Kalatara Holdings Ltd v Benedict Thomas Andersen & Anor

In this case the Claimant, Kalatara Holdings Limited, seeks summary judgment against the Defendants, Benedict Thomas Andersen and William Wentworth-Stanley, for specific performance of a contract for the sale of certain freehold property (“the Property”) situate at 200 Seagrave Road, London SW6, registered at the Land Registry under title number NGL479954 dated February 2007 (“the Contract”) and, in the alternative, for the repayment of a £250,000 deposit paid by the Claimant to the Defendants pursuant to its terms. The Property is a former hospital site owned by the West London Mental Health National Health Service Trust (“the Trust”) and the price payable under the contract was £4,650,000. At the date of the contract the Property was subject to a contract (“the Defendants’ Contract”) between the Defendants as purchasers and the Trust as vendors dated 22 December 2006 whereby the Defendants agreed to purchase the Property from the Trust for £3,350,000 under which the Trust had given the Defendants notice to complete, expiring on 1^st March 2007. It is common ground that it was the Defendants’ intention, at the time of the contract, to “roll over” their performance of the Defendants’ Contract so that title to the Property should pass directly from the Trustees to the Claimant, the purchase price being paid from the consideration paid to them under the Contract so attracting the benefit of Section 45 of the Finance Act 2003 (Section 45”) thereby avoiding the payment of Stamp Duty Land Tax (“SDLT”) otherwise payable under the Contract amounting to some £132,400. Pursuant to the Contract, completion was due to take place at 2.00 pm on 26 February 2007. In the result completion did not take place at that time or subsequently and the Defendants gave notice to rescind the Contract on 1 March 2007. For their part the Defendants seek summary judgment dismissing the claim on the basis that it stands no reasonable prospect of success and judgment on their counterclaim seeking a declaration that the Contract was validly rescinded and that they are entitled to retain the deposit paid under the Contract of £250,000 together with the further sum of £215,000 (totalling £465,000, being the 10% deposit payable under the Contract of which £215,000 has not been paid) which the Claimant should be ordered to pay. Both Claimant and Defendants seek orders for damages and interest.

The relevant provisions of the Contract are as follows: by the Recitals “Completion” meant “actual completion of the sale the subject of this Agreement” and “Completion Date” when read with clause 10.1 of the Contract meant that completion was to take place before 2.00 pm on 26 February 2007 at the offices of the Defendants’ solicitors or as they might direct. They gave no direction otherwise.

By clause 2.2 a deposit of £250,000 was payable by the Claimant on the signing of the contract without prejudice to the Defendants’ right “to claim the full 10% deposit at any time prior to Completion”.

Clause 4 of the contract provided for the Defendants to transfer the Property with limited title guarantee pursuant to Section 2(1)(A) of the Law of Property (Miscellaneous Provisions) Act 1994 giving rise to an implied covenant of title “that the person making the disposition has the right (with the concurrence of any other person conveying the property) to dispose of the property as he purports to.”

By clause 8 the Law Society’s Standard Conditions of Sale (Fourth Edition) (“the Standard Conditions”) were incorporated into the contract, excluding (materially) condition 6 save for condition 6.3, 6.4, 6.6 and 6.8.

The terms of the Contract governing completion were clauses 6, 10 and 18 of the contract and conditions 4.6.5 and 6 of the Standard Conditions. Clause 6 provided for vacant possession of the Property to be given on completion and, as already noted, clause 10.1 provided for the time for completion to be 2.00 pm on 26 February 2007. Clause 10.3 provided for the consideration payable by the Claimant on completion to be paid by direct credit transfer to a bank account nominated by the Defendants’ solicitors or, with the consent of the Defendants’ solicitors, by banker’s draft in their favour or to such other person as they might direct. Clause 10.3.2 further provided that “completion shall not be regarded as having been effected until such time as such drafts or monies have been so delivered or credited so as to be in unconditional possession of the relevant recipient” and clause 10.4 provided that the Defendants should “not be required to complete before 9.30 am or after 5.30 pm …”.

Clause 18 contained “supplementary completion provisions” as follows:-

“18.1

The Seller’s solicitors will supply to the Buyer:

18.1.1

the evidence of title of the registered proprietor from whom the Seller has purchased the Property.

