Matila Ltd v Lisheen Properties Ltd & Ors [2010] EWHC 1832 (Ch)

Neutral Reference No: [2010] EWHC 1832 (Ch)

Venue Manchester Civil Justice Centre,, 1 Bridge Street West, Manchester, M60 9DJ

Date judgment handed down: 16 July 2010

Before His Honour Judge Stephen Davies, sitting as a Judge of the High Court pursuant to s.9 of the Senior Courts Act 1981

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Between

MATILA LIMITEDClaimant

LISHEEN PROPERTIES LIMITED (1)Defendant

PAUL CLARKE (2)Defendant

BRENDAN CLARKE (3)Defendant

AND BETWEEN: Claim I 9LV03959Claimant

ASCOT APARTMENTS LIMITED (1)Claimant

READBANK LIMITED (2)Claimant

LIVERPOOL DISTRICT REGISTRY

LISHEEN PROPERTIES LIMITED (1)

PAUL CLARKE (2)

BRENDAN CLARKE (3)

Defendants

Richard Oughton (instructed by Bellis, Kennan, Gribble & Co, Solicitors, Southport) for Claimants

Charles Machin (instructed by Birchall Blackburn Solicitors, Manchester) for Defendants

Hearing Hearing dates: 5,6,7,10,11 May 2010.

Closing written submissions 21, 28 May, 3 June 2010.

Date of draft judgment: 23 June 2010

APPROVED JUDGMENT

I direct that pursuant to CPR PD 39A paragraph 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

…………………………………..

His Honour Judge Stephen Davies.

Date 2010-07-16

[1]In these two actions, ordered to be tried together by His Honour Judge Hodge QC on 31/7/09, the Claimants seek specific performance of a number of contracts for the grant of leasehold interests over the individual residential apartments and commercial units in a development known as The Edge, 7 Hoghton Street, Southport, Merseyside.

[2]The first action (9LV03204) concerns 25 separate contracts, one each in relation to each of the 25 residential apartments at The Edge (‘the residential apartments contracts’). The Claimant in that action is the vendor, Matila Limited (‘Matila’), a company of which Mr Phil Collins, a property developer from Southport, is a shareholder and director. The 1st Defendant to that action is the purchaser Lisheen Properties Limited (‘Lisheen’), a company owned and controlled by the 2nd and 3rd Defendants, two brothers, who are sued personally in their capacity as guarantors. Paul Clarke is a restaurateur from Magherafelt, County Derry, and Brendan Clarke is the owner of a plastering business from Ballymena, County Antrim. Brendan Clarke is married to Rosaleen Clarke, who is the office manager of the plastering business. Eugene Clarke, a quantity surveyor from Portstewart, County Derry, is the nephew of the Clarke brothers. All of the individuals mentioned above gave evidence at trial.

[3]The second action (9LV03959) concerns 3 separate contracts, one each in relation to each of the 3 commercial units at the Edge (the ‘commercial units contracts’). The original sole Claimant was the vendor Ascot Apartments Limited (‘Ascot’). Ascot is a company owned and controlled by certain other Southport property developers with whom Phil Collins had previous dealings. Matila had entered into the contracts with Ascot relating to the commercial units in similar terms to those of the residential apartments contracts. In turn Ascot had entered into an agreement with Lisheen (‘the Assignment’) under which Ascot had agreed to assign the benefit of the commercial units contracts to Lisheen. Paul Clarke and Brendan Clarke were guarantors to that agreement as well. Ascot, represented separately from Matila, brought proceedings against Lisheen as principal and the Clarke brothers as guarantors, seeking specific performance of the Assignment. More recently, by an assignment made on 1/4/10 (‘the April 2010 Assignment’) Ascot assigned its interest in the relevant contracts to Readbank Limited (‘Readbank’), a company in which Phil Collins is also a director and shareholder, which was then added as 2nd Claimant and which took over conduct of the second action. The Issues

[4]A number of issues arise for determination in this case, some of which raise questions which are both interesting and complex, factually and/or legally. I can summarise the issues as follows:(1) Whether Matila served valid completion notices on Lisheen under the residential apartments contracts. This involves considering whether the residential apartments were completed for occupation so as to entitle Matila to serve completion notices, and whether the wording of the letters said to be completion notices were apt to achieve their intended effect.

(2) Whether Matila served valid completion notices on Ascot under the commercial units contracts. This involves considering whether the commercial units were completed in accordance with the agreed specification.

(3) Whether the notices to complete served by Matila on Lisheen and by Matila on Ascot operated, when not complied with, as an effective rescission of the residential apartments contracts and the commercial units contracts respectively so as to prevent Matila from proceeding with an action for specific performance.

(4) Whether the subsequent assignment by Ascot of its rights to Readbank (a) was champertous, or (b) had the effect of releasing Lisheen from any liability under the Assignment.

(5) Whether the Claimants have established their claimed entitlement against Lisheen to specific performance and, if so, whether nonetheless specific performance should be refused in the discretion of the court.

(6) Whether the Defendants have established any of their Counterclaims and, if so, which and in what amount.

(7) Whether the Claimants have established their claims against Brendan Clarke and Paul Clarke as guarantors and, if so, which claims.

[5]As well as hearing evidence from the 5 individuals mentioned above, I also heard evidence at trial from 2 expert building surveyors. The first was Mr Moran, who was instructed by the parties as a single joint expert, pursuant to the order of Judge Hodge QC on 31/7/09, to consider the alleged defects in the Edge as alleged by the Defendants in the Scott Schedule ordered to be served by them. The second was Mr McLachlan, who was instructed solely by the Defendants. Exceptionally, I granted permission to the Defendants to rely on Mr McLachlan as an expert witness at the Pre-Trial Review on the basis that:(i) he had already inspected the property during the litigation and prepared a schedule for use by the Defendants in the litigation;

(ii) Mr Moran’s conclusions completely supported Matila’s case, and without expert evidence of their own the Defendants had no real prospect of challenging his conclusions;

(iii) in his draft report Mr McLachlan had made it clear that he genuinely disagreed with many of the opinions expressed by Mr Moran;

(iv) the timetable to trial permitted sufficient time for Mr McLachlan to revisit the property, produce a final report and hold discussions with Mr Moran before the time came for them to give evidence;

(v) to refuse the Defendants permission to rely on their own expert evidence in those circumstances might otherwise leave them with a real sense of injustice, especially given the significance to them of this litigation.

[6]So far as the witnesses of fact is concerned, my overall impression of them was that they were all honest witnesses doing their best to give their genuine recollection of events. However, perhaps inevitably, the evidence of those directly involved was to some extent coloured by their interests in the case, together with the time lapse between the events in question and this trial. Where there is a conflict between witnesses which it is necessary to resolve I do so having regard to my assessment of the reliability of their evidence on the particular issue, taking into account the other evidence available to me, and particularly to evidence contained in reliable contemporaneous documents, and taking into account my assessment of the inherent probabilities. For reasons which I give at the relevant stage in this judgment I was less impressed by Eugene Clarke’s evidence, and place much less weight on it where it conflicts with that of Phil Collins, with whom I was favourably impressed as a witness, save where strongly supported by other evidence which I regard as reliable.

[7]So far as the expert witnesses are concerned, they were both obviously expert in their professed field of building surveying, and both were familiar with the particular field of fire safety with which their evidence was primarily concerned. They both appeared to have a reasonable familiarity with and knowledge of the Building Regulations and Approved Document B (Fire Safety), and they also both appeared to have experience of the practical application of fire safety issues. Mr Moran came across as a confident and assured witness. By contrast Mr McLachlan came across as less confident and assured. Whilst that is not of itself important, he also – in my judgment – tended to be overly critical of the design and implementation of the fire safety measures at The Edge, and to place insufficient weight upon the expertise of those involved in that process. There were also occasions in his evidence when it appeared to me that his knowledge of the Building Regulations and the Approved Document B was not as detailed as it might have been. In general, where there was a dispute between them I was more inclined to accept Mr Moran’s views than those of Mr McLachlan. However this is not a case where one expert’s opinions on all issues in dispute between them are clearly to be preferred to those of the other, so that again I will need to resolve the individual disputes between them having regard to all of the relevant evidence relating to that particular issue.

[8]I express my appreciation for the preparation of the trial bundles by Matila’s solicitors and for the able conduct of the case by both counsel. In particular Mr Oughton produced a clear and detailed written chronology and opening, both of which helped me greatly in guiding me through the history of the project and the issues for determination. Both presented their respective cases with ability, clarity and courtesy – and in Mr Machin’s case notwithstanding the fact that he was instructed only shortly before trial. Both produced helpful and detailed closing written submissions. I have taken into account all of the written submissions provided to me.

[9]I will address the issues which arise at the appropriate point in the history of events, to which I now turn.

History preceding March 2007 Agreements

[10]The property was initially acquired by a company known as Work Sharp Ltd, who had secured planning permission for the development in 2004 and produced a marketing brochure for the apartments to be used in a marketing campaign to commence spring 2006. This brochure showed that the plan was to provide 7 apartments on each of floors 1, 2 and 3, and 4 apartments on floor 4. It also contained a page entitled ‘Specifications’, which detailed the intended specification of each apartment and the common areas, although it also stated that it was "a guide only and may be subject to change". I shall return to this point later in this judgement.

[11]Matila, then 50% owned by Phil Collins with 2 other local property investors owning the remainder of the company, acquired the whole property on 3/7/06 for a consideration of £1,305,000. On 30/10/06 the local authority approved amendments to the planning permission in accordance with details shown on drawings prepared by the retained architects, CLA, numbered 06-115-120 through to 125 and 151 to 152, the "issued for construction" versions of which, dated October / November 2006, are in the trial bundle Thus although Mr Machin correctly observed in his closing submissions that the plans referred to in the 2004 planning permission were not in the trial bundle, the plans in existence as approved working amendments to that planning permission are in the trial bundle. .

[12]It appears that before Matila took over the project from Work Sharp a construction company known as CPUK had already tendered with a view to undertaking the required works. The tender process envisaged that the employer and contractor would enter into a JCT design and build contract. Thus in response to the document setting out the employers requirements (which is not in the trial bundle) CPUK produced a document entitled written contractors proposals (which is in the trial bundle, and which has been referred to as the CPUK specification). It appears that Matila and CPUK entered into a JCT design and build contract which provided for the works to commence on 16/10/06 and to be completed 56 weeks later on 5/11/07.

[13]It is common ground that in late 2006 Phil Collins who, it appears from the evidence, has always been the front man for Matila so far as this project is concerned, and the Clarke brothers were put into contact with each other by a property consultant based in Belfast called Nigel Best. Matila had intended to market the individual apartments and units directly to individual purchasers, but was also prepared to consider a sale of the whole package. The Clarke brothers were interested in buying the whole package. They are both businessmen with some previous experience in property acquisition although they told me, and I accept, that they had no previous experience in property acquisition of this size or value. Brendan Clarke told me, and I accept, that he was provided with a copy of the Work Sharp brochure by Mr Best, and that he relied on that in deciding to make an offer for the property. However Phil Collins told me, and I also accept, that he had not provided a copy of this brochure to Mr Best nor had he authorised it to be shown to prospective purchasers on his behalf. I do not accept the suggestion that Mr Best was in some way the authorised agent of Matila for the purpose of providing the Clarke brothers with a copy of the brochure, which of course had nothing to do with Matila. By early 2007 the parties had reached agreement, subject to contract, for the Clarke brothers to acquire, on completion of the development, the 25 apartments for a total of £4,921,583 and the 3 commercial units for a total of £1,000,000.

[14]It was agreed that the commercial units were first to be transferred to Ascot before being transferred to Lisheen. Although the picture is a little complicated and not fully explored in evidence, since at the time it did not appear to have any relevance to the case, it appears that this was part of a process by which Phil Collins and the other Matila shareholders disengaged themselves and this development from other local property developers with whom they had previously been involved. As part of the price payable on disengagement these other developers would, through their ownership of Ascot, obtain the benefit of the profit on the re-sale of the commercial units by Ascot to Lisheen.

[15]Correspondence ensued between the solicitors acting for Matila (Bellis Kennan & Gribble – ‘BKG’), for the Clarke brothers (Rothwell & Evans – ‘R&E’) and for Ascot (Black Norman – ‘Black Norman’). I am satisfied that before contracts were exchanged R&E were provided with a copy of a letter dated 14/3/07 from Matila confirming that "the specifications set out in the contractors proposals both is accurate, and represents the level of finish to be applied to The Edge", and the CPUK specification itself. Although Brendan Clarke suggested that the specification was not provided until after the March 2007 agreements were entered into, that is inconsistent with the letter from BKG to R&E of 14/3/07, so that I am satisfied that the CPUK specification was in the hands of R&E at least by the time the 20 March 2007 agreements were entered into. The 20 March 2007 Agreements a). The residential apartments contracts

[16]Matila and Lisheen entered into 25 separate agreements on 20/3/07 in relation to the 25 individual apartments, all in identical form. Under clause 1 of these residential apartment contracts Matila agreed to grant and Lisheen to accept a lease of each apartment in the form of the draft attached. The following clauses are relevant: [2] The Landlord will at its own cost and in an efficient and workmanlike manner and with proper materials and so as to be fit for habitation with reasonable expedition according to the plans approved by the local planning authority and the relevant competent authority for the purpose of the Building Regulations and shall complete the same in accordance with the requirements of the said Local Authority the plans and specification having been available at the Landlords offices for inspection and the Tenant shall be deemed to purchase with full knowledge thereof. [3](a) The Landlord shall provide the Tenant with the National Housebuilding Council (‘NHBC’) "Buildmark" Offer of Cover/Acceptance prior to completion; and [3]

(b) If there is any dispute arising after completion concerning the obligations of the Landlord in relation to the construction of and defect (sic) in the premises such dispute shall be referred by either party to the NHBC for exclusive determination under its resolution service and such determination shall be final and binding upon the parties. [4] (a) The Lease shall be completed 14 days from the receipt by the Tenants solicitors of notice from the Landlords solicitors that the premises have been or will be within 10 working days of the date of the notice be completed for occupation (whichever shall be the later) … [8] The premises are sold subject to the Standard Conditions of Sale Fourth Edition so far as not varied by or inconsistent with the provisions of this Contract save that:- (a) the contract rate is 4% above the base rate from time to time of Nat West Bank plc. [10] Omissions and commissions of a minor nature which do not inconvenience the Tenant in the use of the premises hereby contracted to be sold and/or any works yet to be completed by the Landlord in respect of the common areas including the paths driveways gardens and grounds within the premises as a whole as defined in the said Lease shall not be a ground for refusal by the Tenant to accept a notice of completion provided for in paragraph 3(b) hereof or to refuse to complete and the Tenant shall be required to accept the undertaking of the Landlord to complete such omissions, repairs, commissions and works as soon as practicable after completion. [11] The Landlord will make every effort to adhere to the said plans and specifications/agreed specification as strictly as possible but the Landlord reserves the right to alter such and to employ and use materials fittings and fixtures alternative or in substitute for but not inferior to those or any of these that may have been or may hereinafter (sic) be employed or at any time intended to be in the construction of the premises now in the course of erection or to erected on the Landlord’s development site and they may also make such amendments to the specification as they shall consider being required during construction of the premises and in so doing shall not be in breach of this Agreement nor shall the Tenant be entitled to raise objections or make any claims for compensation or loss in consequence thereof. [12] Notwithstanding the provisions and conditions (sic) it is hereby agreed that no liability shall attach to the Landlord in respect of any delay (unless unreasonable or due to the default or omission of the Landlord) in completion of the construction of the premises and in addition any estimated completion date given by any servants or agents of the Landlord shall not be construed as being a contractual completion date to the intention that delay resulting in the construction of the premises shall not give rise to any course [sic] of action in respect thereof.

[17]The draft lease was to be for a 999 year term, and was to be entered into between Matila, Lisheen and a management company. In conventional manner, the lessee was granted common rights in relation to the common parts, and there was provision for the management company to maintain the main structure and exterior and common parts, such costs to be recouped by way of service charge.

[18]It is common ground that a deposit of 10% in total (£491,158.30) was paid by the Clarke brothers, and also that there was a side agreement entered into between the respective solicitors confirming that legal completion should not take place until three months from the date of completion of the premises and in any event not before 28/2/08. This reflected what Phil Collins accepted had previously been discussed and agreed, which was that the Clarke brothers would have a 3 month marketing period from completion of the premises before being required to complete the purchase. b). The commercial units contracts

[19]On the same date Matila entered into 3 separate agreements with Ascot in relation to the three commercial units, again all in identical form. Again, draft leases were attached to the agreements, and the clauses of these commercial unit contracts were similar, although not identical, to the clauses in the residential apartment contracts. The total payable was £725,000, with a 5% deposit of £60,250 being payable.

[20]Most relevantly, Clause 2 provided that:

‘The Landlord will at its own cost and in an efficient and workmanlike manner and with proper materials with reasonable expedition erect and completed the Premises in accordance with the attached specification and in accordance with the plans approved by the local authority and relevant competent authority for the purpose of the Building Regulations and shall complete the same in accordance with those agreements to the attached specification.’

[21]The attached specification is headed "Build Specification for three commercial units on the ground floor of The Edge’. It is a short document which reads as follows:

‘Disabled toilets to be provided in each unit. Walls and ceilings to be plastered. Floors to be concrete finish. Shop fronts to be boarded up (i.e. tenant to perform all fitting out work). Electrical and lighting provision to be suitable for retail units.’

[22]It is submitted by the Defendants that the limited nature of this specification and the factual matrix demonstrates that it must have been intended, objectively, that clause 2 also required compliance with the CPUK specification. I am unable to accept this argument for the following reasons:(i) The commercial units agreements are quite clear as a matter of wording in requiring compliance only with the ‘attached specification’. If it had been intended that the CPUK specification should also be complied with it would have been easy to say so.

(ii) In addition to the attached specification clause 2 also requires compliance with the approved plans, which are extremely detailed. Therefore the lack of detail in the specification is mitigated by the detail contained in the plans;

(iii) The CPUK specification is predominantly directed to (a) the structure of the building which, under the commercial units draft leases was to be a landlord repairing obligation, and (b) to the fitting out residential apartments. Accordingly, there is no obvious need for the CPUK specification to be read into the commercial units agreements.

[23]Clause 6 of the commercial units contracts provided that: ‘This contract is assignable by the Tenant and the Tenant may require a Lease of the Premises to be granted to any other person other than himself’. c). The Assignment

[24]On 20/3/07 Ascot also entered into an agreement with Lisheen in relation to the three commercial units. Under this contract Ascot agreed to assign the commercial unit contracts In fact the contract, which is infelicitously worded, refers to ‘the Contract’ as opposed to the 3 individual contracts, but it is not in issue, and I find, that it is clear as a matter of construction that its subject matter is the 3 individual commercial units contracts. to Lisheen, on terms providing for an initial payment of £100,000 and the balance of £900,000 on the completion date, which was to be the same date as the completion of the commercial unit contracts. Payment of the balance was in return for Ascot procuring the granting of the leases referred to in the commercial unit contracts to Lisheen. Under clause 2 Lisheen covenanted with Ascot to:

“pay perform and observe all sums of money stipulations agreements provisos and conditions on the part of [Ascot] contained in the contract and all taxes (including Stamp Duty Land Tax) on the assurance to [Lisheen] and will fully and effectually indemnify [Ascot] against all future liability in respect of the same”

From March 2007 to May 2008

[25]From March 2007 CPUK continued to construct The Edge. It was not completed in November 2007 as had originally been envisaged. In the meantime the Clarke brothers were, according to Paul Clarke, marketing the apartments "off plan" to contacts of theirs in Northern Ireland, with some success. They had also engaged an agency in Southport, known as White Plan-It, to assist with marketing.

