Fairhurst Developments Ltd & Anor v Collins & Anor, Court of Appeal - Technology and Construction Court, February 05, 2016, [2016] EWHC 199 (TCC)

Issuing Organization:Technology and Construction Court
Actores:Fairhurst Developments Ltd & Anor v Collins & Anor
Resolution Date:February 05, 2016
 
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Case No: B50MA020

Neutral Citation Number: [2016] EWHC 199 (TCC)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

MANCHESTER DISTRICT REGISTRY

TECHONOLOGY AND CONSTRUCTION COURT

Manchester Civil Justice Centre,

1 Bridge Street West, Manchester M60 9DJ

Date judgment handed down: 5 February 2016

Before:

HIS HONOUR JUDGE STEPHEN DAVIES

SITTING AS A JUDGE OF THE HIGH COURT

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Between:

(1) Fairhurst Developments Limited

(2) Mr Mark Fairhurst

Claimants

- and -

Mr Richard Vincent Collins

Defendant

- and -

Mr Mark Fairhurst

Additional Defendant to Counterclaim

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Anthony Goff (instructed by Mackenzie Jones Solicitors, St Asaph) for the Claimants and the additional Defendant to Counterclaim

Philip Williams (instructed direct) for the Defendant

Hearing dates: 17-20, 23-27, 30 November, 1-2, 7-10 December 2015

Written closing submissions received: 23 December 2015

Supplemental written closing submissions received: 5 January 2016

Judgment produced in draft: 14 January 2016

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JUDGMENT

His Honour Judge Stephen Davies:

Introduction and summary of my decision

  1. In April 2009 the defendant, Mr Richard Collins, the owner of a residential development site near Chester, entered into an agreement with Mr Mark Fairhurst in the nature of a joint venture (``the development agreement'') for the construction and sale of a new residential property, now known as Aldford View, on that site. There is an issue as to whether Mr Fairhurst, who is the second claimant and the additional defendant to counterclaim, was acting on his own behalf or on behalf of his limited company Fairhurst Developments Limited, the first claimant. (For convenience I refer to the claimants collectively as ``Fairhurst'' save where necessary to distinguish between the two).

  2. By early 2011 Aldford View was substantially but not completely finished and the relationship between the parties had effectively broken down. Mr Collins decided to complete the works himself without further input from Fairhurst and did so by around May 2011. However even now, almost 5 years later, Aldford View has still not been sold. Since May 2011 Mr Collins has occupied it with his family and since October 2014 has rented it out. Mr Collins contends that it is not his fault that the property has not been sold, the reasons being the depressed state of the market and the presence of serious defects which have not yet been remedied and which render it effectively unsaleable.

  3. Fairhurst's position in summary is that Mr Collins is in serious breach of the development agreement and that Mr Collins should be compelled to sell the property and/or to pay Fairhurst what would properly fall due on sale. Mr Collins' position in summary is that Fairhurst was in serious breach of the development agreement whereas he has taken and is continuing to take all reasonable steps to comply with his obligations under it. In the circumstances he says that the claim is misconceived and premature. He also claims that the true position is that when the property is sold nothing will be due to Fairhurst once proper adjustments are made to reflect the financial consequences of its breaches and he counterclaims damages in relation to the loss and damage he says he has suffered.

  4. The claim was issued in the Chester County Court in June 2012 with fully pleaded Particulars of Claim [``POC''] and Defence and Counterclaim [``DCC''] following. HHJ Halbert gave initial directions on 7 May 2013 setting a timetable with a view to a 5 day trial taking place in early 2014. He gave both parties permission to obtain expert evidence from quantity surveyors. In December 2013 the directions were revised to permit both parties to obtain expert evidence from a building surveyor and a quantity surveyor, with the trial to take place in May 2014 over 10 days. In April 2014, due to the ever increasing complexity and number of issues raised and remaining in dispute - the DCC was amended to introduce a substantially amended Counterclaim [``ACC''] and the parties were able to agree almost nothing - the directions were further revised to provide for the trial to take place in October 2014 over 20 days. In early October 2014 HHJ Halbert dismissed an application by Mr Collins to strike out or obtain summary judgment on the claim and shortly thereafter, given his impending retirement, made an order vacating the trial and transferring the action to the Manchester TCC for a further case management hearing.

