Midill (97pl) Ltd v Park Lane Estates Ltd & Anor

A party serving a notice to complete must be ready, able and willing to complete when the notice is served and throughout its period. The requirement is assessed factually. It does not demand that every administrative step has already been performed, provided the necessary matters of substance are in hand and the remaining arrangements could be completed within the reasonably required time. The party challenging readiness bears the burden of proof. A conventional deposit is ordinarily liable to forfeiture where the purchaser fails to complete. The court’s jurisdiction under Law of Property Act 1925, section 49(2), is exceptional and is not ordinarily exercised merely because the vendor later resells at a profit.

Midill agreed to buy all the shares in Park Lane Estates Ltd, whose only asset was a commercial property, from Gomba International Investments Ltd. Midill paid a 10 per cent deposit and a further instalment but failed to complete. Gomba served a notice to complete and later rescinded the agreement. The property was subsequently sold to an unrelated purchaser at a profit.

Midill claimed that Gomba had not been ready, able and willing to complete, and sought repayment of the deposit, interest and damages. The central issues were whether the notice to complete was valid and whether the court should order repayment of the deposit under section 49(2) of the Law of Property Act 1925.

1. Notice to complete. The claim failed because Midill did not establish that Gomba was not ready, able and willing to complete on either 11 April or 27 April 2006. The obligations of vendor and purchaser were concurrent, and the burden of proving the vendor’s lack of readiness lay on Midill.
2. The phrase “ready, able and willing” comprises ordinary English words and raises a question of fact. Applying the guidance in Aero Properties Ltd v Citycrest Properties [2002] 2 P & C R 21, the vendor need not have completed every administrative arrangement instantaneously. It is sufficient that the matters of substance are in hand and that the necessary administrative arrangements could be set up within the time reasonably required. The approach in Aero was not confined to cases lacking the wording of Condition 6 of the Law Society’s Standard Conditions of Sale.
3. The evidence showed that the relevant documents were likely to be available, while the outstanding resignations and related formalities depended in part on Midill identifying its nominated directors. Gomba could reasonably have completed the remaining arrangements if Midill had indicated that it would cooperate and proceed. The actual state of preparation in circumstances where Midill showed no sign of completing was not a reliable indication of what would have occurred if completion had been required.
4. Deposit. Gomba was entitled to retain the £400,000 deposit under Conditions 7.5.1 and 7.5.2. The guidance in Omar v El Wakil [2001] EWCA Civ 1090 established that repayment under section 49(2) should not normally be ordered, and that exceptional circumstances were required where the purchaser could not perform. A resale profit was not such a circumstance. Repayment would create uncertainty inconsistent with the purpose of a fixed deposit.
5. The court accepted Gomba’s concession that the share-sale contract fell within section 49(3) as a contract for the sale or exchange of an interest in land, but expressed no view on that issue. The claims for damages and repayment of the further £800,000 therefore fell away; the £800,000 had already been returned. Issues concerning interest and costs remained for consequential directions.