Home Information Cases Dooba Developments Limited v McLagan Investments Ltd (2016)

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Dooba Developments Limited v McLagan Investments Ltd (2016)

Summary

The correct interpretation of a clause in a conditional sale agreement which entitled either party to rescind "if all of the Conditions [had] not been discharged" by the long-stop date was that either party was entitled to rescind after that date, unless all of the conditions had been discharged by then. Although it might appear at first sight to be surprising to use "all" as if it meant "any", it was linguistically feasible to do so. "All" could mean less than the totality in an appropriate context.

Facts

The defendant applied for summary judgment in a claim brought against it in relation to its purported rescission of a conditional sale agreement.

The agreement, entered into on 23 July 2010, related to the sale of land from the claimant to the defendant. Completion of the agreement was conditional on satisfaction of four conditions: the Planning Condition, the Planning Agreement Condition, the Highway Condition and the Pre-Start Condition. When the agreement was entered into, the claimant was in the process of appealing against the local authority's refusal of planning permission to develop the site. The parties appreciated that the satisfaction of the Planning Condition would be a lengthy process. Under the agreement, completion was to take place 28 days after one of two dates, the relevant one for present purposes being the "Unconditional Date", which was defined as meaning "the date upon which the last of the Conditions is discharged by satisfaction or waiver in accordance with the provisions of Schedule 4". Schedule 4 para.2.2 entitled either party to rescind the agreement if "any of the Conditions have not been discharged" by the date stipulated for each particular condition in Sch.4 para.3. Schedule 4 para.2.3, which was expressed to be without prejudice to Sch.4 para.3, entitled either party to rescind the agreement "if all of the Conditions have not been discharged in accordance with this Schedule" by the long-stop date, which was 23 July 2014. Four months before that date, the secretary of state granted planning permission for the development; thus the Planning Condition was fulfilled. The day after the long-stop date, the defendant served notice purporting to rescind the agreement. It was the defendant's case that the Highway Condition had not been fulfilled by the long-stop date, and thus it was entitled to serve notice to rescind.

The claimant contended that Sch.4 para.2.3 meant exactly what it said, namely that there was only a right to rescind after the long-stop date if all four conditions had not been met by that date. The defendant submitted that Sch.4 para.2.3 entitled either party to rescind after the long-stop date, unless all of the conditions had been discharged by then. It argued that the use of "all" in the expression "if all of the Conditions have not been discharged", where "any" might have been a more obvious word, was not uncommon. The defendant referred to certain cases and statutory provisions where the formulation "if all are not" was used to mean "if not all were".

Held

Although it might appear at first sight to be surprising to use "all" as if it meant "any", it was linguistically feasible to do so. "All" could mean less than the totality in an appropriate context. It did not necessarily mean "each and everyone" or "the entire number of": it could mean "some only" (see para.32 of judgment). 

Schedule 4 para.2.3 was the handmaiden to Sch.4 para.3. The "any" in Sch.4 para.2.2 was referring to the various possibilities for rescission to which Sch.4 para.3 gave rise, based on a failure to discharge the four particular conditions by the stipulated dates. Schedule 4 para.2.3 was intended to achieve something different. Just as Sch.4 para.2.1 explained how the agreement would become unconditional and proceed to completion, Sch.4 para.2.3 was intended to do the opposite, namely to provide clarity about the date on which the agreement could be rescinded upon the expiry of four years from its commencement if any condition had not been complied with (para.32).

In the case of the Planning Condition, Sch.4 para.2.3 duplicated the power to rescind under Sch.4 para.3.3. However, that duplication did not make it unlikely that that was its intended effect, because the Planning Condition, although not expressly given greater weight than the other conditions, was central to the agreement becoming unconditional. There was no reason why the draftsman should not have wished to emphasise its importance in Sch.4 para.3.3, but at the same time to have specified in clear terms that the failure to discharge any condition by 23 July 2014 could lead to rescission (para.32).

The expression "without prejudice to" in Sch.4 para.2.3 meant nothing more than the rights to rescind under Sch.4 para.3 were not diminished by the overall right to rescind in Sch.4 para.2.3 (para.34).

Although the drafting of Sch.4 para.2.3 was less than perfect, it was understandable that it had been added as a "catch all" provision with a view to emphasising the importance of the long-stop date even though it reduced the importance of Sch.4 para.3.3 (para.36).

Application granted

Chancery Division
Chief Master Marsh
Judgment date
29 January 2016
References

LTL 19/2/2016

Previous Members

timothy-c-dutton,Timothy Dutton QC

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