Alchemy Estates Ltd v Astor & Anor

Standard and special conditions in a land sale contract must be read together as one coherent scheme unless a clear conflict requires displacement of the standard terms. A special condition placing additional obligations on the buyer does not ordinarily remove the seller’s basic duty to initiate an application for landlord’s consent.

A contractual right to rescind for want of consent must be exercised promptly, ordinarily by the contractual completion date or within a very short period afterwards. It cannot be retained indefinitely and used without warning after the parties have continued working towards completion. A party’s earlier breach may disable reliance on the right only where it remains current or has significant continuing effects when the notice is given.

The claimant agreed to purchase a long leasehold property from the defendants. The contract incorporated the Standard Conditions of Sale (4th edition) and special conditions concerning landlord’s consent to assignment and enfranchisement under the Leasehold Reform Act 1967.

Landlord’s consent was not obtained by the contractual completion date. The claimant later supplied the required information, continued pursuing the transaction and required the defendants to progress the enfranchisement claim. It then served notice purporting to rescind under standard condition 8.3.3, citing the absence of formal consent.

The claimant sought repayment of its deposit. The defendants counterclaimed for specific performance. The central issues were the interaction between standard condition 8.3 and special condition 16, the effect of the claimant’s conduct and earlier breach, and whether the rescission notice was effective.

1. Summary judgment. The material facts were sufficiently clear and the parties had an adequate opportunity to address the legal issues. The court could therefore determine the merits summarily.
2. Construction. Special condition 16 did not displace standard condition 8.3.2 or 8.3.3. Read together, the provisions placed the main obligation to initiate the application for landlord’s consent on the sellers, while imposing a greater obligation on the buyer to comply with the landlord’s reasonable requirements. Consent was required in the practical sense that it was necessary to provide good title to the leasehold interest.
3. Buyer’s breach. The buyer was entitled to a reasonable time to provide the landlord’s requested materials. Supplying accounts for the wrong company breached the buyer’s obligation. However, by the date of the rescission notice the correct accounts had been supplied and the earlier mistake had no significant continuing effect on dealings with the landlord.
4. Prompt exercise of rescission right. The opening words of standard condition 8.3.3 required consideration of the buyer’s current position and any earlier breach with significant continuing effects. More fundamentally, the right had to be exercised promptly, ordinarily by the contractual completion date or within a day or two afterwards. The contractual notice-to-complete machinery would otherwise be undermined, and the other party could be exposed to an indefinite right of rescission without warning.
5. Affirmation. The claimant’s continued conduct, particularly its request that the defendants take further steps under the enfranchisement provisions, unequivocally represented that the contract remained on foot and affirmed it.
6. The rescission notice was ineffective. The claimant’s claim for repayment of the deposit was dismissed, and judgment was given for the defendants on their counterclaim for specific performance.