England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
BUSINESS & PROPERTY COURTS IN MANCHESTER
BUSINESS LIST (Ch D)

		Manchester Civil Justice Centre 1 Bridge Street West, Manchester, M60 9DJ
		12 October 2018

INDEX

HEADING	PAGE NO.
Introduction	6
Background Occupants of Hillbit The Heads of Terms The sale contract with Whitehall Media Limited The variation and assignment Failure to complete by the contractual date Notice to complete and notice of rescission The present proceedings Proposed sale to Mr Podha	6 6 8 8 9 9 12 13 14
The issues	14
The evidence	15
Was the claimant's rescission effective or is the Contract still on foot? What is the relevant date for determining the validity of the NTC? On whom does the burden of proving/disproving RWA lie? Was the NTC valid? Removal of occupants Removal of chattels My conclusion on the validity of the NTC (4) Was the notice of rescission effective? Conclusion on right to rescind (5) Was the claimant estopped from requiring the defendant to complete?	17 18 20 22 22 23 23 25 30 31
Effect of my conclusions, remaining issues and next steps	32

GLOSSARY OF ABBREVIATED TERMS

TERM	PARA WHERE FIRST DESCRIBED	DESCRIPTION
the claimant	1	Cantt Pak Limited, a company incorporated in Jersey
the defendant	1	Pak Southern China Property Investment Limited
Hillbit	1	The subject matter of the claim in the form of commercial land and buildings known as Hillbit House located on New Street, Miles Platting, Manchester
the NTC	1	The notice to complete served by the claimant on the defendant on 8 December 2016
PIN	7	A UK-based company, PIN Property Consultancy Limited, acting as agent on behalf of the claimant company from Hillbit
M3	7	A UK-based company, M3 Construction Limited, acting on behalf of the claimant company, from Hillbit
Baber	7	Mr Baber Majid, a director at the material time of PIN Property Consultancy Limited
Iftikhar	7	Mr Ifthikar Majid, a director of PIN Property Consultancy Limited and brother of Baber
Zulfikar	7	Mr Zulfikar Majid, a director of the claimant company and brother of Baber and Ifthikar
RWA	12	Ready, willing and able
VP	12	Vacant possession
Mutahhar	14	Mr Mutahhar Aziz, an estate agent and the son of Mr Tariq Aziz
the Contract	15	The contract for sale of Hillbit between the claimant and Whitehall on 21 December 2015
Whitehall	15	Whitehall Media Limited, a party, with the claimant, to the Contract
the Standard Conditions	15	Standard Commercial Property Conditions (Second Edition) referred in clause 3 of the Contract
Kuits	24	Kuit Steinart Levy LLP, the solicitors acting for the claimant in relation to the proposed sale of Hillbit
HSK	24	HSK Solicitors LLP, the solicitors acting for Whitehall and the defendant in relation to the proposed sale of Hillbit
Chand	29	Mr Chand Singh, a colleague of Mr Landa at HSK
MFC	36	Manchester Finance Company Limited, a funder
Lloyds	36	Lloyds Bank plc
Paramount	52	Paramount Properties (Rusholme) Limited
Mr Browne	62	Mr Hayward Browne, a single joint expert who provided a written report to the parties and the court

The Honourable Mr Justice Barling:

Introduction

1. This is an action by Cantt Pak Limited ("the claimant") against Pak Southern China Property Investment Limited ("the defendant"). The claimant seeks the vacation of unilateral notices entered by the defendant on 24 March and 5 April 2017 on the charges register of title relating to commercial land and buildings in New Street, Miles Platting, Manchester, referred to as Hillbit House ("Hillbit"). The claim is made on the basis that an assigned contract for the sale of Hillbit by the claimant to the defendant was terminated by reason of the claimant's acceptance of the defendant's repudiatory breach in failing to complete the sale following the service by the claimant of a Notice to Complete ("the NTC").
2. The defendant disputes the claim and counterclaims for specific performance of the contract.
3. The claim and counterclaim were ordered to be heard as a speedy trial by HH Judge Hodge QC on 18 August 2017, with a time estimate of 3 days. In fact, the trial, in which 12 witnesses were called to give oral evidence, took place over 7 days between January and April 2018.
4. The claimant is represented by Mr Stephen Pritchett of counsel. The defendant is represented by Dr Michael Wilkinson of counsel.

Background

5. It is appropriate to set out the circumstances in which the dispute has arisen. Although a number of issues of fact between the parties do exist, those which have a bearing on the legal questions to be determined are relatively few. Further, the issues were to some extent narrowed in the course of counsels' submissions.
6. The account which follows is intended to be essentially uncontroversial, save where I indicate to the contrary.
7. The claimant, which owns the freehold of Hillbit, is a company incorporated in Jersey. It operates in the UK through agents, including PIN Property Consultancy Limited ("PIN") and M3 Construction Limited ("M3"). Two of PIN's directors are, or were at the material time, Mr Baber Majid and Mr Ifthikar Majid, who are brothers. Both gave evidence at the trial. A third brother, whose hearsay statement was put in evidence, is Mr Zulfikar Majid, who is based in Pakistan and is a director of the claimant. For convenience, and without intending any disrespect, I will refer to Messrs Majid as, respectively, Baber, Ifthikar and Zulfikar.

Occupants of Hillbit

8. Hillbit comprises some 3.34 acres of industrial land, with a large old office block, a warehouse, and various industrial units. There is also an "L"-shaped open yard area, on which are stored a number of heavy industrial boilers belonging to the claimant and some metal shipping containers. A quantity of scrap metal and some building supplies owned by M3 are also present on site.
9. Both PIN and M3 operate from Hillbit, where they have the use of an office building. PIN employs up to about 20 people there, and M3 up to about 8. Certain other people use the property. These include the following: companies referred to as Zip Properties and IPS, who share the offices of M3 and PIN and manage various properties for the claimant; Hit the Sacks Bedding Products Ltd, whose sole director, Mr Mohammed Ishfaq, gave evidence at the trial. His company, with some 5 members of staff, has operated a quilt-filling business from Hillbit since 14 August 2012. Also on site is another witness, Mr Mohammed Amjad, who told me that since early 2011 he has conducted a welding business from a container parked in the yard. He employs one other person. There was also evidence that a Mr Danny Derica (who was not himself called as a witness, although a written statement by him was admitted as hearsay) has since 2012 used a small area for the storage of catering equipment and scrap metal. There was evidence, too, that a Mr Khaduri had used part of the premises until his departure sometime in 2016.
10. A rent schedule produced by Baber in 2015^[1] identified 5 occupants, with the following details:

"Hillbit house	TENANT	ANNUAL RENT
Unit 3	Hit the sack bedding products Ltd	£6,600
Workshop	MR DANNY	£7,800
Offices	PIN Properties	£15,000
Main warehouse	M3 Properties (Manchester) Ltd	£20,000
Viscount shade	RCS	£9,600"

11. In addition, about 4 companies have used Hillbit as the address of their registered office, without having any concrete presence there. These include: Belle Vue Properties (NW) Ltd, NAP (UK) Ltd, NAP (Manchester) Ltd, and Zip Partnership LLP.
12. One of the issues in the case is whether at the material time(s) the claimant was ready, willing and able ("RWA") to complete, including giving vacant possession ("VP") of Hillbit. In light of this issue, the claimant's witnesses were asked about the terms on which those who carried on business there were in occupation, and about their willingness to vacate. It is the claimant's case that all the occupants were licensees with informal licences terminable upon very short notice, and that they had all agreed to vacate promptly – within a couple of days or so - if asked to do so. The defendant maintained that it would have taken the claimant longer to clear the site of occupants and of chattels than the 10 working days allowed by the NTC (if valid).

The Heads of Terms

13. In late 2015 Baber was in negotiation on behalf of the claimant to sell Hillbit. The negotiations were at all times with a Mr Tariq Aziz. The claimant's evidence is that all concerned with the proposed sale on the claimant's part believed that Mr Aziz was conducting the negotiations as principal, and that the defendant was his vehicle. Mr Aziz states that he was an intermediary, having been offered a commission by the claimant upon sale of the property. Neither party has suggested that anything turns on this issue.
14. At some time in November 2015 Heads of Terms, for the sale entitled "Subject to Contract" were drawn up by Baber. These provided that the purchase price would be £1.2 million, and that a 10% deposit would be payable on exchange of contracts. Further, a sum of £20,000 was to be payable in two equal instalments (the first immediately, and the second on 20 November 2015) "for an exclusivity period to 21 December 2015". On that date there would be exchange of contracts, with completion "by 30 April 2016". The "buyer" was described as "Mutahhar Aziz and Nominee". Mutahhar Aziz ("Mutahhar") is Mr Aziz's son, who works as an estate agent. No one who gave evidence for either side suggested that Mutahhar was intended to be the buyer of Hillbit. One witness^[2] appears to have believed (mistakenly) that Mr Aziz's name is Mutahhar.

