Gold Group Properties Ltd v BDW Trading Ltd

Were Barratt in breach of contract as at 12^th January 2009?

Were Gold in breach of contract as at 12^th January 2009?

45% of the first £18,000,000 of revenue and 5% of the first £18,000,000 as an agency fee for selling the properties

A further 55% of the next £1,500,000 of revenue for constructing the properties and 5% for sales and marketing

For revenues of £19,500,000 to £26,000,000 Barratt would be paid 95% of the revenue for constructing the properties and 5% for selling the properties

For any revenue beyond £26,000,000 Barratt would be paid 55% of the revenue for constructing the properties and 5% for selling the properties

……….

comply with the Development Obligations in the Development Plan;

keep the Freeholder informed of the progress of the Development;

comply with the Marketing Plan;

keep the Freeholder informed of the progress of the marketing of the Units; and

in any case have due regard to the proper and reasonable requirements and representations of the Freeholder……..

Paragraph 15 of Mr Gold’s statement, again not disputed, was in these terms:

“At some point during the summer to November 2008, the Gadoline House warehouse and office building was burnt down by vandals. Barratt demolished the remains of the building but left the other warehouse (the unit 4 warehouse) standing. There was progress on some of the other pre-start preparatory work. For example, there were discussions between Barratt and EDF regarding the relocation of the electricity sub-station and with Thames Water regarding the diversion of the culvert running across the site, but no attempt appears to have been made to start actual construction work.”

The report concluded:

“Due to this reduction [on values in the area] Barratt have priced the one bedroomed apartments in the scheme below the suggested prices by agents within the area and have placed the two bedroomed apartments at an affordable level in line with the agents suggestions in the area.”

The demolition contractor to commence work.

The Importance of the Contract Terms

In any situation where one party to a contract alleges that the contract has been frustrated, the proper construction of the contract will be the necessary starting-point of the Court’s investigation. In Davis Contractors Limited v Fareham UDC [1956] AC 696, Lord Reid said:

“It appears to me that frustration depends, at least in most cases, not on adding any implied term, but on the true construction of the terms which are in the contract, read in light of the nature of the contract and of the relevant surrounding circumstances when the contract was made.”

Accordingly, I deal first with the construction issues. They go a long way towards supplying an answer to the question of whether or not the Agreement was frustrated.

The House of Lords restated the test for frustration in National Carriers Limited v Panalpina (Northern) Limited [1981] AC 675 in these terms:

“Frustration of a contract takes place when there supervenes an event (without default of either party and for which the contract makes no sufficient provision) which so significantly changes the nature (not merely the expense or onerousness) of the outstanding contractual rights and/or obligations from what the parties could reasonably have contemplated at the time of its execution that it would be unjust to hold them to the literal sense of its stipulations in the new circumstances; in such case the law declares both parties to be discharged from further performance.”

In the modern day, the Courts have repeatedly said that the doctrine of frustration operates within narrow confines. In Pioneer Shipping Limited v BTP Tioxide Limited (The Nema) [1982] AC 724 at 752, it was stressed that frustration is “not likely to be invoked to relieve contracting parties of the normal consequences of imprudent commercial bargains”. Again this echoes Lord Radcliffe in Davis who said that “frustration is not to be lightly invoked as the dissolvent of a contract”.

In J. Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] 1 Lloyds’ Rep 1, Bingham LJ (as he then was) identified five propositions necessary to establish frustration. In short they were:

Of the different types of frustration noted in the authorities, Barratt’s case comes closest to those cases concerned with the cancellation of an expected event, such as Krell v Henry [1903] 2 KB 740. Barratt’s case, at its highest, is that both sides expected the selling prices of the properties to be no less than the minimum prices in the Fourth Schedule and that this ‘event’ or common assumption was cancelled through the fault of neither party. The other common categories of frustration, namely supervening illegality or delay, do not arise here.

