Bristows’ SnippITs: When will programme delay equal repudiatory breach?

This post is part of the Bristows’ SnippITs series, which pulls together the key practical takeaways from recent court decisions for the tech sector and beyond.

The summary judgement decision of Durkan Estates Limited v Wallace Estates Limited reinforces that, where time is not of the essence, there is a high bar to be met when showing that programme delay amounts to repudiatory breach.

Key Takeaways

Background

Durkan Estates developed an office building into residential properties before selling the freehold to Wallace Estates. The First Tier Tribunal made a remediation order (the Order) requiring Wallace (as the freeholder) to remedy certain defects in the building by 31 May 2025. Wallace and Durkan then entered into a remediation agreement in July 2024 whereby Durkan agreed to carry out the remediation works at its own cost. The remediation agreement had a completion date for the works of 19 September 2025, or such other date agreed as part of the plans and specifications. This completion date was after the date required in the Order as both parties anticipated that an extension would be granted.

The initial element of the remediation project required Durkan to submit plans to Wallace for approval, and a statutory Gateway 2 application to be made before commencement of the works. The project became delayed such that, by June 2025, a year after the remediation agreement had been entered into, Durkan had not yet completed these initial steps.

At a hearing in June 2025, Wallace applied for an extension to the deadline in the Order. However, the Tribunal refused the application, in part because of the lack of any Gateway 2 application having been made, meaning it was not possible to identify an anticipated completion date.

At this hearing (which Durkan also attended), Wallace contended that terminating the remediation agreement and proceeding with a different contractor was not its intention. However, two days after the hearing, Wallace sent Durkan a notice terminating the agreement pursuant to both a contractual right (for “substantive breach”) and common law right (for repudiatory breach). It subsequently sought for than £13 million from Durkan.

Durkan commenced proceedings, seeking a declaration from the court that Wallace’s purported termination of the agreement was unlawful and damages arising from the unlawful termination.

The summary judgment application

Wallace applied for reverse summary judgement, seeking a declaration from the court that Durkan was in repudiatory or anticipatory repudiatory breach at the date of termination, such that Durkan had no real prospect of succeeding in its claim for unlawful termination.

The summary judgement hearing was therefore limited to considering Wallace’s common law right to terminate (rather than the contractual termination right for substantive breach).

Wallace’s position was that not only did Durkan fail to complete the works by the fixed completion date in the agreement (19 September 2025), but it did not even complete the necessary initial steps which would enable works to commence.

Durkan argued that it was not in repudiatory breach for the following reasons, which turned on disputed factual and expert evidence, such that summary judgment was inappropriate:

Decision

The court rejected Wallace’s summary judgment application and held that Durkan had a real prospect of success in its claim for unlawful termination at trial.

Argument 1: Time at Large/Estoppel by Convention

Durkan submitted evidence that the parties were proceeding on the basis that a change to the contractual completion date of 19 September 2025 was necessary even when the parties entered into the remediation agreement and that this date would not be known until the completion of the Gateway 2 application. For example, the parties were working off plans that included week numbers by reference to the post-design period, rather than specific dates and no objections were raised to these plans or mention made of the 19 September 2025 deadline.

Wallace argued that any claim that the completion date had been varied had to fail because the parties had failed to follow the contractual process to varying the completion date (through approved and finalised plans and specifications) and the remediation agreement also contained entire agreement and no oral modification provisions, in conjunction with a definition of ‘writing’ which expressly excluded emails.

The court found that, although Wallace’s arguments on the contractual bars were “potentially powerful”, they were not sufficient to defeat Durkan’s argument based on estoppel by convention. The court acknowledged that “cases of estoppel overriding clear contractual machinery are generally not straightforward” but would need to be determined at trial.

Argument 2: Delay as repudiatory breach

Given that time was not of the essence and there had been no notices seeking to make it so, for the existing delay to constitute a repudiatory breach it would need to have been so prolonged as to have deprived Wallace of substantially the whole benefit of the agreement.

This analysis would be “acutely fact sensitive” and based on many factors, including the manner in which Wallace itself approached the importance of timely progress. The issue was therefore unsuitable for summary determination.

Argument 3: Affirmation

Durkan’s affirmation case was based on Wallace’s preparation with Durkan for the application to extend the Order deadline, as well as the actual submissions made to the Tribunal during the application (including its written skeleton arguments). Durkan’s position was that Wallace’s statements amounted to unequivocal conduct consistent only with the continuation of the contract.

Wallace sought to rely on a non-waiver clause in the agreement, which specified that only written elections to affirm the agreement would be effective.

The court found that the totality of the evidence would be relevant to the issue of affirmation, including the submissions made to the Tribunal. Although these submission were not made directly to Durkan, there was a real possibility both that the factual elements of election could be made out (given Durkan’s presence at the application hearing) and that Wallace’s skeleton arguments could constitute effective written affirmation. This issue could therefore not be summarily determined.

The dismissal of Wallace’s application means that the proceedings continue, and whether the agreement was lawfully terminated will be decided by the trial judge at a future date.