Davies and Others v Jones and another
| Jurisdiction | England & Wales |
| Judge | The Chancellor,Lord Justice Scott Baker,Mr Justice Lewison |
| Judgment Date | 09 November 2009 |
| Neutral Citation | [2009] EWCA Civ 1164 |
| Docket Number | Case No: A3/2009/1266 |
| Court | Court of Appeal (Civil Division) |
| Date | 09 November 2009 |
[2009] EWCA Civ 1164
His Honour Judge Jarman Qc
(sitting as a High Court Judge)
Before: The Chancellor of the High Court
Lord Justice Scott Baker
And
Mr Justice Lewison
Case No: A3/2009/1266
5CX11349
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCEY DIVISION, CARDIFF DISTRICT REGISTRY
MR JEREMY CHILD (instructed by Messrs Clarke Willmott, Birmingham) for the Appellant
MR JEFFREY LITTMAN (instructed by Messrs Charles Crookes, Cardiff) for the Respondent
Hearing date: 29 October 2009
Introduction
By a contract in writing dated 21st June 1999 (“the Jones-Lidl Contract”) the first defendant, Mr Jones, contracted to sell to the second defendant, Lidl, freehold property, comprising land and buildings to the northwest of Perrotts Road, Haverfordwest, for £795,000 (subsequently increased to £898,743). At the time the freehold of that land was vested for the most part in the claimants, as trustees of a retirement benefit scheme, and to a lesser extent in a Mr and Mrs Thomas. On the same day Mr Jones contracted to buy from Mr and Mrs Thomas the part vested in them (“the Jones-Thomas Contract”) for £180,000. Four months later, on 20th October 1999, Mr Jones contracted to buy the major part from the claimants (“the Jones-Trustees Contract”) for £660,000. By a deed of assignment dated 3rd August 2000 (“the Deed of Assignment”) Mr Jones assigned to Lidl his right, title and interest in both the Jones-Thomas Contract and the Jones-Trustees Contract. Both were completed on 4th August 2000 by transfers from Mr and Mrs Thomas and from the claimants direct to Lidl and the payment by Lidl to the claimants, Mr and Mrs Thomas and Mr Jones of the respective sums due to them.
Clause 18 of the Jones-Trustees Contract related to the “Purchaser's Works” which had been defined in clause 14.1 as the ground clearance and site preparation works described in the annexed specification. Clause 18 provided that:
“18.1 On completion the Purchaser [Jones] shall retain the sum of £100,000 from the purchase monies (“the Retention”) payable to the Vendor [the claimants] until the outstanding works shall have been completed by the Purchaser [Jones]
18.2 The Purchaser [Jones] will at the joint expense of the Vendor and the Purchaser forthwith following the completion date commence and diligently proceed to complete the outstanding works….and shall complete the same…in any event within the period of three months following the completion date unless prevented from doing so by matters outside his reasonable anticipation and control.
18.3 Following completion of the outstanding works within the said period the Purchaser shall be entitled to retain one half of the proper costs of so doing from the retention with any balance then being released to the Vendor [the claimants]”
Lidl retained the sum of £100,000 from the money due by Mr Jones to the claimants on completion of the Jones-Trustees Contract. The transfers from Mr and Mrs Thomas and from the claimants to Lidl were duly registered at HM Land Registry on 29th September 2000. The Purchaser's Works as defined in the Jones-Trustees Contract were completed by 30th June 2001 at the latest but Lidl failed to pay any part of the retention to the claimants. The claimants contend that the proper cost of those works was £30,000 Lidl claims to have spent in excess of £200,000 in completing them.
These proceedings were instituted by the claimants on 18th October 2005 against both Mr Jones and Lidl seeking the recovery of £100,000 from one or other of them. As against Mr Jones they were summarily dismissed by Wyn Williams J on 7th January 2008. He also gave the claimants permission to amend their claim against Lidl in some but not all the respects they wished. His decision was upheld by the Court of Appeal on 10th July 2008. The pleadings were duly amended and the claim was fixed for hearing before HH Judge Jarman QC on 5th and 6th May 2009. An application to adjourn the trial was made to Judge Jarman on 27th April 2009 on the basis that necessary expert evidence could not be ready in time. He acceded to that application but, so that the time set aside for the trial should not be wasted, he directed the trial of the following preliminary issue:
“Is the sum of £100,000….subject to a trust and/or fiduciary duty to hold and, as appropriate release, the same on the terms set out in clause 18 of the contract dated 20th October 1999 between the claimants and the first defendant [Jones]?”
