Court of Appeal rejects case involving completion dispute

Last week the Court of Appeal judgement was handed down in the case of Clarke Investments Ltd v Pacific Technologies.

The two parties had entered into a contract for the sale of a shop, with two residential flats above it, in Muswell Hill, London.

The property had previously been offered for sale at auction on 4 October 2010, but not sold.

The auction particulars had stated that VAT was not to be charged. Subsequently Pacific and Clarke entered into a post auction sale contract on 13 October 2010, at a price of £385,000.

The contract was subject to the standard conditions of sale (4th Edition). A dispute then arose as to whether VAT was payable.

This dispute meant the completion date was missed. The claimant purchaser served a notice to complete and sent a letter before action.

The defendant vendor conceded the VAT point and sent a revised completion statement.

The claimant was however dissatisfied with the completion statement and the defendant offered to retain money from the purchase price until the issues were resolved.

The claimant did not forward the completion sum to the defendant on the completion date and the defendant alleged rescission of contract.

The claimant issued proceedings where the claim was dismissed. Following an appeal from the claimant the case ended up in the Court of Appeal.

The Court of Appeal stressed that the issue of time was one of importance for both parties, noting that "completion is an activity in which two parties necessarily co-operate".

The judgement stated that although it is the practice of conveyancing solicitors to prepare and debate the accuracy of completion statements, a failure by the vendor to provide an accurate completion statement is not a basis on which a party is discharged from its obligation to complete.

The Court of Appeal, dismissed the appeal on the grounds that because the claimant had not paid the purchase price in accordance with the contract on the expiry of the notice to complete.

This meant the defendant was entitled to say that the claimant was in breach of a condition, which had been of the essence of the contract, and so had been entitled to rescind.

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