In these circumstances, it is necessary to consider whether or not the event was foreseen or foreseeable. The fact that the parties have foreseen the event but not made any provision for it in their contract will usually, but not necessarily, prevent the doctrine of frustration from applying when the event occurs: see McAlpine Humberoak Limited v McDermott International Inc (1992) 58 Build LR 1 at page 18, compared with Maritime National Fish Ltd v Ocean Trawlers Ltd [1935] AC 524 at 529. There are a number of authorities which make plain that a foreseen event will generally exclude the operation of the doctrine of frustration.

The leading case on frustration, certainly in a construction context, is Davis v Fareham . In that case the House of Lords rejected the contention that the construction contract was frustrated because adequate supplies of labour were not available to the contractor shortly after the end of the last war. Their Lordships were agreed that, on the facts of that case, the appellant fell some way short of demonstrating frustration. Lord Radcliffe identified the relevant principle in this way:

“So perhaps it would be simpler to say at the outset that frustration occurs whenever the law recognises that without default of either party a contractual obligation has become incapable of being performed because the circumstances in which performance is called for would render it a thing radically different from that which was undertaken by the contract………It was not this that I promised to do.”

In the same case, Lord Somervell concluded:

“A party contracting in the light of expectations based on data of that or any other kind must make up his mind whether he is prepared to take the risk of those expectations being disappointed. If not, then he will refuse to contract unless protected by some specific provision. There is no such provision here. The appellants took the risk under the contract, and it seems to me impossible to maintain that the contract did not apply in this situation as it remained, the expectations on which the estimate was based not having been realised.”

At my request, following the conclusion of the hearing, the parties provided me with some examples of more recent Court of Appeal cases concerned with frustration. These both demonstrate the relative rarity of a finding of frustration. Thus, in CTI Group Inc v Transclear SA [2008] EWCA Civ 856, the Court of Appeal rejected the claim for frustration, making it plain that, as numerous earlier authorities showed, the fact that a supplier chose not to make goods available for shipment, thus rendering performance by the seller impossible, was not of itself sufficient to frustrate a contract for sale. A similar result, this time in relation to a charter party, can be found in Edwinton Commercial Corporation v Tsavliris Russ (The Sea Angel) [2007] EWCA Civ 547, a case of frustration based on delay.

It is Barratt’s case that, no later than 12^th January 2009, when their solicitors wrote to say so (see paragraphs 38-39 above), the Agreement was frustrated because, by that point, it was clear that the properties were most unlikely to achieve the minimum prices set out in the Fourth Schedule. They argued that, since that fall in the property market was not the fault of either side, it would be unjust to hold them to their literal obligations under the Development Agreement.

On analysis, I consider that the facts and matters relied on by Barratt fall far short of satisfying the legal doctrine of frustration. There are four principal reasons for that.

First, it is clear that both parties foresaw the possibility that the property market would drop and the minimum prices would not be achieved. The potential fall in the value of property is expressly referred to by Barratt in their letter to Gold of 7^th February 2007 (see paragraph 12 above), which talked about a fall of 28%. The possibility of a fall was therefore expressly contemplated. In such circumstances, the fall that actually happened could not possibly be described as unforeseen.

Secondly, not only was the event foreseen, but the Agreement made express provision for what should happen if that event (i.e. a need to reduce the minimum prices) occurred. I have already explained that the Agreement expressly permitted the parties to renegotiate the Schedule of Minimum Prices. Such express provision was designed to deal with the situation where Barratt received advice that the minimum prices might not be achieved on completion. Mr Dennys acknowledged in his oral submissions that there was “an effective mechanism for dealing with market value falls such that the minimum prices could not be achieved”. It is, in my judgment, quite impossible to argue that the contract was frustrated in circumstances where the allegedly frustrating event was both foreseen by and dealt with expressly by the terms of the contract between the parties. Despite the forecast fall in property prices, the Agreement in this case was, and remained, capable of performance.

