BDW Trading Ltd (t/a Barratt North London) v JM Rowe (Investments) Ltd

This judgment arises out of a trial of this action in March with further significant written submissions following the hearing of the evidence.

The Claimant (“Barratt”) (a subsidiary of Barratt Development Plc) claims the return of a deposit of £180,000 following a purported exercise of an express contractual right to rescind a contract for the purchase, development and leaseback of part of a property owned by the Defendant JM Rowe (Investments) Ltd (“Rowe”). It counterclaims for specific performance of the contract and damages whether in lieu of or in addition to specific performance and/or breach of contract.

In effect it was not appropriate in my view for the trial to be of liability and quantum. It seemed to me appropriate to determine the respective party’s liabilities and consider what relief (if any) should be given to the successful party in the light of that determination. The original pleadings relied upon a notice dated 25th November 2008 served by Barratt on Rowe’s solicitors claiming rescission of the contract with immediate effect.

On 19th March 2010 Barratt’s solicitors served a second without prejudice notice terminating the agreement with immediate effect. That was 4 days before the commencement of the trial.

I granted Barratt permission to amend its Particulars of Claim to rely upon that notice and gave Rowe consequential permission to amend its Defence and Counterclaim.

Independently of that Rowe raised further issues which I permitted it to raise by serving a further Re-Amended Defence and Counterclaim and Re-Re-Amended Defence and Counterclaim.

Rowe initially raised 5 Defences in resistance to the claim for rescission by Barratt:-

After the hearing (as a result of prompting by Barratt in its opening and closing submissions) Rowe produced a revised estoppel by conduct defence which was totally at variance with its original estoppel by convention defence. However during the closing submissions Mr Barnes QC who appears for Rowe abandoned both aspects of estoppel by convention. That therefore left 4 bases for challenging Barratt’s entitlement.

Rowe is the registered proprietor of the properties known as 52A to 56 High Street Watford registered under title numbers HD466816 and HD466818 (“the Premises”). By two leases dated 15th February 2007 (“the Lease”) Rowe granted Alliance & Leicester PLC (“A & L”) tenancies of part of the premises registered under title number HD465767.

Contracts were exchanged and dated 17th February 2008. By the Agreement (“the Agreement”) between Rowe (1) and Barratt (2) whereby Rowe would sell and Barratt would buy the property registered under title numbers HD466816 and part of HD466818 (“the Property”) for £1,800,000 plus VAT and would grant a lease of part of the Property to Barratt and it would build commercial premises thereon.

Rowe had granted the two leases to A & L on differing parts of the Property it occupied in number 52. The leases divided the area occupied by A & L in to two: the front of number 52 (“the Front”) and the rear of number 52 (“the Back”). The lease of the Back (“the Back Lease”) had a break clause. The break clause provided for Rowe to undertake the works necessary to separate the Back from the remainder of A & L’s premises and to compensate A & L for the termination of its lease.

Rowe exercised that break clause on 14th September 2007 so that the lease would be determined on 18th March 2008.

The terms of the Agreement was for sale and purchase at £1,800,000 plus VAT of the property shown as red on the plan annexed to the agreement being part of the two registered titles above mentioned. A deposit of £180,000 was paid on exchange to be held by Rowe’s solicitors as stakeholders. Completion was due to take place on 1st July 2008.

This agreement arose out of negotiations in late 2007. I am cautious about considering those negotiations; there is no claim for rectification and it seems to me any issues as to construction of the Agreement should be restricted to the terms of the Agreement and any background factual relevant information.

Clause 6 enabled Barratt to refuse to complete until various provisions had been satisfied. The relevant clause is as follows:-

“6.1

The Property is sold with vacant possession

6.2

The Purchaser shall be entitled to refuse to complete until such time as:-

(i)

the Vendor’s Solicitors provide written confirmation to the Purchaser’s solicitors that a form SDLT1 has been duly completed and submitted to the Inland Revenue in respect of the determination of the Lease with a copy of such form and the electronic receipt once received and

(ii)

an application has been submitted to the Land Registry for the closure of the leasehold title number HD467416 and removal of the Lease from Title Number HD4668718 and a copy of the application has been provided to the Purchaser’s solicitors together with a written undertaking from the Vendor’s solicitors to the Purchaser’s solicitors to use reasonable endeavours to deal with any requisitions raised by the Land Registry as soon as practicable, and

(iii)

the Deed of Variation has been completed or is ready to be completed simultaneously with completion of the sale and purchase of the Property and the Deed of Variation executed by A & L (as defined in clause 15) is being held by the Vendor’s solicitors and has been released to the Vendor’s solicitors by A & L’s solicitors and the method statement and all matters to be agreed with or approved by A & L pursuant to the Fifth Schedule of the lease have been agreed or approved by A & L the Vendor and the Purchaser in writing (and the Vendor and the Purchaser shall act reasonably and use all reasonable endeavours to agree such matters), and

(iv)

The Vendor’s solicitors have confirmed in writing that they are holding an original signed letter from the Vendor addressed to the Purchaser (in a form previously approved by the Purchaser’s solicitor as shown attached at Appendix 1) confirming the vesting of the copyright of all plans in respect of the Planning Permission in the Purchaser together with the original letter date 9th January 2008 from W Griffiths & Glass (copy attached at Appendix 2) and have undertaken to send both letters to the Purchaser’s solicitors on the Completion Date

(v)

the Vendor has provided a written consent for the Purchaser to temporarily oversail the Retained Land (as defined in the Transfer) and to erect temporary scaffolding abutting the Retained Land and bridging across part of the roof of the building on the Retained Land during redevelopment of the Property pursuant to the Planning Permission provided that neither such oversail rights nor such scaffolding materially interferes with the access of light or air to the Retained and the Adjoining Land (as defined in the Transfer) together “the Land” or with any other right or easement and so that pedestrian access and vehicle deliveries to the High Street entrances of the buildings on the Land and supplies of water gas electricity telecoms and drainage are maintained to the Land and otherwise in a form agreed by the parties (acting reasonably), and provided further that all or any damage caused to the Land shall forthwith be made good by the Purchaser at its own cost to the reasonable satisfaction of the Vendor and

(vi)

the Vendor’s solicitor has confirmed in writing that all sums due to A & L as a result of the Vendor terminating the Lease (being a capital payment of £68,000 and an allowance of £27,500 under their lease of the adjoining property) have been paid in full to A & L and receipt has been acknowledged in writing (a copy if which has been provided to the Purchaser’s solicitors)

Provided that the Vendor or the Purchaser shall be entitled to rescind this contract by serving written notice on the Vendor at any time if the matters referred to in paragraphs (i)-(vi) above have not occurred within 9 months of the date hereof whereupon this Agreement shall automatically determine (and the Deposit shall be returned to (save where the party purporting to serve such notice is in default of its obligations under this clause 6.2) the Purchaser)

6.3

The Vendor shall use all reasonable endeavours to procure that the applications referred to in paragraph (i) and (ii) of clause 6.2 above (if applicable) have been submitted and completed as soon as reasonably practicable after the termination of the Lease”

The clause relied upon by Barratt for its notice of 25th November 2008 was clause 6.2 (vi). In respect of its second notice dated 19th March 2010 it relied upon clause 6.2 (iii).

Clause 9 of the Agreement provided as follows:-

“9 the failure of either party to enforce at any time for any period any one or more of the terms or conditions in this Agreement shall not be a waiver of them or the right at any time subsequently to enforce all or any terms and conditions of this Agreement”.

Clause 15 dealt with the necessary separation works to sever the rear part of the A & L premises from the front part and provides as follows (where relevant to the present dispute):-

“15 Separation Works

The Vendor and the Purchaser agree the following in respect of the Separation Works:

15.1

The Vendor will seek confirmation from Alliance and Leicester Plc (“A & L”) that a meeting dated 14 November 2007 between A & L, the Vendor’s Surveyor and the Purchaser is agreed as the pre-contract meeting required by clause 2.3 of the Fifth Schedule of the Lease and, if not, the Vendor will as soon as practicable agree a date for a meeting with A & L (and the Purchaser) in accordance with the provisions of the Fifth Schedule of the Lease and the Purchaser will attend such meeting upon being given at least 3 working days notice;

15.2

The Purchaser will provide the Specification (as defined in the Fifth Schedule of the Lease) and the method statement and warranties referred to in clause 2.2 of the Fifth Schedule to the Lease within 8 weeks of the date of this Agreement and the Vendor will request approval of them in writing by A & L in accordance with the provisions of the said clause 2.2;

…………..

