February/March 2011
PleAse CAN I hAVe My DePoSit bacK?
section 49 of the law of Property Act 1925 by Catherine smyth, solicitor Development Plot sales
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to grant specific performance of a contract, or in any action for the return of a deposit, the court may, if it thinks fit, order the repayment of any deposit’. The effect of this provision is to give the court a discretion
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in certain circumstances to order the return of a deposit to a buyer. The 2007 case of Aribisala V St James Homes (Grosvenor
Dock) Ltd [2007] EWHC 194 (Ch) concerned a special condition in a contract purporting to exclude the provisions of section 49 (2). The High Court ruled that it was not possible to contract out of this statutory provision and to do so was an attempt to ‘oust the jurisdiction of the court’. In Midill (97PL) Limited V Park Lane Estates Limited [2008]
EWCA Civ 127 the Court of Appeal held that there would need to be something ‘special or exceptional’ to justify overriding the normal contractual expectation that the seller retains the deposit when the buyer defaults. This case also served to clarify when a party is entitled to serve a notice to complete. The essential facts are as follows. Park Lane Estates owned a commercial property in Park
Lane, London, which was its only asset. Gomba International Investments owned all of the shares in Park Lane Estates. In December 2005, the parties agreed the sale and
purchase of the entire shareholding for a price of £4 million payable in three instalments: £400,000.00 on exchange (by way of a deposit); a further £800,000.00 two months before the contractual completion date and a final sum of £2.8 million on completion. The buyer paid the first two sums however, it failed to complete on the contractual completion date and did not pay the final instalment. The seller served a notice to complete. The Buyer failed to complete and the contract was rescinded when the notice expired. The property was subsequently re-sold to a third party for the sum of £4.3 million. The buyer claimed that at neither the contractual
completion date nor the date of expiry of the notice to complete was the seller, ‘ready able and willing’ to
n this article we will look specifically at the application of section 49 (2) of the 1925 Act in connection with the recovery of a deposit paid by a buyer to a seller under a contract for the sale of land. Section 49 (2) states that, ‘where the court refuses
legal solutions for developers
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