Thirdly, there is no reason for the law to intervene and dissolve this contract. As Bingham LJ made plain in Super Servant Two , frustration only arises at all “to give effect to the demands of justice, to achieve a just and reasonable result, to escape from injustice.” But there is no injustice here, because the minimum prices could be renegotiated and, if they could not be agreed, they could be fixed by the expert pursuant to the dispute resolution mechanism. Both parties have a clear and obvious shared interest in maximising the revenues from the properties so there was considerable incentive to make this Agreement work. There was certainly no injustice to Barratt in obliging them to progress the works whilst at the same time renegotiating the minimum prices.

Mr Dennys complains that there would be an injustice if the financial apportionment in clause 10 could not be altered as well. But I have already said that, on my primary construction of the Agreement, the clause provided that a total revenue below £18 million would be split 50/50, so the parties have already agreed the apportionment of that risk. Barratt cannot now complain if they have made a bad bargain. And if I am wrong about that, the clause 10 apportionment percentages could be adjusted, either by agreement or through the Expert determination clause. Either way, there is no injustice that requires the drastic remedy of frustration.

Fourthly, I should add that, in my judgment, there was in truth no supervening event at all. This is not a case where the subject matter of the contract exploded or was lost, or some other event occurred which could not possibly have been envisaged by the contract, and which deprived both sides of the benefits of the contract. Here, all that had happened was that Barratt had been warned that the minimum prices might not be achieved in the future. Since there was a period of two years minimum between the commencement of the building works on site and the sale of the completed properties, it cannot be reasonably argued that the receipt of a gloomy forecast two years before the properties came onto the market was “an event” in the proper sense of the word. It was clearly something which entitled Barratt to attempt to renegotiate the Schedule of Minimum Prices but, given the time period involved and the volatility of the housing market, the pessimistic forecast received in October 2008 was simply that: a warning of what might happen in the future. It was not the happening of an event which could in principle give rise to the frustration of this agreement.

I should make a number of other points about this aspect of the frustration argument. One of the fundamental difficulties that the appellant had in Davis was its inability to satisfy the House of Lords as to when it could sensibly be said that the contract was frustrated. That same difficulty applies here. Although Mr Dennys maintained that ‘the Agreement was frustrated when the forecast prices dipped below the prices in the Schedule’, that is fraught with uncertainty. How many of the prices had to fall below the line before the Agreement was frustrated? One? Two? All of them? As the prices were forecasts anyway (until the properties were built out), what if the forecasts were fluctuating wildly? Did a comparison between forecast and minimum prices conducted in one week mean that the Agreement was frustrated, when the Agreement would not have been frustrated if the comparison had been done the previous or the following week? There is also the related difficulty that the marketing report of 31^st October talked about a possible fall in prices of 20%, which was less than the worst-case scenario of 28% expressly referred to in the letter of 7^th February 2007. Similarly, that letter referred to a minimum revenue figure of £17 million, which was less than the £18 million relied on now by Barratt. The evidence is also that property prices have recovered to some extent since late 2008, although the extent of the recovery may be open to debate. All of this simply demonstrates the insuperable practical difficulties of alleging frustration in circumstances such as these.

Finally, it is convenient to disentangle here one of the complaints made by Barratt about Gold which, despite a certain amount of elision in Mr Dennys’ oral arguments, is wholly irrelevant to Barratt’s case on frustration. One of Barratt’s complaints is that, following the meeting of 4^th November, and their letter of 19^th November 2008, Gold did not renegotiate the revenue split. I deal with that criticism in detail in Section 7.3 below. But, even assuming that Barratt’s criticisms of Gold in this regard were well-founded, and Gold were in breach of the Agreement as a result, that could, at most, give rise to an argument about repudiation and/or a claim for damages for breach. It is wholly irrelevant to the issue as to whether or not the contract was frustrated. Barratt’s pleaded case as to frustration relies on the fall in the property market only, not the failed negotiations. Mr Dennys confirmed that when, in his oral submissions, he said that the Agreement was frustrated once the forecast prices dropped below the stated minimum. The fact that Barratt complained that Gold were in breach of contract in failing to renegotiate in November/December 2008 only confirms my conclusion that the anticipated fall was not an unforeseen or a frustrating event, but instead something which could be addressed by negotiation in accordance with the express terms of the Agreement.

