Having Your Cake and Eating It? Union Eagle v Golden Achievement Ltd

Published date01 March 1998
Date01 March 1998
Having your Cake and Eating It? Union Eagle Ltd v
Golden Achievement Ltd
John Stevens*
In Union Eagle Ltd vGolden Achievement Ltd1the Privy Council considered
whether equitable relief was available to a purchaser of land who had failed to meet
a contractual time stipulation by a mere ten minutes, and whose deposit of 10 per
cent of the purchase price had been forfeited. It concluded that equity cannot grant
relief from the effect of rescission in the context of an ordinary contract for the sale
of land where time was of the essence. Although the refusal of specific performance
may be justifiable for commercial policy reasons the refusal to grant relief against
forfeiture of the deposit seems unduly harsh, and the stated limitations to the scope
of the equitable jurisdiction to grant relief unnecessarily restrictive.
The facts
The appellant contracted to purchase a flat in Hong Kong for $HK4.2m on 1 August
1991. The contract specified that a deposit of 10 per cent of the purchase price was
payable and that completion was to take place before 5.00pm on 30 September.
Clause 12 of the parties’ agreement stated that if the purchaser failed to complete by
the specified deadline the 10 per cent deposit would be ‘absolutely forfeited as and
for liquidated damages (and not a penalty)’ to the vendor, who would be entitled to
rescind the contract. On the 30 September the purchaser was warned that the vendor
would exercise his right to rescind the contract if the balance of the purchase price
was not paid by 5.00pm. At 5.01pm the vendor informed the purchaser that he
reserved his right to rescind and forfeit. The purchaser replied that a messenger was
in transit with a cheque, which was delivered at 5.10pm. On receipt the vendor
opened the envelope, but at 5.11pm he rescinded the contract and returned the
cheque, and forfeited the 10 per cent deposit.
In these circumstances the purchaser claimed either that the vendor had not been
entitled to rescind the contract, or that if such rescission was permissible that he
should be entitled to receive equitable relief from the effects thereof, including
relief from forfeiture of the deposit. First, the purchaser argued that at 5.10pm he
had still been entitled to complete the purchase because the vendor had not at that
point accepted his repudiatory breach and rescinded the contract, which had
therefore remained alive for the benefit of both parties. The Privy Council rejected
this analysis holding that although a contract remains alive for both parties until the
acceptance of a repudiatory breach the party in breach is not entitled to unilaterally
tender performance other than in accordance with its terms. Secondly, it was
argued that the vendor had affirmed the contract by opening the envelope delivered
ßThe Modern Law Review Limited 1998 (MLR 61:2, March). Published by Blackwell Publishers,
108 Cowley Road, Oxford OX4 1JF and 350 Main Street, Malden, MA 02148, USA. 255
* Faculty of Law, University of Birmingham.
1 [1997] 2 All ER 215. See J.D. Heydon [1997] 113 LQR 385; M.P. Thompson [1997] Conv 382.

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