18.1.2

a certified copy of the transfer of the Property to the Seller as nominee for the Buyer and the Buyer admits and accepts that the Seller’s title and shall not be entitled to raise any objection in respect of it or any document or event before the date of this Agreement and (without prejudice to the generality of the foregoing) the Seller shall not be required to give any better title to the Property than received on the occasion of his nominee purchase of the Property.

18.2

Completion will take place on the Completion Date notwithstanding that the registration of the transfer to the Seller has not been completed by that date.

18.3

At completion the Seller will supply the Buyer:

18.3.3

completed form AP1 together with completed form SDLT60 and executed form TR1.

18.3.2

cheque in the sum of £700.

18.4

The Seller’s solicitors will use reasonable endeavours to deal with any requisitions which may be raised by HM Land Registry or HM Revenue and Customs.”

By clause 15 the Claimant agreed “not to communicate or permit communication of the terms of this Agreement to any third parties and will obtain the consent of the [Defendants] before making any publicity announcement relating to the Property save to the extent required by law or pursuant to any other formal requirement or pursuant to the terms of any pre-existing agreement ….” This provision would prevent the Claimant from informing the Trustees of the substantial premium they were paying over the price which the Trustees were receiving from the Defendants under the Defendants’ Contract.

The relevant terms of the Defendants’ Contract are as follows: by clause 8 it incorporated the Standard Conditions, and, materially, excluding condition 6 with the same exceptions as in the Contract. By clause 7 it was provided that:-

“7.1

The [Defendants] may not assign the benefit or burden of [the Defendants’ Contract] and the [Trust] shall only be required to execute one Transfer of the whole Property in favour of the [Defendants] at the Purchase Price.

7.2

The Transfer shall be in the form annexed to this Agreement.”

The annexed form of transfer was worded in a manner appropriate to a purchase by the Defendants from the Trust of the Property beneficially and not as nominee for another. The schedule to the transfer contained overage provisions governing the disposal of the Property or any part thereof to the Defendants or their successors in title within one year for a price greater than the price payable under the Defendants’ Contract. It also contained provisions designed to prevent the Defendants from dealing with the Property (“acts of circumvention”) so as to avoid the overage provisions. It is common ground that the onward sale of the Property by the Defendants to the Claimant would trigger an overage payment.

SDLT is payable pursuant to Part 4 of the Finance Act 2003. Section 45 of that Act, so far as material to this judgment, under the heading “Contract and conveyance: effect of transfer of rights”, reads as follows:-

“45(1) This section applies where (a) a contract for a land transaction (“the original contract”) is entered into under which the transaction is to be completed by a conveyance, and (b) there is an assignment, sub-sale or other transaction (relating to the whole or part of the subject matter of the original contract) as a result of which a person other than the original purchaser becomes entitled to call for a conveyance to him.

References in the following provisions of this section to a transfer of rights are to any such assignment, sub-sale or other transaction.

(2)

The transferee is not regarded as entering into a land transaction by reason of the transfer of rights, but Section 44 (Contract and conveyance) has effect in accordance with the following provisions of this section.

(3)

That section applies as if there was a contract for a land transaction (a “secondary contract”) under which –

(a)

the transferee is the purchaser and

(b)

the consideration for the transaction is –

(1)

so much of the consideration under the original contract as is referable to the subject matter of the transfer of rights and is to be given (directly or indirectly) by the transferee to a person connected with him, and,

(2)

the consideration given for the transfer of rights.

The substantial performance or completion of the original contract at the same time as, and in connection with, the substantial performance or completion of the secondary contract shall be disregarded. …”

By sub-section (5) of Section 44:-

“(5)

A contract is “substantially performed” when –

(a)

the purchaser takes possession of the whole, or substantially the whole of the subject matter of the contract, or

(b)

a substantial amount of the consideration is paid or provided.”

