John Hanson/CHT v Sweb Property Developments Limited

A notice to complete may be served where the vendor has performed the primary obligations required before completion, even though it may remain liable in damages for defective performance. Secondary obligations to pay damages do not ordinarily prevent reliance on a contractual notice-to-complete provision requiring readiness and willingness to perform outstanding obligations.

A purchaser disputing the completion figure must attend and tender the sum believed to be correct, accepting the risk of being wrong. A letter expressing an intention to pay an incorrect sum is not equivalent to the contractual tender of the amount due. The appeal was dismissed.

The appellant agreed to purchase part of a property from the respondent. The agreement required specified works before it became unconditional and incorporated the National Conditions of Sale, including a condition permitting either party, when ready and willing to perform outstanding obligations, to serve a notice to complete.

The respondent served a works-completion notice and later served a notice to complete. The appellant disputed the amount payable, did not tender the correct completion sum, and argued that the respondent was not ready and willing to complete because some minor works remained outstanding. The Yeovil County Court dismissed the claim challenging the notice to complete. The central issues concerned the effect of defective or incomplete works, the requirement to tender the correct sum, and the effect of subsequent correspondence.

1. Appeal dismissed. The notice to complete was valid and the respondent was entitled to rescind after the appellant failed to complete. The appeal was dismissed with costs assessed at £14,000.
2. The agreement was a hybrid contract. It first required the respondent to carry out specified works and then operated as a contract for the sale of land. A term was implied that the works would be carried out in a proper manner.
3. The outstanding items of work constituted breaches of that implied term and were capable of supporting a claim for damages. They were not, however, de minimis for that purpose. The contractual scheme distinguished between the primary obligation to complete the works and the secondary obligation to pay damages for defective performance.
4. Once the valid works-completion notice had been given, the primary works obligation had been performed for the purposes of the agreement. The obligations referred to in condition 22(1) concerned outstanding primary obligations, not a secondary liability to pay damages. The authorities relied on by the appellant were distinguishable because they concerned outstanding primary contractual obligations affecting readiness to complete.
5. Under clause 4(3), the purchaser had to tender or transfer the amount actually required at completion. The appellant’s letter stating that his solicitors should pay £2,962 did not satisfy that requirement because the correct sum was £5,927 and no sum was tendered.
6. A purchaser who disputes the vendor’s completion statement may tender the sum believed to be correct, but does so at the risk that the calculation is wrong. Tendering an incorrect amount leaves the purchaser in breach and does not prevent rescission after a valid notice to complete. Section 49 of the Law of Property Act 1925 provided a possible route for resolving the dispute.
7. Even assuming that the respondent’s later letter caused the appellant’s solicitors not to tender the proposed sum, that sum would have been insufficient. Sedley LJ agreed with this second answer, while expressing reservations about the first.

• Court of Appeal (Civil Division): dismissed the appeal from the decision of His Honour Judge Cotterill in the Yeovil County Court. The appeal concerned the dismissal of the appellant’s challenge to the validity of the notice to complete.
• Yeovil County Court: dismissed the appellant’s claim, holding that the works had been substantially performed and that the notice of completion was justified.