The sale contract with Whitehall Media Limited

15. On 21 December 2015, the claimant entered into a contract ("the Contract") to sell Hillbit to Whitehall Media Limited ("Whitehall") for £1.2m. A 10% deposit was to be paid, and completion was to be on 30 June 2016 or 20 working days after a NTC after 1 April 2016. The Contract, at clause 7, required the claimant to provide VP on completion. Clause 3 incorporated into the Contract the Standard Commercial Property Conditions (Second Edition) ("the Standard Conditions"), subject to certain exceptions. The deposit of £120,000 was paid in instalments, with the final instalment being paid on 25 January 2016.
16. Baber's evidence was that there was an arrangement with Mr Aziz that if he wanted VP he could have it, and that he would let the claimant know before completion whether he wanted the site cleared or whether it would be beneficial for his lender to have rent coming in. Baber said that in late 2015 the claimant had requested a period after completion to make a more orderly departure but that the claimant was in a position if necessary to give VP in June 2016 and also in December 2016.
17. I was shown letters, all dated 18 January 2016, to Mr Amjad, to Hit the Sack Bedding Products Limited and to Mr Danny Durica, informing each of them that their "Informal Letting Agreement" with the claimant would terminate on 30 June 2016 when the claimant would be giving the buyer of Hillbit VP.
18. Ifthikar's evidence in cross-examination was that when the Contract was originally being negotiated in 2015, he had agreed with Mr Aziz at the latter's request to leave the containers on site, as Mr Aziz had a plan to let them out. Mr Agha Israr Ahmed, the sole director of the defendant, stated in his oral evidence that the defendant was aware of 5 or 6 people who required storage and were willing to use Hillbit.

The variation and assignment

19. A few days prior to the completion date, then still 30 June 2016, Baber was requested by Whitehall (through Mr Aziz) to postpone completion. Mr Mohammed Hashemi, a director of Whitehall, who was called by the defendant, told me that by that time his company had only raised £400,000 of the required funds, and he did not wish to proceed with the purchase. Mr Aziz told him that there was another buyer who would enable Whitehall to extricate itself and to recover its deposit.
20. The claimant agreed to an extension of the completion date until 1 December 2016 on condition that a further deposit of £120,000 was paid. This would be treated in the same way as the original deposit and would be non-refundable. By email of 14 July 2016, Whitehall's solicitors (who also acted for the defendant) stated that

"our client has now placed us in funds of £120,000. However, our client would like to proceed in the following name….as our client has secured the extension funds in this name."

The name was that of the defendant. The email went on to say that the Contract should be varied to reflect the change.

21. Accordingly, on 2 August 2016, the Contract was varied by changing the completion date to 1 December 2016 in consideration of Whitehall paying a further 10% deposit - £120,000 - to the claimant. It seems that this sum was paid by a Mr Singh, an uncle of Mr Ahmed.
22. On the same date as the variation agreement was entered into, 2 August 2016, the Contract, as varied, was assigned to the defendant. Deeds of variation and assignment were executed on that date.
23. According to Mr Hashemi, Whitehall recovered its original deposit via a somewhat obscure arrangement, whereby Mutahhar is said to have reduced by an equivalent amount the price of another property which Whitehall was buying from or through his estate agency. Mutahhar was then supposed to be repaid by the defendant. In his witness statement, Mr Ahmed stated that he paid the sum in question to Whitehall. However, in his oral evidence he said that he had only agreed to pay it on completion of the sale, and had not yet done so.

Failure to complete by the contractual date

24. Throughout these transactions Ms Emma Nimmo, a solicitor, of Kuit Steinart Levy LLP, ("Kuits") acted for the claimant and Mr Kim Kawaljeet Singh Landa, a solicitor, of HSK Solicitors LLP ("HSK") acted for Whitehall and the defendant. Both Ms Nimmo and Mr Landa gave evidence at the trial.
25. On 17 November 2016, Ms Nimmo's assistant emailed Mr Landa, asking for confirmation that the defendant would be in a position to complete on 1 December 2016, the date fixed by the variation agreement. Ms Nimmo stated that Kuits were telephoned by HSK on 25 November, asking whether VP "was to be given on completion" but not confirming that the defendant was itself in funds to complete. Ms Nimmo said that this was unlikely to have been a conversation with her – it was probably with a colleague. Nor was she aware at this stage of any request by the claimant for more time to arrange to move out. A File Note of HSK dated 1 December records:

"Telephone conversation at 1.50pm today with Emma Nimmo of Kuits. They are not ready to complete yet and neither are we. Told her that we need vacant possession confirmation."

26. Mr Landa stated in cross-examination that the reason he was not ready to complete was because "the funds were not with us." Ms Nimmo said in cross-examination that she understood the defendant to be asking for confirmation that the property was then vacant. She also stated that on 1 December she could not have said from her own knowledge that the claimant was not ready to complete, and she had no instructions to that effect. She referred to her email to Mr Landa the next day, 2 December:

"Further to our conversation yesterday, we have now spoken to our client who has advised that there was always an understanding between our respective clients that your client would purchase the property allowing our client to vacate within 6 months following completion and procure vacant possession of the other parts of the property within 2 months following completion. Could you please confirm that this is agreed and confirm that your client is in a position to complete."

27. The understanding to which Ms Nimmo referred was, at least to some extent, confirmed by the defendant's witnesses, Mr Ahmed and Mr Aziz, in their oral evidence. Mr Ahmed said that in late summer 2016 he agreed with Mr Aziz, in response to a request from Ifthikar, that the claimant could stay on for a few months after completion paying rent to the defendant, if the defendant was using a bank loan to complete. Mr Aziz told me that in October 2016 Ifthikar asked if the claimant could stay for 6 months after completion, and that he replied that this might be possible if the defendant was borrowing through a bank, but that if a bridging loan was being used the property would have to be empty. The claimant's evidence was that despite other premises being available for their occupation, their preferred course was to undertake a staged departure from Hillbit.
28. There appears to have been no response to Ms Nimmo's email of 2 December 2016 because on 6 December she sent the following email:

"Further to my email [of 2 December], we look forward to hearing from you.

Please note that unless we hear from you that you have instructions by 4.30pm tomorrow, we have instructions from our client to serve a notice to complete."

29. That email elicited the following response the same day from a Mr Chand Singh of HSK, a colleague of Mr Landa ("Chand"):

"In the event that we receive a notice we shall submit our notice to complete. The contract states that vacant possession is to be provided upon completion, our client has attended the property today and has photographic evidence to show that the property has not been vacated.

Please confirm once the property has been vacated."

30. Thus, although a new date had not yet been fixed for completion (the substituted date having now passed), the defendant's position appeared to be that the claimant must vacate the property (and confirm that it has occurred) before the defendant would be able and/or willing to complete.
31. The same day Ms Nimmo responded:

"I take it from your email that your client is in funds to complete. Can you please confirm that is correct. I will then speak to my client with regard to a completion date."

32. To this Chand replied the following day, 7 December:

"We take it from your email that you have vacant possession. Please clarify and we will respond to your enquiry."

33. Ms Nimmo then repeated the claimant's position as set out in her 2 December email, viz that vacant possession upon completion could be given but the claimant would prefer to vacate in stages. She wrote:

"I have instructions from my client that it can give vacant possession on completion. Could you please advise if your client is in funds and is ready to complete. If this cannot be confirmed then I have instructions to serve a notice to complete. As you know, my client is able to give vacant possession on completion but would prefer to remain in occupation as suggested in my email of 2 December attached."

34. On 8 December 2016 Chand emailed Kuits as follows:

"Our client has indicated that he has now got finance in place. The financers wish to visit to [sic] the premises and check that the property is vacant due to the amount of people …currently in occupation.

Please take your client's instructions and confirm when the property will be vacant [s]o that we may arrange an inspection to take place. Our client has indicated that completion can take place the day after the inspection of vacant possession has been carried out."

35. Ms Nimmo's evidence was that she understood from this that the defendant wished VP to be undertaken prior to completion, and that funding would not be released to the defendant until the premises were vacant to the satisfaction of a funder following a survey. She also stated that it became clear to her that the defendant did not have the funds immediately in place.
36. The defendant's evidence about the identity of the "financers" referred to in Chand's email, and about how the defendant was in fact intending to fund the purchase, was somewhat inconsistent. Mr Landa said that he did not know to whom his colleague Chand was referring by "financers". He told me that although he (Mr Landa) had been in talks with a company called Manchester Finance Company Limited ("MFC") about Hillbit, they would not have wanted to inspect prior to completion, as they would advance funds once they received confirmation from Mr Landa that he was happy with everything. He said that lending from MFC was not pursued by the defendant when the issue of VP arose with Kuits. Nor was a loan from Lloyds Bank plc ("Lloyds") (with whom Mr Ahmed himself was dealing) ever finalised. Mr Landa stated that HSK, the defendant's conveyancing solicitors, were never in funds to complete the sale.
37. Mr Ahmed told me in cross-examination that although there would have been no problem obtaining a loan from Lloyds Bank plc ("Lloyds") (in which respect he relied upon a letter from Lloyds dated 19 December 2016), at that stage the defendant had decided not to use Lloyds, and was relying solely on bridging finance from MFC. The intention, he said, was to complete the sale using a bridging loan from MFC, and then revert to Lloyds, which was cheaper. Mr Ahmed told me that Mr Landa dealt with everything concerning the proposed loan from MFC, and that the "financers" in Chand's email were MFC. He understood that MFC would only allow the funds to be drawn down if they had first inspected the property and confirmed VP.
38. In his oral evidence Mr Ahmed also commented on certain formal documents emanating from MFC. These included an unsigned letter dated 30 November 2016 purporting to offer a loan of £1m to the defendant on specified terms and pre-conditions including: a minimum loan period of 1 year at a monthly interest rate of £15,000, an arrangement fee of £20,000, the provision of a guarantor, and the prior supply to the lender of about 18 formal documents, reports and statements. Among these were a professional valuation of the property, and a statement of assets and liabilities of the borrower. Some of the pro-forma documents are attached to the unsigned letter. They have not been completed with the details required, but each bears an illegible signature purportedly on behalf of the borrower and is dated 30 November 2016. However, Mr Ahmed told me that none of these signatures is his and that he had not authorised them. At one point he suggested that the signatures might be those of his uncle and co-investor, Mr Singh. The required guarantor is not identified in any of the signed documents. Mr Landa told me that a personal guarantor would certainly have been required by MFC, as well as a legal charge on the property, but the question of who would be the guarantor had not been determined by the time the process with MFC was terminated.
39. Also shown to me was a letter from MFC dated 17 August 2017 sent to the defendant. It states:

"We write to confirm that we were contacted in October 2016 in order to arrange finance in relation to the purchase of [Hillbit] by the above-named Borrower. We can confirm that we have agreed to provide finance to the Borrower to the value of £1,000,000.00.