Then at sub-section (7) it is provided that:-

“(7)

For the purposes of sub-section (5)(b) a substantial amount of the consideration is paid or provided:-

(a)

…where the whole or substantially the whole of the consideration is paid or provided…”

That the contract should be completed in such a way so that the Defendants’ Contract would have the benefit of the exemption from SDLT contained in Section 45, was not an express term of the Contract. Such an express term would have been solely for the benefit of the Defendants. It was Mr Tager’s submission on behalf of the Claimant that such a term formed no part of the Contract but was simply an “aspiration” of the Claimant with which the Defendants were prepared to co-operate.

I cannot accept that submission. Clause 18.1.2 of the contract provides for the Defendants to supply the Claimant with a copy of a transfer of the Property by the Trust to the Defendants “as nominee for” the Claimant and by Clause 18.3.1 with a completed form SDLT 60. Form SDLT 60 is only required to be completed by way of disclosure to the Revenue, where a transaction in land is sought to be brought within the exemption from SDLT contained in Section 45. Had the parties been proceeding on the basis that the Defendants would acquire title to the Property beneficially under the Defendants’ Contract, SDLT would have been payable and the required form in order to obtain registration of the Claimant’s title to the Property would have been in form SDLT 1 demonstrating that that tax had been paid. Furthermore the provision in Clause 18.1.2 that the transfer should record the Defendants as transferring to the Claimant “as nominee for the Claimant” would have been unnecessary.

In the light of these matters and the admissions in paragraphs 3 and 4 of the Amended Defence, in my judgment, either the contract is to be construed as containing such a provision as mentioned in paragraph 14 above or such a provision is to be implied into the contract. It follows that the Claimant was bound by the contract to co-operate with a completion which permitted so much of the consideration payable under the contract as was necessary to pass to the Trust in order to complete the Defendants’ Contract, to pass to the Trust as part of the “substantial performance” of the Defendants’ Contract and the Contract for the purposes of Section 45(3). That the Contract should be construed in this way seems to me to assist the Claimant.

It was accepted that this result could have been achieved at completion of the Contract by the Claimant paying the price provided for in the contract to the Defendants’ solicitors conditionally, and in advance of completion, subject to an appropriate undertaking to hold the money to the order of the Claimant pending completion, but with authority to apply so much as was necessary to complete the Defendants’ Contract on completion of that contract, as part of a virtually simultaneous completion of both contracts. In order to attract the provisions of Section 45 to the Defendants’ Contract there must either have followed a transfer of the Property directly from the Trust to the Claimant or a transfer from the Trust to the Defendants as nominees for the Claimant. This in turn would require the Trust to consent to the amendment of the agreed form of transfer under the Defendants’ Contract accordingly.

Contracts as between the Claimant and the Defendants were exchanged on 19th February 2007 following negotiations conducted between the parties themselves and their respective solicitors, Mr John Andrew Gilbert (“Mr Gilbert”) acting for the Claimant and Ms. Caroline Abbott (“Ms. Abbott”) acting for the Defendants.

On 20th February 2007 Mr Gilbert sent Ms. Abbott, inter alia, Requisitions on Title and a draft transfer. On 21st February Ms. Abbott replied approving the draft transfer but also saying “I have requested a transfer direct to your client company so please also arrange for your client company to execute a duplicate of that transfer.” On 25th February Ms Abbott wrote to Mr Gilbert enclosing replies to his requisitions on title and saying “I am still waiting confirmation that the sellers [the Trust] will transfer the title directly to your client company. If this is not possible then the onward transfer will require amendment to reflect that my clients will be transferring the title as their trustees.” The replies to the Requisitions on Title stated that the Defendants’ solicitors did not adopt the Law Society’s Code for Completion by Post and that the completion of the contract would take place at their offices.

Ms. Abbott’s description of the events immediately leading up to the 26th February is contained in her witness statement of 29th August 2007 at paragraphs 33 to 37 as follows:-

“33.

AG [Mr Gilbert] sent the Requisitions on Title to which I replied. Both documents are exhibited to AG's second statement. It is to be noted that I state that my firm does not adopt the Law Society's Code for Completion by Post. This is because of the stipulations contained in paragraph 10 (ii) (b). I believe that it is very common for vendors' solicitors to state that they do not adopt the Code. The Code of course imposes an obligation on the buyer's solicitor to state the undertakings required. However this does not in my view mean that in the circumstances it was for me to inform AG as to the undertakings I would give in respect of the purchase monies. Whether under the provisions of the Code or as a matter of conveyancing practice it is for the buyer to make arrangements for completion. These transactions depend on undertakings being requested and given in the normal course of events and as a matter of standard conveyancing practice, completion arrangements never go into the contract. These matters are dealt with post exchange and it is for the buyer's solicitors to set things up.

