Fairhurst Developments Ltd & Anor v Collins & Anor

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

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

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

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

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

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

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

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

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

The parties

The claimants

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

Until trial the only claimant was Fairhurst Developments Limited. Mr Fairhurst was made an additional defendant to the counterclaim because it is Mr Collins’ case that the development agreement was entered into by Mr Fairhurst personally not on behalf of Fairhurst Developments Limited. There was no application to amend to join Mr Fairhurst as a second claimant because it appears to have been assumed by Fairhurst and its advisers that if it lost on the issue of the correct contracting party Mr Fairhurst could simply have brought a fresh action in his own name and thereby obtain the benefit of any substantive determination made in this action. After I had expressed the view in the course of opening submissions that any attempt to do so might well be met with a defence of abuse of process Mr Fairhurst made a belated application to amend to be joined as a second claimant. Although made at a very late stage I took the unusual step of allowing the amendment in the particular circumstances that the issue of the true identity of the contracting party was one which had already been fully prepared for trial on the existing pleadings, with any residual prejudice being addressed by imposing a condition that neither Fairhurst Developments Limited nor Mr Fairhurst would be permitted to recover any of their pre-amendment costs of the claim if I held that the contracting party was not Fairhurst Developments Limited but Mr Fairhurst personally.

As already indicated I have decided that issue against the claimants, so that any judgment will be both for and against Mr Fairhurst personally and with the costs consequences, so far as he is concerned, that I have already mentioned.

The defendant

Mr Richard Collins is the sole legal owner of the property in question. The site is a relatively substantial site, around 4 acres, adjoining Aldford Road, Huntingdon, outside Chester, on which previously stood a modest bungalow and some outbuildings. Mr Collins purchased the property at auction in November 2007 for £450,000, providing an £80,000 deposit with the balance funded through an interest only mortgage. He purchased the property as a development opportunity; the site was sold subject to an existing planning permission and his intention was to demolish the existing bungalow and build a substantial new house and garage and then sell the completed property at – he hoped – a substantial profit.

As at the date of the development agreement Mr Collins had built up a successful business as a mortgage adviser, which he operated through a limited company, and he had also undertaken a number of successful property developments in his own right. These included two properties which feature in the case, the first being Poplar Cottage, Hatton Heath, the substantial detached property with outbuildings in which he was living at the time with his partner, Ms Jayne McGuinness and their family, and the second being another property, 5 the Poplars, Hawarden, purchased by Ms McGuinness and then developed as an investment property.

Before turning to the history of the development I refer to the witnesses whose evidence I heard and my overall assessment of their credibility.

The witnesses of fact

The two principal protagonists: Mr Fairhurst and Mr Collins

Mr Fairhurst had provided two substantial witnesses statements and was cross-examined with vigour over 4 days. Mr Collins had also provided two substantial witness statements and one supplemental witness statement and was likewise vigorously cross-examined over 4 days. The cross-examination of both men was lengthy due to the myriad of disputes and disagreements between the parties, but was also unnecessarily protracted due to their inability, despite frequent urging from me, to provide straightforward answers to straightforward questions without engaging in lengthy and repetitive prevarication and argumentative justification.

My assessment of them both as witnesses is substantially the same. Neither of them are intrinsically dishonest individuals, whether as witnesses or in life generally. I reject, for example, the suggestion made in cross-examination of Mr Fairhurst that he had deliberately filleted his emails and not disclosed those which did not support his case. It is true that Fairhurst had failed to disclose a number of the email exchanges with Mr Collins which were disclosed by Mr Collins (Footnote: ¹), but it is simply not the case that the non-disclosed emails were uniformly unhelpful to his case.

Both Mr Fairhurst and Mr Collins regard themselves as experienced and successful property developers, and are well aware of the rewards which can be made from it; they know what they want and are determined to get it. They are both stubborn men who have become completely obsessed by this dispute, both convinced that they are completely in the right and that the other is completely in the wrong. They have not found it difficult to convince themselves that what they want to believe happened did happen, or to argue their own corner with complete confidence. I am unable to accept that the evidence of either one of them is intrinsically more reliable than that of the other. This is one of those cases, not unusual in this court, where property owners and building contractors enter into joint venture type agreements without detailed discussion or agreement and without involving lawyers to draw up a written contract or even recording the essential terms in contemporaneous written exchanges, and who then fall out very badly amid mutual recrimination. When the case ends up at trial many years later they make unreliable witnesses because they are unable to be objective and dispassionate about the matters in dispute.

This is therefore the sort of case where the court has to do its best by reference to such contemporaneous documentary evidence as there is, assisted by the subsequent exchanges and the oral evidence of other more reliable witnesses where available, and the usual process of assessment of the intrinsic probabilities.

One example concerned what was discussed and agreed about the timescale for the development. In the email correspondence through 2010 and 2011 Mr Fairhurst had referred fairly consistently to an agreed 6 month timescale. In his witness evidence however he said that a timeframe of between 6 and 9 months was discussed. In cross-examination he qualified even this by saying that it was expressly stated to be subject to “everything being in place”, including Mr Collins providing an agreed contribution of £30,000 as one upfront payment, and subject to the proceeds of sale of the development at Rhyl coming through. I find it extremely unlikely that Mr Fairhurst would have introduced these qualifications at the time, and am satisfied that Mr Fairhurst has persuaded himself of what he thinks he should have said with the benefit of hindsight. Equally, however, Mr Collins claimed that a timescale of 5 months was agreed, starting immediately from the date of the agreement, and also claimed that it was specifically agreed that if the development was not completed within the 5 months he would be entitled to charge his ongoing mortgage payments to Fairhurst. This was then refined further as the case progressed so that if the development was not completed within 5 months he would be entitled to charge all of his mortgage payments to Fairhurst, even the first 5 months. I find it unlikely that Fairhurst would have agreed to complete a substantial house and garage from scratch within 5 months from an immediate start, and even more unlikely that there was any agreement about the financial consequences of any delay, and again I am quite satisfied that Mr Collins had persuaded himself that he said what he now believes he should have said.

Another example concerned how much of the £30,000 Mr Collins had paid. In his email of 30 June 2010 [DD1/67 (Footnote: ²)] Mr Fairhurst referred to a balance of £14,000 being outstanding. However in his pleaded case he claimed that only £11,000 had been paid, based on his review of the documents, when: (a) that review was obviously deficient, since he accepted in examination in chief that the documents showed that a further £1,000 had been received; (b) that review appeared to exclude any cash payments. In cross-examination it was put to him that, as he appeared to have accepted in his first witness statement [WS1§55], a further £2,000 had been paid in around May 2009 in relation to the footings. Rather remarkably, given his witness statement, he denied this but later, through Mr Goff, accepted it as correct once Ms McGuinness had disclosed her cheque stub showing £2,000 made payable to “Fez” (Mr Fairhurst’s nickname). It did not seem to me that Mr Fairhurst had any positive recollection that less than £16,000 had been paid and that what he had done was (to use his phrase earlier in cross-examination) to apply a “burden of proof” against Mr Collins and to seek to rely on an absence of documentary proof of payment to justify a refusal to accept that further payments had been made.

Mr Collins had failed to plead a positive case as to how much he had paid, but in his witness statements said that he had paid £19,000, without explaining how it was that he had in his email of 1 July 2010 at [DD1/65] said it was only £16,000. Under cross-examination he maintained that it was at least £19,000 and probably £21,000. Again in my assessment Mr Collins’ evidence was shifting to support his increasingly extreme position. There was another telling example early on in Mr Collins’ cross-examination when he was asked by reference to his email of 10 May 2011 when he had moved into Aldford View. He was very keen to say that it was not in May, probably in June and possibly in July. This was because the tenor of the email gave the impression that he had only recently and reluctantly decided to move in, whereas it was Fairhurst’s case that he had decided to move in to suit his own purposes at a much earlier stage. When pressed he recalled that it was the day of the last football game of the season involving his team, which he believed supported his recollection of events. However, when that was checked it transpired that the last game took place on 14 May 2011, which showed in my view not only that what he had said in evidence was wrong but also that he had tailored his evidence to put the most favourable spin on his own case.

It was also difficult to place real weight on the assertions made by either man in the emails and texts which both had sent from summer 2010 onwards, in circumstances where the majority had come into existence after the parties were already in dispute.

Both men, it seemed to me, were happy to misstate the position in contemporaneous documents to achieve their objectives. For example in a number of emails Mr Fairhurst referred to his and Fairhurst Developments both being in a desperate financial situation - “the absolute brink of bankruptcy” [DD1/6-7], “Magnet … will issue winding up proceedings if I do not pay the £2k on 16^th Feb” [DD1/29-30] - whereas in cross-examination he accepted that these exaggerated the true position. Mr Collins had also repeatedly exhorted Mr Fairhurst in emails to pay an agreed contribution to his mortgage payments without feeling it necessary to disclose that the amount of the monthly payments had reduced or that he had negotiated an agreed mortgage holiday with his lenders.

Fairhurst’s other factual witnesses

Mr Jones is a financial adviser who was asked by Mr Fairhurst, who was his friend, to investigate sources of finance for Fairhurst to complete the development in late 2010 / early 2010. I reject the criticisms made of his evidence by Mr Collins. In my view he was basically an honest and a reliable witness although, not surprisingly perhaps, I accept a little inclined to talk up the prospects of obtaining finance and to support his friend’s case.

Mr Gratton is an architect who was instructed by Fairhurst in spring 2010 to undertake regular inspections of the build in order to provide a certificate which could be used to obtain buildings insurance for the completed property. He provided a witness statement to both parties and although notionally called by Fairhurst as part of its case was, effectively, called by both parties. He was plainly an honest and reliable witness.

Mr Ainsworth is a plumber who, with his father, undertook plumbing works for Fairhurst at the property. Although plainly honest and doing his best, he did not come across to me as a particularly reliable witness. He had made a number of errors in his witness evidence and, unsurprisingly, had little detailed recollection of events which had happened almost 6 years ago in 2010.

Mr Cartridge is the credit controller for Thorncliffe, the building supplies merchant which provided Fairhurst with most of its building supplies for this project, and which is still owed a substantial sum by Mr Fairhurst. He gave evidence to confirm the state of the account as between Mr Fairhurst and Thorncliffe. He was cross examined on the basis that there were discrepancies in the invoices produced by Thorncliffe tending to show that they had concealed the trade discount which Mr Cartridge readily accepted Thorncliffe allowed Fairhurst as a valued trade customer. The consequence, it was suggested, was that the actual cost to Fairhurst was significantly less than the face value of the invoices. If true, that would have meant that Thorncliffe’s statement of account was wrong and misleading and that Mr Cartridge was party to giving false evidence. This was not an allegation which had ever been previously made, so that it was put to Mr Cartridge entirely out of the blue in cross-examination. He refuted it, in my view entirely convincingly, and came across to me as an honest and reliable witness.

Mr Upshall is the co-owner of a business known as Falcon Steel Fabrications, which undertook the supply and installation of the feature staircase and front gates at Aldford View. He agreed to complete the installation of the staircase after Mr Collins had removed Fairhurst from site but then suffered financially through no fault of his own because neither party has been willing to pay Falcon the balance which no-one seriously disputes is due to it. He came across to me as a decent, honest man, although his recollection was adversely affected by the passage of time. I was however satisfied that he was right in rejecting any criticism made of the quality of the installation of the staircase as undertaken by Falcon.

Mr Williams is one of the bricklayers engaged by Fairhurst to build Aldford View. His was an honest witness, but his evidence seemed to me to be tangential and, again, inevitably impaired by the passage of time.

Mr Lewis was called to give evidence about an unrelated transaction involving himself, Mr Collins and Ms McGuinness, relied upon by Fairhurst in support of its case that Mr Collins knew of Fairhurst Developments Limited prior to entry into the development agreement. For the purposes of this case I accept the essential gist of his evidence, without needing to make findings as to matters in dispute between himself, Mr Collins and Ms McGuinness, where their respective credibility and honesty may be called into question if that dispute was ever to be litigated, which appears unlikely.

It was argued at trial and in closing submissions by Mr Williams on behalf of Mr Collins that adverse inferences should be drawn against Fairhurst in relation to the issue of the foul and surface water drainage system by reason of its failure to call Mr Hassan Aryas-Manesh of HA Structures Limited as a witness. Whilst I accept that Mr Aryas-Manesh was the designer of the drainage system, that Fairhurst knew that the design and installation of the drainage system was criticised by Mr Collins and his expert advisers, and that Mr Fairhurst was on sufficiently good terms with Mr Aryas-Manesh for him to attend at the joint inspection of the drainage system in 2014, I do not consider that Fairhurst or its advisers ought to have known that this was a case where it was essential that Mr Aryas-Manesh should make a witness statement and attend trial to be able to explain what he had done and why. This is not a paradigm professional negligence case, where it was always known that the claimant would be seeking to hold the professional to account for his alleged negligent acts and/or omissions. There were no clearly pleaded allegations of breach made as against Mr Aryas-Manesh which, it must have been known by Fairhurst and its advisers, needed to addressed factually by Mr Aryas-Manesh. Mr Aryas-Manesh is a self employed consultant and not a present or former employee of Fairhurst. Fairhurst had its own expert building surveyor to address these criticisms. Mr Collins had not, in the run-up to trial, put Fairhurst on notice that it would be inviting the court to draw an adverse inference if Mr Aryas-Manesh was not called to give evidence.

Insofar as it was also argued that Fairhurst ought to have called the contractor, Alex Chesworth of AJC Construction, who installed the drainage I reject that argument as well for similar reasons. Indeed Mr Chesworth was instructed by Mr Collins to undertake completion works and, seemingly, was on good terms with him, so that there was no impediment to Mr Collins arranging to obtain a witness statement from him and call him as his own witness if that is what he had wanted to do.

Mr Collins’ other factual witnesses

Mr Wright came across to me as a genuine and honest witness. He clearly did invest £70,000 into the development in order to enable Mr Collins to complete the development. He clearly did agree with Mr Collins that he would receive repayment plus 20% of the eventual profit upon sale. Although it is a little surprising at first blush that he was prepared to take the risk that there would be any profit at the end of the job and also that he was prepared to do so without any written confirmation, I am satisfied that the explanation is that he felt that he could trust Mr Collins, not least because of his previous dealings with Mr Collins and his close friendship with Mr Collins’ elder brother Michael.

It is apparent that he did not have any dealings with Fairhurst and that his view of Fairhurst and its performance as expressed in his witness statements has been coloured by his position within Mr Collins’ camp. He made it plain that he did not discuss with Mr Collins who as between Mr Collins and Fairhurst should have to take responsibility for his profit share. It is also apparent that his recollection was adversely affected to some extent by the passage of time. Nonetheless, insofar as relevant I accept his evidence as broadly reliable.

Ms McGuinness is Mr Collins’ partner. They live together and have a child together as well as two children from her previous relationship. She confirmed that they are the equivalent of a married couple for all purposes, including financial matters. It was plain from her evidence, both in her witness statements and her oral evidence, that she feels as strongly as Mr Collins does about Mr Fairhurst and Fairhurst’s performance of the development agreement; in closing submissions Mr Williams referred to her as “robust, if not feisty”, and I agree with that assessment. I did not find her evidence any more intrinsically reliable than that of Mr Fairhurst or Mr Collins, for similar reasons.

Mr Michael Collins is Mr Collins’ elder brother, who assisted Mr Collins in relation to this development both generally and specifically in recommending Mr Wright as an investor and in helping with the completion of the build, and in investigating the issues with the drainage system. It is plain from his witness statements that his view of Fairhurst and its performance has been coloured by his close relationship with and support for his brother but, nonetheless, he came across as genuine and honest and reasonably objective in his evidence, albeit I am satisfied mistaken in some respects (for example his recollection that the staircase was left secured at the top with only one bolt).

Mr Goodier is the plumber who was brought in by Mr Collins to undertake various completion and remedial works. He was an example of someone who appeared to have an extremely clear recollection of events which, on closer analysis, seemed to me to be not quite so reliable as might at first appear. In particular whilst I accept that he did have a genuine recollection of matters generally and of some matters of detail, I found it extremely implausible that as a busy plumbing contractor he would still have had a detailed recollection of events which were already some two years old when he gave his witness statement and over four years old by the time of trial, when large elements of his oral evidence were not even included in his witness statement and when he had no contemporaneous record to remind him other than invoices which he had said he had produced and sent to Mr Collins but which Mr Collins had not disclosed.

I should mention briefly that Mr Collins did not call Mr Pyke, the then senior partner of Wheat Edwards & Associates, which was the design practice employed by Mr Collins to draw up and submit plans for revised planning permission and also to Building Control for Building Regulations approval, because of his medical condition. Nor did he call Mr Michael Collins junior, Mr Collins’ nephew, because he now lives in Dubai. I admit their statements as admissible hearsay statements, but also bear in mind that insofar as seriously contentious I have not had the benefit of seeing them cross-examined.

