Oates & Anor v Hooper & Anor

A premature notice purporting to rescind a contract is not necessarily repudiatory. The court must consider the notice and all the circumstances objectively, from the perspective of a reasonable person in the position of the innocent party. The question is whether the contract-breaker clearly showed an intention to abandon and altogether refuse performance.

Where a notice invokes contractual machinery to terminate but contains an obvious timing or calculation error, it may still show an intention to perform through that machinery. The court should ask whether the party would have performed if the error had been pointed out and the counterparty was willing and able to perform. Subsequent conduct matters only if it illuminates the contemporaneous objective position.

Under a contract dated 8 February 2008, Mr and Mrs Hooper agreed to sell property to Mr Oates for £605,000, subject to the Law Society’s Conditions of Sale 2003. Completion was due on 30 June 2008. The sellers served a notice to complete, but served a notice purporting to rescind on 14 July, before the contractual period had expired, and applied to cancel the buyer’s unilateral notice.

The sellers claimed forfeiture and further sums in county court proceedings; the conveyancing firm was joined under a Part 20 claim. Mr Recorder Khan held that the premature notice was not repudiatory, with an alternative finding of affirmation, and treated a later notice as effective. The buyer appealed. The central issue was whether the premature notice, viewed objectively, showed an intention not to perform the contract.

1. Appeal dismissed. The Recorder’s judgment in favour of the sellers was upheld. The Court of Appeal proceeded on the basis of the objective test stated in Eminence Property Developments Ltd v Kevin Christopher Heaney [2010] EWCA Civ 1168: considering all the circumstances from the perspective of a reasonable person in the position of the innocent party, whether the contract-breaker had clearly shown an intention to abandon and altogether refuse performance.
2. The notice was premature. Under the contractual machinery, the buyer had until 15 July 2008, and the sellers could not give an effective rescission notice before 2 pm on that day. Nevertheless, the notice objectively showed an attempt to perform the contract by invoking its termination machinery. Its wording made clear that the sellers had miscalculated the relevant period, rather than adopted and insisted upon an incorrect construction of the contract.
3. The proper question was whether, if the error had been pointed out, the sellers would have refused to convey the property if the buyer was willing, ready and able to pay the balance. The evidence showed that they would have performed. The premature notice therefore did not amount to a repudiatory breach. A notice may be repudiatory where performance is offered only on the basis of an erroneous interpretation, but that was not this case.
4. The assessment had to be made by reference to the objective position on 14 and 15 July. Later conduct was relevant only so far as it cast light on that contemporaneous position. Subjective advice given to the buyer by his solicitor could not be relied upon. The sending of the UN2 form was objectively consistent with both parties’ competing explanations.
5. Lord Justice Toulson agreed, emphasising that the test was highly fact-sensitive and that the buyer’s attempt to treat the miscalculated notice as repudiatory was opportunistic. Lord Justice Moses agreed with both judgments. Thomas LJ expressed doubt, for completeness, about the Recorder’s finding that the contract was discharged only on 21 October, but left that issue undecided because it did not affect the quantum of the sellers’ claim.

• Court of Appeal (Civil Division): dismissed the appeal and upheld the judgment for the sellers.
• Manchester County Court: Mr Recorder Khan held on 3 March 2010 that the premature notice was not repudiatory; alternatively, the buyer had affirmed the contract. He also held that a later notice determined the contract.