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England and Wales Land Registry Adjudicator
You are here: BAILII >> Databases >> England and Wales Land Registry Adjudicator >> Moses v Silk (Regents Park Road) Ltd (Contracts and options : Contracts for sale) [2016] EWLandRA 2015_0263 (18 January 2016)
URL: http://www.bailii.org/ew/cases/EWLandRA/2016/2015_0263.html
Cite as: [2016] EWLandRA 2015_0263, [2016] EWLandRA 2015_263
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REF/2015/0263
LAND REGISTRATION DIVISION, PROPERTY CHAMBER
FIRST - TIER TRIBUNAL
IN THE MATTER OF A REFERENCE FROM HM LAND REGISTRY
BETWEEN
EPHRAIM JOSHUA MOSES
Applicant
- and -
SILK (REGENTS PARK ROAD) LIMITED
Respondent
Property address: land at the rear of 356 and 358 Regents Park Road, London N3 2LJ and land on the west side of 1-1A Station Road, London N3 2SB
Title numbers: AGL75289, AGL118628, AGL153051
Before: Judge Stephen Jourdan QC
Sitting at: 10 Alfred Place, London
On: 29 October 2015 followed by written submissions
Applicant's Representation: Tom Beasley instructed by Silverman Sherliker
Respondent's Representation: Russell Stone instructed by Whitmore Law
________________________
DECISION
________________________
Contract for sale of land - unilateral notices registered - application to remove them based on contention that contract terminated - completion of sale to take place after completion of works by buyer - what term to be implied as to the works - whether buyer breached contract and if so whether breach was repudiatory - whether renunciation by buyer - whether seller entitled to serve notice to complete
Cases referred to
Deutsche Trustee Company v Cheyne Capital (Management) UK [2015] EWHC 2282 (Ch)
Jolley v Carmel [2000] 2 EGLR 153 and [2000] 3 EGLR 68
Urban 1 (Blonk Street) Ltd v Ayres [2014] 1 WLR 756
Fercometal SARL v Mediterranean Shipping Co SA [1989] AC 788
Hongkong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26
Ampurious Nu Homes Holdings Ltd v Telford Homes (Creekside) Ltd [2013] 4 All ER 377
Introduction
1. This is a dispute about whether a contract for the sale of land by the Applicant, Mr Ephraim Joshua Moses ("Mr Moses") to the Respondent, Silk (Regents Park Road) Limited ("Silk"), was validly terminated by Mr Moses. Silk registered unilateral notices against the registered titles to the land to protect its interest under the contract. Mr Moses applied to have those notices removed, contending the contract had been terminated. Silk objected, contending the contract had not been terminated. The dispute was then referred by HM Land Registry to this Tribunal. It is necessary for me to determine what the contract required of Silk, whether Silk breached or renounced its obligations under the contract, and if so, whether that was sufficient to entitle Mr Moses to terminate the contract, and whether Mr Moses was entitled to serve notice to complete.
The witnesses
2. At the hearing on 29 October 2015, I heard evidence from Mr Moses and from Mr Rishipal Singh, a director of Silk. Mr Moses was an irascible and argumentative witness, who clearly felt very strongly that he was right and Silk was wrong in this dispute. When he could be persuaded to listen to and answer the question put to him, rather than objecting that the question was pointless, or talking about other matters, he tended to answer very quickly and sometimes would then later seek to revisit and revise his evidence. I do not think it would be safe to make findings based solely on his evidence where that evidence was disputed.
3. Mr Singh gave his evidence in a straightforward way, although he was often difficult to hear, which I think was due to nerves. I think he was doing his best to recall the relevant events. However, although I have had regard to the evidence given by Mr Singh in making my findings of fact on matters where the facts are in dispute, I have tested his recollection against the contemporaneous documents and the inherent probabilities and, as will be seen, have decided that, in some respects, his recollection was inaccurate.
Written submissions and the application to admit further evidence
4. Only one day had been allowed for the hearing. This was long enough to get through the evidence, but not long enough for submissions. I directed an exchange of written submissions. I said that if, having read those, I felt oral submissions would assist me I would direct a further hearing. I am very grateful to both counsel for their full and helpful submissions. Having given careful consideration to those, I do not think it necessary to direct a further hearing.
5. I also received an application by Silk for permission to admit further evidence, and an objection to that application by Mr Moses. I indicated that I would consider that application at the same time as I reviewed the submissions. For the reasons I give below, I refuse the application.
The facts
6. Mr Moses is the registered proprietor of three adjacent parcels of land. The first is land at the rear of 356 Regents Park Road (title number AGL 75289). The second is land on the west side of 1-1A Station Road (title number AGL 153051). This is a very small sliver of land to the rear of the first parcel. The third is immediately to the north-east of the first and second parcels, and is land to the rear of 358 Regents Park Road (title number AGL 118628).
7. On 21 April 2004 Mr Moses obtained planning permission from the local planning authority, the London Borough of Barnet ("Barnet LB"), to erect a 2 storey building containing a live/work unit ("the First Building") on the first and second parcels of land, at the rear of 356 Regents Park Road, which was amended on 26 November 2004. On 15 February 2005 he obtained planning permission from Barnet LB to demolish the existing building on the third parcel, at the rear of 358 Regents Park Road, and the erection of a 2 storey building adjacent to the First Building containing two live/work units ("the Second Building"). In each case, it was a condition that the development had to be begun within 5 years of the grant of permission. So development had to be begun by 25 November 2009 in the case of the First Building and by 14 February 2010 in the case of the Second Building, or the planning permissions would cease to have effect to permit those developments. I will refer to the works permitted by those planning permissions as "the Works".
8. On 14 October 2013, Mr Moses entered into a contract ("the Original Contract") to sell the three parcels of land ("the Property") to Silk for £374,000. A deposit of £32,500 was paid. The completion date was 11 November 2013. The Original Contract was conditional on satisfactory searches. Special Condition 12 provided: "The Vendor shall on completion assign all rights and ownership of the drawings, reports and associated documents relating to" the 2004 and 2005 planning permissions "and any other relevant planning permissions ("Planning Permissions") and shall provide to the Purchaser hard copies of and electronic copies of all such drawings, reports and associated documents likely to be required for the development of the Property pursuant to the Planning Permissions". The Contract incorporated the Standard Conditions of Sale (5 th edition) and the Contract Rate was 4% above Barclays Bank base rate.
9. Prior to the Original Contract being entered into, Mr Moses sent Mr Singh two emails dated 3 June 2013, from Mr Moses to Len Davies, a building inspector at Barnet LB. These were in response to a request by Mr Davies for details of when Mr Moses had started work on the developments for which planning permission had been granted. It gave details of works that Mr Moses had carried out pursuant to the permissions within the 5 year periods. In relation to the 2004 permission, relating to the first and second parcels of land, the work was quite extensive. In relation to the 2005 permission, relating to the third parcel of land, the work comprised only strengthening works to the side wall of the First Building, in order that it could serve as a party wall supporting both the First and Second Buildings. The first email said, "I trust these documents completely clarify we started works well within the period required". The first email also recorded that Mr Moses had asked Barnet LB whether, if he provided evidence of implementation of the planning permission, Barnet LB would provide a letter confirming that, and that Barnet LB had said they would not; the planning department: "do not, as a very strict policy, ever write letters saying Planning Consent has been implemented". The second email attached a photo taken on 22 December 2008 of the party wall.
