Cantt Pak Ltd v Pak Southern China Property Investment Ltd

A notice to complete under the Standard Commercial Property Conditions is valid if, when served, the party serving it is ready, able and willing to complete. Its validity is assessed at that date, although later events may provide evidence of the party’s position when the notice was served. If the other party subsequently fails to complete, the party serving the notice may rescind even if it later becomes unable to perform a concurrent obligation, provided the other party has not accepted that breach and terminated the contract. A party that elects to keep the contract alive remains bound to perform, or must promptly seek specific performance. Estoppel requires an established representation and reliance causing detriment.

The claimant owned commercial land and buildings known as Hillbit. It contracted to sell the property to Whitehall Media Limited, later assigning the varied contract to the defendant. The contract required vacant possession on completion and incorporated the Standard Commercial Property Conditions.

Completion did not occur by the varied contractual date. The claimant served a notice to complete on 8 December 2016, requiring completion by 22 December. The defendant disputed the notice, principally because the site remained occupied and contained chattels. The claimant served notice of rescission after the deadline passed. The defendant sought cancellation of unilateral notices and counterclaimed for specific performance. The central issues were whether the notice to complete was valid, whether the claimant could rescind despite its later inability to give vacant possession, and whether it was estopped from relying on the notice.

1. Validity of the notice. The relevant question was whether the claimant was ready, able and willing to complete, including giving vacant possession, when the notice to complete was served. The wording of the Standard Conditions linked that requirement to the giving of the notice. A later inability to complete did not retrospectively invalidate it, although later events could evidence the claimant’s position at the date of service.
2. The evidence established that the occupants had informal licences and could be removed at short notice. Contractors and expert evidence showed that the containers, boilers and scrap could also have been removed before the deadline. The claimant was therefore ready, able and willing to complete with vacant possession on 8 December. The notice was valid and made time of the essence.
3. The claimant accepted that it had not taken steps during the notice period and would not have been able to give vacant possession by 22 December. Applying Rightside Properties Ltd v Gray [1975] Ch 72 and Fercometal SARL v MSC Mediterranean Shipping Co SA [1989] AC 788, the defendant had the choice either to accept that repudiatory breach and terminate, or to affirm the contract. Having wished to keep the contract alive, it remained obliged to complete, or promptly seek specific performance. It did neither.
4. The defendant’s failure to complete by the deadline was therefore repudiatory. The claimant was entitled to accept that repudiation and rescind, notwithstanding its own breach. The defendant’s estoppel argument failed because the alleged representations were not established and, in any event, no sufficient reliance or causal link with the failure to raise finance was proved.
5. The claimant successfully rescinded the contract on 22 December 2016. The specific performance counterclaim did not arise. The parties were directed to agree an order, including directions concerning the defendant’s separate claim for recovery of the deposit under section 49(2) of the Law of Property Act 1925.