Kalatara Holdings Ltd v Benedict Thomas Andersen & Anor

Where a land-sale contract fixes a precise completion time, whether the parties were ready, willing and able to complete is assessed by reference to the facts existing at that time. A party cannot rely on later unilateral performance. The meaning of “actual completion” depends on the contract construed in its factual context; ordinarily it requires transfer of title, although exceptional arrangements may produce a different result. Where an intermediate purchaser intends to use a statutory sub-sale or transfer-of-rights arrangement, the contractual machinery needed to achieve it must be ready by completion. Responsibility for arranging that machinery rests with the party obtaining the benefit of the arrangement. A buyer may refuse to pay where the seller is not ready, willing and able to perform a contractual obligation essential to completion.

The claimant contracted to purchase a former hospital site from the defendants, who themselves had contracted to purchase it from the owning NHS trust. The structure contemplated a direct transfer, or a transfer to the defendants as nominees for the claimant, so that the defendants could rely on the transfer-of-rights provisions in Finance Act 2003 and avoid an additional SDLT charge.

Completion was fixed for 2.00 pm on 26 February 2007. The defendants had not secured the trust’s agreement to amend the transfer or established the arrangements necessary for simultaneous completion. The claimant did not pay the balance and the defendants purported to rescind. The court determined whether either party was in breach and whether the defendants were entitled to rescind.

1. Actual completion. Applying Redwell Investments Ltd v 1-3 Cuba Street Ltd [2005] EWCACiv1799, the meaning of “actual completion” had to be determined by construing the contractual language in its factual context. In this case it meant transfer of title to the claimant.
2. Relevant time. The question whether the contract was completed in accordance with its terms had to be determined by the state of facts at the precise contractual completion time. Later unilateral tender of performance could not cure the position, following Union Eagle Ltd v Golden Achievement Ltd [1997] A.C.514.
3. Contractual machinery. The contract required the defendants to supply a certified copy of the transfer from the trust to them as nominees for the claimant. The defendants could have performed by arranging conditional payment of the purchase money, an undertaking governing its application, the trust’s consent to the amended transfer, and simultaneous completion of both contracts.
4. Responsibility and breach. The necessary arrangements were not in place by 2.00 pm. The burden lay on the defendants and their solicitors because the arrangement was designed to secure the defendants’ tax advantage and could not be organised without the trust’s co-operation. The claimant remained obliged to attend and pay in the prescribed manner if the defendants were ready to complete. Once it became clear that they were not, the claimant was entitled to refuse to attend and pay. This was consistent with the guidance in Aero Properties Ltd v City Crest Properties Ltd [2000]2P&CR.
5. Disposition. The defendants’ failure constituted breach. The contract was not completed because of that breach, the defendants were not entitled to rescind, and the claimant was entitled to summary judgment. The form of the consequential order was left for further submissions.