Smith v Hamilton
| Jurisdiction | England & Wales |
| Date | 1950 |
| Court | Chancery Division |
Vendor and purchaser - Contract for sale of land - Claim for return of deposit - Failure to complete on date fixed - Notice making time essence of contract - Validity.
On February 26, 1949, the plaintiff signed a memorandum acknowledging that she had purchased for 3,000l. a house belonging to the defendant, subject to the attached conditions. She paid a deposit of 300l. to estate agents who held the money as stakeholders. Completion with vacant possession was fixed for April 4, 1949. The conditions of sale adopted the National Conditions of Sale (15th ed.), so far as not inconsistent with the special conditions of sale.
The purchaser, having experienced difficulty in raising the rest of the purchase money, on March 29, 1949, wrote by her solicitors that it would not be possible for her “to complete the purchase on the date fixed by the contract”. The vendor thought that the purchaser would be unable to find the money, and on April 5, 1949, wrote by his solicitors that he could not agree to an extension of time to complete and that he reserved all his rights under the contract of sale; but he was, he wrote, prepared without prejudice to delay exercising those rights until April 19. The vendor refused the purchaser's application for an extension of time. By April 19, 1949, she had not completed the sale, and the vendor notified her that, as she had failed to complete, the deposit had become forfeit and the vendor proposed to exercise his right of re-sale forthwith. The purchaser was, by May 4, 1949, in a position to complete the purchase, but the property had been sold on April 21, 1949.
Condition 25 (1) of the National Conditions of Sale (15th ed.) provides: “If the purchaser shall neglect or fail to complete his purchase according to these conditions, his deposit shall thereupon be forfeited (unless the court otherwise directs) to the vendor … and the vendor may, with or without notice or without previously tendering a conveyance, re-sell the property at such time, and in such manner and subject to such conditions as he shall think fit”.
The purchaser by this action claimed the return of her deposit. The vendor counterclaimed for a declaration that the deposit was forfeited, contending that time was of the essence of the contract; that that could be inferred from the conduct of the parties before the contract was signed; that if time was not originally of the essence of the contract the purchaser's letter of March 29 had entitled the vendor to make it so; and that his letter of April 5 was a sufficient notice of that fact.
Held, (1.) that time was not of the essence of the contract, and there was nothing in the conduct of the parties before they signed the contract from which that condition could be inferred; (2). that, time not being of the essence of the contract, the vendor could not of his own volition make it so, unless the purchaser had been guilty of some impropriety, and the purchaser's letter of March 29 announcing the reasons for delay did not constitute such an impropriety; (3.) that if the purchaser's letter of March 29 did entitle the vendor to make time of the essence of the contract, the latter's letter of April 5 did not have that effect, merely stating as it did that the vendor would rely on his rights under the contract; and even if it had been intended to make time of the essence of the contract, it would have failed to do so, because fourteen days was too short a notice for that purpose; (4.) that the vendor's rights under the contract were governed by condition 25 (1); that the true construction of the condition was that the purchaser should complete on the day fixed or within a reasonable time thereafter; but that such a time had not elapsed and the remedies given by that condition did not become available until the purchaser had, by her delay, deprived herself of the right to specific performance, which would not be so at the end of only fourteen days after the date fixed for completion.
The purchaser was, therefore, entitled to return of the deposit.
ACTION.
The defendants, George Hamilton, and his wife, Esther Grace Hamilton, were the owners of a house known as Castle House, Parkhill, Bexley, Kent. The first defendant was at the material times a member of a London firm of solicitors. His wife took no part in the events giving rise to the action and is not further referred to in this report.
In 1948, the defendant wished to sell Castle House for 3,500l. Having at first been unsuccessful in his attempts, early in 1949 he instructed a company of estate agents to sell it by auction. The sale was advertised to be held on March 3, 1949, in Bexley Heath. Shortly before that date, the plaintiff decided that she would like to acquire the house, and on February 26, 1949, after an interview with the agents, signed a memorandum on the back of the auction particulars, acknowledging that she had “this day purchased the property, subject to the attached conditions, at the price of 3,000l.”, and that she had paid 300l. by way of deposit to the estate agents.
She agreed to pay the remainder of the purchase money and to complete according to the National Conditions of Sale so far as they applied to a sale by private treaty. The 300l. which she paid as a deposit was held by the estate agents as stakeholders. Vacant possession was to be given by the vendor, who was in occupation, on completion of the purchase, which was fixed for April 4, 1949.
The conditions of sale incorporated the National Conditions of Sale (15th ed.), so far as not inconsistent with them. The National Conditions of Sale, so far as relevant, provide: “(1.) The day fixed for completion shall be the day mentioned for that purpose in the Special Conditions …”, that was, April 4. “(2.) On the day fixed for completion the purchaser shall pay the remainder of his purchase money at the office of the vendor's solicitor, or, if the vendor so requires, at the office of the solicitors of his mortgagees … (7.) (3) In respect of the delivery of objections, requisitions and replies, time shall be the essence of the contract … (25.) (1) If the purchaser shall neglect or fail to complete his purchase according to these conditions, his deposit shall thereupon be forfeited (unless the court otherwise directs) to the vendor … and the vendor may, with or without notice or without previously tendering a conveyance, re-sell the property at such time, in such manner and subject to such conditions as he shall think fit”.
Having entered into that contract, the purchaser endeavoured to find the purchase money, but found it more difficult than she had supposed. Meantime, the title was investigated and that part of the formalities was completed within the time allowed. On March 29, 1949, an engrossment of the conveyance was sent by the purchaser's solicitors to the vendor's solicitors with a letter stating: “… our client … has had some difficulty in connexion with the proposed...
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Behzadi v Shaftesbury Hotels Ltd
...(Plaintiff). MR. STEVEN WALSH (instructed by Messrs Gerard Hales & Co.) appeared on behalf of the Defendant. LORD JUSTICE NOURSE 1 In Smith v. Hamilton [1951] Ch. 174 Harman J. held that where one party to a contract for the sale of land fails to meet the date fixed for its completion, time......
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