The purchaser had failed to complete, notwithstanding the service of a notice to complete. The purchaser a Nigerian company suffered a delay in obtaining funds due to a change in the exchange control regulations. There was no attempt to exclude section 49(2) and the purchaser applied under that section for the repayment of the deposit.
Held: Reversing the decision at fist instance, the application for a strike out failed. The court considered the jurisdiction to order the return of a deposit paid under a contract for the sale of land.
Buckley LJ said: ‘a discretion which must, of course, be exercised judicially, and with regard to all relevant considerations, including the very important consideration of the terms of the contract into which the parties have chosen to enter . . . the jurisdiction is one to be exercised where the justice of case requires. In this connection I take the word ‘justice’ to be used in a wide sense, indicating that repayment must be ordered in any circumstances which make this the fairest course between the two parties.’ and ‘I prefer to the judge’s approach to the construction of this subsection the approach of Megarry V-C who has expressed the view that the jurisdiction is one to be exercised where the justice of the case requires: see what he said in Schindler v Pigault. In this connection I take the word ‘justice’ to be used in a wide sense, indicating that repayment must be ordered in any circumstances which makes this the fairest course between the two parties. It is, I think, relevant in the present case that condition 22 of the national conditions does not confer on the vendor an unqualified right to forfeit a deposit. The words in para 3 of the conditions are ‘. . the purchaser’s deposit may be forfeited (unless the court otherwise directs)’. This formula may well have been adopted with the terms of section 49(2) in mind. However that may be, in my view the language makes clear that the vendor does not have an absolute right to retain the deposit paid by a purchaser who is in default under the condition.’
Eveleigh LJ said that the limitation applied by the judge was not ‘plain and obvious’.
The judge dealt with the topic of frustration quite shortly. He said:
‘But quite emphatically the doctrine of frustration cannot be brought into play merely because the purchaser finds, for whatever reason, he has not got the money to complete the contract’
Buckley LJ, Eveleigh LJ
[1979] 1 All ER 552, [1978] 123 SJ 33, [1979] 39 P and CR 687, (1978) 250 EG 447
Law of Property Act 1925 49(2)
England and Wales
Citing:
Applied – Schindler v Pigault 1975
The purchaser of land had not completed and sought return of the deposit paid claiming default by the vendor, or alternatively under section 49(2).
Held: He was entitled to the repayment of the deposit on the first ground. The court went . .
Appal from – Universal Corporation v Five Ways Properties Ltd ChD 1978
Purchasers of a property intended to finance the purchase from monies deposited in a bank in Nigeria. Due to a change in exchange control regulations, the money was received some six weeks late, and after a notice to complete had expired and the . .
Cited by:
Cited – Aribisala v St James Homes (Grosvenor Dock) Ltd ChD 12-Jun-2007
The parties had agreed in a contract for the sale and purchase of land to exclude the application of section 49(2). The buyer had failed to comply with a notice to complete.
Held: The parties cannot contract out of section 49(2). The . .
Cited – MIDILL (97Pl) Ltd v Park Lane Estates Ltd and Another CA 11-Nov-2008
Refusal to return Land Contract Deposit
The court was asked as to whether a seller could retain a deposit paid by the claimant on a sale where contracts had been exchanged but the buyer had proved unable to go ahead.
Held: The appeal against refusal of return of the deposit failed. . .
Too restrictive – Tennaro Ltd v Majorarch 2003
The parties entered into three related contracts to grant long leases of three flats in the same block (Nos 37, 32 and 31), and deposits paid. The vendor served notices to complete and when the purchaser did not comply, he rescinded each agreement . .
Lists of cited by and citing cases may be incomplete.
Updated: 04 August 2021; Ref: scu.266200
