Smithton Ltd v Naggar
| Jurisdiction | England & Wales |
| Judge | Lady Justice Arden,Lord Justice Elias,Lord Justice Tomlinson,Lord Justice Christopher Clarke,Lord Justice Maurice Kay |
| Judgment Date | 31 July 2014 |
| Neutral Citation | [2014] EWCA Civ 714,[2014] EWCA Civ 939 |
| Docket Number | Case No: A1/2013/1345,Case No: A3/2013/2488 |
| Court | Court of Appeal (Civil Division) |
| Date | 31 July 2014 |
[2014] EWCA Civ 714
Lord Justice Maurice Kay
Vice President of the Court of Appeal, Civil Division
Lord Justice Tomlinson
and
Lord Justice Christopher Clarke
Case No: A1/2013/1345
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
MR JUSTICE AKENHEAD
Royal Courts of Justice
Strand, London, WC2A 2LL
Ben Patten QC and Katie Powell (instructed by Simmons & Simmons LLP) for the Appellants
William Webb (instructed by Birketts LLP) for the Respondents
Hearing dates: 13 th February 2014
Optima (Cambridge) Ltd ("Optima") built 2 blocks of flats in a T shape at Jubilee Mansions, Thorpe Road, Peterborough. They engaged Strutt & Parker ("S & P") to carry out inspections of the building in the course of development and to produce "Architects Certificates" in respect of the flats for the benefit of the purchasers and their lenders. Before contract the purchasers were told that they would be receiving Certificates on completion. The buildings were constructed between 1 September 2002 and 10 December 2003 and S & P carried out some ten inspections of the works, producing to Optima Certificates as to the stage of construction of the flats.
S & P also provided Certificates for the purchasers attesting to the satisfactory construction of the flats. In the event the building works were carried out badly and the inspections were carried out negligently. Eight of the purchasers sued Optima and S & P. Akenhead J held that all of them, save the 7 th and 8 th claimants, were entitled to recover damages from Optima, which is now in administration, for breach of contract and all of them were entitled to damages from S & P on account of the erroneous content of the Certificates provided to them.
In the case of two of the claimants – Mr and Mrs Sahi, who were claimants 3 and 4 – the Certificate signed by Mr Egford of Strutt & Parker was executed before the date of the sale agreement between them and Optima. S & P does not seek to appeal the judgment against it in their favour. In respect of claimants 1, 2, 5 and 6 – 8 (hereafter "the claimants"), the Certificate signed by Mr Egford was not provided to the relevant claimant until after, sometimes long after, the exchange of contracts and the execution of the lease of the flat concerned. The claimants were all represented by solicitors. The course of events in respect of the claimants other than claimants 7 and 8 – Mr & Mrs Peace — was for S & P to send the Certificates (in draft or as completed) to Optima's solicitors – Irena Spence & Co ("Irena Spence") – and by them to the individual firms of solicitors of the claimants.
The judge held that the fact that the Certificates had been received by the claimants after contract and completion was no obstacle to the recovery by them of damages from S & P. S & P, the now appellants, contend that in this respect he was in error.
Mr and Mrs Peace, unlike the other claimants, were not the original purchasers from Optima. The original purchaser of their flat — flat 17 – was Ms Chantal Smith whose lease was dated 19 December 2003; and she sold the lease to them in February 2006.
In respect of Ms Wyatt, the sixth claimant, a limitation point arises. Her claim was issued on 23 March 2010 which is more than six years after the date of the Certificate (22 January 2004), the exchange of contracts (15 October 2003) and the lease (17 October 2003). S & P contends that in those circumstances the claim is barred. The judge held that, in respect of the majority of the defects in the building, limitation was no bar because of the provisions of the Limitation Act 1980.
The Table below identifies (a) the individual claimants; (b) the number of their flat; (c) the date of their sale agreement; (d) the date of their lease; (c) the date of S & P's signed Certificates and the date the claimants or their solicitors received them; and (e) the date when a draft Certificate was sent by Irena Spence to the purchaser's solicitors.