The finance is agreed unconditionally and without the requirement of a building survey."

40. The reference to "unconditionally" is surprising in view of the myriad of conditions envisaged in the MFC documents to which I have referred. No evidence was called from anyone connected with MFC. The letter is vague and ambiguous. On its face it could be stating no more than that MFC were "contacted" in October 2016 with a view to a loan, and that at some indefinite point thereafter (perhaps in August 2017) they "have agreed" to provide a loan.
41. Mr Aziz stated that he was not involved in any of the defendant's loan arrangements. He said that Mr Landa had asked him to check whether the premises were vacant. He understood that the lender wanted this confirmed before releasing the funds.

Notice to complete and notice of rescission

42. The claimant gave the NTC to the defendant on 8 December 2016. The NTC recited that the claimant was RWA to complete and, pursuant to Standard Condition 8, required the defendant to complete the Contract within 10 working days of the NTC being given, excluding the day on which it was given. It does not appear to be in dispute that, if effective, the NTC required completion to take place by 1pm on 22 December 2016 and made time of the essence of the Contract.
43. On 12 December 2016 Chand emailed Ms Nimmo as follows:

"Please note that our client has attended the premises and the property is not vacant or empty, therefore your notice to complete is invalid.

Please see attached pictures our client has taken. Please confirm once the property/premises are vacant and we will arrange for completion to take place."

44. Ms Nimmo replied the next day:

"The notice to complete is not invalid. My client only needs to give vacant possession on completion and we have previously confirmed that our client can give vacant possession on completion. Is your client in a position to complete? If your client has an issue with being ready to complete then I suggest that your client calls ours direct to discuss."

45. To this the response from Chand the same day was:

"We understand from video footage and photographic evidence which we have provided yourselves with that it would take a few days to remove all items due to the extent and size of them. We just require a date for when the property will be vacant and free of all containers rubbish etc. we would appreciate it if you can provide confirmation of the above. In the event that an agreement cannot be reached or date for vacant possession is not confirmed, we will have no other alternative but to serve you with our notice to complete."

46. In what appears to have been the final written communication between the solicitors during the period of the NTC, Ms Nimmo replied:

"I tried to call you to discuss…

We repeat that the notice to complete is valid. The contract is clear that vacant possession does not need to be given until completion. It is irrelevant that the property is not currently vacant.

We…look forward to hearing from you with regard to completion."

47. I was shown 3 File Notes, dated 5, 6 and 8 December 2016, outlining advice given by Kuits to the claimant about the latter's instruction to Kuits to serve the NTC. The advice was to the effect that there was a risk that the NTC could be disputed "given that Baber is not ready to provide vacant possession".^[3]
48. Completion did not take place by 1pm on 22 December 2016. Later that day Kuits served notice of rescission of the Contract on the defendant and HSK pursuant to condition 9.5 of the Standard Conditions.

The present proceedings

49. In January 2017 the defendant lodged applications to register unilateral notices against the claimant's several registered titles to Hillbit at HM Land Registry. These notices were registered but then cancelled in February 2017 on the claimant's application. The notices were lodged again in April 2017. The claimant again applied for cancellation but in June 2017 the Land Registry informed Kuits that the defendant had lodged an objection to the application. On 6 July 2017 the claimant issued a claim form in the present proceedings for vacation of the unilateral notices and an injunction restraining the entering of further notices.
50. On 23 May 2017, the defendant's solicitors had intimated an action for specific performance to compel the sale and the giving of VP. No claim for specific performance was made until the defendant's counterclaim was raised in the present proceedings.
51. On 21 July 2017 the defendant gave a notice to complete to the claimant.

Proposed sale to Mr Podha

52. The particulars of claim stated that the claimant "now wishes to sell the Contract Property and has agreed to sell the same subject to contract". In her witness statement in June 2017 Ms Nimmo stated that the claimant "has entered into negotiations to sell the Property to a third party. Contracts have now been exchanged. The sale is conditional upon the Defendant's unilateral notices being removed…" When she gave oral evidence she corrected that statement. She told me that towards the end of January 2017 Kuits were instructed by the claimant to prepare a draft contract for the proposed sale of Hillbit to a company called Paramount Properties (Rusholme) Limited ("Paramount"), which was owned by a Mr Abdul Podha. Although Heads of Terms had at some point been sent to Kuits and a draft contract was prepared by them, contracts were not in the event exchanged as expected. A document was shown to Ms Nimmo which was dated 30 January 2017 and was signed by Mr Podha on behalf of Paramount and by Zulfikar on behalf of the claimant. She stated that this was not the document prepared by Kuits, and she had not seen it before. The document records a payment of £300,000 by Paramount "as deposit for the purchase of [Hillbit]. It also states:

"In the event that Cantt Pak do not complete the sale, both parties agree that the deposit will be returned to Paramount, with a penalty of 100% of the deposit imposed upon Cantt Pak Ltd."

53. In his oral evidence Ifthikar explained that when the defendant did not come up with the money the claimant needed another buyer for Hillbit and were preparing to market it again when they were approached by Mr Podha. A price of £900,000 was agreed, with £300,000 to be paid as a deposit. A cheque for that sum was received from Paramount on 30 January 2017 but had not yet been cashed as the claimant was concerned about money laundering.
54. Mr Ahmed told me that Mr Podha had also been considered as a possible buyer of Hillbit from the defendant. Mr Aziz, too, in his oral evidence, stated that in September 2016 he had sought to interest Mr Podha in purchasing the property, but he had said he was not interested at the price the defendant was paying.

The issues

55. I have referred to the fact that the issues were narrowed in the course of the trial. In particular, at an early stage in his submissions Mr Pritchett indicated that an alternative claim of the defendant, based on an allegation of misrepresentation,^[4] was not a live issue. This was because the claimant accepts that VP of Hillbit was required under the Contract, and that the obligation included clearance of both people and chattels from the site. Dr Wilkinson did not demur. Accordingly, I do not need to consider that alternative claim.
56. Essentially, the claimant's case is that at the time the NTC was given on 8 December 2016 the claimant was RWA to complete, and that it was entitled to terminate the Contract on the basis of the defendant's failure to tender payment by the deadline for completion, fixed at 22 December 2016 by the NTC, notwithstanding that at some point in the operative 10 working days period of the NTC it became impossible for the claimant to give VP by that deadline, and notwithstanding that the claimant itself was arguably in repudiatory breach of the Contract in not having taken steps to put itself in a position to give VP by that time.
57. By contrast, the defendant's primary case is that the claimant was not RWA to vacate the site of people and chattels in accordance with the terms of the Contract, whether at the point of serving the NTC (8 December) or at the time completion had been called for (22 December). In those circumstances the NTC was invalid, time was not made of the essence, the defendant had no obligation to complete, and the Contract was not terminated by the claimant's notice of rescission and remains on foot.
58. Alternatively, the defendant argues that even if (contrary to the defendant's primary case) the claimant was RWA to complete when the NTC was served, and the NTC was validly given, since the claimant had admittedly not taken steps to vacate the site by 22 December, the claimant was in anticipatory breach of the Contract. In those circumstances, the defendant was relieved of its obligation to complete, there was no breach by the defendant in not completing, and the claimant was not entitled to terminate the Contract by rescission.
59. The defendant relies upon a further alternative argument, viz that by representing to the defendant that it "could not give vacant possession within the period required for completion"^[5] and by not taking steps to vacate the site generally or after the defendant had indicated that funding was in place subject to VP being given, the claimant was estopped from requiring the defendant to complete and/or had waived or forborn to rely upon such right and/or had precluded time being of the essence.
60. The defendant further submits that if the claimant's rescission was unlawful or ineffective because the NTC was invalid and/or because the claimant itself was in breach of the Contract, then the defendant is entitled to specific performance of the Contract, pursuant to the Counterclaim.
61. Finally, the defendant submits that, even if the Contract was lawfully rescinded by the claimant, the defendant should recover its deposit pursuant to subsection 49(2) Law of Property Act 1925.^[6] The parties agreed that this issue would be the subject of further submissions after judgment, if appropriate.