  5. Following transfer to the Manchester TCC and further case management by HHJ Raynor, QC the action came on before me for trial on 16 November 2015. I have heard evidence over 15 days, have undertaken a site view and have received extensive closing submissions in writing, replete with voluminous appendices, together with responsive submissions with yet further appendices.

  6. This summary of the procedural history does not include reference to all of the fiercely contested hearings held before Judges Halbert and Raynor. I have been provided with a transcript of many of these hearings and have been taken through some of them. It is readily apparent that the case management of this action has proved challenging, to say the least.

  7. Because the property had not yet been sold and because here is no expert valuation evidence before me as to its true value, whether in its actual state or (if different) in assumed good condition, it is not possible to ascertain with any confidence the true financial value of the claim or the counterclaim. However what is reasonably clear is that the combined costs now incurred by the parties will far exceed any reasonable valuation of the claim or the counterclaim.

  8. It is a particularly unfortunate aspect of this case that it has not been subjected to costs management, since it was issued in the County Court general list prior to the introduction of costs management, whereas if it had been issued or transferred to the Chester County Court TCC list it could have been cost managed under the TCC costs management pilot scheme. That is particularly unfortunate since I have no doubt that if the parties had devoted all of the time and money they have spent in fighting this case to co-operating in completing the build, remedying the defects and selling the property they would both, I am sure, have been far better off than they will be at the conclusion of this litigation.

  9. In summary, my decision is as follows, with my detailed reasons appearing as set out below and the financial position summarised - so far as it can at present - in the table at [§433] below:

    (1) The development agreement was entered into by Mr Fairhurst personally rather than by Fairhurst Developments Limited.

    (2) Fairhurst was in breach of the development agreement in failing to complete the works by January / February 2011. Mr Collins was therefore left with no option but to take over and complete the works, which he did at a cost which I assess as being £40,115.

    (3) Fairhurst was also responsible for defective work, the cost to remedy which I assess as being £16,806.90.

    (4) I assess the revised contract sum to which Fairhurst would be entitled, including variations, in the sum of £202,450. Taking into account damages payable to Mr Collins for the cost of undertaking completion works and defect rectification works Fairhurst's net entitlement is £145,528.81.

    (5) Mr Collins also breached the development agreement by failing to take sufficient steps to market and sell the property and, if necessary, by remedying the defective works and obtaining the necessary certificates and also, after September 2014, by renting out the property to unsuitable tenants.

    (6) By reason of (5) above Fairhurst is entitled to recover damages for breach of the development agreement which will include its net entitlement for the works and its share of the profit, which can only be ascertained once the true open market value of the property in assumed good condition is determined at a further short hearing. This is by far preferable to making an order for specific performance for the property to be sold after defects have been remedied and the property put into good order, with the court then having to conduct a further, potentially complex, inquiry into the parties' respective entitlements.

    (7) Fairhurst is entitled to recover damages to reflect its entitlement to share in the benefit obtained by Mr Collins from occupying and then from renting out the property.

    (8) Mr Collins is entitled to recover damages to reflect his loss over the period of culpable delay by Fairhurst in completing the property.

    Reasons

  10. The parties

    1.1 The claimants

  11. The first claimant, Fairhurst Developments Limited, is a building company. As at 2009 its principal area of operation was residential property development. It has also undertaken some general building work and insurance repair work. It is effectively a one-man company, that man being Mark Fairhurst, who is its managing director and sole shareholder. Mr Fairhurst ran the business but did not do the building; he delegated the building work to workmen and sub-contractors. As at the date of the development agreement the business was in the course of completing two housing developments, the first being a development project it was undertaking in Rhyl, North Wales and the second being a contract in Nantwich, Cheshire.

  12. Until trial the only claimant was Fairhurst Developments Limited. Mr Fairhurst was made an additional defendant to the counterclaim because it is Mr Collins' case that the development agreement was entered into by Mr Fairhurst personally not on behalf of Fairhurst Developments Limited. There was no application to amend to join Mr Fairhurst as a second claimant because it appears to have been assumed by Fairhurst and its advisers that if it lost on the issue of the correct contracting party Mr Fairhurst could simply have brought a fresh action in his own name and thereby obtain the...

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