(1) Neil James Butcher and Another v (1) Hill (First Defendant) (2) Orbit Homes (2020) Ltd (Second Defendant/Applicant)

JurisdictionEngland & Wales
CourtQueen's Bench Division (Technology and Construction Court)
JudgeMr Justice Coulson
Judgment Date13 May 2015
Neutral Citation[2015] EWHC 1703 (TCC)
Date13 May 2015
Docket NumberNo: HT-2014-000159

[2015] EWHC 1703 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

TECHNOLOGY AND CONSTRUCTION COURT

7 Rolls Building

Fetter Lane

London

EC4A 1NL

Before:

Mr Justice Coulson

No: HT-2014-000159

Between
(1) Neil James Butcher
(2) Fiona Marie Butcher
Claimants/Respondents
and
(1) Hill
First Defendant
(2) Orbit Homes (2020) Limited
Second Defendant/Applicant

Matthew Thorne (instructed by Trovers & Hamlins LLP) appeared on behalf of the Applicant/Second Defendant

Mr Peter Brogden (instructed by Brachers LLP) appeared on behalf of the Claimants/Respondents

(As approved)

Mr Justice Coulson
1

The claimants are building owners. They have issued these proceedings pursuant to which they make claims consequential upon alleged defects in their property. The defects are relatively numerous in number, some are small, some are more serious and relate in particular to problems with drainage and sewage. The first defendants are the contractors who built the house. The second defendants are the developers. They employed the first defendants to carry out the construction work and they then sold the property to the claimants.

2

The claimants' claim against the second defendants is put by reference to the Defective Premises Act 1972 and also by reference to the contract between the claimants and the second defendant. By an application dated 2 April 2015, the second defendants seek to strike out the contractual claims made against them by the claimants. Accordingly, the application is slightly unusual because the second defendants accept that the claims against them by reference to the Defective Premises Act are at least arguable and are therefore not the subject and cannot be the subject of an application to strike out.

3

Accordingly, when I was looking at these papers yesterday, I found it difficult to discern quite why the application was being made at all, but I understand from Mr Thorne this morning that a mediation is due to take place imminently. Indeed, the parties have been granted a stay in order to facilitate that mediation and the parties want this point, the potential contractual liability point, resolved prior to the mediation.

4

The application is supported by two statements from Miss McManus, the solicitor for the second defendants. The first point to make is that in her initial statement at section 11, she purports to summarise the contractual framework, that is to say the contractual framework of the claim. That section expressly refers to clauses 3.4 and 3.2.1 and makes a more general point that the terms of the sale contract did not give rise to any liability for defects in the first place. There is then a lengthy argument relating to both clauses 3.4 and 3.2.1. It is only under the third head that Miss McManus comes on to deal with other contractual obligations owed by the second defendants. Only buried away at paragraph 26.2.3 does she deal with clause 3.1 of the terms of the contract: the term that is actually the critical obligation.

5

In my view, that is not a fair summary of the pleaded case against the second defendant. The pleaded case against the second defendant refers at paragraph 4(b) expressly to the obligation under clause 3.1. That is an obligation in these terms:

"3.1 The seller hereby undertakes to use its best endeavours to procure that the property is built in accordance with:

3.1.1 The terms of any relevant planning permission and building regulation consent; and

3.1.2 To the standard of the warranty provider."

The warranty provider was, in this case, the NHBC. That obligation is expressly pleaded at paragraph 5(b) of the Particulars of Claim.

6

Then, in relation to breach of that obligation, the allegations then pick up at paragraph 13 and provide a vehicle for the setting out of the defects to which I have previously referred.

7

I have made plain to the parties that, in the light of the time constraints, it is not possible for me to do a detailed line by line critique of the various terms, express or implied, relied on by the claimants. I hope I have made clear during the argument, but I re-state now so that it is not in any doubt, that in my view clause 3.1 of the contract represents the claimants' best (and possibly only) way of putting this claim against the second defendants under the contract. Accordingly, clause 3.1 is key. If I am against the claimants on clause 3.1, then, as I have said, it is very difficult to see how any other contracted claim could be sustainable against the second defendants. On the contrary, if I am against the second defendants on that point, then, although other matters may need to be resolved by the claimants and their legal team, the application to strike out would necessarily fail.

