Gold Group Properties Ltd v BDW Trading Ltd

On a summary judgment application, the court may determine pure questions of contractual construction and law, while avoiding a mini-trial on disputed evidence. A contractual minimum-price schedule did not operate as a condition precedent to a developer’s obligations to commence, pursue and complete building works. The schedule formed part of a contractual allocation of commercial risk and could be varied by agreement or through the agreed dispute-resolution mechanism. A foreseeable fall in property prices, expressly contemplated and addressed by the agreement, did not frustrate the contract. The developer’s failure to commence and diligently pursue the works amounted to breaches of fundamental obligations and was prima facie repudiatory. However, unresolved evidence concerning the other party’s possible breach and acceptance or affirmation of the contract prevented final summary judgment on repudiation.

Gold owned a development site and entered into an agreement appointing BDW Trading Ltd, formerly Barratt Homes Ltd, to develop and market residential and other units. The agreement included minimum sale prices, revenue-sharing provisions, and obligations to commence works within 12 weeks of vacant possession, proceed diligently and complete within 30 months.

After the property market declined, BDW did little work and contended that the minimum prices were a condition precedent to construction or that the agreement had been frustrated. Gold sought summary judgment for breach and wrongful repudiation. The issues concerned construction of the agreement, frustration, breaches by both parties, repudiation, acceptance and loss.

1. Summary judgment. The court applied the CPR Part 24 test requiring a defence with a real prospect of success. Contractual construction and the law of frustration could properly be determined summarily, although disputed factual issues remained for trial.
2. Construction. The minimum-price schedule was not solely for Gold’s benefit. It allocated anticipated benefit and risk between the parties. The prices could be altered by agreement, and disputes could be referred to the expert. Clause 10 contained no equivalent mechanism for changing the revenue percentages and operated even where total revenue fell below £18 million.
3. The minimum prices were not a condition precedent to BDW’s duty to commence, carry out and complete the works. Those obligations were clear and unqualified. A future risk that prices might not be achieved could not suspend them.
4. Frustration. The fall in prices was foreseeable, expressly contemplated in the parties’ pre-contract discussions and addressed by the agreement. It was not a supervening event radically changing the contract, and the agreement remained capable of performance. The frustration defence therefore failed.
5. Breaches and repudiation. BDW was in breach by failing to commence on time, proceed with due diligence, complete within the contractual period, and prepare the required development and marketing plans. These were fundamental obligations, so the breaches were prima facie repudiatory. It was nevertheless arguable that Gold had breached its obligation to consider renegotiation, and further evidence was required concerning whether Gold accepted BDW’s repudiation or affirmed the agreement.
6. The court declared that BDW was in breach in respect of the commencement, diligence and completion obligations. BDW received conditional leave to defend the remaining allegations, including repudiation, subject to a significant payment into court and directions for a limited trial.