Raineri v Miles

JurisdictionEngland & Wales
JudgeLORD JUSTICE BUCKLEY,LORD JUSTICE BRIDGE,LORD JUSTICE TEMPLEMAN
Judgment Date06 July 1979
Judgment citation (vLex)[1979] EWCA Civ J0706-5
Docket Number1977 R No. 3749
CourtCourt of Appeal (Civil Division)
Date06 July 1979
Between:
Carlo Raineri
Plaintiff
and
Gruffydd Royston Miles
Defendants
(Appellants)
and
Beryl Miles
and
Sygmont Wiejski
Third Parties
(Respondents)
and
Matilda Wiejski

[1979] EWCA Civ J0706-5

Before:

Lord Justice Buckley

Lord Justice Bridge and

Lord Justice Templeman

1977 R No. 3749

In The Supreme Court of Judicature

Court of Appeal (Civil Division)

On Appeal from The High Court of Justice

Chancery Division

Group B

(Mr. Justice Whitford)

MR. ALAN STEINFELD (instructed by Messrs. Collyer-Bristow & Co., Solicitors, London, agents for Messrs. Barlows and Wells & Philpot, Solicitors, Guildford) appeared on behalf of the Defendants (Appellants).

MR. JOHN WEEKS (instructed by Messrs. Waterhouse & Co., Solicitors, London, agents for Messrs. Hart, Brown & Co., Solicitors, Guildford) appeared on behalf of the Third Parties (Respondents).

THE PLAINTIFF was neither present nor represented.

LORD JUSTICE BUCKLEY
1

This case raises a point of general interest on the law of the sale of land. It seems, surprisingly, to be devoid of direct judicial authority. If one party to a contract for the sale of land fails to complete the contract on the stipulated completion date for reasons unconnected with making or accepting a good title to the land or other conveyancing reasons, the other party being then able, ready and willing to complete, whereby the innocent party suffers damage, and if the innocent party thereafter serves a notice to complete the contract within a stipulated reasonable time and the party in default does complete the contract within that time, can the innocent party recover the damage he has suffered by reason of the original default?

2

By a contract dated 14th June 1977 the third parties in this action agreed to sell a freehold residential house in Guildford to the defendants for £25,500. The contract incorporated the Law Society's Conditions of Sale 1975, with the exclusion of Condition 6 (1) and 16 (4). It provided that the purchase should be completed on or before 12th July 1977, when vacant possession should be given to the purchasers.

3

The defendants, also on 14th June 1977, entered into a contract for the sale by them to the plaintiff of the house in Ealing in which they were then living. That contract also stipulated that the transaction should be completed on 12th July 1977, with vacant possession on completion.

4

In neither case was the time for completion expressed to be of the essence of the contract.

5

The third parties had contracted to buy another house. For this purpose they apparently needed to raise £30,000 which theyproposed to do by way of two mortgages of that other house, each for £15,000. One of the lenders, however, proved at a very late stage to be unwilling to lend more than £10,000 with the result that the third parties were £5,000 short of the amount necessary to complete their purchase.

6

Late on Monday 11th July the defendants' solicitors were told that the third parties could not complete their contract with the defendants on the following day. They immediately informed the plaintiff's solicitors, but the plaintiff himself had already vacated his previous house, which was in Warrington, and was on the road to London with his furniture, intending to take possession of the house in Ealing on the following day, 12th July.

7

In consequence of the third parties' failure to complete their contract with the defendants on 12th July 1977, the defendants were prevented from giving the plaintiff vacant possession of the house at Ealing and so could not complete their contract with the plaintiff on that day in accordance with its terms.

8

On 13th July 1977 the defendants, being then able, ready and willing to complete the contract, gave the third parties notice pursuant to Condition 19 of the Law Society's General Conditions of Sale to complete their contract within 28 days. The third parties' financial difficulties were resolved in time to enable them to vacate the house in Guildford and complete their contract with the defendants on 11th August 1977. The defendants' contract with the plaintiff was completed on the same day and the plaintiff was let into possession of the Ealing house. Between 12th July and 11th August the plaintiff had necessarily incurred expense in providing himself and his family with living accommodation. He sued the defendants in damages and recovered summary judgment fordamages to be certified on inquiry. The defendants served the third parties with a third party notice claiming indemnity against the plaintiff's claim on the ground of the failure of the third parties to give vacant possession of the house at Guildford on or before 12th July. The third party proceedings came before Mr. Justice Whitford who, on 19th October 1978, dismissed them. The defendants appeal from that decision.