[26]On 24/1/08 the contract administrators instructed under the building contractor, Ovenden Associates, issued a certificate of practical completion in relation to apartments 1-4 inclusive, but expressly "subject to satisfactory completion of the attached list of outstanding and unsatisfactory work as issued by Ovenden Associates on 9/1/08 and subject to provision of electrical test certificates, water services, foul drainage and NHBC certification’. On 25/1/08 BKG wrote to R&E enclosing the certificate, and purporting to give formal notice of completion under clause 4 of the applicable residential apartments contracts (‘a clause 4 notice’) but also "noting" the agreement for completion to take place three months from the date of service of the notice.

[27]At around this time the Clarke brothers transferred instructions from R&E to new solicitors, Birchall Blackburn. It is apparent that upon reviewing the file Mr Coates, the solicitor dealing with the matter, appreciated that Lisheen had not been incorporated as at 20/3/07 and thus proposed that new contracts should be issued to regularise the situation. This process became protracted, but in the meantime Ovenden continued to produce updated snagging lists. On 20/3/08 Ovenden issued certificates of practical completion in relation to the remaining apartments. However, these certificates were also qualified in the same manner as the earlier certificate. On 26/3/08 BKG wrote to Birchall Blackburn in the same terms as the letter of 25/1/08, giving notices under clause 4 in relation to these apartments, but also making reference to the three month period. When asked about the position at this time, Phil Collins accepted that he had no reason to doubt the accuracy of what was contained in the various snagging lists.

[28]I am quite satisfied, and indeed the contrary has not been seriously argued, that given the items of qualification in the certificates of practical completion it could not be said that the apartments were completed for occupation at this time. Thus I am satisfied that the clause 4 notices served on 26/3/08 were not valid or effective notices. However, it is not suggested by the Defendants, rightly in my judgment, that the service of these notices in those circumstances had any effect adverse to Matila, i.e. it did not prevent Matila from serving further clause 4 notices at some later stage.

[29]On 20/3/08 Ovenden also issued a certificate of practical completion in relation to the three commercial units, also expressly subject to "satisfactory provision of electrical test certificates, water services, foul drainage and NHBC certification", and on 26/3/08 BKG gave notice to Black Norman under clause 3 of the commercial unit contracts (‘a clause 3 notice’), but again referring to the three month deferred completion period.

[30]Again I am quite satisfied that the items of qualification are such that it could not be said that the commercial units had been completed in accordance with the agreed specification, as required by clause 3. Thus, I am satisfied that the clause 3 notices served on 26/3/08 were not valid or effective notices. Again, however, it is not suggested by the Defendants that this prevented Matila from serving a subsequent clause 3 notice.

[31]The correspondence shows that around this time the Clarke brothers were in negotiations with two prospective tenants in relation to 2 of the commercial units.

[32]It is apparent however that by this time the relationship between Matila and CPUK had deteriorated. Although full details have not been provided, by reference to a settlement agreement entered into between Matila and CPUK it can be gleaned that:(i) on 16/4/08 CPUK issued a winding up petition against Matila, presumably in respect of monies certified as due to it by Ovenden;

(ii) on 14/5/08 Matila agreed to pay CPUK a sum of £180,000, of which £80,000 had been paid on account;

(iii) there were disagreements between Matila and CPUK as to the valuation of the works, responsibility for delay and outstanding defects;

(iv) on 5/6/08, pursuant to the settlement agreement referred to, Matila agreed to pay the further sum of £100,000 to CPUK on the basis that Ovenden would issue a certificate of practical completion in relation to the whole development and a certificate extending the time for completion to that date, and on the basis that CPUK would carry out snagging works identified in the appendix to that agreement within four weeks.

[33]Although Phil Collins was not willing to accept this in cross examination, it is apparent to me that the existence of this ongoing dispute must have adversely affected the progress of the remaining works over this period. In any event however, and regardless of this difficulty, by this stage another major problem had emerged, which was that it had been discovered that the existing electricity supply to the development was inadequate to meet the requirements of the development, once completed and occupied. Thus it appears that CPUK were able to obtain a sufficient supply to undertake their works by connection from the street main. However, the relevant electricity supply company (Scottish Power) had insisted that the permanent supply would require the construction of a new electrical substation and a new connection. This then involved difficulties and delays in terms of obtaining planning permission and other associated approvals (which did not occur until 11/12/07) and then having the work completed. This whole process became extremely protracted and, as at May 2008, had still not been resolved.

The 9 May 2008 Agreements

[34]As I have said, the impetus for new contracts being entered into was Lisheen’s new solicitor’s discovery that Lisheen was not legally in existence as at 20/3/07. Thus on 9/5/08 Matila entered into 25 new agreements with Lisheen as the named Tenant, and with Paul Clarke and Brendan Clarke as the named guarantors, in relation to each of the 25 residential apartments. By clause16.1 it was recorded that the parties agreed that this new agreement superseded the original agreements of 20/3/07, and by clause

16.2 to the parties agreed that the original agreements were rescinded with no liability for any antecedent breach. By clause 15 the Clarke brothers jointly and severally agreed with Matila to indemnify it against all losses etc incurred by reason of any default by Lisheen and also, should Lisheen ‘fail for 14 working days after the completion date to complete their lease’, on service of a notice on them to be jointly and severally obliged to perform Lisheen's obligations under the contract, ‘including completing the Lease’.

[35]Clause 2 was revised only insofar as it identified the relevant planning permission and the relevant approved plans In so doing it rather unhelpfully identified the plans referred to in the original planning permission rather than (also) identifying the plans referred to in the subsequent approved amendment. . Clause 4 was substantially revised, so that it provided as follows: [a] The Lease shall be completed seven days from the receipt by the Tenant’s solicitors of notice from the Landlord’s solicitors that the premises have been completed for occupation (such notice not to be served before 12 June 2008) … [b] A precondition of the service by the Landlord upon the Tenant of the notification that the premises are completed as referred to in clause 4 (a) above shall be: (i) The issue by the NHBC of a Cover Note for the Premises pursuant to paragraph 6.6.2 of the Council of Mortgage Lenders Handbook; and (ii) The connection of a mains electricity supply to that part of the building known as The Edge which comprises in total 25 self contained flats and common parts ancillaries thereto.

[36]If one takes seven working days from 12/6/08, it appears that the effect of the revisions to clause 4 was to provide for completion no earlier than 21/6/08. There was no equivalent side agreement recording any agreement that completion should not take place earlier than three months from completion of the premises. It is clear from the correspondence that the parties were proceeding on the basis that completion should take place on or around 21/6/08.

[37]It is convenient at this point to address an argument advanced by the Defendants in paragraph 13.1 of the residential apartments actions, which is that pre-contract Phil Collins represented that the apartments would be completed for occupation by November 2007 and that post completion the Defendants would have a 3 months marketing period before being required to complete.

[38]So far as the former is concerned, it is not in dispute that Phil Collins would have said something along these lines, not least because this is what the building contract provided for, but it is quite clear that there was no equivalent provision in the residential apartments contracts, which by clause 12 provided in terms that any estimated completion date should not be treated as being a contractual completion date and which also, in clause 14, contained an entire agreement and a ‘no representations’ clause. There is therefore no pleaded or other basis for contending that this representation had legal effect.

[39]So far as the latter is concerned, it is apparent from comparing the original agreements read with their side letter with the replacement agreements that there was no equivalent agreement in the May 2008 Agreements that completion should not take place until the Defendants had enjoyed a 3 month marketing period after practical completion. In the course of an unsuccessful application made on the first day of trial to seek to amend the Defence in the residential apartments action to rely on a collateral contract to that effect, Mr Machin took me carefully through the correspondence leading up to the replacement agreements, but I found no basis in that correspondence for any suggestion that the parties were proceeding on the agreed basis that the 3 month marketing provision was carried through into the replacement agreements. Indeed the very opposite is true; in my judgment the correspondence clearly demonstrated that the parties were agreeing that the revised clause 4 would set out in clear terms the circumstances in which and the earliest date by which Matila would be entitled to serve a completion notice.

From May 2008 to October 2008

[40]It is also clear that around this time the economic climate was beginning to worsen. Thus on 6/6/08 Eugene Clarke’s solicitors notified Birchall Blackburn that he was no longer proceeding with the purchase of one of the apartments "due to the economic climate". Nonetheless, I am satisfied that the Clarke brothers were still intent on proceeding with the transaction. It was their evidence that they had agreed funding from the Bank of Ireland in principle some time previously; during the trial that they were able to produce a formal offer of finance totalling £4,400,000 from the Bank dated 30/6/08. This, however, was subject to a number of preconditions, including the provision of appropriate warranties, and also provided for the funds to be drawn down by not later than 30/9/08.

[41]On 30/6/08 a further agreement was entered into between Ascot and Lisheen relating to the commercial units under which, in the same way as with the residential apartment contracts, the difficulty arising from the fact that the original agreements had been entered into before Lisheen had been incorporated was addressed by Lisheen entering into a new agreement on precisely the same terms as before, with Paul Clarke and Brendan Clarke agreeing to guarantee that Lisheen should "pay all sums of money due to [Ascot] and in the event of default [to] pay the sums of money due to [Ascot]".

[52]By early July 2008 it is clear that the Clarke brothers were becoming concerned about the continuing delays and, in particular, the difficulties being experienced in completing the works. In a letter or e-mail sent to Phil Collins dated 9/7/08 they complained about the incomplete state of the building and that they had lost a good opportunity to make sales as a result, and requested a 10% discount on the purchase price. They had also earlier decided to bring in Eugene Clarke to produce a snagging list, which he did, the first version of which is dated 17/6/08. By early July 2008 Rosaleen Clarke was sufficiently concerned to come over herself, and her minute of a meeting held on 10/7/08, which Phil Collins accepted as accurate, records that:(i) it was being envisaged that the electricity supply would be connected sometime ‘mid Aug early Sept’ but ‘nothing confirmed’, and that CPUK would finish and be off site in approximately 3 weeks;

(ii) a copy of Eugene's revised snagging list, produced on 8/7/08, was given to Phil Collins;

(iii) there were discussions about a number of matters raised in the snagging list, specifically the condition of the front entrance, the staircases, the brickwork and the fourth floor roof gardens. At the meeting Phil Collins was also asked whether or not he knew a Mr John Wright, the man behind a company known as Paige Holdings Ltd, who had agreed subject to contract with Lisheen to purchase five of the residential apartments. Phil Collins agreed that he denied any knowledge of John Wright at the meeting.

[53]The last point is said to be relevant because, following the meeting, Rosaleen Clarke conducted investigations via the internet and discovered that not only had Phil Collins and John Wright previously been directors of the same company, but also that his wife and John Wright were still directors of another company. This connection was put to him at a further meeting held on 29/7/08, again minuted by Rosaleen Clarke, and he accepted that he did know John Wright. Phil Collins' explanation was that he had not been in contact with John Wright for some time, and was unaware that John Wright had agreed to buy five apartments from Lisheen, so that when previously asked he had not connected the John Wright he knew with the John Wright behind Paige Holdings. The alternative explanation, which the Defendants invite me to prefer, is that in some way Phil Collins procured John Wright to make an offer for five of the apartments to give them comfort to continue with the transaction. That is an explanation which I am unable to accept; there is no evidence at all that at any stage before the involvement of Paige Holdings the Clarke brothers had indicated any intention to withdraw or, indeed, that they would have been able to do so. Whilst it does appear that the Clarke brothers were relying on this sub sale to bridge the gap between what they were proposing to inject personally and what they were to borrow from the bank, as I have said there is no suggestion that at any time they had said to Phil Collins that unless someone like Paige came along they would have to withdraw from the transaction. Whilst it is, I suppose, possible that Phil Collins was aware that John Wright had agreed to buy five of the apartments from Lisheen but did not want to admit this at the first meeting for fear of exciting suspicion, it does not seem to me that this is a point of any relevance to the issues in the case. I am certainly not satisfied that Phil Collins was deliberately lying about this, either at the earlier meeting or when giving evidence in court.

[54]This is relevant, because the Defendants’ complaint to this effect is one of the grounds advanced by the Defendants for contending that it would be inequitable and would cause great hardship to the Defendants specifically to enforce the residential apartments contracts. I reject this particular argument.

[55]On 29/7/08 Eugene Clarke produced a further revision of his snagging list, which was handed over at the meeting. There were again discussions about particular matters raised in the snagging list. By this stage it appears that the Clarke brothers had agreed to dispense with the services of their marketing agents White Plan-it. Their evidence to me was that there was little point in continuing to have the agents open the show flat for viewing at weekends, because of the incomplete state of the works. Specifically, they complained that the condition of the front entrance was extremely off-putting, because there was an electricity junction box in the middle of the entrance walkway still being used to provide the temporary electricity supply. Whilst it is clear from the photographs that the presence of this junction box was indeed unsightly, and also that the works had not been practically completed by this point, I am not satisfied that this in itself justified their decision. My conclusion is that the decision was more on grounds of cost than anything else.

[56]On 17/7/08 BKG had reported to Birchall Blackburn that the commercial units were now supplied with electricity. Before this Matila had provided a temporary generator at their cost in order to accommodate a tenant, a business known as The Games Workshop, to move into one of the units. In the letter BKG also repeated what Phil Collins had said at the meeting of 10/7/08 about the electricity supply to the whole property.

[57]On 18/8/08 Ovenden issued a further certificate of practical completion, this time relating to all of the apartments and units, purporting to certify that practical completion had been achieved on 11/3/08, but "subject to satisfactory completion of the attached [snagging] list of 18/8/08" and still "subject to provision of electrical test certificates, water services, foul drainage and NHBC certification". Ovenden’s letter to CPUK of 18/8/08 identified the various outstanding work items.

[58]In September 2008 there were discussions between the parties and their solicitors concerning a proposal to reduce the purchase price by £1,000,000 on the basis that 5 apartments were to be retained by Matila. It appears that the impetus behind this was the withdrawal of Paige from the offer to buy 5 apartments. It is clear that these discussions resulted in an agreement between the parties that this should happen, but equally it is clear from the solicitors’ correspondence that this was ‘subject to contract’. In the circumstances, it has not been suggested by the Defendants that this agreement was in any way legally binding. At around this time the Bank of Ireland’s nominated solicitors, Hill Dickinson, became involved. They were particularly interested in ascertaining the arrangements for the provision of warranties in favour of the Bank from those involved in the design and construction of The Edge. It is clear that the Bank was insisting on warranties acceptable to their solicitors being provided as a condition of funding being made available. That was not something, however, for which provision was made in the contracts the subject of these actions. It appears therefore that it involved a lengthy process of discussion and negotiation between the Bank’s solicitors, Matila’s solicitors, Lisheen’s solicitors and the various parties from whom warranties were being requested, and that this caused considerable delay and difficulty, not least because Hill Dickinson’s requirements were exacting.

[59]In the meantime, however, on 2/10/08 the NHBC issued Buildmark Cover Notes in relation to all of the 25 apartments and the 3 commercial units These provided confirmation that the NHBC inspector had carried out a pre-handover inspection and that the NHBC was now willing to provide cover in accordance with the relevant Buildmark policy. This therefore satisfied the first pre-condition in clause 4(b) of the residential apartment contracts.

[60]There is however a significant issue between the parties as to when the second pre-condition, the connection of the mains electricity supply to the residential apartments and ancillary common parts, was satisfied. It is Matila’s case that it was satisfied prior to the service of its completion notice on 14/10/08, whereas that is disputed by the Defendants. For the reasons which I give in some detail later in this judgment, I am satisfied that the second pre-condition in clause 4(b) of the residential apartment contracts was satisfied by 14/10/08.

The Defendants’ allegations of delay by Matila up to 14/10/08

[61]The Defendants plead in paragraph 13 of the Defence in the residential apartments action that Matila was in breach of the obligation in clause 2 to erect and complete the properties with reasonable expedition. In considering this argument I must of course also have regard to clause 12, under which it was agreed that Matila should have no liability for delay unless unreasonable or due to its default or omission. But for the difficulties caused by the provision of a permanent electricity supply, I would have been prepared to find that the process of completing outstanding works from March through to October 2008 does fall within that category, because it does seem to me that the only sensible explanation for the delay in resolving what appear to have been relatively modest outstanding matters was the legal and financial problems as between Matila and CPUK to which I have referred. However in my judgment the real substantial cause of the delay over that period was something which was outside Matila’s control, namely the difficulties caused by the provision of a permanent electricity supply. I am quite satisfied on the evidence that it was this which was holding up the completion of the residential apartments, and that there was nothing which Matila could reasonably have done which could have expedited this. Indeed, the contrary was not suggested in evidence.

[62]Furthermore, even if I am wrong about this, it is difficult to see how this delay could have afforded the Defendants a substantive defence to the claim. It is apparent that in order to rely on this as a substantive defence it would have been necessary for Lisheen to have:(a) been able to establish that as at a specific date Matila was in breach of its obligation to complete the works with reasonable expedition;

(b) served a notice to complete under clause 6.8.1;

(c) assuming Matila failed to complete, rescinded under clause 7.6. At no time did Lisheen seek to take any steps to terminate the contracts on the grounds of Matila’s delay. On the contrary, they continued to press for performance.

[63]It is said however that the delay is relevant to the argument that it would be inequitable and/or cause great hardship to make an order for specific performance because in the period of delay the market turned against the Defendants and they were no longer able to obtain funding from the Bank of Ireland. I will consider this argument once I have considered the evidence as to the circumstances in which the Bank of Ireland withdrew its previous offer of finance.

The Completion Notices dated 14/10/08 in relation to the residential apartments

[64]On 14/10/08 BKG wrote to Birchall Blackburn enclosing the NHBC Cover Notes and also the ‘Certificate of Completion of Works from Building Control issued by Butler & Young building control approved inspectors’. What was enclosed was a letter to CLA from Butler & Young (‘Butler & Young’) dated 6/10/08, on letter-heading describing themselves as building control approved inspectors Confirmed by a certificate, also attached, from the Construction Industry Council. , stating that ‘following a final inspection we have pleasure in confirming that we have issued our final certificate in accordance with section 51 of the Building Act 1984’. The attached Final Certificate was also dated 6/10/08 and stated that it related to ‘new retail unit and apartments at 7 Hoghton Street Southport’, that Butler & Young are ‘approved inspectors and fire safety consultants’, and confirmed that the work described in the initial notice dated 26/10/08 had been completed.

[65]The letter continued: ‘Please treat this letter as formal Notice to Complete under the provisions of clause 4 of the various contracts’.

[66]On 14/10/08 BKG also wrote two letters to Black Norman in relation to the commercial units. The first, said to be ‘without prejudice to the notice to complete served on 26/3/08’, enclosed the NHBC buildmark cover notes issued in respect of the 3 commercial units. The second enclosed the final certificate from Butler & Young issued in respect of the commercial units and residential apartments pursuant to the Building Regulations. Neither letter described itself as, nor has it been argued that they amounted to, notices under clause 3 of the commercial units contracts.

[67]On 15/10/08 the Bank of Ireland renewed its offer of finance to Lisheen in a formal document in the same terms as the earlier offer, this time providing for drawdown to be no later than 30/11/08.

