High Court of Justice in Northern Ireland Queen's Bench Division Decisions

Neutral citation No: [2012] NICA 58	Ref:	GIR8669
Judgment: approved by the Court for handing down	Delivered:	3/12/12
(subject to editorial corrections)*


 


2009 No 101289

IN HER MAJESTY'S COURT OF APPEAL IN NORTHERN IRELAND ________ ON APPEAL FROM THE HIGH COURT OF JUSTICE IN NORTHERN IRELAND CHANCERY DIVISION ________ BETWEEN BERNARD J FITZPATRICK, NAOMI FITZPATRICK, JOHN G McILWAINE, CLAIRE A McILWAINE

Plaintiffs/Respondents

AND SARCON (No 177) LIMITED

Defendant/Appellant

________
Morgan LCJ, Girvan LJ and Coghlin LJ

GIRVAN LJ (giving the judgment of the Court)

Introduction

[1] This is an appeal by the defendant in the proceedings Sarcon (No 177) Limited ("the Appellant") from the judgment and order of Deeny J who on 17 April 2012 upheld the claim by the plaintiffs in the action ("the Respondents") that they were entitled to a declaration that they validly rescinded two contracts made between them and the Appellant, namely a building agreement dated 4 May 2007 ("the Building Agreement") and an agreement for a lease of the same date ("the Agreement for Lease"). As a consequence the judge ordered the Appellant to repay to the Respondents the sum of £23,750 which had been paid as a deposit under the contracts together with interest. Mr Fetherstonaugh QC and Mr Humphreys QC appeared for the Appellant. Mr Crampin QC, Mr Lockhart QC and Mr McLaughlin appeared for the Respondents. The court is grateful to counsel for their full and detailed written and oral submissions.

The Factual Background

[2] Under the terms of the Building Agreement the Appellant agreed to construct for the Respondents Apartment No 28 in the Merchant Building, Pilot Street, Princes' Dock, Belfast ("the Apartment"). On the same date the Agreement for Lease was signed whereby the Appellant agreed to grant a lease of the premises to the Respondents on the terms and conditions therein set out. The Apartment was one of a large number of apartments being constructed by the Appellant in an apartment block. The Apartment was located at level 5 in the building.

[3] Under the relevant terms of the Building Agreement the Appellant, (described in the Agreement as the Developer), by Clause 1 agreed to procure that its contractor should build, complete and finish in a good and workman like manner for the Respondents (described as the Employer) an apartment in accordance with the plans and specifications lodged by the Developer with, and passed and approved by, the relevant authorities for the Contract price of £237,500. A deposit of 10% was payable under the Building Agreement and it was duly paid.

[4] Material terms of the Agreement provided:

(a) By Clause 6 it was provided that:

"Subject to Clause 8 below, the Developer shall procure that his contractors shall erect and completely finish the said Apartment and make same fit for habitation and use on the date of completion mentioned in paragraph 6 of the Schedule or such earlier date notified by the Developer or the Developer's solicitor on not less than 20 working days' notice to the Employer or the Employer's solicitor.

(b) By Clause 8 it was provided:

"If the building work is delayed by bad weather, industrial disputes, shortage of labour or difficulties in obtaining materials, or any other cause outside the Developers or the Developer's contractor's control, a reasonable extension of time for completion shall be allowed by the Employer."

(c) By Clause 9 it was provided:

"The deposit mentioned in paragraph 5 of the schedule is payable on the date of this Agreement and the balance of the Contract Price by the date of completion. Completion shall take place at the office of the solicitor for the Developer. Payment shall be made by banker's draft or the Employer's solicitor's cheque. The solicitor for the Developer shall not be bound by any undertaking or condition sought to be imposed in any completion letter accompanying payment unless the terms of that completion letter have expressly been agreed in writing at least one working day prior to the completion to the intent that the solicitor for the Developer shall be entitled to encash any draft or cheque without accepting or being bound by such undertaking which the solicitor for the Employer may purport to impose without notice."