It was submitted by Fairhurst that I should draw adverse inferences against Mr Collins due to his failure to call Michael Collins junior to give oral evidence. In particular, it was suggested in closing submissions that Mr Collins had taken the conscious decision not to arrange for his nephew to give evidence by video link, even though he knew that his nephew might be unwilling to travel back to the UK to give evidence since there had been something of a family rift more recently, but had continued to assert throughout the trial until the last minute that his nephew was going to attend. I reject this submission. Whilst I agree that it would have been better had Mr Collins either made arrangements for the evidence to be given by video link or made it plain from the outset that his nephew might well not return to give evidence, I do not consider it proper to draw an inference that Mr Collins has deliberately kept his nephew away from court in order to prevent Fairhurst from improving its case by cross-examination of him.

The expert witnesses

Mr Moran was called by Fairhurst and Mr Whittle was called by Mr Collins as their respective building surveyor experts. Both have undoubted professional expertise in building surveying, although in relation to the principal area of contention, namely the foul and surface water drainage systems at the property, both accepted that they were not drainage engineers and, hence, did not have the detailed knowledge of such systems which a drainage engineer would have.

It was suggested to Mr Moran that he was a partisan expert who had failed in his duty to provide objective evidence. Insofar as I am invited to reject his evidence in totality on that basis I do not accept that criticism of him. I consider that overall he was attempting to discharge his duty to the court in a difficult case where he was faced with a demanding client on one side and a hostile opposite party in the shape of Mr Collins on the other. I do accept however that some criticism can be made of some elements of his evidence, and that I cannot accept his evidence on every aspect of the case uncritically. For example:

Mr Whittle came across to me as somewhat less partisan than Mr Moran and, on balance, I was a little more impressed with his evidence on building surveying matters. However I do not accept his evidence uncritically. For example it seemed to me that he had been too quick to condemn the design and construction of the drainage system in his first report and to maintain his opinion subsequently without ever having conducted a full investigation into the system, without acknowledging the limits of his expertise as a building surveyor as opposed to a drainage engineer, and without qualifying his opinion accordingly. He had also not observed the presence of a kite mark on one of the panes in the French doors on his first inspection, and instead had condemned the doors for having no kite marks at all.

Mr Bushell was called by Fairhurst and Mr Hopkinson was called by Mr Collins as their respective quantity surveyor experts. Both undoubtedly have the professional qualifications and expertise to act in that role.

Mr Bushell was cross-examined on the basis that he had allowed himself to be pressured into not complying with the order made on 15 April 2014 by failing to produce a report which included his opinion on the pricing of all of the items in the Scott Schedule. I completely reject this criticism. Mr Bushell had made it perfectly clear why he had not been able to express an opinion as regards the completion items in the schedule in his first report, and it does not seem to me that he can be criticised for taking that course. He was also cross-examined on the basis that he had failed to make any proper attempt to value the completion items by reference to the 2 files of supporting documents provided by Mr Collins, which were neither paginated not cross-referenced to the individual completion items. Again I completely reject this criticism; Mr Bushell explained the circumstances in which he had been provided with these files very shortly before the joint visit to the site, at a time when he had only seen the version of the Scott Schedule containing Mr Collins’ own (overstated) figures and had not seen Mr Hopkinson’s report or had the opportunity to discuss with Mr Hopkinson how he had used the files to support his figures. In the circumstances I do not see how Mr Bushell can possibly be criticised for making clear, as he did in his report, that he could not comment in the absence of details of the completion works or substantiation of their cost. It is regrettable that no order was sought or made for the quantity surveyors to hold a further joint meeting to consider Mr Hopkinson’s completion costings, but Mr Bushell can scarcely be blamed for that. He was also cross-examined on the basis that he had adopted, uncritically, Fairhurst’s valuation of its claim. Again I reject this criticism, because Mr Bushell had made it plain in his report that he had limited himself to considering whether or not there was documentation which supported the claim rather than attempting to conduct a retrospective re-measurement and re-valuation of the works undertaken by Fairhurst which would, of course, have been difficult if not impossible anyway given that by the time he was instructed the property had already been completed by Mr Collins.

To the contrary, I was favourably impressed by Mr Bushell’s evidence, regarding him as a careful and conscientious witness. On the few occasions where it was shown that he had made mistakes he was quick to accept this. His valuations seemed to me to be reasonable and even-handed.

I was not quite so impressed with Mr Hopkinson’s evidence. I accept the over-arching criticism made by Mr Goff that his report reads in parts more as if it were a submission from a construction cost consultant than a report from an independent expert. It seemed to me that his valuations both of the work to complete the property and to rectify defects were over-stated and failed to have sufficient regard to the realities of the case. In particular he had failed to record or to address the fact that Mr Collins had effectively acted as his own project manager for the completion works, doing some of the work himself with help from his brother, otherwise employing small local contractors, sometimes for reciprocal favours and often for cash, with no serious attempt made to obtain or retain or collate invoices or receipts. He had also made a significant number of errors in his assessment of the supporting documents relied upon to justify his assessment of Mr Collins’ completion costs.

He had also failed to consider the planning history when addressing the question of the valuation of extra works to the garage. He had also made deductions for work done in relation to the garage which was allegedly defective, so as to support his opinion that the cost impact of the changes was neutral, but had also separately claimed the cost of rectifying such defective work, thus double counting. He had also made some swingeing discounts in relation to Fairhurst’s materials and sub-contract costs on the basis that Fairhurst ought to have obtained trade discounts without acknowledging that he had not conducted any investigation into what, if any, steps had in fact been taken by Fairhurst to obtain discounts and when, for example, if he had asked Fairhurst or contacted Thorncliffe he would have been told that the invoices relied upon were net of discount already allowed. He had made a significant discount in relation to labour costs without making it clear that this was the most rough and ready of assessments, with no cross-checking by reference to his assessment of the work done.

He was, in fairness to him, more measured both in his approach in the joint meeting and statement and when giving oral evidence but, nonetheless, I am inclined to prefer Mr Bushell’s opinion where there is a conflict of opinions which cannot be resolved other than preferring the view of one or the other.

Summary of the history of the development

Initial stages

I have already referred to Mr Collins’ acquisition of and plans for the property. He instructed Wheat Edwards and Associates to draw up plans and apply for revised planning permission and Building Regulations approval. I have seen a number of such plans, dating from December 2007, showing the proposed development. It is clear from the site plan [BC243] that the intention at that stage was to carve out a smaller plot from the whole site and to build a substantial detached house and detached garage with a new vehicular entrance.

Planning permission for the revised scheme was obtained in February 2008 [BC170]. There were a number of conditions, number 7 being the submission and approval of a scheme for the disposal of foul sewerage and surface water. In March 2008 Building Control issued a conditional approval notice [BC/169] which included a condition 2 that the length of any land drains into which effluent from the septic tank was to discharge should be not less that the minimum determined by a percolation test carried out in accordance with BS6297:1983.

There is some confusion in that one of the detailed layout plans [BC242] shows the new house as having two storeys plus a part basement structure, whereas another [BC240] shows the new house as having two storeys plus a dormer type structure in the roof. It is clear that what was proceeded with was the second option, with additional bedrooms in the roof space and a dormer, so as to provide a 6 bedroom property.

There is some further confusion in that some of the plans [BC240 & BC247] include what is plainly a detached triple garage, the dimensions of which are shown as being 8.6m x 5.5m (total space therefore 47.3m²) on the latter plan. None of these plans indicate the presence of accommodation in the roof structure of the garage. In his witness statement Mr Pyke says that this was proposed with a dormer structure to the front elevation, but that this proposal was rejected by the planning authorities. However none of the plans dating from December 2007 show this proposed dormer structure, whereas the plans dating from May 2009 [C39 & 41] do show the garage with a proposed dormer structure with increased dimensions of 9m x 6.5m (total space therefore 58.5m²). This is the same plan as was submitted with the further application for planning permission showing the revised front porch and revised garage which was granted in August 2010 [C44-56]. It is clear from these documents and, further, the summary of the planning history provided by the planning consultants engaged by Mr Collins in 2013 [C/1371], that Mr Pyke is incorrect and that the dormer window was not part of the 2007 design.

The site plan [BC243] shows the property being served by a septic tank, but does not provide specific details of the intended drainage design. It is apparent that the existing bungalow was served by a septic tank and that there was no drainage system connecting to any main drainage system, whether for foul or for surface water. It is also apparent that the design never contemplated that the foul or the surface water would be drained offsite but equally it is true that the planning permission did not specifically prohibit offsite drainage.

Confusingly, Fairhurst has also produced a plan, similar to the one in the Building Control file [BC240], but which does not show the garage or the site layout. It does however contain much more in the way of construction details, including detailed side notes. It is Fairhurst’s case that this is the only plan it was provided with by Mr Collins prior to entering into the development agreement.

Unfortunately for Mr Collins when, in early 2009, he was ready to begin the development it became apparent that he did not have sufficient monies available to him to do so. According to his first witness statement that was because of the downturn in the property market; the self-build mortgage he had believed was available to him was no longer available, and the market for selling one of his two existing properties to raise cash was poor. According to his statement he had funds of up to £125,000 available and a regular rental income of £31,800 from his 2 investment properties, as well as income from his mortgage business, but he had decided that he did not want to borrow any more money in order to undertake the development on that basis.

He decided that his preferred option was to find an investor who could fund the development works and share in the profit and he thought of Fairhurst. He had been friendly with Mr Fairhurst for a number of years and knew that he was a builder and developer. In a telephone conversation which it is agreed took place on 29 March 2009 Mr Collins and Mr Fairhurst discussed undertaking the works to the property as a joint venture. Mr Fairhurst was indeed interested and there followed at least one if not more meetings on site the following month, in the course of which the development agreement was concluded orally between the two men.

The development agreement

Both parties agree that they did reach an agreement as to the basic terms under which the development was to be undertaken. They also agree that this agreement was not committed to, or recorded in, writing at that time. There is also common ground as to the essential features of the development agreement. Thus it is agreed that the property would be constructed by Fairhurst. It is agreed that Mr Fairhurst provided a figure for the cost of the works in the sum of £180,000. It is agreed that Fairhurst was to undertake those works at its own expense, save for a contribution of £30,000 from Mr Collins. Finally, it is agreed that on completion Aldford View would be marketed and sold and that the net sale proceeds would be used first in repaying Mr Collins the initial purchase price (Footnote: ³) and Fairhurst the cost of the planned works and the remainder, being the profit, would be divided equally between the parties. Since at the time both men believed that the property could be sold for around £1,000,000 it is clear that if the development proceeded according to plan both could hope to make a very handsome return on the venture.

There are however many disputes as to precisely what was agreed and also as to matters which were not the subject of any express agreement.

It is Fairhurst’s pleaded case [POC§8-9] that it provided an estimate to undertake the works as shown on the plans in respect of which planning permission had been obtained for £180,000, which was accepted by Mr Collins. It says that Mr Collins agreed to provide an initial cash advance of £30,000 to Fairhurst to enable it to fund the initial stages of the works, with Fairhurst then funding the remaining £150,000 estimated build costs. Fairhurst contends that any variations to the works would be paid for by Mr Collins when requested by it. It accepts that there was an obligation to undertake the works within a reasonable time; Mr Fairhurst says [WS1§18] that 6-9 months was discussed. It says that there was no discussion or agreement to the effect that Mr Collins could divide the site into more than one plot and retain the plot not built upon for his own separate use or benefit. It says that Mr Collins was obliged to undertake reasonable steps to market Aldford View and to sell it within a reasonable time and for a reasonable sum, without occupying it in the meantime.

It is Mr Collins’ pleaded case [DCC§6-9] that there was no question of Fairhurst’s obligation being limited to undertaking only the works shown on the plans for £180,000, and that Fairhurst was obliged to “fund and invest in the project to completion”, even if it cost more than what the £180,000 which Fairhurst had estimated as being “total build costs”. What Mr Collins says [WS1§25] is that in addition to what was shown on the plans the extent of the works was discussed in some detail and it was agreed that the £180,000 would include other items consistent with the envisaged size and quality of Aldford View, such as the triple garage with accommodation above, an expensive lighting and sound system, an expensive kitchen, an external landscaping to include a drive, electric gates and the like. He says [ACC§5(d)] that Fairhurst assured him that it could undertake and fund this development due to its “excellent relationship with his bank” and the monies which would come from the Rhyl development.

Mr Collins says that it was agreed that he would provide £30,000 of the build costs in four equal stages over the duration of the works. He says that Fairhurst said that it would complete the works within 5 or at worst 6 months, and would start works straight away, at the beginning of April 2009, thus finishing by the end of August or September at the latest. He denies that there was ever any discussion or agreement to the effect that he should pay Fairhurst the £30,000 upfront in order to fund the initial stages. He says that it was agreed that if the project overran the £30,000 would be reduced since it would have to be used to fund his ongoing mortgage repayments. He says that if there were any variations they would have to be paid for by whoever instructed or agreed them but in any event would be divided equally between the parties on sale.

Mr Collins says that there was an agreement from the start that there would be a separate plot outside the scope of the development agreement, which was to be the subject of a further development in due course – but without any commitment to Fairhurst in relation to that - and that this was pegged out at the outset. He says that upon completion both parties would have to separately “itemise and audit” their respective costs. He accepts that it was agreed that on completion the property should be marketed and sold within a reasonable time for a reasonable price.

Thus it can be seen that there are a number of issues of real significance as between the parties. Unfortunately, none of these matters were committed to a formal contract at the time, nor are they mentioned in contemporaneous documents such as emails or text messages. In December 2009 Fairhurst’s solicitors sent Mr Collins a draft written development agreement for his consideration. This, remarkably, appears to have been the first written communication between the parties following their entry into the development agreement some 8 months earlier. It identified the developer as Fairhurst Developments Limited. It is common ground that Mr Collins did not sign or return the document. Mr Collins alleges that he did not agree to it at any time. Fairhurst does not plead that he did ever signify his agreement to its terms nor that this document varied or superseded the terms of the oral agreement already made.

In a case such as this, where the court is considering what was agreed orally over 6 years ago, and in the absence of detailed contemporaneous chronological documentation, it is not always easy to determine what the parties are really able to say was the subject of express agreement and what they say was the subject of agreement by inference from what they did expressly agree. Thus a number of issues which subsequently assume importance may not be the subject of express agreement and have to be resolved by the court by the familiar process of construction of or implication from the terms which were agreed.

2009

There is some dispute as to when work began. It is Fairhurst’s case as pleaded [POC§10] and in evidence that work started in mid May 2009 on the footings, although work did not start in earnest until the end of July 2009. Mr Collins’ case as pleaded [DCC§10] and in evidence [WS1§39] is that work started in early April 2009.

In oral evidence Mr Fairhurst accepted that a trial hole was dug in April 209 in order to assess the ground conditions before starting on the footings but that the work to excavate the footings did not begin until May 2009. His evidence in this regard is consistent with his 2009 diary, which I am satisfied is a genuinely contemporaneous and broadly reliable record, and also with a change in the position of the house and garage for which Wheat Edwards were still seeking the approval of the planners at the time [C1292], and I accept it.

Fairhurst’s case is that Mr Fairhurst had always made it plain to Mr Collins that it was in the process of completing a development at a site in Rhyl, involving the construction of 5 terraced houses, and that he had never said that he would start work on this project immediately. His case is that he had also made it plain to Mr Collins that his funds were fully engaged on the Rhyl development, and that he required Mr Collins to provide the £30,000 upfront to enable him to fund the construction of the property up to wall plate stage, by which time the proceeds from the sale of the Rhyl properties would have come in which he would then use to fund the remaining works. His case is that Mr Collins defaulted in that obligation from the start.

In his witness evidence [WS1§40] Mr Collins referred to being asked by Mr Fairhurst for the £30,000 within a few weeks of the agreement but refusing, on the basis that this was not what had been agreed. Mr Collins accepts that he did not pay the £30,000. He says that was because of the delay in completion and the agreement that he could deduct his mortgage payments from the £30,000 in the event of delay. In his statement of case [DCC§12] he disputed the amount paid, referring to various other (unspecified) payments, which in his witness evidence [WS2§76] he said totalled £19,000.

I have already noted as symptomatic of the way in which this litigation has served only to retrench and then harden positions, that whereas in contemporaneous email communications there appeared to be agreement that Mr Collins had paid “in the region of” £16,000, by the first day of trial Fairhurst was claiming it was substantially less, only £11,000, whereas Mr Collins was claiming it was substantially more, £19,000.

This is of importance, because it is Fairhurst’s positive case that the failure to pay the £30,000 upfront meant that it had to divert funds which were intended to be used to complete Rhyl to make a start on Aldford View, with the result being that completion of Rhyl was delayed and the opportunity of achieving speedy sales was lost, thus prejudicing Fairhurst’s ability to inject further funds into completing Aldford View. In short, Fairhurst now blames the delay in completion almost entirely on Mr Collins’ failure to pay the £30,000 upfront.

Apart from digging a trial hole in April 2009 and excavating the footings in May 2009 I am satisfied that work only began in earnest at the end of July 2009. I am satisfied that the explanation is that Fairhurst was concentrating its efforts on completing the development at Rhyl over the intervening period.

