Neil Farrar v James Rylatt
| Jurisdiction | England & Wales |
| Judge | Lord Justice Coulson,Lady Justice Rose |
| Judgment Date | 08 November 2019 |
| Neutral Citation | [2019] EWCA Civ 1864 |
| Date | 08 November 2019 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A1/2017/3327 |
[2019] EWCA Civ 1864
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURT IN LEEDS TECHNOLOGY AND
CONSTRUCTION COURT (QB)
HH JUDGE RAESIDE QC
D50LS041
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Coulson
and
Lady Justice Rose
Case No: A1/2017/3327
Ms Sarah Lawrenson (instructed by Walker Morris) for the Appellants
Mr Bruce Walker (instructed by Addlestone Keane Solicitors) for the Respondents
Hearing Date: 24th October 2019
Approved Judgment
Introduction and General Observations
At a trial in the TCC in Leeds in November 2017, the claimants (to whom I shall refer collectively as “the appellants”) sought declarations against the defendants (to whom I shall refer collectively as “the respondents”) in respect of two alleged profit share agreements arising out of two different developments in West Yorkshire: one known as Hazel Grove and the other as The Barns. In a judgment given ex tempore on 16 November 2017, almost immediately after the trial, HHJ Raeside QC (“the judge”) rejected both claims.
The factual background and the issues that arose in respect of these two alleged agreements were very different. In relation to Hazel Grove, the alleged profit share was said to arise from an oral agreement made in or around March 2013, the terms of which (amongst other things) “were to create and evidence a trust in respect of Hazel Grove under the terms of which the legal owner or owners of Hazel Grove holds or hold Hazel Grove and the proceeds of sale thereof on trust for [the first and second respondents, whom the judge called “Jim” and “Kevin”], on the one hand, and [the first appellant, whom the judge called “Neil”], on the other, as the tenants-in-common of 50% each of the beneficial interest in Hazel Grove” (see paragraph 2.4 of the Particulars of Claim).
By contrast, the alleged profit share agreement in respect of The Barns arose out of a written but unsigned Heads of Terms (“HoT”) document dated 4 November 2013 which provided (amongst many other things) that Jim and Kevin “will enter” into a joint venture partnership with Neil which involved a 50:50 split of the net proceeds. The HoT was expressly said to be “Subject to Contract and Without Prejudice”, which I shall call “the Subject to Contract tag”.
It is the appellants' case on appeal that, in respect of Hazel Grove, the judge failed to address the existence or otherwise of the oral agreement separately from the existence of the trust, and that his findings on the factual evidence generally were unclear, and did not appear to tally with his rejection of the appellants' case. As to The Barns, it is the appellants' case on appeal that the judge should have found that, despite the Subject to Contract tag, there was a binding profit share agreement as recorded in the HoT.
Somewhat surprisingly, the appellants went on to say that, if this court agreed with their criticisms of the judgment, it should reverse the judge's conclusions, and make positive declarations as to, for example, the existence of the oral contract for Hazel Grove and the binding nature of the HoT in respect of The Barns. As was made plain in the order granting permission to appeal, that would be a most unusual course for this court to adopt, when so much turned on the oral evidence. If the appellants' criticisms are sustained, the appropriate relief will be an order for a new trial.
During the course of argument, Ms Lawrenson for the appellants made a number of sustained criticisms of the judgment. Indeed, Mr Walker, for the respondents, was also unhappy with some aspects of it. I would agree with some of those criticisms. The judgment is not as clear as it might be on important issues of fact and law, and there are some passages which, even now, remain cryptic and unexplained. It has meant that this court has spent rather too long dotting about the judgment, trying to piece together what the judge found and why. As Mr Walker properly conceded, a judgment should not present this sort of jigsaw puzzle.
By the same token, however, an appeal is not a form of gratuitous essay-marking exercise, in which points are awarded by the Court of Appeal for structure, grammar and style. This was a judgment given ex tempore, doubtless for sound reasons of speed and efficiency. However much it might be capable of hindsight improvement, what matters is whether the judgment contained proper answers to the critical issues which had been raised at the trial.