The evidence

62. Evidence was heard from a total of 12 live witnesses of fact. In addition, the statements of Zulfikar and two other witnesses of fact (Mr Tinsley and Mr Durica) were admitted as hearsay. The evidence of a single joint expert, Mr Hayward Browne ("Mr Browne"), dealing with the time needed for removal of containers, boilers and scrap from Hillbit, was admitted in the form of his written report and his written answers to questions from the parties.
63. The main witnesses called by the claimant were Baber, Iftikhar, and Ms Nimmo, plus (in written form) Zulfikar. For the defendant, the main witnesses called were Mr Ahmed, Mr Aziz and Mr Landa. I do not propose to rehearse or comment on the evidence of these witnesses, or of Mr Browne, separately from the issues to which their evidence relates.
64. However, I will now refer briefly to the evidence of the other witnesses of fact called by the parties, all of whom (apart from Mr Durica and Mr Tinsley) were cross-examined, and all of whom were in my view truthful and doing their best to assist the court.
65. Mohammed Ishfaq: His company, Hit the Sack Bedding Limited, with some 5 members of staff, has operated a quilt-filling business at Hillbit for 4 years at an annual payment of £6,500. The arrangement was informal and he did not regard his company as having any statutory claim over the space it used. He had been told by Baber about the sale in 2015 and that he would need to vacate when the sale was to be completed. A written notice indicating a completion date of June 2016 was given to his company on 18 January 2016. He confirmed that he had no problem in moving and that he could do so within 48 hours. He said he had a choice of several places to move to. He also stated that there were on average about 10-14 containers on site.
66. Mr Mohammed Amjad: He gave evidence through an interpreter. He has operated a welding business from a single container at Hillbit since about 2011. He undertakes work for the claimant in lieu of rent. Like Mr Ashfaq, he had been told by Baber in December 2015 that when the sale went through he would have to leave. He has been kept informed of the need to vacate and the changing timescales. He was ready to go whenever required, and could do so within 5 days, and had a number of options of where to go. But he said that in 2015 when he indicated to Ifthikar that he would like to stay if possible, he was told to speak to Mr Aziz. Mr Amjad said that when he did so Mr Aziz claimed to be the purchaser, that his intention was to build units on the site, and that he would have no objection to Mr Amjad staying put.
67. Danny Durica: He did not give oral evidence. In a witness statement he said that he ran a business refurbishing catering equipment from Hillbit. He had no employees. He paid a monthly fee for use of a small area. The arrangement was informal, and he had no statutory claim over any part of the property. He was given oral notice of the need to move out in 2015 by Baber, and he received a written notice in January 2016. He was told that he could be required to do so at very short notice, and indicated to Baber that he was willing to move if necessary and could do so within 5 days, including removing any scrap metal.
68. David Lucketti: He is a haulier, trading as D. Lucketti Transport Services, with experience in loading and unloading heavy goods onto specialised trailers for transit in the UK. He told me that he has undertaken work for the claimant, and that when he visited Hillbit in November or December 2016 there were 14 or 15 containers and 3 boilers in the yard. Ifthikar had said he might have to move them to the premises of "MSL"^[7] and asked how long it would take. Mr Lucketti told him it would take a couple of days. Mr Lucketti told me that the timing of the job kept changing, and that he was effectively on standby to move the items on a day's notice.
69. Debra Briffa-Scullion: This witness is a director of MSL (UK) Limited, a warehousing company in Oldham. She told me that in 2016 she was contacted by PIN who were asking about storage space for 14 large industrial containers and 4 (or possibly 6) large industrial boilers, which she understood would need to be moved at very short notice. This was not an unusual request and was part of her company's usual service. In December 2016 they had 2 sites in the Manchester area which were suitable and available at that time.
70. Stephen Bissett: He is a commercial buyer for Cornbrook Metal Recycling Limited, a scrap metal collection and skip hire business. He stated that he had seen the scrap metal at Hillbit and considered that there may have been about 15 tons of it. To move this would require 4-6 skips, which the company was able to arrange, as they have about 100 skips of varying sizes. The skips would be delivered within 3 days of an order placed.
71. Michael Tinsley: He did not give oral evidence but his witness statement was admitted as hearsay. In it he stated that he is a director of MGA (North West) Limited, which operates a commercial crane hire and contracting business. The company's cranes can lift items weighing up to 200 tons. He had carried out operations for the claimant and its associated companies, including loading and unloading boilers at Hillbit. In October 2017 his team oversaw the loading and removal of a 65 ton industrial boiler from Hillbit. This took 2 hours. In the past a boiler in a more inaccessible position at Hillbit had taken 4 hours to remove.
72. Mohammed Waqas Hashemi: He is a director of Whitehall. He was called by the defendant and cross-examined. I have already referred at some length to the evidence of Mr Hashemi. I therefore do not need to summarise it separately here. His evidence was not challenged in any material respect.

Was the claimant's rescission effective or is the Contract still on foot?

73. Whether the claimant's purported rescission was effective to terminate the Contract or whether the Contract is still on foot is the main issue in the case. It comprises a number of sub-issues. These include:

(1) What is the relevant date for determining the validity of the NTC?

(2) On whom does the burden of proving/disproving RWA lie?

(3) Was the NTC valid?

(4) If so, did the non-completion by the defendant on the date fixed by the NTC entitle the claimant to rescind the Contract notwithstanding that the claimant itself had not taken steps during the operative period of the NTC towards completion by the end of the NTC period, and was thereby arguably in repudiatory breach of the Contract?

(5) Is the claimant in any event estopped from requiring the defendant to complete in accordance with the NTC?

(1) What is the relevant date for determining the validity of the NTC?

74. The legal and contractual framework within which this issue falls to be decided does not appear to be contentious. Under the Contract, on completion the defendant was obliged to pay the purchase price and the claimant was obliged to transfer title to Hillbit.
75. The contractual completion date of 1 December 2016 passed. That date was not of the essence. Section 41 of the Law of Property Act 1925 provides:

"Stipulations not of the essence of a contract.

Stipulations in a contract, as to time or otherwise, which according to rules of equity are not deemed to be or to have become of the essence of the contract, are also construed and have effect at law in accordance with the same rules."

76. The Standard Conditions which, as seen, were incorporated into the Contract, state:

"8.1.1 Completion date is twenty working days after the date of the contract, but time is not of the essence of the contract unless a notice to complete has been served."

77. On 8 December 2016 the claimant served the NTC. If valid, this made time of the essence.
78. Paragraphs 8.8 and 9.5 of the Standard Conditions provide:

"8.8 Notice to complete

8.8.1 At any time on or after completion date, a party who is ready, able and willing to complete may give the other a notice to complete.

8.8.2 The parties are to complete the contract within ten working days of giving a notice to complete, excluding the day on which the notice is given. For this purpose, time is of the essence of the contract.

9.5 Buyer's failure to comply with notice to complete

9.5.1 If the buyer fails to complete in accordance with a notice to complete, the following terms apply.

9.5.2 The seller may rescind the contract, and if it does so:

it may

(i) forfeit and keep any deposit and accrued interest

(ii) resell the property

(iii) claim damages

the buyer is to return any documents received from the seller and is to cancel any registration of the contract."

79. Condition 1.1.3 defines 'ready, able and willing' as follows:

"1.1.3 A party is ready, able and willing to complete:

(a) if it could be, but for the default of the other party, and

(b) in the case of the seller, even though a mortgage remains secured on the property, if the amount to be paid on completion enables the property to be transferred freed of all mortgages (except those to which the sale is expressly subject)."

80. The validity of the NTC is challenged by the defendant. An issue appeared to arise as to whether that validity fell to be judged only as at the point when it was given (the claimant's position) or whether it could become invalid as a result of supervening events during its operative period (the position which the claimant understood that the defendant was taking).
81. It appeared to me that at times during the parties' submissions the validity issue became conflated or confused with the question whether the claimant would be in breach of contract if it did not remain RWA to complete throughout the operative period of the NTC, and in particular at the date when the deadline for completion occurred. Although in his closing written submissions Dr Wilkinson drew a distinction between the question whether a notice to complete is valid in the first place, and whether there is a breach of a notice to complete entitling the other party to terminate, he also submitted that the court could not determine validity without considering the position at the time of completion.^[8]
82. The claimant's submission is that time was originally not of the essence for completion, and therefore a failure to complete on the contractual completion date would not enable the innocent party to treat the Contract as discharged by fundamental breach. The Standard Conditions enable one party unilaterally to make time of the essence by serving a notice to complete. Once made of the essence, a failure to complete on the date so fixed constitutes a fundamental breach, enabling the innocent party to rescind. Thus, a notice to complete makes time of the essence for both parties, and the validity of a notice to complete has to be assessed by reference to facts at the time of service; it is at that point that RWA to complete must exist in order for the notice to be effective in making time of the essence.
83. Mr Pritchett supported this submission by reference to logic, workability and the wording of the relevant Standard Condition. As to logic, he submitted that time cannot start and stop being of the essence, depending on the state of readiness of the party giving a notice to complete throughout its operative period: time is either made of the essence or it is not, and the only date against which that can be judged is the date of the giving of the notice. Similarly, there would be unworkable uncertainty as to the status of a notice to complete if, whilst valid at the outset. it could be rendered invalid and ineffective by something which the giver did or did not do during the relevant period.
84. As to the wording of the provision, paragraph 8^[9] of the Standard Conditions links the RWA requirement with the verb "to give". Thus, in order "to give" a notice to complete, the giver "is" (present tense) "ready able and willing". That, he submitted, is the only requirement. In particular, there is no requirement that the giver must remain RWA throughout. However, Mr Pritchett accepted that if a giver ceases to be RWA within the 10 day period and cannot complete when called upon to do so, he runs the risk of the other party rescinding for repudiatory breach or suing for specific performance.
85. Mr Pritchett prayed in aid the decision of Blackburne J in Aero Properties Ltd v Citycrest Properties Ltd [2002] P & CR 21. In that case, the issue was whether the fact that at the time of service of the notice the vendor did not have in its possession, and was unable therefore to hand over, the charge certificates relating to the head leasehold interest, rendered the vendor not RWA to complete, and the notice invalid. Having reviewed the existing caselaw, the learned Judge held that the notice was valid. At paragraph 20 he said, in relation to dicta of Russell LJ in Quadrangle Development and Construction Co. Ltd v Jenner [1974] 1 WLR 68, at page 71:

"These observations cannot mean that, although valid at the time it was served – assuming the vendor was then ready and willing to fulfil his outstanding obligations under the contract – the notice ceases to be valid because at some later time the server ceases for some reason to be ready and willing. The validity of the notice must be determined by reference to the position at the time of its service. Nor can they mean that the vendor (where it is the vendor who has served the notice) must be and throughout the period of the notice must remain poised to complete at a moment's notice in case the purchaser should suddenly turn up armed with the completion money and calling for completion"

86. He then considered further authorities and said at paragraph 24:

"If therefore a purchaser served with a notice to complete under Condition 22… wishes to contend that, at the time of service, the vendor was not ready to fulfil his outstanding obligations and therefore that the notice was invalid, he must adduce evidence to show either that the vendor was in breach of some obligation under the contract - for example, a failure to show title or answer a requisition - or that the vendor would not have been able within the time reasonably required to do so to setup the necessary administrative arrangements to enable completion take place."