10. Mr Moses also told Mr Singh that Mr Moses was quite satisfied that he had implemented the permissions within the 5 year time limit.
11. The condition of the Original Contract requiring satisfactory searches was satisfied on 19 November 2013. Under Special Condition 11.6, completion was due 10 working days after that. Before that date, on 13 November 2013, Mr Moses' solicitors served a purported notice to complete within 10 working days. There was an issue about the validity of that notice.
12. On 28 November 2013, at 3 am after a long meeting, Mr Moses and Mr Singh both signed a one page handwritten supplemental agreement ("the Supplemental Agreement"). This provided as follows (with Mr Singh referred to as "Rishi" and Mr Moses as "Josh"):
"1 Rishi to pay Josh in cleared funds via solicitor 29/11/13 by 2 pm £75,000 as payment on account of both Finchley sites.
2 Rishi to submit Planning Application for residential use by Monday 9/12/13 copy to you.
3 Rishi can continue with building work on bldg work on both sites from 2/12/13.
4 Rishi to get & supply results on progress of Planning Application.
5 Rishi to complete purchase 10 days after Planning Consent is received.
6 Rishi to complete purchase 10 days from Practical Completion if TP Application fails".
13. Mr Singh and Mr Moses gave different evidence about the circumstances in which the Supplemental Agreement was signed. Mr Singh said that it came to his attention that the planning permissions had lapsed and it was being disputed whether they had been implemented prior to expiration and whether they were still valid, and he told Mr Moses that, due to the lack of planning consents, Silk was unable to obtain funding and therefore could not complete the purchase. Mr Moses said that doubts about the 2004 and 2005 planning permissions had nothing to do with the Supplemental Agreement.
14. There were emails passing between the parties' solicitors on 26 and 27 November, which include a query raised by Silk's lender's solicitor, about why the titles were only recently transferred to Mr Moses, but which make no reference to any issue about planning. Nor is there any reference in the correspondence to any such issue until 4 January 2014. I do not, therefore, accept Mr Singh's evidence that concerns about the planning position had been communicated in the period between the Contract and the Supplemental Agreement. I do not think there were any issues about the implementation of the permissions until January 2014. I think that, if there had been such issues, the Supplemental Agreement would have provided for what would happen if it was not possible to sort out those issues and progress the building works pursuant to the permissions. Clause 3 of the Supplemental Agreement indicates that neither party saw any obstacle to Silk progressing building works while the residential planning application was pursued.
15. Silk paid the additional £75,000 payment on account required by the Supplemental Agreement and, on 9 December 2013, Silk applied for planning permission to erect three purely residential units on the land. A copy of the application was sent to Mr Moses on the same day.
16. Following the signing of the Supplemental Agreement, Mr Moses' position was that it constituted heads of terms, not intended to be binding unless and until a further agreement was entered into. Silk disagreed. At the hearing before me, it was common ground that the Supplemental Agreement created a binding agreement varying the terms of the Contract.
17. On 12 December 2013, Mr Moses' solicitors served a second notice to complete, on the basis that the provisions for completion in the Original Contract, without regard to the Supplemental Agreement, were still in force. It was common ground before me that this notice was a nullity, given the terms of the Supplemental Agreement.
18. On 3 January 2014, Mr Singh sent Mr Moses a letter from Barnet LB. The letter was not in evidence, but it appears likely, from subsequent emails, that the letter said that, if the 2004 and 2005 permissions had not been implemented within the 5 year time limit, then they had expired. There followed an exchange of emails between Mr Singh and Mr Moses between 4 and 9 January 2014. Mr Singh said that Barnet LB had told him the planning had expired. Mr Moses said it had not.
19. Planning permission for the three purely residential units was refused on 4 March 2014.
20. On 11 March 2014, Mr Moses' solicitors wrote to Silk's solicitors, confirming that the Supplemental Agreement was accepted to be a binding agreement and that the second notice to complete was withdrawn. Thus from that time, Mr Moses accepted that the Original Contract had been varied by the Supplemental Agreement. I will refer to the Original Contract as so varied as "the Contract".
21. It is apparent that, subsequently, Mr Moses wrote to Barnet LB seeking to persuade them that the 2004 and 2005 permissions had been implemented within the 5 year time limit. The start of that correspondence was not in evidence. There was in evidence an email dated 4 April 2014 from Mr Springthorpe, a senior planning enforcement officer at Barnet LB to Mr Moses. This told Mr Moses that Mr Springthorpe had not forgotten about the matter and wanted to ask some questions. There then followed an exchange of emails between Mr Moses and Mr Springthorpe concerning evidence which Mr Moses had submitted.
22. This concluded on 9 April 2014, when Mr Springthorpe wrote to Mr Moses. He said "... in my opinion it would not be expedient to pursue further formal enforcement action in the event you proceeded to carry out the remainder of the development" approved by the 2004 and 2005 permissions. He added: "should you require a formal declaration from the council, you may apply for a Certificate of Lawful Development".
23. Mr Singh's evidence was that Mr Moses told Mr Singh, after the planning application for the three residential units was refused, that Mr Moses would get a certificate of lawfulness from Barnet LB, in return for which Mr Singh agreed, subject to contract, that Silk would then complete the sale. Mr Moses said he had not agreed that. Having regard to the correspondence in evidence, I do not think Mr Moses did agree to get a certificate, but I do think he agreed to submit to Barnet LB evidence to try and satisfy them that the 2004 and 2005 permissions had been implemented. That explains why he did write to Barnet LB with that evidence following the refusal of the planning application. There is no reference in any of that correspondence to a certificate of lawfulness.
24. The email of 9 April 2014 from Mr Springthorpe was not forwarded to Silk until 23 June 2014. Mr Moses was unable to explain why he had not forwarded the email from Mr Springthorpe to Mr Singh until then.
25. In the meantime, on 4 April 2014, Mr Moses' solicitors wrote to Silk's solicitors. They said that the Works should take approximately 2 months to complete, but, to be reasonable, Mr Moses would allow 4 months, so that the Works must be completed by 31 July 2014. The letter said it constituted "notice that in respect of the aforesaid sixth provision of the supplemental agreement time is of the essence and the works must be completed by 31 July 2014". By the end of the hearing, it was common ground (correctly) that it was not open to Mr Moses to make time of the essence for the completion of the Works by that letter.
