Ng v Ashley King (Developments) Ltd
| Jurisdiction | England & Wales |
| Judge | THE HON MR JUSTICE LEWISON,Mr Justice Lewison |
| Judgment Date | 11 March 2010 |
| Neutral Citation | [2010] EWHC 456 (Ch) |
| Docket Number | Case No: CH.2009.APP.0705 |
| Court | Chancery Division |
| Date | 11 March 2010 |
[2010] EWHC 456 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Before : The Hon Mr Justice Lewison
Case No: CH.2009.APP.0705
Mr David Berry of Berry & Walton for the Claimants
The Defendant appeared by its representative Mr John Walton
Hearing dates: 4 th March 2010
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Mr Justice Lewison:
In 2003 Mr and Mrs Ng bought a house at 5 Babingley Place, Kings Lynn from Ashley King Developments Ltd, who had built it. They said that it had been so badly built that it was unsaleable. The resulting dispute between them and Ashley King was compromised as a result of a mediation in March 2008. The compromise involved Ashley King agreeing to buy back the house for £380,000. A contract recording that bargain was made between them on 18 March 2008. On the front sheet of the contract the deposit was stated to be “nil”. On the following day Mr and Mrs Ng entered into a contract with Mr Sharp to buy the house next door at 4 Babingley Place, also for £380,000. On the front sheet of that contract the deposit was also stated to be “nil”. Completion of each contract was to take place 28 days after written notice from the seller to the buyer. Both contracts incorporated the Standard Conditions of Sale 4 th edition. Both contracts also incorporated special conditions. Special condition 7 of each contract provided:
“In the event of the deposit amounting to less than 10% of the total price, if the Seller is ready willing and able to complete but the buyer for whatever reason does not complete, then the balance of the full 10% deposit herein shall forthwith become due and payable by the buyer to the seller without any further notice warning or request by the Seller's solicitors and without prejudice to any other rights or remedies of the Seller.”
Standard condition 6.8 deals with the service of a notice to complete. Condition 6.8.3 says:
“On receipt of a notice to complete:
(a) if the buyer paid no deposit he is forthwith to pay a deposit of 10 per cent.”
Standard condition 7.3 is headed “Late completion”. It provides (so far as relevant):
“7.3.1. If there is default by either or both of the parties in performing their obligations under the contract and completion is delayed, the party whose total period of default is the greater is to pay compensation to the other party.
7.3.2 Compensation is calculated at the contract rate on an amount equal to the purchase price and the chattels price, less (where the buyer is the paying party) any deposit paid, for the period by which the paying party's default exceeds that of the receiving party, or, if shorter, the period between completion date and actual completion.
7.3.3. Any claim for loss resulting from delayed completion is to be reduced by any compensation paid under this contract.”
Standard condition 7.5 says (so far as relevant):
“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
(b)….
7.5.3 The seller retains his other rights and remedies.”
Mr and Mrs Ng gave notice under their contract with Ashley King on 3 April 2008, with the result that completion was due on 1 May. Ashley King failed to complete; and this had the knock on effect that Mr and Mrs Ng could not complete their purchase of No 4. On 2 May 2008 Mr and Mrs Ng gave formal notice to complete under standard condition 6.3. Ashley King still failed to complete. On 24 June 2007 Mr and Mrs Ng issued proceedings for specific performance; and an order in their favour was made on 11 July 2008. That order also included an order that Ashley King make a payment of £1,000 on account of damages. Ashley King still failed to complete. By November Mr and Mrs Ng had given up hope of compelling completion and applied for the order of specific performance to be discharged, so that they could recover damages instead. The order for specific performance was discharged on 10 November 2008, and Ashley King were ordered to pay £37,000 as a further payment on account of damages. Ashley King have complied with the orders to pay money on account. So Mr and Mrs Ng have received an amount equal to the 10 per cent deposit required by the contract. They have, of course, also retained ownership of No 5.