87. [Diagram or picture not reproduced in HTML version - see original .rtf file to view diagram or picture][Diagram or picture not reproduced in HTML version - see original .rtf file to view diagram or picture]Neither party showed me any authority which held otherwise than that validity of a notice to complete (as distinct from a question whether there is a later breach by the giver of the requirements of a valid notice) falls to be judged at the time the notice is given. I accept the submissions of Mr Pritchett on this point. A different conclusion would fly in the face of the wording of the Standard Condition in question and would be likely to produce unacceptable results in practice. It is not entirely clear whether in his written submissions Dr Wilkinson was arguing for a different analysis, but in so far as he was, I would not agree. Of course, this is not to say that later events might not constitute evidence that, at the time a notice to complete was given, the giver was not RWA to complete as required by the notice.

(2) On whom does the burden of proving/disproving RWA lie?

88. The claimant submits that the defendant, as the party alleging that the claimant was not RWA to complete, bears the burden of proof on that issue. The claimant relies on the decision of HHJ Mackie QC, sitting as a Judge of the High Court, in Midill (97PL) Limited v Park Lane/Gomba International [2008] EWHC 18 (Ch). The learned Judge, at paragraph 12 of his judgment, said:

"…the burden of proof lies on the party seeking to establish that the other was not ready able and willing to complete."

Also relied upon was the statement of Blackburne J to the same effect, cited at paragraph 86 above: "…he must adduce evidence to show…".

89. [Diagram or picture not reproduced in HTML version - see original .rtf file to view diagram or picture]Dr Wilkinson submitted that the burden was on the claimant. He referred to the decision in Midill (above) at Court of Appeal level,^[10] which he argued had clarified the law on burden of proof in this area. In his judgment Carnwath LJ (as he then was) said this (referring to counsel's argument):

"21. He had submitted that, in the absence of binding authority in this court, the issue of burden of proof should be decided by reference to "fairness, justice and common sense". He relied on the general principle that "he who asserts must prove". A completion notice under condition 6.8.1 contains an implied assertion by the giver that he is ready to complete and accordingly where that assertion is put in issue it is for him to prove it. There is no presumption that the notice is correct. Requiring the recipient to prove the giver's non-readiness is unfair, since it requires him to prove a negative; and unrealistic since the relevant facts will normally be within the peculiar knowledge of of the giver…

22. I see some theoretical force in these submissions. Under the applicable condition the right to serve a completion notice is given to a party "who is ready able and willing to complete". The service of such a notice can be said therefore to carry with it an implicit assertion to that effect. If the truth of that assertion is put in issue, it is not unreasonable to expect the giver to be able to justify it. To that extent, I am prepared to assume that he carries at least some obligation in subsequent proceedings to call evidence to support his position, and that he cannot simply rest on the notice. Although the judgment of Blackburne in Aero Properties contains statements suggesting that the burden of proof lies on the recipient of the notice, there does not appear to have been any argument on that point, as a distinct issue of law."

90. It is worth bearing in mind that in that case the appellant had sought to appeal against inter alia the Judge's holding that the burden of showing that a vendor was not RWA to complete fell on the purchaser. The Court of Appeal (Carnwath LJ, with whom Maurice Kay LJ and Keene LJ agreed) refused permission to appeal on that point. The dicta of Carnwath LJ relied upon by Dr Wilkinson appear to have been obiter, because in the paragraph following that cited above the court indicated that the burden of proof point did not in the circumstances provide a realistic basis to challenge the Judge's decision. Carnwath LJ emphasised that it was often "unhelpful to separate the issue of the burden of proof from the context." In that case the Judge's reference to the burden of proof read "as a makeweight rather than an essential part of the reasoning."
91. Dr Wilkinson submitted that the law relating to burden of proof is as stated by Carnwath LJ. The effect was that once a recipient of a notice to complete has discharged the legal burden by putting in issue that the giver was not RWA to complete, the giver then bears the evidential burden of proof.
92. I am not sure that the obiter dicta of the Court of Appeal in Midill go as far as Dr Wilkinson suggests. Carnwath LJ was prepared to "assume" that the giver of a notice "carries at least some" obligation to call evidence to support his readiness and willingness to complete, and that he cannot "simply" rest on the notice. (My emphases) Those comments do not necessarily imply a full-blown burden of proof. Be that as it may, I would prefer to consider the matter in the context of the evidence of RWA in this case, as the Court of Appeal did there. Where factual evidence on a specific issue has been called by both sides, few cases are likely to turn on the burden of proof alone.

(3) Was the NTC valid?

93. So far as the removal of occupants from Hillbit is concerned, I find that the defendant was well aware that if possible the claimant would prefer a staged departure, and that the claimant had raised the question whether VP would be insisted upon by the defendant. It is also clear from the defendant's own evidence^[11] that the defendant encouraged the claimant to believe that existing occupancies might well be able to continue for a period after completion. I find that the "understanding" to which Ms Nimmo referred in her email of 2 December 2016,^[12] existed. On any view, the defendant was ambivalent about the need for and desirability of VP.
94. However, it is accepted by the claimant that VP of Hillbit on completion was a term of the Contract, and that this obligation included removal from Hillbit of the occupants and of the containers, boilers and scrap metal stored there. It is also accepted by the claimant that by the time of the deadline for completion fixed by the NTC, viz 22 December 2016, the claimant was no longer in a position to give VP as at that time, having taken no steps during the 10 days allowed by the NTC to begin clearing the site of occupants or chattels.
95. Therefore, the essential factual question under this head is whether at the time the NTC was given on 8 December 2016 the claimant was RWA to complete with VP. It is upon the answer to that question that the validity of the NTC depends.

Removal of occupants

96. I have already referred in some detail to the evidence on this issue. There is an abundance of evidence to show that from about the time the Contract was entered into with Whitehall, the claimant (through its representatives at Hillbit), had been preparing the ground for the individuals and companies who carried on activities on the site to vacate it at short notice if and when required to do so. As I have indicated, I accept the evidence of occupants Messrs Ishfaq, Amjad and Durica as generally accurate and truthful. These witnesses confirmed, not just the original notification by Baber of the sale and the future termination of their occupancy, but also their receipt in January 2016 (just after the signing of the Contract) of written notice informing them of the original completion date in June 2016. Thereafter, they received informal updatings on the parties' progress towards completion, and the new timescales. I am satisfied on the balance of probabilities that these witnesses would have vacated within 2-5 days if required by the claimant to do so. I also accept that Mr Amjad, when he spoke to Mr Aziz at Ifthikar's suggestion, was told by Mr Aziz that he could continue to use his container at Hillbit after the sale.
97. The other occupants were either companies with a close association with the claimant, such as PIN and M3 (of which one or more of the Majid brothers were directors), or companies that simply used Hillbit as a registered office without having any physical presence. I find that, if and when the Majid brothers decided that these entities (or any other entities present at the site) needed to move from Hillbit, this would happen.
98. I also accept the evidence of Baber and Ifthikar that none of the occupants of Hillbit had a formal tenancy agreement, and that what they had were informal licences.

Removal of chattels

99. As to the removal of containers, boilers and scrap, I have outlined earlier^[13] the evidence provided by Mr Lucketti, Ms Briffa-Scullion, Mr Bissett and Mr Tinsley. The effect of this evidence confirms that in the latter part of 2016 the claimant was sounding out contractors with a view to removing the containers, boilers and scrap metal from Hillbit and re-locating them at the premises of MSL (UK) Limited in Oldham. These witnesses also provide evidence of the timing necessary to achieve the operations in question and of their capacity to carry them out. Each witness (apart from Mr Tinsley) was cross-examined by Dr Wilkinson.
100. In addition, I had the benefit of the written evidence of the logistics and transport single joint expert, Mr Browne. Both parties had the opportunity to question him in writing and his written answers were also provided to me. In summary Mr Browne, who inspected the site, concluded that there was time after the giving of the NTC for all of the chattels to be removed before the NTC deadline, and with some days to spare.
101. In his closing submissions Dr Wilkinson made a valiant attempt to undermine that conclusion by reference to the evidence of Mr Lucketti in cross-examination relating to the notice required for removal of a 65 ton boiler. However, Mr Lucketti told me that, having inspected the items on site at the relevant time, it would take him a couple of days to clear the site of containers and boilers. That would still leave ample time to complete the work in the time allowed, even if 5 days notice was required for a 65 ton boiler. Similarly, the suggestion by Dr Wilkinson that in the absence of a licence to store scrap metal being produced to the court, the claimant was arguably in contravention of the criminal law, did not advance his submissions on this issue.