15.5

The Vendor and the Purchaser agree to use all reasonable endeavours to agree the Deed of Variation and carry out the provisions of this clause 15 as quickly and expeditiously as reasonably practicable after the date of this Agreement

15.6

The Purchaser agrees and covenants it shall carry out the Separation Works in accordance with the provisions contained in the Fifth Schedule of the Lease and the agreed method statement as referred to in clause 6.2 to the reasonable satisfaction of the Vendor’s Surveyor (acting reasonably) and the Purchaser shall indemnify the Vendor against all costs claims actions and losses directly suffered by the Vendor arising out of any breach of this obligation save where the Purchaser is unable to comply with such obligations due to any act or omission by the Vendor or the Tenant

15.7

For the avoidance of doubt it is agreed that the Purchaser shall be responsible for obtaining all Requisite Consents required to carry out the Separation Works prior to commencing the Separation Works and shall provide copies to the Vendor (except the Planning Permission which the Vendor already has) and shall use its reasonable endeavours to do so as soon as practicable after the Completion Date”

It will be seen that clause 15 is linked to the 5th Schedule of the Back Lease.

Under clause 52.1 of that lease Rowe had a right to terminate the lease at any time after 25th March 2007 having given to A & L not less than 6 months notice in writing of its intention to do so when the lease would absolutely cease and determine but without prejudice to any antecedent rights that had accrued save that Rowe agreed not to make any claim against A & L in respect of dilapidations. Upon such termination Rowe was obligated to pay A & L the sum of £95,500 apportioned as to a capital payment of £68,000 and an allowance against the rent in respect of the Front of £27,500. Finally Rowe agreed that it would carry out at its own expense the Separation Works as defined in accordance with the provisions of the 5th Schedule.

By clause 51 of the lease the provisions of sections 24-28 of the Landlord and Tenant Act 1954 were excluded in accordance with a notice served under the Regulatory Reform (Business Tenancies) (England and Wales) Order 2003.

Clause 15 provides as follows (so far as relevant to this action):-

“1 Definitions

1.1

“Separation Works” means the following works:

Separate all services connecting the Premises with the Adjoining Property ensuring at all times continuity of the existing services to the Adjoining Property

Create in a final position to be agreed (both parties acting reasonably) a new rear extension wall with pedestrian door access at ground level to the Adjoining Property and temporary pedestrian entrance door to the stair lobby leading to the upper floors and adequate structural support for the Plant Room

Reconfigure the rear external staircase serving the upper floors to provide similar pedestrian access to that which is presently existing and comply with fire escape requirements for the Adjoining Property and any associated or consequential works for the use and enjoyment of the Adjoining Property

Create suitable refuse bin storage for the Adjoining Property

Provide adequate drainage facilities for the Adjoining Property in accordance with the Specification and Method Statement

1.2

“Specification” means the specification detailing the Separation Works to be agreed between the Landlord and th Tenant before the Lease terminates under clause 52.1 (both parties acting reasonably)

1.3

“End Date”: 24 weeks after the Lease terminates under clause 52.1

1.4

“Landlord’s Notice”: The notice in writing to be served by the Landlord on the Tenant confirming the date of commencement of the Separation Works for the purposes of paragraph 2 hereof

1.5

“Landlord’s Surveyor”: The Surveyor from time to time nominated by the Landlord which may be a person employed by or otherwise connected with the Landlord

1.6

“Method Statement” means a method statement and programme for carrying out and completing the Separation Works in accordance with this Schedule

1.7

“Warranties” means BPF form of design and construction warranties form the Contractors and Professional Consultants employed and appointed by the Landlord in respect of the Separation Works

2 The Separation Works

If the Landlord terminates the Lease in accordance with clause 52.1 the Landlord hereby covenants with the Tenant as follows:

2.1

To carry out and complete the Separation Works within twelve weeks of the date specified as the date of commencement of the Separation Works in the Landlord’s Notice to the reasonable satisfaction of the Tenant subject to any strikes lock-outs shortage of materials or labour or other services weather conditions inevitable accident emergency Act of God or any cause or circumstances whatsoever beyond the control of the Landlord in which event a reasonable extension shall be agreed between the parties and failing agreement determined by independent expert pursuant to paragraph 6 of this Schedule

2.2

Provide Method Statement and copy of the Warranties for approval by the Tenant before the Separation Works commence such approval not to be unreasonably withheld or delayed”

As will be seen Barratt was entitled to refuse to complete until Rowe’s solicitors had confirmed in writing that all sums due to A & L had been paid in full and receipt had been acknowledged in writing with a copy provided to Barratt’s solicitors. It will be seen that the relevant clause originally gave Barratt a sole option to rescind the contract if that and any of the other matters in clause 6.2 had not occurred within 9 months of the date of the Agreement. However the two handwritten changes conferred an identical right on Rowe and reduced the time to 7th July 2008 i.e. 6 days after the date for completion.

As is sometimes the case with last minute handwritten amendments the clause does not actually make sense. There is no actual provision for Rowe to serve notice on Barratt if it wishes to exercise the right although that has not arisen for argument in this case.

The other point to note about clause 6.2 is the final proviso hand written in “save where the party purporting to serve such notice is in default of its obligations under this clause 6.2”.

It is Barratt’s case that the relevant matters were not agreed by 7th July 2008 and that it was accordingly entitled to serve its second notice on 19th March 2010.

It is Rowe’s case that Barratt is in breach of that clause because it has not acted reasonably and used all reasonable endeavours to agree such matters.

These countervailing submissions will be considered further in this judgment.

It is accepted that no notice was given as required by clause 6.2 (vi). It is equally not challengeable that the conditions required by clause 6.2 (iii) remained unsatisfied by the time the March 2010 notice was served by Barratt as a fall back in case the November notice was ineffective.

What is in dispute is why those matters were not put in place by the time of that notice and whether Barratt could rely on the failures to rescind the Agreement.

Both parties called witnesses for their case. I believe that the majority of the witnesses were genuinely and honestly trying their best to assist me by giving accurate and considered evidence. There maybe a doubt over Mr Paul Murray and to a lesser extent Mr Alan Horn.

It is fair to say in my view that Mr Murray’s evidence was unsatisfactory. He was highly critical of Owen White and Barratt and he was critical of both Owen White and Barratt’s conduct (although the criticism did not find their way in to Rowe’s pleadings).

It is clear that between 22nd August 2008 and 25th November 2008 he blundered in to the process of agreeing the documentation. There looks to me to have been an attempt to trick Barratt in to taking on a contractual obligation to deliver warranties that allowed for an unlimited number of assignments by silence. Further Mr Murray suggested to Mr Horn that he remain silent and finally tried to bounce Barratt in to signing a new deal which could have had no credible purpose. Mr Murray was one of the solicitors for Rowe and Mr Horn was A & L’s solicitor.

To my mind they did not conduct the negotiations in an open way. I have never understood the point of the “gamesmanship” of trying to trap people in to signing documents. It always leads to satellite litigation seeking to restore the position which the parties believe they were signing.

The conclusion I come to having seen the witnesses (and this will be shown by a brief excursion in to the contemporary correspondence) is that before exchange and after exchange all parties were endeavouring to satisfy the conditions with a view to the Agreement becoming unconditional.

During the course of those negotiations and exchange of correspondence various stances were taken by both sides but it is impossible in my view to submit that either party either acted in bad faith or was not doing their best to attempt resolution of the various conditions. I will exemplify this further when one looks at the correspondence in relation to the particular allegations by Rowe that Barratt was in breach and therefore disentitled to serve either notice.

The more the trial went on and the more masses of complicated points appeared to arise the more I became convinced that the issues in this case were actually quite simple (although the resolution of them is not so easy).