34.

Given particularly that time was of the essence, I was thus surprised that, at some stage between exchange and the date fixed for completion, AG did not revert to me and set out the undertakings from my firm that he would require before handing over the monies from his client. If he had done so (for example in the form he eventually suggested in the letter dated 28th February), then I would of course have given the undertakings as discussed above. When he failed to do so however there was no mechanism for me to force this.

35.

At no stage prior to the completion date was it ever suggested that an undertaking by my firm to pay the requisite purchase monies to the Trust would not be appropriate. If there had been some concern raised (for example due to my status or the level of my insurance cover) then I would either have directed AG to pay the necessary monies direct to the Trust or advised my clients to instruct a larger firm to carry out completion.

36.

We also discussed the wording on the transfer document and AG wanted to use the "sub sale wording". This is used when you need to get everything onto one document and was the type of wording used before SDLT was introduced in 2003. It would have recited that in consideration of sums paid to the seller (i.e. the Trust) and sums paid to buyer (i.e. BA & WWS) the Trust by the direction of the buyer transfers the property to the second buyer (i.e. Kalatara). I explained to AG that this did not reflect the nominee structure of the deal and was not possible. The draft transfer would be executed by the Trust but it would not be concerned at what went into panel 11 (the declaration of trust as to how the property is held). This is normally filled in after completion. Depending on how the purchase from the Trust was ultimately completed, as I have stated, if a direct transfer was not possible I would have completed panel 11 stating that the property was held by my clients as transferees on the terms of a Declaration of Trust of the completion date.

37.

I refer to my letter to Mr. Gilbert of 25 February referring to the direct transfer to his client. I had not at that stage made any approach to the Trust as I was only intending to do so once we had the completion funds available. This was with a view to putting pressure on the Trust to agree to a direct transfer. As I pointed out to AG, if this was not agreed then the draft transfer to his client would have to be amended to reflect the fact that my clients would be transferring to his as bare trustees. AG acknowledged this in a letter sent by email at 9.31 the next morning.”

Mr Gilbert’s comments on Ms. Abbott’s description are contained in paragraphs 24 – 27 of his witness statement of 9 November 2007 as follows:-

“24.

I have commented above on paragraph 33; I do not accept that (as suggested in the final sentence) it is for the buyer's solicitors "to set things up" regarding completion arrangements in all cases. Where an intermediate purchaser seeks to arrange the concurrent completion of his own purchase contract and his onward sale contract, only his solicitor can set up the necessary arrangements. After all, in the context of the Defendants' Contract, Ms. Abbott was the buyer's solicitor.

25.

As to paragraph 34, because there was no contractual obligation on the part of the Claimant to hand over the balance of the purchase monies at a stage prior to the completion of the Contract, I saw no reason at the time to take the initiative and propose the form of undertakings to be given by Ms. Abbott's firm to the Claimant and its prospective mortgagee Marfin. There was nothing in Reply 7 to my Requisitions on Title that suggested that Ms. Abbott was anticipating the transfer of the completion monies to her firm's client account at a stage prior to the completion of the Contract, as opposed to being transferred at completion in accordance with clause 10.3.1 of the Contract.

26.

Because Ms. Abbott was not prepared to complete by post, it was going to be necessary for me to attend personally at her office, in order to complete the Contract. The required funds were available in my firm's client account, but there would have been no point in travelling from the West End to her office in Ladbroke Grove if she was not going to be in a position to hand over the requisite documents and the keys to the property concurrently with the transfer of the completion monies to her firm's client account, being the account that had been nominated in the Replies to Requisitions on Title for the purposes of clause 10.3.1 of the Contract.”

