Eagleview Ltd v Worthgate Ltd and another

Vendor purporting to rescind after giving notice to complete – Whether vendor able to give vacant possession at all material times – Whether letter of repudiation sent prematurely – Whether four- year post-writ delay a ground for refusing order of specific performance The title to a residential property in Chelsea, London SW3, was at all material times registered in the name of K, who had charged the property in favour of Barclays Bank plc (the bank). On March 15 1993 the bank, acting under its power of sale, contracted to sell the property for £230,000 to the first named defendant, Worthgate. On March 18 1993 Worthgate entered into a contract, the resale contract, to sell the property for £320,000 to the plaintiff, Eagleview, who paid a 10% deposit. The resale contract specified April 15 1993 as the completion date and required vacant possession to be given. A standard condition entitled either party, provided that he himself was ready willing and able to complete, to make time of the essence by serving on the other, at any time after the completion date, a notice to complete within five working days of receipt. A notice received after 4 pm was deemed to be received on the next working day. In the latter half of April 1993 Worthgate served two such notices, which were contested by Eagleview on the ground that the property was occupied by squatters. On May 6 1993 Worthgate sent by fax a further notice (the third notice) requiring Eagleview to complete by May 13 1993. The time recorded on the fax machine was four seconds after 4 pm. On the same day, May 6, the bank’s solicitors wrote to Worthgate confirming an earlier notification that their client was unable to give vacant possession because of occupation by squatters. By a fax sent by its solicitors on May 14 1993 Worthgate purported to rescind the contract with Eagleview and forfeit the deposit and, having done so, immediately entered into a contract with the second defendant, Capital Prime Properties plc (Capital) for the sale of the property for £305,000. On May 19 1993 Eagleview commenced proceedings for specific performance, but its application for summary judgment was dismissed on September 23 1993. Over the following four years Worthgate was placed in voluntary liquidation, the ownership of Eagleview changed hands and Capital was given leave to add its name as a defendant. At trial, the question whether Worthgate was entitled to rescind the contract turned on the effectiveness or otherwise of the third notice and, in particular, whether Capital could make good its allegation that, if squatters were present, it was because of a collusive arrangement with Eagleview, who allegedly wished to defer completion. After reviewing sharply conflicting evidence, the judge found that that allegation had not been proved on the balance of probabilities. Held The plaintiff had a good claim for specific performance. 1. To be entitled to rescind, a party giving a notice to complete had to be ready, able and willing to complete both at the time of service and at the expiry date: see Horton v Kurzke [1971] 1 WLR 769; Chung v Pericleous unreported October 16 1981. There were two reasons why Worthgate was not so placed at the relevant dates. First, there was, at the very least, a possibility of an adverse claim to possession. Eagleview was not required to wait and see whether or not the claim was good: see Horton (supra). Second, since Worthgate was not registered as proprietor, it could not complete on the date of the notice because its vendor, the bank, was unable to do so. 2. Eagleview had also established that the letter of repudiation was premature. Because of the time recorded for the faxing of the third notice (the only evidence before the court), only four working days, as contractually defined, had passed since the giving of that notice, it being immaterial that the five-day requirement would have been met if the fax had been sent four seconds earlier. 3. Since an award of damages against Worthgate would afford no remedy and as there was no evidence that Capital had been lulled into believing that the claim had been abandoned, the court should not refuse to order specific performance, thus effectively destroying Eagleview’s rights under the contract, simply because it disapproved of Eagleview’s dilatory conduct between 1993 to 1997. Post-writ delay should not normally be a reason for refusal unless the defendant had been prejudiced thereby: see Williams v Greatrex [1957] 1 WLR 31: Du Sautoy v Symes [1967] Ch 1146. Cf Fitzgeraldv Masters (1956) 95 CLR 420; Lamshed v Lamshed (1963) 109 CLR 440. Martin Mann QC and Elizabeth Weaver (instructed by Brook Martin & Co) appeared for the plaintiff; James Munby QC and Robin Hollington (instructed by Stitt & Co) appeared for second defendant, Capital Prime Properties plc; the first defendant did not appear and was not represented.