My conclusion on the validity of the NTC

102. In the light of all the evidence, I find that at the time when the NTC was given on 8 December 2016 the claimant was in a position (able) to give VP on or before 22 December 2016, and that as at the former date it was also ready and willing to complete with VP by that time, as Ms Nimmo informed the defendant's solicitors in writing on several occasions.
103. In reaching this conclusion, I have taken account of the various points made by Dr Wilkinson in relation to the evidence. These include inter alia his reliance on the evidence in Ifthikar's second witness statement, concerning the removal of containers and the fact that Hillbit was sold "as seen". It is my understanding that this evidence refers to the intention of the claimant prior to the raising of the issue of VP by the defendant's solicitors in November/December 2016. I have also taken account of his arguments based on the later arrangements between the claimant and Mr Podha. I do not find that these arrangements undermine the claimant's position that it was RWA to complete the sale to the defendant at the material time.
104. It follows from that conclusion that the NTC was valid, and that the time fixed for completion was of the essence.
105. I have no doubt that, but for the defendant's financial situation which conditioned its reaction to the receipt of the NTC, the sale would have proceeded. I find that at the time the NTC was given the claimant wished to complete the sale to the defendant but was very doubtful that the defendant was in a financial position to pay the balance of the purchase price at the appointed time. I accept the evidence of Baber when he said in cross-examination:

"We wanted them to complete, but Aziz was messing us about. They didn't have the funds."

106. That assessment was in my view accurate. On the evidence of the defendant's own witnesses, the defendant's solicitors were never put in funds to complete, and such funding as might have been available appears to have been dependent upon the claimant clearing the site of all its occupants and chattels before completion (which it was manifestly not obliged to do) and also upon the funders expressing satisfaction with the condition of the site before completion. There is no evidence that, at any point in the run up to the NTC or during its operative period, the defendant provided (or was in a position to provide) the claimant and its solicitors with any real assurance that if the claimant proceeded to clear the site, this would not be a pointless exercise. The defendant's solicitors could not state that they were in funds, because they were not. The nearest they came was to state in an email on 8 December 2016 that "Our client has indicated that he has now got finance in place". It is clear that the claimant was highly sceptical of this assertion, and in my view the claimant was justified in that scepticism in the light of, inter alia, the documentary material from Lloyds and from MFC, as well as the inconsistent evidence of Mr Ahmed and Mr Landa about the proposed funding arrangements.
107. Even allowing for Mr Ahmed's apparently limited grasp of the English language, I did not regard him as a satisfactory witness. His oral evidence differed from his witness statement in a number of respects, such as whether the defendant had paid the second 10% deposit. (In the witness statement he said it had been paid; in oral evidence he accepted it had not.) Another example: the only potential funder referred to in his witness statement is Lloyds, whereas in cross-examination he accepted that funding from Lloyds was not being pursued, and that MCF was intended to be the source of funds. Nor did he attempt to explain why, when he regarded the proposed loan from Lloyds, with an interest rate of £6,000 per month, as "very costly", his evidence was that the defendant intended to take a bridging loan from MCF which required the defendant to pay interest of £15,000 per month, and then to swap to a loan from Lloyds, whilst incurring a substantial penalty to MCF because their bridging facility would be for a minimum term of 1 year. His answer to this and certain other questions was "That's our problem".
108. The reaction of the defendant's solicitors to Ms Nimmo's correspondence, in which she was seeking to move towards completion in early December 2016, also supports the claimant's impression that it was being "messed about". I note in particular: the 4 days delay in responding to her email of 2 December in which she referred to the understanding between the parties about delayed VP; the fact that the response, when it came, did not accept, reject or even mention the alleged understanding, but simply recited the contractual requirement for VP, and noted that the site had not yet been cleared; and the persistent insistence that before completion could take place the site must be cleared and inspected by "financers" who were not identified and were apparently unknown to Mr Landa, the defendant's solicitor.
109. I have come to the firm conclusion that, for whatever reason, the defendant had not managed to arrange the necessary funding by December 2016, was not then able to complete, and was anxious to delay completion. Raising the question of VP might have seemed a convenient reason for doing so. I have already pointed out that there is clear evidence (including from Mr Aziz and Mr Ahmed) to support the existence of an "understanding" between the parties as to a delayed grant of VP. There had certainly been some encouragement by the defendant of this course, possibly because it would have been to the defendant's benefit to have rental income after completion. This was presumably why the claimant twice (2015 and 2016) supplied the defendant at its request with a schedule of occupiers and rentals payable. The Lloyds documents indicated that such rental income would have been conducive to a grant of a loan by the bank.

(4) Was the notice of rescission effective?

110. As I have already mentioned, at some point after 1pm on 22 December 2016 Kuits served notice of rescission of the Contract on both the defendant and HSK pursuant to condition 9.5 of the Standard Conditions. Thus, the claimant purported to accept the defendant's repudiatory breach of the obligation as to time for completion which, as I have found, was successfully made of the essence of the Contract by virtue of the NTC.
111. Consideration is now required of whether the non-completion by the defendant on the date fixed by the NTC entitled the claimant to rescind the Contract, notwithstanding that, as acknowledged by the claimant, it had not taken steps during the operative period of the NTC to have the site cleared of its occupants and chattels by the end of that period, and was itself thereby at least arguably in repudiatory breach of the Contract.
112. The claimant's case is as follows: when faced with a repudiatory breach by the vendor, the purchaser is not, as his sole option, obliged to complete, but has other options. He can choose to accept the repudiatory breach and treat himself as discharged from further fulfilment of the contract, thus bringing it to an end. In those circumstances he can reclaim his deposit. Alternatively, he can disregard the breach and allow the contract to continue. In those circumstances, he can complete the contract and sue for damages for breach of the obligation to give VP, or he can claim specific performance, with an abatement of the purchase price to reflect the costs incurred and/or any damages suffered. If the purchaser allows the contract to continue, then it remains on foot for both parties. This brings with it the risk that, if the purchaser is himself guilty of a repudiatory breach of contract, the vendor is entitled to accept that breach and bring the contract to an end, notwithstanding that he was in breach himself.
113. For these propositions Mr Pritchett relied upon a number of authorities. In respect of the options available to a purchaser where the vendor is in repudiatory breach he cited Megarry & Wade (eighth edition), paragraph 15-091. For the proposition that a vendor can accept a repudiation by the purchaser even when he is himself no longer RWA to give VP, he took me to Rightside Properties Ltd v Gray [1975] Ch 72, a decision of Walton J. In that case the vendor had served an invalid notice to complete on the purchaser. When the purchaser did not comply with the notice the vendor purported to terminate the contract by accepting the purchaser's alleged repudiation. Walton J held that it was in fact the vendor who had repudiated, and that the purchaser was entitled to accept that repudiation and recover damages without having to show that it was at any stage itself RWA to perform its own contractual obligations. At pages 87-8 the learned Judge said:

"In my judgment, in equity as well as at common law the wrongful repudiation by one party of his obligations under the contract entitles the other to accept such repudiation, and thereby put an end to the contract, and such other is, as a consequence, discharged from performing any conditions precedent which it would otherwise fall upon him to discharge…

… [T]here was at all times until, and there was persisted in during, the trial, a wrongful repudiation. It appears to me that in consequence the plaintiffs were never at any time under any obligation to show that they were "able" to perform their part of the contract. "Ability," in this connection, means arranging the finance, which, under modern conditions, could be done either by arranging a mortgage or a sub-sale, and doubtless there are other methods as well. But they all involve some form of preparation on the part of the person raising the finance; and it appears to me pessimi exempli if the vendor was in a position to say, "Because you were not on a particular day ready with your finance, you cannot claim damages against me. True it is that it would have been perfectly useless for you to make the preparations because I told you I was not going to complete, but I can now huff you for having failed to carry out this perfectly useless exercise." This is the morality of a game, not of a serious legal contest."