8

Accordingly, it seemed to me on perusing the papers that clause 3.1 was what this application was all about. In their oral submissions today, Mr Thorne and Mr Brogden have indeed focused on clause 3.1.

9

As I have said, this is an application to strike out. The burden, therefore, is high. It is a significant hurdle for a party seeking to strike out a claim to overcome. Effectively what matters, as the authorities made plain, is whether I am certain that the claim is bound to fail. The words "certain that the claim is bound to fail" comes from the Court of Appeal case of Richards v Hughes [2004] EWCA Civ 266, but is consistent with many other cases, including the well-known test from the Three Rivers case, where Lord Hobhouse said that what matters is an absence or reality.

10

Dealing with clause 3.1, Mr Brogden said that the object was effectively a pleading point and there can be no doubt that the point is extremely narrow. One can see that firstly by reference to paragraph 26.2.3 of Miss McManus' first statement. She sets out the clause and then she says:

"Accordingly, there is no obligation 'to build' the property in any particular way. This is not a primary obligation in respect of defects, but a secondary obligation to use best endeavours to have the property built by Hill in a particular manner. The Butchers have not pleaded any matters which would go to a breach of this (secondary) obligation. Indeed no such matters could be pleaded, because Orbit satisfied the obligation by requiring Hill, as contractor, to build in accordance with planning permission and NHBC requirements (as is admitted by Hill)."

11

The same point is taken up by Mr Thorne at paragraph 24 of his skeleton. He says:

"Having overlooked the words 'undertakes to use its best endeavours' in both their statements of case, the Butchers have failed to plead as to how Orbit failed to use its best endeavours; what Orbit should have done; and what the outcome would have been if Orbit had done such actions. It is self-evident that, even by using 'best endeavours', a party might not be able to achieve a particular outcome. The Butchers have entirely failed to grapple with this matter, notwithstanding that their entire contractual claim is based upon this clause. "

12

I agree, for the reasons that I have given, that Mr Thorne is right to say that in reality the contractual claim is based upon this clause.

13

I consider that the remainder of those two paragraphs which I have just set out are erroneous. The first point to make is that it is wrong to describe this as a secondary obligation. It is not a secondary obligation. It is an obligation to procure something but it is tempered by the fact that the seller has to use its best endeavours to procure that outcome. Accordingly, it is right to say that the mere fact that the outcome is not achieved does not give rise to liability, but it is wrong to describe it as a secondary obligation and it is misconceived to say that merely because a contractor was engaged, by the second defendants, to carry out this work, there can be no liability. In my judgment, that is simply wrong.

14

It is, therefore, a question first of whether or not the pleading has been put by reference to the right obligation and then a question of whether that pleading is arguable. I have already said that the clause as set out in the Particulars of Claim makes plain that the obligation was to use its best endeavours. The pleading is that the seller, the second defendants, were in breach of that obligation and the various defects are set out. That is a perfectly reasonable way of pleading a case like this. If the second defendants were concerned that the pleading did not focus on what their best endeavours should have involved, then of course it was open to them to raise a request for further information. They have not done that. As I have said, on the face of it, it seems to me that the pleading is satisfactory and, if a point arises as to 'the best endeavours', then that can be the subject of a request for further information.

15

Given that, as a matter of law, it is not right to say that "I have a complete defence to that point because I engaged a contractor", the ultimate result must therefore be that the pleading is arguable by reference to clause 3.1 and the alleged breaches. Indeed, that conclusion, I think, is supported by the case of reasonable endeavours that Mr Thorne helpfully drew my attention to, namely IBN UK v Rockware Glass Ltd. That was about using your best endeavours to obtain planning permission. Buckley LJ explained the difference between obtaining...

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