26. On 11 April 2014, Silk's solicitors replied. They said there were many formalities to complete before any building work could commence. The issue of services was still outstanding, party wall matters were still pending, valid live planning permission needed to be confirmed, and building control approval was still required. A 9 months construction period was realistic, but Silk would not start the Works until such time as all the necessary formalities were formalised. Silk believed that 15-18 months was a realistic timeframe, but did not accept that even that time frame was binding upon it, as completion was based on an event not estimated time periods. They asked for confirmation that the position set out was accepted so that Silk might continue to incur costs in progressing with the preconstruction formalities. They did not say that Mr Moses had agreed to get a certificate of lawful development from Barnet LB. If there had been an agreement by Mr Moses to do that, I would expect that to have been recorded in this letter.
27. On 14 April 2014, Mr Moses' solicitors replied saying that the Supplemental Agreement did not envisage delay while planning permission was obtained after refusal of the residential application, and that Silk should have sorted out building control and party wall matters already. They said that Mr Moses did not believe that Silk had any genuine intention to commence the Works and had shown no appetite to do what was necessary to ensure the transaction proceeded to completion. They did not provide a copy of Mr Springthorpe's email of 9 April 2014. However, Mr Moses did send a copy of that to Silk on 23 June 2014.
28. On 20 August 2014, Mr Moses' solicitors served a third notice to complete under Standard Condition 6.8. The notice said that the Works should have been completed by 31 July 2014 and therefore the sale should have been completed by 10 August 2014. It required completion to take place within 10 working days of the notice, with time of the essence. On 4 September 2014, Silk's solicitors replied saying that the notice to complete was invalid as Silk had not breached the Contract. They said that Silk had been working on required administrative tasks in an effort to complete the matter, including arranging the connection of services, without which the Works could not be completed. Silk hoped to resolve these issues relatively soon and if that transpired would endeavour to complete prior to the completion of the Works.
29. On 8 September 2014, Mr Moses' solicitors replied saying that time for completing the Works was made of the essence by the letter of 4 April 2014 and time was made of the essence for completing the purchase by the notice to complete, and the Contract: "... is now void in the light of your client's failure to complete".
30. On 16 October 2014, Mr Moses applied to the Land Registry to cancel the unilateral notices. Silk objected on 11 November 2014. On 10 April 2015, the Land Registry referred the matter to this Tribunal under s.73(7) of the Land Registration Act 2002.
31. Statements of Case were exchanged in May and June 2015. Mr Moses' Statement of Case alleged that the Supplemental Agreement required the Works to commence on or after 2 December 2013, that the Works were to be completed by 31 July 2014, a completion date was set for 10 August 2014, and the contract was determined by a notice to complete expiring on 3 September 2014 and terminated on that date. It alleged that the Supplemental Agreement was an "understanding in principle" although, as I have said, at the hearing it was accepted by Mr Moses that the Supplemental Agreement had varied the Original Contract. Silk's Statement of Case took issue with those allegations.
32. On 17 June 2015, Silk applied to Barnet LB for certificates of lawfulness in respect of the developments permitted by the 2004 and 2005 permissions, and certificates were granted by Barnet LB on 12 August 2015.
33. Witness statements were exchanged in August 2015.
34. On 18 September 2015, Silk's solicitors wrote to Mr Moses' solicitors, saying that the certificates of lawful development had been obtained and that Silk was willing to waive any outstanding matters and complete the transaction.
35. Very shortly before the hearing, skeleton arguments were exchanged and then further witness statements on each side. This was the first time that the real issues between the parties were set out clearly. Sensibly, neither side objected to the other's very late witness statements, nor to additional evidence which emerged in the course of Mr Moses' oral evidence. There is, however, an issue about whether Mr Moses is entitled to rely on events occurring after 16 October 2014 to justify the cancellation of the unilateral notices.
The application for permission to adduce further evidence
36. The new evidence that Silk wished to adduce was an email sent by Mr Moses to Barnet LB on 3 February 2014. It attached proposals intended to address some points that Barnet LB had indicated were unacceptable in Silk's planning application for residential development. It was submitted that this email was inconsistent with evidence that Mr Moses gave.
37. That email does not seem to me to be relevant to any of the issues in the case. All it shows is that Mr Moses was trying to ensure that Barnet LB gave permission for the residential development on the sites. That is hardly surprising. If such permission was given, then under the Supplemental Agreement, the sale would complete 10 days after permission was given. If permission was not given, then Mr Moses would have to wait until practical completion of the Works.
38. Even if I had thought that the email was relevant, and likely to be important in reaching my decision, I would not have admitted it. I did not find the reasons given for why it had not been adduced in evidence before or at the hearing persuasive.
The issues
39. The principal issues arising from the parties' closing submissions can be summarised as follows:
(1) What obligation is implicit in clause 6 of the Supplemental Agreement: "Rishi to complete purchase 10 days from Practical Completion if TP Application fails"?
(2) Was Silk obliged to use reasonable efforts to progress the Works from 2 December 2013?
(3) Did Special Condition 12 of the Contract, when read with the Supplemental Agreement, oblige Mr Moses to provide a certificate of lawfulness, and/or to send Silk a copy of Mr Springthorpe email of 9 April 2014?
(4) Did Silk breach its obligations under the Contract?
(5) If so, was the breach sufficiently serious to constitute a repudiatory breach?
(6) Did Silk's conduct constitute a renunciation of the contract?
(7) Was Mr Moses entitled to serve notice to complete on 20 August 2014?
40. Before turning to those issues, I will first explain my approach to ascertaining the meaning of the Contract, as varied, and consider the question of whether I should have regard to events after the application to the Land Registry to cancel the unilateral notices.
The approach to the meaning of the Contract as varied by the Supplemental Agreement
41. The meaning of the Supplemental Agreement, in conjunction with the Original Contract which it varied, is to be ascertained not by reference to what was in the minds of Mr Moses and Mr Singh when they negotiated and signed it, nor by reference to what they said during those negotiations. Rather, interpretation is an objective exercise in which the task is to ascertain the meaning that the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. The starting point is the ordinary, natural and grammatical sense of the language used by the parties. Then one carries out an iterative process, checking the rival meanings of the provision in question against the other provisions of the document and its overall scheme, and investigating their commercial consequences. If one concludes that the language used is unambiguous, then one applies it, even though some other result might be thought more commercially reasonable, and even if it gives a result that is commercially disadvantageous to one of the parties, unless it is clear that something has gone wrong because it produces a result that the parties plainly could not have intended, and it is also clear what was intended. If the language used is capable of bearing more than one ordinary and natural meaning, one prefers the interpretation that is most consistent with business common sense having regard to the commercial purpose of the transaction: see Deutsche Trustee Company v Cheyne Capital (Management) UK [2015] EWHC 2282 (Ch) at [38], approving an earlier summary of many well known authorities.
Should I not only consider the position as at 16 October 2014, but also subsequently?
42. In his Statement of Case and skeleton argument, Mr Moses only addressed events up to 16 October 2014, when the applications to cancel the unilateral notices were made. However, at the hearing, I raised the question of whether I should also consider events subsequent to that date. I suggested that it might be unsatisfactory to freeze consideration of matters at that date, leaving the way open for a future dispute about whether, even if the Contract had not been terminated by that date, it was nonetheless terminated at a later date. In his closing submissions, taking up that suggestion, Mr Beasley submitted that I should, indeed, consider events subsequent to 16 October 2014 and hold that, even if the Contract had not been determined by that date, it was subsequently.