[68]On 16/10/08 Birchall Blackburn wrote to BKG including the following:

‘Our client is in the process of compiling an updated snagging list, and I hope to have this with you shortly. Upon receipt I would be grateful if you could take your client’s instructions regarding the undertaking that will be required pursuant to clause 10 of the Contracts’

. That of course was a reference to Matila’s obligation to undertake minor commissions etc and to complete outstanding works in relation to the common parts post-completion. It thus indicated that at that stage Birchall Blackburn had not been instructed by their clients that in their view the pre-conditions to completion had not been met.

The Defendants’ objections to the clause 4 notices

[69]It is pleaded in paragraph 8 of the Defence to the residential apartments claim that this notice was invalid in two respects, first because it did not comply with the requirement of clause 4 in that it did not give notice that the apartments had been ‘completed for occupation’, and second because as at that date the apartments were not in fact completed for occupation. a). Formal non-compliance with clause 4

[70]So far as the former objection is concerned, whilst Mr Oughton accepts that the notice does not use the words found in clause 4, he submits that the real question is whether or not a reasonable recipient of the notice be misled, and submits that the answer to that question can only be no.

[71]The learned authors of Megarry & Wade’s The Law of Real Property (7th edition) at paragraph 15-095 say, referring to the decision of the Court of Appeal in Delta Vale Properties v Mills

[1990] 1 WLR 445

, that ‘no particular form is required for such a notice [of completion], but it must inform the recipient clearly and unambiguously of what he is required to do to fulfil his contractual obligations’. Although I have been unable to find a transcript, I note that this principle appears to have been applied by the Chancellor, Morritt J, in the recent unreported case of Jeans v Taylor Ch.D. 6/10/09, where he also considered that one relevant question would be whether it would be reasonable to infer that such a recipient would have had the benefit of legal advice when reading the notice. In this case, where the Defendants had been legally represented throughout in a substantial transaction, I have no doubt that this is an inference which can reasonably be drawn. In any event, however, I also consider that the notice does indeed inform the recipient clearly and unambiguously that the apartments were completed for occupation. This is because:(a) they attach the NHBC buildmark cover note and the building inspector’s certificates of completion which, as any reasonable recipient would know, would not be issued if the apartments were not fit for occupation;

(b) they describe themselves as notices to complete under clause 4, and the only notice which can be served under clause 4 is a notice that the premises have been completed for occupation, which triggers the obligation to complete.

[72]Accordingly, I reject the Defendants’ argument on that ground. b). Were the properties completed for occupation on 14/10/08?

[73]This, coupled with the issue as to whether or not the mains electricity supply was connected before 14/10/08, is perhaps the most significant issue in the case. It involves a consideration of what the contract required, a consideration of the competing factual evidence of the parties (in particular Phil Collins and Eugene Clarke), and a consideration of the expert evidence in relation in particular to the issue of compliance with the Building Regulations in relation to fire safety.

Completed for occupation – meaning?

[74]Mr Machin argues that the words ‘completed for occupation’ go beyond ‘practical completion’ and require the apartments to be ready to occupy residentially. He argues that the detail of Matila’s obligation to carry out and complete the works is to be found in clause 2, which is by no means as clear as it might be in identifying what is required.

[75]Although it is true that clause 2 of the residential apartments contracts is not worded as clearly as it might be, I consider that nonetheless on a proper construction it requires Matila to erect and complete the individual apartments:(i) at its own costs;

(ii) in an efficient and workmanlike manner with proper materials and so as to be fit for habitation;

(iii) with reasonable expedition;

(iv) in accordance with the planning permission (which would by necessary implication include any approved amendment to the planning permission); (iv) in accordance with the plans approved for planning and Building Regulations purposes (which would again by necessary implication include any approved amendments);

(v) in accordance with the CPUK specification.

[76]Whilst I have already noted that clause 2 refers specifically to plans submitted at the time of the original planning application, and identified on the planning permission, but not to the plans subsequently lodged and approved by the planning authority as amendments, I am satisfied that on a true construction of the clause the obvious intention of the parties was that the apartments should be completed in accordance with the terms of the planning permission as amended if that occurred, and thus in accordance with any approved amendments and/or approved plans submitted. I am also satisfied that although the ‘specification’ referred to in clause 2 is nowhere defined, I consider that when construed against the factual matrix, in particular the letter dated 13/3/07 which was clearly intended to have effect, it is quite clear that the ‘specification’ must, objectively speaking, have been intended to be a reference to the CPUK specification.

[77]In contrast, Lisheen’s position as put to Phil Collins in cross-examination and as explained by Brendan Clarke and Paul Clarke in their evidence was that they understood that the specification was additionally to be found in the marketing brochure produced by Work Sharp. I have already concluded that the Clarke brothers were provided with this brochure, but that this was without Matila’s authorisation or knowledge.

[78]However in my judgment there is no basis for believing that the Work Sharp brochure specification could form part of the contract specification. That would be inconsistent with the wording of clause 2, which refers to a specification in the singular. Furthermore, the brochure clearly emanates from Work Sharp as opposed to Matila, and cannot sensibly in my judgment have been understood by the Defendants to have been a contractual specification applicable to their contractual relationship with Matila. There is no evidence to suggest that at any time prior to entry into the original or revised residential apartments contracts there was any discussion or agreement between Phil Collins and the Clarke brothers or between their solicitors to this effect. Whilst I appreciate that Brendan Clarke and Paul Clarke genuinely believed that this was what they were going to get, I am not satisfied either that this belief was one which, considered objectively, was a reasonable one or was induced by anything said or done by Matila or anyone for whom Matila is responsible.

[79]I must go on to consider the clause 4 obligation. As Mr Oughton submits, the question as to whether or not Matila is entitled to serve and Lisheen is obliged to comply with a completion notice under clause 4(a) is different from the question as to whether or not Matila has complied strictly with all of its obligations under clause 2, because under clause 4(a) the essential requirement is that the premises have been ‘completed for occupation’ and because under clause 10 Lisheen is not entitled to rely on ‘omissions and commissions of a minor nature which do not inconvenience [it] in the use of the premises’ nor on ‘works yet to be completed by [Matila] in respect of the common areas’ as a ground for refusing to accept notice of completion. In that regard, I am satisfied that incomplete works would include works which had been undertaken but left incomplete or in a defective state.

[80]Mr Oughton has submitted that because it is a pre-condition of service of a clause 4 notice that there should be an NHBC Buildmark Offer, and because the notice is to be served by a solicitor, it is the equivalent of an architect’s certificate which is to be regarded as conclusive. I do not accept that submission. There is an obvious difference between a notice and a certificate, not least in this case because the notice is to be served by Matila’s solicitor, who is not – unlike an architect appointed to act as such under a standard form building contract when deciding whether or not to issue a certificate – required to act independently of his employer when deciding whether or not it is proper to serve a notice. Although Mr Oughton submits, and Mr Machin does not disagree, that Matila’s solicitor is professionally obliged not to act capriciously or in bad faith, that does not seem to me to be an answer to the point that in serving a notice Matila’s solicitor is essentially acting on his client’s instructions rather than exercising his own independent judgment. Mr Oughton also submits that since the notice cannot be served unless and until the NHBC has issued a cover note, which could only happen following a final inspection by an approved NHBC inspector who was satisfied with what he observed, that shows the intention that the notice should be conclusive. I am unable to accept that argument, firstly because the wording of clause 4 shows clearly that that this is a pre-condition to service of a clause 4 notice rather than an independent certification of the state of completion of the apartment, and secondly because it does not address the second pre-condition of connection of the mains electricity supply, upon which the solicitor could hardly be in a position to pronounce. There is nothing else in the contract which indicates that the notice is to have the effect of a certificate or, even if it is, that it is not capable of review by the courts in the event of a dispute.

[81]Mr Oughton has also submitted that since the obligation in clause 2 of each contract relates only to the ‘premises’, which are described in clause 1 by reference to the schedule and the draft leases as being the individual apartment, then it is apparent that the obligation can only relate to the individual apartment, such that there is no obligation or basis for complaint in relation to any defect or omission in relation to the common parts. Although Mr Machin did not explicitly take issue with this submission, it is implicit in his clients’ case that they consider that defects or omissions in relation to the common parts justify non-completion, so that I must consider this argument on its merits. Whilst I accept that the premises are defined as Mr Oughton has said, I do not accept the submission that this necessarily restricts the scope and extent of the obligation under clause 2. If that was the case there would be no need to have the ‘common areas’ rider in clause 10, nor would the undertaking in clause 10 have anything on which it could bite in relation to any non-completion of the common areas. It would also, given that the definition of the premises in the draft lease excludes the structure, mean that Lisheen would have no remedy (either by refusing to complete or in damages) in the event of a major defect in the structure of the individual apartment. It would also mean that Lisheen would have no such remedy in the event of a major defect relating to the common areas. Whilst I can see that there might have been scope for interesting arguments as to how far Lisheen, if it had simply been an individual purchaser of an individual apartment, could claim for damages in relation to defects in the structure or common areas where under the lease the responsibility for remedying such would lie with the management company, those arguments do not arise in this case since:(a) There is the obligation to provide an express undertaking under clause 10.

(b) Lisheen was the purchaser of all of the apartments;

(c) It is common ground that as well as entering into the individual agreements Matila and Lisheen also entered into an agreement whereby Lisheen was entitled to have transferred to itself the freehold reversion of the whole building on completing the individual leases.

[82]In my judgment I am entitled to and should take into account when construing the nature and extent of the obligations imposed by the residential apartments contracts that contracting to acquire the whole development en bloc is very different from contracting to acquire one, or even several, apartments as separate units off plan. In this case the contracts must all be construed in their factual matrix which includes, as is common ground, the fact that Lisheen was purchasing the whole development en bloc and, also, would likely acquire the freehold reversion once it had completed the individual purchases.

[83]For present purposes, it is sufficient for me to say that in my judgment the obligation in paragraph 2 to complete the apartment so that it is fit for habitation and the pre-condition to completion in clause 4(a) that the apartment is completed for occupation must mean, when read with clause 10, and in the commercial context, that any defect or omission in the structure or common areas which(a) amounts to a breach of the obligations imposed by clause 2, and

(b) is sufficiently serious that it results in the apartment being unfit or incomplete for habitation would justify Lisheen in refusing to complete. Otherwise, they would not. I observe that a similar argument by the vendor was rejected by Ramsey J in the case of Donnelly v Weybridge Construction

[2006] EWHC 2678 (TCC)

, at paragraphs 147 - 150. In that case Ramsey J had to consider the construction of a clause which was similar but not identical to the wording used in clause 10 in this case. He held (in paragraphs 207 – 208) that: (i) the intention of the clause was to prevent completion from being held up whilst the landlord satisfied the tenant that every defect had been completed; (ii) the defect would not be minor if it unreasonably interfered with the use of the flat (taking into consideration matters such as the amount of remedial work required to remedy the defect, the time which would be needed to undertake the remedial work, and the effect on the purchaser of that work being done post-completion); (iii) consideration should need to be given to the defects both individually and overall. I respectfully agree with his conclusions, and follow the same approach in this judgment.

My conclusions in relation to Phil Collins and Eugene Clarke’s evidence

[84]On 17/10/08 Eugene Clarke visited site and produced revision 5 of his snagging list. On 24/10/08 he produced what is described as a ‘provisional cost schedule’ the purpose of which was to identify and cost a number of items under the headings:(1) ‘main outstanding work items’;

(2) ‘contracts documents items’;

(3) ‘general snagging items’;

(4) ‘design fees’; and

(5) ‘other cost items’. The schedule totals £200,730.

[85]The outstanding works referred to in the costs schedule, incorporating as it does the items in the snagging list, form a major plank in support of the Defendants’ case that the residential apartments were not ‘completed for occupation’ as at 14/10/08 so that Matila was not entitled to serve a completion notice under clause 4(a) of the residential apartment contracts on that date. The snagging list produced by Eugene Clarke was attached to the Defence and Counterclaim as was the costs schedule. It followed that the issue of the accuracy or otherwise of these documents formed a significant element of the cross-examination both of Phil Collins and Eugene Clarke, and I should therefore address it at this stage.

[86]So far as my assessment of the witnesses on this aspect of the case is concerned, I considered Phil Collins to be overall an impressive witness, who appeared to me to give evidence honestly and openly. He was willing to accept on numerous occasions under cross-examination that there were a number of items of defective and incomplete work. He did not seem to me to be determined to minimise the nature or extent of any defects or omissions. Where he disputed individual items he appeared to do so on good grounds. He seemed to have a very clear knowledge of the development, explained by the fact that he clearly took a very hands-on role in relation to the completion of the development and its subsequent management.

[87]When cross-examined about the cost schedule his primary point was that many of the individual items represented what he described as Lisheen’s ‘wish list’, by which he meant works which Matila was not contractually obliged to undertake but which Lisheen had requested. He did accept that in some instances Matila had agreed to undertake further works at its own expense rather than standing on its strict rights. His position was that Matila’s obligations were governed by the CPUK specification, which – as I have already concluded – was correct as a matter of contract. In contrast the Defendants’ position was that Matila’s obligations were governed by the specification in the Work Sharp brochure, which I have already concluded was not correct. Even if however that conclusion was wrong:(a) The relevant part of the brochure itself stated that it was a guide only and might be subject to change.

(b) I accept Phil Collins’ evidence that the only substantial non-optional items in the brochure which were not in fact provided were kitchen under unit lighting and a security system. The Defendants have never complained about the non-provision of either.

[88]In contrast to my assessment of Phil Collins, I am afraid that I was considerably less impressed by Eugene Clarke as a witness, and with the reliability of his cost schedule or his snagging lists. So far as his reliability as a witness was concerned, I gained the strong impression that he had very little detailed or independent recollection of the events of 2008, and that the documents which he had prepared at the time were largely intended to promote the case of his uncles the Defendants than accurately to record the factual position. The same was true in my judgment in his evidence at trial. Thus:(1) Before confirming his witness statement he indicated that he wished to change paragraph 5, where he had stated that on 17/10/98 ‘the electricity was now on and the junction box had been removed from the thoroughfare’, to state that the junction box was still in position. The reason he gave for wishing to change his evidence was that in the snagging schedule he had noted (p3) that the box was still in position. However his snagging list had of course been available to him when he made his witness statement, and he was unable to explain why his witness statement had said what it did. It did not seem to me that he had any genuine independent recollection of the position as at 17/10/08, and I formed the strong suspicion that he was more intent on bolstering his uncles’ position, especially their reliance on photographs which had been put to Phil Collins on the basis that they were taken on 17/10/08, which showed the box as still being in situ. However in cross-examination he admitted that he had not written the date on the photographs, and indeed he seemed to me to know very little about the photographs.

(2) At the outset of his cross-examination he was unable to recall much if anything about the circumstances in which he had initially agreed with his uncles to buy and subsequently decided not to proceed with the purchase of apartment 6. It seemed to me that either his recollection was surprisingly poor, this after all being a substantial undertaking for a relatively young man buying an expensive apartment off-plan from his uncles, or – which I consider more likely – being unwilling to give evidence which he considered might harm his uncles’ defence. That, in my judgment, was his reason for not admitting that his reason for not proceeding was because of his perception that the market had turned. He would not accept this even when he was shown the letter from his solicitors communicating his decision which specifically referred to the ‘economic climate’ .

(3) It was also evident that at the time he produced the cost schedule he had no real knowledge of the contractual position, in particular the contract specification. Thus it appeared that he had referred to documents other than the CPUK specification and architects’ drawings when preparing the schedule and, although he was unable to recall which, I am satisfied that he also referred to the Work Sharp brochure. Significantly, he admitted that the purpose of the cost schedule was for his uncles to use in putting to Phil Collins a proposal for them to take over and complete the outstanding works at their own expense, so that the purpose of the exercise was to obtain a price reduction to reflect that cost. It was quite clear that the costs estimates he had included were extremely high and although he was unwilling to admit this, I have no doubt that they were deliberately inflated for his uncles to use them as a starting point in negotiations. He had also made mistakes in his analysis of the contract documents; thus he had mistakenly assumed that drawing 19 required the full length cladding shown to the inner side of the 1st, 2nd and 3rd floor apartments on the front elevation to be powder coated horizontal cladding, whereas in fact they showed timber cladding. It appeared that his confusion originated from the fact that the Work Sharp brochure showed a different design, with the meshed screens running the full length of the balcony and individual coloured powder coated panels whereas the drawing showed timber cladding.

(4) The snagging schedule was not, in my judgment, a reliable historical document. Thus the original version was dated 17/6/08. There were then a number of revisions, each apparently following a further inspection by Eugene Clarke. It is clear that it was added to following each inspection. However it is also clear that it was not consistently or conscientiously updated. Thus the title of the column headed ‘comments as at 29/7/08’ was not revised to record the further inspection dates, even though the text in that column showed that it had been updated in certain respects. Confusingly, however, on at least one occasion the entry still read ‘not complete’ even though the item had been highlighted to show that it was complete.

(5) In his witness statement Eugene Clarke referred to a final snagging visit on 30/10/08 and to a final snagging list produced following that inspection, but the list was not exhibited nor disclosed, and nothing of relevance was said to arise from it. It was only produced by the Defendants after Eugene Clarke had finished giving evidence. Mr Machin now places considerable reliance on that list to seek to demonstrate that it was only between 17/10/08 and 31/10/08 that the mains electrical supply was connected, because the ‘comments as at 29/7/08’ column against that item had been altered from ‘not done’ to ‘n/a’. However, as Mr Oughton observed, there was an inconsistency there because the 17/10/08 version (which was not provided in colour) appeared to have been shaded which would indicate that that item of work was complete at that date. Again, I was left with the impression that the schedule had been updated partially on different occasions, with the result that it can not be relied upon as a completely accurate contemporaneous record.

Connection of the mains electricity supply

[89]There does not appear to be any direct contemporaneous documentary evidence about this. However, Phil Collins did exhibit to his witness statement an e-mail sent by Mr Ovenden of Ovenden Associates on 14/12/09, copied to Phil Collins, which said:

‘Have trawled through e-mails to retrieve dates for electrical connections as follows: Retail Cabled by 30th May 2008 Meters fitted by 16th June 2008 No actual energisation date given, but will be within a couple of weeks of meter fitting. Residential Substation energised 12th August 2008. Meters started being fitted for residential and landlord’s supply 21st August 2008. Test and commission by electrical contractor started 1st September 2008 to allow for handover – completed within 2 weeks allowing full use of apartments. Old temporary supply in accessway/ entrance – meter removed 2nd October 2008 to allow the cabinet to be removed and area made good shortly thereafter.’

[90]Although the Defendants did not agree this as an accurate record, and although the claimants did not produce in evidence the e-mails referred to or tender a witness statement from or call Mr Ovenden to give evidence, nonetheless this appears to me to be a credible piece of evidence. In particular:(i) it is not contrary to any other contemporaneous documentary evidence;

(ii) Mr Ovenden has clearly distinguished between where he is able from e-mails available to him to give precise dates and where he is not;

(iii) there is no obvious reason why the information provided, especially where it gives precise dates, should be inaccurate, coming as it seems to do from contemporaneous e-mails sent to the contract administrator. It is also consistent with the fact that NHBC notices and Building Regulations Certificates were issued in early October 2008; it appears unlikely that Matila would have requested an inspection and that these documents would have been issued if the mains electrical supply was not connected. It would also appear unlikely that Phil Collins would have instructed BKG to draw up and serve a clause 4 completion notice if in fact the mains electrical supply was not connected, or that there would not have been a reply from Birchall Blackburn taking issue with that if in fact as at 17/10/08 the Defendants were aware from Eugene Clarke’s snagging list of that date that the electrical supply had not been connected.

