Gateway Plaza Ltd (Claimant Appellant) v (1) John David White (Defendant Respondent) (2) Kathryn Peace (Defendant but not party to the appeal)

JurisdictionEngland & Wales
JudgeSir Timothy Lloyd,Lord Justice Vos,Lord Justice Rimer
Judgment Date08 May 2014
Neutral Citation[2014] EWCA Civ 555
CourtCourt of Appeal (Civil Division)
Date08 May 2014
Docket NumberCase No: B2/2013/2068

[2014] EWCA Civ 555

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE SHEFFIELD COUNTY COURT

MR RECORDER PHILIPS

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

Lord Justice Rimer

Lord Justice Vos

and

Sir Timothy Lloyd

Case No: B2/2013/2068

Between:
Gateway Plaza Limited
Claimant Appellant
and
(1) John David White
Defendant Respondent
(2) Kathryn Peace
Defendant but not party to the appeal

Jonathan Cohen (instructed by Metis Law) for the Appellant

Paul Brook (instructed by Simpson Millar) for the Respondent

Hearing date: 15 April 2014

Sir Timothy Lloyd

Introduction

1

This appeal, from an order made by Mr Recorder Philips in the Sheffield County Court on 3 July 2013, requires the court to consider the true construction of an agreement reached in the context of court proceedings. The litigation arose from the non-completion of a contract for the purchase of a plot in a development carried out by the claimant, Gateway Plaza Ltd (Gateway). By the settlement agreement, made on 17 February 2012, Mr White, the defendant, had the opportunity to buy another plot in the development, if he committed himself by exchange by a given date. If so, the litigation would be discontinued as against him. If he did not, the litigation would continue. He did not exchange by the given time or at all, but in answer to Gateway's contention that the original litigation therefore remains in existence, he argues that the only reason that he did not exchange was that Gateway was in breach of the contract itself, as a result of which he was unable to do so.

2

The recorder had to decide a preliminary issue, as to whether there was a binding settlement agreement and, if so, whether Gateway was in breach of it. At the hearing it was not in dispute that the settlement agreement was binding. The recorder held that the settlement agreement imposed an obligation on Gateway of which it was in breach, and that it was Gateway's fault that Mr White did not enter into an agreement to purchase the substituted plot.

3

Gateway appeals against that finding, with permission granted by Lord Justice Davis. It has been represented on the appeal by Mr Jonathan Cohen, who did not appear below. Mr White was represented, as he had been below, by Mr Paul Brook. Despite Mr Cohen's powerful submissions I consider that the recorder was right in his conclusion and I would dismiss the appeal. I set out my reasons in what follows.

The essential facts

4

In 2005 Mr White agreed to buy a plot in a development in Barnsley from Gateway. He acted jointly with a Mr Ian Peace, with whom he was, at that time, in business. The plot formed part of a development which Gateway was undertaking. The property to be bought was not finished until 2010. The contract was not performed by Mr White or Mr Peace, and Gateway forfeited the deposit of about £17,000, and then sued Mr White and Mr Peace for damages. For reasons which it is not necessary to describe, Mr White was unaware of the proceedings until early in 2012. He and Mr Peace had fallen out in 2008.

5

Mr White acted promptly once he got to know of the proceedings, and discussions followed between him and Gateway, which led to an agreement by which Mr White would purchase a different flat in the development, and the £17,000 which had already been paid would be credited against the purchase price of £92,000. This agreement was finalised in an email dated 16 February 2012 from Gateway's solicitors, Metis Law (Natalie Milnes), to Mr White's solicitors, Simpson Millar (Alex Dunne), to which agreement was given on 17 February.

6

Before the settlement agreement was reached, it was made clear by Mr White to Gateway that he would be seeking mortgage finance in order to complete the new purchase. At a meeting on 23 January 2012, between Mr White and Mr Stephens, of Gateway, the latter suggested that Mr White should use a particular mortgage broker. On 1 February Mr White's solicitors told those acting for Gateway that he had contacted the recommended broker and had started on the process of applying for mortgage finance. On behalf of Gateway Mr Cohen accepted in argument that it was known to both sides at the time of the settlement agreement that Mr White would be seeking mortgage finance for the purchase.