The first point which has always been clear to me is that the terms of condition 6 as they were negotiated simply set a number of conditions which have to be satisfied before Barratt could be required to complete. It is significant that if any of the relevant conditions was not satisfied either party had the right to terminate the contract. Thus in my view the clause plainly gave either side the right to terminate the contract on non fulfilment of any of the conditions. That does not require there to be a breach as such. It is not a breach; it is simply an option to determine.

As I have pointed out the clause did not specify a time by which that option to determine had to be exercised as is often the case in clauses like this. It seems to me that unless the right to exercise the option had been given up or was made unenforceable by waiver estoppel agreement or breach of the proviso that if the condition was not satisfied by the time thereafter until the contract proceeded to completion either party could walk away from it by giving the notice. That seems to me to be the risk that the parties took.

I do not accept that this is a case of election at all. This is reinforced by the fact that by the hand written amendments both parties were given the right to terminate if the conditions were not satisfied.

Such right in my view is exercisable if the right has accrued and it does not matter whether or not the non compliance has caused any loss (which it had not) or prejudice (which they had not).

As the evidence shows (I shall set out below) what happened in this case is that the Agreement was caught by the credit crunch. The time for compliance of the conditions came and went and neither party took a point on it. They continued their negotiations and those negotiations were moving towards a resolution when clearly Barratt because of its financial difficulties in November examined whether it could escape from completing the Agreement. I have no doubt its lawyers pored over the Agreement and found magically that condition 6.2 (vi) had not been satisfied. This was a technical failure but to my mind it makes no difference. Consider this point. If Rowe had received a higher offer it for example could have relied on the same non compliance to rescind the Agreement and enter in to a fresh contract to sell at a higher price. I do not see that Barratt could have objected to that just as Rowe cannot object in my view to what Barratt has done. This is a commercial contract (when the market has fallen) where the parties are at arms length and have agreed between them that if certain conditions are not satisfied by a particular date either party has the right to terminate the contract and walk away from it. I see nothing unusual in this. It is unfortunate but circumstances sometimes change which make a contract less attractive than when it was entered in to.

Equally the evidence of the witnesses in my view plainly showed that all that happened in the relevant period between exchange and the first notice was that the parties were working towards satisfaction of the conditions. No party ever addressed to my mind during that period the passing of the time for satisfaction of the conditions or any variation or giving up or altering of any of those conditions; they were working towards satisfying the conditions prior to completion. Clearly they were aware that the time for completion had passed (1st July 2008) but nothing happened when that date came and went; they carried on (as Wellington might have said) in the same old way.

Barratt in my view (like Rowe) had an accrued right to rescind the Agreement once the time for the fulfilment of the conditions had passed. The motivation for seeking to exercise that right in my view is irrelevant. I have no doubt it was a commercial decision in the light of its grave financial difficulties (which were publicised and well known) in 2008.

It follows from these general observations that in my view the contractual rights to terminate accrued; they were never varied, terminated or waived. There was no question that for there to be an election or a waiver or an agreement to vary there must be some conscious decision by the person whom it is alleged has the right to elect, waive or vary to do one of those things: see for example Peyman v Lanjani [1985] Ch 457.

As I have said the time for fulfilment of the conditions came and went. Nothing changed and nobody on either side ever addressed so far as I can see from the evidence and correspondence the fact that none of the conditions had been fulfilled by the condition date save in one respect. Obviously completion did not take place on 1st July 2008. Nobody complained about completion not taking place. Nobody alleged that the fact that completion had not taken place was a fault of anybody else because everybody was still working towards fulfilment of the conditions. It was never suggested to any of the witnesses that Barratt called that they had made a decision (for example) to give up its rights to terminate which had accrued by reason of non fulfilment of the conditions by the 8th July 2008. It was plain as I have said that nobody gave a thought to seeking to exercise rights at that time (on either side) because the conditions had not been fulfilled.

Nor was it seriously put to any of Barratt’s witnesses that they had failed to discharge the duties to attempt to agree the documents required to be agreed by the terms of the Agreement.

On this basic analysis the right to rescind accrued and was duly exercised either on 25th November or in March 2010 because the conditions had not been satisfied by 8th July 2008 and Barratt (exercising the right to rescind) had not given up its rights so to do. Nor was Barratt in breach of any obligation on its part.

The decision to terminate as shown by the evidence of Barratt’s witnesses was taken in late November 2008 when it was clear that due to the downturn in the economy and its own fortunes the appraisals showed that the project would not be profitable. So I will review the correspondence briefly to show what the parties were doing.

There was correspondence between Barratt’s solicitors Owen White and Rowe’s solicitors Pitmans before the contract was exchanged.

Between October 2007 and January 2008 Barratt’s solicitors provided various warranties to Rowe’s solicitors to inform them (see email 15th January 2008) that there were standard and substantial amendments that could not be agreed. These warranties however related to the major works but not the separation works which is the subject matter of the allegation of non compliance against Barratt in this action.

Exchange occurred on 7th February 2008. On 21st February 2008 it was proposed that A & L’s occupation of the Back should continue up to 23rd June 2008 with all income payable to Rowe at that date. Written confirmation that Barratt would not object to that was sought. Barratt confirmed they had no objection by reply email dated 22nd February 2008.

In April 2008 there was exchange between the parties over the provision of the Specification which Barratt had an obligation to produce by 3rd April 2008. However it is important to appreciate that the exchange was not in the sense of suggesting that Barratt had failed by not providing the Specification and the correspondence carried on on the basis that both sides were endeavouring in my view to satisfy the conditions. Thus an email from Pitmans of 22nd April 2008 recalling the Specification acknowledged that it had by then been provided.

This is further demonstrated by the email of 13th June 2008 which addressed the warranties to be given from the consultants to the proposed development. By this time the time for completion had passed as had the time for satisfaction of the conditions. Either party could have rescinded the Agreement by that time. Neither did.

On 20th June 2008 there was an exchange concerning the method statement which was not ready because all the works had to be agreed for which there were ongoing discussions. On 24th June 2008 Barratt initiated discussions with A & L about carrying out the proposed workings.

In July the discussions appeared to move towards the deed of variation. There was a tripartite meeting on 4th July 2008 where various of the works were apparently agreed. The warranties issues surfaced around 24th July 2008 with an email from Gough Commercial (who were acting for Rowe) to A & L and Barratt. This developed by an exchange on 28th July 2008 which initiated from Robert Wheeler who was A & L’s surveyor to his solicitor Alan Horn and Project Manager and sent to Gough Commercial again. He in turn passed it on to Philip Jones of Barratt. The discussion was of the various documents to be drafted and it is quite clear that the matter was advancing amicably (Robert Wheeler’s comments being “there does not seem to be anything controversial here”). That is clear when one looks at the forms of the warranties the provisions of which taxed people later (for example number of assignments of the benefit of the warranties), and the form of the warranty which is stated to be “based closely on the BPF form of warranty” were raised. In the latter context Robert Wheeler pronounced himself that he was happy with the form of warranty provided i.e. he was not insisting on a BPF form of warranty.

The solicitors then became involved and there is a telling email from Sheilagh Magee of Pitmans (Rowe’s solicitors) to Alan Horn for A & L where she said (after discussing the various drafts) “under the terms of the Agreement we have [] we need to be seen to be acting reasonably however I stress that I am reviewing this document currently if you wish to make any comments please to so as we obviously have to be at one between ourselves on this……..”

On 11th August 2008 Paul Murray became involved and sent a letter to Caryn Beidas Barratt’s solicitor at Owen White setting out various amendments.

There was an attempt in my view as I have said by Mr Murray and Mr Horn to obtain a greater number of assignments. This appears to have been an attempt to exploit the fact that the Barratt person responsible Joel Day had no legal expertise and was not necessarily fully conversant with the implications of matters which he appeared to agree. Stephanie Bishop of Owen White became involved towards the end of August (her letter of 22nd August 2008). Paul Murray went on holiday at the end of September and Sheilagh Magee returned and there were more changes proposed to the warranties which she sent to Stephanie Bishop. She in turn replied pointing out that she was not retained by Barratt in respect of the warranties and that they should be sent on to Barratt (i.e. Joel Day).