43. Mr Stone, in his closing submissions, objected to that course. He said allegations relating to the period after 16 October 2014 were not raised in the Applicant's statement of case and neither party presented its case or evidence in this way. There would be significant potential prejudice to Silk if it was not able to call further evidence of the steps it took during the period after the original letter purportedly determining the contract. The issue of what happened in that period was not fully explored in evidence or by way of disclosure.
44. I consider that Silk's objections on this point are well founded, and it would be wrong for me to find in favour of Mr Moses, in this Decision, based on what happened after 16 October 2014. However, it seems to me that it also could be unsatisfactory to simply dismiss the application, ignoring what happened after that date. If there was a real possibility that the Contract had been validly terminated by Mr Moses after 16 October 2014, it might be appropriate to give permission to Mr Moses to amend his case to plead reliance on the events of that period, and give directions for a response, disclosure, evidence, and a further hearing before me to determine whether the Contract was determined during that period. I will return to this issue below once I have explained my analysis of the position as at 16 October 2014.
What obligation is implicit in clause 6 of the Supplemental Agreement: "Rishi to complete purchase 10 days from Practical Completion if TP Application fails"?
45. There was no dispute that it is necessary, in order to give business efficacy to clause 6, to imply some obligation on Silk in relation to achieving practical completion of the Works. The question is what term should be implied.
46. Mr Beasley argued that clause 6 is to be read as imposing an obligation on Silk, if the residential planning application failed, to use reasonable efforts to achieve practical completion of the Works within a reasonable time. Mr Stone submitted it only imposed an obligation on Silk to achieve practical completion of the Works within a reasonable time. The difference is subtle, but important. On Mr Stone's formulation, there could be no breach until the expiry of a reasonable time. On Mr Beasley's formulation, there would be a breach if, at any time, Silk failed to use reasonable efforts to progress the Works.
47. It is common ground that, on either formulation, in deciding whether there was a breach of the obligation, it is necessary to take account of all the circumstances which affected the performance of the obligation. Mr Beasley accepted that the obligation to get to practical completion implied that the Works had planning permission and that it follows that an assessment of Silk's actions must take into account any problems that arose with the 2004 and 2005 planning permissions.
48. I was referred to Lewison: The Interpretation of Contracts (5 th ed, 2011) at [6-16], which says: "Where a contract does not expressly, or by necessary implication, fix any time for the performance of a contractual obligation, the law usually implies that it shall be performed within a reasonable time", and provides illustrations of that principle.
49. A number of cases were cited on this issue. I have taken them all into account, but there were two which I think are particularly important. The first is Jolley v Carmel [2000] 2 EGLR 153 (Kim Lewison QC, sitting as a deputy High Court Judge) and [2000] 3 EGLR 68 (Court of Appeal, upholding his decision). It concerned a contract under which the buyer was, within 3 months, to submit a planning application for residential development on the property, and the completion date was to be 28 days after satisfactory planning permission for 16 residential units had been granted to the buyer. Mr Lewison QC reviewed a number of previous authorities, some of which were also cited to me. He held that it was an implied term that the buyer would use reasonable efforts to obtain planning permission within a reasonable time. How long the reasonable time would be would depend on the circumstances which actually existed, including any problems which arose in obtaining permission beyond the buyer's control. Provided the buyer did not act negligently or unreasonably, any delay in obtaining permission attributable to causes beyond the buyer's control would not be a breach of the implied term. A breach of this implied term would not necessarily be repudiatory; it would depend on the gravity of the breach and its consequences. It was not an implied term that the permission had to be obtained within a particular period of time ascertained at the date of the contract. So long as the buyer was complying with its obligation to use reasonable efforts to obtain permission, the condition was still capable of fulfilment. On the facts, he held that there was no breach.
50. The second is Urban 1 (Blonk Street) Ltd v Ayres [2014] 1 WLR 756, a decision of the Court of Appeal where the leading judgment was given by Sir Terence Etherton C. The contract there was for the sale of a flat to be built by the seller, which provided that on completion of the building works, the seller would serve notice on the buyers and completion would then occur on or before 10 days after the notice. The parties did not expressly provide for what was to happen in the event of a delay in completing the works. The works started later than had been intended and were delayed by a variety of factors. Eventually, the buyers wrote purporting to terminate the contract because of what was claimed to be unreasonable delay. The seller proceeded to complete the works and then served notice under the contract calling on the buyers to purchase the flat within 10 days. The buyers refused to proceed with the purchase, claiming they had validly terminated the contract. HHJ Kaye QC, sitting as a High Court Judge, held in the buyers' favour, but the Court of Appeal reversed his decision.
51. The Chancellor agreed with HHJ Kaye QC that, in the absence of any express stipulated date, it was an implied term of the contract that completion of the flat, and hence the consequential completion of the contract, was to be within a reasonable time. What was a reasonable time was a mixed question of fact and law. The obligation to complete the flat within a reasonable time was not a condition, so that any delay in breach of the term, however slight, would be repudiatory and entitle the buyers to terminate the contract immediately. Nor was it a warranty, so that any delay in breach of the term, however serious, would only ever entitle the buyers to damages and not to terminate the contract. Rather, it was an innominate term, where a breach would entitle the buyers to terminate the contract only: (1) if and when it ceased to be equitable to grant the seller specific performance, and (2) which was probably the same date, if and when the delay was such as to go to the root of the contract, that is to say it deprived the buyers of substantially the whole benefit which it was intended they should have under the contract; or alternatively (3) the seller showed that it had no intention of carrying out the contract or, at any event, only to do so in a manner substantially inconsistent with its contractual obligations such as to buyers of substantially the whole benefit which it was intended they should receive under the contract.
53. The Chancellor held that it was not necessary to determine when the flat should have been completed as it was apparent that, even if one took the earliest date, the delay thereafter in completing did not go to the root of the contract. It was necessary to consider what benefit the injured party was intended to obtain from performance of the contract. That was a 125 year lease of the flat. A delay of approximately one month, at most, between the earliest possible date for contractual completion and the buyers' purported termination of the contract could not possibly be said to have deprived the buyers of a substantial part of the benefit of the contract, let alone substantially the whole of the benefit. There was no question of the seller being in anticipatory breach since it is clear that the seller was throughout attempting to complete the works, and to hold the buyers to the contract.
54. It does not appear to have been argued in Ayres that the obligation was to use reasonable efforts to complete the flat within a reasonable time, and Jolley was not referred to. The term implied in Jolley focused on the efforts to be made by the buyer, while that implied in Ayres focused on the result to be achieved by the seller. The Jolley implied term could have been breached even if, ultimately, planning permission had been granted within a reasonable time, because it required reasonable efforts by the buyer from the date the contract was entered into. The Ayres implied term could only be breached once a reasonable time had elapsed. With the Ayres implied term, the seller could delay starting the works provided he made up the time subsequently so as ultimately to complete the flat within a reasonable time.