At 9.31 am on 26^th February 2007 Mr Gilbert communicated with Ms. Abbott thanking her for her letter of the 25^th and continuing “I note what you say in the second paragraph of your fax. Please let me know as soon as possible, as my client is executing offshore.” By a later e-mail from Mr Gilbert to Ms. Abbott timed at 12.30 pm Mr Gilbert wrote:-

“I refer to my unsuccessful attempt to reach you on the telephone just now, leaving messages on both your land line and mobile voice mails. I am about to send the balance of the price to you by CHAPS. Please confirm that you are now holding the items referred to in clause 18.1.2 and 18.3 of the contract. I await hearing, as a matter of extreme urgency.”

By Ms. Abbott’s e-mail response timed at 12.48 she wrote to Mr Gilbert:-

“I am not holding the transfer signed by the sellers [the Trust] as this is with their solicitors. I will remit the funds to the seller’s solicitors for them to hold to order pending completion and amendment of the transfer to show your Client Company as the transferee. I have the documents described in clause 18.3 of the contract but these will not be required if the title is transferred directly. As stated in my fax of yesterday any onward transfer will require amendment to reflect that my clients will be transferring the title as bare trustees.”

Mr Gilbert’s e-mailed response timed at 12.52 and apparently before he received or had read Ms. Abbott’s e-mail of 12.48, was as follows having referred to earlier e-mail traffic:-

“As requested in my previous e-mailed letter, please confirm that you are holding the items referred to in clause 18.1.2 and 18.3 of the contract and please do so by faxing me certified copies. Without those your client is not ready able and willing to complete and I am unable to send you the balance of the price. If by reason of your failure to respond to this request, completion does not take place today then such failure to complete would be your client’s as not being ready able and willing to complete and your client would be in breach of contract, in which event my client would be entitled to repayment of its deposit and damages. I await hearing from you as a matter of extreme urgency.”

By e-mail timed at 1.31 pm, by which time it seems that Mr Gilbert had read Ms. Abbott’s e-mail timed at 12.48 he wrote to Ms. Abbott:-

“Clause 18.1.2 of the contract requires you to supply me with a certified copy of the transfer to your client. You have not done so. It is not sufficient for you to say that it is with the original seller’s solicitors. Please would you ask them to fax you a certified copy and please would you then fax me a certified copy. In default of you so doing your client is not ready able and willing to complete and I am unable to send you the balance of the price. I repeat the contents of the fourth paragraph of my last e-mailed letter to you. I await hearing from you as a matter of extreme urgency.”

Ms. Abbott responded by e-mail timed at 1.35 pm:-

“I refer to your e-mail upon which I would comment:

(a)

you are not entitled to request certified copies of the completion documents.

(b)

Accordingly your client company will be in breach of contract if the completion monies are not remitted.”

In a further e-mail response timed at 1.52 pm Ms. Abbott wrote to Mr Gilbert:-

“Thank you for your e-mail and I would just mention that you are not entitled to receive a certified copy of the transfer referred to at clause 18.1.2 until that transaction has been completed.”

Mr Gilbert responded by e-mail timed at 2.00 pm:-

“I have your faxes, timed at 13:33 and 13:51. I am not merely requesting “certified copies of the completion documents”. I am asking you to comply with your obligation pursuant to clause 18.1.2 of the contract which is for you to supply me with “a certified copy of the transfer of the property to the seller as nominee for the buyer”. This you have failed to do. In your earlier fax of today, timed at 12:48, you said that “I am not holding the transfer signed by the sellers as this is with their solicitors.” Your client is, therefore, in breach of its obligation, in this respect and is, therefore, not ready, able and willing to complete. I, therefore, await this item immediately. I would reiterate that, as stated in my e-mail of 12:14, I am in funds. My client is, therefore, ready, able and willing to complete. Moreover, clause 18.1.2 of the contract does not provide as set out in the latter of your faxes. Without the item in question, how am I to be satisfied as to your client’s ability to complete?”

The communication then continued under threat of injunction proceedings to request an undertaking from Ms. Abbott not to part with the deposit monies.

Thereafter, and notwithstanding that the time for completion had gone by, the parties continued to attempt to complete the transaction. In the course of the ensuing discussions Ms. Abbott wrote by e-mail to Mr Gilbert:-

“I cannot supply a certified copy of the transfer of the property to my client until completion has taken place. The wording of the contract provides for this document to be handed over following completion. If your analysis was correct then the phrase “on or before completion” would have been included.”