[91]That conclusion is also consistent with the evidence of Eugene Clarke in paragraph 8 of his witness statement, which he did not withdraw in examination in chief before confirming his witness statement as true, that as at 17/10/08 ‘the electricity was now on’. What he specifically withdrew was the further statement that at that time ‘the junction box had been removed from the thoroughfare’. Indeed that also appears consistent with his further evidence on this point in paragraph 8, consistent with his snagging list, that he had observed shrinkage and cracking which he said was due to the effect of the building being heated. Since the heating system is an electrical system, it would appear that this could only have happened once the full electricity supply had been provided. Although under cross-examination he attempted to explain this away by saying that shrinkage and cracking could happen within ‘days’ from the heating being turned on, it seems inherently unlikely in my judgment that the mains electricity supply could be connected and the heating turned on not earlier than 14/10/08 and the property to suffer consequential drying out cracks within 3 days on 17/10/08.

[92]So far as other evidence is concerned, this point was not addressed in the witness statements of Brendan Clarke, Paul Clarke or Rosaleen Clarke, and I am satisfied that they have no clear recollection of the matter. Phil Collins in his witness statement effectively adopted the dates given by Mr Ovenden in his witness statement and, again, I considered that it was unlikely that he had any direct detailed recollection, other than that the supply had been connected before the NHBC notice and Building Regulations certificate were issued and before the clause 4 notice was sent. I have already referred to the photographs put to Phil Collins as showing that the junction box was still in position on 17/10/08. It is difficult to come to a clear conclusion about this, given that the photographs have not been digitally dated and the dates written on them by someone other than their taker, i.e. Eugene Clarke. It is irrelevant anyway, since even if the junction box was not removed and the area tidied up until after 17/10/08, that does not affect the issue as to when the electricity supply was connected. On the balance of probabilities if I had to decide I would conclude by reference to the re-examination of Phil Collins and the cross-examination of Eugene Clarke that it most likely that the photographs had not been taken on 17/10/08, and that they had been taken well before that, probably in July 2008.

Individual items in the cost schedule and 17/10/08 snagging list

[93]I now turn to the individual items in the cost schedule and snagging list. There are of course other matters relied upon by the Defendants, contained in the Scott Schedule served by the Defendants in compliance with the order made by Judge Hodge QC, which have been addressed by the experts. I accept that before I can reach a conclusion about the position as at 14/10/08 I must consider these matters as well. I do so at a later stage in this judgment only for convenience, and not because I consider that they are irrelevant to the position as at 14/10/08. I should also record that in his closing submissions Mr Oughton complained that I should not have regard to matters contained in the costs schedule and snagging list but not carried over into the Scott Schedule. Whilst strictly speaking that may be a correct analysis of the intention behind Judge Hodge’s order, since these issues have been fully canvassed during trial and since it is clear that the Defendants are relying on all of them individually and collectively, I take the view that the proper course is to consider them all.

Items 1(a) & (b)

(a) & (b)

[94]These complaints relate to the cedar cladding to the sides of the balconies to 6 apartments to the front elevation. It appears that Eugene Clarke had assumed, as I have held wrongly, that the Work Sharp brochure was a contractual document and thus assumed that what was required was powder coated panels, and that the CPUK specification, showing cedar cladding was a variation. However it is clear from the CPUK specification and drawing 151 that the contractual specification provided for cedar cladding at this location.

[95]There is no evidence to support the complaint that this cedar cladding required sheeting to the rear or that it is too flimsy to provide sufficient fall protection. Mr Moran concluded that this complaint was not made out, and Mr McLachlan did not contradict him.

[96]There was also no contractual requirement to stain or varnish the cedar cladding. Phil Collins said, and I accept, that the design envisaged that the cedar would be left in its natural condition and fade over time, which apart from anything else would limit any ongoing maintenance. Phil Collins agreed that there was some water staining in these locations, and that Matila did agree to and did varnish and stain the affected areas at its own expense. I accept this evidence, so that I am satisfied that agreement was reached in relation to this defect, which was duly remedied. If it had not been rectified as at 14/10/08, then it was in my judgment a minor defect within clause 10.

[97]It also emerged only at the end of Eugene Clarke’s evidence in response to a question from me that the remedial work referred to in item 1(b) was in fact an alternative to that referred to in item 1(a), yet in the cost schedule they had been treated as cumulative and thus the cost claimed twice over.

Item 1(c)

[98]When asked about this Phil Collins reasonably accepted that, whilst he had no particular knowledge of the complaint, he assumed that it referred to damage to the powder coated cladding and that, if it had been present, it would have been notified by him to CPUK and remedied. I note that this complaint appears to be echoed at page 3 of the snagging list. I am satisfied, particularly given that it is not referred to in the expert evidence, that this defect if it existed was remedied.

[99]Although the schedule suggests that this area of cladding required replacement at a cost of £4,400, this is illustrative in my judgment of Eugene Clarke’s approach, which was grossly to over-estimate the extent and cost of any necessary remedial works in order, I am satisfied, to inflate this claim for negotiating purposes. I do not accept Eugene Clarke’s evidence in relation to costings.

[100]I am satisfied therefore that although this was an item of outstanding work, it is not an item on which Lisheen can rely to justify a refusal to complete because it is a minor item under clause 10 and/or an incomplete common area item under clause 10.

Item 1(d)

[101]Eugene Clarke’s complaint was that the flags in this location were laid too early on so that they had become damaged and discoloured by builders’ traffic. However I accept Phil Collins’ evidence that the flagging was not heavily damaged or discoloured, that initially there was an obvious difference because the flags around where the junction box had been were laid later and looked different in colour, but that over time they came to look the same, and that they have not been altered since. Mr Moran said in the schedule that they were in a satisfactory condition and Mr McLachlan did not disagree.

[102]If I am wrong about this, then nonetheless in my judgment it is a minor item or an incomplete common area item under clause 10.

Items 1(e) & (f)

(e) & (f)

[103]It appears to be common ground, and if not I accept Phil Collins’ evidence to this effect, that this wall does not form part of the development itself, and formed part of the adjacent property, that it was comprised of old brickwork which Matila was not obliged to remedy, but that nonetheless Matila did subsequently at its own expense sand and cement render the area.

[104]Whilst Lisheen complains that it should have been completed in monocoque render, and complains that the use of sand and cement render is contrary to what was agreed at a meeting on 10/7/08, I am satisfied that this is not something which it can insist on as a matter of contract. It seems to me that this was a point which Brendan Clarke was particularly alert to given his expertise as a plastering contractor but, if he had wanted to ensure that this was provided under the contract, it would have been necessary for him to instruct it and pay for it as a variation under clause 13. I also note that although it is included in the schedule, it is not noted by either expert as a defect.

[105]If I am wrong about this, then nonetheless in my judgment it is a minor item or an incomplete common area item under clause 10.

Items 1(g) & (h)

(g) & (h)

[106]This complaint relates to the provision of vinyl flooring to the common staircase serving the apartments. Phil Collins’ evidence, consistent with paragraph 7.3 of the CPUK specification, was that there was no obligation to provide any finish to the stairwell, but that Matila subsequently provided a vinyl flooring at its own expense and on the basis that the specialist flooring contractor it approached confirmed that vinyl was appropriate for a location such as this. It is clear from the minutes of the July 2008 meetings that this was raised as an issue, but there is no evidence that Phil Collins ever agreed to provide a resin finish, although that is clearly what Lisheen wanted him to do. Again, however, they were not prepared to pay for it as a variation, and I am satisfied that there was no contractual obligation on Matila to provide it at its expense.

[107]I also accept Phil Collins’ evidence that there is no evidence of ponding to the vinyl finish. Mr Moran considered that the choice of vinyl was acceptable, and neither he nor Mr McLachlan noted evidence of ponding.

[108]If I am wrong about this, then nonetheless in my judgment it is a minor item or an incomplete common area item under clause 10.

Item 1(j)

[109]It was not apparent that either Phil Collins or Eugene Clarke were aware what was meant by this complaint. I am not satisfied that any complaint is made out.

[110]If I am wrong about this, then nonetheless in my judgment it is a minor item or an incomplete common area item under clause 10.

Item 1(k)

[111]Phil Collins accepted that the lift keypads became rusted and gave evidence that replacements were ordered and fitted. I accept that this item was still outstanding as at 14 October 2008, that it was rectified subsequently.

[112]In my judgment it is a minor item or an incomplete common area item under clause 10.

Item 1(l)

[113]Phil Collins accepted that certain doors required additional threshold detailing to prevent water ingress, and that this was done. He denied that any doors needed replacing. I accept his evidence, and thus whilst I accept that there was a defect as at October 2008, it was rectified subsequently.

[114]In my judgment it is a minor item.

Item 1(m)

[115]During cross-examination of Eugene Clarke it became clear that the real complaint here was that the hardwood decking had been left in its natural state rather than stained. However by reference to section 17.2 of the CPUK specification it is clear that there was no contractual requirement for the hardwood decking to this communal area to be stained or varnished or otherwise treated in any way. I accept Phil Collins’ evidence that the design envisaged that the hardwood did not need protection, would age naturally, and because not treated would not need maintenance.

[116]Phil Collins accepted later in his evidence that certain lengths had to be replaced because they were damaged when the render around the lift enclosures was hacked off, but he denied (and I accept this evidence) that this resulted in an unacceptable patchwork appearance or a need to replace or stain the whole area. I accept Phil Collins’ evidence that the decking has not become unsightly and that, insofar as regular cleaning is required, that is something which can and should be undertaken as part of the normal maintenance programme.

[117]If I am wrong about this, then nonetheless in my judgment it is a minor item or an incomplete common area item under clause 10.

Item 1(p)

[118]The evidence of Eugene Clarke and Brendan Clarke was that the decking boards had distorted so that they bowed upwards along their width. In contrast, Phil Collins’ evidence was that some minor adjustment of the decking boards in the first floor communal area was necessary and was attended to, but that otherwise the decking is as is and remains in an acceptable condition. Mr Moran observed 2 minor areas of loose decking, but considered that this was a minor matter. Mr McLachlan said that he had observed a number of areas of poor workmanship with loose sections and where a large number of fixing screws had been used.

[119]There is no photographic evidence showing that this was anything other than a minor problem as at October 2008 or even at the present time, and I prefer the evidence of Phil Collins and Mr Moran.

[120]I conclude therefore that this is a minor item or an incomplete common area item under clause 10.

Items 1(q) & (r)

(q) & (r)

[121]So far as the complaints about the lighting to the car park and retail unit lobby are concerned, Phil Collins’ evidence was that what was provided to the car park area was 4 large sodium lights, which are perfectly adequate to serve what is not an underground or fully enclosed area but a ground floor ‘undercroft’ car park which does benefit from some natural lighting. He also denied that the lighting to the lobby was inadequate. He said, and I accept, that the lighting has not been revised since it was installed, and I note that the experts do not suggest that the lighting is inadequate.

[122]I accept his evidence and am satisfied that this complaint has not been made out. If I am wrong about this, then nonetheless in my judgment it is a minor item or an incomplete common area item under clause 10.

Item 1(s)

[123]I accept Phil Collins’ evidence that this complaint refers to damage to the pavement at the rear of the premises, caused when a skip was delivered and sited there, so that it does not affect the development as such, and also that there is no continuing disrepair. I note that the experts share this latter view.

[124]I am satisfied that any damage did not occur within the curtilage of The Edge, so is not a matter of complaint which can be raised in this case. If I am wrong about that, then nonetheless in my judgment it is a minor item or an incomplete common area item under clause 10.

Item 1(t)

[125]I accept Phil Collins’ evidence, supported by the photographs, that the entrance lobby is adequately lighted by artificial lighting. That is especially so given that it is not completely enclosed, and thus does benefit from some natural lighting, and given that there is a 2.5m x 4m glazed panel which also allows natural lighting to enter.

[126]If I am wrong about this, then nonetheless in my judgment it is a minor item or an incomplete common area item under clause 10.

Item 1(u)

[127]My conclusions in relation to this item are broadly the same as my conclusions in relation to item 1(m). Section 17.3 of the CPUK specification applies here, and I am satisfied that there was no contractual requirement for the hardwood decking to the individual apartments to be stained. I am satisfied that there is no question of the decking needing cleaning as at October 2008. Any cleaning would be part of normal maintenance by the occupiers.

[128]If I am wrong about this, and it is a defect, then it falls within clause 10 as a minor item.

Item 1(v)

[129]The CPUK specification does not, so far as I can see, specify what is to be used to divide the individual apartments’ roof terraces. I accept Phil Collins’ evidence, consistent with the minutes of the July meetings and indeed confirmed by Rosaleen Clarke, that there was some initial discussion about this and that it was subsequently agreed on site with Brendan Clarke and Rosie Clarke that a galvanised steel wrought iron fence should be provided, and that this was duly done.

[130]This is also a particularly extreme example of a manifestly excessive cost estimate being provided by Eugene Clarke. The estimated cost of £9,300 for this item does seem extraordinarily high, and I accept Phil Collins’ evidence that he was able to have the fencing supplied and installed for circa £2,500.

[131]If I am wrong about this then it falls within clause 10, as a minor item.

Item 2(a)

[132]It is clear that the CPUK specification called for raised planters in brickwork or blockwork to be constructed on the 1st floor communal area, whereas what was provided was plants in individual tubs. Phil Collins said that the reason for this was to provide greater flexibility in relation to the use of the communal area and to enable the plants to be moved to benefit from the sunshine. I accept this evidence. There was provision in the contract (clause 11) for Matila to make amendments to the specification in appropriate circumstances, and I am satisfied that this falls within that clause. If I am wrong about that and it is a defect, then in my judgment it falls within clause 10, as an incomplete common area item.

[133]This is yet another example of Eugene Clarke providing a cost estimate, in this case of £21,000, which is I am satisfied out of all proportion to the realistic cost of rectification. When asked about this he attempted to defend his estimate by suggesting that it was because there would need to be additional steelwork to support the brick or blockwork, but that I am satisfied was complete speculation on his part with the intent of inflating the figures for his uncles’ benefit.

Item 2(c)

[134]The CPUK specification requires wall light positions to be provided, but not wall lights themselves, therefore this complaint is not made out.

[135]If I am wrong about this, nonetheless if it is a defect it falls within clause 10, as a minor item, in that there is no suggestion that the bedrooms were not lit at all, only that they did not have these side lights.

Item 2(d)

[136]The CPUK specification requires 4 LED uplighters to balconies; Phil Collins’ evidence was that appropriate low energy ‘bulkhead’ light fittings were supplied instead. I accept this evidence and conclude that this is an amendment under clause 11 which Matila was entitled to make. If I am wrong about this, then nonetheless in my judgment it is a minor item under clause 10.

Item 2(e)

[137]I accept Phil Collins’ evidence that exit emergency lighting was provided; if it had not been then it is difficult to see the building inspector approving the works.

Item 2(f)

[138]This is a reference to item 21.3 of the CPUK specification, and it does appear therefore that in this case Phil Collins was in error when he said in evidence that floor mounted floodlights did not form part of the specification. Nonetheless I am satisfied, as I have already said, that the lighting provided overall in the car park was adequate. Thus even though floor mounted floodlights were not provided that is something which I consider falls within clause 11 or, if it is a defect, falls within clause 10 as a minor item and/or as an incomplete common area item.

Items 2(g)-(m)

(g) -(m)

[139]These individual lighting items are, I am satisfied, not included in the CPUK specification, and thus there can be no complaint that they were not provided. Indeed it would appear that the Lutron items are only in the Word Sharp specification as optional items.

Item 2(n)

[140]I accept Phil Collins’ evidence that all glass fitted was kitemarked, supported as it was by Mr Moran. Mr McLachlan agreed with Mr Moran, and thus did not seek to support the complaint that what had been fitted was not kitemarked.

Item 2(p)

[141]Phil Collins was unable to understand what this referred to, and Eugene Clarke was unable to elucidate when asked. I therefore reject this item.

Item 3

[142]This incorporates by reference the snagging list produced by Eugene Clarke. It is true that this contains a large number of items, but the majority either duplicate items included in sections 1 and 2 of the costs schedule or are items recorded on the face of the list itself as having already been completed by 17/10/08.

[143]So far as the remainder are concerned, although there were some which Phil Collins did not accept, in the main he was willing to accept that if they had been noted by Eugene Clarke and included in the schedule then they would probably have been present as snagging items, notified to him and by him to CPUK, which were in hand and which were in due course remedied as part of the ongoing snagging process. I accept that evidence.

[144]Particular items of significance which were explored in evidence include the following:

[145]: Efflorescence to brickwork. Phil Collins agreed that this was a problem and that Matila had linseed oil applied to the external brickwork to cover over the visual signs. If this was still in existence as at 14/10/08 and amounted to a defect, noting as I do that efflorescence is a naturally occurring phenomenon, then in my judgment it falls within clause 10, as a minor item and/or as an incomplete common area item.

[146]: Phil Collins agreed there was a problem with rainwater ingress to a number of windows and doors due to insufficient sealing, and that this was remedied as soon as it was observed. I accept this evidence. If this problem was still in existence as at 14/10/08, I am satisfied that it falls within clause 10, as a minor item.

[147]: Phil Collins accepted that there were some problems with the quality of the screed finish in apartment 21 (one of the 2 show apartments, the other being number 1), but that this was remedied, and I accept this evidence. There was also some discussion about whether it was Lisheen’s marketing agents who were responsible for alterations to the kitchens of the show apartments, and I accept Phil Collins’ evidence that they were. If they are defects, then they fall within clause 10, as minor items.

[148]: Phil Collins was asked about missing carpeting to stairs. He said that this related to the stairs to the upstairs ‘pods’ in apartments 21-25 and observed, correctly, that item 7.4 of the CPUK specification omitted carpeting in this area.

[149]: In relation to one issue, where it was said that a number of the cookers were not working, Phil Collins’ evidence, which I accept, was that he discovered that the simple explanation for this was that approximately 20% of the cookers had not had the unit electrical sockets switched on. I am satisfied there was no more serious problem with the electrical supply.

[150]It was suggested to Phil Collins that the overall presence of these ‘snagging’ items adversely affected the marketability of the apartments. He disputed this, explaining that firstly it was always Lisheen’s plan to market and sell units off-plan (i.e. before they had been completed) and secondly in any event the show apartments could be used to show prospective purchasers the quality of the development. His evidence was that the development did indeed present as a high quality development, and I accept that evidence.

[151]This raises the question of the totality of the matters which were being complained about by the Defendants as at October 2008. In my judgment, looked at in totality and in the commercial context, I am satisfied that overall the picture is of a development completed ready for use and occupation, and that all outstanding matters as at October 2008 were either matters which related to the common areas or, which were, in the context of the overall development, minor. In both cases they could not therefore be relied upon as justifying non-completion. I reach this last conclusion on the basis of the cost schedule and snagging schedule; I will have to revisit it when I come – as I do – to consider the contents of the Scott Schedule and the expert evidence relating thereto, particularly to the significant issue of fire safety.

October 2008 to 23 December 2008

[152]On 3/11/08 Birchall Blackburn e-mailed BKG, referring to the snagging list and costs schedule, and suggesting that their clients would be willing to proceed on the basis of £100,000 being deducted from the completion monies. Through November 2008 the process of dealing with the conveyancing documentation and the warranties required by the Bank continued as did negotiations in relation to a proposed discount from the purchase price. I am satisfied that the Clarke brothers still genuinely intended to complete the transaction at this stage, and indeed there is uncontradicted evidence to show that they transmitted a further substantial sum to their solicitors in readiness for completion. However on 21/11/08 the Bank’s solicitors dealt what appears to have been a mortal blow by issuing a formal report advising that in their opinion the warranties provided were so deficient that it would be unwise for the Bank to proceed with the transaction. Although this provoked a flurry of further exchanges in an attempt to satisfy the solicitors, that activity did not achieve success. Accordingly, by the end of November 2008 the transaction had not been completed and the offer of finance from the Bank of Ireland had expired.