Thereafter, as is apparent from Mr Fairhurst’s 2009 diary, work continued until around the end of November 2009, save for two weeks in late October 2009. At the end of November 2009 work stopped, at a time when the works were far from complete, for over 2 months. There were two principal reasons for this. The first was that Mr Fairhurst married in early December 2009 and was on extended honeymoon through the rest of that month and the next month. The second is that Fairhurst had run out of funds. In his oral evidence Mr Fairhurst referred to one of the properties at Rhyl completing on 23 December 2009. However it is also apparent that Fairhurst’s bank had the first right over the proceeds in order to be repaid its lending to Fairhurst to undertake Rhyl and I am satisfied that this did not therefore provide Fairhurst with the funds it needed to press on with Aldford View. I am satisfied from the evidence that it was not until around February / March 2010, when Fairhurst was able to negotiate a further loan of £100,000 to complete Aldford View, that it was able to start work again.

Fairhurst’s contribution to Mr Collins’ mortgage repayments

It is also clear that Mr Collins was extremely unhappy about the delay, not least because he was having to fund the mortgage repayments on Aldford View on a continuing basis. He was also unhappy with what he perceived to be Mr Fairhurst spending money lavishly on his wedding and honeymoon yet claiming to be unable to spend money on the development. It is clear that at this time there was some agreement reached between the two men whereby Fairhurst agreed to make some contribution to these mortgage repayments. This agreement, and its performance (or non-performance) has been the subject of major dispute between the parties and was a major cause of the final rift between the two men.

In short, Mr Collins contends [DCC§27] that it was Fairhurst which volunteered to make these payments from January 2010, to reflect the fact that it was due to its delay in completion that Mr Collins was incurring this continued expenditure. Mr Collins contends that Fairhurst agreed to pay £1,000 per month towards the mortgage payments, but then failed to do so, causing him financial difficulties in the meantime.

Fairhurst contends [POC§27-28] that over the period from March 2010 to December 2011 it made payments totalling £13,413 to enable Mr Collins to discharge his mortgage payments. In his witness evidence Mr Fairhurst says [WS1§51] that Fairhurst agreed to make a 50% contribution to the mortgage payments to enable Mr Collins to pay his mortgage pending a re-mortgage to avoid the risk of repossession in the meantime, and on the basis that it would be reimbursed on sale. In his evidence Mr Fairhurst provides details of these payments [WS1§53-54]. Mr Fairhurst also contends that he was deceived by Mr Collins, because despite repeatedly asking for copies of the mortgage statements Mr Collins refused to provide them whereas, now they have been provided, it has become clear that even though the mortgage payments were first reduced and subsequently the subject of a negotiated repayment holiday, Mr Collins failed to notify Mr Fairhurst of these changes and continued to press for and accept payment from Mr Fairhurst on the basis that he continued to be liable for the full monthly payments, despite Mr Fairhurst’s growing scepticism.

2010

The works restarted around February / March 2010. In March 2010 Building Control inspected the house, as did Mr Gratton at Fairhurst’s instigation. The Building Control notes and Mr Gratton’s inspection records evidence work progressing from March through to June 2010 as regards the house and in July and August 2010 as regards the garage and the drainage system.

Mr Fairhurst has not disclosed a diary for 2010. He claims that this is because he did not produce a diary for that year. His explanation was that there was no need for him to do so, because the primary purpose of the diary was to record where his sub-contract labour were working at any one time and that through 2010 he was predominantly working on Aldford View so that there was no need to diarise this. This seems to me to be a very curious explanation. It is apparent from looking at the 2009 diary that it did not just record work locations but also the number of hours worked and thus the payment entitlements of the sub-contract labour as well as other matters. It seems extremely unlikely to me that in January 2010 Mr Fairhurst could have known in advance that his men would have been doing nothing but working on Aldford View for the whole of that year or that he would have no need to record their times and hours and thus payment entitlements. Moreover, although he was not cross-examined about this specifically I note that when on 30 June 2010 Mr Fairhurst wrote what appears to be the first email disclosed by either party, he stated (in the context of a debate about progress) “I have a diary too”. I am driven to the conclusion that Mr Fairhurst has disposed of or failed to disclose this diary because he knows that it would record the lack of detailed progress on this project over significant periods of time throughout 2010.

In that email Mr Fairhurst recorded what he accepted was the “fairly ad hoc” progress of the works, suggesting that it was “due in the main to funding on both of our behalf”, claiming that Mr Collins had failed to pay the £30,000 “promised …. down-payment”, having paid only £16,000 and of that £4,000 extremely late. He also referred to the extra work and cost Fairhurst had absorbed without complaint. He said that at that stage Fairhurst was in the process of working on the garage and about to begin the external drainage system. He concluded by expressing the hope that with co-operation they should move forwards with a view to completing by the end of August 2010.

Mr Collins’ response of 1 July 2010 challenged the suggestion that he had agreed to pay the £30,000 upfront. He did not however dispute what was said about what had been paid. Mr Fairhurst immediately responded to argue the point, and the parties remained at loggerheads over that and other matters in subsequent communications.

As regards the extra works it is Fairhurst’s case [POC§12] that a number of variations were requested by Mr Collins which Fairhurst values at approximately £45,000, principally an increase in the garage size, an alteration of the porch, an alteration of the staircase and the planting of a considerable number of trees, but that Mr Collins failed to make any payment in respect of the cost of these extra works, putting increased financial pressure on Fairhurst.

Mr Collins does not accept [DCC§12] that he requested variations or that their valuation is £45,000. He contends that the garage size was never varied, that the porch was a minor variation and that Fairhurst instigated the staircase alteration.

Despite Mr Fairhurst’s expressed optimism the property was not completed by the end of August 2010. It appears that Mr Collins had found someone, a Mr John Smith, who was interested in renting Aldford View with a view to purchasing it for £1.25M, and there was a running discussion as to whether he could be induced to pay a 10% deposit and if so whether it could be made available to Fairhurst to enable it to fund the remaining works. However towards the end of 2010 it had become clear that Mr Smith was not going to proceed, as Mr Fairhurst claims he always knew would happen. Mr Collins claims that Mr Fairhurst tried to persuade him to borrow more money to fund Fairhurst to complete the works, secured on Aldford View but that he steadfastly refused to do so.

December 2010 – February 2011

By this stage it is clear that an impasse had been reached, in that it is apparent that Fairhurst was unable to complete the works without access to further funds, which it was not immediately able to obtain, whereas Mr Collins was neither willing nor, he says, able given the incomplete state of the work to provide further funds to do so if that involved either remortgaging or giving a second charge over Aldford View.

In its pleaded case Fairhurst admits [POC §13] that completion of the works was delayed, but contends that this was due to financial difficulties caused by defendant’s breaches in failing to pay the advance in full and for the variations. Mr Fairhurst also contends [WS1§19-20] that the works were delayed by adverse weather conditions and by alterations and variations to the works. Fairhurst admits [POC§14-18] that the end result was that in January 2011 it was forced to cease works, whereas otherwise it would have been able to do so.

Mr Collins’ case is that the true reason was that Fairhurst did not have the funds available to complete the development. He contends [DCC §18] that the works came to a complete stop in autumn 2010, due to Fairhurst’s lack of funds.

In January 2011 there was some discussion about the costs already incurred by Fairhurst. By email dated 23 January 2011 [DD1/20] Mr Collins asked Mr Fairhurst to provide details of the costs incurred to date. By email in response dated 25 January 2011 [DD1/36] Mr Fairhurst provided Mr Collins with what he described as “the costs to date on [the project]”, adding that “I have copies of all invoices and PAYE slips for your investigation when we agree to meet”. The spreadsheet set out the costs as at 17 December 2010 – that I am satisfied being the approximate date at which Fairhurst effectively ceased work on site - under 3 headings: General; Labour and Material. The total amounted to £189,608.77. The labour element was said to amount to £82,601. When Mr Collins subsequently, in his email dated 28 February 2011 [DD1/15], asked Mr Fairhurst to scan and send the relevant invoices, Mr Fairhurst’s response of the same date [DD1/14] was to refuse, stating that he would provide them at the end. In his email of the following day [DD1/13] he said that it was “practically impossible” to scan and send such a large volume of material.

In cross-examination Mr Fairhurst admitted that the real reason for not providing the supporting invoices at that stage was that he was not prepared – as he put it – to show his hand in what he regarded as a game of poker, when Mr Collins was not prepared to disclose a copy of his mortgage statement which Mr Fairhurst had been asking him for.

I have some sympathy with Mr Fairhurst’s position at this stage, where he was being asked for supporting information in hostile terms whereas Mr Collins was studiously refusing to provide supporting information himself. Nonetheless his answer revealed the true position, which is that the schedule was produced as part of a negotiating process rather than being a document which Mr Fairhurst had produced on the basis of a careful analysis of the contemporaneous invoices and other records. Fairhurst did not seek to rely on that schedule in the claim, relying instead on a further breakdown of invoices where the total for labour was significantly less than that shown in the original breakdown. When asked about this Mr Fairhurst repeatedly stated that it did not matter, because the total was broadly the same. When pressed, he claimed that an explanation was that some of the labour costs were based on invoices from sub-contractors which were inclusive of everything, i.e. materials, plant and overheads, not just labour. However there is no evidence to support this explanation, and when asked how he had gone about preparing the original schedule he was unable to provide a clear explanation as to what, if any, documents or process he had used. He referred to it being a form of updated running total but that did not make the position any clearer. In my view it was clear that this schedule was no more than a negotiating document, which Mr Fairhurst could not have substantiated by invoices or PAYE slips as he claimed, which is why he was not prepared to do so.

What was also under discussion at that stage was how much was needed to complete the development. By an email dated 4 January 2011 [DD1/52] Mr Fairhurst summarised what he considered to be the outstanding works and the costs to complete associated with each, producing a total of £28,500 (Footnote: ⁴). This did not include any allowance for the kitchen, even though Fairhurst has always accepted that this was within the scope of the development agreement, seemingly because Mr Collins was arranging for that to be obtained on finance. This would of course have been the cost to Fairhurst of these works and, hence, net of VAT and also of any overheads or profit. In mid January 2011 there was a meeting at which these costs were further discussed and Mr Collins subsequently asserted that it was agreed at the meeting that it would cost around £50,000 to complete the works.

By this stage Mr Collins was also investigating sources of funding to finish the works. Mr Fairhurst was still searching for alternative sources of finance and requesting that Mr Collins give him the time and the opportunity to do so. David Jones confirmed that around this time Mr Fairhurst had approached him seeking a further £50,000 to complete the development. He said that he had approached sources of venture capital known to him who were willing, in principle, to make a 12 month loan of £50,000. However this would come at a steep cost of £20,000 (being the equivalent of an eye-watering 40% interest rate) and there was also a stipulation that the loan be adequately secured, either on Aldford View itself or on one or more of Mr Fairhurst’s properties. Mr Collins however resolutely refused to agree to give a second charge over Aldford View. Furthermore, there is no evidence that the second option ever proceeded beyond these initial discussions and Mr Fairhurst has not provided any documentary evidence to support his assertion that at that stage he had sufficient equity in alternative properties to provide an acceptable second charge. What is clear is that at no time prior to the end of February 2011, when the final parting of the ways occurred, had Mr Fairhurst actually obtained any firm offer of finance to enable him to complete the works which he was able to communicate to Mr Collins.

By mid January 2011 Mr Collins was making it clear to Mr Fairhurst that he was going to proceed to complete the house himself with or without Mr Fairhurst and that he had agreed with Mr Wright that the latter would make funds available to complete the development, on the basis of an oral agreement under which Mr Wright would obtain 20% of the net profit as his reward, which Mr Collins was saying should come entirely from Fairhurst’s share of the profit. Mr Fairhurst was, understandably, unhappy with this and unwilling to agree to it.

Mr Collins informed Fairhurst at the time that he was only borrowing £50,000, as oppsoed to the £70,000 he had in fact agreed, and did not tell Fairhurst that Mr Wright had already provided him with the first £20,000 by 19 January 2011 [DD2/11/409]. Mr Collins’ explanation was that he did not want Mr Fairhurst to know that he had already received this money because he thought that Mr Fairhurst would attempt to persuade him to give some of that money to him. Although I accept that this was one reason I am also satisfied that the principal reason was that Mr Collins was not intending to use the full £70,000 for the completion works, and was intending to use the balance for his own financial purposes, including paying the mortgage on Aldford View, but did not want Mr Fairhurst to know this because he still wanted to extract monies from Fairhurst to contribute towards the mortgage repayments on Aldford View.

The other difficulty was that by this stage Mr Collins was not willing to pay over any further monies to Fairhurst for Fairhurst to complete the works itself using those monies at its discretion because he quite clearly no longer trusted Mr Fairhurst to apply those monies to the build. In short, he was insisting on controlling the purse strings, whereas that was not acceptable to Fairhurst.

The end result of all this was that an impasse was reached between the two men, because Mr Fairhurst was unwilling to concede defeat on his wish to be able to complete the development, but was unable to find the finances to do so, whereas Mr Collins was willing to complete the development himself using funds from Mr Wright, but unable to obtain Mr Fairhurst’s agreement that he should have to bear the whole of the 20% profit share which Mr Wright was to receive as his reward It is apparent from the correspondence between the parties, and between Mr Collins and Mr Upshall regarding the staircase, that by late January 2011 Mr Collins had already made plain that he was going to take control of the development and complete the works himself, with or without Fairhurst’s assistance, and had taken steps to put this into place, by instructing Mr Upshall to complete the work to the staircase on a direct basis.

Although correspondence continued sporadically through February 2011, the final parting of the ways occurred on 28 February 2011, when Mr Collins emailed Mr Fairhurst [DD1/14-16] demanding payment of the arrears of the mortgage contributions, together with payment of the present and future contributions, making it clear that he had taken over the completion works, and that he was excluding him from the site until after the works had been completed. This provoked an angry response from Mr Fairhurst and marked the final nail in the coffin so far as any possibility of rescuing the relationship between the two men was concerned. It is clear that by this stage Fairhurst had completely left site, with Mr Collins continuing to make arrangements to complete the works himself.

It should be noted however that Mr Collins did not, whether in this email or subsequent correspondence, state that he regarded the development agreement as completely at an end, or state that he regarded himself as under no obligation to pay Fairhurst anything for the work done or for any profit share. Thus in his email of 28 February he continued to press Fairhurst to continue making the mortgage payments which he claims was part of the development agreement. He said that if Fairhurst did not make payments he would have to make other arrangements which “could result in potential expense to you or jeopardise the marketing or sale of the property” which, in my view, can only be read as a reference to Mr Collins accepting that Fairhurst was still entitled to receive its share of any profit on sale, after taking into account losses incurred by Mr Collins due to Fairhurst’s alleged breaches. He also said that his “next job” after the works had been completed would be to “audit” the spreadsheet of costs previously provided by Fairhurst, and he asked Fairhurst to scan and email copies of all invoices or to send details of the true costs incurred, stating that he would not “be funding” costs due to lack of management on Fairhurst’s part. Again, there would have been no point in saying that if his stance was that he had terminated the whole of the development agreement because of Fairhurst’s breaches.

March 2011 onwards

Mr Collins did not employ another builder to undertake the completion works. Instead he organised the works himself, with assistance from his brother, purchasing materials direct and employing and paying for labour and other sub-contractors direct. He failed however to take the precaution of recording the state of the works at that point or to ensure that the work he was doing and costs he was incurring were adequately recorded and documented.

Mr Collins has not produced a spreadsheet detailing his expenditure, whether paid through bank accounts (his own, those of Ms McGuinness or his company) or paid in cash, nor has he disclosed a diary or cash book or other record to show what work was done and when and by whom. He has failed to provide anything like full supporting documentary records of his expenditure. He has, it is true, provided a number of invoices, which have been assessed and reported on by Mr Hopkinson, but those are far from exhaustive. In particular, there is no documentary evidence for the labour or sub-contractor costs incurred.

This is all extremely surprising, given that by this stage he must have known that he would need to provide substantiation of his costs if he was going to seek to debit them against Fairhurst’s profit share. Indeed by this stage there had already been reference to litigation. Mr Collins seeks to explain this failure by saying that he was too busy to do so. However, given his experience in business and his previous experience of constructing new properties, I have to say that I am unable to accept this as a satisfactory or a sufficient explanation. I am satisfied that Mr Collins was able to undertake the completion works for significantly less than the amount which he claims it cost, and less even that the £50,000 which he was referring to at the time. I am satisfied that it is because he is keen to contra-charge Fairhurst as much as he can get away with in this litigation that he is not prepared to provide a full and transparent account of his actual costs.

