Pathway to Relief & Anor v Shvan Abbas Ali & Anor
[2024] EWHC 1284 (Ch)
Sheffield City Council v Scotfield Group Limited & Anor.
15 May 2023
[2023] EWHC 990 (Ch)
High Court
A council sold land, but the buyer didn't prove they'd get the building started in time. The council ended the deal, kept the deposit, and got the small part of the land back.
Key Facts
- •Sheffield City Council (Claimant) sold land to Scotfield Group Limited (First Defendant), with Camstead Limited (Second Defendant) later assigned the contract.
- •The contract (dated 21 March 2019) was conditional upon planning permission, with a clause requiring evidence of a 'Building Contract' before completion.
- •Planning permission was granted, but the First Defendant failed to provide satisfactory evidence of the Building Contract within a reasonable time.
- •The Claimant served a notice to rectify and, later, a notice of termination under clause 29(a).
- •The First Defendant argued the termination was invalid and counterclaimed for specific performance.
- •A key dispute centered on whether an implied term should be added requiring the First Defendant to provide evidence of the Building Contract within a reasonable timeframe.
Legal Principles
Contract interpretation: identifying the parties' intention by reference to what a reasonable person would understand.
Arnold v Britton [2015] AC 1619 and Wood v Sureterm Direct Ltd [2017] AC 1173
Implied terms: Conditions for implying a term (reasonableness, necessity, obviousness, clear expression, no contradiction of express terms).
Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2016] AC 742
Section 49(2) of the Law of Property Act 1925 allows the court discretion to order deposit repayment when specific performance is refused.
Law of Property Act 1925, Section 49(2)
Deposit forfeiture: Deposits are usually forfeited for purchaser defaults; exceptional circumstances needed for repayment.
Bidaisee v Sampath (1995) 46 WIR 461, Omar v El-Wakil [2002] 2 P & CR 36 and Midill (97PL) Ltd v Park Lane Estates Ltd [2009] 1 WLR 2460
Outcomes
The contract was validly terminated under clause 29(a).
The First Defendant substantially breached an implied term to provide evidence of a Building Contract within a reasonable time after the contract became unconditional. The provided documentation was insufficient.
The Claimant is entitled to retain the deposit.
No exceptional circumstances justified overriding the ordinary contractual expectations. The First Defendant's arguments regarding windfall and expenses were rejected.
Property 2 must be re-conveyed to the Claimant for £1.00.
This follows from the termination of the contract.