The trial of that preliminary issue came on before Judge Jarman on 5th May 2009. Counsel for the claimants then contended that the preliminary issue was too narrow and should be extended to include the question:
“or is [Lidl] bound by some other, and if so what, duty to observe the said terms”.
The extension of the preliminary issue was opposed by counsel for Lidl on the grounds that such question did not reflect an issue raised by the pleadings, such issue would constitute the addition of a new claim by then barred by the Limitation Act 1980, such new issue did not arise from the same or substantially the same facts as the existing claims and, in any event, was raised too late. The judge was conscious of the fact that the extension would raise a new point and adjourned the hearing to the following day to enable counsel for Lidl to prepare his submissions but he allowed the extension of the preliminary issue sought by counsel for the claimants.
The judge heard argument on the extended preliminary issue on 6th May 2009 and gave judgment the same day. He determined the original preliminary issue in favour of Lidl but the additional issue he had allowed the day before in favour of the claimants. In that respect he concluded that:
“…there was a clear understanding that on the 3 rd or 4 th August, the rights of Mr Jones under his contract with the trustees would be given to Lidl. There was a clear benefit to them of that operation. It gave them the likelihood of completion without going through the intermediary of Mr Jones and being left perhaps with a worthless judgment in damages. There was a clear practical benefit to them. It seems to me that they did have a choice whether to take that benefit or not. That was the basis of the correspondence between the parties' solicitors from July. They had a choice to continue the sub purchaser arrangement. They had no need, from a legal point of view, to deal directly with the trustee's solicitors but that they did. They did so, in my judgment, because they were concerned to have completion sooner rather than later. Having taken the benefit of that arrangement, in respect of the contract in question, in my judgment, they are bound by the burden under it to pay the £100,000 if and in the event it is found the conditions for such payment have been complied with.”
The judge declared that:
“[Lidl] is bound by a duty to observe the said terms [sc. those set out in clause 18 of the Jones-Trustees Contract] as a burden appurtenant to the benefit it took under the same contract.”
Lidl now appeals with the permission of Carnwath LJ. It does so on the grounds that the judge was wrong:
(1) to have allowed the extension of the preliminary issue, and
(2) to have concluded that Lidl was bound by the terms of clause 18.3 of the Jones-Lidl Contract.
I propose to deal first with the second of those issues. But before I do so I should set out the facts in somewhat greater detail.
The Facts
The land that Lidl so acquired had been the site of a garage. Lidl proposed to use it as the site for a supermarket. Thus it was necessary to remove the garage buildings and fittings and clear the site. The garage premises and other buildings were to be removed by the claimants. Site clearance and preparation works were to be effected by Mr Jones. Provision was made in the Jones-Thomas Contract for certain fencing and other works. In the Jones-Lidl contract clause 14 contained provisions comparable to clause 18 of the Jones-Trustees Contract. Thus the vendor, Mr Jones, contracted to commence after the completion date and within 3 months complete the site preparation work indicated in the definition of the vendor's works. On completion the purchaser, Lidl, was to be entitled to retain £100,000 from the purchase price until completion of those works to its reasonable satisfaction. If the works were not so completed then the purchaser, Lidl, might carry them out and retain the proper costs of so doing from the retention. Though similar, the provisions of clause 14 of the Jones-Lidl Contract were not the same as those of clause 18 of the Jones-Trustees Contract; under the former Lidl might reimburse itself for the whole of the cost of carrying out the works under the latter it could only retain one half of such cost.
On 19th October, namely the day before the conclusion of the Jones-Trustees Contract, there was an agreement between Mr Jones and Lidl (“the Supplemental Agreement”) whereby the price payable by the latter was increased to £898,743. In addition Mr Jones agreed to use his reasonable endeavours to procure that the property was transferred to Lidl direct by way of sub-sale. As I have already indicated the Jones-Trustees Contract was exchanged on 20th October 1999. It provided for a deposit of £30,000 in addition to the retention of the £100,000 on the terms I have quoted in paragraph 2 above. The garage premises and other buildings were excluded from the sale and the claimants were entitled within three months after completion to enter on the land...
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