Chinnock v Hocaoglu and another
| Jurisdiction | England & Wales |
| Judge | MR. JUSTICE BLACKBURNE |
| Judgment Date | 09 November 2007 |
| Neutral Citation | [2007] EWHC 2933 (Ch) |
| Date | 09 November 2007 |
| Court | Chancery Division |
| Docket Number | Case No: HC 07 C00442 |
[2007] EWHC 2933 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr. Justice Blackburne
Case No: HC 07 C00442
Mr. Philip Kremen (instructed by Messrs. Gelbergs) appeared for the Claimant
Mr. Tom Weekes (instructed by DKLM Solicitors) appeared for the Defendants
Approved Judgment
1. This is a claim for rectification and specific performance of a contract for the sale by the defendants to the claimant for £120,000 of a freehold property situate at and known as 70 Ommaney Road, London SE14. Damages and interest are also claimed. The defendants contend that they have lawfully rescinded the contract and forfeited the £12,000 deposit and therefore that the claimant is not entitled to the relief which he claims.
2. Because at the date of the contract the property was divided into flats held by qualifying tenants within the meaning of Part 1 of the Landlord and Tenant Act 1987, under which the tenants in question enjoy a right of first refusal in the event of a sale of the kind involved in this case, it was necessary for the defendants to serve offer notices on the affected tenants pursuant to section 5 of that Act. As they were required to do under section 5(5) of the Act, the defendants served notices on two of the three tenants and specified 1 st February 2007 as the date by which the offer of disposal had to be accepted. Under section 5A(4) of the Act, a section 5 notice has to specify a period of not less than two months which is to begin with the date of service of the notice. The notices served on the two tenants in this case were dated 24 th November 2006 and were served, I understand, on that date. This meant that the notices were seven or so days longer than they needed to be. In the event, neither of the tenants exercised his or her right to acquire the defendants' interest in the property.
3. The contract was dated 12 th December 2006, which is when, in accordance with the Law Society Formula B, contracts were exchanged. As I have mentioned, the stated purchase price was £120,000. A deposit of £12,000 was duly paid on exchange. The contract was expressed to be subject to the special conditions endorsed on it and, by Special Condition 4, to the Standard Conditions of Sale, 4 th edition, in so far as appropriate to a sale by private treaty and not inconsistent with or varied by the express provisions of the contract.
4. The following special conditions are material to this dispute. Special Condition 10:
“Completion shall take place by 1.00 p.m. on the day fixed for completion at the place reasonably nominated by the Seller's Conveyancers … and if completion shall take place after that time the Buyer shall be treated as having completed on the next following working day not being a Saturday, Sunday or Public Holiday.”
Special Condition 11:
“If the Seller's Conveyancers serve a Notice to complete the Seller shall not be obliged to complete until the Buyers pay Seller's Conveyancers
(a) monies due on completion including interest and …. ”
Special Condition 24:
“The purchaser's Solicitors will pay to the vendor's Solicitors upon completion the additional sum of £4,497.91 to recoup the Vendor of the losses incurred to date due to the owner of the Ground Floor Flat which is made up as follows:”
The make–up of the £4,497–odd is set out. I pause to say that something has gone wrong with the grammar of that condition, but the sense of it is reasonably plain.
Special Condition 25, which has been added in handwriting:
“Prior to the date hereof the Seller's Solicitors have served notice pursuant to section 5 Landlord and Tenant Act 1987 upon the qualifying tenants of the property. This agreement is conditional upon the said tenants not exercising their rights under the 87 Act. If the said tenants do exercise their rights under the Act, then this Agreement shall be null and void in all respects and the deposit paid hereunder shall be returned in full with interest. If the said tenants do not exercise their rights under the Act, then completion shall take place 10 days after the date upon which the said tenants' rights to proceed under the Act have expired. Such date shall be 24 th January 2007.”
Then Special Condition 26, also in handwriting:
“The purchaser will be responsible for the legal costs incurred by the vendor in relation to the sale of the above being £500 plus VAT, plus office copies of £12.00.”
I should also refer to certain of the standard conditions. Standard Condition 6.8, headed “Notice to complete”, provides:
“6.8.1. At any time on or after completion date a party who is ready, able and willing to complete may give the other a notice to complete.”
