Sujeeun v Mukhtar & Ors

In construing a written compromise, the court gives effect to clear contractual machinery governing default. Where surrender of ownership is conditional on punctual instalment payments, failure to pay on time may immediately restore the contractual right to claim ownership and activate a provision reinstating prior rights. A clause requiring the agreement to be recorded or registered with solicitors does not postpone payment unless the agreement clearly makes that step a condition precedent. The parties’ subjective understanding cannot alter the written terms. An unwaived and unvaried failure to make the first payment may therefore constitute repudiatory breach, leaving the compromise no longer binding.

This was the defendant’s renewed application for permission to appeal a preliminary ruling of the Central London County Court. The Recorder held that the claimant was not bound by a compromise agreement made after a dispute over ownership of a Mercedes car. His reasons included duress, failure to satisfy a clause requiring the agreement to be recorded with solicitors, and repudiatory breach after the first instalment was not paid on time. The Court of Appeal considered whether the agreement made time of payment essential and whether payment was conditional on compliance with the solicitors’ clause. The central issue was whether those arguments gave a real prospect of showing that the compromise remained binding.

Lord Justice Tuckey, sitting alone, dismissed the renewed application and refused permission to appeal. The Recorder’s findings that the agreement was no longer binding were not displaced by the applicant’s construction arguments.

1. Clauses 6 and 8 were to be read together. Clause 8 clearly provided that failure to pay an instalment on time immediately enabled the claimant to resume his right to claim ownership of the vehicle. That failure was itself a breach and therefore also triggered clause 6. The agreement consequently made time for payment of the essence.
2. The submission that payment was not due until the agreement had been referred to the parties’ solicitors failed as a matter of construction. Accepting that the agreement became binding when made, its terms contained nothing to suggest that payment was postponed until compliance with the solicitors’ clause. The parties’ subjective understanding was irrelevant to the meaning of the written agreement.
3. The Recorder had rejected the evidence that the first £2,000 payment had been made or properly made available on 20 April. His findings also disposed of arguments based on variation, waiver and failure to accept the breach as repudiatory. Those findings were unassailable on appeal and meant that there was no real prospect of showing that the agreement remained binding.

The formal outcome was: application dismissed.

1. Court of Appeal (Civil Division): On 9 March 2001, the renewed application for permission to appeal was dismissed. [2001] EWCA Civ 374
2. Central London County Court: On 7 March 2000, Mr Recorder Bellamy QC decided as a preliminary issue that the claimant was not bound by the compromise agreement.