance with his own erroneous interpretation of it amounts to a repudiation, and the same is true of a genuine mistake of fact or law. Even the giving of notice of rescission or the commencement of proceedings by one party claiming rescission of a contract does not necessarily entitle the other to treat the contract as repudiated since such action may be taken in order to determine the respective rights of the parties and so not evince an intention to abandon a contract. On the other hand, it is generally no defence for the party who is alleged to have repudiated a contract to show that he acted in good faith. The courts have struggled to reconcile the latter proposition with their reluctance to conclude that a party has acted in good faith but was mistaken has thereby repudiated the contract".
Paragraph 24.020 reads in part:
"The result of this tension is that the cases are not at all easy to reconcile and have been said to be highly fact sensitive. The test that is applied by the courts can, however, be set out in straight forward terms. It is whether, looking at all the circumstances objectively, that is from the perspective of a reasonable person in the position of the innocent party, the contract breaker has clearly shown an intention to abandon and altogether refuse to perform the contract."
It goes on to say that the test is easier to state than to apply.
- Even without the benefit of submissions from Mr. Hodgkin, I see no sound argument for saying that the claimant repudiated the contract. All cases are fact-sensitive. Here, there was a communication in the context of previous e-mails between the solicitors concerning what possibly might be done in the event of late performance. This was a communication initiated by the defendant's estate agent and responded to without advice by Mr. Azim. It came, significantly, in circumstances where there was no contractual date of completion at all. The second day of May had been suggested but was not a contractual fixed date and was not a date towards which Mr. Azim was working. He had at that stage no particular time limit. It is true that there was no contractual righty of inspection, but inspection had been mooted in the earlier e-mails and had not been refused and, as I say, there was no existing time-limit for completion. The reference to price-reduction and to compensation cannot, I think, be pressed too far. The last sentence of the e-mail, for example, does not necessarily mean that Mr. Azim wanted money in his pocket before he would complete; and the request for price-reduction was explained by his solicitor in a subsequent telephone conversation.
- Ultimately, the question is whether, when it is read in context, this was an unequivocal statement of absolute refusal to perform a contract in accordance with its terms. Unless the most literalistic and acontextual approach be taken, I find it impossible to think that it amounted to such a statement. This is a secondary reason why I should regard it as inappropriate to grant permission for the proposed amendment.
- Do the facts relating to the e-mail nevertheless impinge on the exercise of the court's equitable power to grant specific performance? In my judgment, no. There was nothing in the conduct of Mr. Azim that means that he does not come with clean hands or that he acted in bad faith such as to disentitle the claimant to equitable relief. In my judgment, a decree of specific performance is appropriate and I shall make one.
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