Chinnock v Hocaoglu & Anor

Where a sale contract requires the buyer to pay a specified sum but does not clearly state that it is payable as a condition of completion, the court should not treat it as part of the money due on completion. A contractual time-of-day provision must be construed according to its language. A reference to “the day fixed for completion” ordinarily identifies the contractual completion date, not every day within a later notice-to-complete period. Standard Conditions of Sale provisions governing completion within ten working days and the financial consequences of late-day completion may therefore continue to operate after the contractual completion date. Clear drafting is required if non-compliance with a time-of-day requirement is intended to prevent completion or permit rescission.

The claimant agreed to buy a tenanted freehold property as an investment. The contract contained special conditions concerning the statutory rights of long-leaseholders, the seller’s legal costs, the time for completion and the consequences of a notice to complete. Completion did not occur on the contractual date. After a notice to complete, the claimant’s solicitors transferred the completion money at 2.44 pm on the tenth working day.

Blackburne J dismissed the claim for specific performance, holding that the claimant had failed to tender the full amount required on completion under special condition 26. The defendants supported that result on a further ground, arguing that payment after 1.00 pm was too late under special condition 10. The central issues were whether the sum in condition 26 was money due as a condition of completion and whether the 1.00 pm requirement applied during the notice-to-complete period.

1. Appeal allowed; Respondent’s Notice dismissed. The defendants were not entitled to rescind. The claimant was entitled to specific performance, with the matter remitted to the Chancery Division for determination of the detailed order, including any necessary accounts and enquiries.
2. Special condition 26 made the purchaser responsible for the vendor’s legal costs, stated as £500 plus VAT and office copies. Unlike special condition 24, it did not say that the sum was payable upon completion or that it formed part of the money due on completion. The court declined to imply a term fixing the time or consequences of payment. The sum was therefore not payable as a condition of completion. It was unnecessary to decide whether payment was due after completion on the completion date or within a reasonable time thereafter.
3. Special condition 10 required completion by 1.00 pm “on the day fixed for completion”. Its language differed from Standard Condition 6.1.2, which addressed only the financial consequences of completion late in the day. The phrase referred to the single contractual completion date. It did not extend to each of the ten working days allowed by Standard Condition 6.8.2 after service of a notice to complete. The drafter’s express treatment of notice-to-complete consequences in special condition 11 and the references in special condition 12 supported that construction.
4. On the contractual completion date, a 1.00 pm provision did not ordinarily permit rescission for late completion where time was not otherwise of the essence. Union Eagle Ltd v Golden Achievement Ltd