By e-mail of 27 February Mr Gilbert wrote to Ms. Abbbott:-

“I have considered matters overnight with my client. As a result of that consideration, I am instructed to put forward three options as regards the completion machinery, which would enable your client to comply with its obligations in clause 18 of the contract.

These are as follows:

1.

As previously requested, in compliance with clause 18.1.2 you let us have, prior to completion, a certified copy of the transfer of the property to your client. [In paragraph 20 of his witness statement of 9 November Mr Gilbert says that prior to 26 February he had anticipated “that if (as I assumed) Ms. Abbott would be arranging the simultaneous completion of the Defendants’ Contract and the Contract, she would have in her possession an executed transfer of the property from the Trust to the Defendants …being either the original (which she would be holding in escrow pending completion of the Defendants’ Contract) or a copy that she would be able to certify (or perhaps which the Trust’s solicitor would certify immediately following the completion of the Defendants’ Contract)”.]

2.

There is an attended completion, at which there is tabled the said certified copy transfer, the documents that your client is to supply to my client, pursuant to clause 18.3 and split drafts, one in favour of the original seller’s solicitors for the amount required from your client to the original seller and the other for the balance of the price due from my client to your client.

3.

Completions at the offices of the original seller’s solicitors and your offices, of the original sale and purchase as between the original seller and your client and the sale and purchase as between your client and my client respectively on the basis that we chaps the amounts required to complete those transactions to the original seller’s solicitors and your firm, the original seller’s solicitors undertake to forward to us, forthwith upon completion having taken place, as directed by you, the transfer from the original seller to your client and you release to us the items referred to in clause 18.3 their having been sent to us prior to completion, to be held by us to your order, pending completion.

I should be grateful if you could take your client’s immediate instructions on these proposals and revert to me thereafter. As stated in my correspondence of yesterday, I am in funds and my client remains ready willing and able to complete.”

On 28^th February, by e-mail, Mr Gilbert made a further proposal for completion of the transaction as follows:-

“3.

You to undertake:

a.

Of the balance of the price, you to utilise the sum of £3.35 million solely in connection with the purchase of the property by your clients and the balance solely in connection with the purchase of the property by my client.

b.

To immediately complete the purchase of the property by your clients.

c.

Immediately following the completion of the purchase of the property by your client, to complete the purchase of the property by our client.

d.

To send to us, forthwith upon the completion of the purchase of the property by our client:

i.

A certified copy of the TR1 to your client, duly executed, together with a certified copy of the RX3 duly signed by the original Seller's solicitors in relation to the existing restriction.

ii.

The original TRI to your client, duly executed, together with the original RX3 duly signed by the original Seller's solicitors in relation to existing restriction as soon as you receive them.

iii.

The original TRI to our client, duly executed, together with the AR1, SDLT60 and cheque for £700 in payment of the Land Registry fees, if any.

iv.

To use reasonable endeavours to deal with any requisition which may be raised by H M Land Registry for H M Revenue and Customs.”

Later that day Mr Gilbert communicated an offer to Ms. Abbott by the Claimant to increase the purchase price by £100,000 as an incentive to complete. In the meantime it seems that the Defendants had been negotiating the provision of finance so that they could complete their purchase from the Trust without recourse to the consideration payable under the Contract. However, in the meantime, the Claimant’s financiers had obtained a priority search on the Property which would stand in the way of completion of the Defendants’ Contract. As already described, on 1^st March, the date of the expiry of the Trust’s notice to complete the Defendants’ Contract, Ms. Abbott gave notice by fax to rescind the Contract. On the same day the priority notice was waived so that the Defendants’ Contract could be completed by the Defendants using their own money.

Beyond defining “completion” of the Contract in the Recitals as “actual completion of the sale the subject of this agreement” the contract does not help further in defining what completion means for its purposes. In Redwell Investments Limited v 1-3 Cuba Street Limited [2005] EWCACiv1799 Lord Justice Chadwick was considering what was meant by the expression “actual completion” for the purposes of that case. At paragraph 34 of his judgment he says this:-

“I accept, of course, that there is no absolute rule that completion takes place when title is transferred. …We were referred to no case in which it has been held that completion did not take place until some time after title had been transferred. The question has to be answered on the facts of each case; construing the language which the parties have used in their agreement in the light of the facts known to them (or which they must be taken to have known) at the time.”