On 10 May 2011 Mr Collins emailed Mr Fairhurst [DD1/11] to say that he was proposing to finish off Aldford View by furnishing it (referred to as “staging” the house) and then move in with his family. He claimed that he had been advised that the house would sell more quickly and for a higher price if it was finished off like a show house and habited. However it is apparent that his real motivation was that if he moved in he could then accept an offer he had secured to rent out his own home, Poplar Cottage, for enough to cover the mortgage on Aldford View and to make a significant contribution towards the mortgage on Poplar Cottage. What he did not disclose to Fairhurst at the time was that he had already made a firm plan to move into Aldford View, whatever Fairhurst might do or say. After some prevarication in cross-examination, where he initially tried to suggest that he did not move in until June or even July 2011, he eventually had to concede that he had moved in on 14 May 2011. In the email however he was, at least ostensibly, seeking to persuade Mr Fairhurst’s to agree to this course of action; on any view he was not saying that he could do what he liked with the house because the development agreement had been terminated and Fairhurst no longer had any right to know about or interest in the sale of the property. Mr Fairhurst in his email the following day [DD1/10] refused to agree observing – presciently – that if Mr Collins did so he would no longer have any strong incentive to sell the property whereas Mr Fairhurst would receive nothing to cover his costs until the property was sold.

There was then a hiatus until September 2011 when Mr Fairhurst emailed [DD1/6] asking whether there had been any progress on selling the property. In what was clearly intended to be a conciliatory move he also said that he would make some further contributions to the mortgage once he had funds coming through. The tenor of his letter shows that he regarded the development agreement as still subsisting. In his response [DD1/5] Mr Collins explained that he had not been in contact because there had been no real interest in the property. He said that he had spent more than £50,000 on finishing the property and that he was proposing to undertake some further external works before having further sales photographs taken with a view to achieving a sale. He indicated that if Fairhurst could make some funds available that would help him to undertake the external works which would, in turn, promote the prospects of sale. The tenor of his letter also shows that Mr Collins also regarded the development agreement as still subsisting. There was then a discussion about changing estate agents, but Mr Collins provided his reasons for wanting to stay with the existing agents and Mr Fairhurst did not disagree [DD1/4], stating that “we only need 1 buyer”. In October, November and December 2011 Fairhurst made 3 monthly payments to Mr Collins in relation to the mortgage contributions, totalling £4,350. In November 2011 Mr Collins was considering changing agents and instructed another firm who took some photographs of the property in its completed state [DD1/1] but for some reason Mr Collins decided not to use those agents, so that it appears that the new photographs were never used and the property stayed on the market with the same agents.

Nothing further happened until May 2012, when Fairhurst’s current solicitors wrote to Mr Collins on behalf of Fairhurst Developments Limited, enclosing a draft Particulars of Claim and stating that proceedings would be commenced unless agreement could be reached. They also notified Mr Collins that they had entered into a conditional fee agreement in relation to the claim. It is apparent that there was no acceptable response and these proceedings were duly commenced the following month.

Mr Collins gave evidence at trial that in November 2014 he had moved back to Poplar Cottage and rented out Aldford View. His explanation was that he had problems with his tenants at Poplar Cottage so that the plan to rent it out and cover his mortgage payments at Aldford View was not working out. He has not however disclosed any documentation as to this. He said that he had rented out Aldford View to a business associate at a rental of £2,500 pcm. After the evidence had concluded Mr Collins finally provided a 1 page document, disclosing a 1 year assured shorthold tenancy with effect from 1 October 2014, the tenants being “Excel Cleaning” and a named individual. Mr Collins accepted in evidence that he had agreed to this tenancy on the basis that the property would be occupied by a number of individuals as opposed to by one family.

It was apparent from the site view that the property is being occupied as a shared house by a number of individuals. The property is not in my assessment being actively maltreated, but it is not being looked after in the way that it would be if it was a privately owned and occupied family residence. Moreover, it is also apparent that regular maintenance is not being undertaken; for example a number of the window frames are showing signs of requiring repainting. In short, it would be quite impossible in my view for Aldford View to be marketed and sold at a premium as matters currently stand. It seems to my unqualified eye that in order to market the property to best advantage one would need to decant the existing tenants, undertake a thorough refurbishment, and either market for sale as an empty property or one which was being occupied as an upmarket family property by a family who would be committed to looking after it and co-operating in relation to viewings and the like.

The involvement of the statutory authorities

Mr Collins’ positive case is that the property is effectively unsellable due to the presence of defects. In the original DCC Mr Collins pleaded that Fairhurst’s workmanship was seriously defective, without providing any details. It appears that a schedule of defects was produced prior to the first substantive case management hearing, and that subsequently on 15 August 2013 the quantity surveyor then instructed by Mr Collins visited site for a preliminary meeting in order to produce a report in which he was instructed amongst other things to identify any defects and quantify any remedial cost. It is apparent that the quantity surveyor advised Mr Collins that he would need to instruct a building surveyor to address the question of defects, to include undertaking a drainage survey. It was at this point that Mr Collins instructed Mr Whittle to report on the presence of defects in the works.

In September and in November 2012 the local planning enforcement officer had served an enforcement notice on Mr Collins relating to an alleged breach of the planning conditions as regards landscaping works, boundary treatment and the demolition and removal of existing structures. Unless Mr Collins can demonstrate that Fairhurst undertook an obligation to comply with all planning conditions, as to which there is a dispute, there is no apparent basis for considering that this is a matter for which Fairhurst is responsible. In May 2013 criminal proceedings were threatened. Mr Collins instructed a firm known as Civitas to regularise the position, and they did so in July 2013.

In March 2013 Building Control wrote to Mr Collins to notify him that no statutory notice at completion had been given with the effect that there was no completion certificate which could cause difficulties in selling the property. Since Mr Collins had taken over responsibility for completing the property, that is something for which responsibility would also appear to have rested with him.

In October 2013 Building Control wrote to Fairhurst to advise that so far as they were concerned the only outstanding condition was that relating to the provision of SAP calculations, to do with air testing, and the only outstanding matter was for a final inspection to take place to determine whether a completion certificate could be issued. However by November 2013 Mr Collins had become involved and was writing to Building Control positively asserting that the foul and surface water drainage system was not compliant with the Building Regulations. This appears to have been based on the contents of the first report of Mr Whittle, which had by then been obtained, and to which I shall return. By January 2014 Mr Collins and Building Control were in communications with a view to arranging a meeting to discuss what was required before a completion certificate could be issued. Mr Collins supplied Building Control with a copy of the reports he had obtained from Mr Whittle. On 5 February 2014 Building Control wrote to Mr Collins following an inspection setting out a list of matters requiring attention, including “further investigation of the septic tank and outfall drainage by a drainage specialist”.

Mr Collins duly engaged drainage specialists who produced a report in March 2014 recommending the separation of the foul and surface water drainage system into two separate systems, both discharging into a ditch or watercourse. Mr Collins advised Building Control of this who in turn advised him – undoubtedly correctly – that he would need to contact the Environment Agency in order to obtain permission for this to be done. At this point there was a dispute about the extent to which Building Control should be involved and be provided with information and representations by the respective solicitors, which involved a contested application in court. Building Control were, not surprisingly, becoming increasingly concerned about being used as a punch-ball in this litigation. In May 2014 they wrote to the parties what was intended to convey their final position as to which specific matters required rectification and which did not but which required to be addressed before a completion certificate could be issued. The problems with the drainage system were stated in terms to fall into neither category, on the basis that it was considered that “the system in place is capable of performing satisfactorily if subjected to an appropriate maintenance regime”. There the matter has rested so far as Building Control is concerned.

There was also however correspondence from the Environment Agency dated 5 June and 10 July 2014, the first letter having been written following a site visit initiated by Mr Collins to inspect what was reported as being an escape of effluent onto adjacent farmland. The letters demonstrate that the Environment Agency representative who had attended had observed septic discharge onto the site itself, where the ground was saturated, and also pooling onto the adjacent farmland. The letters required steps to be taken to address the escape onto the adjoining land. The Environment Agency was happy to endorse the scheme proposed by the drainage specialists instructed by Mr Collins which they stated would qualify for a water discharge activity exemption. However they were careful not to express any opinion as to the cause of the problem; they said that the reason could be “inadequate equipment, land or maintenance or a combination”.

Although they required Mr Collins to complete the improvements by October 2014, in fact Mr Collins has not done so, because he is awaiting the outcome of this litigation, and there is no evidence that they have taken any steps to compel him to do so. From my – admittedly non-expert – observations at the site visit, whilst there was visual and olfactory evidence of septic discharge remaining on the site itself, I observed no such evidence – and nor was my attention drawn to any – on the adjacent farmer’s land.

The pleaded cases

Fairhurst’s pleaded case

I have already referred to elements of Fairhurst’s pleaded case. It may be summarised as follows by reference to the POC.

Mr Collins breached the terms of the development agreement in failing to pay the whole of the cash advance up front or at all and in failing to pay anything in relation to the variations [POC§12]. It was these breaches by Mr Collins which led to Fairhurst being unable to complete and having to cease works in January 2011 [POC§18].

After January 2011 Mr Collins acted in breach of the terms of the development agreement by:

By reason of Mr Collins’ pleaded breaches of the development agreement Fairhurst has suffered loss in the amount of the agreed cost of the works as paid by him (£150,000), the shortfall in the advance (£19,000) and the cost of the variations (£45,000) [POC§26].

By reason of the circumstances in which it entered into the development agreement and made contributions towards the mortgage payments a trust arose under which Mr Collins holds the property on trust for them both in proportion to the terms of the development agreement and to the respective contributions made by the parties [POC §29-30].

The relief claimed by Fairhurst is pleaded as follows:

Although not entirely clear, it appears to follow that Fairhurst’s primary pleaded case is that it is immediately entitled to the monies said to be due for the works and that its profit share will be realised once the property is sold under the order for specific performance and sale under the trust. However in his opening skeleton argument Fairhurst’s counsel Mr Goff made it plain that Fairhurst’s preferred position was to obtain a clear cut remedy in the form of an award of damages to include an award for the loss of profit it would otherwise have made on the completed development. The difficulty with that suggestion is that there is no valuation evidence as to “the realistic sum to be determined by an appropriately qualified surveyor” referred to in the prayer. At the beginning of the trial I indicated that one possible solution, assuming I found for Fairhurst, would be to make some order for sale within a specific period failing which the parties would have to return to court with valuation evidence in order to allow the court to assess damages. At the conclusion of the trial I invited the parties to indicate in their written closing submissions what specific orders each was seeking in relation to relief, and the basis on which those orders were being sought, so that each would have the opportunity to respond before I gave judgment.

Mr Collins’ pleaded case

Mr Collins’ case appears from his DCC and ACC, the latter replacing the original Counterclaim. In some respects the legal basis of the case being advanced is not entirely clear or consistent. I have already referred to his case as regards the parties to and terms of the development agreement. The balance may be summarised as follows:

Mr Collins was not in breach as regards payment of the £30,000 or payment for the alleged variations, which were not accepted [DCC§12].

Fairhurst misrepresented its true financial position and if Mr Collins had known the true position he would not have entered into the development agreement. It was Fairhurst’s impecuniosity which caused the delays to the project [DCC§13].

Mr Collins denies that Fairhurst has expended the amount claimed on the works, and requires Fairhurst to document and to prove its claim [DCC§19]. He contends that Fairhurst has been guilty of double charging, overcharging, and charging for labour, materials and plant not used at this site [ACC§4]. He contends that Fairhurst has failed to provide invoices to substantiate its alleged costs [ACC§10].

Mr Collins denies that he acted in breach after January 2011, claiming that he was obliged to take over the completion of the works and to live at the property in consequence of Fairhurst’s “impecuniosity, fundamental breaches and misrepresentations” and in order to enable him to comply with his obligation to market and to sell the property [DCC§20-22]. It is alleged that Fairhurst has caused its own loss due to its impecuniosity, fundamental breaches and misrepresentations [DCC§26].

Although no trust arose by reference to the payment of the mortgage instalments, Mr Collins accepts that a trust arose in relation to the development agreement [DCC§29-30]. He contends however that Fairhurst’s profit share has been reduced to 30% due to the introduction of Mr Wright, necessitated by Fairhurst’s breaches, and that this reduced profit share should be subject to credit being given for the cost of completing the works and financing the development and to the other losses suffered by him due to Fairhurst’s breaches.

In his response to the prayer Mr Collins denies that Fairhurst is entitled to specific performance, on the basis that he is already performing and will continue to perform his obligations under the development agreement so far as marketing and sale are concerned. He accepts that as and when the property is sold Fairhurst is entitled to its costs, to the extent proved, and the reduced 30% profit share.

The tenor of the above, in my view, is that Mr Collins is accepting that he is still bound to perform the development agreement, but is asserting that whatever is due to Fairhurst will be paid on sale of the property but must be strictly proved as regards the claim for payment for works done and is subject in any event to deductions for the consequences of its breaches.

However, and a little confusingly, Mr Collins also positively contends that nothing is due to Fairhurst under the development agreement due to its serious breaches, but that if anything is owed it is not yet due because the property is not yet sold due to Fairhurst’s breaches [ACC §32]. In the un-amended version of the Counterclaim there was an allegation that the development agreement was “rendered void due to the claimant’s complete failure to perform his contractual obligations” and that Mr Collins “therefore seeks restitution of all sums paid to the claimant” [§41]. That paragraph is carried through into the ACC [§19]. Whatever that does mean, there is no clearly pleaded allegation to the effect that Mr Collins has accepted Fairhurst’s repudiatory breaches and, thus, that he is completely discharged from its obligation to make any payment at all to Fairhurst, whether for works undertaken or for its profit share.

Instead, the tenor of the ACC is to advance a significant counterclaim by way of defence of set off, contending that the effect of Fairhurst’s breaches is that nothing is owed to it [§4]. In particular Mr Collins contends that Fairhurst’s works are incomplete and defective in very significant respects, that the planning permission conditions have not been satisfied and that there are serious breaches of the applicable Buildings Regulations, leading to a risk of prosecution and the expenditure of fees of planning advisers. He contends that the property is effectively unsaleable in consequence. He seeks his remedial costs, including the costs associated with addressing the planning and environmental issues, his mortgage payments over the property, and his loss of earnings as a mortgage consultant.

There is in existence a definitive Scott Schedule of defective and incomplete work which has itself been the subject of very considerable disagreement and the expenditure of wholly disproportionate costs, as noted by HHJ Raynor QC at the hearing before him on 21 August 2015. In summary, the position is that there are 28 individual items of defective works which emanate from and are supported by Mr Whittle, and a further 27 items of completion work added by Mr Collins himself.

Was the development agreement entered into by the claimant or by Mr Fairhurst personally?

Mr Collins made it plain in the DCC and in his evidence that his position was that the development agreement was entered into with Mr Fairhurst personally and not with Fairhurst Developments Limited.

Although Fairhurst made it clear in the Reply that it took issue with that argument, it has never pleaded a positive case as to the basis on which it claimed that the development agreement was entered into with Fairhurst Developments Limited as opposed to with Mr Fairhurst.

Perhaps even more surprisingly, given the lengthy and detailed witness statements produced by Mr Fairhurst, it was not addressed at all in his witness evidence. It is difficult to avoid the conclusion, having listened to his evidence, that this is because he had very little he could say about this issue.

When pressed by me whilst giving evidence, he claimed for the first time that it was made very clear at the very first meeting that he was going to undertake the development through his limited company. I am wholly unable to accept that evidence. I have no doubt that there was no express reference to Fairhurst Developments Limited in any of the discussions in March or April 2009. If there had been such a reference, I am quite sure that Mr Fairhurst would have made some reference to this long before he first did so.

Before turning to the law, I refer to the evidence about Fairhurst Developments Limited and Mr Collins’ knowledge of Mr Fairhurst and his business.

Fairhurst Developments Limited was incorporated in 2004 and has always been wholly owned and controlled by Mr Fairhurst. It is VAT registered, whereas Mr Fairhurst is not. At the relevant times it had its own bank account. I am satisfied that this project was always intended to be undertaken by Fairhurst Developments Limited, and that it was in fact undertaken by Fairhurst Developments Limited, in the sense that it was Fairhurst Developments Limited which ordered and paid for all of the plant and materials used for the development (other than those obtained through Thorncliffe) and which ordered and paid for the subcontract packages and subcontract labour used for the development. It was also Fairhurst Developments Limited which obtained the finance from Barclays Bank to pay for the works, and which reclaimed the VAT on the supplies. It is also the case that payments were made by Mr Collins through his company and through Ms McGuinness, by bank transfer and cheque, to Fairhurst Developments Limited.

Furthermore, although I do not have full disclosure in relation to the Rhyl development, I am also satisfied from the evidence which I do have, such as the documents in relation to the bank overdraft facility, that this development was also in fact undertaken by Fairhurst Developments Limited.

Mr Fairhurst has not however always conducted all of his development projects through Fairhurst Developments Limited. Thus he acquired and developed his own property, known as The Stables, in his own name. Mr Collins was also aware of a further development undertaken by Mr Fairhurst in conjunction with others including a Mr Trussell (being Mr Fairhurst’s cousin and Mr Collins’ friend, and the man who introduced them originally), and there is no evidence that this was developed by Mr Fairhurst through Fairhurst Developments Limited. Mr Fairhurst also opened a trade account with Thorncliffe in his own name, and made extensive use of that trade account in relation to this project. Mr Collins said in evidence that the first time that he became aware that Mr Fairhurst did in fact have a limited company was in summer 2009 when he was asked by Mr Fairhurst, whilst they were in a car together, whether he knew how Mr Fairhurst could get the trade account debt transferred from his own name into that of the company. Although Mr Fairhurst did not accept this, I am satisfied that this conversation did take place.