114. Particular reliance was placed by the claimant on the decision of the House of Lords in Fercometal SARL v MSC Mediterranean Shipping Co SA [1989] AC 788. There charterers prematurely exercised a right to cancel the charterparty. As a result, the charterers were guilty of a repudiatory breach thereof. The charterers loaded the cargo onto another ship. The shipowners did not accept the premature termination as bringing the charterparty to an end, and served a notice of readiness to load. In fact, they were not ready to load by the time specified, and so the charterers exercised their cancellation rights again. The House of Lords held that the second notice was effective despite the charterers' own inability to load the cargo because it was on another ship. Since the shipowners had not accepted the charterers' repudiation, their own obligation to have the ship ready for loading at the specified time continued. Mr Pritchett drew attention to the following passages in the speech of Lord Ackner (with whom the other members of the court agreed), at pages 799-805:

"When one party wrongly refuses to perform obligations, this will not automatically bring the contract to an end. The innocent party has an option. He may either accept the wrongful repudiation as determining the contract and sue for damages, or he may ignore or reject the attempt to determine the contract and affirm its continued existence. Cockburn C.J. in Frost v. Knight, L.R. 7 Ex. 111, 112-113, put the matter thus:

"The law with reference to a contract to be performed at a future time, where the party bound to performance announces prior to the time his intention not to perform it, as established by the cases of Hochster v. De La Tour, 2 E. & B. 678 and The Danube and Black Sea Co. v. Xenos (1863) 13 C.B.N.S. 825 on the one hand, and Avery v. Bowden (1855) 5 E. & B. 714 , Reid v. Hoskins (1856) 6 E. & B. 953 , and Barwick v. Buba (1857) 2 C.B.N.S. 563 on the other, may be thus stated. The promisee, if he pleases, may treat the notice of intention as inoperative, and await the time when the contract is to be executed, and then hold the other party responsible for all the consequences of non-performance: but in that case he keeps the contract alive for the benefit of the other party as well as his own; he remains subject to all his own obligations and liabilities under it, and enables the other party not only to complete the contract, if so advised, notwithstanding his previous repudiation of it, but also to take advantage of any supervening circumstance which would justify him in declining to complete it. On the other hand, the promisee may, if he thinks proper, treat the repudiation of the other party as a wrongful putting an end to the contract, and may at once bring his action as on a breach of it, and in such action he will be entitled to such damages as would have arisen from the non-performance of the contract at the appointed time, subject, however, to abatement in respect of any circumstances which may have afforded him the means of mitigating his loss"

…If an unaccepted repudiation has no legal effect ("a thing writ in water and of no value to anybody" - per Asquith L.J. in Howard v. Pickford Tool Co. Ltd. [1951] 1 K.B. 417, 421) how can the unaccepted acts of repudiation by the charterers in this case provide the owners with any cause of action? It was accepted in the Court of Appeal by counsel then appearing for the owners, that it was an inevitable inference from the findings made by the arbitrators that the Simona was not ready to load the charterers' steel at any time prior to the charterers' notice of cancellation on 12 July. Mr. Boyd, who has appeared before your Lordships for the owners, has not been able to depart from this concession. Applying the well established principles set out above, the anticipatory breaches by the charterers not having been accepted by the owners as terminating the contract, the charterparty survived intact with the right of cancellation unaffected. The vessel was not ready to load by close of business on the cancelling date viz. 9 July and the charterers were therefore entitled to and did give what on the face of it was an effective notice of cancellation.

…When A wrongfully repudiates his contractual obligations in anticipation of the time for their performance, he presents the innocent party B with two choices. He may either affirm the contract by treating it as still in force or he may treat it as finally and conclusively discharged. There is no third choice, as a sort of via media, to affirm the contract and yet to be absolved from tendering further performance unless and until A gives reasonable notice that he is once again able and willing to perform. Such a choice would negate the contract being kept alive for the benefit of both parties and would deny the party who unsuccessfully sought to rescind, the right to take advantage of any supervening circumstance which would justify him in declining to complete."

115. Applying these principles to the present case, the claimant submits that the defendant could have treated itself as discharged from performance upon the basis that (as was common ground) at some point during the NTC period of 10 working days, it had become impossible for the claimant to achieve VP. The defendant could then have elected to treat the breach as repudiatory, and to bring the contract to an end. However, the defendant had not taken that course, and wished to keep the contract alive. That being so, there continued to be an obligation on the defendant's part to perform its own obligations under the Contract. Thus, at the end of the operative period of the NTC, not having accepted the claimant's repudiation and terminated the Contract, the defendant was obliged either to complete under the Contract in accordance with the NTC and sue for damages for breach of the VP obligation, or immediately intimate and bring a claim for specific performance. Having done neither, it was itself guilty of a repudiatory breach, which the claimant had accepted, thus rescinding the Contract.
116. The defendant submitted that the claimant was in error in contending that it was entitled to terminate the Contract as a result of the defendant's breach in not tendering payment by the specified time. It is not irrelevant that the claimant itself was not RWA to complete by the time when completion was actually due. The latter point in time is relevant to assessing whether there was a breach of contract or an entitlement for a party to rescind. If a party is not RWA to complete on matters of substance by the point of completion, that party cannot itself rescind for the other's breach, regardless of what the position was at the time the notice was given. The rescinding party must be "innocent" at the time of the rescission. Thus, in the present case the claimant's inability to complete with VP on the 22 December 2016 relieved the defendant of performing the concurrent and dependent obligation to pay or tender the purchase price. The claimant's breach either meant that there was no breach of contract by the defendant or it precluded the defendant's breach from being regarded as fundamental.
117. Dr Wilkinson relied upon the approach of HH Judge Mackie QC in the Midill case at first instance.^[14] The issue in that case was whether the vendor of shares was RWA to complete at the time the notice to complete was given and throughout the operative period. The purchaser, who was at all material times admittedly unable to complete, was arguing that the vendor's notice to complete was invalid and therefore ineffective to make time of the essence and to entitle the vendor to rescind the contract. The case was essentially concerned with the nature of the circumstances required to satisfy RWA. The focus was not, as here, on circumstances where the notice to complete had been validly given (as I have held the claimant's NTC to be) but during the notice's operative period the vendor ceases to be able to give VP by the final day thereof, and is thereby in breach of its own obligations.
118. Moreover, as the following passages from the learned Judge's judgment show, the point in issue in the present case, namely whether a party, who is not itself RWA to complete on matters of substance by the point of completion, is thereby precluded from rescinding for the other's fundamental breach, appears to have been common ground and/or conceded by the vendor who was claiming to have successfully rescinded. It was not, therefore, the subject of argument or of reasoning in the judgment:

"9 … Condition 6 requires that the party giving notice to complete must itself be ready, able and willing to complete. Midill asserts that Gomba was not, at any relevant time, in a position to tender the documents and other matters … Further Midill submits that whatever the degree of readiness required of the notice giver when he first gives notice he must be completely ready, able and willing to complete on the last day of the period to avoid himself either being in breach or relieving the other party of the need to tender performance.

10 … Mr Thompson for Gomba accepts that the Vendor has to remain ready, able and willing throughout the notice period but submits with reference to Quadrangle Development -v- Jenner [1974] 1WLR 68, CA that there is no obligation to carry out every task instantaneously, an impossibly high and unreasonable requirement which no court has ever stipulated. The Vendor is required to be ready to complete the matters of substance and to effect any administrative arrangements within a reasonable time."

(My emphases)

119. For these reasons I do not find that Midill provides me with much assistance in resolving the present issue.
120. In his written closing submissions Dr Wilkinson did not refer to the House of Lords' decision in Fercometal (above), save in connection with his alternative estoppel argument. However, in addressing me orally he submitted that that decision was not a helpful analogy in the present case, as it concerned an independent breach of contract by giving an invalid notice to terminate the charterparty, rather than breach of a concurrent and dependent obligation. Similarly, he contended that the Rightside decision was not in point, as it also involved a wrongful notice to complete and time had not therefore been made of the essence; nor was the breach a continuing one. He referred me instead to the decision of the High Court of Australia in Foran v Wight (1989) 168 CLR 385.
121. Foran concerned a contract for the sale of land. The time for completion had been made of the essence and it was due to take place by 22 June 1983. It was a condition of the contract that before completion the vendor would obtain registration of a right of way. On 20 June the vendor notified the purchaser that it would not be able to do this by that date and could not complete on that date. By 20 June the purchaser had not been able to raise funds to purchase the property, and made no further attempt to do so. On 24 June the purchaser terminated the contract on the ground of the vendor's failure to complete. The purchaser then sought the return of its deposit. The majority of the court concluded that the purchaser was entitled to recover the deposit. However, the members took different approaches to the right of a party who was himself in breach of contract to accept a repudiation by the other party.
122. One judge, Gaudron J, considered that Fercometal was correct, and that the vendor's notification of an inability to complete meant that the purchaser was not obliged to tender the purchase price and was entitled to accept the vendor's repudiatory breach without having to establish that it was itself RWA to complete on the date for completion. Deane J considered that where both parties were in breach either of them could accept the other's repudiation and terminate the contract, recovering any deposit but not suing for damages. Brennan and Dawson JJ were of the view that where one party notified the other of its refusal or inability to perform its contractual obligations, and the other did not accept the repudiation until later, the latter must establish that when it received notification it was RWA to fulfil its obligations. It was not, however, required to take further steps. These two members of the court were of the view that on the facts the purchaser was RWA at the time of notification. Finally, Mason CJ, who dissented in the result, held that since the purchaser had not accepted the repudiation before the completion date, it was required to prove it was RWA to complete on the completion date, which it had not done.
123. Foran is of considerable interest for its exploration of the tricky issues involved. Dr Wilkinson submitted that the majority of the members of the court were of the opinion that a party not RWA to perform its own obligations could not accept the other's unwillingness or inability to perform their obligations as a repudiatory breach. Whether or not that analysis of the decision is strictly accurate, the multiplicity of views expressed by the High Court of Australia render it very difficult to identify precisely what principles are to be derived from it. I share the view of the learned authors of Jones & Goodhart (second edition) who, when posing the question whether a party can accept a repudiation by the other party even when it is not itself RWA to perform the contract, state that in the light of Foran so far as Australian law is concerned the answer is "unclear".^[15]
124. However, the authors are in no real doubt that English law provides a positive answer to that question, based on the Rightside and Fercometal decisions. They point out that such a position is not optimal, in that it presents problems for a party who is not in breach himself and wishes to keep the contract alive in the face of repudiation by the other side. In those circumstances that innocent party may be driven to incur the expense and trouble of making a useless tender of performance in order not to provide the repudiator with an opportunity of himself terminating the contract by accepting the repudiatory non-performance of the "innocent" party. The authors suggest that hard cases might be mitigated by recourse to estoppel, or by restricting Fercometal to cases where specific performance is not an option.^[16]
125. However, I note that most, if not all, of the alternative approaches to this problem discussed by the authors have disadvantages of their own. In support of the Fercometal approach is the fact that it avoids what Mr Pritchett described as a "Mexican stand-off", where a party who is in breach of an essential term of the contract cannot terminate it if the other party is also in breach, so that the contract is in limbo.