In my view Mr Murray and Mr Horn exploited Mr Day’s lack of legal expertise. The drafts dealing with the assignment of the warranties as drafted by Mr Day were inadequate because there was lack of clarity as to who was to have the benefit of the warranties. Initially Mr Day drafted it with the word “tenant” in it. Mr Horn changed that by extending the definition of tenant to extend to assignees. This had the effect of potentially allowing an unlimited number of assignments. Mr Day plainly did not appreciate that. Mr Horn (see his email of 20th August 2008 to Mr Day) sought that the warranties be given for the benefit of A & L and reinstate the word “Tenant” and an extended definition of the word tenant to include “successors in title and permitted assignees under this Agreement” that had the effect of meaning that anybody who stood in the shoes of a tenant also had the benefit of the warranty. Plainly that was never something Barratt contemplated and both Mr Horn (and later Mr Murray) knew that. In his email of 15th August 2008 for example to Mr Day Mr Horn expressly referred to a maximum of two assignees being permitted. The changes introduced by Mr Horn removed by stealth that limitation.

By November 2008 when the warranties were being discussed between Mr Murray and Stephanie Bishop this same point was there. On 14th November 2008 Mr Murray introduced a new one page deed of agreement. She understood that there would be a limit to two assignments (her letter of 17th November 2008 to Mr Murray) stating “I assume therefore that you meant this point is agreed”. Mr Murray never replied to that. However he sent a revised version to Caryn Beidas at Owen White. His one page document did not have any limit on the number of assignments. It was silent.

Stephanie Bishop replied on 20th November 2008 rejecting the single deed which gave the benefit of the covenants direct to A & L. Barratt’s stance was that A & L could be added as a party to the warranties that was not a contractual requirement. Its stance was that Barratt would give the warranties to Rowe and it would procure the enforcement as Landlord.

Paul Murray challenged that in an email of 20th November 2008 (timed 12:25). On 24th November 2008 timed 11:05 Mr Horn had sent an email to Mr Murray and had copied in Ms Beidas (of Owen White). He was referring to the draft that he had created back in July/August. He said “however for the purpose of the warranties I believe it would be preferable that a specific right for A & L to assign is expressly set out”. Ten minutes later Mr Murray replied to Mr Horn and copied in David Gough. He said this “do you think it is sensible to draw their drafting errors (which after all benefit your client) to Owen White’s attention?”

This to my mind was an attempt (in which Mr Horn participated) to have Barratt sign a document where the definition of tenant meant that the assignments potentially could exceed two. They both knew that this was not what Barratt had ever agreed or intended. Mr Murray justified this as getting the best for his client.

It is clear from the evidence of Mr Murray and Mr Horn that they were setting a trap whereby they hoped that Barratt would inadvertently agree to unlimited assignments. I refer to the cross examination of Mr Murray (T4) and Mr Horn (T5). To my mind this is unacceptable. All that it would do would be to create an ambiguity in the understanding of the parties which ultimately, if it became important, would have led to more litigation and claims for rectification. Lawyers who are instructed to draft documents do it for the purpose of avoiding litigation, not creating it. Mr Horn acknowledged this. He was quite willing to concede to the assignment point knowing that is what Barratt wanted if Barratt came back but they never did. He acknowledged that this is the kind of attitude that would create litigation in the future (T5/69/20;T5/82-84). In particular he clearly took on board Mr Murray’s suggestion about silence.

Mr Murray from his side described his actions as “….it wasn’t the most noble piece of correspondence but I was trying to achieve an end” (T4/141/15) and his acknowledgement (T4/151/20) that they were trying to pull a fast one.

Finally in this context his stance meant that his clients were arguably acting in breach of clause 6.2 (iii) and clause 15.5 as he was not acting reasonably and was not using reasonable endeavours to agree the Deed of Variation because he was trying to better the position during the negotiations (T4/153-155).

The notice of rescission was served the next day 25th November 2008. Going through that correspondence what is happening is that both parties are attempting to agree the form of the Deed of warranties but I cannot see that it can be said that Barratt has acted in breach from an examination of that exchange of correspondence and in the light of the evidence and cross examination. If anybody was in breach as I have said, it was Mr Murray in stringing things out so as to better the position by trapping Barratt in to agreeing something which it did not believe it was agreeing to.

The warranties therefore had not been agreed by 25th November 2008 and it was not Barratt’s fault. It must be appreciated that Barratt’s obligation was not an absolute obligation to provide these matters. It was (clause 15.5) to use all reasonable endeavours and carry out the provisions of clause 15 as quickly and as expeditiously as reasonably practical from the date of this Agreement.

This is reflected also in clause 6.2 (iii) “the method statements and all matters be agreed or approved by A & L pursuant to the Fifth Schedule of the Lease have been agreed or approved by A & L, the vendor and the purchaser in writing (and the vendor and the purchaser shall act reasonably and use all reasonable endeavours to agree such matters)…….”

It seems to me on reviewing the correspondence and evidence as briefly set out above both parties were attempting to agree the documentation which needed to be in place in order for there to be an agreed redevelopment procedure including the work and the various warranties to be given in respect of such works. Both sides were working towards achieving a mutually agreed set of documents (although not necessarily strictly in accordance with the Agreement). Thus in my view (although as I have said Mr Murray and Mr Horn were less frank than they ought to have been) all the parties’ professionals were attempting to agree a modus operandi so the Agreement could become unconditional.

It is equally clear that nobody took any notice of the fact that the time for compliance for the conditions had past. Indeed the contractual date for completion came and went with no complaint from anyone. However equally on the evidence and the documents nobody took the point that the conditions had not been satisfied by that date.

Thus neither party in my view gave up or altered any of the terms for compliance which were conditions precedent to the completion of the Agreement. All rights remained in place. As I have said it seems to me plain that the right of termination under clause 6 was available to either party as a free standing right that could be exercised at any time after 7th July 2008 up until the time when the option became incapable of exercise namely when the Agreement completed.

It is equally clear that until 24th November 2008 neither party had in mind the fact that they had an accrued right to terminate the Agreement for non compliance with clause 6.2. It never occurred to either party that they wished to escape from the contract as they were all working towards a mutually agreeable resolution of the outstanding issues.

Equally as I have said as neither party considered the exercise of the rights before 24th November 2008 it is clear that neither party expressly or impliedly conducted themselves or agreed expressly or impliedly that the provisions would no longer be in force. If the conditions had been subsequently satisfied there might have been a potential argument as to whether a party could then still exercise the right of rescission. This does not arise in the context of this case because the relevant condition which Barratt relies upon as being unsatisfied were not satisfied at the time of the service of both of the two notices. If they had been it seems to me that if (for example Barratt) agreed that the conditions had been satisfied it would thereafter be impossible for it to exercise a right to terminate.

It is clear that some people within the Barratt organisation were becoming nervous about the Agreement as early as 17th July 2008. Gary Ennis Barratt’s Regional MD (who did not give evidence) raised questions about a number of contracts and asked Mark Davies Barratt’s local Development Director until June 2008 to look into whether or not Barratt could “get out of the contract”. It was not clear whether Mr Davies carried out that enquiry. By the time of the next Divisional Board meeting he had left Barratt’s employment and it appears that nobody else dealt with the query. It was not raised at subsequent meetings until November 2008 (see below). The financial viability of the development covered by the Agreement was considered on 24th July 2008 and approved with a standard quarterly review to occur thereafter. That took place on 28th October 2008. There was no reference to this development at that meeting according to the minutes. The position clearly changed by the Divisional Board meeting of 21st November 2008. Gary Ennis became nervous again about expected sales revenue and asked Christine Scarborough Barratt’s Sales Director to revise the figures. She had expressed the view that the expected revenue from the private (non social housing) sales were far too optimistic in the light of later conditions. Once again Mr Ennis asked for consideration to be given to whether there was any way of getting out of the contract. The revised figures showed that there was a substantial reduction from over £11,000,000 of sales to £8,000,000. It appeared therefore that if the development proceeded at that time with the purchase at £1,800,000 Barratt would make a loss on the development.

It seems to me clear that Barratt made a commercial decision that in the light of the revised forecast the contract was no longer viable and it wished to consider what rights were available to it to avoid proceeding with the contract. I find that up until that date both Barratt and Rowe as I have set out were working towards satisfying the conditions to the contract. As I have also said and so determine neither had addressed or given up or agreed to vary the existing contractual rights.