55. In my view, having regard to the language of the Supplemental Agreement and its commercial context, the right term to imply here is the same as that implied in Ayres - that practical completion of the Works would be achieved within a reasonable time, with the question of whether a reasonable time had elapsed to be assessed in the way summarised in paragraph 52 above, with the benefit of hindsight, not as a fixed period assessed at the date of the Supplemental Agreement. The language of clause 6 of the Supplemental Agreement focuses on the result - practical completion, rather than the process which leads to that result. The commercial context was that Mr Moses had agreed to sell the Property to Silk for a fixed price, and the Supplemental Agreement gave Silk longer to come up with the price than the original Contract, in return for Silk paying an additional £75,000 on account of the purchase price. Mr Moses' commercial interest under the Contract both originally and as amended was in receiving the balance of the purchase price. What mattered to him was whether practical completion was achieved within a reasonable time, not in the efforts Silk made to achieve that result. So, in my judgment, Silk would not have been in breach of the Contract if it delayed in starting the Works provided it made up the time later so as to achieve, overall, practical completion within a reasonable time.
Did Silk have to progress the Works starting on 2 December 2013?
56. Mr Beasley argued that the Supplemental Agreement required Silk to commence taking steps towards practical completion immediately. He said that clause 2 only referred to a change of use and not a more fundamental change to the design. There would obviously have to be some changes regarding finish but not fundamental design changes that would inhibit progress toward practical completion. If Silk wanted to change the design materially, then that was at its own risk and it would not justify delaying the obligation to reach practical completion within the time that it would have taken under the original design starting from 2 December 2013. In any event, the designs that accompanied the new application involved a building that was materially the same as the original designs with a few features that were slightly different. There would therefore been no reason why building works could not have commenced and at least made significant progress while the change of use application was pending.
57. In my view, the ordinary and natural meaning of the Supplemental Agreement is that Silk had a right, and not an obligation, to start work on site prior to determination of the new planning application for purely residential use. An investigation of the commercial consequences of that interpretation does not indicate any ambiguity. Whether it was or was not sensible to start work on site prior to the determination of the residential planning application would depend heavily on the design of the residential units. If they were designed to be similar to the live/work units, then it might be sensible to start work even before the outcome of the residential application was known. If the design was different, it would make no sense to start work until the outcome of the application was known. There was nothing in the wording of the Supplemental Agreement nor as a matter of commercial commonsense to indicate that Silk had to stick with the original designs or a modified version of them; Silk was free to make whatever application it thought had the best chance of succeeding. Clause 3, which provided that Silk: "... can continue with building work on both sites from 2/12/13" was clearly permissive, not mandatory, unlike clauses 4-6.
Special Condition 12 of the Contract
58. Special Condition 12 was, in my view, only concerned with documents already in existence, and did not impose an obligation on Mr Moses to cause new documents to be created. Further, it only obliged Mr Moses to provide documents on completion of the sale. Mr Stone submitted that this was implicitly varied by the Supplemental Agreement so as to require provision of the documents prior to completion. I disagree; no such implicit variation is obvious, nor is it necessary to give business efficacy to the agreement. Condition 12 did not, therefore, oblige Mr Moses to take steps to cause a new document, namely a certificate of lawfulness, to be created. Nor did it oblige him to send Silk a copy of Mr Springthorpe's email of 9 April 2014.
Did Silk breach its obligations?
59. Applying the approach summarised in paragraph 52 above, I must consider whether, on 16 October 2014, taking a broad view, with the benefit of hindsight, in all the circumstances which were by then known to have happened, a reasonable time for achieving practical completion had passed.
60. On 4 March 2014, planning permission for purely residential development was refused. For the reasons I have given above, that represents the start of the reasonable period.
61. Barnet LB were clearly not satisfied at that time that the 2004 and 2005 permissions had been implemented within the 5 year period, and this was known to both parties. Mr Moses therefore agreed with Mr Singh that Mr Moses would submit to Barnet LB evidence to try and satisfy them that the 2004 and 2005 permissions had been implemented, in order to try and overcome that problem. In my view, it was reasonable for Silk to hold off doing anything to progress the Works until the planning position was clarified. If Barnet LB's position was that the 2004 and 2005 permissions had lapsed, then Silk would have to either challenge that view, or apply for a new planning permission, or both. In that situation, only if it was possible to either establish that the 2004 and 2005 permissions were still effective, or to obtain a new permission, would it be sensible for Silk to take steps to progress the Works. If, however, Barnet LB could be persuaded that the permissions had been implemented within the 5 years, that would be unnecessary, and the Works could be progressed without further delay.
62. Mr Beasley argued that Silk had enough information even before 23 June 2014 to be confident that any planning problems could be overcome. He drew my attention to s.56(4) of the Town and Country Planning Act 1990 and extracts from the Encyclopaedia of Planning Law and Practice at [1.002.21] and [P56.01-56.17]. These do show, as he submitted, that very little work needs to be done during the life of the planning permission to keep it alive. He pointed out that Silk had been provided with the emails of 3 June 2013 to Len Davies which explained what work had been done to commence the permitted developments, and with photographs and other documents supporting what was said in that email.
63. It is clear from Mr Springthorpe's email of 8 April 2014 that he had seen the email to Len Davies of 3 June 2013, and was far from satisfied with the information contained in it. It required further explanation from Mr Moses in his email of 9 April 2014 to persuade Mr Springthorpe to write his email of the same date in which he said that it would not be expedient to pursue further formal enforcement action. In the light of that, I consider a reasonable person in Silk's position would have waited until seeing that email of 9 April 2014 from Mr Springthorpe before pursuing the Works.
64. I do not think a reasonable person would have waited longer than that. I consider that Mr Springthorpe's email of 9 April 2014 was all that was required to make it reasonable for Silk to progress the Works. I do not consider that it was reasonable for Silk to delay progress until a certificate of lawfulness was obtained. Mr Springthorpe's email was, in my view, sufficient to satisfy a reasonable buyer that there was no planning obstacle to carrying out the Works. If Silk thought that a certificate of lawfulness would be necessary or desirable in order to help sell the finished units, it could be applied for at the same time as the Works were being carried out.
65. For reasons Mr Moses was unable to explain, he did not tell Silk of his success with Barnet LB until 23 June 2014. In my view, until that date, it was reasonable for Silk to hold off progressing the Works, and any delay in progressing the Works up to that date was not unreasonable.
66. Mr Stone argued that Silk was also entitled to delay progressing the Works until 11 March 2014, because until then, Mr Moses did not accept that the Supplemental Agreement was binding. It is unnecessary for me to form a view on that point, given the conclusion I have reached in relation to the planning position.