7

The agreement was that the proceedings be stayed for 6 weeks, to enable Mr White "to proceed with the alternative purchase set out herein". In consideration of that stay, under paragraph 1, Mr White was required to pay Gateway's solicitors £15,000 by two instalments, on making the agreement and on or before 28 February 2012, which sums were to be held to Mr White's order. This reflected the fact that Gateway had obtained an order requiring Mr White to pay £15,000 as an interim payment on account of the damages claimed.

8

Paragraph 2 is central to the appeal. It is as follows:

"On or before 28 March 2012 [Mr White] shall exchange contracts with [Gateway] for the purchase of Plot 2, Gateway Plaza on the same terms as previously agreed, save for the substitution of the new property details set out in this paragraph, at a purchase price of £92,000 … less an allowance of £17,000 … on account of deposit and reservation fee previously paid but subsequently forfeited."

9

If Mr White complied with paragraph 2, paragraph 3 provided that the parties were to consent to an order discontinuing the proceedings, with a provision that Mr White was to pay half of Gateway's costs of the proceedings up to the time of discontinuance, assessed if not agreed, and the £15,000 was to be applied towards the purchase price under the new contract. If, on the other hand, Mr White did not comply with paragraph 2, paragraph 4 provided that the proceedings were to continue and the £15,000 was to be applied towards any sum due to Gateway arising out of the proceedings.

10

It is common ground that, despite the wording of paragraph 2, which appears to oblige Mr White to exchange contracts with Gateway, the settlement agreement did not require him to do so. Rather, it gave him the opportunity to do so within the stipulated time, and it set out the consequences according to whether he did so or not.

11

Gateway used different solicitors for conveyancing, Gordons, and for litigation, Metis. As soon as the settlement agreement had been reached Simpson Millar asked Metis to ask Gateway to instruct Gordons as soon as possible, so that they could get contract papers out without delay. Not until 12 March did Gordons send to Simpson Millar a draft contract and other related documents. Their letter and the enclosed documents proceeded on an incorrect basis, namely that the purchase would be by Mr White and Mr Peace together. In that respect the draft contract, the engrossment of the lease and a form, referred to as the CML form, sent with the letter were all incorrect. The letter enclosed all of those documents and some others. It anticipated that there would be further enquiries on the part of the buyer.

12

On 20 March Simpson Millar replied. They sought to make amendments to the contract over and above correcting the name of the purchaser. They also asked for the lease to be corrected and for the CML form to be provided giving the correct name of the buyer. Gordons replied on 2 April, refusing to amend the contract in any substantive respect, but saying that both it and the lease could be amended in manuscript to delete the name of Mr Peace. They said that they had requested the CML form from their client.

13

By then, of course, the original date stipulated in the settlement agreement had gone by, but no-one treated that as fatal at the time.

14

Simpson Millar chased Gordons for the CML form later on 10 April, 18 April, 30 April and 2 May. The only answer given by Gordons was that they had requested it from their client and it had not been provided. Since a form had already been provided, albeit in the wrong names, it is difficult to see what reason there could have been for not supplying a correct form. None was ever advanced. The case turns on whether Gateway was obliged to provide the correct form before exchange.

The CML form

15

CML means the Council of Mortgage Lenders. The form, which I will continue to refer to as the CML form, as the parties did, is properly called a CML Disclosure of Incentives form.

16

The evidence includes the CML form supplied in March, and briefing notes provided by the CML about their form, as well as the witness statement and oral evidence of Mr Thackray, the conveyancing solicitor at Simpson Millar. The CML form is said to be intended to draw all relevant financial information about the sale of newly built, converted or renovated properties into a single form, for the benefit of mortgage lenders lending on the security of such a property, and of valuers providing valuations for such a lender. It is the responsibility of the seller to complete the form, and it is required to be provided to the lender's solicitor or conveyancer as a standard part of the process. According to the CML's briefing notes "the form should be sent to the lender's solicitor/conveyancer as early as possible in order to avoid any last minute delays and no later than 7 working days before exchange of contracts/missives".

17

Mr Thackray said in his witness statement that he could not commit his client to exchange without having received a CML form in the correct terms. He was cross-examined on this point, but maintained his position that, as a matter of prudence for his client Mr White, he needed the CML form before exchange.

18

I must mention Mr Peace. He played no part in the negotiation for the...

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