Ampurius NU Homes Holdings Ltd v Telford Homes (Creekside) Ltd

In a construction contract containing intermediate terms, prolonged delay may become repudiatory even where time is not of the essence and no notice making time of the essence has been served. The question is whether the breach, viewed in context, substantially deprives the innocent party of the benefit intended by the contract or frustrates its commercial purpose. A deliberate suspension of work caused by funding difficulties remains a breach of an obligation to proceed with due diligence; lack of finance does not excuse it. Continuing negotiations, expressly conducted without prejudice to termination rights, do not necessarily affirm the contract.

The claimant contracted with the defendant for construction and the grant of long leases of commercial units in four blocks forming a single development. The defendant completed work on two blocks but suspended work on the other two because of funding difficulties. The claimant later accepted the alleged repudiation and sought recovery of deposits and further damages. It also alleged fraudulent or negligent misrepresentation concerning development funding and breach of the contractual consultation obligation concerning affordable workspace.

The central issues were whether the defendant had made actionable misrepresentations; whether its delay and suspension of work breached the contract and were repudiatory; whether the claimant had affirmed the contract; and what loss was recoverable.

1. Misrepresentation. The alleged representations were not proved. In any event, a statement that funding was in place would not ordinarily imply that the facility was unconditional. The defendant’s view that the pre-sales condition would be met was not negligent when assessed without hindsight.
2. Contractual breach. The obligation to proceed with the works “with due diligence” included due assiduity and expedition as well as care. The deliberate cessation of work on two of the four blocks was inconsistent with that obligation. The defendant’s funding difficulties explained the cessation but did not remove the breach. The reasonable-endeavours obligation concerning completion did not extend to securing the financial resources needed to perform the works.
3. Repudiation. The obligations were intermediate terms. The relevant question was the nature and consequences of the breach, not whether time had first been made of the essence. The contract concerned one unified development. An indeterminate and prolonged halt to two blocks substantially defeated the claimant’s commercial purpose and became repudiatory by at least the end of 2009. The breach of the affordable-workspace consultation provision was not repudiatory because the proposed allocation was not unreasonable.
4. Affirmation and loss. Prolonged without-prejudice negotiations did not amount to affirmation, particularly because the breach was continuing and worsening. The claimant was entitled to accept the repudiation on 22 October 2010. It recovered the contractual deposits with interest, but the defendant proved that the claimant would not have made sufficient profit to recoup its claimed wasted expenditure.
5. The defendant’s counterclaim was dismissed.

First-instance decision. The judgment does not state any subsequent appellate history.