Read the full judgment text of CACV 285/1998 on BabelCite. This Court of Appeal judgment was delivered on 14 January 2000 before Nazareth V-P, Mayo JA and Keith JA.
Contract law – sale of land – building contract – architect's extension of time – rescission – affirmation/election – construction of contract – Property slump triggers successive rescissions of intermediate sale and purchase agreements at declining prices. Kut Kee Building, Central, sold three times in 1993-1994 at rising prices ($256m, $405m, $600m); market value fell to $290m by April 1996. Cl. 14 of first agreement required completion with occupation permit by 30 June 1995 "subject to the usual architect's extension". Whether extension of time purportedly granted by named architect Mr Gordon Yeung was "the usual architect's extension" within meaning of cl. 14 – held, no extension was not "usual" where architect had not performed his ongoing duties under building contract, was not in position to hold balance between contractor and developer, and was not capable of making informed assessment of contractor's entitlement to more time; developer therefore in breach of first agreement giving Third Party right to rescind (first level of challenge). Peyman v Lanjani [1985] 1 Ch 457 applied to whether Defendant lost its right to rescind second agreement under cl. 23(b) by 9-month delay – held, no; Defendant unaware of facts giving rise to Third Party's right to rescind (Mr Yeung's non-performance of architect duties) until his evidence at trial, and mere inactivity without such knowledge does not amount to affirmation. Earlier letters from Plaintiff's solicitors concerned only the merits of Mr Yeung's decision (fourth level of challenge), not the first level. Whether cl. 23(f) of second agreement overrides cl. 23(b) when Third Party elects to wait for completion – held, no; cl. 23(b) gives right to rescind "notwithstanding any provisions herein contained to the contrary" and cl. 23(f) does not purport to be to the contrary. Whether Defendant's right to rescind second agreement is dependent on Third Party's continuing right to rescind first agreement – held, no; no express or implied term to that effect, and the only express loss-of-right provision (cl. 23(d)) is limited to cases where Defendant directed Third Party to refrain from rescinding. Third Party's appeal dismissed; Defendant's conditional appeal dismissed. Orders nisi: Third Party to pay Defendant's costs of Third Party's appeal; Defendant to pay Plaintiff's costs of Defendant's appeal; Third Party to indemnify Defendant in respect of both Defendant's and Plaintiff's costs of Defendant's appeal.
Legal issues: Whether the extension of time granted by Mr Yeung was "the usual architect's extension" under cl. 14 of the first agreement · Whether the Defendant lost its right to rescind the second agreement by affirmation · Whether cl. 23(f) overrides cl. 23(b) of the second agreement · Whether the Defendant's right to rescind the second agreement is dependent on the Third Party's continuing right to rescind the first agreement
Outcome: Third Party's appeal dismissed; Defendant's appeal dismissed.
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