Accordingly, for all these reasons, I have concluded that the Agreement was not frustrated as alleged by Barratt, or at all. On a proper construction of the Agreement, the ‘event’ which occurred (if, contrary to my view, that is what it was) was something which the Agreement expressly contemplated and allowed for. Thus, in the absence of frustration, what matters is whether one or both of these parties were in breach of the terms of the Agreement and, if so, whether or not those breaches amounted to a wrongful repudiation of the Agreement.

It is clear beyond doubt that Barratt were in breach of contract by 12^th January 2009. This was not ultimately disputed by Barratt. I identify what I consider to be the critical breaches below.

Pursuant to paragraph 7.1 of the Second Schedule to the Agreement, Barratt were obliged to commence work no later than early June 2008. The unchallenged evidence of Mr Gold was that they failed to do so (see paragraph 28 above).

Pursuant to paragraph 7.3.7of the Second Schedule to the Agreement, Barratt were obliged, following commencement of the works, to proceed with those works with due diligence. Again, it is plain from the unchallenged evidence of Mr Gold (see paragraphs 28-29 above) that they failed to do so. Indeed, the evidence is that Barratt carried out next to no work on this site. They did not demolish the buildings and, even though some of those warehouses were destroyed by vandals, at least one other warehouse remained standing. They carried out some preliminary investigations but no start was made on the construction works themselves.

Pursuant to clause 5.2 and paragraph 7.2 of the Second Schedule to the Agreement, Barratt were obliged to complete the works within 30 months of commencement. That was a date in early January 2011. By January 2009, with demolition not complete and no building works at all having been commenced, that date was simply unachievable.

As I have said, beyond the unsuccessful arguments of law as to the condition precedent and frustration, Barratt did not endeavour to deny these defaults. Their general attempt to justify these failures now rests on the advice which they received as to the likely selling prices of the properties. However, even that case does not bear closer analysis.

First, there is the question of timing. As set out in paragraphs 31-32 above, Barratt did not raise the question of the minimum prices with Gold until the meeting on 4^th November 2008. That was five months after they should have, but failed to, commence the works on site. No justification for that five month delay is put forward in the documents or in the evidence of Mr Champion. Thus, even on Barratt’s own case, they were in breach of contract in the ways particularised in paragraphs 86-88 above without any justification whatsoever.

From 4^th November 2008 onwards, Barratt were putting forward different proposals as to the restructuring of the financial apportionment in clause 10. On my primary view of the terms of the Agreement, that was illegitimate: see paragraph 53 above. But even if that was wrong, and the apportionment in clause 10 could be altered by agreement or by the Expert, the fact that those proposals were offered and/or were being considered by Gold did not provide any sort of reason or excuse to Barratt for failing to commence the building works. Thus the fact that an attempt was being made at negotiation (albeit an illegitimate attempt to change clause 10 rather than a bona fide attempt to agree a new Schedule of Minimum Prices) did not relieve Barratt of their obligations to commence and carry on with the works. Thus, the breaches noted at paragraphs 86-88 above were continuing up to 12^th January 2009.