(d) By Clause 10 provision was made for interest at the specified rate to be paid in the event of any delay by the Employer in the payment of the deposit and on the balance of any Contract price within 3 working days of notice to the Employer that the money was due.

(e) By Clause 11 it was provided:

"If by the completion date (as detailed in paragraph 6 of the Schedule or such later date for completion as provided for by Clause 8 above) the Developer has completed the Apartment in accordance with this Agreement and the sale is not completed on the said completion date the Developer may on said date or anytime thereafter give to the Employer notice in writing to complete this transaction. Upon service of an effective notice pursuant to this clause it shall be an express term of the Agreement that the Employer should complete the transaction within 5 working days after the service of the notice (excluding the date of service) and in respect of such a period time shall be of the essence. If the Employer does not comply with the terms of an effective notice served by the Developer under this clause then the Developer may rescind its Agreement and:

(i) the Employer shall forthwith on the expiry of that notice, or within such further period as the Developer may allow, return all papers in his possession belonging to the Developer and at his own expense (subject to the right of any legal mortgagee) execute a proper surrender, reassignment or reconveyance as the case may be to the Developer of the site upon which the dwelling is situated; and

(ii) without prejudice to any other rights or remedies available to him at law or in equity the Developer may forfeit and retain for his own benefit the deposit paid by the Employer pursuant of clause 9 above."

(f) Clause 19 contained a mediation and arbitration clause.

(g) Clause 23 provided:

"In relation to the time limits specified in this Agreement time shall be deemed to be of the essence."

[5] Under the Agreement for Lease the Appellant agreed to grant and the Respondents agreed to accept a Lease of the premises for a term of 800 years from the date specified in the Lease on the terms set out in the draft Lease annexed. Clause 5 of the Agreement provided:

"This Agreement is conditional upon a contemporaneous Building Agreement for the erection of an Apartment on the Site being entered into as contemporaneously between the Purchaser of the one part and the Vendor of the other part and in the event of the said Building Agreement not taking effect or ceasing to take effect then the present Agreement shall also cease to have effect.

It is not in dispute that if the Respondents were entitled to rescind the Building Agreement, as they claim, the Agreement for Lease ceased to have effect.

[6] The main contractor on site was Gilbert Ash. It commenced and proceeded with construction. It appears that the Contractor at tendering said that the programme would take 24 months rather than the 22 months originally envisaged by the Developer.

[7] By a letter dated 6 February 2009, Carson McDowell, the solicitors for the Appellant, wrote to the respondent's solicitors stating:

"Please note that your client will now have been informed by Messrs BTW Cairns that completion of this Apartment is anticipated for October-November 2009. We will write to you further once an exact date for handover of this Apartment is confirmed."

It is not clear what information was sought from or provided by Messrs BTW Cairns when they informed the Respondents of the delay.

[9] As noted by the judge in his judgment, this letter did not seek an extension of time, it did not expressly rely on Clause 8 of the Agreement and it did not give reasons for the delay.

[10] Although that letter was sent in early February alerting the Respondents to a delay of some 6 months, the Respondents did not reply to that letter until 6 May 2009. Having raised no initial objection to the purported rescheduling of the completion when the letter of 6 February was received, on 6 May the Respondents' solicitors wrote to Carson McDowell stating that:

"We contend that the Contractual completion date of 31 May 2009 constitutes a time limit in respect of which time is of the essence … . We are of the opinion that it is not open to your client to suggest a new completion date. Our clients are entitled to expect completion to take place on 31 May as stated in the Building Agreement".

[11] By way of response the Appellant's solicitors replied on 8 May 2009 simply disagreeing with the Respondents' interpretation of the Agreement. On 5 June 2009 the Respondents' solicitors wrote back asserting that, as there had not been completion in accordance with the Building Agreement, the Respondents thereby rescinded the Agreement and/or accepted repudiation of the Contract. They sought a refund of the deposit with interest from 19 April 2007. On 8 June 2009 the Appellant's solicitors replied challenging the Respondents' right to rescind stating that the Appellant would enforce the Agreement. On 4 September 2009 they wrote again advising:

"The anticipated completion date for the property is 26 October 2009."

