Building contract – Specific performance – Summary judgment – Claimant seeking specific performance of agreement compromising claim in connection with defective property – Claimant applying for summary judgment on declaration relating to cost of additions/alterations to new property – Whether agreement being conditional on conclusion of formal contract – Application granted
The claimants bought a property known as 1, Fuller Way, Cambridge from the defendants. The property was significantly defective and the claimants’ claims against the defendants in respect of those defects were compromised. By a property agreement in writing, the defendants were to demolish and rebuild an adjoining property which they owned known as 19, The Crescent, Cambridge. On completion of those works, the freehold of that property was to be transferred to the claimants and the freehold in Fuller Way would be transferred to the defendants. It was effectively a property swap: The defendants would build a new house for the claimants and take the existing, defective house in exchange.
When the defendants were ready to put the building works out to tender, the claimants required certain additions and alterations resulting in an extras bill of £30,000. Notwithstanding the absence of an agreed specification, the defendants built the new property. A dispute arose when the defendants sent the claimants a demand for £89,575.61 said to be due for extras that the claimants had instructed pursuant to clause 5 of the property agreement. That demand made no reference to the £30,000 and the defendants subsequently refused to acknowledge any agreement in that figure. The claimants refused to pay the sum demanded and commenced a claim for specific performance.
They applied for summary judgment pursuant to CPR 24 in respect of part of their claim comprising a declaration that they and the first defendant had compromised all claims for compensation or additional payment that the first defendant might have arising from additions or variations to the works at 19 The Crescent by an email dated 1 September 2011. The defendants resisted the application because they maintained that any agreement was conditional on a formal contract that had never been made.
Held: The application was granted.
(1) It was not uncommon for an application under CPR 24 to give rise to a short point of law or construction and, if the court was satisfied that it had before it all the evidence necessary for the proper determination of the question and that the parties had had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. In cases where the issue was one of construction, the respondent often sought to persuade the court that the case should go to trial by arguing that in due course evidence might be called that would shed a different light on the document in question. However, any such submission had to be approached with a degree of caution. It was the responsibility of the respondent to place before the court, in the form of a witness statement, whatever evidence he thought necessary to support his case. Where it was said that the circumstances in which a document came to be written were relevant to its construction, particularly if they were said to point to a construction different from that which the document would naturally bear, the respondent had to provide sufficient evidence of those circumstances to enable the court to see that, if the relevant facts were established at trial, they might have a bearing on the outcome: Barclays Bank plc v Landgraf [2014] EWHC 503 (Comm) and ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725 applied.
(2) In deciding whether the parties had reached agreement, the court had to have regard to the whole of the negotiations. Once the parties had, to all outward appearances, agreed in the same terms on the same subject matter, usually by a process of offer and acceptance, a contract would have been formed. It was possible for the parties to conclude a binding contract, even though it was understood between them that a formal document recording or even adding to the terms that they had agreed would also need to be executed. Whether they intended to be bound in such circumstances, or whether they intended to be bound only when the formal document was executed, depended on an objective appraisal of their words and conduct: Whitehead Mann Ltd v Cheverny Consulting Ltd [2006] EWCA Civ. 1303, RTS Flexible Systems Ltd v Molkerei Alois Müller GmbH & Co Kg [2010] 1 WLR 753, Air Studios (Lyndhurst) Ltd v Lombard North Central PLC [2012] EWHC 3162 (QB) and Newbury v Sun Microsystems [2013] EWHC 2180 (QB) applied.
(3) Applying those principles to when considering the negotiations as a whole in the present case, there was a binding agreement between the parties that the value of the extras ordered by the claimants was £30,000. In the light of the evidence, the low monetary value of the issue and the likely need for the defendants to revamp there were compelling reasons for the court to decide the issue at this stage and not to order a trial.
Seb Oram (instructed by Hewitsons) appeared for the claimants; Tom Owen (instructed by Systech Solicitors) appeared for the defendants.
Eileen O’Grady, barrister
Read a transcript of Seeney and another v Gleeson Developments Ltd and another here