67. On 8 September 2014, Mr Moses' solicitors wrote to Silk's solicitors, saying that the Contract was "now void in the light of your client's failure to complete". In my view, once that email had been received by Silk's solicitors, it was reasonable for Silk to take no further steps to progress the Works. Mr Moses' position was that the Contract, including the permission given by the Supplemental Agreement for Silk to carry out the Works on Mr Moses' land, was at an end. I think that, in those circumstances, no reasonable buyer in Silk's position would have spent further time and money in progressing the Works until resolution of the dispute as to whether or not the Contract had been validly terminated.
68. Accordingly, in my judgment, only the 11 week period from 23 June to 8 September 2014 could count towards the reasonable period required to achieve practical completion of the Works. That was plainly not long enough to achieve practical completion, and therefore a reasonable time for achieving practical completion had not passed as at 16 October 2014.
69. Mr Beasley argued that, even while Mr Moses was asserting that the Contract was at an end, and, implicitly, that Silk had no right to carry out the Works, Silk was still obliged to carry out the Works, and was in breach of contract in failing to do so. He relied on Fercometal SARL v Mediterranean Shipping Co SA [1989] AC 788. In that case, the House of Lords held that, if one party to a contract, party A, repudiates a contract, and the other party, party B, elects to treat the contract as remaining in effect rather than rescinding, the contract remains in existence for the benefit of both parties, including party A, the original wrongdoer. If party B himself then commits a repudiatory breach of contract, party A may then rescind. Party B, originally the innocent party, could not affirm the contract and yet be absolved from tendering further performance of the contract until party A, the original repudiating party, gave notice that he was once again ready and willing to perform his contractual obligations. An unaccepted repudiation has no legal effect; it is "a thing writ in water and of no value to anybody". Lord Ackner (with whom the other Law Lords agreed) said, at p.805:
"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."
70. Lord Ackner then recognised the possibility of an estoppel arising as a result of party A's repudiation. If A's repudiation is in such terms as to communicate to B a clear representation to B that A does not require B to perform his obligations under the contract, and B acts upon that representation, then A will be estopped from relying on B's subsequent failure to perform B's obligations under the contract as entitling A to terminate the contract. However, on the facts in that case, there had been no such representation nor any change of position in reliance on any such representation.
71. Mr Stone submitted that there was an additional way in which party A might not be able to rely on any failure by party B to perform - if A prevented B from performing. He cited Chitty at [24-012], where the editors say that "... where the repudiating party, by means of a breach of contract or other default, prevents the innocent party from performing his obligations under the contract he cannot rely on that non-performance to reduce or eliminate his liability". I agree with that. If party A to a contract prevents party B from performing his obligations, then party B is not in breach of the contract by failing to perform.
72. If Silk had been under an obligation to achieve practical completion of the Works within a fixed period, say 10 months from the date on which the planning application for purely residential development was refused, then Fercometal would be directly in point. Silk would have been obliged to achieve practical completion within the fixed period, regardless of Mr Moses' contention that the Contract was at an end, unless the communications from Mr Moses' solicitors gave rise to an estoppel, or amounted to preventing Silk from performing.
73. However, the obligation under the Supplemental Agreement was not of that nature, but only to use achieve practical completion within a reasonable time, with that time judged with hindsight, having regard to all the circumstances. In my view, that makes all the difference. An absolute obligation on party B to achieve a result within a set period is not affected by a wrongful repudiation by party A, if party B elects to keep the contract alive. The position is different, I think, in the case of an obligation on party B to achieve a result within a reasonable period, with that period assessed retrospectively having regard to all the circumstances. Given that the performance of such an obligation can clearly be affected by the attitude of third parties (such as that of Barnet LB in the present case), I can see no reason why it cannot be affected by the attitude of party A.
74. Mr Beasley made five points against that conclusion. First, he argued that Fercometal does not identify any such exception. He said that it is very common for a contractual obligation to require one party to act reasonably in carrying out its obligations and it would be surprising if such a large exception should have been ignored by the House of Lords. I disagree. The House of Lords was concerned with the right of a charterer to cancel a charterparty if the ship was not ready to load by a specified date. There was no reason for it to consider what the position would have been if the right to cancel had been exercisable if the ship was not ready to load within a reasonable time, judged retrospectively.
75. Second, he argued that the reasonableness in the implied term is intended to qualify the obligation to carry out the development and so is directed at what steps are reasonable in that context alone, not a wider context of the enforceability of the contract. That is right, but if it would be unreasonable to expect Silk to build the units on the Property in circumstances where Mr Moses' position was that the Contract was at an end, then the implied term is directly in point.
76. Third, he argued that, if the test is one of reasonableness, it can be assumed that the parties were aware of the current state of the law and that if they choose to affirm the contract, they know they will therefore be obliged to honour their own obligations. That seems to me to beg the question of what the current state of the law is.
77. Fourth, he said that, to succeed Silk has to argue that the reasoning in Fercometal is unreasonable when in fact it makes perfect sense. I do not think Silk needs to argue that Fercometal produces an unreasonable result, and nor do I think it does. The question is whether the position is different in the case of an obligation to achieve a result within a fixed period and an obligation to achieve it within a reasonable time, judged retrospectively.
78. Fifth, he said that specific rights to suspend contractual obligations have been permitted in other areas of the law, such as s.112 of the Housing Grants, Construction and Regeneration Act 1996, but no such statutory right is given here. The absence of any statutory provision does not seem to me to shed any light on the issue.
79. Mr Stone put his case on this point in two additional ways. First, he argued that, by declaring that the Contract was at an end, and with it Silk's right to carry out the Works on the Property, Mr Moses prevented Silk from carrying out the Works. I disagree. It is not as if Silk asked if it could continue to carry out the Works, despite Mr Moses' claim that the Contract was at an end, and Mr Moses refused.
80. Second, Mr Stone argued that Mr Moses' communications gave rise to an estoppel; they sent the clear and unequivocal message that Mr Moses did not require Silk to take any further steps to carry out the Works, and Silk relied on that in not doing anything more. The first part of that argument seems to me to be correct; I think that by saying the Contract was at an end Mr Moses was communicating clearly that Silk need do nothing more under it. The second part, however, is not supported by the evidence. Mr Singh did not say that Silk was induced by the fact that Mr Moses was treating the Contract as at an end to do nothing more towards achieving practical completion of the Works. Nor do Silk's actions support such a finding. On 3 October 2014, Silk booked an appointment with UK Power Networks for them to supply power to the Property on 22 October 2014, and then on that date, rebooked the appointment for 18 and 19 November 2014. Further, Silk applied for and obtained a certificate of lawfulness in 2015.
If so, was the breach sufficiently serious to constitute a repudiatory breach?
81. On my findings so far, this question does not arise, as Silk was not in breach of the Contract as at 16 October 2014. I should, however, say what my conclusions would have been if I had held that Silk's obligation was to use reasonable efforts to progress the Works so as to achieve practical completion within a reasonable time.
82. On that basis, I still think, for the reasons I have given above, that only the 11 week period from 23 June to 8 September 2014 is relevant. Only during that period was it reasonable to expect Silk to take steps to progress the Works.