[12] On 17 September 2009 the Respondents' new solicitors wrote back saying that they were now instructed that the Contract had been rescinded as repudiated. On the same date they sent the Writ of Summons in the proceedings. In response the Appellant's solicitors rejected the alleged rescission and/or repudiation of the contract. As the judge noted, the Appellant did not assert any contractual right to an extension of the agreed completion date.

The Pleadings

[13] In their writ and statement of claim the Respondents sought a declaration of their entitlement to rescind the Building Agreement and the Agreement for Lease, rescission of the contract and/or order for repayment of the deposit. They asserted that the Appellant had repudiated the contract by reason of its breach of an express term of the contract that time was of the essence. In its defence and counterclaim the Appellant claimed that it was entitled to a reasonable extension of time. It denied that time was of the essence and denied any breach of contract. By its counterclaim it claimed that there had been a number of delays in the construction and completion of the development all of which had been outside its control or the control of its contractors. It relied on:

(a) the fact that following entering into the Agreement the contractor was appointed and it stated that a reasonable contract period was 24 months which the Appellant accepted;

(b) there had to be a change in the form of piling works;

(c) it was discovered that the walls of the existing building supported services to the roof of an adjoining building, the result of which was that there had to be a redesign and negotiations with the owners of the adjoining building;

(d) following a change of ownership of adjoining premises further negotiations had to take place with the new neighbours causing delay to the placement of cranes and scaffolding;

(e) the works were affected by inclement weather;

(f) the supplier of sanitary wear went into administration necessitating alternative servicing.

The Appellant asserted that it was entitled to an extension of time under Clause 8 of the Building Agreement and that a reasonable extension of time in the circumstances until 26 October 2009 was necessary. It claimed specific performance of the Agreement.

[14] By their reply and defence to counterclaim the Respondents asserted that the completion date was a time limit within Clause 23 and that time was of the essence of that obligation. If grounds were available to the Appellant to seek an extension of time for the completion of the Agreement the Respondents asserted that the Appellant was required (a) to provide the reasons and basis for the request; (b) to identify the period which was sought; (c) to identify a proposed alternative completion date; and (d) to do so prior to the agreed date of completion. The Respondents asserted that the Appellant had done none of these things and was thus not entitled to an extension of time. They denied that any of the asserted grounds alleged to justify delay on the facts constituted good grounds for an extension of time. They denied that an extension from 31 May 2009 to 26 October 2009 was a reasonable period.

The Judge's Conclusions

[15] In two earlier decisions (Holloway v Sarcon (No.177) Ltd [2010] NICh 15 and Clear Homes v Sarcon (No.177) Ltd [2010] NICh 16) involving building agreements on the same terms in relation to the same development Deeny J had concluded that, in light of the contractual provisions including Clause 23, time was not of the essence in relation to the contractual completion date. The parties appear to have proceeded on the basis that that was a conclusion already reached by Deeny J and the Respondents, assuming without conceding that conclusion that time was not of the essence, focussed on whether they were entitled in the circumstances of their case to treat the Appellant's failure to complete by the completion date as a repudiatory breach of contract entitling them to treat the contact as no longer binding.

[16] The judge concluded that although time was not of the essence the importance of the contractual completion date did not disappear. It was not a warranty but a condition or an innominate term. Once 31 May 2009 had passed without completion the Appellant was in breach of contract. It was open to the Appellant to seek relief from the consequences of that breach. In considering whether relief should be granted it was necessary to consider the conduct of the Appellant at the relevant time. By February 2009 it had sufficient information to know that completion could be anticipated by October-November. The Appellant should have set out, albeit in summary form, that delays had occurred in whatever way they had occurred but that they fell within Clause 8 and that the Appellant was seeking an extension of time to complete. This was particularly so in the light of (a) the falling value of property; and (b) the need for the Respondents to have ready cash available to complete. Clause 8 on a fair and proper construction should be interpreted on the basis that the Employer should be told of any alleged Contractual right on the part of the Developer to extend the time. The completion date remained the completion date until the vendor lawfully exercised a right to an extension of time. The letter of 6 February without giving reasons for the delay and without reference to Clause 8 did not of itself extend the time for completion. The Appellant had not acted equitably. It had kept the Respondents in the dark and treated them with unjustifiable disdain. The Appellant should have provided the Respondents with the requisite information by February 2009. It could still have validly exercised its right to an extension in May 2009 when replying to the Respondents' correspondence. The judge said that he might even have found that the Developer could have made his case for an extension on receipt of the Respondents' notice of rescission. He concluded that there had been a grave repudiatory breach by the Appellant. In exercise of his discretion in equity and for the reasons given he found that the Respondents were entitled to serve their notice to rescind 5 days after 31 May 2009. The judge considered that he could take account of the strict stance which the Appellant had taken in relation to the time frame which it had imposed for the return of the signed agreements at the outset.