In evidence Mr Collins accepted during the course of detailed cross-examination that he was aware prior to March 2009 that Mr Fairhurst was a property developer and builder. Although this acceptance was rather grudging, Mr Collins wishing to downplay his knowledge of the scale and extent of Mr Fairhurst’s business, I am satisfied that he knew this full well. Indeed, it was for precisely this reason that he approached Mr Fairhurst in the first place.

However, the more difficult question is whether Mr Collins was aware that Mr Fairhurst conducted this business through a limited company.

Fairhurst has been unable to point to much material to support its case on this issue. Thus although Fairhurst attempted at trial to establish that Mr Collins knew because in around 2008 his company had arranged a mortgage for Mr Fairhurst in which reference was made to Fairhurst Developments Limited, I ruled inadmissible the documentation which Fairhurst wished to adduce because of its lateness and the prejudice to Mr Collins in having been unable to investigate the precise details of this transaction and his involvement in it prior to the trial. In any event by reference to such evidence as I do have I am not satisfied that it has been established that Mr Collins had personal involvement in this matter or, even if he did, that he was made aware of Fairhurst Developments Limited as the corporate vehicle through which Mr Fairhurst conducted a substantial part let alone all of his business.

Earlier this year Fairhurst obtained permission to rely at trial upon the witness statement made by Mr Lewis in March 2015 which referred to, and attached, an invoice rendered by Fairhurst Developments Limited to Ms McGuinness in December 2008 for drainage works in the sum of £15,000. The gist of Mr Lewis’ evidence was that in 2007 he had agreed with Mr Collins and his business partner Karl Faulkner to sell a plot of development land in Hawarden to them, although the land was in fact transferred to Ms McGuinness. He said that there was an agreement under which the purchaser would be entitled to a deduction to reflect the costs of certain drainage works necessary before the property could be developed. He said that a dispute arose as to whether the full deduction should be made and, in the course of correspondence between the respective solicitors, the purchaser’s solicitors sent to his solicitors a letter justifying the costs incurred, which referred to and enclosed the invoice from Fairhurst Developments Limited. Under cross-examination he accepted that he had no personal knowledge as to whether or not Mr Collins had seen the invoice in question. He claimed that the only reason he had become involved was that having received his (by then) former solicitors’ file in early 2015 he had seen the invoice and, because he did not believe that Fairhurst Developments Limited had in fact done the drainage work referred to, he had telephoned the number given on the invoice and spoken to Mr Fairhurst, who admitted that his company had not done the work but had produced the invoice. He said that before this he did not know, and had never met, Mr Fairhurst.

It is a curious feature of this aspect of the case that Fairhurst had not adduced any evidence about this previous transaction, either by making disclosure of the invoice or other documents relating to this transaction or by addressing it in witness statements. All that Mr Fairhurst had said about this was that he had undertaken some drainage work for Mr Collins on a site owned by him in or around December 2008 [WS1§6]. It would have been open to him to have provided more details of this transaction to support his case that Mr Collins knew prior to April 2009 that he operated his business through Fairhurst Developments Limited, for example by explaining what was produced or discussed at the time or by detailing the circumstances in which the invoice came to be produced and given – if this is indeed Fairhurst’s case – to Mr Collins. It is another curious feature of this aspect of the case that Fairhurst is relying on the evidence of Mr Lewis even though that witness has said that Mr Fairhurst admitted to him that he produced the invoice even though his company had not in fact done the work the subject of the invoice.

Mr Collins was given and took the opportunity to respond to this evidence through his supplemental witness statement. In his supplemental witness statement and in his cross-examination Mr Collins accepted that he had been involved in the acquisition and development of this plot by Ms McGuinness, and that Mr Faulkner had also been involved, albeit as project manager as opposed to business partner. He also accepted that there had been an agreement reached as regards the deduction for the drainage costs. He said that he had asked Mr Fairhurst to arrange the drainage works and, so far as he was concerned, Mr Fairhurst had undertaken them in December 2008 whilst he and Ms McGuinness had been abroad on holiday. He said that Mr Fairhurst had been paid in cash, although he did not think it was as much as £15,000. He insisted that he had never seen the invoice until he had seen Mr Lewis’ witness statement, and suggested that since the invoice had been addressed to Ms McGuinness at the Hawarden property it was possible that it had been asked for by the solicitors in connection with the dispute and sent direct by Mr Fairhurst to them. There is no suggestion however that either he or Ms McGuinness had made enquiries of the solicitors to obtain a statement as to the circumstances in which they came to obtain this invoice.

Ms McGuinness was unable to add very much to the account given by Mr Collins.

Although Mr Lewis had alleged that the true owner of the property was Mr Collins, and that it was transferred into Ms McGuinness’ name for tax reasons, and although Mr Collins had alleged that Mr Lewis had insisted on a separate cash payment which he believed Mr Lewis had failed to declare to the revenue, I made it clear that I was not prepared to extend the ambit of this case and try what was on any view satellite litigation, particularly in circumstances where neither party had made, or requested, full disclosure of the documents relevant to this issue, and where it would have involved potentially making serious findings against persons not parties to this case. The only relevant question for me is whether or not, in the course of this unrelated transaction, Mr Collins came to see the invoice from Fairhurst Developments Limited prior to the conclusion of the development agreement in circumstances which ought to have made him aware that Mr Fairhurst operated his building business through that separate legal entity.

I am satisfied that the evidence is too equivocal to enable me to make such a finding. There are some extremely curious aspects of the whole transaction and the circumstances in which it is said that Fairhurst only came to be rely on this invoice as a result of Mr Lewis having quite coincidentally come forwards in what on any view were unusual circumstances. I cannot be satisfied that this was a straightforward commercial transaction where Mr Collins instructed Fairhurst Developments Limited as Mr Fairhurst’s limited company to undertake the work, received the invoice from that company, and paid the amount stated. There is no evidence that any mention was made of the company other than by reference to the invoice. However the invoice is not addressed to him personally, nor is it addressed either to his private residence or to his business address. There is no hard evidence that the invoice was sent to Mr Collins. It seems to me on the evidence before me to be just as likely that the invoice was not produced contemporaneously and was asked for and provided subsequently in order to submit direct to the solicitors to deploy as evidence to defend the claim being made by Mr Lewis.

In the circumstances I am not satisfied that Fairhurst has demonstrated from this particular transaction that in late 2008 / early 2009 Mr Collins knew or should have known that Mr Fairhurst was conducting his building business through Fairhurst Developments Limited.

Fairhurst is unable to point to any other hard evidence to demonstrate that Mr Collins was, or must have been, aware that this was the case at any time prior to March 2009. Mr Collins accepts that during the discussions in March and April 2009 leading up to the conclusion of the development agreement Mr Fairhurst did refer to the Rhyl development in the context of it providing security for the bank to advance funding if needed to enable Fairhurst to finance the works. He was prepared to accept that Mr Fairhurst might well have been operating through a limited company, but at the time he did not give it any thought, because it was not something which concerned him either way. His only concern was that Mr Fairhurst was able to undertake and complete the works in accordance with the agreement, not whether he was to undertake it through a limited company or in his own name.

However Mr Collins went a little further in his supplementary witness statement, where he said that he knew there was a company in existence, although he did not pay much attention to the name and would probably have been unable to name it [§7]. Although he was not specifically cross-examined about this paragraph, he does appear to be referring to his state of knowledge at the time of the development agreement. He also made some other references to Mr Fairhurst operating through a firm or a company in an email and in a statement and an affidavit, but I do not consider that these, read in context, were ever intended to signify an acceptance by Mr Collins that the contract was made with, or that the claim was properly brought by, the limited company.

Having regard to the totality of the evidence I am satisfied that Mr Collins’ state of knowledge at the time of the development agreement was that whilst he did not give the matter much thought, he would probably have answered, if asked, that he believed that Mr Fairhurst did have a limited company, but he did not know anything about it, whether its name or precisely how it was used by Mr Fairhurst, in particular for every aspect of his business or only some aspects of his business, and had no particular interest in the matter.

Mr Collins did accept that in the course of the discussions about the cost of the work Mr Fairhurst made it plain that there would be no VAT charged on the works, it being common ground that VAT would not be chargeable on a new build, and also that Mr Collins would not be charged the VAT added to their invoices by suppliers, because Fairhurst would be able to reclaim the VAT. As I have found, however, Mr Fairhurst did not state at that meeting that the VAT would be reclaimed by his “company” as opposed to by his “business” or his “firm”, or that it was his “company” as opposed to his “business” or “firm” which was VAT registered and thus which would enable it to reclaim the VAT. Although Mr Collins was cross-examined on his witness statement [WS1§26] where he said that “I thought the extra … would be repaid to him or to his company”, I accept that this was not intended to convey that Mr Fairhurst had referred to “his company” at the time, or even that Mr Collins had thought in those terms at the time, and that this reference to the company was made with the benefit of hindsight, and without specific reference either to Fairhurst Developments Limited in particular or a limited company (as opposed to a business, incorporated or unincorporated) in general.

Mr Goff submits that it does however follow that Mr Fairhurst was making it plain that the contracting party would be the entity, whichever it might be, that was in fact undertaking the works and was in fact registered for VAT. It seems to me, however, that the position is not quite so clear cut as Mr Goff suggests. All that can reasonably be concluded is that Mr Fairhurst was stating and representing that the cost would be net of VAT and also that it would be lower than would otherwise be the case because the VAT on supplies could be claimed back and would not be passed on and that Mr Collins was – not surprisingly – perfectly happy with this. It cannot safely be concluded in my view that Mr Fairhurst was also making it plain, expressly or by implication, that for this to be effective the contract would have to be with whichever entity was VAT registered and was undertaking the works. Whilst it is clear that this is what Mr Fairhurst intended, he did not make this clear to Mr Collins, and it is dangerous in my view to view this matter with the benefit of a lawyer’s eye and 20/20 hindsight. Indeed, since the largest proportion of the supplies came from Thorncliffe which was in a contractual relationship with Mr Fairhurst personally rather than Fairhurst Developments Limited, it is not even strictly speaking accurate. The reality in my judgment is that the VAT system would work perfectly well even if on an objective analysis the contract was made between Mr Collins and Mr Fairhurst, but Mr Fairhurst was treated as having subcontracted the whole project to Fairhurst Developments Limited. Whilst that was not what was intended by Mr Fairhurst at the time, there was as I have said no discussion or agreement about what would happen at the time either.

Because Fairhurst did not provide a written quotation and because neither Fairhurst nor Mr Collins sent a contemporaneous email referring to the agreed terms there is no contemporaneous documentary evidence to assist in answering this question. When the parties began to engage in email correspondence Mr Fairhurst used his personal email address rather than a company email address even though it appears from the December 2008 invoice that Mr Fairhurst did have a separate company email address. However it is clearly the case that whilst, as I have said, the first payment was made in May 2009 by cheque to Mr Fairhurst personally, by August 2009 Mr Collins was making payments to Fairhurst through a bank account in his company name to what I am satisfied was, and was known to be, the bank account of Fairhurst Developments Limited. Mr Collins was cross-examined about these payments, which are referred to in his company bank statements as being made to Fairhurst Developments Limited. It was put to him that he must have been given Fairhurst Developments Limited’s bank details by Mr Fairhurst and, by this stage at least, must have known that the works were being undertaken by this limited company. However Mr Collins claimed that he was not responsible for the operation of the company account, and that all bank transfers were made by his nephew Michael, so that it was far more likely that he had agreed with Mr Fairhurst to make a specific payment and had then asked Mr Fairhurst to contact Michael to give him the relevant bank details. He also claimed that he did not regularly read the company bank statements and, hence, would not have known that payments were being made to Fairhurst Developments Limited.

It is submitted that Mr Collins’ evidence on this issue is implausible, and should be treated with scepticism, especially in the absence of his nephew giving oral evidence to confirm it. Whilst I am prepared to accept Mr Collins’ evidence that he left the details of the account operation to his nephew, I do tend to agree that it is implausible that Mr Collins did not notice that these payments had been made to Fairhurst Developments Limited. However there is no suggestion that Mr Fairhurst asked for payment to be made to Fairhurst Developments Limited on the basis that this was to be the contracting party, and again it is worth noting that Mr Fairhurst did not refer to this point in his witness evidence. Moreover, by this stage of course the contract was already in place, and Fairhurst has not advanced (nor would there be any basis for advancing) a positive case to the effect that even if the contract was not originally made with Fairhurst Developments Limited the fact that payments were subsequently made to it operated in some way as a variation or novation of the existing contract.

I have already referred to the draft development agreement produced by Fairhurst’s solicitors in December 2008. It undoubtedly identified Fairhurst Developments Limited as the contracting party, consistently with Fairhurst’s case – which I have accepted – that Mr Fairhurst always viewed the contract as one to be performed by Fairhurst Developments Limited. However there is nothing in the draft or the covering letter which specifically draws attention to the fact that the contract is being proposed to be entered into by Fairhurst Developments Limited. Nonetheless, Mr Goff submits that reliance can be placed on Mr Collins’ failure to refute that this was what had been agreed. Insofar as relevant, I accept that there is no evidence that Mr Collins was particularly troubled by the reference to the limited company, if indeed he even noticed it. I accept that if the contract had been progressing smoothly at that time it is perfectly possible that Mr Collins would have been prepared to sign it with Fairhurst Developments Limited as the other party. However, since he was clearly not at all happy with progress at the time, and did not even respond to this draft in any way, let alone agree it, it is difficult to see how Fairhurst can place any real weight on this. The same is true of subsequent correspondence in which, it is true, there were references to Fairhurst Developments Limited, which were not challenged by Mr Collins.

Finally, Mr Goff cross-examined Mr Collins by reference to his dealings with Mr Upshall of Falcon Fabrications Limited in January / February 2011, in which Mr Collins had threatened to hold Mr Upshall personally responsible for repayment rather than his company. Mr Goff suggested that this was part of a pattern of conduct, in which Mr Collins was happy to play the “no contract with limited company” card when it suited him. However it does not seem to me that the two situations are at all comparable, or that this exchange provides any foundation for a submission that Mr Collins knew full well in April 2009 that Mr Fairhurst was contracting through his limited company and has taken this point as a cynical device to avoid payment or make life difficult for Mr Fairhurst.

I turn to the law. Mr Williams referred me in his opening submissions to the recent decision of the Court of Appeal in Hamid v Francis Bradshaw Partnership [2013] EWCA Civ 470, an unsuccessful appeal against a decision of HHJ Raynor QC in this court to the effect that a claimant had contracted personally rather than through his limited company with the defendant consulting engineers. Mr Goff accepted in closing submissions that it provides an accurate and a helpful summary of the applicable legal principles.

In that case the contract had been made in part orally and in part followed up by a letter of appointment, which was signed by the claimant above the name “Moon Furniture”, which was in fact (although this was not stated on the letter or communicated at the time) the trading name of the claimant’s limited company. There was no indication in the letter or otherwise that the claimant was acting in his capacity of director of that company. The defendant’s argument on appeal was that the contract was concluded on behalf of whichever entity in fact traded as Moon Furniture.

The judgment of Jackson LJ, with which McCombe and Rix LJJ agreed, identifies the applicable legal principles. In short, Jackson LJ held [§56-57] that in determining the identity of the contracting party the approach is objective, not subjective, the question being what a reasonable person, furnished with all the relevant information in the period leading up to the formation of the contract, would conclude, and that the private thoughts of the protagonists on the question are irrelevant and inadmissible. He also held that (where the contract is written or part written) extrinsic evidence may be admitted to establish the correct identity of a party. He held that the person who signed is the contracting party unless it is made clear in the document or by extrinsic evidence that he is signing as officer of a company.

In this case of course the contract was made wholly orally, but there is no basis for suggesting that a different approach ought to apply to oral as opposed to written contracts; see generally the observations of Arden LJ in Khan v Khan [2007] EWCA Civ 399, where she noted that there was no difference in principle between the rules of interpretation in relation to contractual documents and oral contracts [§36]. Of course in the case of an oral contract there is no issue about extrinsic evidence when considering an oral contract. Furthermore in principle evidence as to subsequent dealings may be admissible to enable the court to assist the court in reaching a conclusion about what was said at the time of formation of the contract. Nonetheless it seems to me that the essential principle is the same; the person whose words and/or conduct result in the contract being formed is the contracting party unless it is made clear at the time of contracting or in the period leading up to the formation of the contract that he is speaking and/or acting as officer of a company.

As Jackson LJ said [§49, and again at §70], in the context of construing the letter, but as is equally applicable to this case, the established principles of construction do not require the court to take into account matters which the parties might have discovered but did not in fact discovered. If, therefore, there was no communication by Mr Fairhurst to Mr Collins to the effect that: (1) he was the owner of Fairhurst Developments Limited; and/or (2) he carried out his construction business through that company; and/or (3) it was Fairhurst Developments Limited which was VAT registered and not him personally; and/or and thus that (4) in making the contract he was doing so in his capacity as director of Fairhurst Developments Limited rather than in his private capacity, then in construing the oral contract made in this case those matters cannot be taken into account. It cannot be said that if Mr Collins had asked Mr Fairhurst that is what he would have been told; there is in an ordinary case such as the present no duty on a contracting party to enquire as to the capacity in which the other is acting.

