[2024] EWHC 3625 (TCC)

Was there a certain and binding oral agreement between Orchard House and the Defendants reached between September 2018 and March 2019 as to the Purchase Price for Plot C (less Plot G)?

Orchard House’s position is that, from shortly after Mr Lomax wrote to the Defendants on 20 July 2018, setting out his detailed proposal for, and justification of, the Purchase Price of Plot C, the parties proceeded on the footing that the Purchase Price would be £250,000. The Defendants did not put forward any counterproposal and they were conducting themselves as if Mr Lomax’s proposed figure were uncontroversial. The only variation of that figure that was discussed was based on the potential for the Defendants to reduce their liability for CGT.

Ms Dimelow accepts that the figure of £250,000 was used in negotiations and discussions between the parties, but her position is that it was never, in fact, agreed.

Orchard House has not persuaded me, on the balance of probabilities, that the parties agreed a Purchase Price of £250,000 for Plot C between September 2018 and March 2019.

Firstly, I have not been able to find anywhere in the email correspondence passing between the parties (or between their solicitors) any express agreement of the Purchase Price. If it had been agreed, I would have expected that fact to have been recorded distinctly and clearly, especially in the solicitors’ correspondence.

If anything, the email correspondence (or, at times, the absence of it) suggests that no agreement was reached.

For example, Mr Collins sent an email to Mr Rose on 19 October 2018 in which he suggested that the Purchase Price would be £250,000 or 85% of the market value of Plot C. Mr Lomax suggested that this was an error on Mr Collins’ part, but it does not seem to have been challenged at the time and, in my view, it is unlikely that Mr Collins would have made such a mistake.

In her email to Mr Collins on 23 January 2019, Mrs Davies was referring to a “proposed agreement” and the tenor of her email to Ms Dimelow on 21 February 2019 was persuading her to reach an agreement, rather than confirming that an agreement had been finalised.

As late as 27 June 2019, Mrs Davies wrote to Ms Dimelow saying, “Once we have a value that both parties agree to, we would like to exercise the option set out in Clause 7.1 of the agreement by serving an option notice on your client.”

Moreover, the emails sent following meetings at which the parties were without legal representation often suggested that any common ground was to be advised on, or endorsed by, the lawyers.

For example, in his email dated 8 November 2018, Mr Lomax says, “it will be much easier to obtain an agreement in principle prior to involving solicitors, save as to costs and time delays.” On 23 November 2018, Mrs Davies wrote to Ms Dimelow, “once you and [Mrs Dimelow] are happy with absolutely everything, then we will send over to [Mr Collins] and we can hopefully have everything signed off in the next couple of weeks, if you are in agreement.”

Furthermore, the correspondence sent by Mr Collins was generally marked “Subject to Contract and Without Prejudice”, suggesting that no final, binding agreement had been reached, or would be reached, until all outstanding contractual issues had been resolved.

Secondly, as I have noted above, and leaving aside email correspondence, Orchard House has not produced any persuasive contemporaneous documents tending to show that an agreement was reached by the parties in relation to the Purchase Price. In particular, it has not disclosed any file notes or the minutes taken by Mrs Davies and I have seen no relevant internal emails sent, or file notes taken, by Mr Lomax or Mr Rose.

Thirdly, Orchard House’s case on this issue has lacked clarity and consistency. Mr Lomax acknowledged in the witness box that some of the dates referred to in the Claimants’ evidence and pleaded case “might not be exact”.

In response to a question from me, Mr Lomax accepted that he could not recall a particular time when the agreement of £250,000 for the Purchase Price was reached. Mrs Davies told me that the deal was reached when Mr Rose drew up the contractual agreements.

In my oral judgment following the reverse Summary Judgment application, I made the following observations:-

“… Where a claim is based on an oral agreement, the Particulars of Claim should set out the contractual words used and should state by whom, to whom, and when they were spoken. The paragraphs of the Particulars of Claim about which the Defendants complain do not appear to comply with this guidance…”

“… There appears to be no case stated by reference to the principle of offer and acceptance…”

Orchard House subsequently elected to amend its Particulars of Claim.

In the Amended Particulars of Claim, it is pleaded that at a meeting on 4 September 2018, “Mr Lomax repeated the offer [of £250,000] made in his letter dated 20 July 2018] and Mr Wynford Collins stated that the Defendants agreed that the sale price of the balance of Option C would be £250,000 and that the sale would occur on the grant of planning permission. Mr Lomax agreed to this”.

Therefore, on Orchard House’s pleaded case, an agreement on the Purchase Price was reached on 4 September 2018.

However, that assertion was not reflected in the witness statements of Mr Lomax or Mr Rose, and Mr Lomax’s evidence in the witness box was that “it was not a definite deal at this point”. Mrs Davies was not able to comment on the meeting on 4 September 2018 because it took place before she began working for Orchard House.

