'Proceed With Due Diligence', 'Reasonable Endeavours To Procure', Repudiatory Breach And Affirmation All In One Case

Ampurius Nu Homes Holdings Limited v Telford Homes (Creekside) Limited [2012] EWHC1820 (Ch)

This case related to a development of 4 blocks of waterfront properties in Greenwich/Deptford. The parties entered into an agreement under which Telford agreed to construct the mixed use blocks and grant long leases of the commercial units to Ampurius. In March 2009 Telford stopped work on 2 of the blocks because of funding difficulties. In November 2009, Ampurius alleged that cessation of work amounted to a repudiatory breach. In October 2010, Ampurius' solicitors gave notice terminating the contract for repudiatory breach. By that stage, Telford had just recommenced work, so it denied being in repudiatory breach and terminated the contract itself for Ampurius' repudiatory breach.

The contract provided that Telford was to procure that its works were carried out "with due diligence". It was also to "use its reasonable endeavours to procure completion of its works by the Target Date or as soon as reasonably possible thereafter". There was no termination clause.

Included amongst the various claims was a claim by Ampurius that Telford was in breach of these two obligations and that this amounted to repudiatory breach. Telford claimed that, even if it was in repudiatory breach, Ampurius had delayed too long in accepting repudiation and had affirmed the contract.

The High Court (Roth J) found in favour of Ampurius. In a judgment that touched on several areas of contract law relating to termination, a number of points are of interest:

Due diligence obligation.Telford argued that the obligations should be interpreted as meaning only to do the work carefully and not in time – one reason being that timing was covered by the reasonable endeavours obligation as to target dates. The judge did not accept that. The judge observed that it was not infrequent for overlapping obligations to be imposed by different contractual provisions, and "the presumption against surplusage is of little weight in the interpretation of commercial contracts". Due diligence was a familiar concept in construction contracts and usually connoted both due care and "due assiduity/expedition". He could see no reason to give it a restricted interpretation. It was well known to both parties that Ampurius was keen to have delivery of all four blocks as close together in time as possible. Therefore, deliberate cessation of all work on two of the four blocks could not be consonant with due...