83. Silk did no actual building work on the Property at all. It contended that it was, nonetheless, taking active steps to progress the Works in a number of ways.
84. First, it said it was seeking to address the matter of services. Mr Moses said there was power available at the Property, Mr Singh disagreed. I prefer Mr Singh's evidence on this, both for the general reasons given above, and because of the documents exhibited to Mr Singh's third witness statement. That statement exhibited some correspondence between Silk and UK Power Networks ("UKPN") concerning the supply of electrical power to the Property. Silk would not have needed to enter into that correspondence if there was an existing power supply.
85. However, the correspondence does not record Silk trying very hard to get a power supply. On 26 February 2014, Silk applied to UKPN for a temporary power supply and asked that the application be expedited. On 5 March 2014, UKPN wrote with a quotation for a new underground single phase 100 amp service. Mr Singh said in his third statement that this quote was for a permanent supply. On 9 April 2014, UKPN wrote with a different quotation for a new underground single phase 100 amp service. Mr Singh said in his third statement that this quote was for a temporary supply. He did not say that there was any problem with this quote as such. Silk did not accept the quote. Mr Singh said in his oral evidence that this was because he was not satisfied with the planning position, but I have held that a reasonable person in Silk's position would have been satisfied by the planning position on 23 June 2014.
86. Mr Singh said that Siamese Mews, under which any electric cable would have to pass from the highway, was unregistered land, and it was unclear whether the Property had the right to lay new services under that land. One of the registered titles, AGL75289, records that the land has the benefit of a right to run services under land to the north-west and south-west of the land in the title, but the other two titles do not include any such right. Further, it is far from clear that the right granted would authorise the laying of new services as opposed to replacing existing services.
87. There is some limited correspondence concerning the possibility of indemnity insurance relating to the laying of services under Siamese Mews. On 31 July 2014, Mr Moses sent an email to Amrit Virdi requesting a quote, and on 4 August 214 Mr Singh emailed Mr Virdi saying that Mr Singh's lawyer believed that there was probably a right to lay services under Siamese Mews but "I must have some sort of indemnity cover if that event ever arises". The next day, 5 August 2014, Mr Virdi forwarded to Mr Singh an email from Countrywide Legal Indemnities asking for four pieces of information to enable them to consider a services indemnity. There does not appear to have been any further communication from Mr Singh on this subject. There is no evidence of Silk taking any other active steps to address this issue.
88. Based on that evidence, my assessment is that Silk was not making reasonable efforts to obtain either a temporary or a permanent power supply to the Property during the relevant 11 week period.
89. Second, Silk said it was dealing with party wall matters. The evidence on this comprised two email chains, covering the period from 18 October 2013 to 7 May 2014 and 14 August to 30 August 2014. In the first email, on 18 October 2013, Mr Singh wrote to Mervyn Shaya of Shaya Associates, who seems to have been acting for the owner of a property adjoining the Property. Mr Singh said in that email that he intended to appoint a party wall surveyor the following week. It is apparent that Silk never did appoint a party wall surveyor. The second email chain, from August 2014, shows that Silk was aware that there were party wall issues from before the date of the Supplemental Agreement and yet did nothing about them. In my view, Silk was not making reasonable efforts to deal with party wall matters during the relevant 11 week period.
90. So if Silk was obliged to use reasonable efforts to progress the Works from 23 June 2014, then it breached that obligation. It essentially did almost nothing.
91. On that basis, if Silk was obliged to use reasonable efforts to progress the Works from 23 June 2014, did Silk's breach of that obligation go to the root of the Contract - did it deprive Mr Moses of substantially the whole benefit which it was intended he should have under the Contract? That is the formulation of the applicable test stated by Diplock LJ in Hongkong Fir Shipping v Kawasaki Kisen Kaisha [1962] 2 QB 26 and approved by the Chancellor in Urban 1 (Blonk Street) Ltd v Ayres at [57].
92. Mr Beasley cited Chitty on Contracts (31 st ed) at 24-041 for a discussion of what is required for a breach of an innominate term to be repudiatory. Mr Beasley also cited Ampurious Nu Homes Holdings Ltd v Telford Homes (Creekside) Ltd [2013] 4 All ER 377 as providing guidance on the right approach to this question. The case concerned whether delay in carrying out building works under an agreement for lease was sufficiently serious to have constituted a repudiatory breach of contract. The Court of Appeal, reversing the trial judge, held that it had not.
93. I derive the following principles from Chitty and that decision:
(1) The court must look at the position as at the date of the purported termination of the contract by the innocent party.
(2) The starting point is to consider what benefit the injured party was intended to obtain from performance of the contract.
(3) Then one must consider the effect of the breach on the injured party. What financial loss has it caused? How much of the intended benefit under the contract has the injured party already received? Can the injured party be adequately compensated by an award of damages? Is the breach likely to be repeated? Will the guilty party resume compliance with his obligations? Has the breach fundamentally changed the value of future performance of the guilty party's outstanding obligations?
(4) All the relevant circumstances need to be evaluated, the question of whether a breach is repudiatory is fact-sensitive and involves a multi-factorial assessment. Relevant considerations include any steps taken by the party in breach to remedy the breaches and likely future events, judged by reference to objective facts as the date of purported termination.
94. Mr Beasley submitted that it would be wrong to simply say that the relevant benefit was payment of the purchase price alone. He argued that a material aspect of the "whole benefit" includes when that payment was to be made. The benefit to Mr Moses was payment 10 days after the end of the reasonable period of time required to achieve practical completion of the Works. Given that the breached term already includes a standard of reasonableness, no further time should be allowed when defining the "whole benefit" i.e. the whole benefit included the prompt payment of the purchase price following a reasonable period of time to complete the works.
95. I do not think that analysis is correct. Silk could not rely on its own breach of contract to contend that the completion date had not arrived. Therefore, a delay by Silk in carrying out the Works would not deprive Mr Moses of the right to payment of the balance of the purchase price on the date falling 10 days after the date when the Works should have been practically completed. In paragraph 123 of his closing submissions, Mr Beasley submitted that, if Silk breached the Contract and as a result practical completion of the Works was delayed, it was implicit that Mr Moses could require completion of the sale to take place 10 working days after the date when practical completion would have occurred, had there been no breach. I agree with that analysis. In my judgment, it means that Silk could not, by delaying the Works, deprive Mr Moses of the right to payment of the balance of the purchase price on the date when he was contractually entitled to it.
96. If that analysis is incorrect, and a delay by Silk in carrying out the Works would also delay the date on which it would be obliged to complete and pay the balance of the purchase price then, in order to decide whether a delay of 11 weeks was sufficient to deprive Mr Moses of substantially the whole benefit of his right to receive payment of the balance of the purchase price within the time provided for in the Contract as amended, it is first necessary to form a view on the overall period needed to achieve practical completion of the Works. This is an issue on which I would have been assisted by expert evidence, but neither side adduced any. I have to do the best I can with the evidence I have.
