Court Of Appeal Clarifies Time For Determining Whether Breach Of Contract Repudiatory

Telford Homes (Creekside) Limited v. Ampurius Nu Homes Holdings Ltd [2013] EWCA Civ 577

The fact that the Court of Appeal in this case disagreed with the first instance Judge on whether a landlord's breaches of a lease agreement were repudiatory illustrates the difficulty faced by an innocent party in deciding whether and when its counterparty's breach becomes sufficiently serious as to entitle it to terminate the contract and claim damages. The Court of Appeal's judgment provides useful guidance on a number of issues arising in relation to repudiatory breaches including: how to determine whether a breach of an innominate term in a contract is sufficiently serious as to amount to repudiatory breach; when the determination as to the nature and seriousness of the breach should be made; and when a repudiatory breach can be cured.

The background facts

In October 2008, the parties entered into a lease agreement relating to four commercial units in a property development. T was the developer of the property but also the landlord under the anticipated leases. A was an investor and intended tenant. The leases were to be for 999 years from completion of each block and the lease agreement provided a target completion date of 21 July 2010 for two of the commercial blocks, with the two remaining blocks to be completed by 28 February 2011. Under the lease agreement, T was to use its reasonable endeavours to complete the work by the target completion dates "or as soon as reasonably possible thereafter" and to carry out the work on the property with due diligence. Work on the blocks commenced promptly but, in June 2009, T suspended work on the two blocks with a target completion date of 28 February 2011 due to cash flow problems. It was not clear when the work would be restarted although the parties entered into detailed correspondence and extensive negotiations to try and resolve the situation. At all times, however, T maintained that the work would in due course be recommenced and the blocks would be completed, albeit late. Finally, on 22 October 2010, A purported to accept what it deemed to be T's repudiatory breach in delaying the work to the two blocks in question and terminated the lease agreement. Unknown to A, however, T had restarted work on those two blocks a few weeks earlier, on 4 October 2010. T, therefore, denied that it was in repudiatory breach, alleged that A was itself in repudiatory breach for failing to settle some outstanding payments...