In my judgment the terms of the contract do not render this case such an exceptional case. “Actual completion” in this case meant the transfer of title to the Property to the Claimant.

It is clear law that the question whether a contract for the sale of land, which contains provisions prescribing a precise time for its completion, has been completed in accordance with its terms, falls to be decided on the state of facts existing at the time prescribed for completion and not at any later time at which one of the parties to it has been able unilaterally to tender performance in conformity with its other terms: see the judgment of the Privy Council in Union Eagle Limited v Golden Achievement Limited [1997] A.C.514 given by Lord Hoffmann at page 518 B.

The question therefore is, were either of the parties in breach of the provisions of the Contract by not being ready willing and able to complete it in accordance with its terms as at 2.00 pm on 26^th February 2007.

It is the Defendants’ case that the Claimant was in breach because the Claimant had failed by that time to pay the consideration monies payable under the Contract in accordance with clause 10.3., in particular, the final paragraph of that clause which prescribes that “completion shall not be regarded as having been effected until such time as such drafts or monies have been so delivered or credited so as to be in unconditional possession of the relevant recipient”. See paragraph 6(vii), paragraph 8 and paragraph 10 of the Amended Defence and Part 20 counterclaim. It is common ground that had payment been made by the Claimant to the Defendants’ solicitors subject to those solicitors undertaking to hold the amount paid to the order of the Claimant pending completion this would not have been payment for the purposes of clause 10.3.2. No payment of the purchase price conforming to that sub-clause has ever been made by the Claimant. However it is not in issue that, at all material times, the Claimant’s solicitor was in funds and ready to complete in accordance with the Defendants’ solicitor’s directions.

The question therefore becomes whether the Claimant was justified in not making such payment because the Defendants were not at the material time themselves ready willing and able to complete; see the guidance of Blackburne J in Aero Properties Ltd v City Crest Properties Ltd [2000]2P&CR at paragraph 24 and the cases that he cites.

It is the Claimant’s case that they were justified in not paying over the purchase price in compliance with clause 10 because the Defendants were not in a position to comply, at the relevant time, with clause 18.1.2, namely the requirement to “supply to the Claimant” at a time unspecified in sub-clause 18.1.2, “a certified copy of the transfer of the property to the Defendants as nominee for the buyer.” It is common ground that this sub-clause could not be complied with at any time prior to the completion of the Defendants’ Contract if that completion was to be effected by the Defendants from monies payable to them under the Contract and that compliance with Section 45 required that the consideration for completion of the Defendants’ Contract was paid in that way. It follows that the Contract could only be completed with the result that the parties sought to achieve if there was simultaneous completion of both contracts or if the contract could be construed so that the supply of the document by the Defendants provided for in clauses 18.1.2 was to take place after completion when the Defendants’ interest in the Property passed to the Claimant.

It was the Defendants’ initial submission that clause 18.1.2 of the contract must be construed in this way but this was abandoned when it was conceded by Mr Holland that his argument, based on impossibility of performance, must fail if it could be demonstrated that the Defendants would have been able to complete the contract if simultaneous completion of the Defendants’ Contract and the Contract could have been arranged to take place at or before the time fixed for completion. Even if the concession had not been made, I would have construed clause 18.1.2 as requiring the Defendants to supply a certified copy of the transfer duly executed from the Trust to themselves at the time of completion. Not to do so would mean that the Claimant would be required to make unconditional payment without confirmation that the Defendants were in a position to transfer the title which they had purchased from the Trust to the Claimant. The existence of the Defendants’ Contract for which Specific Performance could be sought by the Defendants in the future was not enough.

