Patrick John Lomax & Anor v Susan Wendy Dimelow & Anor

Payment of a deposit is a condition precedent to exercising a land option only where the contract, properly construed, makes it an essential constituent of exercise. Under one option, payment invalidated exercise when the purchase price had already been agreed; where the price remained to be agreed or determined, no deposit was payable at that stage. Under a separately drafted option, payment was a related obligation rather than a condition precedent.

Where an expert determination is final and binding subject only to manifest error or fraud, the contract may require a challenge to be brought promptly within the completion period. Failure to challenge the determination, pay the deposit or complete may amount to repudiatory or fundamental breach.

The claimants sought specific performance and damages concerning options to purchase two plots of land granted under agreements with the defendants. The principal disputes concerned whether binding agreements had been reached on the purchase price, whether the options had been validly exercised without payment of deposits, whether an expert determination concerning one plot was binding, and whether the defendants had validly terminated the options.

Orchard House also brought a Part 8 claim challenging the expert determination for excess of jurisdiction and manifest error. The claims were tried together. The central issues were the construction of the option agreements, the effect of the expert determination, and whether the defendants were entitled to terminate.

1. Disposition. Orchard House’s claims, including the Part 8 claim, and Mr Lomax’s claim were dismissed.
2. Under Option Agreement C, clauses 8 and 17 were reconciled by construing the deposit obligation according to whether the purchase price had already been agreed. If the price had been agreed before exercise, payment of the deposit was a condition precedent and failure to pay made the exercise null and void. If the price had not been agreed or determined, the deposit was not ascertainable and was not payable on exercise. The option had therefore been validly exercised on 6 January 2021.
3. An implied term required a party wishing to challenge the expert determination for manifest error or fraud to issue proceedings for appropriate declaratory or other relief within 28 days of receiving the determination, being the contractual completion window. At the least, the challenge had to be brought within a reasonable period, which on the facts would have been no more than eight weeks. A further implied term required payment of the deposit by completion, or within the challenge period where the determination was being challenged.
4. Orchard House failed to complete, pay the deposit, or take concrete procedural steps to challenge the determination. Objectively, that conduct showed an intention not to perform the contract. It amounted to repudiatory breach at common law and fundamental breach under clause 21, entitling the defendants to terminate. The same conclusion would have followed even without the implied deposit term.
5. Under Option Agreement F, clause 8.1 identified service of the option notice as the method of exercise. Clause 8.3 imposed a separate obligation to pay the deposit on the date of exercise. Unlike Option Agreement C, the agreement did not state that non-payment invalidated exercise. Payment was therefore not a condition precedent. Nevertheless, the deposit remained unpaid, and no waiver or affirmation was established.
6. The defendants had moved into the New Farmhouse in June 2018. The later exercise of Option F in January 2021 was outside the two-year option period. The court also indicated, obiter, that the period began when the defendants were able to vacate the old property and move into the new one, rather than only when they actually moved.
7. The Part 8 claim would have succeeded because the expert materially overstated gross development value and build costs by treating the affordable housing requirement incorrectly. Those errors were recognisable and capable of affecting the valuation. The issue was immaterial to the result because the option had already been validly terminated.