[2024] EWHC 3625 (TCC)

As is made clear in Barnsley’s Land Options, each option contract must be construed individually, with careful consideration being given to the words used in the contract. The Court’s decision in any given case is, therefore, determined by the usual principles applying to the construction and interpretation of contracts.

Clause 8.1 makes provision for how Mr Lomax is to exercise Option F, namely “by serving an Option Notice on [the Defendants]”.

The only limitations on service of the Option Notice are contained in Clause 8.1 (that it may only be exercised during the Option Period) and Clause 8.2 (that it may not be exercised before the issue of a Completion Certificate).

Clause 8.3 then sets out an additional obligation on Mr Lomax to pay the deposit “on the date of exercise of the Option”.

The authorities referred to above indicate that the Courts have tended to accept that deposit clauses amount to conditions precedent to the exercising of options where payment of the deposit is a necessary and constituent part of exercising the option.

The obligation set out in Clause 8.3 is not tied to the exercise of the option. Clause 8.1 does not stipulate that Mr Lomax may exercise the deposit by serving an Option Notice and paying the deposit. Paying the deposit is not an element of the process of exercising the option. The payment of the deposit is a separate, but related, obligation.

The wording of Clause 8.3 requires the deposit to be paid “on the date of exercise of the Option”. That requirement could be met by paying the deposit after serving the Option Notice.

If the draughtsman had intended Clause 8.3 to amount to a condition precedent, he could have made that clear by deploying appropriate wording in the contract. He did not to do so.

Moreover, Option Agreement C was executed at the same time as Option Agreement F. The former contract stipulated that, in the absence of payment of a deposit, the exercise of the option would be null and void. Option Agreement F contained no such provision.

Therefore, after careful consideration, I am not satisfied that payment of the deposit under Clause 8.3 was a condition precedent of the proper and effective exercise of Option F.

Turning to Mr Horne’s waiver argument, I do not find that it has been established that Hibberts refused, to provide their bank details to Mr Lomax and that he was unable to pay the deposit for that reason.

Firstly, there was no reason why Mr Lomax’s solicitors could not have provided the Defendants’ solicitors with a cheque in relation to the deposit at the same time as they exercised the option (as they did on their second attempt). The deposit did not have to be paid by direct credit (unlike the requirement in Option Agreement C).

Secondly, on cross-examination (for the first time), Mr Lomax suggested that he had the bank details for one of Hibberts’ offices, but that he was not sure that they were the correct details for the office dealing with this transaction. In my view, it is almost inconceivable that payment to the Hibberts office for which he had the correct bank details would not have been accepted by the firm and the Defendants. As far as I am aware, Hibberts was one firm, irrespective of how many branch offices it had.

Thirdly, it was for Mr Lomax to ensure that he was in a position to pay the deposit. There was no urgency involved in exercising the option. This was accepted by both Mr Lomax and Mrs Davies. Mr Lomax could quite properly have waited until he was in a position to pay the deposit, before exercising the option.

Fourthly, I do not accept that Hibberts were being obstructive. There is no correspondence in which Mr Lomax or his solicitors requested Hibberts’ bank details. If the matter were of such urgency and concern to Mr Lomax, I would have expected to see such correspondence. The emails from Mrs Davies to Mrs Platt which are included in the trial bundle (dated 28 June 2018, and 2, 8, 12, 23, 24 and 25 July 2018) make no reference to the payment of the deposit.

At paragraph 20 of the Amended Particulars of Claim it is pleaded that Hibberts “were verbally requested to give their client account details but… refused to do so pending the taking of instructions from the Defendants, which instructions were either never taken or never given”.

Mrs Platt has not been called to give evidence and the high point of Mr Lomax’s case on this issue is that, during a telephone call on 9 July 2019 (some 12 days after the Option had been exercised), she told Mrs Davies that “before we could proceed with making payment of the deposit, she needed to speak with her client”.

Mrs Davies and Mrs Platt were dealing with a range of issues at that time. I cannot accept that Mrs Davies’ memory of an alleged remark by Mrs Platt some 5 years ago (and concerning which there is no file note in the bundle) could justify a finding that Mrs Platt had effectively declined to provide her firm’s bank details.

Moreover, it was not put to Ms Dimelow that she had instructed Hibberts not to provide Mr Lomax with her bank details.

In line with the discussion above in the context of Plot C, following the decision in Samarenko, it is clear that the requirement to pay a deposit is generally a condition of a contract. In my judgment, there is nothing in the present case which takes it out of the ordinary run of cases in the context of the purchase of land, such as to render the payment of the deposit otherwise.

The deposit remains unpaid to this day.

On 29 January 2021, Mr Lomax’s solicitors purported to pay the deposit, but that was in relation to their second attempt to exercise option F which, for the reasons set out elsewhere in this judgment, I do not accept was valid or effective. The covering letter dated 29 January 2021 referred specifically to the Option Notice served on that day. The Defendants were entitled to return the deposit cheque to the Claimants’ solicitors.

The Defendants’ solicitors have made it clear in correspondence that they have elected to treat the contract as being at an end. They have done so by their actions and in their correspondence with the Claimants’ solicitors. Specifically, in Mr Eagle’s email dated 21 October 2021, he made clear that the Defendants considered the contract to be at an end.

Mr Horne’s position is that the Defendants waived their right to terminate the contract by taking no steps to do so after Mr Lomax had failed to pay the deposit. In order to succeed in this argument, he would need to show that the Defendants had affirmed the contract. Affirmation may be express or implied. Mere inactivity does not, of itself, amount to affirmation. In considering this issue, the Court is not conducting a mechanical exercise, but is exercising a judgment.

I do not find that there was any such affirmation or waiver. Firstly, relations between the parties had all but broken down by the time the option was exercised, which was a matter of 10 days after Mr Lomax wrote to Ms Dimelow, criticising the Defendants’ conduct in relation to Plot C. Secondly, Ms Dimelow had written to Mr Lomax only 3 days before the option was exercised, reminding him that she was awaiting a valuation for Plot F, whereas, under Option Agreement F, the Purchase Price was to be fixed. She wrote to Mrs Davies in similar terms the day before the option was exercised for the first time. Thirdly, there appears to be no subsequent correspondence from Mrs Platt or from Ms Dimelow, indicating an intention to press on with the sale of Plot F on the basis of the option notice served, irrespective of Mr Lomax’s failure to pay the deposit. In fact, matters went quiet whilst Plot C took centre stage.