Time of the Essence Issue

[17] The first question which must be addressed is whether, as the Respondents assert, time was of the essence in respect of the contractual obligation in Clause 6(2) to "completely finish the said Apartment and make the same fit for habitation on the date of completion" which in the Schedule was defined as 31 May 2009. It is common case that if time was of the essence then the breach of the term would have entitled the Respondents to treat the contract as repudiated.

The parties' submissions

[18] Counsel for the Respondents argued that the question whether time was of the essence of a contractual term is in every case simply one of the proper construction of the contract. The question is what a reasonable person, having all the background knowledge which would have been available to the parties, would have understood the language of the contract to mean. If it is clear that something has gone wrong with the language of the agreement the law did not require a court to attribute to the parties an intention which a reasonable person would not have understood them to have had. It requires a strong case to persuade the court that something has gone wrong with the language (per Lord Hoffman in Chartbrooks Ltd v Persimmon Homes Ltd [2009] 1 AC 1101). The Respondents asserted that the Appellant would only succeed in its argument if it could show that Clause 23 did not mean what it says and that something had gone wrong with its language. There was no reason not to give Clause 23 its clear meaning. The time stipulation in Clause 6 was a "time limit" specified in the Agreement.

[19] Counsel for the Appellant focused on the consequences flowing from the wording of Clause 11. That Clause, he argued, is premised on the assumption that for performance of the obligation in Clause 9 to pay the balance purchase price on the date of completion time was not of the essence. It could be made of the essence by the service of an effective notice under Clause 11 requiring completion within 5 days after service of the notice (in respect of which period time was expressly made of the essence). It followed that the term "time limit" could not have been intended to make time of the essence in respect of the interlinked obligations in Clauses 6, 9 and 11. Mr Crampin QC argued that while time may not have been of the essence under Clause 9 in respect of payment in light of Clause 11 it did not follow that time was not of the essence in respect of the obligation under Clause 6 to complete by the specified date. He argued that there was no logical or legal basis for concluding that when a contract makes time expressly of the essence in relation to, for example, delivery of goods and property but does not make time of the essence in relation to payment, time is of the essence in respect of the latter obligation. It is perfectly possible to have concurrent conditions where time is essential in respect to one of the conditions (delivery) but not of the other (payment). The Respondents argued that the structure and language of the Agreement was not arbitrary or irrational if construed literally. It could not be said that something had gone wrong with the language of the Contract pointing to a construction contrary to the clear meaning of the words used.

Conclusions on the Issue

[20] If a Developer fails to complete a contract in accordance with the terms of the contract, it is a breach of contract and he is liable in damages. Whether or not the breach enables the Employer to treat the contract as at an end requires a consideration of the principles of repudiation of contract and whether time is of the essence of the contract. The rules relating to time being of the essence are simply a particular application of the law of repudiation (see United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 at 944). When time is of the essence of the contract it is a condition which goes to the root of the contract irrespective of the magnitude of the breach. There is no general concept of time being of the essence of a contract as a whole, the question being whether time is of the essence of a particular obligation. It is quite possible to have time stipulations which are conditions and others which are not. In United Scientific Holdings v Burnley Borough Council [1978] AC 904 their Lordships at 937, 944 and 958 approved the following statement of law in Halsbury's Laws of England Volume 9(1) 4^th Edition paragraph (931):

"The modern law, in the case of contracts of all types, may be summarised as follows. Time will not be considered to be of the essence unless:

(i) the parties expressly stipulate that conditions as to time must be strictly complied with; or

(ii) the nature of the subject matter of the Contract or the surrounding circumstances show that time should be considered to be of the essence; or

(iii) a party who has been subject to unreasonable delay gives notice to the party in default making time of the essence."