Claimant 5: Ms Ransome — Flat 1
| Claimant | Flat | Date of Sale Agreement | Date of Lease | Date on S&P Certificate & Date of receipt | Date first draft sent to Claimant's solicitors by Optima's solicitors |
| 1st: Mr Hunt | Penthouse 1 | 15 April 2004 | 15 April 2004 | 15 June 2004 Received by the claimant on 1 December 2008 | 3 October 2003 |
| 2nd: Mr Bedwell | 14 | 19 October 2004 | 20 October 2004 | 20 October 2004 Received by the claimant on 5 October 2005 | 26 July 2004 |
| 3rd/4th: Mr/Mrs Sahi | 15A | 19 December 2007 | 19 December 2007 | 23 April 2004 | Not appellants |
| 5th: Ms Ransome | 1 | 19 September 2003 | 19 September 2003 | 23 April 2004 Received by the claimant on 28 January 2009 | 31 July 2003 |
| 6th: Ms Wyatt | 5 | 15 October 2003 | 17 October 2003 | 22 January 2004 9 February 2004 (date sent to Ms Wyatt's solicitors by Irena Spence) | 1 August 2003 |
| 7th/8th Mr/Mrs Peace | 17 | 10 February 2006 Completion 17 February 2006 | 19 December 2003 | 23 April 2004 Posted to C7 & B by their solicitors on 1 December 2008. Copy received by Mr Peace in October 2009. | Not sent |
The typical course of events can be illustrated by the case of Ms Ransome, the 5 th claimant, who was, of all the claimants, the earliest purchaser in time. When she agreed to purchase flat 1 she was told by Optima that it would come with an Architect's Certificate which Optima said was similar to an NHBC Certificate.
On 23 July 2003 Mr Egford sent to Irena Spence at Optima's request a draft architect's Certificate for her reference. The Certificate was in the following form (which I shall call "the first draft"):
" I certify that:
1. I have visited the site at appropriate periods from the commencement of the construction to the current stage to check:
a. progress
b. use of materials, and
c. conformity with structural drawings and building regulations
2. At the time of my last inspection on 15.07.2003, Phase I of the property had reached the state of completion.
3. So far as could be determined by each periodic visual inspection, the property has been constructed:
a. to a satisfactory standard, and
b. in general compliance with the approved structural drawings and/or building regulations.
4. I was originally retained by Optima Cambridge Ltd who are the developers in this case.
5. I am aware this Certificate is being relied upon by the first purchaser…………………..….
I confirm that I have appropriate experience in the design and/or monitoring of the construction of residential buildings.
Name of Professional Consultant: Mr S Egford (Strutt & Parker)
….
Professional Indemnity Insurer Aon Ltd
Date of Cover 1 May 2003
Amount of Cover £ 5,000,000."
On 31 July 2003 Irena Spence sent to MyHomeMoveConveyancing ("MHM Solicitors"), Ms Ransome's solicitors, a set of documentation which included as one of the enclosed items a " Draft Architect's Certificate" in the form of the first draft. The letter included the following paragraphs:
" The Sellers still await the Building Regulation final inspection Certificate together with a final architect's Certificate and these will be forwarded to you as soon as they are available.
Please note that exchange of contracts is required within 28 days of submission of draft documentation or within seven days of the building regulations and architect's Certificate being available, whichever is the later."
Hereafter I refer to a letter in these terms as "the standard form letter".
At some stage MHM Solicitors received a Reply to their General Enquiries before Contract. Question 12.3 (a) asked:
" Are there any agreements, Certificates, guarantees, warranties or insurance policies relating to the construction of the Property or any installations, repairs, improvements or treatment?"
to which the response was:
" An architect's Certificate will be provided on completion in relation to the construction of the building"
I refer to this exchange as "the Reply".
On 11 August 2003 Mr Egford replied to a letter from Irena Spence of 8 August 2003, which was not before the judge or us, to confirm that the Certificate he had sent was a draft, that no Certificate currently existed, and that he was not in a position to issue one at this stage as he was awaiting information from various parties. He also said that he had amended the Certificate " as noted in your letter".
On 9 September 2003 Mr Egford sent a fax ("the 9 September fax") to Irena Spence saying:
" SUBJECT: Jubilee Mansions – Optima Cambridge Ltd
I am now in a position to issue certificates for apartments 1–9 at the above.
The certificate needs to be completed with the purchasers name and name of their lenders – if any.
I would be grateful to receive these details at your earliest convenience."
A copy of this reached MHM Solicitors' file.
On 10 September 2003 Mrs Spence wrote to Mr Egford in response to his fax. Mrs Spence says that she would advise him of the names of the purchasers and their mortgages " as Contracts are exchanged in connection with each of these properties". She also referred to the fact that she had written to him over the issue of the wording of the Certificate and enclosed a fresh copy of the...
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