Robert James Oakley, Carolyn Oakley, Jonathan Mark Page, Union Pension Trustees Limited, Morgan Lloyd Trustees Limited v Harper McKay Developments Limited [2018] EWHC 3405 (Ch)

The Court recently had to consider whether claimant sellers were entitled to rescind a contract on the basis that they may not have been ready, willing and able to complete when they served a notice to complete.

Contracts were exchanged for a property to be sold to a buyer to convert it to flats. The buyer failed to complete due to issues with funding and the sellers served a notice to complete. Following the buyer’s failure to complete by the date in the notice the seller served a notice to rescind the contract.

The buyer argued that the sellers were not entitled to rescind the contract as copyright to plans and report relating to the property had not been assigned to the buyer as required by the contract when the notice to complete was served. The buyer also argued that the seller had not allowed it access to the property as required by the contract. The buyer accordingly counterclaimed for breach of contract.

The Court decided that the seller was entitled to rescind the contract. Whilst the sellers had not “assigned” the copyright they had granted the buyer a licence to use it and confirmed that the assignment would take place on completion. The buyer had waived the right to insist on an assignment having raised no objection regarding the form of the rights being offered.

The Court found that whilst the contract allowed the buyer access to the property for the purpose of the conversion works in fact the buyer had neither started the works nor requested access to start them. In any event the lack of access had no impact on the failure to complete.

Key points

  • Once a notice to complete is served, time is made of the essence for both parties, and if the party serving the notice is not ready to complete by the date fixed in the notice, it would be in breach of an essential condition of the contract
  • Satellite issues which do not actually prevent a buyer from completing will not be considered by a Court on the issue of the seller's ability to serve a notice to complete
  • A buyer who exchanges contracts on a property before concluding the necessary financial arrangements for that purchase does so at risk
  • Where a buyer fails to complete ordinarily, as in this case, the seller is entitled to retain the deposit. The seller is also entitled to sell the property and to claim damages for breach of contract