[153]I was told by the Clarke brothers, and I have no reason to doubt this, that the result was that the local branch with whom they had dealt advised them that the matter was now out of their hands and would have to be referred to head office. The result was that subsequently a revised offer was notified to them, which provided for a significantly lesser sum being advanced to them and on significantly more onerous terms than had previously been made available. This, I accept, was probably as a result of the Bank’s increased nervousness about the downturn in the property market and their unwillingness to exceed a stated loan to value ratio. It is, I think, clear from the letter from the Bank dated 22/12/08 confirming that the Bank was not prepared to extend the original offer beyond 30/11/08 ‘given the contraction in the property market and the general economic downturn’ that the Bank was quite relieved to have been able to withdraw from the proposed transaction on the terms in its original offer.

[154]Accordingly, unless the Clarke brothers could fund the difference themselves, they would be unable to complete. Brendan Clarke said in cross-examination that the Bank was asking them to put in more than they could afford. Accordingly, they were simply unable to proceed with the transaction.

[155]It is true that the Defendants have put in little hard evidence about all of this. Initially they had not disclosed the written offers of finance from the Bank of Ireland, but when this was requested during the course of the trial it was provided without difficulty or delay, and I am satisfied that the omission was simply oversight on their part. However it is still true that the subsequent revised offer was not provided, nor did the Defendants provide any documentary evidence as to their means and their ability either in 2008 or as at the present date to bridge the funding gap. There was also no evidence from them that they had approached any alternative funders, either at this time or subsequently. When I asked Paul Clarke about this he said that since the Bank of Ireland was the business bankers to both his business and Brendan Clarke’s business they believed there was no prospect of any other funder agreeing to fund them if the Bank of Ireland was unwilling to do so. I am satisfied that this was a genuine statement of their thinking at the time. I also accept, as the evidence makes clears, that right up until the very end they had a genuine desire to complete, and that but for the Bank of Ireland pulling the plug they would have done so. I regard it as intrinsically unlikely, having regard to the disclosed documentation and having had the benefit of listening to the Clarke brothers give evidence and watch them as they did so, that they would have wanted to walk away from this venture had they thought that there was any realistic possibility that they could have continued with it, even on less advantageous terms. They have sunk substantial amounts into this venture in payment of deposits and otherwise, and I cannot conceive that they would willingly have wanted to jeopardise those monies by walking away from the venture. I am satisfied that this is not a case where they have taken a calculated decision that their best prospect of recovering their personal investment is to contest this case on spurious grounds rather than raising extra funding and completing the development.

[156]I should say at this point that there is an issue as between Phil Collins and Brendan Clarke as to whether the latter informed the former of the problem at the end of November or not until late December 2008. My conclusion is that whilst Brendan Clarke may have mentioned this as a potential difficulty at the earlier stage, it was not until the later stage that it was made clear to Phil Collins that there was no possibility of the Clarke brothers proceeding. I am satisfied that if that had been made plain earlier then there would have been some reference to it in solicitors’ correspondence at that earlier stage. Instead, it appears from BKG’s file note of 7/1/09 that this was the first time that Birchall Blackburn made them aware that the Bank had "pulled the plug". This was formally confirmed by an e-mail from Birchall Blackburn dated 9/1/09. I am satisfied that the reason why Brendan Clarke did not mention this earlier is that through December 2008 he was continuing to negotiate with the Bank of Ireland to see if they would be prepared to advance sufficient to enable the contracts to be completed, and that it was only when he realised that this would not be possible that he asked the bank to confirm the position in writing, which they did on 22/12/08, and that it was not until the new year that, having decided that they were simply unable to proceed, Matila was advised accordingly.

The Notices to Complete of 23 December 2008

[157]In the meantime, on 22/12/08 BKG wrote to Birchall Blackburn enclosing notices to complete pursuant to condition 6.8 of the incorporated Standard Conditions of Sale in relation to each of the 25 residential apartments. Since the Defendants in their Defence rely on the wording of the notices to complete, it is necessary to refer to the relevant parts of it at this stage, in particular paragraph 5:

"As solicitors for the vendor we give you notice: 1. That the vendor is ready and willing to execute a lease …; 2. That … this notice is given in pursuance of condition 6.8 of [the Standard Conditions]; 3. That you are in default, having failed to complete the purchase of the property by the date fixed for completion by the contract; 4. That the vendor requires you to pay the balance of the purchase money with interest as agreed under the contract; 5. That if you fail to comply with this notice within 10 working days from the date of service of this notice (excluding the date of service) the vendor will forfeit the deposit paid by you and will rescind the contract and resell the property in accordance with the contract and will claim from you any deficiency in price on such resale and all expenses for associated with the resale and any attempted resale and all expenses and losses incurred by reason of your default."

[158]What the Defendants say in paragraphs 15 and 16 of their Defence about the effect of these notices to complete is that:(a) by their wording they gave notice that if Lisheen failed to complete by the relevant date (9/1/09) then Matila would, without further notice, treat the residential apartments contracts as rescinded;

(b) thus when Lisheen did not complete by that date, as it did not, Matila is to be treated as having elected to treat the contracts as rescinded due to Lisheen’s failure to complete;

(c) because Lisheen was not obliged to complete as at 9/4/09 (having regard to its case that the residential apartments were not completed for occupation), that itself was repudiatory conduct by Matila; (b) the Defendants were entitled to and did, by service of the Defence if not before, elect to treat that as treating the residential apartments contracts as terminated.

[159]On 23/12/08 BKG wrote to Black Norman enclosing notices to complete on the same basis and in the same terms in relation to the 3 commercial units. It is difficult to see, however, how these could have operated as effective notices to complete, since the only clause 3 completion notices served at that time had been those dated 26/3/08 which I have already held ineffective. It appears that on the same day Black Norman wrote to Birchall Blackburn enclosing Notices to Complete purportedly under condition 8.8 of the Standard Commercial Property Conditions (2nd edition) but again, as is common ground, there was no basis for so doing since neither those nor any other standard conditions had been incorporated into the Assignment.

[160]However in their Defence in the commercial units action the Defendants raise the same argument in relation to the notices to complete served by Matila upon Ascot as they do in relation to the notices to complete served in the residential apartments action. They further contend that the effect of the Assignment is that they are entitled to and do, by service of the Defence in the commercial units action, served also on Matila, elect to accept the repudiation by Matila and, thus, treat the commercial units contracts as rescinded.

[161]The foundation stone of the argument advanced by the Defendants is thus that on their true construction the notices to complete operated, without more, as advance notice of Matila’s election to treat the contracts as rescinded in the event that Lisheen or Ascot respectively failed to complete within the stipulated time period. That is contested by Matila, who contends through Mr Oughton that:(i) The wording of the notices to complete were in standard form as used in a number of forms and precedents and could not, on proper analysis, be construed as leading to rescission in the event of non-compliance without further election by the serving party.

(ii) The decision of Goulding J. in Luck v White

(1973) 26 P&CR 89

is authority to the effect that a contract is not without more rescinded in such circumstances.

(iii) Subsequent decided cases have also proceeded on the basis, not regarded as controversial by either counsel or judge, that there is no automatic rescission in such circumstances.

[162]In his reply to Mr Oughton’s closing submissions Mr Machin accepted that the weight of legal authority suggested that the mandatory form of notices to complete does not amount to an irrevocable election to rescind, as distinct from a statement of intention to do so. Whilst it would appear therefore that this is no longer in issue, out of an abundance of caution and because the point has been fully argued by Mr Oughton and is an interesting one, I propose to deal with it nonetheless.

[163]The starting point is the provisions of the Standard Conditions. Clause 6.8 itself does not provide any assistance in considering the effect of non-compliance with a notice to complete, however clause 7.5, entitled ‘buyer’s failure to comply with notice to complete’ is material. It provides:7.5.1 If the buyer fails to complete in accordance with a notice to complete, the following terms apply.

7.5.2 The seller may(emphasis added) rescind the contract, and if he does so:

(a) He may: (i) forfeit and keep any deposit and accrued interest; (ii) resell the property … (iii) claim damages

(b) …

7.5.3 The seller retains his other rights and remedies.

[164]It is clear, therefore, in my judgment that the Standard Conditions envisage that service of a notice to complete under clause 6.8 does not automatically and without more lead to rescission on non-compliance by the purchaser. That, of course, is consistent with the general law, under which it would be necessary to serve a notice making time of the essence and then, if the time for performance passes, for the innocent party to communicate to the party in breach that he is treating the contract as discharged by reason of that breach. (For convenience I use the word rescission as shorthand for communication of acceptance of repudiatory breach, since the Standard Conditions refer to rescission as having that meaning and since there is no risk of confusion arising in this case.)

[165]Whilst so far as I am aware there is no reason why, as matter of principle, it would not be possible for a vendor in such circumstances to inform the purchaser in the notice to complete, i.e. in advance of the time for performance, that failure to complete within a specified period would be regarded as repudiatory and would, without the need for further notice, be accepted by the vendor as such so that the contract would be rescinded on expiry of that period, equally it seems to me that very clear words would be required to achieve that objective, when otherwise the common law requires the innocent party to communicate his election to rescind the contract once the other party has committed a repudiatory breach.

[166]I am satisfied that the words used in these notices do not make it sufficiently clear to Lisheen or to Ascot that Matila will, without further communication, elect to treat the contracts as rescinded if the date for completion passes. I reach that conclusion for the following reasons:(a) the words used do not make it clear that these consequences will follow without the need for any further notice or communication;

(b) the words used in paragraph 5 upon which reliance is placed by the Defendants (‘will rescind the contract’) themselves imply the occurrence of some further act (rescission) which as a matter of law necessarily involves some further communication to the purchaser to be effective;

(c) since the last date for completion is stipulated to be 10 working days after service of the notice (excluding the date of service), it seems to me that a reasonable recipient would consider it unlikely that the sender would have intended to provide for an automatic rescission without the need for further communication on a date which could not be specified in the notice itself.

[167]I am fortified in this by the precedents and authorities referred to by Mr Oughton which, it seems to me, do illustrate a general understanding amongst those involved in conveyancing that notices to complete employed in cases of contracts incorporating standard forms, even if expressed in terms which might on first reading suggest that non-compliance will result in rescission, do not have that effect and that a further communication informing the party in breach that the innocent party is electing to treat the contract as rescinded is required. I do not, however, consider that Luck v White is binding or even persuasive authority to this effect, because it appears to me that the point simply was not taken by the vendor. It may be that the reason was that the form of the words used in that case, apparently in accordance with the then applicable Conditions of Sale, did not permit that argument to be run, or it may be that it is because on 7 September 1971 (which may on the evidence have been within the notice period) the vendors solicitors wrote a letter inconsistent with there having been an automatic rescission, or it may have been that the argument simply did not occur to the vendor’s representatives. Whatever the reason, it does not seem to me to have been an essential part of the decision or the reasoning of the judge.

January 2009 to April 2009

[168]Returning to the chronology, as I have already indicated there was no formal response by Birchall Blackburn to the Notices to Complete. Indeed there were no further relevant developments until April 2009. On 7/4/09 BKG on behalf of Matila served on Birchall Blackburn on behalf of the Clarke brothers notices in relation to each of the 25 residential apartment contracts under clause 15 of those contracts, requiring them to perform Lisheen's obligations under those contracts, including completing a lease of each apartment. A further copy was sent direct to the Clarke brothers on 9/4/09.

[169]On 9/4/09 BKG also sent three letters to Black Norman, each relating to one of the three commercial units, in the following terms: "In accordance with the provisions of clause 3(a) of the agreement for purchase of 20/3/07 and without prejudice to the validity of the notice of practical completion served upon you on 26/3/08 in respect of the above unit we would be obliged if you would treat this letter as formal notice of practical completion of the above property. As evidence of such we enclose herein both a copy of the certificate of completion of building works and the interim NHBC certificate, noting that copies of these were actually served upon you at the cover of our previous correspondence or 14/10/08. In view of the fact that you have indicated that your client assigned the benefit of the contract to Lisheen we are today serving a copy of that notice upon their solicitors and upon Lisheen directly. We note that it was agreed on each of the contracts that completion should take place three months from the service of such notice of practical completion.’

[170]As indicated, on 9/4/09 BKG wrote to Birchall Blackburn, referring to the further notices served on Black Norman, referring to the assignment to Lisheen, and asking them to ‘treat this as formal notice of practical completion’ under the terms of the commercial units contracts. On the same day BKG wrote to Black Norman confirming that Matila was prepared to complete the commercial units contracts with Lisheen ‘but otherwise would look to Ascot to satisfy its claims under the contract’. On 16/4/09 BKG wrote direct to Lisheen in the same terms as its previous letters to Birchall Blackburn.

The proceedings

[171]The proceedings in relation to the residential apartments were commenced by Matila against Lisheen and the Clarke brothers by claim form issued on 20/4/09. Matila sought specific performance and damages in lieu or in addition, alternatively at its election a declaration that it was discharged as a result of Lisheen’s breach with a declaration forfeiting the deposits and damages. Matila claimed the same relief against the Clarke brothers as guarantors.

[172]The proceedings in relation to the commercial units were commenced by Ascot against Lisheen and the Clarke brothers by claim form issued sometime in May 2009. Ascot were represented by separate solicitors and counsel to Matila. It claimed specific performance of the commercial units contracts against Lisheen, on the basis that Ascot was ready, willing and able to complete the Assignment, because it was ready, willing and able to complete with Matila and because Matila was, as it had stated in its letter of 9/4/09, prepared to complete the commercial units contracts with Lisheen.

The Assignment of 1 April 2010

[173]I have already made reference to this April 2010 assignment. The parties to it are(1) Ascot,

(2) Readbank Limited,

(3) Matila and

(4) Phil Collins. Amongst other things it provided as follows: (i) By clause 3, Ascot assigned the benefit of the commercial units contracts to Readbank; (ii) By clause 4, Ascot assigned the benefit of the Assignment, including the guarantee by the Clarke brothers, to Readbank, and including the benefit of all rights to damages or other monetary claims against Lisheen or the Clarke brothers accruing prior to the 2010 Assignment. (iii) By clause 5(b) Matila agreed with Ascot not to sue Ascot in respect of any breach of the commercial units contracts, but reserving all rights against Lisheen thereunder. (iv) By clause 5(c), Readbank agreed with Matila to be bound by the commercial units contracts as if it were the original party thereto.

[174]At the Pre-Trial Review I gave Readbank permission to be joined as Second Claimant in the commercial units action, and I gave the Defendants permission to file and serve an Amended Defence to respond to the Amended Particulars of Claim served by Readbank. Although served late, not until the second week of the trial, since the Amended Defence appeared at the time to raise issues of construction which did not require further evidence I granted the Defendants permission to rely on it. In summary, it contended that:(a) The April 2010 Assignment was champertous, because Readbank had no existing interest in or connection with Ascot’s rights under the commercial units contracts and/or the Assignment.

(b) The effect of Matila’s release of Ascot by clause 5(b) of the April 2010 Assignment was that there could be no further obligation on its part to perform any obligation or pay any sums to Matila, so that there is nothing on which Lisheen’s covenant in clause 2.1 of the Assignment or the Clarke brothers’ guarantee in clause 3 of the Assignment can bite.

[175]I shall consider these defences later in this judgment, but first it is convenient to set out the respective positions and my findings in relation to the defects alleged by the Defendants.

The Schedule of Defects

[176]The Schedule of Defects does not separately address the position as at the various dates identified in the order of 31/7/09. It is necessary, therefore, for me to consider not only whether there are or have been defects, but if so at what time or times. In so doing I take into account not only the expert evidence, but also such other contemporaneous evidence upon which I consider I can safely rely. In considering the expert evidence, I take into account that it was Mr McLachlan who first inspected the Edge (in September 2009), that Mr Moran did not inspect the Edge until March 2010, and that Mr McLachlan undertook a further inspection in April 2010. It is also right to say that although there remained significant items of disagreement between the experts, particularly in relation to the fire safety issues, they were also able to reach agreement in relation to other matters at their joint meeting, as shown in the final version of the schedule available and clarified at trial.

The Building Regulations - Fire Safety

[177]Before I consider the individual matters of complaint, since many and certainly the most serious relate to issues of fire safety, it is convenient for me to consider the general position in relation to the Building Regulations, and in particular the need for compliance with Approved Document B – Fire Safety, and to consider the question of what the contracts required so far as compliance with the Building Regulations is concerned.

[178]It is common ground that the relevant regulations are the Building Regulations 2000, made by the Secretary of State under the Building Act 1984. Regulation 4 requires building work to be carried out so that it complies with the applicable requirements contained in Schedule 1. Schedule 1 is in the form of a table, divided into separate sections for separate aspects of building work, where the first column is headed ‘requirement’ and contains the general requirement, whereas the second column is headed ‘limitations on application’, and specifies any limitations upon the requirement (where applicable). As relevant to this case, Part B is entitled ‘Fire Safety’, and contains 5 separate requirements. Thus:(i) Requirement B1 requires the building to be ‘designed and constructed so that there are appropriate provisions for the early warning of fire, and appropriate means of escape in case of fire from the building to a place of safety outside the building …’.

(ii) Requirement B2 impose requirements in relation to internal linings to deal with internal fire spread.

(iii) Requirement B3 impose requirements in relation to internal fire spread.

(iv) Requirement B4 relates to external fire spread.

(v) Requirement B5 relates to access and facilities for the fire service.

[179]Mr Oughton submits that these requirements are ‘very generalised’. Whilst I would not accept that description, I do agree that they are expressed in general terms (which of course given that there are only 5 requirements applicable to the whole area of fire safety is perhaps inevitable), and also that the obligations are expressed by reference to words such as ‘appropriate’, ‘adequate’ and ‘reasonable’. Mr Machin’s submission is that nonetheless the Approved Document ‘condescends to a high degree of particularity’, which I do not think Mr Oughton would take issue with, but that begs the question as to how the Approved Document fits in with this regulatory structure, to which topic I now turn.

[180]Regulations 12 to 15 require notice to be given and plans to be deposited before work commences, and Regulation 17 provides for the local authority to issue a completion certificate on completion of work and where they have been ‘able to ascertain, after taking all reasonable steps, that the relevant requirements of Schedule 1 specified in the certificate have been satisfied’. It further provides that such a certificate shall be evidence, but not conclusive evidence, that those requirements have been complied with.

[181]Approved Document B – Fire Safety (‘the Approved Document’) is, as it states in the section entitled ‘Use of Guidance’, a document approved and issued by the Secretary of State to provide ‘practical guidance’ with respect to the requirements of Schedule 1. It appears from the Explanatory Note to the Regulations that he is ‘empowered under the Building Act 1984 to approve and issue documents containing practical guidance with respect to the requirements contained in these Regulations’. There is nothing in the Regulations or in Schedule 1 which provides that in order to comply with the fire safety requirements of Schedule 1 it is necessary to comply with the requirements of the Approved Document. Instead, it appears (see the commentary in Keating on Construction Contracts (8th edition) paragraph 15-021) that s.7 of the 1984 Act provides that a failure to comply with the approved document may be relied upon ‘as tending to negative or establish liability’ It further appears from the commentary in Keating that as matters currently stand the only liability which may arise under the Building Act is criminal not civil liability. .