During the course of his submissions, Mr Dennys referred me to clause 6.1 of the Agreement, which required Barratt to produce an updated Development Plan, and clause 6.4 which required Barratt to produce a Marketing Plan. He accepted that Barratt had produced neither of these documents prior to 12^th January 2009, or at all. On the face of it, therefore, those failures comprised further breaches on the part of Barratt. As I understand it, Barratt contend that they were unable to carry out either of these tasks until the minimum prices had been renegotiated. I do not accept that for a variety of reasons. First, it seems to me that the updated Development Plan and the Marketing Plan were always going to need to be revised and produced respectively, probably on a number of occasions, during the time that the building works were carried out on site. The two Plans should therefore have been produced. Secondly, if Barratt considered that the Schedule of Minimum Prices needed to be renegotiated then these documents provided one clear and contractual vehicle by which their proposals could have been properly spelt out in detail for Gold to consider.

Finally on this point, I should add that if, as Barratt now claim, the critical thing was to get Gold to agree the new Minimum Prices (even if, according to their case, that went hand-in-hand with the need to alter clause 10), then at the very least Barratt should have proposed the changes they wished to make to the Fourth Schedule. They did not do so. Thus they cannot blame Gold for their own failure to produce either a new Fourth Schedule, or the updated Development Plan, or the Marketing Plan. In the circumstances, all of these documents were for Barratt to prepare, and they failed to produce any of them.

Accordingly, for all of the reasons set out above, it is plain that Barratt were in breach of contract as at 12^th January 2009. As I have said, there is a marked lack of contrary evidence from Barratt in relation to any of these failures, and no evidence to counter Mr Gold’s statement which highlights in particular the breaches identified at paragraphs 86-88 above.

Were Gold in Breach of Contract as at 12 ^th January 2009?

Summary

For the reasons set out in Section 7.1 above, I am in no doubt that Barratt were in breach of the Agreement. For the reasons set out in Section 7.2 above, I have concluded that it is at least arguable that Gold were also in breach of contract. Further evidence will be required on that aspect of the dispute.

The remaining question then becomes whether Barratt or Gold (or both) were arguably in repudiatory breach of contract and, if so, whether that wrongful repudiation was accepted by the other party.

REPUDIATION

Applicable Principles of Law

If a party to a contract is in breach of that contract, the other party has a claim for damages. If the breach amounts to the manifestation of an intention on the part of the wrongdoer no longer to be bound by the terms of the contract, the breach will be treated as repudiatory and may be accepted as such by the innocent party. Whether or not the breach will be regarded as repudiatory depends largely on the nature of the contractual term in issue and the nature and extent of the breach.

A failure of performance which constitutes a breach of condition entitles the innocent party to treat himself as discharged from further liability under the contract: see Chitty on Contracts, 30 ^th ed., paragraphs 12-025 and 24-040. Where the failure of performance is not a breach of condition, but of an ‘intermediate’ term, it may still amount to repudiation, depending on the nature and consequences of the breach. In all circumstances, for repudiation, the breach must “go to the root of the contract”: see Federal Commerce and Navigation Co. Ltd v Molena Alpha Inc. [1979] AC 757, 779.

If both parties are alleged to have committed a breach and it is asserted that each breach, taken independently give rise to a right to terminate, regard must be had to the order in which the breaches occurred: see State Trading Corp of India v M Golodetz Ltd [1989] 2 Lloyds’ Rep 277. While a party who has committed a repudiatory breach of contract is not entitled to enforce the contract against a party who is ready and willing to perform his obligations under the contract, it has been suggested that it does not follow that the fact that a party that has committed a repudiatory breach should preclude him from accepting a repudiatory breach committed by the other party: see Chitty, paragraph 24-016.

The general rule is that an innocent party must accept the repudiation of the other, although an act of acceptance of a repudiation requires no particular form: see Stocznia Gdanska SA v Latvian Shipping Co. [2002] 1 Lloyds’ Rep 436. However, as the State Trading case makes plain, it may sometimes be sufficient simply to lead evidence of an unequivocal overt act by the innocent party which is inconsistent with the subsistence of the contract, without any concurrent manifestation of intent directed to the other party. If the repudiation is not accepted and the innocent part elects to treat the contract as continuing, then it remains in existence for the benefit of the wrongdoer as well as of the innocent party: see Suisse Atlantique Societe d’Armement Martime SA v MV Rotterdamsche Kolen Centrale [1967] 1 AC 361.

