Friends' Provident Life Office v Hillier Parker May & Rowden
| Jurisdiction | England & Wales |
| Judge | Rose,Saville,Auld L JJ. |
| Judgment Date | 03 April 1995 |
| Date | 03 April 1995 |
| Court | Court of Appeal (Civil Division) |
Court of Appeal
Rose, Saville And Auld L JJ.
Michael Harvey QC and A Phillips (instructed by Cameron Markby Hewitt) for the defendants.
Colin Ross-Munro QC (instructed by Forsyte Saunders Kerman) for the developers.
The following cases were referred to in the judgment of Auld LJ:
Agip (Africa) Ltd v JacksonELR [1990] Ch 265.
Ashmore v Corp of Lloyd's (No. 2)UNK [1992] 2 Ll Rep 620
Bartlett v Barclays Bank Trust Co Ltd (Nos. 1 and 2)ELR [1980] Ch 515.
Biggerstaff v Rowatt's Wharf LtdELR [1896] 2 Ch 93.
Bilbie v LumleyENR (1802) 2 East 469; 102 ER 448
Bush v Canfield (ISIS) 2 Conn 485
Chase Manhattan Bank NA v Israel-British Bank (London) LtdELR [1981] Ch 105.
Dawson decd, Re [1966] 2 NSWR 211
Diplock, ReELR [1948] Ch 465.
Eldan Services Ltd v Chandag Motors LtdUNK [1990] 3 All ER 459
Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour LtdELR [1943] AC 32.
Greaves & Go (Contractors) Ltd v Baynham Meikle & PartnersUNK [1975] 3 All ER 99.
Hatch Re, [1919] 1 Ch 351
Holt v MarkhamELR [1923] 1 KB 504.
K v PUNK [1993] 1 All ER 521.
Kleinwort Benson v South Tyneside Metropolitan Borough Council [1993] 2 Bank LR 197
Lake, Re, ex parte DyerELR [1901] 1 KB 710
Lipkin Gorman (a firm) v Karpnale LtdELR [1991] 2 AC 548
Marcan Shipping (London) Ltd v Polish Steamship Co (“The Manifest Lipkowy”)UNK [1989] 2 Ll Rep 138
Metall und Rohstoff AG v Donaldson Lufkin & Jenrette IncELR [1990] 1 QB 391
Morgan Guaranty Trust Co of New York v Lothian Regional Council [1995] TLR 14
Neste Oy v Lloyds Bank plcUNK [1983] 2 Ll Rep 658
Nestle v National Westminster Bank plcWLR [1993] 1 WLR 1260
Nocton v Lord AshburtonELR [1914] AC 932.
O'Brien v Associated Fire Alarms LtdWLR [1968] 1 WLR 1916
Ord v OrdELR [1923] 2 KB 432
Rugg v MinettENR (1809) 11 East 210; 1003 ER 985.
Sinclair v BroughamELR [1914] AC 398.
South Tyneside Metropolitan Borough Council v Svenska International plcUNK [1995] 1 All ER 545.
Target Holdings Ltd v RedfernsWLR [1994] 1 WLR 1089.
Tilling v WhitemanELR [1980] AC 1.
Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1993] 2 Bank LR 159; [1994] 1 WLR 938; [1994] CLC 96 (CA).
Wilkinson v LloydENR (1845) 7 QB 27; 115 ER 398
Woolwich Equitable Building Society v IR CommrsELR [1993] AC 70; [1992] BTC 470.
Third party action — Striking out third party proceedings — Agreement to develop shopping centre — Under finance agreement plaintiffs paid notional interest claimed by developers — Plaintiff's' action against developers for return of interest settled — Plaintiffs sued surveyors for failure to advise that notional interest was not payable under agreement — Surveyors issued third party notice against developers — Whether claim was for restitution in quasi-contract, breach of trust or breach of contract — Whether surveyors entitled to contribution from developers — Whether pleadings disclosed reasonable cause of action — Civil Liability (Contribution) Act 1978, s. 1 (1) — Rules of the Supreme Court, O. 14A, r. 1(1), O.18, r. 19(2).
This was an appeal by the defendant against the striking out of third party claims against the first and second third parries, Estates & General plc and Castle Mall Securities Ltd (“the developers”), as disclosing no reasonable cause of action and dismissing the third party proceedings against them.
The plaintiffs entered into an agreement (“the principal agreement”) in January 1988 with the developers and Norwich City Council for the construction of a shopping centre on land owned by the city council. On the same day a finance agreement was entered into between the plaintiffs and the developers. Under both agreements Estates & General guaranteed the performance of the obligations of its subsidiary, Castle Mall, to develop and finance the shopping centre. By cl. 7 of the finance agreement the plaintiffs agreed to share the development costs as they arose. The plaintiffs engaged the defendant chartered surveyors as adviser and development consultant, which duties included responsibility for checking and authorising payment of Castle Mall's claims for the plaintiffs' share of the development costs.
Between December 1989 and June 1992 the developers made 32 claims to the plaintiffs for payment of development costs including a figure for “notional interest”. Each claim was submitted to the defendants with records of expenditure and other supporting documents. The defendants checked each claim and recommended the plaintiffs to pay it, including the claim for notional interest. The plaintiffs did so. In July 1992 the plaintiffs wrote to the developers demanding repayment of the notional interest on 31 payments of £6,706,378, maintaining that it was not part of the development costs under the finance agreement and ought not to have been claimed or paid. The developers rejected the demand. The plaintiffs refused to pay the next claim for development costs. The plaintiffs brought an action against the developers claiming the return of the notional interest. The action settled with the plaintiffs abandoning their claim and the developers giving up most of their interest in the development.