97. Mr Moses said he thought the Works could have been completed within 4 months, bearing in mind the foundations were already in place. Mr Singh's view was that the building works themselves would take about 6-9 months, and that preparatory matters including planning would take a further 6-9 months - getting clarification on the planning position, preparing the designs, submitting them to building control, dealing with party wall matters, and arranging for the supply of services. For the reasons I have given, I prefer Mr Singh's evidence, but as I have held that a reasonable person in Silk's position would have regarded the planning position as resolved by 23 June 2014 I think that no more than an additional 10 weeks would have been reasonable to deal with other preparatory matters before starting work, and I think it right to take the mid point of his estimate for carrying out the works, namely around 7½ months or about 33 weeks. My assessment, therefore, is that a period of about 43 weeks from 23 June 2014 would have been a reasonable period to achieve practical completion of the Works.
98. Mr Beasley argued that a short period was all that was required. He said that the Original Contract anticipated an immediate sale, but the Original Contract was amended and is no guide to how long was intended to be allowed under the amended Contract. He said that the new planning application would have given a result after only a few months (and if positive would result in completion within ten days). That is true, but then Silk would have been buying a property with a purely residential planning permission which no doubt would have made it more valuable. He said that the parties were negotiating on the basis that completion might be between March and the end of April 2014, relying on an email dated 12 December 2013. That was at a time when it was still hoped that the application for residential permission would be successful and is no guide to how long was reasonable to carry out the Works.
99. I do not think that the delay in progressing the Works which Silk was responsible for deprived Mr Moses of substantially the whole of the benefit of Silk's obligation to use reasonable efforts to progress the Works. A delay of 11 weeks in receiving the purchase price beyond a period of 43 weeks is not, in my judgment, so substantial a delay as to deprive Mr Moses of substantially the whole of the benefit that the Contract conferred on him. Interest is payable under the Contract at 4% over Barclays Bank base rate (under Standard Condition 7.2) if completion is delayed due to the purchaser's default. There is no evidence or submission that Mr Moses suffered any loss in excess of the interest to which he would be entitled if Silk delayed completion of the purchase by a breach of contract; as Lewison LJ said in Ampurious Nu at [56]: "It is to say the least unusual that a breach of contract that has caused no actual loss is characterised as a repudiatory breach". I would have formed the same view even if I had held that the planning position was such that the 43 week period started on 4 March 2014. In that case, the period of delay would have been about 27 weeks, but I still do not think it would have been sufficient to have constituted a repudiatory breach.
Did Silk's conduct constitute a renunciation of the contract?
100. The test for renunciation is summarised in Chitty on Contracts (31st ed) at [24-018 to 020] and in Ampurius Nu at [70]-[72]. A renunciation of a contract occurs when one party by words or conduct evinces an intention not to perform, or expressly declares that he is or will be unable to perform, his obligations under the contract in some essential respect. The renunciation may occur before or at the time fixed for performance. An absolute refusal by one party to perform his side of the contract will entitle the other party to treat himself as discharged, as will also a clear and unambiguous assertion by one party that he will be unable to perform when the time for performance should arrive. Short of such an express refusal or declaration, however, the test is to ascertain whether the action or actions of the party in default are such as to lead a reasonable person to conclude that he no longer intends to be bound by its provisions. The renunciation is then evidenced by conduct. Also the party in default may intend in fact to fulfil the contract but may be determined to do so only in a manner substantially inconsistent with his obligations. If one party evinces an intention not to perform or declares his inability to perform some, but not all, of his obligations under the contract, then the right of the other party to treat himself as discharged depends on whether the non-performance of those obligations will amount to a breach of a condition of the contract or deprive him of substantially the whole benefit which it was the intention of the parties that he should obtain from the obligations of the parties under the contract then remaining unperformed. It is a drastic conclusion which should only be held to arise in clear cases of a refusal, in a matter going to the root of the contract, to perform contractual obligations.
101. Mr Beasley argued that, despite communications suggesting it wanted to reach practical completion, Silk's actions unequivocally indicated that it did not so intend, or at best intended to fulfil the Contract but only in a manner substantially inconsistent with its obligation to do so within a reasonable period of time and by wrongfully requiring Mr Moses to comply with conditions that were not required by the terms of the contract.
102. In my view, Silk's actions did not amount to renunciation. Silk made it clear that it regarded the Contract as binding and intended to perform it. I have held that, if (contrary to my view) Silk was obliged to use reasonable efforts to progress the Works, it was in breach of that obligation, but that the breach was not a sufficiently serious one to go to the root of the Contract. Having considered all the circumstances, in my judgment a reasonable person in Mr Moses' position would have understood that Silk intended to be bound by its obligations under the Contract. Such a reasonable person would not have understood Silk's actions as meaning that Silk intended to abandon the Contract. Nor would such a person have understood that Silk intended to perform it in a way sufficiently different to what was required to deprive Mr Moses of substantially the whole benefit which it was the intention of the parties that he should obtain under the Contract.
Was Mr Moses entitled to serve notice to complete on 20 August 2014?
103. Given my findings so far, it is clear that the date for completing the contract had not arrived by 20 August 2014, and therefore Mr Moses was not entitled to serve notice to complete on that date.
Events after 16 October 2014
104. I return to the question of events after 16 October 2014 and whether I should give permission to Mr Moses to amend his Statement of Case to rely on those events. I do not think I should do so, because I do not think that there is a real possibility that the Contract was determined during that period. For the whole of that period, Mr Moses' position has been that the Contract was at an end. For the reasons I have given above, I consider that Silk's obligation to achieve practical completion within a reasonable time must be assessed taking that position into account. The same would be true if the right term to imply is that Silk was obliged to use reasonable efforts to progress the Works so as to achieve practical completion within a reasonable time. In either case, I do not think it was reasonable to expect Silk to progress the Works at a time when Mr Moses' position was that the Contract was at an end, and in consequence, that Silk had no right to carry out the Works. Therefore, if Mr Moses was not entitled to terminate the Contract by 16 October 2014, I do not think that any subsequent failure by Silk to achieve practical completion or to progress the Works constituted a breach of contract by it.
Order
105. For the reasons given above, I direct the Chief Land Registrar to cancel the three applications made by Mr Moses on 16 October 2014.
Costs
106. I give the following directions in relation to costs:
(1) If Silk, as the successful party wishes to apply for its costs, it must, by 29 January 2016, serve on Mr Moses a summary of the costs claimed by it.
(2) If Mr Moses disputes Silk's entitlement to costs, or the amount claimed, he must, by 19 February 2016, serve a response giving its reasons and the amount, if any, it considers it should pay.
(3) If the parties cannot, by 18 March 2016, agree the issue of costs, then either party may thereafter apply to me to determine the matters in dispute, sending me copies of the costs summary, the response, and any additional submissions Silk wishes to rely on, with a copy to Mr Moses. I will then issue a determination as to costs. If no such application has been made by 1 April 2016, then there will be no order as to costs.
DATED THIS 18 th DAY OF JANUARY 2016
BY ORDER OF THE TRIBUNAL