In the light of the changed circumstances no doubt Barratt was advised it might well be able to terminate the Agreement by serving of the notice on 25th November 2008.

The relevant condition was not satisfied by that time.

It seems to me that the right accrued and was available to either party. It could be exercisable “at any time”. That expression despite its apparently unending duration would have a logical termination namely the date of completion. By that time the idea that the completion could be retrospectively set aside by the service of a notice is nonsensical. It is plain in my mind that the rights accrued by the non satisfaction of the condition and that thereafter at any time until completion either side could terminate. As I have said this seems to me to be a commercial contract where the parties changed the effect of clause 6 by giving each a mutual right to terminate. Both sides assumed the risk that if the conditions were not satisfied either party could walk away from the Agreement unless that right was no longer exercisable for the various reasons that I have set out earlier in this judgment.

This is not unfair. The right was a bilateral one. As I have said it would have been equally open to Rowe if the market changed in its favour and it found another buyer to do precisely what Barratt itself felt able to do.

I therefore approach Rowe’s contentions against Barratt in the light that prima facie the rights relied upon by both notices had accrued and that Barratt was therefore entitled to serve both notices. I will therefore consider Rowe’s objections to Barratt’s prima facie entitlement.

In the light of my findings above in my view in reality Rowe’s claims largely fall away. Comprehensive closing submissions were provided by Rowe but given my findings having seen the witnesses and considered the evidence I do not intend to deal with each and every matter set out in the closing submissions. They run to 191 pages. They are supplemented by another 55 pages in response to Barratt’s closing and 2 more pages on what is called the “BPF” issues.

The first point taken by Rowe is the wording of Barratt’s letter of rescission where they stated that Rowe was in breach of the contract as it had not given confirmation all sums due to A & L had been paid in full. I accept that the word breach was not appropriate. I do not believe Rowe had a contractual obligation to Barratt that they would make any payment nor did Rowe have a contractual obligation to provide the confirmation. However this does not assist Rowe. In my view as I have said this was a condition the non fulfilment of which entitled Barratt to refuse to complete until it was fulfilled. However there is also the overriding right of rescission if the conditions had not been satisfied by 7th July 2008 (i.e. 6 days after the contractual date for completion). It does not obviate the notice in my view that Barratt’s solicitors wrongly categorise this as a breach by Rowe.

Clause 6.2 is linked to clause 52 of the Back Lease. That provides as follows:-

“52.1

If the Landlord wishes to terminate this Lease at any time after 25 March 2007 and shall have given to the Tenant not less than six months notice in writing of its intention to do so then on the expiration of such notice this Lease shall absolutely cease and determine but without prejudice to any rights of action or claims of either party in respect of any antecedent breach or breaches of covenant save that the Landlord shall not make any claim against the Tenant in respect of dilapidations.

52.2

In the event that Landlord terminates this Lease in accordance with clause 52.1 it will pay to the tenant the sum of £95,500 to be apportioned as follows:

52.2.1

A capital payment of £68,000

52.2.2

An allowance made by the Landlord against the rent payable by the Tenant in respect of the Adjoining Property in the sum of £27,500

52.3

In the event that the Landlord terminates this Lease in accordance with clause 52.1 the Landlord will at its own expense carry out the Separation Works as defined in and in accordance with the provisions set out in the Fifth Schedule hereto

52.4

For the avoidance of doubt the Landlords obligations set out in the Fifth Schedule hereto shall not merge upon termination of the Lease and shall continue in full force and effect until discharged.”

This provision was essential for Barratt. If they wished to complete they would need to be assured that the Back Lease was ended. Clause 52 gave Rowe the option to terminate the lease after 25th March 2007 giving not less than 6 months notice (I should say the lease was excluded from the operation of the Landlord and Tenant Act 1954 Part II). Under clause 52.2 when the lease is terminated Rowe is obligated to pay £95,500 to A & L being a capital payment of £68,000 and an allowance made by it against the rent payable of the tenant in respect of the adjoining property of £27,500.

What is totally missing from there is vacant possession. It seems to me to be clear as a matter of construction of clause 52.2 that after Rowe served notice of termination then the notice takes effect, and the lease thereby terminates, it becomes under an obligation to pay those sums. If it does not pay those sums whilst the lease will have terminated it seems to me that A & L will be entitled to seek to remain in possession until the sums were paid (in effect a Vendor’s lien).

This then marries with clause 6.2 because Barratt wants to be sure that the lease is terminated and the capital payments have been paid. Thus there is no basis if the lease has been terminated and the monies paid that A & L could insist on staying in possession. Once that confirmation is provided to Barratt then it would clearly be willing to proceed to completion but not otherwise.

Rowe raised a number of reasons as to why that is not a straightforward answer to the construction of the clause. First it suggested the construction of clause 52 is that the compensation was not payable until vacant possession was given. I do not agree. Vacant possession is not referred to at all. The notice as I have said was given on 14th September 2007 and expired on 18th March 2008. The lease therefore terminated on that latter date. In fact (with the concurrence of Barratt) as set out above Rowe negotiated an extension of time for the delivery up of vacant possession by A & L. That in my view had no impact whatsoever on the construction of clause 6.2. It is not an agreed variation (it was not addressed). Nor is it material to suggest that the monies were payable when vacant possession is delivered up. Although of course Barratt would wish to ensure vacant possession under the Agreement there is a separate obligation (clause 6.1) to provide vacant possession. Clause 6.2 is linked to the termination of the lease and the payment of monies thereunder. It is therefore not linked to the vacant possession which is an obligation under a different clause. Barratt could refuse to complete unless vacant possession was available.

It might be that Rowe and A & L agree variations of the compensation (or even give it up) or even an extension of occupation (provided Barratt agree because of its impact on the contractual completion date of 1st July 2008 when vacant possession has to be delivered up) but the purpose of clause 6.2 (vi) is for confirmation to be given at the latest by 8th July 2008 that all of the obstacles as regards A & L’s lease have gone. By that date therefore Rowe must provide the evidence that all sums have been paid. Barratt of course knew already that the lease had been terminated by the notice that had already been given before exchange of contracts.

If Rowe and A & L negotiate different terms so that (for example) no money is payable then Barratt should also be told that. However of course Barratt were told absolutely nothing. There was no attempt to provide the information required by clause 6.2 (vi).

It is true that there is linkage in clause 52.3 to the Separation Works specified in the Fifth Schedule but that clause does not enable A & L to use that as a basis for resisting termination. It is significant to note that in the Fifth Schedule the linkage to the commencement of the Separation Works is to the date of the landlord’s notice confirming the date of commencement of the Separation Works. It is not linked to the termination of the lease. Thus clause 6.2 (vi) is a freestanding requirement that the evidence of the payment of all monies that are due on termination of the lease is provided to Barratt.

After 18th March 2008 A & L’s lease terminated and it would have been required to deliver up vacant possession to Rowe. The only basis for it remaining there would be if the monies had not been paid. However given the fact that the Separation Works had not been agreed it is commercially sensible for all the parties not to require A & L precipitously to give up vacant possession until the time for the implementation of the Separation Works arrived. That is what happened.

There were negotiations between Rowe and A & L to cover the occupation beyond the expiry of the notice on 8th March 2008. A tenancy at will was executed on 20th March 2008 with a rent payable at £2,660. This would give no rise to any security of tenure under the Landlord and Tenant Act 1954 Part II because such tenancies are not protected under those provisions. They also executed a side letter postponing the date that A & L obtained the monies until it gave up vacant possession.

However neither the tenancy at will nor the side letter was sent to Barratt or their solicitors. An email was sent on 4th July 2008 by Mr Gough to Robert Wheeler of A & L and in that he stated that the lawyers needed to be instructed so that compensation to A & L could be released. This was after the date fixed for completion. He copied it to Barratt’s technical director (Philip Jones). Neither he nor anybody else at Barratt raised any objections to what they were told.

I do not see that takes the matter any further. I do not accept it can be construed as some kind of express or implied variation to the obligations under clause 6.2 (vi), much more is required. If the circumstances were such that Rowe and A & L had agreed a variation which meant that clause 6.2 (vi) could never be fulfilled before 7th July 2008 they should have secured an agreement from Barratt before the date arose that the clause operated in some other way. However Rowe did not reveal the revised terms of the continued occupation of the Back by A & L and it seems to me that it therefore took a risk that if it became impossible to give any notice by its own actions nevertheless it would be open to Barratt to rely upon that to terminate the Agreement if it so wished.

