Appeal Decision ‘Raises Important Property Development Contract Issues’

Legal Expert Reacts To Ruling In Litigation Case

29.07.2013

By Rob Dixon

The Court of Appeal’s recent decision in a case related to issues which arose after the construction of an apartment block finished seven months behind target completion offers important lessons on contract law issues, according to a property litigation specialist.

The case of Urban I (Blonk Street) Ltd v Ayres and another related to a scenario in which a person was looking to buy an apartment in a new mixed commercial and residential development in Sheffield in 2007.

Problems emerged when the completion of the development was delayed by around seven months after the original target, in which time the buyer had a mortgage offer withdrawn and subsequently wanted his contract to buy one of the flats to be terminated.

However, the Court of Appeal has now ruled that the delay was not sufficient to allow the contract to be terminated. This was on the basis that a delay of one month between the earliest possible contractual completion date and B's purported termination could not be said to have deprived B of substantially the whole benefit of the contract where the contract was for a 125 year lease.

Commenting on the case, Danny Revitt, a Partner and specialist in property litigation issues at Irwin Mitchell’s Sheffield office, said: “The facts in this case were common to many new developments, where delays can inevitably arise.”

“Given the many factors that can inevitably cause delays, a developer is naturally reluctant to commit to a completion date.

“On the flipside, this case highlights the difficulties that buyers can face if a longstop date, after which a contract can be terminated, is not agreed, especially when a mortgage can be hard to secure.”

Read more about Irwin Mitchell's expertise related to Property Litigation