While their dispute with Ashley King was proceeding, Mr and Mrs Ng tried to save their contract to purchase No 5. They were also put to incidental expense (such as the abortive costs of hiring a removal van; and the cost of hotel accommodation). Mr Sharp had served them with notice to complete on 6 May 2008; but without the money from Ashley King, they could not comply with that notice. Mr and Mrs Ng agreed an extension of time with Mr Sharp; but there was a price to pay. On 13 June 2008 Mr Sharp agreed to extend time for completion by 28 days in return for a payment of £11,500-odd. This was made up of £4,861.47 in respect of costs that Mr Sharp said he had incurred and £6,652.70 interest. The interest represented interest on the whole of the purchase price. On 28 July 2008 Mr Sharp terminated the contract because of Mr and Mrs Ng's inability to complete and demanded the deposit of £38,000 due from them under special condition 7 or Standard condition 6.8.3 of their purchase contract. In October 2008 Mr and Mrs Ng granted a charge in favour of Mr Sharp to secure payment of the deposit. On 3 December Mr and Mrs Ng redeemed that charge and paid Mr Sharp the deposit of 10 per cent plus interest.
The assessment of damages payable by Ashley King to Mr and Mrs Ng came before DJ Wharton in the Chancery Division, Peterborough District Registry. Mr and Mrs Ng's claims were set out in a Scott Schedule. They included:
i) The deposit of £38,000 payable to them under their contract with Ashley King. Ashley King accepted liability for this, subject to that sum being brought into account in the overall assessment of damages.
ii) The deposit of £38,000 payable by them under their contract with Mr Sharp. Ashley King admitted liability for one deposit only. The claim also included the amount that Mr and Mrs Ng had paid to Mr Sharp in order to redeem the charge. On the face of it this item duplicated the claim for the deposit that was payable to Mr Sharp under the contract.
iii) Interest on the contract sum of £380,000 payable under their contract with Ashley King at the rate of 9 per cent on £380,000 for 193 days, from the completion date to the date on which the order for specific performance was discharged. This amounted to £6,600. Ashley King denied liability.
iv) The interest, amounting to £6,653, that Mr and Mrs Ng had agreed to pay Mr Sharp as the price of the extension of time. Ashley King denied liability.
The judge held a hearing over two days on 9 July 2009 and 14 September 2009. On 20 October 2009 he sent a draft judgment to the parties “to be handed down on a date to be fixed”. In that draft he said that:
i) It was reasonably foreseeable that upon exchanging contracts to sell No 5 to Ashley King Mr and Mrs Ng would simultaneously enter into a contract to buy another house; and that if Ashley King failed to complete the purchase of No 5, Mr and Mrs Ng would be unable to complete their associated purchase. Not only that, but Ashley King actually knew that Mr and Mrs Ng intended to buy elsewhere concurrently with the sale of No 5.
ii) He could see no possible difference of principle between bringing a forfeited deposit into account where there is a resale and where there is not; and he could see no difference in principle in requiring a vendor to give credit for a forfeited deposit against liquidated damages or special damages incurred by reason of a purchaser's failure to complete.
iii) Mr and Mrs Ng were entitled to recover the deposit payable to them by Ashley King, but it must be set off against other damages.
iv) Mr and Mrs Ng were entitled to recover the deposit paid by them to Mr Sharp. But it too had to be set off against other damages. He also appears to have allowed the amount that Mr and Mrs Ng had paid to redeem the charge in favour of Mr Sharp.
v) Mr and Mrs Ng were not entitled to recover contractual interest, because that was only payable for late completion; and completion had not taken place.
vi) Mr and Mrs Ng were not entitled to recover the interest that they had paid to Mr Sharp because they were not legally liable to pay it (since completion of their purchase had not taken place); and the judge was not satisfied that the payment was a reasonable compromise.
On receipt of the draft judgment Mr Berry, Mr and Mrs Ng's solicitor, submitted a form of draft order. The draft order required Ashley King to pay £76,000 (the deposit on Mr and Mrs Ng's sale and the deposit on their purchase) plus interest on that sum. The set off to which the judge referred was given effect by not including any of the other sums that he had allowed as damages. Ashley King's solicitors considered that his draft did not reflect what the judge had decided. The fundamental point of disagreement was whether the judge had decided that Mr and Mrs Ng were entitled to recover the deposit payable to them by Ashley King without bringing that sum into account in the overall assessment of damages. After an exchange of e-mails the judge sent an e-mail to both solicitors on 9 November 2009 in which he said:
“I...
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