It is important to distinguish between sensible practical arrangements that the parties agreed before the conditions were fulfilled from a strict obligation under the Agreement. It might well have made sense for the delivery up of vacant possession by A & L to be postponed but that does not make any difference in my view to the operation of this clause. Nor does it remove (merely because Barratt was aware that they were remaining in occupation but not upon what basis) the obligation to give the notices to satisfy the conditions. Rowe took the risk. It does not matter that Barratt is not prejudiced; it is a question of giving effect to the freely negotiated terms agreed between two commercial organisations.

Equally I reject the third argument put forward by Rowe namely the fact that the rent allowance of £27,500 was not going to be paid but was to be allowed against the rent of the Front. This seems to me to be a matter of irrelevance again. If it is allowed against the rent of the Front that in my view means that there is a payment within the meaning of clause 6.2 (vi) by Rowe to A & L even though all it does is reduce the rent that becomes due. The wording of clause 6.2 (vi) is clear and as regards that part Rowe should have given the notice saying that the £27,500 had been allowed against a particular quarter’s rent as regards the Front. It is a technical point as Rowe freely admits in its closing submissions. However that does not matter because in my view the argument is wrong.

Accordingly I reject Rowe’s first reason.

Rowe in its closing submissions devoted 80 pages to this issue. In so doing it plainly significantly expanded on its pleadings. The Re-Re-Amended Defence and Counterclaim which was not significantly varied does not even begin to allude to the huge expansion in Rowe’s closing submissions.

I have set out above an analysis of the correspondence showing what the parties were doing up until 25th November 2008. Having heard the witnesses and reviewed the correspondence I do not believe it is possible to allege that either party had failed to comply with their obligations under clause 6.2 (iii). Equally I found no evidence to show that either party was in breach of their obligations under clause 15.5. Both parties were in my view doing their best to secure an agreement as regards the outstanding matters required to be dealt with for the contract to go unconditional.

Rowe in its closing submissions drew analogies with common enough break clauses found in leases. In that context it referred to the cases of Bass Holdings Ltd v Morton Music Ltd [1988] 1 Ch 492 and Bairstow Eves (Securities) Ltd v Ripley [1993] 65P & CR 220.

Whilst it is always interesting to look at different decisions in different areas of law it should not be pressed too far. It seems to me (despite the efforts of Rowe to the contrary in the closing submissions) that clause 6 is relatively clear and easy to implement.

However difficult questions of construction only arise if (1) there is an ambiguity over the construction which needs to be resolved and (2) there is evidence which addresses the matters that are required to be done under the relevant clause.

I have not found clause 6.2 to be particularly difficult even though I accept its fundamental nature was changed when the option to terminate became bilateral and as I have said earlier in this judgment there is a gap in the clause. Nevertheless the structure seems to me to be reasonably clear:-

I have already examined the evidence both the contemporary correspondence and the witnesses who were involved. As I have said I cannot find any evidence in there to show that either party has failed in the obligations it had to agree these relevant documents.

Equally it was never put to any of the Barratt witnesses that they had acted in breach of their various obligations. The allegations (which are not easily set out in the Re-Re-Amended Defence and Counterclaim and the attached appendices) were never put to them. The impression as I have said (and I apologise for repetition in this judgment) is that all the professionals were trying to work to satisfying these outstanding matters. As I have said the only criticism I have is of Mr Murray and Mr Horn. Even then I accept whilst I found their conduct on the particular aspect unsatisfactory at best it could be argued that Mr Murray might have put Rowe in breach but that does not arise for consideration.

None of the above propositions is in my view particularly complicated. However the key point is that none of them arises for consideration in my view on the facts.

Much is made over the different forms of the warranties. Barratt produced their form of warranties before the contract yet agreed to provide warranties in the BPF form according to the contract. There is not much difference between the forms.

Neither party in the correspondence challenged whether a particular form was in accordance with the contract. This is particularly significant when the stage occurred of giving A & L a direct covenant as opposed to Rowe having the benefit of a covenant which it would enforce at A & L’s behest. In my view by 24th November 2008 the parties were proceeding to an agreement as to all forms and were fairly close in achieving that object. However it is important to appreciate that the forms were not agreed by 24th November 2008 and it was the fault of no party in my view.

The stance of the parties is best illustrated by the email from Alan Horn to Robert Wheeler dated 25th July 2008. He had been provided with Barratt’s warranties and his comment was “I can confirm that I am happy with the forms of warranty provided (which appear to be based closely on the BPF form of warranty) subject to various comments”.

What is totally lacking of course is his objection to a non BPF form of warranty per se. The same stance was taken by Rowe in the negotiations. This is of course despite the fact that under the Agreement Barratt agreed (clause 15.2 of the Agreement) to provide (inter alia) warranties referred to in clause 2.2 of the Fifth Schedule to the Back Lease. Under that clause it is of course Rowe that assumes the obligation. The purpose of clause 15.2 of the Agreement is to make Barratt’s obligations back to back with those of Rowe.

The warranties are supposed to be in the BPF form. Yet when Barratt produced its own warranties the one cry that was not raised by either Rowe or A & L was “these are not BPF warranties and therefore do not apply”. What actually happened was that the lawyers instead of becoming embroiled in that kind of unhelpful dispute pragmatically attempted to reconcile the drafts that were produced in a form which would be acceptable to all parties. That is not of course what the Agreement provided but I can understand the approach of the lawyers “Jaw Jaw” is better than “War War”.

Therefore when all parties embraced that procedure as a sensible and pragmatic approach to attempting to agree documentation to make the contract unconditional it is not appropriate subsequently to analyse that conduct in an attempt to point to one or other as being in default of the reasonable endeavours type obligation set out in the Agreement. A detailed analysis of what went on in these negotiations of every letter, email, meeting or step achieves nothing if it is not put to the persons that what they have done is a breach of contract. It was never formally put to any of the various witnesses. However I regard that failure as (unusually) of not great significance. There is always a danger in hindsight in analysing each document or conversation line by line and attribute great significance to things when there is no such significance. As I have said when one looks at the correspondence and the witnesses the position is clear. The parties were through their representatives trying to achieve a consensus as to the way forward. Neither party was insisting on its strict rights but equally neither party had given up any rights.

Rowe gives in its closing 10 defaults on the part of Barratt. I do not accept that any of them is established. They are in my view an over elaborate analysis of what went on during the period of negotiation for the reasons that I have set out above.

Accordingly I do not accept that Barratt was in breach of any duty under clause 6.2 at the time when it served the first notice.

Equally Barratt was not in breach when it served the second notice. Nobody took any steps to progress the contract after the fall out over the first notice. A party is entitled to test the validity of a notice in a contractual situation. By so doing it does not put itself in breach of contract: see Woodar v George Wimpey [1980] 1 WLR 277 H.L.

Rowe denies Barratt is entitled to rely on the second notice by reason of the breaches which it contends prevented it from serving the first notice. No new issues arise.

Self evidently the matters required to be agreed by 6.2 (iii) were not agreed by 25th November 2008. They were not developed further. If Rowe fails to establish any of its objections then it has no defence to a claim of rescission based on the second notice.

Rowe’s contention is that if any of the conditions had not been satisfied by 7th July 2008 a right arose in favour of Barratt which required it to elect between that right and continuing on with the Agreement.

Rowe in paragraph 44 of its Re-Re-Amended Defence and Counterclaim puts the matter quite shortly:-

“[Barratt] are prevented in law from relying on the purported notice of rescission given by them on 25th November 2008 by virtue of an estoppel, or waiver of the right to rescind, or the operation of the doctrine of election.”

Rowe based its contention on the (admitted) fact that from 7th July 2008 to 24th November 2008 Barratt continued discussions with Rowe to achieve the specification for the Separation Works under clause 15.2, they continued to discuss and provide the method statement, they continued to discuss the warranties and continued to attend meetings and attempt to agree a Deed of Variation. Rowe submits that these were only consistent with Barratt deciding to choose to carry on with the Agreement and not exercise the right to rescind which accrued on 7th July 2008.