[21] While time is normally of the essence in mercantile contracts, construction contracts are not mercantile contracts and the normal rule is that time is not of the essence unless it is expressly so provided. Construction contracts often empower the contractor, the employer or the architect, if one is engaged, to serve notices and for resulting rights to depend on those notices. It is a question of construction whether strict compliance with any stipulated time provisions for service of such notice is necessary to secure the resulting rights which may be lost if time for service is not strictly observed.

[22] The Building Agreement does contain time limits for the service of certain notices and the doing of certain acts. Thus Clause 10 triggers interest if there is a failure to pay the deposit or balance purchase price within 3 days of the notice being given. Clause 13(c) provides that in default of an offer of a loan being made within 28 days the Agreement would be void. Clause 19 contains time limits in respect of the mediation and arbitration provisions. The question is whether the contract can be said to have set a "time limit" by which the Apartment must be completed. A time limit means a point which sets an outer limit in time by which something must be done. Under the Building Agreement Clause 8 recognises that there will be circumstances in which a Developer cannot reasonably be faulted for not being able to complete by 31 May 2009. That date cannot, accordingly, be considered as a limit in time beyond which the Developer cannot go in any circumstances. To the question "What is the time limit by which the Apartment must be completed?" the answer must be that that depends on the circumstances. There is a contractual date for completion but circumstances may lead to that date being unachievable. In Lamprell v Billericay 3EX 283 Rolfe B when dealing with an argument that time was of the essence in respect of a contractual date for the completion of the building of a workhouse stated:

"The only point raised on those pleas is that the works were not completed before the end of December 1840 instead of 24 June 1840. But looking at the whole deed we are of opinion that time for completion was not an essential part of the Contract; first because there is an express provision for liquidated damages for delay; and, secondly, because the deed clearly meant to except the plaintiff from the obligation as to the particular day in case he should be prevented by fire or other circumstances satisfactory to the architects …"

Keating on Construction Contracts in its most recent edition citing this authority states:

"It seems ordinarily that time is not of the essence where the Contract includes provisions for extension of time and the payment of liquidated damages for delay."

[23] The absence of a liquidated damages clause does not detract from the point that the extendibility of a construction contract period points away from time being of the essence in the contract in respect of the building obligation. The completion date as fixed may turn out not to be the date by which the contract is lawfully completed. The contract completion date is not in all circumstances the limit beyond which the building work cannot continue.

[24] Furthermore, Clauses 6, 9 and 11 read together lead to the conclusion that the parties cannot have intended that time was of the essence in respect of the completion date under Clause 6 whereas under Clause 9 it was not. Reading into Clause 23 the necessary implication that it does not apply to Clause 9 (as conceded by the Respondents) it becomes clear that for the purposes of Clause 23 "time limits" was not intended to apply to all contractual references to a time by which certain steps had to be taken under the contract. While it is indeed legally possible for parties to make time of the essence for one contractual obligation but not for another (such as delivery of goods under the Sale of Goods Act and payment therefore) in this contract completion of the Apartment and completion of the transaction by payment were so inextricably linked that one is led to the conclusion that the parties cannot have intended a difference of approach to the question of whether time was of the essence for one and not of the other. Accordingly, the argument that time was of the essence in respect of the completion of the building work must be rejected.

Were the Respondents entitled to treat the contract as repudiated?

[25] The Appellant contends that where time is not of the essence of the contract breach of a time stipulation cannot on its own be repudiatory. If a breach of contract time term occurs the wrongdoer is admittedly liable in damages. Counsel argued that the purchasers are only entitled to treat the contract as at an end if either (a) the purchaser has served a notice to complete requiring completion within a reasonable time; or (b) the vendor has been guilty of such unreasonable delay that it constitutes repudiatory conduct.

