Amaal Ventures Limited & Anor v Eros Limited

A seller may serve a notice to complete only if ready, able and willing to perform the substantive obligations falling due on completion. Chattels included in a land sale form part of the contractual sale and must be available on completion, although minor omissions which do not materially affect beneficial use may be treated as snagging items. The objective question is whether a reasonable buyer would regard the omission as materially affecting use and enjoyment as a furnished property.

Stage payments may constitute deposits despite their contractual label. A deposit exceeding 10 per cent is not penal where special circumstances show that forfeiture is not exorbitant or unconscionable in relation to the seller’s legitimate interest. Relief under section 49(2) of the Law of Property Act 1925 remains exceptional.

The claim concerned contracts for the off-plan sale of two Mayfair flats. The buyers had paid deposits and two stage payments amounting to 30 per cent of the purchase price. The seller served completion notices and later notices to complete. The buyers did not provide the completion monies by the expiry of the notices, and the seller purported to terminate the contracts.

The buyers challenged the validity of the completion notices, relying principally on the alleged absence of a valid structural defects insurance certificate and deficiencies in the furniture package. They sought specific performance or repayment of the sums paid. The issues included whether the furniture package had to be installed, whether deficiencies invalidated the notices, whether the stage payments were deposits, and whether forfeiture was penal.

1. Completion notices. The certificates of insurance and policy wording, read together, satisfied the contractual requirement. The documents showed that Homeproof, a qualifying warranty scheme administrator, had issued the certificate. The earlier notices could not be relied upon because the policy wording had not then been supplied, but the fresh notices were valid in that respect. If the certificate requirement had not been met, it would have been a condition precedent to serving a completion notice.
2. Furniture package. The contract required the seller to supply the furniture package, but not to install it. The package was sufficiently ascertainable by reference to the rental programme and Appendix 4. The package was contractual chattel subject to the standard conditions concerning contents, rather than merely a description of the flat.
3. Readiness to complete. The seller bore the burden of proving facts establishing valid termination. The court treated uncertain items as absent where the evidence did not establish their presence. The missing curtains and blinds, headboards and bed bases materially affected the beneficial use and enjoyment of the flats as furnished apartments. They were not snagging items. Missing artwork, rugs, table lamps, bedside tables and the dry bar were minor omissions.
4. The seller could not rely on an unpleaded case that it was able on 17 August 2023 to provide the missing items by 1 September. The notices to complete were therefore invalid, and the contracts remained in existence. The buyers were entitled to specific performance, subject to consequential matters being adjourned.
5. Stage payments and forfeiture. The stage payments were deposits, notwithstanding their description as stage payments, because they were held by solicitors as stakeholder and were subject to deposit protection arrangements. The forfeiture provision was not a penalty. The development risks, the parties’ sophistication and their equal bargaining position justified a deposit exceeding the customary 10 per cent.
6. Equity had no jurisdiction to relieve against forfeiture of a deposit, but section 49(2) of the Law of Property Act 1925 conferred a statutory discretion. If termination had been valid, the court would nevertheless have refused repayment because the buyers’ unexplained failure to fund completion and the parties’ negotiated allocation of risk outweighed the absence of loss and the potential windfall.

First-instance decision. The judgment records no prior appellate stage.