Specific Performance Can Be Available Even If The Claimant Is In Breach

Caveat Venditor!

Redrow Homes Ltd v Martin Dawn (Leckhampton) Ltd [2016] EWHC 934 (Ch)

Summary

This case concerned land that had been sold for residential development. The buyer made an application to Court for specific performance to compel the seller to comply with the obligation to execute a planning agreement. The application was made despite the seller's argument that the buyer itself was in breach of its obligations.

The Court found that, although the buyer had failed to perform certain obligations, they were not significant obligations, and damages would be an adequate remedy for the seller. Consequently the buyer's breaches were no impediment to its ability to seek an order for specific performance.

The key question was whether a claim for breach of contract and damages was a sufficient defence to a claim for specific performance of contractual obligations. The Court had to consider whether the two obligations and connected claims were sufficiently connected so that an order for specific performance in one claim would jeopardise the success of the other claim.

The facts

The buyer purchased land from the seller with a view to constructing a residential development on the plot. The sale contract was subject to a provision to pay overage and to enter into a first legal charge over the property. The legal charge secured the "Secured Amounts", which included sums payable by the Buyer under the contract and overage deed.

The contract contained a requirement to obtain planning permission for residential development, which required the buyer to enter into a planning agreement with the council under Section 106 Town and Country Planning Act 1990. The seller needed to be a party to this agreement, because it was the mortgagee under the legal charge and so its consent was required. There were no additional obligations for the seller. However, it was likely that any delay in executing the planning agreement would affect the ability of the buyer to obtain planning permission.

The buyer negotiated the planning agreement with the local authority and then approached the Seller to sign it. The Seller refused for several reasons. First, it considered the buyer to be in breach of the requirement in the contract to use "reasonable endeavours" to procure a minimum size development. Secondly, it objected to the terms of the planning agreement that the buyer had agreed with the council, which ultimately meant that it would receive less consideration for...