It is perhaps worth noting that this apparently pivotal date of 4 September 2018 did not even appear in Orchard House’s original Particulars of Claim and that Mr Horne’s Skeleton Argument refers to the alleged agreement having been reached during meetings on 19 October, 6 November and 7 November 2018.

Mr Lomax’s evidence on the meetings of 4 September 2018 and 19 October 2018 was far from clear. He told me that his witness statement contained an error in that it indicated that the Defendants were not present at the meeting on 4 September 2018, when they were. He was unsure whether there was a meeting on 19 October 2018 or whether he was present at it. It seems that the only witness statement served by the Claimant referring to a meeting on that date is that of Mrs Davies, who confirms that she did not attend it.

I am not satisfied on the evidence that a meeting took place on 19 October 2018.

In any event, there is the email sent by Mr Collins to Mr Rose on 19 October 2018 (referred to above) which suggests that the agreement for which Orchard House now contends had not been reached.

Mr Lomax is now clear that he attended the meeting on 6 November 2018, whereas he had previously indicated that he was not at the meeting.

Orchard House’s position now appears to be that the agreement was reached at some point between the meetings on 4 September 2018 and 19 March 2019.

Its pleaded case suggests that, at the meeting on 19 March 2019 which was held at Hibberts’ offices, “it was confirmed by the Defendants during those discussions… that the agreed sale price of the balance of plot C was £250,000”. However, this additional wording was introduced at a late stage at paragraph 9(v) of the Amended Particulars of Claim, which again is surprising, given the crucial nature of the allegation.

It is also noteworthy that the Claimants’ letter of claim made no reference to any of the meetings between the parties before 12 February 2019.

I accept that mistakes can be made, but there are too many inconsistencies in Orchard House’s written case to justify making the finding which it seeks.

Fourthly, the basis of the figure of £250,000 is the letter dated 20 July 2018 sent by Mr Lomax to the Defendants. I was referred to that letter several times during the trial. However, it is apparent that Mr Lomax’s offer was premised on a number of factors, and chiefly on his allegation that the Defendants had failed to disclose the existence of the Severn Trent Pipeline, leading to Orchard House incurring very substantial outlay. That appears to have been a key feature of Mr Lomax’s justification for the proposed Purchase Price.

The Defendants were prompt in disabusing Mr Lomax of his position. Mr Collins wrote to Mr Rose, to confirm that, not only had the Defendants informed Mr Lomax of the presence of the pipeline on two separate occasions, but that, in any event, it was his responsibility to make the appropriate drainage searches. I found Ms Dimelow’s evidence on whether Mr Lomax had been informed about the water main compelling, and I accept what she told me. She was very specific and detailed about when and how the information was conveyed to Mr Lomax.

On any view (and this was accepted by Mr Rose), a drainage search ought to have been undertaken by Orchard House, and yet it did not take that step. Mr Rose says that the search that was ultimately carried out did not reveal the Severn Trent Pipeline. However, he has not been able to produce a copy of the search (for understandable reasons) and, in any event, it takes the matter no further.

The Severn Trent Pipeline issue was, on any view, contentious. The Defendants did not, and do not, accept that they were at fault in failing to disclose its presence on the Farm. Mr Lomax claimed that it had cost him approximately £220,000 to move. In light of their justifiably strong views on the issue and given that it was the key plank of the reasoning behind Orchard House’s offer, it is unlikely that the Defendants would have simply accepted Mr Lomax’s proposed starting point for the calculation of the Purchase Price.

In the same context, I note that the Defendants say that they did not accept Mr Lomax’s calculation of the sums for which they were liable in relation to the New Farmhouse. The amount in dispute was less substantial than the costs to be incurred as a result of the pipeline, but nevertheless Mr Lomax’s figures appear to have been unacceptable to the Defendants.

Fifthly, it was Ms Dimelow’s clear evidence that no such Purchase Price had been agreed and that the figure of £250,000 was simply used in negotiations. Whether she was correct or not, she recalled that Mr Collins had told her that no Purchase Price could be agreed until Planning Permission had been obtained. I found her evidence on this issue persuasive and consistent with the documentary evidence and the other matters to which I have referred above.

Sixthly, if the parties had agreed the Purchase Price at £250,000, there would have been no reason for the further agreement for which Orchard House now contends.

Indeed, if it was sure of its ground, then I would have expected Orchard House to have exercised Option C on the first occasion on the basis of the Purchase Price which it contended had been agreed.

Lastly, there is the perhaps obvious point that, even on Orchard House’s case, there are a number of figures advanced as the agreed Purchase Price: £250,000; £25,000; £251,000. This lack of consistency does not assist Orchard House’s case.

Moreover, I accept Mr Aslett’s point that any agreement reached (none having been found by me) would have constituted a new agreement, as set out in the amended contractual documentation prepared by Orchard House, rather than an agreement pursuant to Option Agreement C. I note that Mr Lomax accepted that a new agreement had been proposed and was unable to recall whether Mr Rose had discussed its implications with him.