[182]Furthermore, the Approved Document itself states in terms that compliance with the Approved Document is not obligatory if the requirement can be met in some other way. It also states in the section entitled ‘General Introduction’ that the aim of section B1 of the Approved Document is to ‘ensure … a satisfactory standard of means of escape …’. In the same section it emphasises that the provisions are interlinked, so that the provisions for means of escape are closely linked to the provisions for controlling fire growth, fire containment and facilities for the fire service, with the intention that the guidance in the document ‘should be considered as a package aimed at ensuring an acceptable standard of fire safety’. The section entitled B1 Guidance begins by expressing the Secretary of State’s view that ‘the requirement of B1 will be met if(a) there are routes of sufficient number and capacity which are suitably located to enable persons to escape to a place of safety in the event of fire;

(b) the routes are sufficiently protected from the effects of fire by enclosure where necessary … all to an extent necessary that is dependent on the use of the building, its size and height’.

[183]In my judgment what is clear from this is that the Approved Document is not intended to set out mandatory requirements which must be followed in every material respect in order to comply with the fire safety requirements of Schedule 1. Furthermore, what is required is not compliance with some absolute standard, but (in relation to B1) to provide ‘appropriate’ means of escape. When read with regulation 17, it can readily be seen that what is envisaged – and as the experts accepted what happens in practice – is that there is considerable room for dialogue between the building owner and his contractor and/or consultants on the one hand and the approved building inspector on the other, with a view to agreement being reached on a package which provides an overall acceptable standard. Although a certificate issued where works have been completed in accordance with a package which has proceeded through this dialogue and agreement is not conclusive that the requirements of Schedule 1 have been complied with, it is in my judgment highly probative evidence that they have been.

[184]It is also necessary, in my judgment, for clause 2 of the residential apartments contracts to be read against this statutory background. I have already held that the words of clause 2 require Matila to erect and complete the individual apartments:(i) at its own cost;

(ii) in an efficient and workmanlike manner with proper materials and so as to be fit for habitation;

(iii) with reasonable expedition;

(v) in accordance with the CPUK specification. Thus it is clear that there is no absolute or free-standing obligation to comply with the requirements of the Building Regulations.

[185]Mr Oughton submits that the effect of this is that so long as the apartments are constructed in accordance with the plans approved for Building Regulations purposes that is an end of the matter, even if it could be shown that constructing the apartments in that way would be contrary to the requirements of the Approved Document or even the Requirements in Schedule 1. Mr Machin retorts that this ignores the separate obligation in clause 2 to erect and complete the apartments so that they are fit for habitation.

[186]I am satisfied that the obligation to complete the works so that the individual apartments are fit for habitation must include with it the obligation to comply with the Requirements of Schedule 1 to the Regulations insofar as non-compliance with those Requirements would render the apartments unfit for habitation. I am also satisfied that in considering whether the Requirements have been complied with I must have regard to the Approved Document. I am also satisfied that this involves considering the design and construction of The Edge as a whole, in particular the common parts as well as the individual apartments, especially where those common parts are intended as being part of the means of escape. Thus, if I was satisfied that there was some serious failure to follow the Approved Document which rendered the building a real fire hazard to its occupants, then it would not in my judgment be a defence for Matila to say that the works were completed in accordance with the plans approved by the approved inspector and that the works had been certified. Equally, however, it is not open to the Defendants simply to point to an apparent non-compliance with a particular part of the Approved Document and to submit that this without more amounts to a breach of clause 2. I must have regard to all of the relevant circumstances, bearing in mind that the primary obligation on Matila under clause 2 so far as compliance with the Building Regulations is concerned is to comply with the approved drawings and that this is prima facie demonstrated by the issue of the relevant certificate, and also that the requisite requirement is that Matila should achieve a standard which is appropriate as an overall package, not a requirement that Matila should achieve compliance with each and every separate requirement of the Approved Document.

[187]I consider that the approach taken by Mr Moran in his evidence is more consistent with this analysis of what was required than is the approach taken by Mr McLachlan, which appears to me to view each individual part of the Approved Document as a freestanding requirement which had to be complied with regardless of the overall position. Mr McLachlan also in my judgment sought to downplay the relevance of the process of dialogue and agreement with the approved inspector and the ultimate issue of a certificate of compliance. In my judgment that showed both a lack of familiarity on the part of Mr McLachlan with what the relevant regulations and Approved Document actually required, and also a failure to apply the necessary flexibility when considering the question of compliance or non-compliance. These differences explain why, where there was a dispute, I have largely preferred the opinion of Mr Moran over that of Mr McLachlan in relation to fire safety matters.

[188]I am also satisfied that the relevant approved drawings so far as compliance with clause 2 is concerned are the fire plans as issued for construction and attached to Mr Moran’s report. These are a series of drawings produced by CLA numbered 06-115-250, 251 and 252. They show the proposed fire precautions to be applied to each of the building levels. The legend shows that they were first produced in November and December 2006, that they were revised in February 2007 with ‘notes added to suit Butler & Young’s comments’, that they were revised again in March and August 2007, the latter including an added requirement for ‘cedar cladding to achieve Class 0 fire spread’, and finally that they were updated ‘as issued for construction’ in April 2008.

[189]All of this is consistent with the chronology provided by Mr Moran in his report (he having first considered the project files), and with what the experts accepted was likely to have happened in a project such as the present, namely there having been a whole series of meetings and discussions between CLA (as project architects) and Butler & Young (in their capacity as the approved building inspectors), at which numerous amendments were discussed and subsequently introduced into the design as it related to fire safety issues, all of which is evidenced by the revisions to the fire plans, showing what was in effect an agreement between CLA and Butler & Young as to how the requirements in Schedule 1 should be complied with in this case. The issue of the certificate by Butler & Young on 6/10/08 confirmed that, so far as they were concerned, those requirements had been satisfied.

[190]In reaching these conclusions I have considered whether I should bear in mind that I have not heard from the representatives of CLA or Butler & Young who dealt with these matters, nor have I seen their files. However I have had the benefit of evidence from Mr Moran who has evidently seen documentation relevant to the process by which Building Regulations approval was secured, and none of that has been challenged. I must also bear in mind that, through no fault of Matila, it was only at a relatively late stage in the litigation, once I had given permission at the Pre-Trial Review for the Defendants to rely on their own expert evidence and once they had seen Mr McLachlan’s report, that it became apparent that the whole question of fire safety had become a key element in the case, so that in my judgment it would be unfair to draw an inference against Matila for failing to anticipate this and go to the time, trouble and expense of seeking to obtain documents and witness statements from third parties.

[191]In my judgment I must consider the individual criticisms made by Mr McLachlan of the fire safety provision at The Edge with all of this very much in mind. The individual defects Items 1-3: External claddings

The individual defects

[192]The complaints are that:(i) where cladding sheets have been cut they are corroding and showing signs of early failure in a number of locations;

(ii) where cladding sheets are connected by gaskets the connections have failed in certain locations and the attempt at repair has involved the use of a non-durable and unsightly mastic.

[193]Mr McLachlan took photographs in September 2009 showing evidence of (ii). Mr Moran accepted that there was some oxidation at some horizontal joints, and accepted that the photographic evidence from September 2009 showed the problems with the gaskets and mastic at that time, although by the time he had inspected they had been remedied. Mr McLachlan did not dissent from this following his more recent report. They had agreed that any necessary repairs to address the oxidation issue would be of the order of £2,823.31 and to address the gaskets / mastic issue would be of the order of £1,411.66.

[194]In his evidence Mr Moran considered that this was really an aesthetic issue rather than an issue as to the long-term performance of the cladding. In his evidence Mr McLachlan accepted that some repairs had been undertaken since he first inspected, but suggested that the problem was due to poor workmanship and that it was likely to recur. He suggested that without poor workmanship he would have expected the gaskets to last at least 9 years or so. He did not however suggest that the defects he had identified had actually caused the cladding system to fail. He agreed that he would have expected the NHBC inspector to observe the defects which he had observed in September 2009.

[195]There was no evidence from Mr McLachlan as to the scale and extent of the problem. It would appear however that since the cladding undoubtedly forms part of the structure of the building it is not part of the individual apartments as defined in the residential apartments contracts or the draft leases.

[196]My conclusion is that:(i) In and prior to October 2008 any defects were isolated and minor, since they were not observed by the NHBC inspector, nor the subject of the numerous snagging lists.

(ii) By September 2009 it is clear that gaskets had failed in a number of areas and been remedied by application of mastic, but that was unsatisfactory.

(iii) By March 2010 these areas had been remedied, so that the only remaining defect now relates to isolated areas of oxidation.

(iv) I am satisfied that these defects have never amounted to serious structural defects, although I do accept that the failed gaskets, if left unremedied, could allow water access through what is in effect the first (albeit not the only) barrier to water entry.

(v) I am satisfied that at all relevant times these defects have not prevented the individual properties from being complete and fit for occupation, and that they fall within clause 10, because they are minor items and/or because they are incomplete common area items.

(vi) I am satisfied that as at the present date all that is required is to undertake the works to tidy up the areas of oxidation in the sum of £2,823.31. Any further work would form part of normal maintenance.

Item 4 – roof decking

[197]The complaint here is that the timber decking in the first floor communal open area and the fourth floor individual open areas has been laid in such a way as to impede roof drainage which, it is said, leads to water ponding and will lead to premature failure of the roof finish.

[198]It is common ground between the experts that the roof is made of asphalt, and that the timber decking has been constructed off this roof surface by being supported on timber bearers. The crucial detail is that the timber bearers are themselves supported on plastic packers which, according to Mr Moran, allow water to flow underneath the timber bearers and thus to drain away through the rainwater outlets situated within the flat roof areas. However Mr McLachlan argues that the plastic packers are not sufficiently high to perform this function, and that photographs show that the area underneath the bearers is silting up and thus obstructing drainage. The experts agree that if remedial works are required the cost for each roof level will be in the order of £4,234.97. This would effectively involve providing proprietary rubber spacers which would allow the timber bearers to sit higher off the asphalt roof.

[199]In cross-examination Mr Moran accepted that there was a variation in the distance between asphalt roof and timber bearers, itself a consequence of the fact that the asphalt roof has been laid to falls to promote drainage whereas the bearers have been laid so that their topside is level (to ensure that the timber decking is level). He did not consider that it was a problem, saying that whilst after rainfall there might be localised ponding that would dissipate either through the rainwater outlets or through evaporation, so that there was no evidence to show a more serious problem nor any reason to expect one. He observed that whilst some siltation was inevitable, that would be dealt with by routine maintenance of the rainwater drainage system.

[200]In his cross-examination Mr McLachlan accepted there was no visible evidence of ponding. He suggested that the minimum clearance required was 15mm, and that the failure to achieve this would, over time and increased siltation, lead to the timber decking eventually sitting in standing water.

[201]I am satisfied that this has not been made out as a defect. This is essentially a simple system, where these plastic packers allow water to drain under the timber decking. There is no clear evidence that they are not performing their intended function at any location, and whilst it may be that they do not allow drainage quite as efficiently as would higher standing proprietary rubber spacers, especially where there is localised silting, there is no evidence that the consequence is widespread persistent ponding such as would pose either a slip risk to users or compromise the watertightness of the asphalt roof.

[202]If I am wrong about this, in any event I would not have concluded that this prevents the individual properties being completed and fit for occupation and use, and I would have concluded that it is a minor defect and, in the case of the communal first floor, an incomplete common area item.

Item 5 – walkway decking

[203]The complaint here is that the timber decking which forms the surface of the walkways which serve the individual apartments on floors 1- 4 inclusive is unacceptably slippery. It is said that because the walkways are a means of escape the Building Regulations are engaged and, in particular, paragraph 6.27 of Approved Document B, which requires the flooring of all escape routes to be ‘chosen to minimise their slipperiness when wet’.

[204]It is clear from the fire plans that the building inspector was fully aware that the walkways (referred to as access balconies) were part of the means of escape and were to be made of timber decking. Mr Moran demonstrated that each piece of decking had 8 grooves each measuring 3mm x 5mm, which he considered provided reasonable grip. He observed that keeping the decking free from contaminants such as moss or pigeon droppings which might cause slipperiness was a matter of routine maintenance, and was being undertaken. The schedule refers to a ‘drawing reference 192’, which it is said specified a wirecloth covering over the decking. This would completely cover the decking and thus would detract from the aesthetic appearance of the decking. There is no suggestion that it is required by the Approved Document, and indeed the Defendants have been unable even to provide a copy of the drawing. Mr Moran believed that it pre-dated Matila’s involvement. It is not referred to in the CPUK specification and, so far as can be ascertained, it is not shown on any drawing referred to in the contract. Mr McLachlan accepted that he had not undertaken any slipperiness tests to confirm on an objective basis the degree of slip protection afforded by the decking. He accepted that the grooves would provide slip protection, although he suggested that this would not apply after heavy rainfall when the grooves would fill up. However the force of last point is undermined, in my judgment, by the fact that there are gaps between the decking which prevents water gathering on the decking from ponding there.

[205]The experts are agreed that if there is a defect then wirecloth could be laid to each of the 3 walkways at a cost of £1,270.49 per walkway.

[206]I am quite satisfied, however, that there is no breach of the Building Regulations, let alone of the relevant contracts. I am satisfied that the selection of a grooved hardwood timber decking does minimise the slipperiness of the floor surface. I do not accept that the Approved Document in some way operates to prohibit the use of timber decking as a means of escape. It is clear that this was shown on the relevant drawings and approved by Butler & Young. Its presence cannot conceivably be said to render the apartments unfit for habitation.

Item 6 – walkway fire resistance

[207]The complaint in the schedule is that the timber decking has no more than a nominal fire resistance, whereas it should have a 30 minute fire resistance.

[208]In fact, it appears from the Approved Document that where, as here, the floor forms part of the structure, then Tables A1 and A2 apply, so that here given the height of the building a minimum period of 60 minutes fire resistance is required. However it is clear from what I have already said that this cannot be regarded as an inviolable principle; thus the note to Table A2 gives one example of a case where the fact that a structure is in the open air and not likely to be affected by a fire in the building is a reason where one particular principle (the need to ensure supporting structures are no less fire resistant than the structure which they support) may reasonably be varied.

[209]In this case it is common ground that the walkways are constructed on cantilevered steel beams, which support steel channels and angles, to which the timber decking is affixed by timber bearers. The fire plans specify that the steel is to be 1 hour fire protected, with the ‘underside of timber decking to be ½ hour protected’.

[210]Mr McLachlan’s criticism is that:(a) there is no evidence that the timber decking has had fire protection applied to it;

(b) even if it had, because there are gaps between the individual section that negates the effectiveness of the fire protection, because fire can pass between the gaps and attack the untreated timber above the underside.

[211]Mr Moran says that:(i) there is no reason to believe that the timber decking has not been fire protected, and in particular that there is no reason to believe that the individual pieces of timber decking were not individually fully treated, so that it is irrelevant that there are gaps between them;

(ii) it is apparent that the adequacy of the fire protection to the timber decking was considered and agreed by Butler & Young and, indeed, it can be seen from the additional requirement of external smoke detectors being fitted to the underside of the timber decking that the building inspector was alert to the need for suitable fire precautions in relation to the use of the timber decking as a means of escape;

(iii) it is unlikely that Butler & Young would have certified the completed works unless they had been satisfied, whether by inspections or by the provision of certificates from the manufacturer / supplier of the timber decking or from the contractor, that the timber decking had indeed received the requisite fire protection.

[212]In my judgment there are 2 separate questions here. The first is whether the stipulation for only 30 minutes fire protection for the underside of the timber decking is in itself and without more a breach of the requirements of Schedule 1. The second, if not, is whether that 30 minute fire protection has been provided. So far as the first question is concerned, I am quite satisfied that the provision of 30 minutes fire protection to this external walkway, where it is clear that the requirements of Approved Document are not mandatory and where it is also clear that the building inspector had sanctioned only 30 minutes fire protection given the provision of 60 minutes fire protection to the steel and the provision of smoke detectors, cannot amount to a breach. So far as the second question is concerned I am satisfied on the available evidence and on the balance of probabilities that 30 minutes fire protection was satisfied. The certificate is evidence of compliance, and I am satisfied from Mr Moran’s evidence, which was not contradicted by Mr McLachlan, that the building inspector is unlikely to have given this certificate unless he had been satisfied on proper evidence that the fire protection had been provided. In my judgment the point about the gaps only applies if it was the case that the fire protection had been applied once the decking was installed and in situ, but there is no evidence that this is what did happen or even that it is reasonable to assume that it did.

[213]I do accept that if I am wrong about this and there was a serious and significant breach of Schedule 1 in this respect, then the impact on the safety of those using the apartments would be such that the apartments could not be said to be fit for habitation and that there would therefore be a breach of the relevant contracts. The same applies in my judgment to all allegations of breach of the fire safety regulation.

Item 7 – walkway supporting bearers’ fire resistance

[214]Closely allied to the last criticism is the further criticism that the timber bearers supporting the timber decking are not fire protected. Contrary to Mr Oughton’s submission in paragraph 69 of his closing submissions, my understanding of the evidence was that Mr Moran accepted that these bearers are made of softwood and unlikely to have been fire protected but says that there is nothing unusual in that, because they do not form part of the structure. They are, he says, simply a means of fixing the hardwood decking to the supporting steel angle beneath, and the timber decking is supported not by these softwood bearers but by the steel angles. He says that even if the softwood bearers were consumed by fire that would have no effect because the decking would still be supported by the steel angles. Mr McLachlan said that the bearings ought to be considered a part of the structure and that if they were consumed by fire the decking would drop and this could not be regarded as a safe design.

[215]I prefer Mr Moran’s opinion and evidence on this point. It is clear from the CPUK specification and the drawings that no reference is made to timber supports or to their needing fire protection. Mr McLachlan does not suggest that they were not needed as fixings. Accordingly, it seems inherently unlikely either that the architects and the building inspectors would have overlooked the need to specify fire protection for this fixing, if it was needed. I accept Mr Moran’s opinion that it is normal practice not to require these softwood fixings to be treated. I also accept that this is because they are not regarded as part of the structure, and that even if they caught fire they would ‘fail safe’ because the decking would still be supported by the treated steel angles.

Item 8 – no protection to landings or walkways

[216]The complaint is that there is a breach of paragraph 6.25(d) of the Approved Document, which requires any stair more than 6m in vertical extent to be protected from the effects of adverse weather conditions. However that paragraph continues as follows:

‘This should not be taken to imply a full enclosure. Much will depend on the location of the stair and the degree of protection given to the stair by the building itself’

[217]It is clear that this requirement cannot extend to the walkways themselves. Although I had understood Mr McLachlan to accept this, in cross-examination he appeared to suggest that this requirement did apply to the walkways themselves. I consider that he is plainly wrong about this. So far as the stairs are concerned, it is apparent from the photographs and plans that the stair flights themselves are enclosed, the only open area is where the stairs open into the landing on each level. Moreover, it is apparent for example from photos 39 and 42 taken by Mr Moran that this area is protected in that there is the balcony above as a ‘roof’, there is a glazed wall between this area and the entrance to the lift area, and there is a return to the other side. Indeed Mr McLachlan appeared to accept as much in cross-examination.

[218]I am quite satisfied that this detail, which is of course shown on the architect’s drawings and the fire plans, is quite satisfactory for the purpose of complying with requirement B1. This is nothing like a fully exposed external staircase in which there is a real risk of the means of escape being rendered treacherous by exposure to adverse weather conditions such as heavy rain, snow or ice.

Item 9 – timber cladding not fire-protected

[219]Although not entirely clear from the schedule, it became clear from Mr McLachlan’s response to Mr Moran’s comments that this complaint was directed to the timber cladding to the walls between the individual apartments and the walkway.