“6.8.2. The parties are to complete the contract within 10 working days of giving a notice to complete, excluding the day on which the notice is given. For this purpose time is of the essence of the contract.”
Standard Condition 1.1.1 defines working day as “any day from Monday to Friday (inclusive) which is not Christmas Day, Good Friday or a statutory Bank Holiday”.
Standard Condition 7.5, headed “Buyer's failure to comply with notice to complete”, provides:
“7.5.1. If the buyer fails to complete in accordance with a notice to complete, the following terms apply:
7.5.2. The seller may rescind the contract, and if he does so:
(a) he may;
(i) forfeit and keep any deposit and accrued interest;
(ii) resell the property and any chattels included in the contract;
(iii) claim damages.”
Then by 7.5.2 (b): “the buyer is to return any documents he received from the seller and is …. to cancel any registration of the contract,” and by 7.5.3: “The seller retains his other rights and remedies”.
5. Both parties to the sale had lawyers or conveyancers acting for them. The claimant had a firm of solicitors called Gelbergs, with the matter being handled by one of the firm's partners, a Mr. Graham Taylor. The defendants acted by licensed conveyancers called Cain Associates, initially through an associate called Nicola Walsh and subsequently by a partner, Joseph Mann.
6. By 18 th January 2007, it seemed very likely that the tenants would not be exercising their right to acquire the defendants' interest in the property and therefore that the contract would be proceeding to completion. But at this point a difference of opinion surfaced between the parties' advisers over the identity of the contractual completion date. Initially the defendants' advisers took the view, mistakenly, that the contractual completion date was 24 th January 2007, the date appearing at the end of Special Condition 25. In that belief, and on the basis that the completion monies had not been tendered on that day, Cain Associates served notice to complete under Standard Condition 6.8.1 in purported exercise of their clients' right to do so under the contract.
7. Gelbergs, who had been supplied a few days earlier with copies of the section 5 notices which had been served, immediately responded by pointing out that this involved a misreading of Special Condition 25. They did so in a letter to Cain Associates, dated 25 th January, in which, omitting irrelevant immaterial parts, they stated:
“Clause 25 of the contract is clear in that completion is to take place 10 days after the date on which the Tenants rights to proceed under the Act [that is the Landlord and Tenant Act 1987] expire. This date was stated in the contract to be 24th January 2007 thus making the completion date envisaged by the terms of the contract 3 rd February 2007, which is of course a Saturday.
This point is somewhat irrelevant as the actual date stated on the Notices served by you as being the date of expiry of the Tenants rights, is stated to be 1 st February 2007. Accordingly, the 10 day period would expire on Sunday 11 th February 2007 and accordingly completion would be due to take place on 12 th February 2007.”
8. Accepting that their notice to complete was indeed premature, Cain Associates wrote to Gelbergs on 31 st January to confirm that the notice to complete was withdrawn. However, contrary to the contentions in Gelbergs' letter, Cain Associates maintained that the contractual completion date would be 10 days after 24 th January, i.e., on 3 rdFebruary 2007. Gelbergs again countered that this was wrong, that the 10 days fell to be calculated by reference to the date when by their terms the section 5 notices expired, namely 1 st February, and that as the 10 th day so calculated fell on a Sunday, contractual completion would fall on Monday, 12 th February 2007.
9. Sticking to their view of the contract, Cain Associates on 5 th February served a fresh notice to complete. Once again, Gelbergs challenged the validity of the notice. They again pointed out that the contractual completion date was intended to be 10 days after the date on which the tenants' rights under the 1987 Act expired and that in accordance with the notices served on the tenants, specifying 1 st February as the latest date for acceptance, the 10–day period would not start to run until after 1 st February.
10. No doubt accepting that Gelbergs' view of Special Condition 25 might be right, Cain Associates served a further notice to complete – the third in this dispute – on Monday, 12 th February. It was expressed to be without prejudice to any previous notice served. It was served not least because Gelbergs' client, the claimant, had still failed to tender the completion monies.
11. Nothing material then seems to have occurred until 2.44 p.m. on 26 th February when Cain Associates received by telegraphic...
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