Did Barratt Repudiate the Contract in 2009?

On the face of it, Barratt wrongfully repudiated the Agreement no later than 12^th January 2009, and possibly before. They failed to comply with their critical obligations under the Agreement, namely their obligations to commence, carry out and complete the building works on site. Those were conditions, not intermediate terms, because they were so important. In my judgment, Barratt’s failure to comply with them went to the root of the contract. Thereafter, on 12^th January 2009, they wrongly treated the contract as frustrated and did not carry out any further works on site. Two months or so later they put the keys through the letterbox on the hoarding, a sure sign that they did not intend to comply further with this Agreement.

Barratt had two principal defences to the allegation that they were in repudiatory breach of contract. One was to argue that the achieving of the prices set out in the Fourth Schedule was in some way a condition precedent to the carrying out of the works. I have rejected that argument as a matter of construction of the Agreement in Section 5.2 above. The second argument was to allege that the contract was frustrated, and I have rejected that argument as a matter of law, in Section 6 above. That therefore leaves Barratt’s defence to the claim for repudiation hanging by a relatively slender thread.

However, I have concluded that, although it is slender, there is one possible argument open to Barratt which I cannot at this point describe as fanciful. That is their argument to the effect that, because Gold were in breach of the Agreement (because they did not renegotiate or even contemplate renegotiation in November/December 2008), it was actually Gold who wrongfully repudiated the Agreement.

I do not regard this argument as having a strong chance of success. It seems to me that, if the problem was simply the need to agree lower prices, Barratt should have proposed them; they should not, without more, simply have treated the Agreement as being at an end. However, I have already said that I require further evidence as to the detail of the negotiations during that period and, until that evidence is considered, it is difficult for me to say whether or not Gold were in breach and, if they were, whether or not that breach could be said to be repudiatory.

For those reasons, although on the face of it Barratt were in repudiatory breach of the Agreement by 12^th January 2009, I consider that there is one last element of their defence to that allegation still open to them which would require evidence to determine. In those circumstances, the alleged repudiation by Barratt ought not to be the subject of a judgment on liability under CPR Part 24. However, because of my doubts about the strength of this remaining defence, I would only grant Barratt conditional leave to defend the repudiation claim brought against them.

Did Gold Accept Barratt’s Repudiation?

The other reason why I am not presently prepared to give summary judgment on the repudiation element of the case is the muddle which exists, on the face of the documents, from 12^th January 2009 onwards. Although it is clear that Barratt were no longer prepared to do any work on site, which would in normal circumstances give rise to the clearest possible evidence of repudiation, Gold’s acceptance of that repudiation is surprisingly unclear. I note in particular:

Accordingly, it seems to me that the events both before and after the letter of 12^th January 2009 are not clear enough to warrant summary judgment on the repudiation claim. Barratt have also raised the point that, even if they were in repudiatory breach of contract, that repudiation was not accepted by Gold and that, on the contrary, Gold affirmed the continuing nature of the Agreement. I am again unable to resolve that issue without evidence.

CAUSATION AND LOSS

During the course of his submissions, both written and oral, Mr Dennys made a number of points as to causation and loss, and the alleged difficulties that he said Gold would have in being able to establish either of them in the present case. In general terms, it seems to me that such matters are of limited relevance to the issues before me on this application, since Gold merely seek summary judgment, with damages to be assessed. However, questions of causation and loss are not entirely irrelevant to this application, because I have concluded that, in all the circumstances of this case, I ought to grant Barratt conditional leave to defend the repudiation claim. Gold’s potential recovery against Barratt is therefore likely to be at least one element in calculating an appropriate sum for Barratt to pay into Court as a condition for defending the claim.

