Delay may not amount to repudiatory breach
Many developers frequently rely upon their right to terminate a contract if a project is severely delayed by the actions of another party. In such circumstances, clients will often seek to prove that the delay amounts to a ‘repudiatory’ breach that gives them an automatic right to terminate the contract. The decision in Telford Homes (Creekside) Ltd v Ampurius Nu Homes Holdings Ltd gives further insight into how the Court of Appeal assesses whether a breach is repudiatory in nature, and therefore whether a right of termination follows.
A landlord and tenant had entered into an agreement for lease of a London property development. Under this agreement, the landlord was obliged to construct sections of the works in line with target dates. As is all too common in construction projects, the landlord missed the key dates on two of the four sections and the tenant sought to terminate on the basis that the delay constituted a repudiatory breach. The first-instance court ruled in favour of the tenant and accepted that the delay was sufficiently serious to justify immediate termination of the contract. The landlord accepted that these key dates had been missed but appealed on the basis that the tenant had not been deprived of any ‘substantial benefit’ and that it was fully capable of completing the development.
The appeal tested two important legal principles…
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This decision represents a welcome return to the ‘pay for what you use’ principle and strikes a fairer balance between different creditor and expense groups.
Winckworth Sherwood has provided a summary of the Trusts (Capital and Income) Act 2013.