Barratt did in my view (and I so find) no such thing. I have analysed what Barratt and Rowe did up until 25th November 2008. It is clear that Barratt never considered the accrual of and existence of the right to rescind between 7th July 2008 and 24th November 2008. It was never put to Barratt’s witnesses that they had. There is (whatever the legal principle) no factual platform to sustain it.

Whether this is called election waiver or estoppel by conduct in this context in my view does not matter because the factual basis for it is simply not made out. All of those in my view require some active conduct by the person alleged to be debarred. By that I mean there must be some kind of considered decision to choose between the rights or to give up (or waive the rights) or to conduct themselves in such a way that the other party in reliance upon that conduct was entitled to assume that the rights had been given up. It all relates back in my view to the important decision of the Court of Appeal in Peyman v Lanjani above. I do not see that a party can give up a right if it is not aware of it arising. It is quite clear as I have said Barratt’s employees until 24th November 2008 never considered that rights had accrued on 7th July 2008 which they could exercise. As Rowe point out in their closing the classic formulation in Kammins Ballrooms v Zenith Investments Ltd [1991] AC 850 at page 883 does not in my view arise on the facts. For the doctrine of election or waiver or estoppel by conduct to arise it must arise “in a situation where a person is entitled to alternative rights inconsistent with one another. If he has knowledge of the facts which give rise in law to these alternative rights and acts in a manner which is consistent only with his having chosen to rely on one of them, the law holds him to his choice even though he was unaware that this would be the legal consequence of what he did”.

There is nothing in the evidence in my view which showed that Barratt acted in such a way. Nor was it ever put to them that they had consciously or unconsciously exercised their rights in a way in which was consistent only with giving up of the rights which accrued to rescind the Agreement on 7th July 2008.

Equally Rowe’s evidence failed completely to establish that it had acted any way in reliance on an understanding that Barratt had given up its alternative rights. This is reinforced by the observations in Peyman v Lanjani where not only was it necessary for the doctrine to be established to show that the person knew the facts which gave rise to inconsistent rights but also of the existence of the inconsistent rights. Obviously Barratt as an organisation knew the contractual terms but it seems to me that the conduct being analysed is that of the people who were negotiating the Agreement of the conditional matters. It does not seem to me that there is evidence to show that when they carried on the negotiations after the right to rescind had arisen on 8th July 2008 that they were doing anything other than merely carrying on the negotiations. Nothing significant happened. As I have said the contractual date for completion passed and the date for fulfilment of the conditions passed without having any impact on the way in which Barratt and Rowe carried on addressing the finalisation of the conditional matters. It is insufficient in my mind to add the clear corporate knowledge that Barratt had of the rights accruing and merge that with the officers in question who were conducting the negotiations when they never appeared to have considered the rights let alone the possible exercise of the rights. Equally they cannot be said to have communicated to Rowe the fact that they intended on behalf of Barratt to elect between these two supposed alternative rights.

This can be seen from the observations of Stephenson LJ in Peyman at page 487 (cited by Rowe) where he said:-

“knowledge of the facts which gives rise to the right to rescind is not enough to prevent the plaintiff from exercising that right, but he must also know that the law gives him that right yet choose with that knowledge not to exercise it…..”

Stephenson LJ then went on to consider the second aspect namely where in fact no intention to waive or abandon the right because there is no knowledge of it will that intention be presumed from conduct. Thus he said:-

“this raises, in my opinion, two questions:- (a) does his conduct amount to affirmation of his contract, an abandonment of his right to rescind it? (b) is he precluded or estopped by his conduct from denying that he has abandoned his contract? And in answering each question the position of the other party to the contract must be considered. In this case there is no need to consider the position of any third party in answering either question” (ibid page 488).

He continued further:-

“Waiver or election is always a question of intention to be decided on the evidence as a question of fact….In fact and in law men’s intentions must be judged by their actions, and a mans acts may convey to any reasonable person standing in the shoes of the other party to a contract, as clearly as any other words, an intention to repudiate or to affirm the contract. If the other party relying on acts having the latter effect, suffers detriment or prejudice, there is unequivocal, and irrevocable affirmation….. “(ibid page 488).

The difficulty I have is the fundamental proposition that on 8th July 2008 a second right arose in favour of Barratt which it was required to elect whether to exercise or not. I simply do not accept that this is an event which is covered by the principle of election at all. On this analysis as Barratt admits in its closing the right accrues on the 8th July 2008 (subject to considering its position for a short period of time) Barratt must then either elect to rescind or carry on with the Agreement. This flies in the face of the wording of clause 6.2 which gives it a right (and Rowe as well which is not to be forgotten) to terminate “at any time”. Those words must mean something.

In my view what they mean is that an additional right arises upon the non fulfilment of the conditions by 8th July 2008 in favour of both Barratt and Rowe. That is exercisable at any time. Thus as I have already determined it is exercisable until the right is either given up in one form or another or it becomes incapable of exercise by completion of the Agreement. At that stage of course the contractual rights would merge in the transfer and it would be impossible as I have said for Barratt retrospectively to undo the completed transfer of the land.

Rowe criticised this analysis by reference to the doctrine of continuing breach or event (see their closing paragraphs 201 et seq). It drew an analogy with breaches of covenants which are divided into once and for all breaches and continuing breaches. If a breach is a once and for all breach subsequent acts by the landlord with knowledge of the breach which unequivocally recognise the continued existence of the lease waive the right to forfeit. However it is dangerous in my view to draw an analogy based on the waiver by a landlord of a right to forfeit any breach of covenant by acceptance of rent. It has long been held that waiver operates irrespective of the state of mind of the landlord. He will waive if he demands and receives rent with knowledge of the breach. The analogy as regards continuing breach is fallacious.

It is fallacious for the following reason. What happened on 8th July 2008 when the conditions were not fulfilled (absent any of the debarring part of clause 6.2 in the proviso) is not a breach of contract which requires the “innocent” party to elect whether or not to act on that breach or affirm the Agreement to go on.

The non fulfilment of the conditions is not a breach by anybody. Equally it must be remembered that the right is exercisable by both Barratt and Rowe. All the clause does is give either party an option which it can exercise “at any time” to terminate the Agreement. The analysis between waiver of once and for all breaches or continuing breaches is therefore a false and unhelpful one.

Equally the analogy with an election in respect of a repudiatory breach is false.

In my judgment this is not a case involving election at all as I have said. Both parties negotiated for an additional right to terminate the agreement without breach if the conditions were not satisfied by a particular date. When such clauses are drafted they regularly set an express time limit within which that right can be exercised. In so far as the Agreement purported to do so it gave a right to exercise at any time. Effect must be given to that provision and I have given meaning to it earlier in this judgment. When both parties are given the identical right by reason of the non fulfilment to a condition the concepts of doctrine of election and the position of the innocent and guilty party simply do not arise.

I therefore conclude that there is no doctrine of election applicable to the arising of the right to rescind after 7th July 2008.

In case I am wrong I am quite satisfied on the facts that Barratt did not elect between the two rights nor did it waive or give Rowe the impression that it was electing between two separate rights and neither party conducted themselves as if the rights that had arisen by reason of non fulfilment of clause 6.2 (vi) ever entered their minds.

I therefore conclude that this issue too fails.

Rowe contends that Barratt could not exercise its right to rescind under clause 6.2 because it was in breach of clause 15.5.

The legal principle is considered in a number of cases starting in modern times with Algussein Establishment v Eaton College [1988] 1 WLR 587. The House of Lords affirm the well know principle of construction that there was a presumption that a party to a contract could not be permitted to take advantage of his own wrong as against the other party. It will be seen that it is a matter of construction depending on the terms of the agreement in question.

That it is a matter of construction of the contract is reinforced by two first instance decisions namely Micklefield v SAT Technology Ltd [1990] 1 WLR 1002 and Thompson v Asda-MFI Plc [1988] Ch 241. The latter case is particularly significant because the Defendants by their actions prevented the fulfilment of the Plaintiff’s share option by selling their shares. That of course meant that the option was not exercisable but it was held by Scott J (as he then was) that in the absence of a particular clause in the agreement preventing them from selling the shares it was open to them to sell the shares even though that prevented the fulfilment of the option.