9

It was common ground before Mr. Justice Whitford that, if the third parties were in breach of their contract by reason of their failure to complete on 12th July 1977. they were liable to indemnify the defendants against their liability to the plaintiff. The third parties' case here and below has been that they were never in breach of their contract. They contend that on the true construction of that contract they were only bound to complete on 12th July 1977 or within a reasonable time thereafter. Consequently there could be no breach until a reasonable time after 12th July had elapsed. They further submit that the effect of the notice to complete was to substitute for 12th July 1977 a new date for completion, and that they fulfilled the contract as so varied. The learned judge reached his conclusion on the following ground stated at the end of his judgment: "I have come to the conclusion that accepting, as on the authorities I think I ought to accept, that notwithstanding the fact that a failure to meet an original date for completion may not constitute a breach sufficient to bring an agreement to an end it may nonetheless in appropriate circumstances amount to what could be described as a partial breach giving rise to a good claim in damages, it does in fact only do so if the failure arose from some unreasonable action or inaction on the side of the person who failed. Theclaim can only be good if it can be established that a person in default had not acted reasonably in doing what they in fact did. It was not suggested before me that any such case could be made out against the third parties on the facts and in the result I have come to the conclusion that the defendants are not entitled to the relief which they seek against the third parties".

10

It will be convenient to deal first with the point of construction. Upon this Mr. Weeks, for the third parties, relied on three authorities, Babacomp Ltd. v. Bightside Properties Ltd., (1973) 3 All England Reports, 873; Woods v. MacKenzie Hill Ltd., (1975) 1 Weekly Law Reports, 613 and Smith v. Hamilton (1951) Chancery, 174. In the first of these cases purchasers, having given a notice to complete which was held to have made time of the essence of the contract, and with which the vendors had not complied, sued for return of their deposit and damages. They were successful. The original time for completion in that case was 60 days after 12th July 1972, which was the date of the contract. On 31st October 1972 the purchasers wrote the letter set out in the judgment at page 874 at H. Mr. Justice Goff held (at page 877 at H) this letter to be a sufficient notice to make time of the essence pursuant to the contract. The learned judge, having held that the purchasers' case did not there depend on repudiation by the vendor, said: "As time was originally not of the essence, there was no breach of contract either at law or in equity at the expiration of 60 days, but provided proper steps were taken to make time of the essence, then the defendants' failure to perform on the date so made essential would be a breach of contract at law and in equity". He then cited a passage from Williams on Vendor and Purchaser, 4th Edition page 991, whichincludes the following: "It follows that, except where time is of the essence of the stipulation, a breach of contract is only committed in the case of unreasonable delay in the performance of any act agreed to be done. For example, where time is not essential, a party failing to complete a sale of land on the day fixed therefore by the agreement does not then commit a breach of contract either in equity or law; it is only on failure to complete within a reasonable time after that date that the contract is broken". The plaintiffs' right to relief in that action did not depend upon whether there had been a breach of contract at the expiration of the 60 day period. Once it had been decided that the letter of 31st October 1972 was an effective notice to complete for the purposes of the contract, the plaintiffs' right to relief flowed from the undoubted breach of contract involved in the vendors' not completing in accordance with that notice. Consequently the passage which I have read from the judgment was, in my opinion, obiter.

11

In Woods v. MacKenzie vendors sued for specific performance for a contract of sale of land. The contractual date for completion was 30th September 1974, but the contract was not then completed. Two of the three vendors purported to give a notice to complete pursuant to the contract, but this was invalid. On 8th November 1974 the vendors issued a writ claiming specific performance. Mr. Justice Megarry held that the service of a notice to complete was not a condition precedent for the enforcement of the contract and that, since more than a reasonable time for completion had elapsed, the plaintiffs were entitled to specific performance. In the paragraph which starts at the foot of page 615, Mr. Justice Megarry twice refers to the contractualobligation of the parties "to complete on the date fixed for completion or within a reasonable...

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