4th September, 2017
Time can fool us. We are often up against it, running out of it, racing against the clock, trying to avoid crunch time. Time can be a thief – both of rights and money – but there are ways of making sure you are not a victim.
Many property documents specify timescales by which certain actions are to be taken or by which certain rights are to be exercised, failing which such rights may be lost. So typically:
In the euphoria and relief brought about by completing a deal, it is all too easy to move onto the next thing. It is, however, important that you continue to keep an eye on time critical dates arising from that deal and, when taking action, interpret timescales correctly.
The way the relevant document is drafted and the expressions it uses can make a difference:
Whatever words or expressions are used, consideration must also be given as to whether or not “time is of the essence”. A time of the essence provision is express or implicit in many – but not all – property arrangements. In a 2001 case [2], Lord Nicholls of Birkenhead said:
“Inherent in a time limit is the notion that the parties are drawing a line. Once the line is crossed, a miss is as good as a mile."
This neatly sums up the meaning of “time is of the essence”. Time is of the essence in conditional contracts and option agreements, as well as under a completion notice served by a seller on a defaulting buyer who has failed to complete on the due date. Failure to meet the deadline can have dire consequences.
That said, equity still intervenes in some cases. Here is Lord Nicholls of Birkenhead again in the same 2001 case:
"The rigour of this principle is softened when the parties are taken to have intended otherwise".
So, for instance, timescales about operating rent reviews are seldom "of the essence" nowadays – especially after the key United Scientific [3] case - although you should never rely on this: it depends on the construction of the wording.
There are also practical considerations to bear in mind. Notice periods may expire at the weekend or during the festive break at the end of the year. Similarly, certain actions may have to be taken during holiday periods.
To avoid increasing stress levels (or even worse repercussions), the key points are to:
To adapt from a Dr Seuss poem: don’t let it get too late too soon.
If you would like further advice or have any questions, please contact Alice Liddle ([javascript protected email address]).
[1] Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749
[2] Valentines Property Ltd v Huntco Corp Ltd [2001] N.Z.L.R 305
[3] United Scientific Holdings Ltd v Burnley BC [1978] AC 904
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