Classic Property Developments (South East) Ltd v Islam & Ors

A contractual option period may end on the occurrence of a specified event where time is of the essence. Rectification for unilateral mistake requires knowledge of the mistake and an attempt to take advantage of it. An implied term must reflect what the instrument, read as a whole against its background, would reasonably be understood to mean, and cannot contradict express wording. Mere delay in enforcing a right does not establish waiver by election. Estoppel requires a communicated shared assumption or a clear promise, together with the necessary unconscionability or detrimental reliance. A genuine contractual dispute is not repudiation. Where an agreement requires appointment of an individually qualified valuer, a later countersignature by another person does not cure an invalid appointment.

Classic sought specific performance of an option agreement dated 6 August 2013, under which the defendants had a first option to acquire Classic’s property and Classic had a second option to acquire the defendants’ property. The defendants failed to provide evidence of Lloyds’ consent, Redmist failed to pay rent on 29 September 2013, and Mr and Mrs Islam failed to pay the £100,000 Compensation Sum by 31 October 2013.

The defendants argued that the agreement should be rectified or supplemented by implied terms, and relied on waiver, estoppel, tender, entire obligation and repudiatory breach. A further issue concerned whether the defendants had appointed a qualified valuer.

1. Rectification and implied terms. The claim to rectify the chargee-consent provision failed. The evidence did not establish that Classic knew of any mistake by the defendants or sought to take advantage of it. The proposed implied term, limiting the obligation to cases where consent existed, was not necessary, did not go without saying and was inconsistent with the express requirement to provide written evidence of consent. The approach in Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988 was applied.
2. Waiver and estoppel. Classic’s conduct in progressing valuations after 3 September 2013 was not consistent only with an election to treat the first option period as continuing. Mere failure to enforce a right at the earliest opportunity did not amount to waiver. Nor was there a shared communicated assumption, clear promise or detrimental alteration of position. The principles reviewed in Dixon v Blindley Heath Investments Ltd [2015] EWCA Civ 1023 were applied.
3. Rent and Compensation Sum. No term required Classic to invoice Redmist before rent became payable. The course of dealing did not alter the distinct contractual trigger in clause 1.1(d), and the alleged prior agreement was in any event ineffective under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. The rent was not validly tendered. The Compensation Sum was not conditional on complete performance by Classic of an entire obligation. Classic had already granted the first option, and its assertion that the period had ended did not prevent payment. The correspondence involved, at most, a genuine dispute and did not amount to repudiation.
4. Outcome. The first option period ended on 3 September 2013, alternatively on 29 September or 31 October 2013. The defendants had not appointed a qualifying individual valuer; countersigning by another RICS-qualified person did not cure the appointment. Classic was entitled to specific performance and judgment for the Compensation Sum.