In addition, I consider that at least some of the appellants' criticisms of the judge have masked what was actually in issue at the trial itself, and therefore what the judge was being asked to decide. As we shall see, the skeleton argument in support of the appeal, and the appellants' oral arguments, often play down, if not ignore outright, the arguments which were advanced before the judge, in preference for new ways of putting the case. That is unhelpful and potentially misleading. Ultimately, this court has to reach a decision about the judge's treatment of the issues that were argued before him, not to embark on an exercise as to how he might have dealt with other matters which might have been (but which were not) clearly raised at the trial.
Hazel Grove / Facts and Issues
The Facts
Hazel Grove was a plot of land in Featherstone, near Pontefract in West Yorkshire, owned by a third party, with planning permission for a five bedroomed house. Jim and Kevin bought the plot for £50,000 in 2013.
It was common ground that they agreed to pay £100,000 for the house to be built at Hazel Grove. The identity of the intended builder was in dispute at trial (because the appellants said it was Neil, whilst the respondents said it was the second appellant, his construction company (“FCL”)). That dispute was not resolved anywhere in the judgment. The £100,000, less £3,000 for costs incurred directly by Jim and Kevin, was paid.
The appellants alleged that there was a profit share agreement between Neil, on the one hand, and Jim and Kevin, on the other, and that this agreement was reached orally “in or around March 2013”. The fact of this oral agreement was denied by the respondents. The existence or otherwise of this agreement was at the heart of the dispute in respect of Hazel Grove.
The building works at Hazel Grove were completed in early 2015. It was common ground that Neil was subsequently involved in the marketing of Hazel Grove. The appellants asked the judge to infer from this that he had an interest in the proceeds of sale. It appears that in April 2015, FCL made an application to register a restriction on Hazel Grove, claiming a beneficial interest therein. The application said that this beneficial interest arose because of an oral profit share agreement allegedly reached with FCL (not Neil) on 22 January 2013 (not March). Eventually, Hazel Grove was sold in September 2016 for £190,000, which was considerably less than the £250,000 which Neil had said to Jim and Kevin that he could obtain.
The Pleaded Issues
The appellants' case as to the oral agreement was set out in paragraph 2 of the Particulars of Claim. It is necessary to set that out in full:
“2.0 By an oral agreement entered into at the premises of Farrar Construction Limited at Parkfield Farm, North Featherstone, in or around March 2013 between the First Claimant, on the one part, and the Rylatts, on the other, it was agreed as follows (the following terms being referred to hereafter as “the Hazel Grove Agreement”):
2.1. Hazel Grove would be purchased with funds provided by the Rylatts and registered in the names of the Rylatts. Pursuant to this term, Hazel Grove was so acquired by the Rylatts for a purchase price of £50,000 and registered in the name of the Rylatts in or around 22 April 2013.
2.2 The First Claimant would charge a fee of £100,000 to erect and complete a five-bedroomed house on Hazel Grove, being 7A Hazel Grove, Land Registry Title Number YY12139 (“the Hazel Grove House”), that fee to be payable by the Rylatts at the request of the First Claimant. To date, the First Claimant has expended £97,000 in the erection and completion of the Hazel Grove House.
2.3 Following completion of the Hazel Grove House, Hazel Grove would be sold on the open market.
2.4 Following the sale of Hazel Grove, any net profit arising from the sale would be split equally as between 50% to the First Claimant and 50% to the First Defendant and the Second Defendant. For the avoidance of doubt, the terms of the Hazel Grove Agreement were to create and evidence a trust in respect of Hazel Grove under the terms of which the legal owner or owners of Hazel Grove holds or hold Hazel Grove and the proceeds of sale thereof on trust for the Rylatts, on the one hand, and the First Claimant, on the other, as the tenants-in-common of 50% each of the beneficial interest in Hazel Grove.
2.5 The net profit arising on the sale of Hazel Grove would be the gross sale proceeds less (a) the purchase cost of Hazel Grove (£50,000), (b) build costs (£97,000 to date, but limited in any event to £100,000 irrespective of any costs in excess of that figure which would be borne the First Claimant) and (c) costs of sale.
2.6 Further, it was an express term of the Hazel Grove Agreement, alternatively a term implied so as to give the contract business efficacy, that the Rylatts would not refuse any reasonable offer for the Hazel Grove House in the circumstances of the market pertaining at the time of any such offer” (Emphasis supplied).
By reference to particular paragraphs in the defence, the thrust of the pleaded response was that: there was no agreement to...
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