Lodha Developers 1 GSQ Ltd v 1 GSQ 1 Ltd & Anor

A contractual right to terminate a land sale agreement for non-payment may be exercised where the contract, read as a whole, makes punctual payment essential, even if it does not use those exact words. A grace period and an express right to treat the agreement as discharged may demonstrate that intention.

Equitable relief from forfeiture is distinct from relief requiring continuation or specific performance of an ordinary land sale contract. The court will not generally relieve against termination for failure to comply with an essential time condition, subject to recognised exceptional categories such as mortgages and landlord-and-tenant cases. A purchaser’s lien for payments made under a failed land sale ordinarily depends on default by the vendor.

The claimant sought summary judgment on its claim that a sale and purchase agreement for luxury residential property had been validly terminated after the defendants failed to pay a third stage payment. It also sought removal of unilateral notices entered on the claimant’s title.

The defendants argued that the claimant’s alleged breach of a measurement obligation prevented termination, that equity could grant relief from forfeiture or specific performance, and that they had a lien securing repayment of sums paid. The application concerned termination and the unilateral notices, not the ultimate entitlement to retain the deposit and stage payment.

1. Summary judgment. Under CPR 24.2, the claimant had to show that the defendants had no real prospect of successfully defending the relevant issues and that there was no other compelling reason for trial. The court was not to conduct a mini-trial and assumed disputed facts in the defendants’ favour where appropriate.
2. Clause 9.3. Even assuming that the claimant had been late in measuring and notifying the net saleable area, there was no contractual or implied nexus making compliance with clause 9.3 a condition precedent to the defendants’ obligation to make the stage payments. The payments were fixed sums and could fall due before measurement became reasonably practicable. Any breach gave rise to a claim for damages, and clause 25.1 preserved claims for antecedent breaches. The defendants therefore had no real prospect on this issue.
3. Termination and equitable relief. The agreement was, in substance, an ordinary negotiated contract for the sale of land. Although the precise words “time is of the essence” were absent from the payment provisions, clauses 3 and 25 clearly gave the seller a right to treat the agreement as discharged after non-payment within the specified grace period. The contractual termination notice was served more than 15 working days after the payment fell due.
4. The court distinguished equitable relief against forfeiture of a deposit from relief which would require continuation or specific performance of the contract. The exceptional jurisdiction identified in Shiloh Spinners Ltd v Harding did not create a general power to relieve against bargains. The reasoning in Union Eagle Ltd v Golden Achievement Ltd applied to this ordinary land sale. The defendants therefore had no real prospect of obtaining specific performance after valid termination. The reasons for the claimant’s election to terminate were irrelevant.
5. Lien. The defendants could not maintain the unilateral notices on the basis of a purchaser’s lien. The principle stated in Dinn v Grant was that such a lien arises where the purchase fails through the vendor’s default. The contrasting facts in Rose v Watson did not assist the defendants.
6. The claimant’s application succeeded on both grounds.