Gold’s claim is for the profit lost as a result of the failure by Barratt to proceed with the Agreement, in the sum of £9.5 million odd. That claim appears to assume that the site is now worthless, which cannot be right. At the very least, therefore, the £9.5 million figure is a gross figure, or one side of the equation only, to be reduced by the value of the site, the value of the work done by Barratt (if any) and so on.

Furthermore, if on the evidence the prices in the Fourth Schedule should have been reduced by agreement because they were too high, the £9.5 million would be too high a starting-point for the calculation of lost profit. The £9.5 million figure assumes that the total revenue actually achieved did not drop below £18 million. But, because the Agreement envisaged the sharing of the risk that prices would go down as well as up, the loss of profit claim will have to reflect the possibility that minimum prices in the Fourth Schedule would have had to have been modified. In those circumstances, the correct loss of profit figures may not be easy to ascertain.

On the face of it, a claim by Gold for the costs and losses caused by the delays would be much more straightforward. On that hypothesis, Barratt’s breaches of contract, if nothing else, significantly delayed the completion of this major project. Gold may be able to recover those losses in any event. If the repudiation argument is successful, there may also be a claim for the increased costs of the works themselves.

No detailed figures of any sort are put forward by Gold. However, I acknowledge that this was intended to be a major development with total sales revenues projected anywhere between £18-25 million and an expected (if ultimately unachievable) profit of £9.5 million. Accordingly, it seems to me that, assuming a proven case on repudiation, the damages recovered by Gold in consequence are likely to be substantial, even if rather less than the sums currently claimed.

CONCLUSIONS

My conclusions as to the true construction of the Agreement are set out in Section 5 above. The most significant of these is my conclusion that the Fourth Schedule and the minimum prices set out there did not operate as a form of condition precedent to the carrying out of the building works on site. The potential fall in property prices did not allow Barratt to refuse to carry out and complete any of those works.

For the reasons set out in Section 6 above, I have concluded that this Agreement was not frustrated. If (which I doubt) an ‘event’ occurred, it was no more than a forecast drop in property prices, which was foreseen: it was expressly discussed during the pre-contract negotiations and was allowed for in the terms of the Development Agreement itself.

For the reasons set out in Section 7 above, I have concluded that Barratt were in unequivocal breach of critical terms of the Agreement. I have also concluded that it is at least arguable that Gold were also in breach of the terms of the Agreement, and that further evidence on this aspect of the dispute will be necessary.

For the reasons set out in Section 8 above, I have concluded that, whilst Barratt were prima facie in repudiatory breach of the Agreement, there is a potential argument open to them (which I cannot decide without evidence) to the effect that Gold’s failure to re-negotiate was not only a breach of the Agreement, but was itself repudiatory. I do not regard that argument as strong, but it is not fanciful. In addition, I cannot resolve Barratt’s further argument – that, even if they were in repudiatory breach, it was not accepted by Gold – without requiring more evidence about the post-12^th January 2009 events.

Given my rejection of the two principal planks of Barratt’s submissions (namely the alleged condition precedent and the frustration of the Agreement), and my firm conclusion that Barratt were in breach of fundamental conditions of the Agreement, certain elements of Gold’s claim against Barratt have been made out; indeed, on Gold’s pleaded case, the only remaining liability issues arise out of the repudiation arguments. Even there, Barratt’s position is not strong. In those circumstances, I propose:

I will consider the parties’ submissions as to the amount of the payment into Court and the appropriate directions. But my preliminary view as to the amount of the payment is that it should be in the order of £500,000, in order to reflect the likely losses which have been caused by the failure on the part of Barratt to build out the works. The range of claims and figures that may be involved at any subsequent quantum hearing are set out in Section 9 above.

As to the necessary directions, I do not envisage the hearing on the limited liability issues which remain taking longer than 2 days, and that trial should be fixed for April or May 2010, following the disclosure of any other relevant documents by either side, and the preparation of witness statements dealing with the situation from the end of October 2008 until September 2009. No expert evidence will be required.