Lane v O'Brien Homes Ltd
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE DAVID CLARKE |
| Judgment Date | 05 February 2004 |
| Neutral Citation | [2004] EWHC 303 (QB),[2004] EWHC 363 (QB) |
| Court | Queen's Bench Division |
| Docket Number | CC/2002/PTA/0987 |
| Date | 05 February 2004 |
[2004] EWHC 303 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand
London WCA 2LL
Mr Justice David Clarke
CC/2002/PTA/0987
MR C DARTON appeared on behalf of the CLAIMANT/RESPONDENT
MR N AGNIHOTRI (for Mr W Webster) appeared on behalf of the DEFENDANT/APPELLANT
This is an appeal against the judgment of His Honour Judge Michael Kennedy QC, given in the Brighton County Court on 1 st November 2002, awarding damages of £150,000 to the claimant against the defendant, O'Brien Homes Limited. The defendant sought permission to appeal against the finding of liability, as well as the award of damages.
On 10 th February 2003 Lawrence Collins J refused permission to appeal against the finding of liability, but held that an arguable question of principle arose in relation to the award of damages made by the judge. He granted permission to appeal solely on the question whether the award of damages was made on an appropriate basis. At a subsequent hearing in April, the judge was pressed to change his mind and to grant permission to appeal on the issue of liability, but he maintained his earlier decision, which was that the essential question on liability was one of fact, and that the judge had taken into account all relevant considerations.
The dispute between the parties arose from the sale by the claimant to the defendant of an area of land in Angmering in Sussex, which included the house owned by her and in which she was still living, namely Orchard End. Also on the land in question, but not included in the sale to the defendant, was another house, Raffles Place, jointly owned by the claimant and her friend, Mr Hilbourne, who acted as her agent in the negotiations which led to the transaction.
The judge held that, although there was no relevant restrictive covenant in the contract for the sale of the land, a collateral contract was formed between the parties, whereby the purchasers (the defendants in the action) would not build more than three new houses on the land. This was on the understanding that the existing house, Orchard End, would remain standing, and that three new houses in addition were contemplated. There was existing planning permission for this level of density of development.
Some months after the sale to the defendants, they were able to obtain planning permission from the local authority authorising the construction not of three but four new houses on the land. The judge held that, at the time of the contract of sale in April 2001, neither party had any reason to anticipate that such planning permission would be forthcoming. The essential issue of liability which he had to determine, in the absence of a restrictive covenant or any other form of stipulation in the contract of sale limiting density of development to three new houses, was whether the defendants were in fact prohibited in any other way from increasing the density beyond that contemplated at the time of the sale, and whether the subsequent grant of that planning permission entitled the claimant to any redress for misrepresentation or otherwise.
When these proceedings were launched, the claimant sought from the court an injunction restraining the development insofar as it involved the construction of four rather than three houses, and this issue was compromised by the defendant's undertaking not to do so pending resolution of the dispute. It may be significant that the claimant took this step and indeed gave the appropriate undertaking as to damages should her claim in due course fail. The fact that she was prepared to do so, despite the uncertainty as to the prospects of success in her action (having regard to the absence of the relevant stipulation from the contract of sale), is some indication of her determination.
As I have indicated, the judge held that there came into existence a collateral contract, whereby the defendants were prohibited from constructing four houses on the site. This contract was evidenced by Mr Hilbourne's letter on behalf of the claimant, dated 23 rd March 2001, which reads as follows:
"Following our meeting yesterday between Joan and you and me, I write to confirm the basic terms of our agreement as follows.
1. Joan will sell and your company will purchase the whole of the property known as Orchard End and the land that forms part of it, but excepting the property known as Raffles Place, which is included in a separate title.
2. The purchase price is £950,000, to be paid as follows."
Certain terms for payment are set out.
"3. You will build not more than three new houses on the land, pursuant to the existing planning permission, which was implemented when Raffles Place was built in 1997. These terms are, I believe, agreed, and I understand you will confirm them in writing. In the meantime, I am writing to our solicitors to put them in the picture."
By his letter of 30 th March 2001, Mr Stephen O'Brien, Managing Director of the defendant company, replied:
"Dear Kenneth,
Further to your most recent letter, I write to confirm that your proposals are acceptable to me."
The letter then went on to deal with the purchase price arrangements and added:
"I hope this confirms our agreement. I look forward to executing the paperwork."
It was argued before the judge that although these letters had been exchanged, the absence of any stipulated limit of three houses from the eventual contract of sale indicated that the parties did not intend this to become a legal obligation. The judge rejected that contention and held that a collateral contract was thereby formed. As I have indicated, no appeal now lies against that decision, permission having been refused by the High Court judge.
I am told that at the hearing of the leave application before him he suggested that the claimant might have been entitled to no more than nominal damages. The basis for this suggestion seems to be as follows. On the understanding on which the land was sold – with planning permission permitting the development of three new houses on the site – the sale price was a reasonable price. The land was not undervalued. The construction of the fourth house on the site would have no adverse effect on the enjoyment by the claimant of the property which she, together with Mr Hilbourne, was then retaining, namely Raffles Place. The projected fourth house was on the most distant corner of the site from that property, on a low-lying part of the site. Thus, the subsequent obtaining of planning permission to construct four houses occasioned no loss to the claimant. Accordingly, she should be entitled to no more than nominal damages.
That argument is not pursued by Mr Webster, on behalf of the appellant/defendant. He sensibly recognised that it is not a result which would appeal to the court, any more than such an argument appealed to Brightman J in the Wrotham Park case, to which I shall shortly turn.
A preliminary point was taken by counsel for the respondent/claimant, Mr Darton, that the permission to appeal did not extend beyond a consideration of the appropriateness of the basis on which the judge assessed the damages and therefore did not extend to permitting this court, in the event of it finding that the basis of assessment was inappropriate, to proceed to reassess damages on the proper basis. Either the court should find that the basis was correct, in which case the appeal fails, or it was incorrect and the claimant should be left with no more than nominal damages. This was not a pure technicality. There was some substance in it, because, in the absence of transcripts or any other record of the oral evidence, particularly of the joint valuation expert, Mr Hampton, whose evidence I was told diverged in various ways from his written report, I might have had insufficient material for making a satisfactory reassessment. Despite this, in a brief ruling I rejected the argument, and held that the grant of leave must be taken to cover the issue of damages generally. I accordingly granted leave to the appellant to amend their grounds of appeal to those set out in the appeal bundle at tab 3, and to the respondent/claimant to rely, if necessary, on her counter notice, by which she sought to uphold the assessment on additional grounds.
Judge Kennedy's judgment on the issue of damages was as follows: I read paragraphs 68 to 76 of his judgment.
"What the claimant has really suffered is loss of the contractual effect of the prohibition against building a fourth home, i.e. the value and bargaining terms of that prohibition, or the value of releasing Mr O'Brien from it. As indicated, I do not believe that if anyone had thought of the possibility of a fourth house prior to the sale, either side would have valued the prospect of that highly. Nor, however, do I accept that Mrs Lane would have refused to negotiate or to sell on the basis that Mr O'Brien had said he might try for a fourth house. She could have refused to sell, but I do not believe she would have. She could have put it into the contract of sale. I do not believe that she would have preferred to go back to Berkley House."
I interpose that that is a reference to Berkley Homes, who had also been bidding with her to buy the property for development. The judgment continues:
"Had the possibility been seriously raised, she would have had to choose whether to refuse to sell (which I really do not believe was her state of mind at that date), or to have considered putting the prohibition onto the land itself by a suitable covenant, so as to make it a condition binding upon successors of the...
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