Jackson LJ referred [§52] to an earlier decision of the Court of Appeal, Badgerhill Properties Ltd v Cottrell [1991] BCLC 805, in which the court had concluded that on the facts the contract was made with whichever company was trading under the trade name used on the estimates. However, as he noted [§53] two crucial features of that case were that two estimates were signed expressly as director and the company name appeared, albeit misstated, in the estimates.

Jackson LJ observed [§60] that in the case before him the crucial question was as to the capacity, objectively ascertained, in which the party entering the agreement was acting, whether personally or as agent for a limited company. The same applies here in my judgment; the essential question is the capacity, objectively ascertained, in which Mr Fairhurst entered into the development agreement with Mr Collins; was it personally or as agent for Fairhurst Developments Limited. In this case I consider that the answer is clear; on my factual findings Mr Fairhurst never made it clear that he was acting on behalf of any limited company at all, let alone on behalf of Fairhurst Developments Limited. As Mr Williams submits, many of the “untenable” and “doomed” arguments identified by Jackson LJ at [§67] are equally applicable here.

Even if, as I have found, Mr Collins was aware that Mr Fairhurst did have a limited company, that would not have been enough, since he did not know that it was Fairhurst Developments Limited. Even if he had seen the invoice from Fairhurst Developments Limited in relation to the drainage works at Hawarden and knew that Mr Fairhurst used that company as the medium for undertaking building works, I would still have felt unable to conclude that Mr Fairhurst had made it sufficiently clear that he was acting on behalf of Fairhurst Developments Limited in entering into the development agreement. That is because this was not a straightforward contract for construction works to be undertaken; it was a joint venture agreement under which two men who knew each other reasonably well and who were relying on their perception of the other’s personal attributes were undertaking a joint venture for the development of Mr Collins’ property and the equal division of the profits. It does not seem to me that it should have been self-evident to Mr Collins in such circumstances that Mr Fairhurst could only have been entering into the transaction on behalf of his company. It would, viewed objectively, have been equally plausible that Mr Fairhurst was entering into the agreement personally and, hence, obtaining the profit personally, but planning to subcontract the building works to his limited company and, hence, reclaim the VAT that way.

I should also record, for completeness, that the case was not pleaded, prepared for trial or argued on the basis that Fairhurst Developments Limited was entitled to bring the claim in its own name as an undisclosed principal and, hence, I express no opinion as to whether or not it could have succeeded had it advanced its case on that basis.

For all those reasons I am satisfied that the claim by Fairhurst Developments Limited must fail and that Mr Fairhurst is both entitled to pursue the claim in his own name as the contracting party and personally liable for any breaches of the development agreement.

The disputed terms of the development agreement

In this section I shall seek to resolve the more important aspects of the dispute between the parties as to precisely what was agreed. I should begin however by noting that Mr Collins is seeking, in addition to the purchase price of £450,000, to recover as part of his costs his acquisition costs, which are undocumented. I am satisfied that there is no evidence that this was ever discussed or agreed, above and beyond the stamp duty of £13,500 which Fairhurst agrees was discussed and agreed, and that it is another example of Mr Collins, in the same way as Mr Fairhurst, seeking to add in figures and claims to maximise his return and minimise that of Fairhurst.

What works did Fairhurst agree to undertake and at what cost?

It is common ground that Fairhurst agreed to undertake the works shown in the plan(s) it was provided with at the time of entry into the development agreement. The first question concerns the scope of the works which Fairhurst agreed to undertake. In particular: (a) which plan or plans was it provided with; (b) was it also provided with a copy of the planning permission, including the conditions; (c) what was agreed as regards further works not shown on that plan or plans? The second question is what if any responsibility for workmanship and/or design did Fairhurst undertake? The third question is what if anything was agreed as regards Fairhurst’s entitlement to payment beyond the £180,000?

Mr Fairhurst’s evidence was that he had provided his estimate on the basis of the plan he was given, his discussions with Mr Collins, and his subsequent discussions with his preferred sub-contractor. He had not involved a quantity surveyor or an estimator, and had not produced a written breakdown of his estimate, whether one sent to Mr Collins or one used only internally. In cross-examination Mr Fairhurst was unable to give specific figures as to his breakdown, save only that in general terms he had estimated it would cost about £30,000 to build the house to wall plate stage. In re-examination Mr Fairhurst also said that he had worked on a figure of £20,000 for the kitchen.

As to the issue of the plan or plans, Mr Fairhurst was insistent in his oral evidence that Mr Collins provided him with just one plan at the first meeting in April 2009. He said that he took that away and, after discussing it with his regular sub-contractors, came up with the estimate of £180,000 which he gave Mr Collins at a second meeting on site later that month. He said that the significance of this plan was that it contained the annotations showing the detail of the construction required to comply with Building Regulations, but that it did not (and nor would one expect it to) record the planning conditions which had been imposed by the planning authority. He also said that it was important because it did not show the garage on the plan and, hence, although he accepted that he always knew that there would be a separate garage, he assumed that it would be a conventional size double garage. He said that he was not told that it would be a larger size triple garage or that it was planned that there should be first floor accommodation above. He said that subsequently he received a drawing which showed the garage, but that this also did not show it as a triple garage with a first floor above.

I note that in the POC it was pleaded [§6] that Fairhurst had been provided with “all relevant plans and/or the specification as used by the defendant in order to secure … planning permission”. I do not place much weight on that, however, because it does not seem to me that this was a carefully pleaded part of the POC, in the sense that it was being intended to set out with precision Fairhurst’s factual case as to what had been given at that time. Furthermore, in fairness to Mr Fairhurst, in his WS1 at [§10] he clearly stated that he had only been provided with the one drawing.

However in cross-examination he was taken to his email dated 25 January 2011 [DD1/36] in which he referred to “a set of drawings to review and price”. He claimed that this was simply “builders’ speak” for a plan or plans, with no emphasis on the singular or plural. I find it difficult to accept this explanation, especially when by this stage he was clearly aware that the total cost of the works to date and to works to completion would almost certainly exceed the £180,000, and was asserting that the extra cost of the garage was one of the reasons for the increase.

Mr Collins says [WS1§25] that he took some new and some old plans, and made it clear that the property would include a triple garage with a room above, as well as fittings and external works commensurate with the size and value of the proposed property. He says that he told him that the budget for the kitchen alone would be £30,000, and that Mr Fairhurst proceeded there and then to give a figure of £180,000 to undertake all of the works.

It seems to me to be inherently unlikely that Mr Collins, who obviously knew and had instructed Wheat Edwards to seek revised planning permission to include a triple garage, would not have informed Mr Fairhurst in April 2009 that this is what was to be built. Moreover, since it is clear that Mr Fairhurst was dealing with Wheat Edwards in May 2009 as regards the re-siting of the garage, it seems inherently unlikely that some reference to its being a triple garage would not have been made.

I am satisfied that Mr Fairhurst was indeed informed at the meeting in April 2009 that the intention was to build a triple garage. I am also satisfied that he was shown the other plans produced by Wheat Edwards including the plans which showed the garage including its dimensions and the fact that it was a triple garage. This therefore includes the general layout plan [BC240], the site plan [BC243], and the detailed plan [BC247]. However there is no evidence that Mr Fairhurst was made aware that it was intended to create habitable accommodation in the garage, and I do not accept that he was. That is not what the plans submitted for planning permission approval in 2008 show, as Mr Bushell observed in his first report [§3.3.9] (Footnote: ⁶). I am satisfied on the balance of probabilities that the idea for a first floor with habitable accommodation above was not conceived until after the development agreement had been entered into.

I am also not satisfied that Mr Collins provided Fairhurst with a copy of the planning permission at the time the development agreement was entered into. It would in my view have been very unusual for a builder to have been provided with such a document, and there is no evidence that this is what happened. Whilst it is the case that there was some correspondence between Mr Pyke and Mr Fairhurst in May 2009 about the re-siting of the position of the house and the garage [C37-40], there is no indication in that correspondence that the planning conditions had been or were being provided. The first evidence of the planning conditions being supplied is later, in November 2009 [C43]. There is no evidence of the Building Regulations approval being provided at any earlier stage.

Since I am not satisfied that Fairhurst was provided with the planning decision or conditions or the Building Regulations approval or conditions at the time, and I do not consider that there is any basis for finding that Fairhurst undertook an obligation, express or implied, to procure compliance with all planning or Building Regulations conditions, I do not consider that it was part of Fairhurst’s duties under the development agreement to do so. It is true that there is correspondence which shows that Fairhurst was taking steps to ensure that the planning and Building Regulations conditions were satisfied, but I do not consider that this establishes that it was obliged to do so; it was obviously sensible for Fairhurst to seek to assist in achieving this, in circumstances where it appears that Mr Collins had effectively left it to Fairhurst to sort out. It is also true that the draft contract submitted by Fairhurst’s solicitors in December 2009 imposes an obligation on Fairhurst to comply with planning conditions, but in my view Mr Collins can place no more reliance on this than can Fairhurst in relation to the issue of the true identity of the contracting party. Obviously to the extent that proper performance of Fairhurst’s duties would involve the conditions being satisfied there is a factual connection between the two, but that is different from Fairhurst coming under a separate obligation to comply with conditions about which it was not notified.

I am however satisfied that there was, as there must have been, some discussion about fittings in the context of an agreement to build what was intended to be a substantial 6 bedroom house and 3 car detached garage set in large grounds with an anticipated sale value of £1M. It is, as I have said, common ground that there was a discussion about the kitchen, and it is unlikely that this is the only conversation that there was. I am not satisfied however that the question of what fixtures and fittings were included was discussed or agreed in great detail. I am satisfied that if it had, so that both parties had agreed a list of what was going to be provided in terms of kitchen fittings, bathroom fittings, lighting and sound systems, external works including landscaping and the like it would have been committed to writing as a specification. I am satisfied that it was agreed in general terms that the property would be fitted out to a standard commensurate with its size, location and estimated value, but that further specific items would have to be the subject of discussion and agreement. Whilst I appreciate that this left matters in a rather vague state, that is simply a reflection of the parties’ failure at the time to produce and agree a detailed specification, no doubt on the basis that they confidently expected that any issues would be resolved by discussion and agreement during the course of the build.

Mr Collins’ pleaded case is that Fairhurst was obliged to undertake the works in accordance with the agreed specification and in accordance with all applicable Building Regulations [ACC§3] and with reasonable care and skill [ACC§6]. This is not disputed. Although at one point it was suggested in cross-examination that Fairhurst could not be held responsible for the activities of competent sub-contractors, such as AJC Drainage, who installed the drainage system, that was not pursued in closing submissions. In my view Mr Goff was right not to do so, in circumstances where Fairhurst undertook an implied contractual obligation of reasonable care and skill as regards workmanship and cannot escape that by choosing to sub-contract out the work as opposed to undertake it himself or through employees.

There is however a dispute, not pleaded by either side but raised at trial and in submissions, as to whether or not Fairhurst was obliged to complete the design of the works and as to whether or not Fairhurst was contractually responsible for design work undertaken by others.

There was, I am satisfied, no express discussion about this. At the time the parties were proceeding on the assumption that the design was comprised in the plans produced by Wheat Edwards and that since planning permission and Building Regulations approval had been obtained there was no difficulty with that design. Furthermore, at this stage Wheat Edwards were still involved, as evidenced by the correspondence in May 2009, and the only reasonable inference is that it was envisaged at the time that if further design was necessary it would be procured by Mr Collins through Wheat Edwards. It appears that in May 2009 Wheat Edwards in fact invoiced Fairhurst for the further work it had done at that point, but according to Mr Pyke Fairhurst did not pay but Mr Collins did. There is no evidence, documentary or otherwise, to the effect that it was agreed between Mr Collins and Mr Fairhurst that Wheat Edwards’ appointment as designer would effectively be novated to Fairhurst on the basis that he undertook a design and build obligation as part of the agreed price, as often does happen with more knowledgeable parties, and there is no basis in my view for implying such an obligation.

This issue is only relevant to the design of the foul and surface water drainage system. As I have already said it was a condition of the planning permission that a scheme for this system be submitted and approved. As I have already found, it was no part of Fairhurst’s obligation under the development agreement to do everything necessary for compliance with planning conditions. It thus was not responsible for undertaking this work. However it is common ground that in 2010 Mr Fairhurst of his own volition instructed Mr Aryas-Manesh to undertake this work, which he did, and Mr Aryas-Manesh’s fees form an element of his claim. There is no indication that before doing so he had asked Mr Collins whether or not he wished to instruct Wheat Edwards to undertake the design at his cost, or had explained to Mr Collins that if he instructed Mr Aryas-Manesh it would be on his (Mr Collins’s) behalf and at his cost. The question is whether in such circumstances Fairhurst is liable for that design work.

In my view Fairhurst, having taken it upon itself to arrange for this work to be done, on the basis that it was including the cost as an extra, must be treated as having accepted direct contractual responsibility for the performance of the obligation. If Fairhurst had not done so then it would not have been responsible.

I turn now to the question of extras. In re-examination Mr Fairhurst was asked whether anything was said or agreed about extra works over and above what was shown on the plans or specifically discussed. His answer, which I entirely accept as consistent with what tends to happen in such cases, is that there was no express discussion or agreement about it.

When asked further he said that he believed that it was implied that he would have recovered his actual costs, and that he would not have been held to the original figure of £180,000, although he added that he would have been able to keep to that figure if there had not been changes. It was pointed out that there was correspondence from Mr Collins in January 2011 where he had indicated that Fairhurst would receive its costs back on sale, and would take into account any overspend. However I am satisfied that Fairhurst gave a price of £180,000 on the basis that the works would be undertaken to the plans and as amplified in oral discussions. I am satisfied that there was no discussion or agreement to the effect that Fairhurst would be entitled to recover its actual costs regardless of the reason for any increase. I am satisfied that this is not a case where a builder makes it clear that he is providing what is only an estimate which does not prevent him from claiming his actual costs, even if greater.

It may well be that Mr Fairhurst underpriced the cost of the works, since I note the opinion of his quantity surveyor expert Mr Bushell that the mean general rate for the house would have been c.£250,000 and the garage c.£23,500; although equally it is possible that the difference represents the savings through being able to reclaim VAT and there being no allowance for Mr Fairhurst’s time or for profit. Either way Fairhurst cannot simply claim the difference without some contractual basis for doing so. Even if I had been able to accept that there was a discussion and agreement to the effect that Fairhurst could charge whatever it actually cost, regardless of the reasons for the increase, that would not assist Fairhurst since that is not its pleaded case, as Mr Goff recognised in his closing submissions [§8].

Equally however I am unable to accept Mr Collins’ argument that Fairhurst could not recover more than £180,000 under any circumstances even if there were changes to the scope of works. That would be a most unusual result in the absence of some express discussion and agreement to that effect. I am satisfied that this is a case where the law implies a term into the contract that if the scope of work changed, either by agreement between the parties or because it was reasonably necessary due to matters not covered, expressly or by reasonable implication, by the plans or oral discussions, then Fairhurst would be entitled to add the reasonable cost of that extra work to the £180,000. However I am also satisfied that this would not convert the contract into what is effectively a cost reimbursement contract. Nor would it entitle Fairhurst to obtain payment for those extras from Mr Collins upfront; if Mr Collins had requested Fairhurst to undertake extras which Fairhurst was reasonably not prepared to do without upfront payment which Mr Collins was not prepared to do then I suspect that Fairhurst would have been justified under the development agreement in refusing to undertake the extra works, but there is no suggestion in the correspondence or in the statements of case or evidence that this is what happened in this case.

What was agreed as regards the time for completion?

I am satisfied on the balance of probabilities that Mr Fairhurst did give an indication that the property could be finished within 6 months. That is consistent with what he appears to have accepted in his email of 24 January 2011 [DD1/17-18]. It may be that he was too optimistic, but I am satisfied that he would have been keen to emphasise Fairhurst’s ability to deliver quickly and on budget, so as to increase its chances of securing the job. I do not accept that he said 5 months, and even on Mr Collins’ account the 5 months was qualified and Mr Collins made it clear at the time that he would not object if it stretched to 6 months. Equally I do not accept that he said 6–9 months; that seems to me to have been a gloss added later, with the benefit of hindsight.

I am also satisfied that there was no discussion as to whether the start date would have been the day after the development agreement was agreed, some time in mid April 2009, or some other date. I also do not accept however that Mr Fairhurst was asked to, or did, give a firm guarantee that the property would be completed in precisely 6 months.