In my opinion it is a matter of construction of the agreement. Barratt argue that the only place where there is a restriction in terminating is in the proviso to clause 6.2. The clause does not say a party cannot exercise that right if it is in breach of any other provision of the Agreement (and in particular clause 15.5). However the short answer to that is clause 6.2 (iii) which brings in the obligations in the Fifth Schedule to the Back Lease. If Barratt is in breach of those provisions it cannot serve the notice because the clause expressly prevents it from so doing.

There is no justification for implying in my view a term beyond that.

Barratt has admitted (see paragraph 156 of its observations on Rowe’s Closing Submissions) that prior to 7th July 2008 it had breached clause 15.2 by the late provision of the specification, method statement and warranties referred to in clause 2.2 of the Fifth Schedule of the Back Lease (they were due on 3rd April 2008).

Rowe raised the failure to provide the Specification on 3rd April 2008. The next day it received a reply from Stephanie Bishop saying that Barratt had been liaising direct with A & L regarding the Specification. On 22nd April 2008 Sheilagh Magee (from Pitmans Rowe’s solicitors) sent an email to Stephanie Bishop and Caryn Beidas (at Owen White Barratt’s solicitors). She reviewed the various matters of conditionality required to be satisfied under clause 6.2. Under clause 6.2 (iii) she commented that there had been a delay in the provisions of the Specification. Interestingly under clause 6.2 (vi) she proposed that confirmation would be sent in the penultimate week of June. That of course never happened. The Specification and the Method Statement were agreed as the emails dated 24th April 2008 (from Rowe’s surveyor Chris Griffiths) and the one dated 28th April 2008 from Lance Blackstone (a director of Rowe) show.

The warranties remained outstanding but Barratt and Rowe regarded the agreement of the warranties as being a continuing exercise. I do not see that the failure to provide the warranties by 3rd April 2008 when both parties were still attempting to agree them (in fact right up until 24th November 2008) can possibly be a breach of contract by Barratt. Neither party took any issue over the passing of that date. The failure to deliver the warranties by that date arose entirely from the fact that all parties were still negotiating the terms. Barratt therefore had nothing that it could have produced by that date and it was not its fault. Rowe submits the sequence of works was not produced until 4th July 2008 but in my view nothing turns on that.

The reason why nothing turns on these various breaches at 3rd April 2008 is that they were all cured by the 7th July 2008. It follows therefore that when the rescission arose the breaches were spent in the sense that by that time Barratt was no longer in breach. It might have a technical liability to pay nominal damages for the delay in clause 15.2 but no loss or damage has been suggested by Rowe for that short period. It seems to me therefore that Barratt was neither in breach of the proviso to clause 6.2 nor in breach of an implied term that prevented it from taking advantage of its own breach of contract by the time the rights of rescission arose on 7th July 2008 because it was not acting in that way.

I leave out of that consideration the warranties. For the reasons I have set out in this judgment it is impossible to say either party was in breach over the provision of the warranties.

Further it should be borne in mind that the principle under discussion in this part of the judgment is that a party should not be entitled to take advantage of its own wrong. That does not mean that a party in breach cannot exercise any other rights which it has.

The relevant requirement therefore is that Barratt must be acting by taking advantage of its own wrong. If Rowe had established that Barratt was still in breach of clause 6.2 (iii) and 15.2 as at 7th July 2008 and that those breaches were not rectified by the time it came to serve the notice on 25th November 2008 it could not rely upon the non fulfilment of that condition when the failure to fulfil the condition was its own breach of contract. However as regards clause 6.2 (vi) none of those failures applies to the notice under that clause.

A distinction needs to be drawn between the proviso of clause 6.2 and the general principle of no profit from one’s own breach of contract. In the case of the former any breach of the obligations under clause 6.2 (even if unrelated to the ground relied upon) prevented the service of notice because that is what the clause says. By contrast the general principle prevents a party relying on the non fulfilment of a condition when that occurs by reason of its own breach of contract. Thus the breach of clause 15.2 could not in my view prevent Barratt from serving a notice under 6.2 (vi) as there is no relationship between them. It could however prevent it from relying on a notice served under 6.2 (iii) however that does not have any greater impact than the express wording of 6.2 as that provision has incorporated, as I have said. the obligation in 15.2.

It follows therefore that whilst Barratt could not have served the notice on 25th November 2008 if it was in breach of clause 6.2 (because the clause says so) as a matter of the general principle that would not have prevented it serving the notice on 25th November 2008 unrelated to any alleged separate breach. This is somewhat academic because the breaches of clause 15.2 are replicated in my view in clause 6.2 (iii). By that clause there was introduced Barratt’s obligation to provide the documents by 3rd April 2008. If the failure on its part (unremedied) to provide them by 7th July 2008 was Barratt’s fault it could not have served a notice until those defaults were rectified.

By way of contrast if by the time of the second notice Barratt was still in default in the provision of the Specification and Method Statement it could not because it was in breach of clause 6.2 (iii) (and 15.2) rely upon the non fulfilment of that condition then because it arose by reason of its own breach.

However interesting although all this is intellectually it has no application to the facts in my view because the breaches that occurred on 3rd April 2008 were rectified before the rights of rescission arose and there was therefore nothing in clause 6.2 or the implied term principle that prevented Barratt from serving the notice.

I therefore reject this ground of opposition also.

It follows therefore that I am satisfied that Barratt was entitled to serve both notices.

In view of my conclusion it follows that Rowe have not suffered any loss (beyond perhaps the technical failure to provide the Specification and Method Statement by 3rd April 2008 where the damages to my mind seem to be nominal only).

Nor does the question of specific performance arise for the same reasons.

As I indicated at trial the reality is that it should proceed as a split trial with remedies only arising if liability was established.

Rowe had made submissions on damages. Ordinarily in case I was wrong on the primary decision I would go on to consider those. However in my view that is not appropriate. If Rowe wish to challenge my decision on Barratt’s notices and are successful then the action should proceed to an inquiry as to damages where all issues, quantum and measure can be properly ventilated by an appropriate inquiry. In that context all issues will be open (including a possible one by Barratt that by seeking to establish the validity of notices they were not by that action in breach of contract) see Woodar above. However I am not expressing any concluded view on damages for the reasons that I have said.

Contracts for the sale of land are ordinarily the subject matter of an order for specific performance if there is a breach. An innocent party is entitled to that relief even before the date fixed for completion if the other party is evinced an intention not to be bound by the agreement see Hasha v Zenab [1960] AC 316 PC. Equally because land is normally considered to be a unique asset that too is generally used as the basis for regarding specific performance (albeit remaining discretionary) the natural remedy for breach of a contract for sale of land. The remedy however remains discretionary.

However in the present case had I reached this stage I would have concluded that specific performance is not an appropriate remedy. The reason is that in my view an order for specific performance would require the parties to continue to work together in order to finalise the outstanding matters and implement the ensuing works. That is a process of co-operation which in my view does not lend itself readily to an order for specific performance see for example CIS v Argyll Stores (Holdings) [1998] AC 1. I do not think the finalisation of the outstanding matters should be done under the threat of an order for specific performance. There is no reason in my view why Rowe if it had established liability cannot obtain a suitable recompense in damages.

At the moment I would consider that the planning position might also be a further bar to specific performance. As I said during argument at the trial Rowe could have taken such steps that were necessary to implement the existing planning permission. They chose not to do so. After the trial I was provided with a witness statement of Mr Blackstone (his third) where he provided information which suggested that the planning permission would be forthcoming on 18th May 2010. I have not been updated as regards the position. If that is correct then the planning issue is not a bar to specific performance. If there is no extant planning permission that in my view would be a further bar to specific performance.

Therefore I conclude that Barratt’s two notices were valid and the Agreement has been terminated by them either by the first notice or the second notice.

Accordingly I dismiss the counterclaim although I will hear (if necessary) arguments based on the claim for damages based on the failure of Barratt to provide the Specification and Method Statement by 3rd April 2008.

I am as ever grateful to all Counsel for the comprehensive nature of their written and oral submissions. The fact that I do not deal with every issue does not mean that I have not considered them; it merely means that I do not accept that they are relevant to the matters which I have decided and set out in this judgment.