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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Lodha Developers 1 GSQ Ltd v 1 GSQ 1 Ltd & Anor  EWHC 2356 (Ch) (28 August 2020)
Cite as:  EWHC 2356 (Ch)
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BUSINESS AND PROPERTY COURTS ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
London EC4A 1NL
B e f o r e :
|LODHA DEVELOPERS 1 GSQ LIMITED||Claimant|
|(1) 1 GSQ1 LIMITED|
|(2) 1 GSQ2 LIMITED||Defendants|
John McGhee QC and James McCreath (instructed by BDB Pitmans LLP) for the Defendants
Hearing dates: 12th August 2020
Crown Copyright ©
(Signed) STEPHEN LLOYD (Deputy Master)
(1) The definitions (clause 1) included the following:(i) The 'anticipated completion date' was specified as the 31st March 2020 although there were provisions for extension;(ii) "completion certificate" meant a certificate issued by the seller to the effect that in the opinion of the seller (acting reasonably) the works are practicably complete;(iii) The 'completion date' was defined as the fifteenth working day following the date of service by or on behalf of the Seller on the Buyer or the Buyer's Solicitors of a completion notice and certain other documents (as specified in clause 1.18) including the completion certificate;(iv) The 'longstop date' was the 30th June 2022;(v) 'Practically Complete' meant that the Penthouse Apartment and Apartment 3.7 and 3.8 had been constructed in accordance with the seller's obligations under the agreement and as described in the specification and Penthouse Specification, that the building had constructed to the extent required for the Seller to comply with the Seller's obligations and there was no planning condition outstanding that specifically prohibited the use and enjoyment of the premises, safe access to them and the use of the car park and the building.
(2) Clause 3.2 provided that the deposit was to be held as a deposit and in part payment of the premium by the claimant's solicitors as stakeholders until the claimant was able to provide to the defendants' satisfaction written evidence that the building guarantee (as defined) was in place or a bank guarantee.
(3) Clause 3.3 made provision in respect of the second stage payment which was due (and paid) by 31st May 2019 and clause 3.4 dealt with default (in terms similar to clause 3.5 next mentioned).
(4) Clause 3.5 provided that the Buyer should pay to the Seller's Solicitors the third advance stage payment on or before 2 December 2019.
(5) The next clause also numbered 3.5 provided as follows: "If the Premium Third Advance Stage payment has not been received by the Seller's solicitors as cleared funds and in accordance with clause 6, within 10 working days after the due date then the seller may without prejudice to its other remedies either elect to: 3.5.1 (but only before payment has been received) treat this agreement as discharged by the breach thereof by the Buyer in which case the Seller shall be entitled to forfeit and retain any of the First Deposit, the Premium Second Advance Stage Payment that has been paid by the Buyer; or 3.5.2 enforce payment of the Premium Second (sic) Advance Stage payment owed in which event the Seller shall not be entitled to treat this Agreement as discharged pursuant to clause 3.5.1". The word 'Second' is clearly an error and should be 'Third'; nothing I have to decide turns on that.
(6) Clause 9 I will set out below.
(7) Clause 19.1 was an 'entire agreement' clause; clause 19.2 provided the agreement might only be varied in writing signed by or on behalf of both parties to the agreement
(8) Clause 23 provided that the illegality, invalidity or unenforceability of any provision should not affect or impair the legality, invalidity or enforceability of the rest of the agreement;
(9) Clause 25 dealt with termination and clause 25.1.1. provided that if "at any time the Buyer fails to comply with the provisions of Clause 3 relating to the payment of the Deposit on the due date or the Premium Second Advance Stage Payment and the Premium Third Advance Stage Payment (as the case may be) within 15 working days after the due date (but not after payment has been made by the Buyer in accordance with clause 6 , together with any interest due in respect of late payment) then (and in any case) the Seller may, at any time prior to the grant of the Apartment Lease, determine this Agreement by written notice to the Buyer and this Agreement shall then terminate and the Seller shall be entitled to forfeit and retain any of the Deposit and the Premium Second Advance Stage Payment or the Premium Third Advance Stage Payment as has been paid by the Buyer at the date of termination and without prejudice to any claim by either party against the other in respect of any antecedent breach of this Agreement".
(10) Clause 25.2 provided "If this Agreement is validly terminated, the Buyer shall at its own cost procure that any unilateral notice made against the Seller's title to the Premises made by or on behalf of the Buyer shall be removed".
(1) The claimant had not complied with its obligations under clauses 9.3 or 32.2.2 of the contract;
(2) Because of 'the conduct of the parties' before and after the third stage payment became due, the defendants did not accept that the notice was effective to terminate and or forfeit the contract;
(3) Given the scale of the defendants' investment in the property, the termination and forfeiture provisions of the contract were unenforceable; and
(4) Given that investment Equity would intervene to grant the defendants relief from forfeiture or termination.
As to the first of those points only the allegation of a failure to comply with clause 9.3 is still pursued.
The issues for determination
(1) If, as the defendants contend, the claimant was in breach of its obligations under clause 9.3 of the contract, could it terminate the contract?
(2) do the defendants have a real prospect of showing that relief from forfeiture is available?
(3) do the defendants have an arguable case for a lien for the return of the moneys paid, and does that lien entitle them to retain the UN1s on the register? This last point is not currently pleaded and, I was told, emerged shortly before skeleton arguments were due in correspondence between Counsel.
The clause 9.3 point
"9.1 the Seller shall use reasonable endeavours to procure construction of the Premises so that the NSA equals or exceeds the Agreed Square Footage of each of the Apartments.
9.2 If notwithstanding clause 9.1, the NSA of any of the Apartments is less than 95% of the Agreed Square Footage, then the Price shall be reduced by an amount which equates to the Per Square Foot Rate for each square foot by which the Apartments as built is less than 95% of the Agreed Square Footage.
9.3 If notwithstanding clause 9.1, the NSA of any of the Apartments is less than 90% of the Agreed Square Footage for the Apartment, then the Buyer shall be entitled to serve a Determination Notice (Determination Notice) on each of the Seller and the Seller's Solicitors provided that the Determination Notice must be served within 20 Working Days (as to which time is of the essence) of the Seller notifying the Buyer of the NSA which it will do as soon as reasonably practical after such measurement is capable of being taken.
9.4 If the Buyer serves a Determination Notice, the Buyer's obligation under the Agreement shall cease and determine and upon such determination the Seller shall repay the First Deposit and the Premium Second Advance Stage Payment and the Premium Third Advance Stage Payment (to the extent then paid by the Buyer) together with accrued interest so long as any moneys are held as stakeholder and the Seller shall have no further liability in respect of the Premises and the termination of this Agreement, and such determination shall be without prejudice to any antecedent breaches by the buyer"
The claim to a lien