Failure to complete with 'all due diligence' a repudiatory breach of contract

In Baht v Masshouse Developments Ltd [2012] All ER (D) 168 (Mar) Mr George Bompas QC, sitting as a Deputy Judge of the High Court, held that the defendant developers had committed a repudiatory breach of contract in failing to arrange for a development to be completed ‘with all due diligence’ and that the claimant purchasers of apartments in the development were, as a consequence, entitled to recover the deposits which they had paid for the properties in question. On the facts he concluded that this was not a case of ‘mere delay’ in the completion of the works but was a case in which the defendant, by its failure to take forward the project during 2009, had signalled an intention on its part not to be bound by the contracts.

The facts

The facts of the case evidence the impact which the financial crisis has had upon the construction industry. The claimants all entered into contracts with the defendant developers for the purchase of apartments in a block of flats which were under development. Almost all of the contracts were entered into before November 2007 and all of the claimants duly paid their deposits. Unfortunately, the development did not proceed according to plan. The principal cause of the substantial delay was that the main contractor went into administration on 24 October 2008. This led to a substantial delay in the completion of the works and the project became, in the words of one the witnesses, a ‘stalled residential scheme’. Indeed the work on the flats was not completed until April 2011. In May 2011 the defendant’s solicitors served notices to complete on the claimants and, when they failed to do so, purported to forfeit the deposits which they had paid. In the present proceedings the claimants sought to recover their deposits from the defendant. It was held that the defendant had repudiated its various contracts with the claimants and that the claimants were therefore entitled to recover their deposits.