Time is of the essence of contracts to sell land only if a notice to complete has been served. A person serving a notice to complete must not only be ready, able and willing to complete at the date upon which the notice is served but must remain so throughout the period of the notice. The issue of whether a party is ready, able and willing to complete is essentially one of fact and, when in doubt, the party claiming that the other was not ready, able or willing to complete must prove its case.
The decision in Midill (97PL) Ltd v Park Lane Estates Ltd [2008] EWHC 18 (Ch); [2008] PLSCS 9 provides conveyancers with an up-to-date authority on the status of a seller that serves a notice to complete under a contract for the sale of shares in a “property rich” company. The issue arose in the context of a contract for the sale of shares that imported various conditions, which were drawn directly from the Law Society’s standard conditions of sale (4th ed), to facilitate the service of a notice to complete in the event of a delay in completion.
Time is of the essence of contracts to sell land only if a notice to complete has been served. A person serving a notice to complete must not only be ready, able and willing to complete at the date upon which the notice is served but must remain so throughout the period of the notice. The issue of whether a party is ready, able and willing to complete is essentially one of fact and, when in doubt, the party claiming that the other was not ready, able or willing to complete must prove its case. The decision in Midill (97PL) Ltd v Park Lane Estates Ltd [2008] EWHC 18 (Ch); [2008] PLSCS 9 provides conveyancers with an up-to-date authority on the status of a seller that serves a notice to complete under a contract for the sale of shares in a “property rich” company. The issue arose in the context of a contract for the sale of shares that imported various conditions, which were drawn directly from the Law Society’s standard conditions of sale (4th ed), to facilitate the service of a notice to complete in the event of a delay in completion. Completions involving the sale of a company, as opposed to the sale of land, tend to involve attendance by, and require a high degree of co-operation between, the parties and their solicitors. Completion meetings are usually interactive. The parties will attend to the paperwork required to (i) replace the officers of the company; (ii) transfer the shares to the buyer; and (iii) deal with any other issues arising under the heading of “corporate governance”. Although these matters are usually dealt with during the course of completion, the buyer alleged that the seller was not in a position to complete when the notice to complete expired because the seller was not in possession of all the relevant paperwork – in particular, the signed resignations from the company officers. However, the judge accepted that all matters of substance were in hand. The outstanding matters were purely administrative and would have been dealt with had there been any sign of activity from the buyer. It was not enough for the buyer, when it had failed to co-operate and showed no signs of proceeding, to point to what had actually happened because this did not present a true picture of what would have happened had the buyer intimated that it would complete on time. Does section 49(2) of the Law of Property Act 1925 (which empowers the courts to order the repayment of a deposit to a buyer that has defaulted on its obligation to complete a contract to purchase land) apply to a contract to sell shares? The judge did not decide the point because the seller had conceded it. However, he ruled that there were no special factors that would justify the return of the deposit to the buyer, even though the land was subsequently sold to a third party for considerably more than the buyer had agreed to pay for it. Allyson Colby is a property law consultant
