Guernsey Law Reports 2005-06 GLR Note 20
F.R. PROPERTIES LIMITED v. SKIPTON
COURT OF APPEAL (Vaughan, Mantell and Carey, JJ.A.): April 7th, 2006
Land Law—contract of sale—incomplete terms
The parties agreed to buy and sell two properties, and the appellant purchaser paid a deposit of 5% of the purchase price. A standard agreement of sale was signed in November 2002, specifying a completion date of April 29th, 2003. It was common ground that time was of the essence of the contract.
The conditions of sale gave the purchaser the right to withdraw before the operative date of the contract in certain circumstances, including being dissatisfied with a survey report, for which the purchaser undertook to give immediate instructions. However, the operative date was left blank, save that “2002” was specified at the foot of the conditions. The appellant did not instruct a surveyor until January 2003, after which there were problems gaining access to the property. The survey was eventually carried out on March 24th, 2003; the report indicated that both properties were in very poor condition and there would be a need for complete demolition of part of one of them, and complete refurbishment of the rest.
The appellant sought to withdraw form the contract and to recover its deposit on the basis that, since the operative date had not been completed, April 29th, 2003 (the completion date) was the date until which it had the right to withdraw. The parties agreed that the following be tried as a preliminary issue: “Were the conditions of sale dated November 7th, 2002 subject to a survey being obtained by April 29th, 2003?” The Royal Court (Hancox, Lieut. Bailiff) held that the conditions of sale were subject to a survey being obtained by December 31st, 2002, since that represented a reasonable time after the making of the agreement of sale. It held that it had the power to imply a term into a contract in an appropriate case, where this aided business efficacy. Further, it reasoned that the operative date had to be different from the completion date, as there would otherwise have been no margin of time within which the purchaser could have considered the report and decided whether to withdraw. The proceedings in the Royal Court are reported at 2005–06 GLR 184.
Held: (1) The appeal would be dismissed and the preliminary issue resolved as follows: “The notice of withdrawal following a survey which was not satisfactory to the purchaser had to be given in writing to the vendor or his agents before 5.00 p.m. on December 31st, 2002.”
(2) It was clear that when a conditional contract of sale fixed a date for completion, the condition had to be fulfilled by that date; when it fixed no date, the condition had to be fulfilled within a reasonable time; and when it fixed a date by which the condition had to be fulfilled, that deadline had to be strictly adhered to and could not be extended by reference to equitable principles. As the date had not been fully prescribed, it had to be found as a matter of construction; if proper construction provided a date, the condition had to be fulfilled by that date without fail. Time was of the essence and the purchaser had undertaken to give “immediate instruction” for a survey, which indicated a relatively early operative date. Thus, given the undefined “2002” date at the foot of the conditions, December 31st, 2002 was the date most in accordance with the presumed intention of the parties as to when the condition had to be fulfilled. After that, the contract became unconditional and the purchaser was bound to complete.
(3) It was self-evident that the operative date had to be prior to the completion date, since it would have been wholly impracticable for withdrawal to be on the same date, bearing in mind the matters which needed to be executed before completion.
(4) The fact that the purchaser undertook to give immediate instructions for a survey of the properties would suggest a relatively early operative date—between signing the contract and the date of completion—especially as time was of the essence.
2009
Law Report
None
Guernsey Law Reports 2005-06 GLR Note 20