Di Luca v Juraise (Springs) Ltd & Ors

Time is of the essence for exercising an option to purchase land within a stipulated period. The option must be exercised strictly within that period, both at law and in equity, unless the language of the option demonstrates a contrary intention. The rule applies regardless of whether the grantor reasonably needs certainty about the expiry date. An option’s structure, the availability of more than one triggering event, the absence of a notice provision, or the grantee’s late knowledge of the event does not relax the time limit. A contractual option is distinct from an ordinary contract for the sale and purchase of land, where equity may generally treat a completion date as non-essential.

Two agreements granted the appellant options to purchase half-shares in separate freehold properties. Each option lasted six years and became exercisable on specified events, including the grant of satisfactory planning permission. The grantee had to give written notice within two months of the relevant event.

Planning permission was granted within the six-year period. Notices were sent before the expiry of the two-month period but were received by the respondents’ solicitors afterwards. On preliminary issues, His Honour Judge Boggis QC held that time was of the essence and dismissed the claim for specific performance. The appeal concerned whether the two-month exercise period was subject to strict compliance.

Appeal dismissed unanimously, with costs. The Court of Appeal affirmed the decision that the option notices were out of time.

1. Contractual stipulations as to time are ordinarily essential at law. Equity relieves against strict time stipulations in certain contracts for the sale and purchase of land, but an option to purchase land is not such a contract. The grantee obtains the benefit only by performing the condition strictly. This distinction was stated in Lord Ranelagh v Melton (1864) 2 Drew. & Sm. 278, and the same rule was stated in Dibbins v Dibbins [1896] 2 Ch 348 and Hare v Nicoll [1966] 2 QB 130.
2. Per Lord Justice Nourse, the rule is universal in relation to options to purchase. It applies unless the language of the option demonstrates the contrary, irrespective of the grantor’s particular need for certainty. The practical explanation given by Lord Diplock in United Scientific Holdings Ltd v Burnley Borough Council [1978] AC 904 arose in a different context and could not restrict the established rule.
3. The agreements were properly understood as providing one relevant exercise period: two months after the specified event, provided that event occurred within the six-year period. The possibility of different triggering events did not alter the strict nature of the period. Nor did the absence of an implied obligation to notify the grantee of the event create any contractual laxity. The notices were therefore ineffective because they were received after the period expired.

• Court of Appeal (Civil Division) — In [1997] EWCA Civ 2419, the court affirmed the decision below and dismissed the appeal with costs.
• High Court of Justice, Chancery Division, Birmingham District Registry — His Honour Judge Boggis QC decided the preliminary issue that time was of the essence of the two-month exercise period and dismissed the claim for specific performance.