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

Delay in performing an ongoing contractual obligation is repudiatory only where, assessed when termination is purported, its actual and reasonably foreseeable effects deprive the innocent party of the contractual benefit in a manner that goes to the root of the contract. The inquiry requires attention to the benefit bargained for, loss, the adequacy of damages, and whether performance has resumed or is likely to resume. Where time is not of the essence, delay and its commercial uncertainty will ordinarily justify termination only when so prolonged that they frustrate the contract. A breach remedied before termination may cease to support a right to terminate. Renunciation also requires clear words or conduct objectively evincing an intention not to perform essential obligations.

The developer agreed to construct four mixed-use blocks and grant the investor four 999-year leases of their commercial units. The agreement contemplated handover in two pairs, with seven months between the target dates. Financial difficulties caused the developer to suspend work on two blocks, although it continued to state that it intended to complete the development.

The investor purported to terminate for repudiatory breach shortly after work on the suspended blocks had resumed, but without knowing of that resumption. The developer then purported to terminate when the investor did not pay a further deposit. Roth J held that the developer's delay was repudiatory. The developer appealed.

The central issue was whether the accrued delay, and the developer's conduct concerning the works and affordable space, entitled the investor to accept a repudiation on the date of its purported termination.

Appeal allowed unanimously. Lewison LJ gave the leading judgment. Tomlinson LJ gave concurring reasons and Longmore LJ agreed with both judgments.

1. The judge had not given sufficient weight to the principal contractual benefit: four 999-year leasehold interests. A possible increase from seven to thirteen months in the interval between the two staged handovers did not, without findings of material financial consequences, deprive the investor of a substantial part, let alone substantially the whole, of that benefit.
2. The governing inquiry, derived from Hongkong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26, was the effect of the breach at the date on which termination was purported. It required consideration of accrued loss, foreseeable future loss, the adequacy of damages, the prospect of resumed performance, and the value of the remaining performance.
3. The delay had caused no actual loss. Any foreseeable additional funding costs were modest and readily compensable. The developer had resumed work before the investor's purported termination, had obtained funding, and remained committed to completing all four blocks. The prior stoppage was therefore no longer indeterminate. Its actual and foreseeable consequences did not frustrate the agreement or amount to a repudiatory breach.
4. The judge had wrongly treated the position at an earlier point in time as decisive. The principles applied equally to actual and anticipatory breaches. A breach whose repudiatory character depends upon uncertainty may cease to be repudiatory once that uncertainty is removed before acceptance: compare The Hermosa [1982] 1 Lloyd’s Rep 570 and Stocznia Gdanska SA v Latvian Shipping Company [2002] EWCA Civ 889.
5. The alternative case of renunciation failed. The developer repeatedly asserted an intention to perform and did perform. Its unimplemented communication to the local authority about marketing and affordable space was too slender a basis for the clear conclusion of refusal required by Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277.

The investor's purported termination was ineffective. The appeal was allowed.

• Court of Appeal (Civil Division): By [2013] EWCA Civ 577, the court allowed the developer's appeal and reversed the finding that its delay amounted to a repudiatory breach.
• High Court, Chancery Division: Roth J held that the developer's delay in carrying out works to two blocks was repudiatory and granted permission to appeal.