Notice making 'time of the essence'

The Court of Appeal in Samarenko v Dawn Hill House Ltd [2011] EWCA Civ 1445, [2012] 2 All ER 476 held that, in the case of a contract for the sale of land, the obligation of the purchaser to pay a deposit by a particular time will generally be a term of fundamental importance to the contract so that any breach will entitle the vendor to treat the contract as at an end. However, the same cannot be said of a failure to comply with a time of the essence notice. Where such a notice is served following the breach of an innominate term or a warranty a failure to comply with the notice will not, of itself, amount to a repudiatory breach of contract.

The facts

The parties entered into a contract for the sale of a property by the claimant to the defendant for £5m. The contract provided that the contract was conditional upon the defendant obtaining planning permission. The contract further provided that, once planning permission had been obtained, the contract became unconditional and the defendant was obliged to pay a deposit of £500,000 within a prescribed time frame. Planning permission was granted but not in the form anticipated in the contract and so the parties entered into a supplemental agreement according to which it was agreed that a reduced deposit of £450,000 was to be paid to the claimant’s solicitors on 3 March 2011.