The plaintiffs issued proceedings against the defendants claiming damages in negligence and breach of contract for failure to advise the plaintiffs that the 31 claims for development costs wrongly included notional interest. The defendants admitted that notional interest was not part of the development costs, but denied negligence or breach of contract, and alleged contributory negligence. The defendants issued third party notices against the developers and the project manager, which was another subsidiary of Estates & General, claiming contribution under the Civil Liability (Contribution) Act 1978. The developers applied to strike out the third party notice against them on the ground, inter alia, that it disclosed no reasonable cause of action, or to determine questions of law under RSC, O.14A, r. 1.
Judge Havery QC struck out the whole of the third party proceedings against the developers (but not against the project manager). The judge found that the defendants had no right of contribution under the 1978 Act in respect of any liability that the developers might have to the plaintiffs for money paid under a mistake of fact or for no consideration; that although it was arguable that the developers were trustees of the interest, the defendants had no right of contribution against them under the 1978 Act in respect of such liability as they might have to the plaintiffs for breach of trust; and that there was an express or implied term of the finance agreement that Castle Mall's claims for payment had to be factually correct, but that the defendants could not establish any breach by Castle Mall of such a term or any right to contribution or indemnity based on it. The defendants appealed.
Held, allowing the defendants' appeal and setting aside the order to strike out the third party notice and to dismiss the third party proceedings against the developers:
1 There was no justification for striking out as disclosing no reasonable cause of action the pleaded allegation that the notional interest was paid under a mistake of fact, since by RSC, O.18, r. 19(2) the matter was to be determined on the pleadings, affidavit evidence being inadmissible. Further, if, as alleged, the developers knew of the mistake the money was recoverable whether the mistake was one of fact or law. The rule that money paid under a mistake of law was irrecoverable was in doubt. (Woolwich Equitable Building Society v IR CommrsELR[1993] AC 70.)
2 It was arguable that the plaintiffs had a claim against the developers for repayment of the notional interest because it was paid under a mistake of fact or for no consideration. On the assumption that the developers were so liable to compensate the plaintiffs, s. 1(1) of the 1978 Act — which was drafted in very broad terms spanning a variety of causes of action, forms of damage in the sense of loss of some kind and remedies under the umbrella of “compensation”— applied to such liability. Further, the defendants' third party claim against the developers was permitted by s. 1(3) of the 1978 Act notwithstanding that the plaintiffs had settled their contractual claim against them in an action for essentially the same sum.
3 The defendants' claim that mere receipt of the notional interest by the developers made them trustees of the money was arguable, even without knowledge that they were not entitled to the money. Whether the defendants' remedy was restitutionary or in damages, it was for compensation for damage suffered by its loss. Accordingly, assuming that the developers were trustees for the plaintiffs of all or some of the notional interest and in breach of trust by paying away the money for its own use or in not repaying it on demand by the plaintiffs, then subject to a successful defence of estoppel s. 1(1) of the 1978 Act applied to a claim for restitutionary compensation based on such liability.
4 It was not appropriate to determine on an application under RSC, O. 14A implied terms in a contract before all the relevant facts had been proved or admitted. Further, the procedures of striking out and determination of preliminary points of law were not: suitable in a case involving complex facts, points of mixed law and unresolved fact and highly contentious points of law.
Auld LJ:
This is an appeal by the defendant, Hillier Parker May & Rowden (“Hillier Parker”), from an order of His Honour Judge Havery QC on 7 February 1994 striking out its third party claims against the first and second parties, Estates & General plc and Castle Mall Securities Ltd (“the developers”), as disclosing no reasonable causes of action, and dismissing the third party proceedings as against them.
The litigation arises out of the construction of a...
To continue reading
Request your trial
-
Niru Battery Manufacturing Company v Milestone Trading Ltd
... ... the approach of this court in Friends' Provident Life Office v Hillier Parker May & ... ...
-
Niru Battery Manufacturing Company v Milestone Trading Ltd (No 2)
...might be liable in tort and CAI in restitution. 5 That was common ground because of the decision of this court in Friends' Provident Life Office v Hillier Parker May & Rowden [1997] QB 85 in which it was held that the 1978 Act enabled contribution to be claimed in such circumstances. Both C......
-
Oxford University Fixed Assets Ltd v Architects Design Partnership [QBD (TCC)]
...675. Crown Estate Commissioners v John Mowlem & Co LtdUNK (1994) 70 BLR 1. Friends' Provident Life Office v Hillier Parker May & Rowden [1995] CLC 592; [1997] QB 85. Guinness plc v CMD Property Development LtdUNK (1995) 46 Con LR 48. Jameson v Central Electricity Generating BoardWLR [1999] ......
-
Fujitsu Services Ltd v IBM United Kingdom Ltd [QBD (TCC)]
...Alternative Investment (Holdings) Ltd v BarthelemyUNK [2011] EWHC 1731 (Ch). Friends Provident Life Office v Hillier Parker May & Rowden [1995] CLC 592; [1997] QB 85. Gilbert-Ash (Northern) Ltd v Modern Engineering (Bristol) LtdELR [1974] AC 689. Global Container Lines Ltd v Bonyad Shipping......