[220]The fire plans show that the cedar cladding to this elevation is required to achieve a Class 0 fire spread, and it is the alleged lack of this which Mr McLachlan was complaining about in his response to the schedule. However, it is apparent from the photographs (for example number 71) that the cladding in this location does appear to have been treated by something. So far as I am aware, there is no reason for Mr McLachlan to have considered that these timbers had not been treated as required by the building inspector, and in cross-examination he accepted that the cladding might well be compliant.

Item 10 – unprotected glazing in walls between apartments and walkway

[221]Mr McLachlan’s alternative criticism of these walls was that, as shown by the plans, each apartment had opening UPVC windows to the kitchen and the bedroom to either side of the (FD20 fire rated) doors. Mr Moran considered that it was inappropriate to have windows in what he considered to be a compartment wall separating the apartments and the common means of escape. He suggested that it was possible to have windows which would achieve the same fire resistance as the remainder of the wall, and which would be self-closing in the event of fire, but that without this level of protection there should be no windows in this location. He accepted that this would mean that these rooms would have no artificial lighting, but maintained his view.

[222]His argument was that paragraph B3.22 of the Approved Document applies here, and requires ‘common corridors’ to be ‘protected corridors’ and thus the wall between each dwelling and the ‘corridor’ to be a compartment wall. He says that by reference to section 9 of the Approved Document, particularly paragraph 9.35, it is simply not permissible to have windows in compartment walls. He says that the reason from a fire safety reason is that there is an obvious risk that a fire in (for example in this case the kitchen of an apartment) might lead to the windows being broken which itself would be a danger and which would also be a source of fire or smoke spread to the walkway, thus compromising the means of escape from adjacent apartments.

[223]The fallacy, in my judgment, with the Defendants’ argument is to regard this open walkway as an enclosed corridor, which it manifestly is not. It cannot be equated with an enclosed corridor, not least because the very fact that it is open means that it cannot be affected by smoke from a fire in an apartment kitchen in the same way as an enclosed corridor could be. Although not directly applicable, I agree with Mr Moran that it is relevant that in the case of space separation between adjacent structures it is permissible (see Diagram 44) for there to be unprotected structures (i.e. apertures such as windows) so long as they do not exceed certain specified dimensions, which the windows in this case do not. He also observed that in the context of looking at the whole fire protection arrangement, it was clear that the hallways within each individual apartment had been upgraded to provide half hour protection, which indicated that the building inspector was looking at the position overall, as they were entitled to do, when approving this design.

[224]Again, in my judgment, it is apparent from the fire plans that the whole question of the fire resistance of these walls was considered by the architects and the building inspectors, and it is apparent that they agreed the design, including the revised design to include the Class 0 fire spread to the cedar cladding, in full knowledge that they were to have windows in them. They did not require the windows to achieve any minimum fire protection, in the same way as they specifically did in relation to the doors, and it is obvious in my judgment that this cannot have been a simple oversight on their part. It is apparent that the construction was certified approved on the basis of this approved design. I am not satisfied on the balance of probabilities that the Approved Document has the effect that in a case such as the present the requirements of Schedule 1 can only be satisfied either by having no windows at all or only windows of the type referred to by Mr McLachlan. I am therefore satisfied on the balance of probabilities that the requirements of Schedule 1 were satisfied.

Item 11 – maximum distance of travel along walkways exceeded

[225]Paragraph 3.18 requires dwellings to have access to alternative escape routes. It provides for an exception where there is a single common stair and where the access to the common stair is through a common corridor and the travel distance limitation in Table 2 is observed. Table 2 provides for a maximum distance of travel of 7.5m. But paragraph 3.21 provides that ‘escape routes in the common areas should comply with the limitations on travel distance in Table 2. However there may be circumstances where some increase on these maximum figures will be reasonable’.

[226]Here there is only one escape route, but that is a single common stair, thus the travel distance limitation is potentially applicable. Mr Moran accepted that on each level the 3 apartments to the rear of the development all exceeded the travel distance limitation from front door to stairs. He said however that when looked at overall the precautions were reasonable.

[227]In my judgment the significant factor here is that the walkways are open escape routes and are not enclosed corridors. It follows, in my judgment, that it would appear to be reasonable to allow an increase on the maximum figures. It is inconceivable, I consider, that the architect and the building inspector would not, when considering the design, have been well aware of the fact that there was only one means of escape from the upper floors and that the distance from the rear apartments to the stairs was more than 7.5m. It follows, I am satisfied, that consideration must have been given to whether it was reasonable to increase the 7.5m figure. It is apparent in my judgment that there are factors which would, objectively, justify this. Specifically the fact that the walkways are open (thus again the problem of smoke is less of an issue) and the fact that enhanced precautions were specified for the fire protection rating of the walkways and for the walls and doors separating the walkways and the apartments. I am satisfied, therefore that the requirements of Schedule 1 are satisfied in this regard.

Item 12

[228]This is the same complaint as under item 9, and does not require re-consideration.

Item 13 – no fire resistant enclosure around lift

[229]It is common ground that the enclosure around the lift area is not of fire resistant enclosure. Mr Moran says that this is not necessary since its only purpose is to provide a rainscreen. Mr McLachlan’s argument to the contrary appears to me to fall down on 2 bases. Firstly, the enclosure does not enclose the staircase, it encloses the lift area, which is not a means of escape. Second, Mr McLachlan’s argument as he explained it in cross-examination was that whilst he accepted there was no obligation to enclose this area, his opinion was that if it was enclosed it had to be enclosed to be a fire resistant. However he could not, so far as I can see, refer to any specific part of the Approved Document in support of this argument, which does seem to be illogical. As long as the enclosure does not make the position worse in terms of fire risk, it is difficult to see how if there can be no obligation to enclose there is an obligation if enclosure is provided to make it fire resistant.

[230]Furthermore, since there is no suggestion that the fire plans show that this enclosure should be of any particular construction or achieve any particular fire resistance, again it is difficult to see how the architect and building inspector could have overlooked this requirement if that is what is it. I am therefore not satisfied that this complaint has been made out.

Item 14

[231]This is the same item as items 1(a) and (b) in Eugene Clarke’s costs schedule, so that I do not need to address it further here.

Item 15 – openings to side garage wall

[232]The complaint here is that the side garage wall which opens onto the side passageway leading to the rear pedestrian entrance to Anchor Street has a number of apertures fitted with metal grills but which are otherwise open. It is said that this is unsatisfactory because it prevents the side passageway being used as a means of escape, and also because in the event of a garage fire it would allow smoke to escape and rise up to the walkways above, i.e. the upper levels means of escape.

[233]Mr Moran suggests that the car park has been specifically designed in accordance with paragraph 12.4 of the Approved Document, which makes special provision for open-sided car parks, and suggests that the requirements here are met because the garage is located at ground floor not basement level, because the garage is a separate unit for fire purposes both vertically from the ground floor commercial units and horizontally from the first floor residential apartments above, and because it has these permanent openings to provide natural ventilation.

[234]Although Mr McLachlan may well be right when he says that the presence of a fire in the garage might prevent exist via the side passage and rear exist, that ignores the obvious fact that there is an alternative means of escape at ground floor via the front entrance onto Hoghton Street Although there was some suggestion in evidence that the front entrance cannot be used to exit other than by putting one’s hand through the bars to input the entry code, I am satisfied that this defect – if present – was only a temporary malfunction and that the design and installation was such as to permit exit simply by depressing a button on the inside of the door. . Thus this point does not assist him; he has not advanced an argument to the effect that there is some mandatory requirement for 2 alternative means of escape at ground level both of which are separated by a compartment wall from other parts of the building. Although he may also be right to observe that smoke escaping from a garage fire could pass upwards to the walkways above, again in my judgment he is ignoring the obvious point that in this case the walkways are open to the elements.

[235]Again, it is apparent that this is the design from the fire plans, and again there can be no credible suggestion in my judgment that the architect and building inspector had somehow overlooked this aspect of the design. To the contrary I am satisfied that the garage has been specifically designed to be an open sided garage, so that it is simply not possible in my judgment to say that the requirements of schedule 1 have been contravened.

Item 16 – bathroom doors

[236]The complaint is that the doors have been hung so that the light switches serving the bathrooms are obscured when the doors are opened.

[237]Mr Moran agreed that this it would have been better to hang the doors the other way round, but considered that this could not be said to be a defect within clause 2. I agree, and I also consider that in any event it is a minor item within clause 10.

Item 17 – roof leak

[238]The schedule refers to a leak to the roof. In its reply Matila accepts that there was a leak, which was remedied by CPUK. Neither expert can comment on this, and there is no suggestion that there is a continuing problem. It follows, in my judgment, that this was at best a minor item present at some time in mid - late 2009 when the schedule was produced but there is no basis in my judgment for a finding either that it was present before proceedings were issued or that it is still present.

[239]This is the first of a number of items in the schedule, where the experts were not cross-examined in relation to these items in the same manner as they were cross-examined in relation to the items I have just considered. That is either because they duplicated items in Eugene Clarke’s costs schedule and snagging list, which had already been investigated in evidence, or because they were not supported by the expert evidence as being defects which either had seen or confirmed as present or a defect during their inspections, so that for the most part there was no disagreement between the experts in relation to these items. Even if they are items not already addressed and even if one or more was made out as defects, on any view they are minor items and/or incomplete common areas items, and thus not such (whether individually or collectively) as to justify a conclusion that the apartments were not completed for occupation as at 14/10/08 or subsequently.

Item 18 – stairwells

[240]There is a complaint about the vinyl covering to the stairs, which I have already addressed in the section dealing with the position as at October 2008. There is a further complaint that the gap between the stairs and the side wall has been filled with timber which is a fire hazard. There is an issue as to whether this is present to the extent contended for, and also an issue as to whether where it was installed at the request of the Defendants. I am satisfied that insofar as individual locations were filled with timber this was at the Defendants’ request and thus cannot be a matter for which Matila can be held responsible. In any event, it would be a minor item and/or an incomplete common area item.

Item 19 – list keypad

[241]This complaint has already been addressed in the section dealing with the position as at October 2008.

Items 20 – 50; 53-55; 56

[242]These are the other items in the schedule where the experts were not cross-examined at all or in any detail. Some I have already considered when addressing Eugene Clarke’s costs schedule and snagging list. So far as the others are concerned, I reach the same conclusion in relation to each of them as I do in respect of item 17 above. In addition, I have read and accept the submissions made by Mr Oughton in relation to certain individual items in paragraphs 46 and 48 of his closing submissions.

Item 51 – delayed supply of electricity supply

[243]I have already dealt with this. The dates stated by the Defendants in the schedule are simply wrong.

Item 52 – commercial

[244]This is the only reference in the schedules to the commercial units. The only complaint is that the third unit shop front and screed has been left incomplete. The Claimant’s reply observes, correctly, that the specification attached to the commercial units contracts provides:

‘Floors to be concrete finish. Shop fronts to be boarded up (i.e. tenant to perform all fitting out work).’

The former is consistent with items 2.4 and 2.5 of the CPUK specification (albeit not a contractual document in relation to the commercial units), and the latter is consistent with the note on drawing 06-115-120. Thus it is clear, in my judgment, that the commercial units were left in the state which they were required to be in accordance with the commercial units contracts, so that there is no conceivable basis for these allegations.

[245]I should also say that in the Defence in the commercial units action it was complained that as at 9/4/09 there was no suitable electrical or lighting provision in the retail units. However there is no evidence of this, and indeed it is contrary to the evidence I have already referred to as to the dates when the permanent electricity supply was made available to the commercial units, and to the fact that 2 are occupied by commercial tenants and have been for some time. There are also pleaded allegations that there are no window frames, door frames or sanitary ware in Unit A, but again no evidence to support these allegations. The specification required a disabled toilet to be provided in each unit and there is no evidence that this has not been provided. Window frames and door frames would appear to fall within the fitting out works which the incoming tenant would perform, and if that is not right there is no evidence to suggest that what was required has not been provided. For completeness there was a pleaded allegation that no NHBC certificate had been issued nor had a building regulations certificate been issued as at 26/3/08. Whilst that was true as at that date it was evidently not true as at 9/4/09; there are separate NHBC certificates relating to Plot Numbers 1-25 and Plot Numbers NR1 - NR3, indicating that the latter refer to the commercial units, and in any event there is no requirement in the commercial units contracts that NHBC certificates are provided. The latter complaint is demonstrably untrue; the certificate issued by the building inspector relates to the ‘new retail unit and apartments at Hoghton Street’. Conclusions in relation to the allegations of incomplete and/or defective work as at all relevant dates

[246]I have now considered the evidence in relation to the allegations of incomplete and/or defective work as at all relevant dates. For the reasons which I have given, I am satisfied that as at all relevant dates (i.e. October 2008, January 2009, April 2009 and the present date) the state of the works both in relation to the residential apartments and commercial units separately and together, considered by reference to the individual matters complained of and overall, was such that the Defendants are not and were not justified in relying on any defective or incomplete works as a reason for challenging the efficacy of the contractual completion notices served or for refusing to complete the relevant contracts.

[247]This is not a case where there is any substantial misdescription so as to prevent Matila from enforcing its right to specific performance. Nor is it a case where any right to an abatement arises. I need not, therefore, express any opinion as to what appears to be the vexed question – considered most recently by Ramsey J in Donnelly v Weybridge Construction, as to whether or not defects which do not amount to a substantial misdescription but which entitled the purchaser to an abatement from the purchase price would also have the effect of preventing the vendor from serving a notice to complete or from obtaining a decree of specific performance. I respectfully agree with the conclusion which Ramsey J reached in that case, which is that the effect of a clause such as clause 10 here means that the purchaser cannot rely on matters falling within the scope of that clause as a basis for impeaching the notices to complete. Conclusions in relation to the defences to the claim for specific performance of the residential apartments

[248]My conclusions are that:(1) Matila was entitled to serve clause 4 notices on Lisheen on 14/10/08 because the residential apartments were all completed for occupation as at that date.

(2) The notices thus served were effective as clause 4 notices.

(3) Matila was entitled to serve notices to complete on Lisheen under clause 6.8 of the Standard Conditions on 23/12/08.

(4) Matila has not rescinded the residential apartments contracts at any time prior to the issue of proceedings or prior to trial.

(5) Matila has established its right as against Lisheen to specific performance of the residential apartments contracts. It is and has at all relevant times been ready, willing and able to complete.

Exercise of discretion in relation to specific performance

[249]I must now decide whether or not there is a proper basis for exercising the discretion which the court undoubtedly has against ordering specific performance.

[250]The first argument advanced in paragraph 24 of the Defence is the complaint as to the non-completion of the residential apartments and the common areas. However I have already found that the residential apartments and the common areas have been completed in accordance with the residential apartments contracts. Any remaining items of incomplete and/or defective works were minor. In my judgment it was not unreasonable to expect Lisheen to accept Matila’s undertaking under clause 10 in relation to any such matters. It is also material to note that the position as at October 2008, when completion should have taken place, was that Lisheen was perfectly happy to complete but was seeking to negotiate a discount from the purchase price to reflect its own assessment of the costs of finishing off the works to its own satisfaction.

[251]The second argument advanced in paragraph 24 of the Defence is the complaint as to the delay in completion. As I have already found, I am satisfied that Matila did perform its obligation to erect and complete the works with reasonable expedition, and that the overriding cause of the delays was the problem with the electricity supply which was not its fault. As I have observed, not only was there no specific provision in the residential apartments contracts entitling Lisheen to terminate the contracts in the event that the residential apartments were not complete for occupation by a specified date, but also at no time did Lisheen seek to terminate the contracts in reliance on such delay. Indeed at no time did it even seek to negotiate a release from the contracts on that basis; its position was that it always wanted to complete.

[252]The third argument advanced in paragraph 24 of the Defence is the complaint that the delay has led to a fall in the market values of the residential apartments as at the date of the contracts. The agreed valuation evidence shows that by January 2009 the open market value of the residential apartments with vacant possession (as indeed it is now) had fallen to £2,500,000 compared to the original contract sale price of £4,921,583. Although there is no specific evidence as to this, it is not disputed that in general terms there was a fall in the market between the date of the contracts and October 2008, so that there is no reason to believe that the value of the residential apartments was any different in October 2008 to their value in January 2009. However, it does not seem to me that this by itself is sufficient to allow Lisheen to escape from its obligations under the contracts; a purchaser always takes the risk of a fall in property values (as the vendor takes the risk of a rise).

[251]Having regard to the conclusions I have already reached about the 3 month marketing period and the Paige Holdings issue I would not have been satisfied that these matters, raised in paragraphs 24.5 and 24.6 of the Defence, were circumstances which would have entitled the Defendants to resist specific performance.

[252]However the fourth argument advanced in paragraph 24 of the Defence is the complaint that as a result of the delay and diminution in market value the Defendants have been unable to obtain the funding required to complete the contracts. I must consider whether this is something which the Defendants are entitled to argue and, if so, whether they have made out their argument.

[253]I have been referred to the passage in Snell’s Equity (31st edition) at paragraph 15-41(2) where the authorities on the issue as to whether supervening hardship is a ground for refusing specific performance are reviewed. It is clear that in normal circumstances supervening hardship which cannot be laid at the door of the claimant cannot be a basis for refusing specific performance. Equally it is clear from the decision of Goulding J. in Patel v Ali

[1984] Ch 283

that the court’s discretion is wide enough, in a proper case, to refuse specific performance on the ground of hardship subsequent to the contract and not caused by the claimant, and that it does not have to be hardship related to the subject matter of the contract as opposed to personal hardship of the defendant. However, it is only in ‘extraordinary and persuasive principles’ that hardship can supply an excuse for resisting specific performance. In that case Goulding J was prepared to find such hardship, in particular having regard to supervening events during the substantial period of delay between the time when completion should have taken place and the date of the hearing where that delay was not due to any fault of the defendant.

[254]I have also been referred to the decision of the Court of Appeal in North East Lincolnshire BC v Millenium Park (Grimsby) Ltd

[2002] EWCA Civ 1719

. Although that case primarily concerned the appropriate test to be applied in the context of determining an application for summary judgment for specific performance, it is relevant that the defence advanced by the defendant in that case was that due to its financial position it was simply impossible for it to comply with an order for specific performance and that this was a proper ground for the court to exercise its discretion against ordering specific performance. The judge at first instance accepted that in a case of actual impossibility the court would not order specific performance, but it was otherwise in the case of reluctance or unpalatability or difficulty. The Court of Appeal did not criticise that approach, but held that on the evidence the judge could not properly have concluded that the defendant had no real prospect of demonstrating impossibility at trial. They also concluded that on the particular facts of that case (where the claimant was seeking to enforce by specific performance an obligation undertaken by the defendant to undertake works on the claimant’s land) it was at least arguable that the claim did not fall within one of the settled grounds for awarding specific performance.

[255]At first instance the judge referred to the decision of the House of Lords in the case of Co-operative Insurance Services v. Argyll Stores Holdings

[1988] AC 1

in the context of the danger of oppression in making an order for specific performance with which the defendant was unable to comply. At page 18 Lord Hoffman said this:

‘Mr. Smith, who appeared for C.I.S., said that if the order became oppressive (for example, because Argyll were being driven into bankruptcy) or difficult to enforce, they could apply for it to be varied or discharged. But the order would be a final order and there is no case in this jurisdiction in which such an order has been varied or discharged, except when the injuncted activity has been legalised by statute. Even assuming that there was such a jurisdiction if circumstances were radically changed, I find it difficult to see how this could be made to apply. Difficulties of enforcement would not be a change of circumstances. They would have been entirely predictable when the order was made. and so would the fact that Argyll would suffer unquantifiable loss if it was obliged to continue trading. I do not think that such expedients are an answer to the difficulties on which the objections to such orders are based.’