It follows in my view that it cannot be said, in the same way as it could have been had the parties entered into a standard JCT type contract with a specified start date and a fixed time for completion, that there was a fixed date for completion. It follows, I am satisfied, that as at the date the development agreement was entered into the obligation on Fairhurst was to complete within a reasonable time, albeit that in ascertaining what would be a reasonable time one would have regard to the fact that Mr Fairhurst had given an indication that based on what he then knew the property could be completed in 6 months. However one must also in such a case have regard to what happened after the date of the development agreement as well as to what was contemplated and discussed at the time.

What was agreed in relation to the £30,000 contribution from Mr Collins?

Fairhurst’s case [Reply §6(c)(i)] and Mr Fairhurst’s evidence is that it was made clear to Mr Collins that it needed the £30,000 upfront because at that stage it was in the process of completing other developments, and did not have immediate access to funds. Mr Fairhurst says [WS1§21] that it was the sum which he estimated he needed to get the build to wall plate stage, at which point he envisaged that money from the sale of one of his developments would come on stream to enable him to fund the £150,000. Mr Fairhurst maintained this stance in cross-examination.

Mr Collins’ case as pleaded [DCC §9] was that he agreed to “invest” £30,000 on the basis of completion within 5-6 months, after which it would be reduced month by month to allow him to meet his mortgage payments, and that he agreed to pay the £30,000 by way of “normal stage payments”, which he amplified in his witness evidence as being discussed and agreed as 4 stages in the same way as a lender funding a development would do [WS1§33].

In cross-examination Mr Collins was, it seemed to me, not particularly clear in his recollection as to what, if anything, had been agreed as to when and how this payment should be made. He was also cross-examined to some effect by Mr Goff as to why he should have agreed to make any contribution at all to Fairhurst’s costs if, as he had repeatedly claimed, a fundamental reason for choosing Fairhurst was Mr Fairhurst’s insistence that he had the financial means to fund the whole development to completion. Although he was also cross-examined by Mr Goff on the contents of a briefing note he had produced for the benefit of Mr Hopkinson [7/A1526-9], which Mr Goff suggested showed that he was admitting that Mr Fairhurst had demanded the full £30,000 up front from the outset, it is clear from the note as a whole that Mr Collins was not suggesting that this is what was agreed, only what Mr Fairhurst was asking for.

Regrettably, and perhaps surprisingly in the circumstances, the contemporaneous documents do not assist, because there are none in existence from April 2009 to July 2010 which touch on this point. Thus there are no chasing emails or texts from Mr Fairhurst complaining about the failure to pay upfront or recording the effect on the works programme. When the parties started communicating on this issue, in July 2010, they were almost immediately in disagreement as to whether it had been agreed that Mr Collins would provide the £30,000 upfront; thus this is not a case where the court can gain assistance from the terms of the first response of the parties once the issue was raised.

I must therefore make my decision on the basis of my assessment of the probabilities.

In Fairhurst’s favour is the point made to Mr Collins in cross-examination, to which I have already referred. It could also be argued that in its favour is the coincidence in time between the payment instalments being made (£2,000 in May 2009 and then more in August 2009) and the time when the footings were dug and the work proper started on site. However, I do not place much weight on that because: (i) it does not appear that the payments actually preceded the work beginning (in other words, Fairhurst did not simply refuse to do anything unless it had received something); (ii) making a series of relatively modest interim payments is not the same as making one upfront payment.

Against Fairhurst is the complete absence of contemporaneous complaint in emails or texts or similar over an extended period from May 2009 through to June 2010 when, on Fairhurst’s case, Mr Collins had over that same period breached a fundamental plank of the development agreement, causing it immense difficulties in relation to this development and the Rhyl development. Indeed, one may question why Fairhurst would have been prepared to undertake any work at all on this development through 2009 if, on its case, it was desperately trying to finish off and sell Rhyl but was struggling due to shortage of funds. Instead, Mr Fairhurst was willing to agree to make some contribution to Mr Collins’ mortgage costs from January 2010, again inconsistently in my view with him believing at the time that the primary reason for the delay was Mr Collins’ refusal to honour an essential part of the development agreement. Finally, it is to be noted that there is no reference to this being a condition of the agreement in the draft submitted in December 2009.

By reference to the inherent probabilities, it also seems to me to be implausible that Mr Fairhurst would have insisted on this stipulation before the development agreement was concluded; after all it would scarcely have inspired confidence in Mr Collins in Fairhurst’s ability to fund the whole cost of the development up front if Mr Fairhurst had been obliged to confess that Fairhurst’s credit was so bad that it could not even begin work without an immediate £30,000 cash injection.

In the circumstances I am satisfied on the balance of probabilities that Mr Fairhurst did not make it clear at that time that the £30,000 had to be paid up front, and thus that there was no agreement to this effect. I am satisfied on the balance of probabilities that Mr Collins agreed to put in £30,000 by way of being a contribution to the expensive fixtures and fittings which both men were discussing and agreeing should be installed to make the house an attractive sale prospect. The likelihood is that Mr Fairhurst believed that he would be able to secure sufficient resources, by way of advance funds from Mr Collins and credit facilities, to get the building to wall plate stage for £30,000, by which time the funds from Rhyl would have came in. That explains why he was indeed pressing for funds from a very early stage, however the lack of agreement on this point explains why the £30,000 was not paid up front by Mr Collins. By June 2010 Mr Fairhurst was obviously disgruntled that Mr Collins had not only not paid the full £30,000 but had extracted monies from him to pay the mortgage, and had already convinced himself that this was contrary to what should have happened and, hence, what he by then already believed had been agreed.

I am not satisfied that anything specific was said about the time for payment. I do not accept Mr Collins’ evidence that it was agreed it should be paid in 4 instalments; that in my view is retrospectively what he likes to think he would have agreed. I consider that both parties were working on the basis that it would be paid in a number of regular instalments roughly corresponding with the anticipated progress of the works. This explains why Mr Collins was not willing to pay more than £2,000 until work started in earnest, why he was then prepared to make more regular payments in August 2009 once work did start in earnest, but that later the payments dried up as did the rate of progress.

What if anything was said or agreed about the potential division of the plot?

Fairhurst’s case is that since there was no discussion let alone agreement as to the potential division of the site into separate plots the development agreement extends to the whole of the site and it is not open to Mr Collins unilaterally to hive off some part of the site for his own benefit.

In evidence Mr Fairhurst said that the idea of splitting the plot only emerged at around the time that Mr Smith came on the scene as the proposed purchaser; the plan being to sell him the new property plus 1.5 acres for £1.25M and then to seek to obtain a separate planning permission to develop the remaining land as a further development. It was around this time that Mr Fairhurst and Mr Collins jointly planted trees to divide the two plots, later replaced by fencing. It is clear that Mr Fairhurst was perfectly happy with this on the basis that at the time he envisaged that once Aldford View had been completed they could move on to obtain planning permission and develop the other plot.

Mr Collins’ position is that it was always made clear that the plot would be split with Aldford View occupying only part of the site. He accepts that the fencing and trees have more recently been removed to open up the site in an attempt to sell it. He says that the adjacent plot does not have the benefit of planning permission anyway. Nonetheless his position is that the development agreement only applied to that part of the site which was identified as comprising the development [WS2§100-102]

In Mr Collins’ favour it is clear that the plans produced by Wheat Edwards in December 2007 do indicate a separate smaller plot being carved out of the whole site. However as against him the boundary of this smaller section seems to bear no relation either to any existing boundary features or to the line of fencing subsequently erected or trees subsequently planted. The same is true of the revised plans referred to in a letter from Wheat Edwards to Mr Fairhurst in May 2009. It is clear that both before and at the time the development agreement was concluded the site was not physically divided into two separate plots. Furthermore, there is no corroborative evidence that at the time of the development agreement it was clearly agreed that the site would be divided into two physically separate plots with the development agreement only applying to one.

In the circumstances I am not satisfied that the development agreement as concluded applied to anything other than the whole of the site. Furthermore I do not accept, insofar as it was pleaded or argued, that what happened as regards the proposed sale to Mr Smith or the fencing or trees could amount to an effective variation of the original development agreement, not least given the absence of any consideration for such a revision.

In my view it follows that Fairhurst is entitled to insist that the development agreement is performed by reference to the whole of the site as owned by Mr Collins. That means that the property must be sold or valued by reference to the whole plot being sold as one which, presumably, would include any potential of obtaining planning permission for part of the plot and then developing it or selling it off with planning permission. Mr Collins argues that because there is no planning permission for this part of the plot, and no prospect of obtaining it, then the saleable value of the plot in issue is modest anyway, no more than around £15,000 - £20,000, but I cannot resolve this point on the evidence before me which would have to be resolved separately as part of the valuation exercise if Fairhurst wished to raise it.

What was agreed in relation to Mr Collins’ mortgage repayments?

It is Fairhurst’s case that nothing was agreed in relation to mortgage repayments until late on in 2009 when Fairhurst agreed to contribute 50% of the mortgage payments from January 2010. It is Fairhurst’s case that this was not because it accepted that it was its fault that the project was in delay, but because Mr Collins was expressing concern about his financial position and Fairhurst did not want to risk the property being repossessed and its losing its investment to date.

It is Mr Collins’ case that Fairhurst agreed from the outset and as part of the development agreement that if the project overran it would pay his ongoing mortgage costs either directly or by deduction from the balance of the £30,000.

I do not accept Mr Collins’ case as remotely credible. There is no reference to this at the time or in the immediate exchanges. It is inherently improbable in my view that Mr Fairhurst and Mr Collins, entering into an agreement which they believe will work, without discussing let alone agreeing or recording much by way of detail, would even have discussed what would happen if the project was delayed, let alone have agreed that if there was an overrun Mr Collins could deduct part of the £30,000 to cover his ongoing mortgage costs. It also seems to me that Mr Collins’ case is inconsistent with Fairhurst agreeing to pay only 50% of the mortgage costs, as opposed to 100%, and from February 2010, as opposed to September or October 2009. Although there was some dispute as to whether or not the agreement was for Fairhurst to pay 50% or £1,000, either is inconsistent in my view with Mr Collins’ case that it was agreed from the outset that Fairhurst should take full responsibility for his ongoing mortgage payments if completion extended beyond 5-6 months.

Mr Fairhurst was cross examined in relation to the email exchange of 23 January 2011 on the footing that it showed that he did not at that time challenge Mr Collins’ case. However it seems to me that there is nothing inconsistent with his case in this email. There are also a number of emails from Mr Fairhurst, on which he was cross examined, in which he made promises to make payments towards the mortgage. However again they do not in my view show that he has accepted a binding contractual obligation to continue to make these payments come what may on the basis that it was Fairhurst’s fault, and solely Fairhurst’s fault, that the project had not been completed within 6 months.

I am satisfied that the true position is that by late 2009 Mr Collins was cross that Fairhurst had not been putting in the resources to complete the project to the ambitious 6 month timetable that Mr Fairhurst had predicted, and was particularly cross that whilst he was having to fund ongoing monthly mortgage payments over the extended construction period Mr Fairhurst was, as he saw it, spending money on an expensive wedding and honeymoon whilst badgering him for payment of the remainder of the £30,000. I am satisfied that in such circumstances Mr Collins complained to Mr Fairhurst who, in an emollient gesture, accepting that the delay was at least in part due to Fairhurst’s ability to put in sufficient resource due to lack of funds, offered to contribute 50% of the mortgage payments in anticipation of the works being completed and the property sold at some stage in the New Year. However I am also satisfied that this did not amount to a contractual undertaking on Fairhurst’s part to do so, whether by way of variation to the terms of the original development agreement, or otherwise. I am satisfied that there was insufficient certainty as to what was being proposed or agreed to in terms of duration, and also that the circumstances were not such as to denote a binding contractual obligation as opposed to a goodwill gesture. I am also satisfied that there was no consideration for any promise – this was not a case, for example, where Mr Collins demanded an unconditional promise by Fairhurst to pay 50% of the mortgage until completion failing which he would terminate the development agreement for delay in completion and Fairhurst agreed to do so to prevent that outcome.

I should of course emphasise that this conclusion does not mean that Mr Collins is not entitled to make a claim for recovery of his extended mortgage repayments as damages for delayed completion, which is a claim I shall have to address later in this judgment. What it does mean is that Mr Collins is not entitled to claim these payments as of right under a contractually effective promise to pay them or (if he does) to rely on their non-payment as grounds for treating the development agreement as discharged for repudiatory breach.

I should also say that insofar as Mr Collins contended that there was also some agreement at the outset to the effect that if there was a delay in completing or selling Aldford View he should be entitled either to occupy it free of charge or to rent it out at his sole benefit I entirely reject that argument, for essentially the same reasons.

What if any representations were made by Fairhurst concerning its financial position?

It is alleged by Mr Collins that Mr Fairhurst misrepresented Fairhurst’s financial position because, despite assuring him that there was no need to worry because the bank was more than willing to lend Fairhurst money to finance the build until the proceeds of sale from the Rhyl development came through, in fact Fairhurst was impecunious. Mr Fairhurst does not deny that he said words to this effect; Fairhurst’s case is that what was said was true in that it did have a good relationship with its bank which was willing to lend it money and it did expect to be able to finance the build from the proceeds of sale at Rhyl.

How much of the £30,000 did Mr Collins pay Fairhurst and how much did Fairhurst pay Mr Collins towards the mortgage payments?

I have already recorded that Mr Fairhurst’s position has fluctuated from £16,000 in pre-action correspondence down to £11,000 and then back up to £14,000.

Mr Collins’ position as set out at WS2§76 is that he paid Fairhurst £19,000, including £4,000 towards his wedding whereas, as I have said, previously he had accepted that £16,000 had been paid.

I accept Mr Collins’ case that he did make cash payments as part of the £30,000 and that, as recorded and agreed in the more contemporaneous documents, the total paid was £16,000. I am not satisfied that any payments were made in excess of the £16,000.

I am not satisfied that Mr Collins was in breach of contract in making the payments which he did, given Fairhurst’s failure to proceed regularly and diligently with the works so as to achieve completion with a reasonable time. On a rough and ready basis it seems that in 2009 payments were made broadly consistent with progress, and that by late 2009 Mr Collins was entitled to take the view that unless and until progress resumed in earnest he was not obliged to pay any more. I do however consider that by July 2010 Fairhurst was frustrated that, having started work again that spring and having made good progress, Mr Collins was still not prepared to make further payments and, instead, was insisting on payment of his mortgage. Insofar as it might be said that Mr Collins should have paid more than £16,000 by January / February 2011, I am satisfied that on any basis Mr Collins could not have been liable to pay the full further £14,000 and that, based upon my broad analysis of the value of work done and outstanding at that stage, at most the shortfall would have been around £8,000.

As regards the mortgage payments, Mr Fairhurst produced a schedule [A/1603] showing the mortgage payments actually made by Mr Collins through 2010 and 2011 and the contributions made by him. The mortgage payments made by Mr Collins are taken from the statement of account produced by Mr Collins [DD2/8/348] and are, thus, not in dispute nor could they be. I accept Mr Fairhurst’s evidence as to the mortgage payments actually made by him, amounting to £9,443 in 2010 and £4,350 in 2011 (total £13,793). I also accept that Mr Collins failed to inform Mr Fairhurst either that the monthly mortgage payment had decreased from £1,943.07 to £1,561.80 as from January 2010 or that he had negotiated a mortgage payment holiday for the months of August 2010 to April 2011 inclusive. Whilst I accept that Mr Collins was still being debited the monthly payments during the mortgage holiday, nonetheless I regard it as reprehensible that Mr Collins failed to come clean to Mr Fairhurst about either of those two matters at the time and, instead, sought to extract payments from Fairhurst on a false basis.

Incomplete and defective works

In this section of my judgment I need to consider in detail the extent to which the works were incomplete as at February 2011 and how much Mr Collins has spent to complete them, and the extent to which the works were defective as at February 2011 and how much Mr Collins will need to spend to rectify them.

Since there is a Scott Schedule of defective and incomplete works, I shall work through that schedule items by item.

Defective works

It is clear from the site inspection that if there is missing pointing it is in an extremely limited area, hence the limited cost of £140 claimed, which is agreed as a cost. I am not satisfied that the pointing is missing, as opposed to recessed, or that there is any evidence that there is a defect even after 6 years. In closing submissions Mr Collins referred to a text from Mr Fairhurst which he said was tantamount to an admission that the work needed doing, however in my view the text cannot necessarily be viewed as a comment on this particular item. In the circumstances I do not allow this item.

It is common ground that the initial design was for a timber ridged roof construction, whereas the revised version, for which planning permission was obtained in August 2010, involved a more imposing portico head with sandstone pillars set onto a tiled base.

It is also common ground that there are defects in the porch construction for which Fairhurst is responsible. Thus it is agreed that in this area the bricks used below damp proof course (dpc) level, which are not frost resistant, have spalled to their faces and are in need of replacing. It is also agreed that the porch floor falls towards the front door, allowing rainwater falling onto the porch floor to travel in that direction, and the fall needs to be reversed. It is also agreed that because the porch level is higher than the internal floor level such water enters the hall and has caused some water damage to the oak flooring in the hall. It is also agreed that there has been some impact damage to the right hand side pillar for which Fairhurst is responsible.

