Matila Ltd v Lisheen Properties Ltd & Ors

A contractual completion notice is effective if it clearly and unambiguously informs the recipient that the premises are completed for occupation. The notice is not conclusive merely because it is supported by an NHBC cover note or building control certificate. Minor defects and incomplete common-area works do not justify refusal to complete where the contract preserves the vendor’s undertaking to remedy them. Fire-safety compliance is assessed by reference to the Building Regulations as an overall package, having regard to the approved design and the Approved Document, rather than by demanding literal compliance with every item of guidance. Specific performance may be refused for exceptional supervening hardship or actual impossibility, but the party relying on such hardship must provide full financial disclosure.

Two actions concerning The Edge development were tried together. Matila sought specific performance of contracts for 25 residential apartments. Ascot, later joined by Readbank following an assignment, sought specific performance concerning three commercial units and the related Assignment. The defendants alleged that completion notices were invalid, the premises were incomplete or defective, the contracts had been rescinded, the later assignment was champertous, and specific performance would cause hardship because financing had become unavailable after a fall in property values. The central issues were whether the contractual completion conditions had been satisfied, whether the notices operated as rescission without further communication, and whether the claimants were entitled to specific performance.

1. Residential apartments. The apartments were completed for occupation by 14 October 2008. The clause 4 notices were therefore valid. The wording of the notices, together with the enclosed NHBC and building-control documents, clearly informed a reasonable recipient of their effect. The notices were not conclusive certificates and remained reviewable by the court.
2. Clause 2 required completion in accordance with the approved planning and Building Regulations drawings, the CPUK specification, and the obligation to make the apartments fit for habitation. Read with clause 10 and the commercial context of an en bloc purchase, only defects sufficiently serious to make the apartments unfit or incomplete for habitation justified refusal to complete. The defects proved were minor or concerned incomplete common areas.
3. The Building Regulations 2000 and Approved Document B did not impose an absolute obligation to comply literally with every detail of the guidance. Compliance was assessed as an appropriate overall package, with the approved drawings and building-control certificate being highly probative. No serious fire-safety breach was established.
4. Service of a notice to complete did not automatically rescind the contracts. Under the Standard Conditions, rescission remained discretionary and required a further communication accepting the repudiatory breach. The wording used did not constitute such an irrevocable election.
5. Specific performance was ordered for the residential contracts. A fall in property values was ordinarily a purchaser’s risk. Although exceptional hardship or actual inability to comply could justify refusal, the defendants had not provided the fullest financial disclosure needed to establish impossibility. The Clarke brothers were liable under their guarantees, including the obligation to complete the leases and pay any damages.
6. Commercial units. The units complied with the agreed specification by 9 April 2009, when valid clause 3 notices were served. The April 2010 Assignment was not champertous because it formed part of a genuine commercial transaction involving contractual and proprietary interests. Readbank was entitled to enforce the Assignment and obtain specific performance. The Clarke brothers remained liable as guarantors for monetary obligations.