[256]In Chitty on Contracts (30th edition) at paragraph 27-041 it is said that ‘impossibility of enforcing an order of specific performance (e.g. because the defendant is not and has no assets within the jurisdiction) may also be a reason for refusing to make such an order. The case cited in support of that proposition, Locobail International Finance v Agroexport

[1986] 1 WLR 657

, is a case about an interlocutory order for a mandatory injunction. It appears, however, that the problem is the same in both cases, which is that a defendant who is subject to an order is at risk of committal in the event of non-compliance. If the court is satisfied that a defendant against whom an order is sought is simply not in a position to comply, then it would not be equitable to order him to comply nonetheless and thus put him at risk of committal, even if in fact an order for committal should not be made unless the court was satisfied that the defendant was able to comply but had chosen not to do so. Although it is true that in a specific performance case it is open to the claimant, where it becomes apparent that the order cannot be performed, to seek an order discharging the decree, that would not appear to be a sufficient answer to the problem so far as the defendant is concerned.

[257]I have already concluded that as a result of the delay in completing the development and the consequential downturn in the property market the position by the end of 2008 was that the Defendants were unable to complete the contracts because:(a) they could not complete without finance;

(b) the Bank of Ireland was unwilling to advance sufficient to enable the Defendants to complete making up the balance from their own resources;

[258]In paragraph 86 of his closing submissions Mr Oughton for Matila submitted that the Defendants had failed to provide any, let alone full, disclosure as to their respective means, both in terms of the assets available to Lisheen, Brendan Clarke and Paul Clarke, but also in terms of what might reasonably be available to them from third party sources, whether commercial lenders or otherwise. He submitted that since it would only be in exceptional circumstances that the Court would not order specific performance in a case such as the present, it was incumbent on the Defendants to provide the fullest disclosure as to their means and, given their failure to do so, the Court could not draw the inference which they invited the Court to make.

[259]I agree with that submission. It seems to me that there is a real difference between my concluding, as I do, that as at the end of September 2008 the Clarke brothers themselves saw no way of completing without funds from the Bank of Ireland, and my concluding that on the evidence before me that as at the present date the combined finances of the Defendants, coupled with their access to third party funds, whether on a commercial or non-commercial basis, and whether on a secured or unsecured basis, is such that it is simply impossible for them to complete. Whilst given the fall in property values and the credit crunch I can see that this may well be the case, in my judgment it is incumbent on a defendant who wishes to advance such an argument to give the fullest possible disclosure of his financial position so that the other party and the court can be satisfied that this is so, and in this case the Defendants have failed to surmount that high hurdle.

[260]I conclude, therefore, that Matila is entitled to specific performance in relation to the residential apartments contracts as claimed.

Matila’s entitlement to damages

[261]From the conclusions which I have reached it would appear to follow that Matila would also be entitled to damages in lieu or in addition to specific performance under s.50 Senior Courts Act 1981.

[262]It appears from the Particulars of Claim and Mr Oughton’s skeleton that Matila is awaiting this judgment before deciding whether or not to elect to rescind the residential apartments contracts on the basis of Lisheen’s failure to comply with the notices to complete and/or on the basis of what he contends is its repudiatory breach in failing to complete at any time thereafter. I have already held that the notice to complete of 23/12/08 was a valid and effective notice, and that no question of misdescription or abatement arises which could be said to impeach that notice. I am also satisfied that the Defendants have since the date that notice was served demonstrated a clear intention not to perform the residential apartments contracts and, thus, can properly be described as being in repudiatory breach of those contracts.

[263]It also appears to me that if damages are claimed, then the proper measure is the contract price less the deposit (on the assumption that it is and remains forfeit) and less the current market value, which is agreed at £1,950,000. Mr Machin submits that I cannot determine this unless and until I have also determined whether or not the Defendants are entitled to an allowance for any outstanding snagging matters. However, by reference to the findings which I have made, I have found that I am satisfied that all of the matters included in Eugene Clarke’s costs schedule and snagging list have been remedied. So far as the Scott Schedule is concerned, the only items where I have been satisfied on the evidence, and made a specific finding, that there is a continuing problem, are items 1-3, where I have concluded that the appropriate remedial works would cost £2,823.31. It follows that this is the extent of any deduction which may be made from any damages recoverable.

The form of order for specific performance

[264]It appears that what is sought in paragraphs 94 and 95 is not contentious, and seems to me to be appropriate. If it possible to agree a form of order then that would be the most sensible course. If not, I will rule on any disputed issues upon handing down judgment.

The position of the Clarke brothers as guarantors

[265]In my judgment there is no separate defence available to the Clarke brothers as guarantors who, accordingly, are liable to Matila under the guarantees which they gave under the residential apartments contracts. This would, I am satisfied, include an obligation to complete the leases in accordance with clause 15(ii) of the residential apartments contracts, as demanded of them on 7/4/09 and 9/4/09. It would also include an obligation to pay any damages awarded against Lisheen.

[266]In paragraph 99 of his closing submissions Mr Oughton suggested that the order for specific performance should be against the Clarke brothers only as opposed to against Lisheen as well. I am not entirely clear why it is said that Matila is not also entitled to an order of specific performance against Lisheen as well, and this may be something which should be considered by counsel and be the subject of further submissions if necessary when judgment is handed down.

The defences to the claim for specific performance of the commercial units contracts

[267]Subject to any issues arising out of the terms of the April 2010 Assignment, my conclusions are that:(1) Matila was entitled to serve clause 3 notices on Ascot on 9/4/09 because the commercial units were all completed in accordance with the agreed specification as at that date.

(2) The notices thus served were effective as clause 3 notices.

(3) Matila was not entitled to serve notices to complete on Ascot under clause 6.8 of the Standard Conditions on 23/12/08, because as at that date although the commercial units were completed in accordance with the agreed specification, no effective clause 3 notice had been served. Ascot was not entitled to serve notices to complete on Lisheen on 23/12/08, because no conditions had been incorporated which gave them such a right. However, at no time prior to 9/4/09 or service of proceedings had Ascot or Lisheen purported to treat the service of either of the notices to complete as a repudiatory breach justifying them as rescinding the commercial units contracts or the Assignment. Matila has not attempted to rescind the commercial units contracts at any time prior to the issue of proceedings or prior to trial, nor has Ascot attempted to rescind the Assignment at any such time.

(4) Insofar as put in issue by the Defendants, Matila has established its right as against Ascot to specific performance of the commercial units contracts. Ascot has established its right as against Lisheen to specific performance of the Assignment. Both Matila and Ascot are, and have been at all relevant times, ready, willing and able to complete. In accordance with what Matila’s solicitors said on 9/4/09, these obligations can be satisfied by the simple expedient of Matila granting a lease of the commercial units direct to Lisheen.

[268]I turn therefore to the defences asserted by the Defendants by way of the Amended Defence and said to arise from the April 2010 Assignment.

Champerty

[269]The Defendants’ argument is that the April 2010 Assignment amounts to a champertous assignment by Ascot to Readbank of a bare right of action, because:(i) Readbank has no pre-existing genuine commercial interest in the subject matter of the assignment;

(ii) this is not an assignment of a right or cause of action incidental to a transfer of property. They say that the reality of the transaction as an assignment of a bare right to litigate is demonstrated by (i) the fact that it took place very shortly before and obviously in anticipation of the trial, (ii) the modest deferred payment to be made by Readbank,

(iii) the detailed provisions made in relation to costs as between Readbank and Ascot;

(iv) the provision made for representation at trial.

[270]The Claimants’ argument is that there was no prohibition against assignment either of the commercial units contracts or of the Assignment. (This is not challenged.) They say that there was a genuine pre-existing commercial interest and/or that the assignment is an incident of the transfer of a property right. They also say that whatever else may be the position, there can be no objection to a transfer of the right to claim payment of the sum of £900,000 payable under clause 1.3 of the Assignment, which is a statutory assignment of a debt which cannot be challenged on the grounds of champerty.

[271]I have been referred by both counsel to the section in Chitty on Contracts (30th ed) (paragraphs 16-048 – 066) dealing with maintenance and champerty. The complaint in this case is that the April 2010 Assignment is champertous because it is an assignment of a bare right to litigate in which the assignee Readbank has no genuine commercial interest. Since this case is about the validity of an assignment, I have also referred to the section in Chitty at paragraphs 19-049 – 53. The leading decision is of course the decision of the House of Lords in Trendext Trading Corp v Credit Suisse

[1982] AC 679

. In that case Lord Roskill said (at page 703):

‘But it is true today to say that in English law an assignee who can show that he has a genuine commercial interest in the enforcement of the claim of another and to that extent takes an assignment of that claim to himself is entitled to enforce that assignment unless by the terms of that assignment he falls foul of our law of champerty, which, as has often been said, is a branch of our law of maintenance.’

[272]That approach was applied in the subsequent decision of the Court of Appeal in Brownton Ltd v Edward Moore Inbucon Ltd

[1985] 3 All ER 499

, where the Court held that a claimant who had sued its computer installer and its computer supplier had a sufficient commercial interest to accept an assignment from the former of its rights against the latter as part of a settlement of its claim against the former. They held that it was necessary to examine the transaction as a whole to see if the assignee had a sufficient genuine commercial interest, that it was not necessary for the assignee’s interest to extend to ‘every facet of the cause of action’, and that it was not objectionable that the assignee stood to make a profit from the assignment so long as there was no massive disproportion.

[273]I have also found assistance in the decision of the Privy Council in Massai Aviation Services v Attorney General

[2007] UKPC 12

, where the court upheld the validity of an assignment of a cause of action from the company in whom the claim was vested to a second company formed and owned by the shareholders of the original company, in circumstances where the remainder of the assets of the original company had been sold to a third party who had no interest in prosecuting the claim. Baroness Hale, reading the judgment of the court, said (as relevant to this case):(1) Normally it would not matter if the assignment was void because, if so, the assignor could simply continue the action which in that case (as in the present) had been commenced before the assignment [paragraph 1].

(2) In order to decide whether the particular transaction is permissible it is essential to look at the transaction as a whole and to ask whether there is anything in it which is contrary to public policy [paragraph 19].

(3) The question was whether the transaction was or was not ‘wanton and officious meddling in another person’s litigation for no good reason’. If, taken as a whole, the transaction was a perfectly sensible business arrangement, then it would be held to be void [paragraph 21].

[274]Here, examining the transaction as a whole, it is clear that Matila had a genuine pre-existing commercial interest in the performance of the contract between Ascot and Lisheen. It is evident from the history which I have recounted that the only reason Ascot was introduced as a contractual intermediary between Matila and Lisheen was because of the arrangement between Phil Collins and his business partners to allow the latter to receive a payment in return for their disengagement from this property development. The Defendants’ dealings were always with Matila, through Phil Collins and its solicitors. Furthermore, all parties were well aware that under the Assignment Lisheen had obtained an assignment of the benefit of Ascot’s interest in the commercial units contracts, and that what was agreed was that in return for Lisheen paying the remainder of the price (£900,000) Matila would grant the leases over the commercial units direct to Lisheen. It is also relevant to remind myself that from a financial point of view Ascot agreed to pay Matila £725,000 for the 3 units and paid a deposit of £60,250, whereas Lisheen agreed to pay Ascot £1,000,000 and paid a deposit of £100,000. Thus Ascot was £39,750 in profit from the outset, and stood to make a further £235,250. Ascot therefore had a financial interest of its own in pursuing Lisheen, but also had a financial exposure, in that unless it could obtain specific performance against Lisheen it was at risk of being forced to complete by Matila in relation to 3 commercial units which on the valuation evidence before me are worth less than the price they had agreed to pay for them. It is clear that the real issue in the litigation has always been Lisheen’s argument that there was no obligation to complete the leases in relation to the commercial units by reason of its essential allegation that they had not been completed in accordance with the commercial units contracts as at the date of the clause 3 notices. If this argument was to succeed, then it would entitle Ascot also to refuse to accept the leases of the commercial units. Thus the essential contest was, and always has been, between Matila and Lisheen, with Ascot really standing in the middle.

[275]In all of those circumstances, had it been Matila not Readbank who took the place of Ascot vis-à-vis the Defendants by the April 2010 Assignment, I consider it quite clear on the basis of these authorities that the assignment could not have been said to have been objectionable. This is not simply an assignment of a bare cause of action. It is an assignment of a contract which itself, as Mr Oughton submitted, created property rights in the commercial units. It is also an assignment of a contract where the principal claim made is a claim for the payment of a sum of money under clause 1.3. It is true that it requires litigation to enforce those rights, but that does not alter the essential nature of the transaction. Matila, as a company with an existing proprietary interest in the commercial units, and a genuine pre-existing commercial interest both in the commercial units contracts and in the Assignment, would have been perfectly justified in agreeing with Ascot to step into Ascot’s shoes so as to seek to enforce the Assignment against Lisheen. The effect, as I have described it, is that in return for keeping the profit it had already earned Ascot was able to step out of heavily contested litigation. It is true that it thereby lost the potential opportunity to make the remainder of its profit on the deal but, equally, it avoided the risk of having to complete vis-à-vis Matila and then find itself unable to enforce completion as against Lisheen or the Clarke brothers and, hence, potentially be substantially out of pocket in a declining property market. The potential profit to be made by Matila in taking over the Assignment is not disproportionate having regard to the history and the factors I have referred to. The terms in relation to costs and representation were in my judgment incidental to this commercial transaction, rather than the real focus of it.

[276]The question then is whether it makes any difference to this analysis that the transaction was entered into by Readbank rather than Matila. It is true, as Mr Machin observes, that the Claimants have failed to adduce detailed evidence as to the relationship between Matila and Readbank beyond the assertion that they have a common (albeit unparticularised) shareholding. However, since it is known from his witness statement that Phil Collins is at the very least a 50% shareholder in Matila See paragraph 13 of his witness statement. , since it is known from the Companies House documentation in file 2A that he is a director of Matila and a director of Readbank, since it is also known that Readbank is acting through the same solicitors and counsel as Matila, and since there has been no suggestion that the arrangements between Matila and Readbank are at arms length involving competing commercial interests (if that had been so or even suggested by the Defendants there would have needed to be disclosure about the arrangement), I consider that I would be closing my eyes to the obvious if I were to conclude that I was not satisfied that there was no commonality of interest between the two companies. That is particularly so when the point was raise extremely late in the day by the Defendants so that it would be unfair to hold it against the Claimants that they had not provided chapter and verse in relation to the relationship between Matila and Readbank, and when Phil Collins was not even cross-examined on these points. It is obvious having regard to this evidence, and I conclude, that Phil Collins has if not a controlling interest in both companies certainly a substantial interest in both. On any view, on the evidence this is not an arm’s length relationship where Readbank has officiously intermeddled with a view to maintaining this litigation for its own profit. In the circumstances, in my judgment it makes no difference at all that the assignee is Readbank rather than Matila and, accordingly, I am satisfied that it is not open to the Defendants to contest the commercial units claim by seeking to impugn the validity of the 2010 Assignment.

[277]Even if I was wrong in the conclusion I have just reached, that does not of course make any difference on the facts of this case because Ascot is still a Claimant to the commercial units action and if the assignment is void it would – subject to the next point – be entitled to enforce the Assignment against Lisheen as the original contracting party.

Release of Ascot bars the claim

[278]The other argument advanced in relation to the April 2010 Assignment is that the effect of Matila’s release of Ascot by clause 5(b) of that contract was that there could be no further obligation on Ascot’s part to perform any obligation or pay any sums to Matila, so that there is nothing on which Lisheen’s covenant in clause 2.1 of the Assignment or the Clarke brothers’ guarantee in clause 3 of the Assignment can bite.

[279]In his response Mr Oughton correctly observes that the true analysis of clause 5(b) is that it operates, as it says it does, as a covenant not to sue as opposed to a release, but I do not consider that anything turns on that.

[280]The more fundamental difficulty with this argument so far as Lisheen is concerned is that it ignores the separate obligation undertaken by Lisheen in clause 1.3 of the Assignment, which is on completion to pay £900,000 to Ascot provided that Ascot procures the grant of the leases the subject of the commercial units contracts to Lisheen. That is an obligation which in my judgment Readbank is entitled by virtue of clause 4(a) of the April 2010 Assignment to enforce against Lisheen, and it is an obligation which does not depend on Ascot (or Readbank) being under any obligation in relation to Matila. It follows that the essential thrust of the claim advanced against Lisheen in the commercial units action has nothing to do with clause 2 of the Assignment, and is unaffected by Matila’s release of Ascot.

[281]Even if that was wrong, in my judgment the effect of clause 5(c) of the April 2010 Assignment when read with 5(b) is that Readbank would be entitled to enforce clause 2 of the Assignment against Lisheen on the basis that it is now the party liable to Matila under the commercial units contracts. Although Mr Machin submits that it cannot be right that Lisheen should end up being liable to Readbank because Readbank chose to enter into this obligation to Matila, in my judgment that ignores the commercial reality, which is that the intention of the April 2010 Assignment, which I have already held was perfectly lawful, was for Readbank to step into Ascot’s shoes. I see no reason why as part of that process Readbank should not have agreed to accept the liability which Ascot previously had to Matila, and to enforce its rights under the assignment of the Assignment against Lisheen on that basis.

[282]However, as I have said it is not strictly necessary for me to decide this point because the commercial units action is a claim for specific performance of the obligations in clause 1, not a claim under which Ascot and now Readbank are seeking to require Lisheen to perform the obligations which Ascot and now Readbank has undertaken to Matila under the commercial units contracts.

[283]For the reasons I have already given, therefore, I am satisfied that Readbank is entitled in principle to specific performance of the Assignment against Lisheen. For the same reasons as I have given in relation to the residential apartments I am satisfied that Readbank is entitled to an order for specific performance. I am satisfied that there is no question of any counterclaim for damages for defects. In this case the undisputed agreed valuation evidence is that by April 2009 the value of the 3 commercial units was only £479,000, compared to £1M as at the date of contracting, and even now the value is only £557,500. As Mr Oughton has observed in his skeleton argument, there is no separate plea for rescission in the alternative in the commercial units action, so I do not need to consider that point here.

[284]So far as interest is concerned, it is clear from the findings which I have made that it is only the clause 3 notice of 9/4/09 which is valid and, hence, the issue raised in paragraph 96 of Mr Oughton’s closing submissions does not arise. I note the proposal in relation to apportionment, which appears sensible. Again I will hear further argument on the form of order when judgment is handed down if the parties are unable to agree it beforehand.

The position of the Clarke brothers are guarantors

[285]So far as the position of the Clarke brothers as guarantors is concerned, under clause 3 of the Assignment they guarantee that Lisheen ‘shall pay all sums of money due to the Assignor and in the event of default shall pay the sums of money due to the Assignor’. It follows in my judgment that although an order for specific performance could not be made against them directly they are nonetheless liable to Readbank as guarantors for payment of any damages in lieu or in addition to Readbank, and it would appear appropriate to make a declaration to that effect, with all questions of enforcement to be adjourned generally to be restored if so advised. Again however I will listen to further submissions about the form of order when judgment is handed down.

Conclusions

[286]It follows from what I have said that I find for the Claimants in both actions. I have great sympathy for the predicament in which Brendan and Paul Clarke find themselves, which is not of their making, but unfortunately for them I am compelled to conclude that they have no defence as a matter of law to these claims.