Westvilla Properties Ltd v Dow Properties Ltd

A contract is not void for uncertainty merely because plans or a term have been omitted. The court may use admissible background material to identify the property and construe an obvious omission where the correction is sufficiently clear. Contractual interpretation is a single contextual exercise, including correction of mistakes by construction. The court will fill a blank only in unusual cases where the language, factual matrix and commercial context establish the intended term with reasonable certainty. A party serving a notice to complete must remain ready, willing and able to perform the contract on its true terms throughout the notice period. A notice served while insisting on different terms cannot support rescission.

Westvilla agreed to sell its freehold property to Dow for £850,000, subject to Dow granting Westvilla a 999-year lease of the upper parts. The draft lease referred to missing plans and left the landlord’s service-charge percentage blank. The parties later negotiated proposed amendments, but the court found that agreement non-binding under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989.

Dow served a notice to complete and later purported to rescind when completion did not occur. The issues were whether the contract was void for uncertainty and whether Dow had remained ready, willing and able to complete on the contractual terms.

1. The court held that the contract was not void for uncertainty. The omission of Plans A and B was a clear mistake. The plans in the auction pack were admissible contextual material and supplied the missing identification of the premises. The contractual definition, read with those plans, was sufficiently certain.

2. The blank service-charge percentage was also an obvious error capable of correction by construction. The relevant question was what a reasonable person, with the background knowledge available to the parties, would understand the parties to have intended. The court rejected the proposed formula of a fair and reasonable percentage because the document plainly contemplated a fixed figure.

3. On the unusual commercial facts, the intended correction was 36 per cent. That figure matched the service-charge percentage payable by C&G, preserved the ordinary commercial allocation of service charges, and avoided the uncommercial result that Dow would fund Westvilla’s occupation for 999 years. The possible presence of the Rear Rooms and Basement did not make the term uncertain. The court emphasised that the circumstances in which a blank can be filled will generally be limited.

4. Under General Condition 7, Dow had to be ready, willing and able to complete throughout the notice period. Although the 28 May notice referred to the contract, Dow’s correspondence showed that it would complete only at £845,000 and on amended lease terms. It was therefore not ready, willing and able to complete on the true contractual terms and could not rescind on 12 June.

5. Westvilla’s notice of 25 June was valid and Dow failed to comply. Specific performance was ordered. The precise form of order, interest and costs were left for further consideration or agreement.