There were two routes by which this was possible, the first, which the Defendants conceded (see paragraph 11 of Ms. Abbott’s witness statement of 29^th August 2007), was a conditional payment of the purchase price by the Claimant to the Defendants’ solicitors upon their undertaking at completion of the contract to apply so much of the money as would be required to complete the Defendants’ Contract, to complete that contract, and obtain from the Trust a certified copy of a duly executed transfer from the Trust to the Defendants as nominee for the Claimant which could immediately be faxed to the completion meeting of the Contract specified by the Defendants as taking place at their offices. As already noted this would have required the Trust’s agreement in advance of completion to amend the form of transfer which had been agreed pursuant to the Defendants’ Contract. Once the Defendants’ Contract was completed there would be no difficulty in supplying at the same time the documents prescribed in clause 18.3.1 which that clause required to be supplied “at completion” and which, it appears from Ms. Abbott’s e-mail of 12.48 pm on 26^th February, she had ready.

An alternative method might have been the supply of a certified copy of a transfer by the Trust to the Defendants as nominees for the Claimant in advance of completion on the basis that that transfer was delivered subject to an escrow which would be lifted on receipt by the Trust’s solicitors of the purchase money under the Defendants’ Contract. Mr Holland did not accept that the provision of a certified copy of a document of transfer subject to an escrow would be effective. It is not necessary for me to rule on this point because he did accept that simultaneous completion would have been possible using the former method. Indeed it seems that this method of completion was what was envisaged in Ms. Abbott’s e-mail message on 26^th February transmitted at 12.48 pm.

It is common ground that as at the time of transmission of that message Ms. Abbott had taken no steps to set up a simultaneous completion of the Contract and the Defendants’ Contract in that she had not obtained the Trust’s agreement to an amendment of the form of transfer under the Defendants’ Contract to make it a transfer to the Defendants as nominee for the Claimant and she had not agreed with the Claimant any form of undertaking by her under which the Claimant could have made conditional payment of the purchase price under the contract in anticipation of completion: see paragraph 7 of Ms. Abbott’s witness statement of 26^th November 2007. In short the necessary mechanics for simultaneous completion of the contract and the Defendants’ Contract were not in place by 2.00 pm on 26^th February.

It is the Defendants’ submission that it was the Claimant’s duty to arrange this, in particular, it was necessary for the Claimant to agree with its financiers a form of undertaking acceptable to them which the Defendants’ solicitors would be required to give as a condition for payment over of the purchase price. In support of this submission Mr Holland drew attention to paragraph 5(3) of the Law Society’s Code for Completion by Post (which his clients had excluded from applying to this case) as indicating a practice that “the buyer’s solicitor will send to the seller’s solicitor …(iii) undertakings to be given”.

I cannot accept this submission because it does not deal with the necessity to obtain the Trust’s co-operation in a simultaneous completion, in particular, their agreement to amend the form of transfer under the Defendants’ Contract. If the practice is as Mr Holland submits then Ms. Abbott was representing the buyer under the Defendants’ Contract but, more importantly, it would have involved the Claimant in communicating the provisions of clause 18.1.2 to the Trust contrary to the provisions as to confidentiality contained in clause 15.1 set out above. More broadly the provisions of that sub-clause were in the agreement in order that the Defendants should obtain the benefit of the tax avoidance provisions of Section 45. The complications that this imposed on completion of the contract were for the benefit of the Defendants.

In my judgment, and as the Defendants concede, it would have been possible to effect a simultaneous completion of the Contract and the Defendants’ Contract in accordance with the former’s terms as at the time fixed for completion of the contract. It was for the Defendants and their solicitors to ensure that arrangements were in place for that purpose, in particular, so that the Defendants would be able to comply at the time of completion with the provisions of clause 18.1.2, namely to supply the Claimant with a copy of the transfer of the Property by the Trust to the Defendants as nominees for the Claimant. The Defendants’ failure to do this constituted a breach of the Contract. It was the Claimant’s duty, on completion of the Contract, to attend at the place of completion fixed by the Defendants ready to pay over to the Defendants the purchase price payable under that contract in the way prescribed by clause 10. Once the Claimant became aware that the Defendants were not able to comply with the provisions of clause 18.1.2 the Claimant was entitled to refuse to attend and make payment. It follows, in my judgment, that the Contract was not completed, at the time fixed by it for completion, by reason of the breach of the Defendants. It follows that the Defendants were not entitled to rescind the Contract and the Claimant is entitled to the summary relief which it seeks. I will hear submissions from Counsel as to the form of order which should follow.