Notice To Complete Makes Time Of Essence For Both Parties

Clarke Investments Ltd v Pacific Technologies [2013] EWCA Civ 750

In relation to the purchase of a property on industry standard terms, a dispute arose between contract and completion as to whether VAT was payable on the sale. The contractual completion date was 10th November 2010, but time was stated not to be of the essence. Because of the dispute, completion did not take place on that date, so CI, the purchaser, issued a notice to complete on that date, specifying 25th November as the new date for completion. PT, the Seller, alleged that the notice was invalid because CI's offer to complete did not include VAT. On 24th November, CI warned PT that if completion did not take place by the following day, proceedings would be issued. It claimed that the completion monies should include an allowance for loss and damage caused by PT's failure to complete on the original date. On the date itself, PT sent an email abandoning its argument on VAT and enclosing a completion statement - which did not make any allowance for loss and damage. That issue remained unresolved. By the following day, CI had not forwarded the completion money, so PT rescinded the contract on the basis that CI was in repudiatory breach.

CI was unsuccessful in its application to the High Court for specific performance. The Judge found that CI had not been in a position to complete on the specified date as its solicitor did not have instructions to complete before the issue of compensation was agreed. CI argued that PT's email was merely an invitation to negotiate and that the completion statement was incorrect.

The Court of Appal confirmed the High Court's decision. Once a notice to complete had been served, time was made of the essence for both parties. If the party serving the notice was not ready to complete...