[26] Counsel argued that the judge had wrongly construed a time provision which was not of the essence (and was thus not an essential term) into what he termed to be an innominate term breach of which constituted repudiatory conduct. Counsel contended that it was not argued and there was no support for the contention that the delay was so unreasonably long as to entitle the Respondents to treat the delay as repudiatory. No such case had been pleaded. Thus, the Respondents' proper remedy was to have served a notice fixing a reasonable time after 31 May 2009 for completion and making time of the essence. This they had not done and they could not treat their letter of 6 May 2009 as akin to such a notice because: (a) it asserted that the time was already of the essence; (b) it preceded the contractual completion date; and (c) it gave no time for the completion following the completion date.

[27] The two parties differed fundamentally on the proper construction of Clause 8 and the effect which the provisions had on the contractual rights of the parties in the circumstances. It was the Respondents' case that the Appellant had failed to carry out the requisite steps implied in Article 8 and accordingly had no right to any extension of time. This resulted in the Appellant being in breach of his obligation to complete by 31 May 2012. The Respondents' pleaded and argued case was that on its proper construction Clause 8 required the Developer to make a request for an extension, to provide the reasons for the delay, to identify the period of extension sought and to do so before the agreed date of completion.

[28] The Appellant argued that the evident purpose of Clause 8 was to enable the contractual completion date to be postponed in circumstances where the delay was beyond the Appellant's control. Where it was entitled to an extension the Appellant would not be in breach of contract. The judge thus erred in concluding that Clause 8 merely enabled the Appellant to seek relief from the consequences of the breach of a condition in the Contract. It was not appropriate to imply a notice mechanism into Clause 8 as suggested by the Respondents. While the clause uses the word "allowed" the Respondents did not have the discretion to object to or modify an objectively justified extension necessitated by the excusable delays provided for. It was, thus, unnecessary for the Appellants to seek permission for an extension if the facts objectively justified it. The lack of a notice requirement in Clause 8 was to be compared with other specific contractual provisions under the Building Agreement for the service of notices. Counsel noted that the judge had not accepted the Respondents' pleaded case as to what was to be implied into Clause 8 and the judge appeared to be unable himself to formulate with precision any implied terms. The judge's proposition that it was implied that the Respondents should be given sufficient detail to make a judgement was wrong. They had no judgement to make. They had been informed that there was a need to extend the completion date some 3½ months before the contractual date. The Respondents' case, now shown to be wrong, was that time was of the essence. They were so wedded to that erroneous interpretation of the Contract that they had not even troubled to ask what reasons there might be for the delay.

Conclusions

[29] Clause 8(1) differs from many well drawn time extension clauses in construction contracts. Firstly, it does not make provision for the service of notices seeking or granting an extension of time for completion. Secondly, it does not make provision for the determination by a third party, such as an architect, of whether an extension of time is appropriate and, if so, the duration of an extension. Thirdly, it does not expressly deal with the question whether an extension is to be sought and granted prospectively or retrospectively. Inadequately drafted as it may be, Clause 8(1), however, must be properly construed by the court on the wording used. What emerges clearly from the provision is that it gives rise to a contractual right for the Developer to an extended period for completion in certain objectively verifiable events. It gives rise to a contractual extension of time which is to be objectively assessed ("a reasonable extension"). The objective basis for the right to an extension and for the assessment of the duration of that extension negatives any suggestion that there is some subjective element dependent on the will or wishes of the Employer or Developer. Clearly there may be room for a factual debate in given situations whether an extension for the time sought by the Developer is justifiable. In the absence of an agreement or a mediated outcome under Clause 19 the objective right to an extension and the objective assessment of the period of extension will fall to be determined by arbitration (if the parties submit to arbitration) or by the court in default of arbitration. That being so the reference to the Employer "allowing" a reasonable extension cannot be interpreted as in some way conferring on the Employer some discretionary power or influence on the objective determination of what is, dependent on the facts, a contractual right to an extension of an objectively assessable length. Accordingly, we cannot agree with the construction of the clause which requires in some way some form of indefinable preliminary role to be played by the Employer before the Developer could escape from his contractual obligation to complete by 31 May 2009. On its true construction Clause 8 entitles the Developer to an extension of time for completion if he requires it for one of the reasons specified in Clause 8 and it is objectively justified and verified in the circumstances. He is entitled to such a period of extension as is objectively verifiable in the circumstances. The Employer is bound to accept such an extension and in that sense must "allow" it to the developer.

