Woodar Investment Development Ltd v Wimpey Construction U.K. Ltd

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Wilberforce,Lord Salmon,Lord Russell of Killowen,Lord Keith of Kinkel,Lord Scarman
Judgment Date14 Feb 1980
Judgment citation (vLex)[1980] UKHL J0214-3

[1980] UKHL J0214-3

House of Lords

Lord Wilberforce

Lord Salmon

Lord Russell of Killowen

Lord Keith of Kinkel

Lord Scarman

Woodar Investment Development Limited
(Respondents)
and
Wimpey Construction U.K. Limited
(Appellants)
Lord Wilberforce

My Lords,

1

The appellants ("Wimpey") are defendants in this action brought by the respondents ("Woodar") upon a contract of sale dated 21st February 1973. This contract related to 14 acres of land at Cobham, Surrey, near to the site later occupied by the Esher by-pass. There was the prospect of planning permission being granted for development. The purchase price was £850,000 and there was a special condition (Condition I) that upon completion the purchasers should pay £150,000 to a company called Transworld Trade Ltd. Completion was fixed for the earliest of three dates namely (i) two months from the granting of outline planning permission for the development of the property, (ii) 21st February 1980, (iii) such date as the purchaser should specify by not less than 14 days' notice in writing.

2

The contract contained a special Condition E under which there was reserved to the purchasers power to rescind the contract in either of three events. The first related to failure to obtain outline planning permission, the second to failure to obtain an easement giving access to the property, the third (E(a)(iii)) was in the following terms:

"[if prior to the date of completion]

(iii) Any Authority having a statutory power of compulsory acquisition shall have commenced to negotiate for the acquisition by agreement or shall have commenced the procedure required by law for the compulsory acquisition of the property or any part thereof."

3

On 20th March 1974 the appellants sent to the respondents a notice in writing purporting to rescind the contract under this provision. The notice stated that the ground relied on was that the Secretary of State for the Environment had commenced the procedure required by law for the compulsory acquisition of 2�3 acres of the property.

4

It was in fact known to both parties at the date of the contract that certain steps had already been taken in relation to these 2�3 acres. In 1970 the Minister had given notice to the then owner of a draft compulsory purchase order, and this fact had been published in the local press. Notice had been given of the appointment of an Inspector to hold a public inquiry, and this was held. A compulsory purchase order was made on 8th November 1973. On these facts, the respondents contended that Special Condition E(a)(iii) could not be invoked by the appellants because the relevant procedure for compulsory purchase had started before the date of the contract, and so did not come within the words "shall have commenced". This contention was upheld by Fox J. at the trial and was not the subject of appeal, so that the appellants' claim to invoke the condition has failed.

5

This gives rise to the first issue in this appeal: whether, by invoking Special Condition E(a)(iii), and in the circumstances, the appellants are to be taken as having repudiated the contract. The respondents so claim, and assert that they have accepted the repudiation and are entitled to sue the appellants for damages

6

My Lords, I have used the words "in the circumstances" to indicate, as I think both sides accept, that in considering whether there has been a repudiation by one party, it is necessary to look at his conduct as a whole. Does this indicate an intention to abandon and to refuse performance of the contract? In the present case, without taking the appellants conduct generally into account, the respondents' contention, that the appellants had repudiated, would be a difficult one. So far from repudiating the contract, the appellants were relying on it and invoking one of its provisions, to which both parties had given their consent. And unless the invocation of that provision were totally abusive, or lacking in good faith, (neither of which is contended for), the fact that it has proved to be wrong in law cannot turn it into a repudiation. At the lowest, the notice of rescission was a neutral document consistent either with an intention to preserve or with an intention to abandon the contract, and I will deal with it on this basis�more favourable to the respondents. In order to decide which is correct the appellants' conduct has to be examined.

7

One point can, in my opinion, be disposed of at once. The respondents, in March 1974 started proceedings against the appellants: this is one of the actions consolidated in the litigation before us. They claimed a declaration that the appellants' notice of rescission was not valid, and the appellants, by their defence, asserted the contrary and they counterclaimed for a declaration to that effect. The respondents now contend that if the original notice did not amount to a repudiation, the defence and counterclaim did. I regard this contention as hopeless. The appellants' pleading carried the matter no further: it simply rested the matter on the contract. It showed no intention to abandon the contract whatever the result of the action might be. If the action were to succeed (i.e. if the appellants lost) there was no indication that the appellants would not abide by the result and implement the contract.

8

The facts indicative of the appellants' intention must now be summarised. It is clear in the first place that, subjectively, the appellants, in 1974, wanted to get out of the contract. Land prices had fallen, and they thought that if the contract were dissolved, they could probably acquire it at a much lower price. But subjective intention is not decisive: it supplied the motive for serving the notice of rescission : there remains the question whether, objectively regarded, their conduct showed an intention to abandon the contract.