Conclusion on right to rescind

126. My conclusion in respect of this issue is subject to the defendant's estoppel argument, which I discuss in the next section.
127. With that qualification, I accept Mr Pritchett's submissions on this issue. In the light of his acknowledgment that the claimant itself was in repudiatory breach of the Contract in failing to provide VP, the defendant in my view had the options described by Lord Ackner in Fercometal. The defendant did not accept the claimant's repudiation and terminate the Contract. Rather, the defendant wished to keep it alive. In those circumstances, the Contract was alive for both parties, and the defendant was obliged to complete (claiming damages if so advised), unless it immediately sought specific performance (again, with a claim for damages if so advised). The defendant did not complete. Nor did it claim specific performance until it counterclaimed many months later in these proceedings on the basis of its own notice to complete. That notice was given only in July 2017 notwithstanding that it was threatened in the December 2016 email interchange between solicitors. A claim for specific performance was only formally intimated on 23 May 2017. It may reasonably be inferred that this was because at an earlier stage the defendant was not in a financial position to complete and to establish grounds for specific performance.
128. In my view, in failing to complete by the deadline, the defendant was in repudiatory breach of the Contract. The claimant was entitled to accept this repudiation notwithstanding its own breach, and did so by serving its notice of rescission a few hours after the 1pm deadline for completion. The significance of that deadline had been clear to the defendant and its legal advisers throughout. They would always have been aware that if completion did not take place by then the claimant might well seek to terminate the Contract. That option is expressly provided for in the Standard Conditions. The defendant and its legal advisers had also been well aware of the continuing presence of the occupants and chattels at Hillbit, having inspected it on more than one occasion in December 2016. They would, therefore, have been aware of their options well before the expiry of the operative period.
129. Therefore, subject to Dr Wilkinson' alternative argument based on estoppel, I would conclude that the claimant lawfully rescinded the Contract on 22 December 2016.

(5) Was the claimant estopped from requiring the defendant to complete?

130. As indicated earlier, the defendant argues that, even if the claimant was RWA to complete when the NTC was served, by representing to the defendant that it "could not give vacant possession within the period required for completion"^[17] and by not taking steps to vacate the site generally or after the defendant had indicated that funding was in place subject to VP being given, the claimant was estopped from requiring the defendant to complete and/or had waived or forborn to rely upon such right and/or had precluded time being of the essence.
131. The possibility of an estoppel arising was mentioned by Lord Ackner in his speech in Fercometal (above). He said:

"Towards the conclusion of his able address, Mr. Boyd … submitted that the charterers' conduct had induced or caused the owners to abstain from having the ship ready prior to the cancellation date. Of course, it is always open to A, who has refused to accept B's repudiation of the contract, and thereby kept the contract alive, to contend that in relation to a particular right or obligation under the contract, B is estopped from contending that he, B, is entitled to exercise that right or that he, A, has remained bound by that obligation. If B represents to A that he no longer intends to exercise that right or requires that obligation to be fulfilled by A and A acts upon that representation, then clearly B cannot be heard thereafter to say that he is entitled to exercise that right or that A is in breach of contract by not fulfilling that obligation."

On the facts, Lord Ackner held that the owners had not established (1) that there had been a representation by the charterers to the effect that they had surrendered their option to exercise a right of cancellation, and (2) that the owners had been induced to act upon that representation by not presenting the vessel for loading on time.^[18] The owners' estoppel argument therefore failed.

132. In Dr Wilkinson's written closing submissions the estoppel point was put in this way:

"The reason [the defendant] did not actually raise the money is because [the defendant] was told that [the claimant] would not be clearing the site - which was said even after the NTC was served. The clear evidence of Tariq Aziz was that the Majid brothers indicated that they would not provide vacant possession, but would be staying on even if [the defendant^[19]] did complete. That was tantamount to indicating that even if [the defendant] did draw down bridging finance [the defendant] would not be getting vacant possession. These indications were given on 9 or 10 December, and again on 13 December, and were in addition to the indications that [the claimant] needed more time that were given leading up to December 2016, and indeed on 1 December by [the claimant's] solicitor and in the 2 December email. (Paragraph 116)

"It is clear on balance … that representations were made by the Majids that VP would not be given. Those were tantamount to confirming that it was pointless for the money to be tendered because even if tendered the site would not be sold with VP. Even if [the claimant] was entitled to rescind for [the defendant's] breach (which is not the case because the default was excused), [the claimant's] intimations that VP would not be given constitute conduct estopping time from being of the essence or estopping [the claimant] from terminating for breach…" (Paragraph 138)

133. There are a number of problems with this submission. First, even if the indications said to have been given by the Majid brothers on 9 or 10 and 13 December 2016 are established, they cannot in my judgment amount to a representation that it was pointless for the money to be tendered and that therefore the defendant was relieved from complying with the NTC. Indeed, Mr Aziz's own oral evidence in re-examination was to the effect that at the meetings in question (which he said took place during the operative period of the NTC) Ifthikar was in fact urging the defendant to complete. The representation relied upon by the defendant is therefore simply not established.
134. Second, if at those meetings the Majid brothers stated that they would not be providing VP by the end of the operative period, that would have reinforced the anticipatory breach which the claimant has already acknowledged by its acceptance that at some point during the operative period it would have become impossible to provide VP by the specified date.
135. Third, for the reasons set out earlier in this judgment, I do not accept that the reason the defendant did not actually raise the money was because of anything that it had been told by the claimant about the timing of VP. I am of the view that there is no sufficient, if any, link between the alleged indications by the claimant and the defendant's failure to raise the purchase price at the material time. There was therefore no reliance such as would be required to establish an estoppel.
136. Finally, and in any event, taking account of the evidence as a whole, I am not satisfied on the balance of probabilities that the alleged statements by the claimant on 9 or 10 and 13 December 2016 are established. Mr Aziz's evidence about them was disputed by Ifthikar and Baber, and such statements by the Majid brothers would have been entirely inconsistent with the very clear written assurances which at the same time, on their instructions, were being given by Ms Nimmo, as to the claimant's ability to give VP by the end of the operative period of the NTC.^[20] Further, Mr Aziz's oral evidence, while maintaining that "after the NTC" Ifthikar had said that 6 months was needed in order to remove the tenants, was far from clear about the timing of his discussions with the Majid brothers,. These discussions apparently continued well into January 2017, both during and following Mr Aziz's trip to Pakistan.
137. For these reasons the defendant's alternative argument based on estoppel fails. Dr Wilkinson did not develop the other ways in which this point was pleaded, in terms of waiver and/or forbearance. I do not consider that reformulating the argument in either of those ways would advance the defendant's case.

Effect of my conclusions, remaining issues and next steps

138. It follows from my conclusions that the claimant successfully rescinded the Contract by its notice of rescission on 22 December 2016. In those circumstances, the defendant's claim for specific performance of the Contract does not arise.
139. The remaining issue concerns the defendant's claim that it should recover its deposit pursuant to subsection 49(2) Law of Property Act 1925.^[21] The parties agreed that if appropriate this issue would be the subject of further submissions after judgment.
140. I invite the parties to agree the terms of a draft order reflecting the conclusions in this judgment. The draft should also cover any order for costs, and directions for the resolution of the remaining issue relating to the deposit. The draft should be sent to me for consideration by the end of 14 days following the date on which this judgment is handed down. Failing agreement on the terms, rival drafts should be sent to me by the end of the same 14 day period.

Note 1   A further rent schedule as at 2016 was apparently prepared by Baber, identifying 9 units, but with the same 5 occupants as shown in the earlier schedule.    [Back]

Note 2   Mr Mohammed Hashemi.    [Back]

Note 3   File Note 5 December 2016.    [Back]

Note 4   Paragraph 16 of the Counterclaim.    [Back]

Note 5   Amended Defence and Counterclaim, paragraph 8A.    [Back]

Note 6   Amended Defence and Counterclaim, paragraph 10A.    [Back]

Note 7   I understand this to be a reference to MSL (UK) Limited, a warehousing company in Oldham.    [Back]

Note 8   See defendant’s closing submissions, paragraph 36.    [Back]

Note 9   See paragraph 78 of this judgment.    [Back]

Note 10   Midill (97PL) Limited v Park Lane / Gomba International [2009] 1 WLR 2460.    [Back]

Note 11   See paragraph 27 of this judgment.     [Back]

Note 12   See paragraph 26 of this judgment.    [Back]

Note 13   See paragraphs 68 to 71 of this judgment.    [Back]

Note 14   See paragraph 88 of this judgment.    [Back]

Note 15   Op. cit. page 69.    [Back]

Note 16   Ibid pages 69-72.    [Back]

Note 17   Amended Defence and Counterclaim, paragraph 8A.    [Back]

Note 18   [1989] AC 788, at pages 805F-806E.    [Back]

Note 19   The submission says “the claimant” but the sense indicates that it should have said “the defendant”.    [Back]

Note 20   See paragraphs 33, 44 and 46 of this judgment.    [Back]

Note 21   Amended Defence and Counterclaim, paragraph 10A.    [Back]