[30] It is a question of fact whether the Appellant in the present instance was delayed in the building work on one of the grounds specified in Clause 8. It is a question of fact as to what reasonable objectively verifiable extension of time is appropriate in the circumstances. In so far as the actual delay in completion is properly covered by the right under Clause 8 to an extension the Appellant could not be considered to be in breach of Contract during the period of justified delay. This would have the effect of pushing forward in time the contractual completion date. If and so far as any period of the delay falls outside a reasonable extension under Clause 8 the Appellant during that unjustifiable period was in breach of contract and would be liable in damages for any provable loss or damage sustained by the Respondents in consequence. These remain triable issues which fall to be determined by the lower court which has not yet ruled on them.

[31] As noted, the Respondents have not pleaded a case that the Appellant repudiated their contract by reason of such unreasonable delay as to evince an intention to repudiate. They did not make time of the essence in respect of a term in respect of which we have concluded time was not originally of the essence. We accept as correct the argument put forward by the Appellant that before a party could treat as repudiated a contract which was not subject to a time of the essence provision service of a notice making time of the essence was an essential step to be taken. There is clear authority for the requirement on a party to serve such a notice. See, for example, Stickney v Keeble [1950] AC 386, United Scientific Holdings v Burnley Borough Council [1978] AC 904 at 946, British and Commonwealth Holdings Ltd v Quadrex [1989] 1 QB 842 at 857 and Belzadi v Shaftesbury Hotels Ltd [1992] Ch 1 at 24. Such a notice must post-date the contractual completion date and must specify a reasonable time thereafter within which the contractual obligation of the party in default is to be completed.

[32] No such notice having been served and no case of alleged repudiation by gross delay having been pleaded or argued, there is no reason on that ground alone why the contract should not be enforced in equity. We cannot see a basis for the proposition that the omission by the Appellant to spell out the reasons for the delay in the correspondence made it inequitable for it to rely on Clause 8. Even if one were to regard the omission as relevant conduct going to the equities relating to the question whether the contract should be enforced one must bear in mind that the Respondents, having been informed of the likely delay in February 2009 both by the agents and in correspondence, did not challenge the delay and sought no reasons or explanation. They did not respond until very close to the completion date when they sought to rely on an incorrect legal basis for treating the contract as repudiated. We see nothing in the evidence to justify the conclusion that it would be inequitable for the Appellant to seek enforcement of the agreement in equity were there no other basis for refusing specific performance.

[33] In the circumstances we conclude that the judge erred in his interpretation of clause 8 which led to his conclusion that the Respondents were entitled to treat the contract as repudiated. We must thus allow the appeal. We must remit the matter to the judge to complete and bring to finality the trial of all outstanding issues. In the light of the submissions made after we announced our decision, and in the light of the correspondence and documentation referred to by counsel, it appears that there are, or may be, a number of other issues which may impact on the question whether specific performance should be ordered. As Mr Lockhart QC was bound to accept it is regrettable that these points were not made clear during the course of the substantive hearing of the appeal. The trial judge is best placed to determine the course of the conduct of the trial of the remaining issues and to give appropriate procedural directions.

[34] We seriously doubt whether this was ever an appropriate case for the determination of a preliminary point. As has been frequently stated an apparent shortcut offered by a preliminary point may turn out to be no such thing. The use of the preliminary point procedure should be restricted to cases in which the outcome will be determinative of the case between the parties. In view the parties' further submissions this does not appear to have been the case in the present instance.