Chinnock v Hocaoglu & Anor

Rectification is available where the parties shared a continuing intention about the contractual term, that intention was sufficiently expressed, and the written contract failed to record it. A completion provision requiring payment by a stated time may regulate the financial consequences of late completion without making that time an absolute deadline, if the contractual wording permits completion later that day. However, every sum expressly payable on completion must be tendered within the period fixed by an effective notice to complete. Failure to pay even a comparatively small contractual sum entitled the vendor to rescind where time was of the essence. A purchaser in breach is entitled to recovery of a forfeited deposit only in exceptional circumstances.

The claimant agreed to buy a freehold property from the defendants. The property was subject to tenants’ statutory rights of first refusal, and the contract stated that completion would occur ten days after those rights expired, but mistakenly identified the expiry date as 24 January 2007 rather than 1 February 2007.

The claimant sought rectification and specific performance after the defendants served notices to complete and purported to rescind when payment was made on 26 February. The issues were whether the contract should be rectified, whether payment at 2.44 pm was late, whether the amount tendered was sufficient, and whether the deposit should be returned.

1. Rectification. The parties shared the intention that completion should take place ten days after the tenants’ rights expired. The date of 24 January 2007 was inserted because of a common mistake about that expiry date. The intention was sufficiently communicated and the written term failed to express it. Special Condition 25 was therefore rectified by substituting 1 February 2007.
2. Time for completion. The notice to complete served on 12 February was effective, and its ten-working-day period expired on 26 February. Special Condition 10 did not make 1.00 pm an absolute deadline. Its wording contemplated that completion could occur after that time and had the same practical effect as Standard Condition 6.1.2: the financial calculation was to proceed as if completion had occurred before 1.00 pm on the next working day. The claimant’s tender at 2.44 pm was therefore not, for that reason alone, ineffective.
3. Insufficient tender. The claimant failed to include the £599.50 payable under Special Condition 26 for the defendants’ legal costs. That sum was payable on completion. Since it remained unpaid when the notice period expired, the defendants were entitled to rescind under Standard Condition 7.5.
4. Deposit and orders. The claim for specific performance and damages failed. The deposit was forfeited, and the court declined to order its repayment under section 49(2) of the Law of Property Act 1925, because the circumstances were not exceptional. The claimant was ordered to pay the defendants’ costs, assessed subject to the stated reduction. Permission to appeal was refused, with time extended for an application to the Court of Appeal.

This was a first-instance decision. Permission to appeal was refused, with 14 days allowed for an application to the Court of Appeal.