Eminence Property Developments v Heaney

Eminence Property Developments Ltd v Heaney [2010] EWCA Civ 1168

Repudiatory breach of contract and the right to terminate.

Facts

Mr. Heaney purchased 13 flats from Eminence Property for an aggregate price, concluding 13 separate contracts, with identical terms, with a completion date of 4 December 2008. Heaney failed to complete by 4 December. On 5 December, the seller’s solicitors issued a ‘notice to complete’ within (10) working days pursuant to contractual clause 6.8, after which they would have the right to rescind the Contract under contractual clause 7.5.  Treating the final date of completion as 15 December, the seller’s solicitors issued a notice of breach and repudiation of the contract on 17 December. The actual completion date, calculating the definition of working days under the contract, was 19 December. Heaney alleged that it was not possible for him to complete the purchase as Eminence has wrongfully rescinded the contract prior to the expiry of the notice to complete.

Issues

The question arose as to whether the seller’s mistaken notices of recession constituted a repudiatory breach of contract that entitled the purchaser to terminate the contract.

Decision/Outcome

The Court held that the test for repudiatory breach of contract requires an assessment of all circumstances of the contract objectively, from the view of a reasonable person in the position of the innocent party, to determine whether the breaching party has demonstrated an intention to abandon the contract. In so construing, the motive of the breaching party is a relevant circumstance, in so far as it reflects the way in which the alleged repudiatory act would have been viewed by the innocent party or a reasonable party in his/her position. Accordingly, on the facts, the Court held that it could not infer an intention by Eminence to abandon the contract, particularly in light of the contractual clauses and Heaney’s awareness of the mistaken date. Thus, the seller’s mistaken notices of recession did not constitute a repudiatory breach that entitled the purchaser to terminate the contract.

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