9

In early 1974, there was a possibility that some planning permission might be granted. If it were, and unless the purchasers could take valid objection to it, completion would (under the Conditions) have to follow in two months. Therefore, if a notice of rescission were to be given, it had to be served without delay, i.e. before the planning permission arrived. In this situation, the appellants' advisers arranged a meeting with a Mr. Cornwell, who was acting for the vendors, or as an intermediary with power to commit the vendors, to discuss the matter. This took place on 7 March 1974 and is recorded as a disclosed aide memoire dated the next day. This document was prepared by the appellants, and we have not the benefit of Mr. Cornwell's evidence upon it: he had died before the trial. But the rest of the correspondence is fully in line with it and I see no reason to doubt its general accuracy. After recording each side's statement of position, the document contained (inter alia) these passages:

"He [Mr. Cornwell] stated that if we attempted to rescind the contract, then he would take us to court and let the judge decide whether the contract could be rescinded on the point we were making."

10

This "point" was undoubtedly that relating to the compulsory purchase of the 2.5 acres.

"I told him that our Legal Department would be serving the Notice to Rescind the Contract within a short while�this would ensure that the company was fully protected and was prudent. He assured me that he would accept it on that basis and not regard it as a hostile act."

11

The notice was then served on 20 March 1974. On 22 March the respondents' solicitors wrote that they did not accept its validity. On 30 May 1974 Mr. Cornwell wrote a long letter to Sir Godfrey Mitchell, President of Wimpey.

12

I refer to one passage:

"� within a few days of the original meeting, a notice of rescission was served upon the vendor company by your organisation that the contract was to be rescinded. Simultaneously with that notice or rescission, proceedings were instituted and there the matter remains so far as the legal situation is concerned and both parties, from the legal point of view, must now await the decision of the court as to the validity of the claim made by Messrs. George Wimpey & Co. Limited that they are entitled to rescind this contract upon the grounds which they have so stated."

13

On 4th June 1974 Mr. Cornwell wrote again:

"All I need say now is that we will retire to our battle stations and it goes without saying I am sure that you will abide by the result as I will."

14

My Lords, I cannot find anything which carries the matter one inch beyond, on Wimpey's part, an expressed reliance on the contact (Condition E(a)(iii)), on Woodar's side an intention to take the issue of the validity of the notice (nothing else) to the courts, and an assumption, not disputed by Wimpey, that both sides would abide by the decision of the court. This is quite insufficient to support the case for repudiation. There is only one other matter relied on. At the date of the contract (21st February 1973) there were arrangements made for a loan of £165,000 to be made to the respondents by the National Westminster Bank. The appellants guaranteed�subject to three months' notice of termination�the respondents' indebtedness to the Bank up to £165,000 and agreed with the Bank to meet interest and other charges. As between the appellants and the respondents it was agreed that the appellants should indemnify the respondents against all interest on the loan for seven years or until the contract should be "fulfilled or discharged". These arrangements did not form part of the contract of sale but were collateral to it.

15

When the notice of rescission was served on 20th March 1974, it was accompanied by a covering letter, of the same date, referring to the loan arrangements. It stated:

"The undertaking was limited to seven years from the date of exchange, or until the contract was fulfilled or discharged. As the contract is now...

To continue reading

Request your trial
215 cases
3 firm's commentaries
  • Property & Real Estate - What's News - 31 May 2016
    • Australia
    • Mondaq Australia
    • 6 June 2016
    ...and considering all the circumstances of the case - Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] UKHL 11; (1980) 1 WLR 277 - DTR Nominees Pty Ltd v Mona Homes Pty Ltd [1978] HCA 12; (1978) 138 CLR 423 - Sopov v Kane Constructions Pty Ltd (2007) 20 VR Houlahan & ......
  • Court Of Appeal Clarifies And Restates Test For Repudiatory Breach Of Contract
    • United Kingdom
    • Mondaq United Kingdom
    • 22 February 2011
    ...of the contract breaker. Thus (as Lord Wilberforce had observed in Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277), subjective intention is not necessarily decisive. It may supply a motive but it does not remove the requirement to test whether, on an objecti......
  • Charterers Held to be in Repudiatory Breach of 5 Year Consecutive Voyage Charter
    • United Kingdom
    • Mondaq United Kingdom
    • 29 June 2010
    ...The judge dismissed FMG's argument - based on the principle set out in Woodar Investment Development Ltd v. Wimpey Construction UK [1980] 1 WLR 277 - that their stance reflected a genuine but mistaken view of the contractual terms, including their mistaken belief that they were entitled to ......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT