PROVING THINGS 50: TO PROVE BREACH OF CONTRACT YOU FIRST HAVE TO PROVE THAT THERE WAS A CONTRACT

Mediatelegal

The judgment of Mr Justice Stuart-Smith in Secker -v-Fairhill Property Services Ltd [2017] EWHC 69 (QB) may contain an important lesson about pleading as well as evidence.  The claimant’s claim could not be put in negligence and her case based on breach of collateral contract failed.  The claimant failed to establish that there was any collateral contract.   There is no guarantee that the claimant would have succeeded if had been able to frame her claim in negligence, however the action failed because of the absence of any evidence that a collateral contract existed.

KEY POINTS

  • The claimant’s claim for damages was confined to a claim for breach of a collateral contract.
  • Permission to amend to plead allegations of negligence and a claim under the Defective Premises Act was refused.
  • The claimant’s evidence did not support the assertion that a collateral contract existed.
  • The claimant’s case failed.

THE CASE

The claimant was seriously injured and left paralysed in all four limbs, after tripping up over a paving stone in her garden. The home and garden had been newly built. The defect had been noted and the builder promised to attend to it.

The action was pleaded in breach of contract.  The claimant made an application to amend the Particulars 12 days before the date fixed for the trial of liability.  The court allowed a claim for breach of contract that was collateral to the main contract, it refused permission to amend to plead a case in negligence.   On the second morning of the trial the claimant applied for permission to amend the claim pursuant to the Defective Premises Act 1972. That application was refused.

By the end of the trial the only issue the claimant relied upon was the claim for breach of collateral contract (that claim that had been allowed by amendment shortly before the trial).

THE JUDGMENT

The judge accepted most of the claimant’s evidence as to the circumstances of the accident. He also accepted that promises had been made by one of the defendants to remedy the paving stone.

The Claim Based on Collateral Contract
    1. The Claim advanced from 17 November 2016 was in the following terms:
“[T]here was a collateral contract between the Claimant and the Second and Third Defendants whose terms and breaches were as follows.
PARTICULARS OF COLLATERAL CONTRACT CLAIM
(i) The Second and Third Defendants entered into a collateral contract with the Claimant, whereby in consideration for her agreement to buy the Property as above, the Second Defendant agreed that he would ensure that following completion, he would deal with and correct defects (or ‘snags’) which the Claimant identified after she had moved into the Property.
(ii) Following completion, as set out above, the Claimant did tell the Second Defendant about certain defects and asked him to correct them. Some of the defects identified were corrected in accordance with the terms of the collateral contract.
(iii) However, in breach of the collateral contract, the Second Defendant did not rectify other defects as the Claimant complained of as above.
  1. It is immediately to be noted that the collateral contract as pleaded at (i) above is not supported in such terms by Mrs Secker’s evidence.
  2. There is no technical reason why there could not be a collateral contract in the terms pleaded. The alleged collateral contract was neither itself a contract for the sale of an interest in land nor part of a composite transaction for the sale of an interest in land; nor was the sale of the property to Mrs Secker made conditional upon the fulfilment of the obligations imposed by the alleged collateral contract: see North Eastern Properties Ltd v Coleman [2010] 1 WLR 2715 at [43]-[54]. The question is therefore whether the requirements for the existence of a collateral contract have been satisfied.
  3. The Defendants make the point that all of the formal negotiations between the parties as conducted through the medium of solicitors emphasised that, under the main contract, Mrs Secker was buying the property as was: see [24] to [29]. That is factually correct, but it only goes to emphasise why a person buying a new build property might want extra-contractual comfort that snagging defects would be dealt with by the builder. It would have been a compelling argument against the existence of the implied term of the main contract that the Claimant originally pleaded, and appreciation of its potency may have informed the decision to abandon that basis of claim; but it is far less potent in relation to the allegation that there was a collateral contract.
  4. The prerequisites for a collateral contract include the basic requirements for the existence of any contract. As is implicitly recognised by the form of the pleading that I have set out, there must be both offer and acceptance backed by good consideration; there must be an intention that the offer and acceptance should give rise to binding contractual relations; and there must be reasonable certainty of terms. It would be unrealistic to expect lawyerly precision in the context of what was a relatively informal conversation between Mrs Secker and Mr Goulding, but there must be sufficient clarity to enable the parties’ respective obligations to be identified.
  5. Taking Mrs Secker’s evidence at face value, it does not support the existence of a collateral contract based upon an assurance that defects would be remedied either generally or in the terms pleaded. Her evidence establishes, and I accept, that she was concerned about the possibility of snagging defects and wanted to know what would happen if there were any. So far so good. But her evidence is that Mr Goulding did not say anything which can properly be interpreted as meaning that if she entered into the main contract he would undertake a direct contractual obligation to her to remedy defects. Instead, as set out at [33] above, he told her that he already had an obligation under the NHBC scheme to remedy defects, which was true. At its highest, it was on the basis of that information (namely that he had an obligation under the NHBC scheme) that she was content to go ahead. She readily accepted that he had explained to her that it was because he was a member of the NHBC scheme that he was obliged to put things right: it was the NHBC scheme that was her guarantee that snagging works would be done. On her evidence she neither sought nor obtained a separate undertaking to assume an obligation or liability directly to her in addition to his obligations as a builder involved in the NHBC scheme if she bought the house.
  6. Her reliance upon the existence of the NHBC Scheme is shown both by the terms of the conversation with Mr Goulding and also by the steps taken by her solicitors to ensure that it was in force and that the property was properly identified. In that context her solicitors’ express advice that, if she expected the vendors to remedy or pay for remedying any defects, special conditions would have to be added to the contract is material (though not determinative). That was not done. It was not done because Mrs Secker relied upon the existence of the NHBC guarantee, which she understood to be what obliged Mr Goulding to carry out snagging works.
  7. Nor can any weight be placed upon the short passage in the cross-examination of Mr Goulding, which I have set out at [36] above. The mere fact that Mrs Secker bought the house after a conversation to the effect that if there were any problems after she moved in he would come and sort them out does not evidence or establish that she agreed to purchase the house in consideration for his assurance; nor does it evidence or establish that in consideration for her agreeing to buy the house he agreed as a separate contractual obligation to her to ensure that he would deal with and correct defects or snags which she identified after moving in.
  8. There is, in my judgment, no evidence upon the basis of which I could properly find the existence of a collateral contract as pleaded or any collateral contract that would be of assistance to Mrs Secker in bringing her claim.
  9. In the light of my conclusion that there was no collateral contract, the claim as now advanced must fail.”

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