In the circumstances and not surprisingly Mr Moran accepted that remedial works were required. As to that, whereas Mr Whittle’ position is that the whole of the porch would need to be rebuilt, so that frost resistant bricks can be installed and so that the porch can be relaid to the correct fall, and that the water damage means that the existing door casing and oak floor to the hallway should be replaced, Fairhurst’s position is that the repair works to the porch can be done locally, without the need for the whole of the porch to be rebuilt, and that there is no need to replace the door casing or to do more than replace the immediately affected area of oak flooring. The quantity surveyors have agreed that the repair works would cost £2,122.49 whereas a full replacement would cost £4,328.

On balance I am satisfied that the defects can adequately be addressed by repairs and that replacement is unnecessary. In my view it would be possible to repair in a way which would leave the porch and hall in a perfectly reasonable condition, in the context that these works are being done to prepare the property for sale, and that what would be being sold now would be a 5 year old house which has already been lived in for those 5 years. In particular there is no need to replace the columns or all of the oak flooring. In the circumstances I am satisfied that this is a defect where the reasonable cost of rectification is £2,112.49.

It is common ground that the brickwork under the dpc around the whole perimeter of the house is not frost resistant. It is a manufactured reclaimed brick, which is not engineered so as to be frost resistant. As I have noted, Mr Moran accepts that the bricks in the porch have spalled and that they should be replaced. His position as regards the remainder however is that there is no overriding requirement to use frost resistant engineered bricks below dpc because: (a) that is not required by the Building Regulations; (b) nor was it required by the notes to the contract plans (which refer to concrete common bricks, which it is accepted would be inappropriate in aesthetic terms); (c) nor is it otherwise necessarily required as a matter of good practice, although he accepts that engineered bricks are usually used. He accepts that there are one or two individual bricks which have spalled to their faces, which he accepts require cutting out and replacing, but otherwise he maintains that there is no need to replace all of the bricks. He emphasises that this is not a structural problem, where the integrity of the bricks is compromised, but solely an aesthetic one. His position is that there is a difference between the bricks whose faces have spalled, where he accepts the need for remedial works, and the bricks whose edges have deteriorated, which he says are perfectly acceptable in the context of the use of reclaimed style bricks.

Mr Whittle accepted that only two of the bricks had spalled thus far, but he expressed a concern that more might spall in the future. He did accept that it would be possible to replace spalled bricks on an ad hoc basis, although he entered a caveat about obtaining a good match.

In my view it was unacceptable to use non-frost resistant bricks below the dpc as a matter of good building practice, and I am satisfied that it was a breach of contract to do so. However I am not satisfied that in the context of this case, where the intention was always to sell the house rather than to live in it, it is reasonably necessary to replace all of the bricks below dpc. I am not satisfied that in the absence of any evidence of a structural problem, and in the absence of spalling to the face of a significant number of bricks even after 6 years, the damage to the bricks is such as to require complete replacement. There is no evidence that a reasonable prospective purchaser, competently advised, would demand and obtain a reduction in price to allow the complete replacement of all of the bricks below dpc. In making this decision I bear in mind that the experts had agreed that the cost of complete replacement would be somewhere between Mr Bushell’s figure of £2,844 and Mr Hopkinson’s figure of £3,800, which seems to me to be excessive in the context of the problem complained of.

There is no evidence as to the cost of replacing the defective bricks which I am satisfied must be minimal and may no doubt be wrapped up within the work to the porch. I allow a further £100.

It is common ground that there are no cavity trays in these windows; the question is whether or not they are required. It appears that these windows were not shown in the original design and were cut into the walls after they had been constructed, but it cannot be said by Fairhurst that this would excuse a failure to provide cavity trays if required. I am satisfied that they are required, because that is what the manufacturer’s guide specifies and because I am not satisfied that there is sufficient eaves overhang to dispense with the need for them. I am satisfied that this is a defect where the reasonable cost of rectification is agreed at £700

It is agreed that there are no weepholes above the external window and door openings, and that they should be provided at a cost of £203.71. I am satisfied that this is a defect where that is a reasonable cost of rectification.

It is agreed that the walls do not require rebuilding, but do require cleaning at a cost of £200. I am satisfied that this is a defect and that £200 is a reasonable cost of rectification.

This item has been withdrawn.

This relates to the timber soffits which form the horizontal base of the roofs of the house and garage. It is Mr Whittle’s view that they are suffering from warping along their length due to a lack of support and/or being insufficiently thick, 4mm instead of the 6 mm or 9mm which he considers appropriate for a house of this standard. It is Mr Moran’s view that the soffits are performing acceptably, save for the garage which is dealt with separately below, and that since neither the plans nor the Building Regulations specify a particular thickness there is no breach. At the site visit it could be seen that the soffits had deflected to the front of the garage, but otherwise they appeared adequate save that the soffit appeared somewhat flimsy in the lean-to at the rear elevation.

In my view Mr Collins has established that this is a defect, but not one which requires full replacement of the soffits. I accept that there will be a need to undertake some limited remedial work to the area at the rear elevation. The experts agreed the cost range of complete replacement is between £570 (Mr Bushell) and £1,850 (Mr Hopkinson). Doing the best I can I allow £150 for the cost of replacing the limited area at the rear.

Mr Whittle’s view is that the protruding aluminium thresholds are inappropriate because the opening is set above ground level. He recommends their removal and replacement, at a rather expensive £1,315. Mr Moran agrees that the drop down to the patio is unsatisfactory, but that the provision of a stone step would address that problem and the problem of the threshold at the same time. In cross-examination Mr Whittle agreed that this would be acceptable, and I so find.

I am satisfied that this should have been addressed when the French doors were fitted, and that this is a defect for which Fairhurst is responsible rather than a completion item and that the agreed cost of £400 is a reasonable remedial cost.

It is common ground that toughened glass is required. In his first report Mr Whittle noted that there was no visible kite mark present to show that the manufacturer of the French doors had indeed fitted toughened glass, and sought confirmation that this had been done. Building Control have since become involved and have also asked for confirmation – repeated in their letter dated 5 May 2014 [BC28]. Mr Whittle now accepts that a kite mark is present on one of the panes, but maintains that none are visible on the others, and that unless Fairhurst provides written confirmation from the manufacturer that all of the panes are toughened glass Building Control will not be satisfied. The cost claimed of £2,000 is for replacement on the basis that no confirmation can be provided.

It is Mr Moran’s position that kite marks are visible on all of the panes, and this is consistent with what Mr Bushell said in his second report [§3.1.2.10] and what the quantity surveyors agreed in their joint report [§3.1.9.1]. Mr Moran also stated that in his view Building Control would have no difficulty in agreeing to issue a certificate given that at least one pane is visibly kite marked and given that it would be nonsensical for a manufacturer to use only one toughened glass pane to manufacture a prefabricated unit. In cross-examination Mr Whittle was disposed to accept, rightly in my view, that the invoice from Magnet, correlating with the enquiry forms making clear toughened glass was specified, would probably suffice although he would still prefer confirmation.

I am satisfied that toughened glass was used throughout and I am also satisfied that Building Control would be persuaded on the basis that at an inspection all of the panes could be shown to be kite marked and would issue a certificate accordingly. Even if only one was visible I am satisfied that this, coupled with the documentary evidence, would persuade them to issue a certificate even if Magnet was now unable to provide the required confirmation.

Accordingly I reject this claim.

This item has been withdrawn

This is perhaps the most contentious of the individual items, and the one with the greatest value.

It is helpful to begin with what is common ground. The existing bungalow on the site was served by a septic tank, about which little or nothing is known. There was no existing mains drain into which either foul or surface water could be discharged, and no suggestion that it would have been possible to connect the new foul or surface water drainage system into any mains drainage system. The original planning permission contained a condition requiring the submission and approval of a foul and surface water drainage scheme. There has been some debate about whether it was a condition of the planning permission that the foul and surface water had to be retained on site. It is apparent that there was no such formal condition. However I do accept Mr Fairhurst’s evidence that for all intents and purposes that was the position, given the absence of any relevant mains drainage, unless there was some other available and suitable means of off site drainage.

As to that, there is no evidence that water has, historically, drained off the site into any watercourse, or that the owner of the site has any lawful right to drain water off the site in such manner. The site is substantially a flat grassed area. The evidence clearly indicates that it is prone in places to waterlogging after heavy rain. That is not surprising since underneath the loam topsoil there is a substrata of heavy impermeable clay. There is a pond adjacent to the south east facing boundary, and it is possible that water may percolate from the site into that pond, but no-one suggests that this would be an appropriate discharge.

There is also a ditch lying along the northern boundary of the site, adjacent to the farm to the north. However Mr Collins has produced no evidence that the ditch lies, in whole or in part, within the land in his ownership. Whilst this is not a boundary dispute, from my observations on site it appears unlikely that it does, since there is an apparently longstanding hedge and wire fence separating the site from the ditch. Whilst it is right to say that there is also a wire fence separating the farmer’s land to the north from the ditch as well, that is more obviously explained by the need to deter livestock from getting into the ditch. Furthermore, there is no evidence that the ditch actually drains water offsite, in the sense that it is part of any established watercourse. The ditch is relevant since it is a substantial plank of Mr Collins’ case that the scheme which ought to have been designed and which is now required involves the discharge of the treated foul water and the surface water into this ditch. However neither Mr Collins nor anyone acting on his behalf has established that he has the right to discharge treated foul water or surface water into the ditch or that the owner of the adjacent land would grant him permission to do so if asked. Although the Environment Agency has, in correspondence dated 5 June 2014 and 10 July 2014, indicated that they would consent to a scheme under which treated foul water would be discharged into a watercourse, it has not been suggested that they have statutory power to require the adjacent landowner to accept such a discharge onto his land, or if they did that they would exercise it.

As I have already said the original design produced by Wheat Edwards made provision for a simple septic tank, no doubt reflecting the fact that this was what had been used to serve the bungalow and the absence of a mains drain into which a connection could be made. The original design did not, however, provide any details as to the drainage system. Mr Fairhurst’s evidence about this, which I accept, was that in the absence of a developed drainage design he had budgeted in April 2009 for a standard septic tank and outfall. He said in re-examination that he had estimated it would cost “a couple of thousand pounds” (although there was no documentary evidence to back this up). He said, and I accept, that whilst the trial hole dug in April 2009 had showed standing water that trial hole was for the purpose of assessing the foundation design not for assessing the drainage design. He said that it was his practice to undertake drainage works towards the end of a project, which does not seem to me to be particularly surprising or inappropriate in the context of a straightforward development such as this. He said, and I accept, that he first became aware of the site’s propensity to flood in autumn 2009, when the project experienced delays due to heavy rainfall. He said, and I accept, that when in summer 2010 it had become apparent that neither Mr Collins nor Wheat Edwards were going to do anything to produce a detailed drainage design he had asked Mr Aryas-Manesh, the consulting engineer with whom he had worked successfully on previous projects, and who had already provided advice in relation to the foundations and in relation to the staircase, to do so.

In July 2010 Mr Aryas-Manesh produced a plan showing his proposed drainage system. It is known that it was submitted to Building Control in September 2010, and I refer at this point to that version, stamped by Building Control [BC241]. It shows foul water discharging into a septic tank “details to manufacturers specifications”. It then shows the overflow from the septic tank passing into a pumping station, where it is joined by surface water draining from the structure of the newly constructed property. Both foul and surface water then travel through a pressurised pipe to an attenuation tank, designed to retain water at times of heavy rainfall. The drawing gives the required dimensions of the attenuation tank and shows that it is to be laid on top of what is described in the notes as a “very heavy … practically impermeable clay stratum”. The outfall from the attenuation tank leads into a perforated pipe surrounded by stones and then a geotextile membrane, in a herringbone type design, the intention being that water will gradually soak through the perforations in the pipe into the surrounding stone, through the geotextile and away into the surrounding soil (hence its description as a “soakaway”). The notes describe this surrounding soil as being a “loamy light” layer of topsoil, some 30-40cm thick, which it is said was not waterlogged even soon after heavy rainfall. The notes stated that on this basis there was no point in carrying out a percolation test on the clay and no need to carry out a percolation test on the topsoil. The overall length of the pipe was stated to be approx. 45m, and the approx. area covered by the herringbone pattern to be approx. 60m².

It is worth saying something at this stage about the difference between a septic tank and a sewage or waste water treatment plant. It is apparent that Mr Aryas-Manesh’s design involved the effluent from the foul drains undergoing only primary anaerobic treatment within the septic tank. It would therefore follow, as Mr Moran accepted, that the design postulated that any secondary aerobic treatment of any effluent carried with the overflow foul water from the septic tank would take place within the layer of topsoil. A sewage treatment plant, by contrast, involves both primary and secondary treatment being undertaken within the system before any effluent is released. It was therefore important, as Mr Whittle emphasised and as I accept, that the topsoil was not liable to waterlogging, because if the topsoil was waterlogged there would be no air and hence no aerobic treatment. That is obviously why Mr Aryas-Manesh noted on the submitted plan his observation that the topsoil was not waterlogged even after heavy rainfall. It is however also important to observe that Mr Aryas-Manesh also noted his assumption that “during exceptionally heavy rainfall the field would have been temporarily flooded”. In other words, the possibility of temporary flooding was anticipated, but not such as to prevent the soakaway from working efficiently overall.

It is apparent that Building Control was happy to approve the drainage design as acceptable, being designed as it was by an ostensibly competent drainage engineer. There is no suggestion or basis for suggesting that Mr Aryas-Manesh was or should have been thought by Fairhurst to be anything other than a reputable and competent consulting engineer.

However at trial Mr Williams cross-examined Mr Fairhurst on the basis that a further version of this plan, apparently produced directly by Mr Aryas-Manesh to Mr Fairhurst after the litigation had begun and circulated on to the experts, contained materially different notation. Whilst there were some differences between the approved plan and the further version of it, in my view they were not differences of substance. I entirely acquit Mr Fairhurst of any intention to mislead. The most likely explanation is that this version was either a previous draft produced by Mr Aryas-Manesh or, perhaps more likely, a revised version produced by him during the course of the litigation to emphasise and perhaps better to justify the drainage design. I repeat, however, that I do not consider that the amendments such that they indicate any intention by anyone to provide a seriously misleading picture. If Mr Fairhurst and Mr Aryas-Manesh had concocted such a plot it would be inexplicable for Fairhurst to have requested and obtained, as it did, the complete file from Building Control, including the approved drawings.

In accordance with the drawing, no percolation test was undertaken on the topsoil layer and nor did Building Control require one to be undertaken as a condition of approving the design. Building Control obviously accepted what was stated on the drawing that one was not needed. I have been referred by Mr Collins in closing submissions [§117] to an undated note produced by Mr Aryas-Manesh and disclosed by Fairhurst which, it is said, suggests that a percolation test was carried out. In fact it does no such thing, and I place no weight upon it.

The drainage system was installed by drainage sub-contractors employed by Fairhurst, AJC Contractors. Again there is no suggestion or basis for suggesting that they were or should have been thought by Fairhurst to be anything other than competent groundwork and drainage contractors. Indeed Mr Collins employed them subsequently in relation to the completion works without complaint. It is however worth noting that there are, according to Mr Collins, some significant differences between the design and the as-built installation. In particular:

There has also been some question as to the type and make of septic tank installed by Fairhurst. In a letter written by Fairhurst’s solicitors, clearly on instructions, it was said [A1823] that it was a Klargester “Alpha” septic tank. It is now conceded that this was a mistake based, according to Mr Fairhurst in cross-examination, on incorrect information provided to him second hand by the supplier. He now accepts that it was a Clearwater septic tank. It should be noted however that it was not being claimed by Fairhurst through its solicitors that a Klargester sewage treatment plant had been installed. Some question has been raised in the course of the trial as to whether the septic tank is suitably sized for a 6 bedroom property, on the basis that if the sizing information provided by Fairhurst’s solicitors is correct that would not be sufficient. However, because of the difficulties in ascertaining the make and model, no-one has been able to seek clarification from the manufacturers as to the actual dimensions of the septic tank, and no-one has measured the capacity of the septic tank, which could have been done when the tank was emptied. I note in passing that Mr Moran was able to note that the depth of the tank was 2645mm [A671] as compared to 1565mm as stated in the letter, although they are measurements to different points. Nonetheless it follows from all of this that insofar as criticism is made by Mr Collins’ experts as to the sizing of the septic tank I am unable to be satisfied that this criticism has been made out.

The Building Control notes show that the septic tank as installed was inspected by a Building Control representative on 22 July 2010 and that on 15 September 2010 they received details for the septic tank and outfall provisions which they were content to approve. There is also an email from the planning officer [BC142] which confirms that the drainage was agreed by them at some point in autumn 2010.

So far as the drainage system being a variation is concerned, I am satisfied that the revised drainage system was indeed a variation to the initial design and that it was properly added to the final cost. However, since neither the initial design nor the revised design as installed has been costed by Fairhurst or by Mr Bushell it is difficult if not impossible to put any figure on the cost increase.

So far as the allegation that it is defective is concerned, the starting point is that there is, notwithstanding the evidence of Ms McGuinness, no evidence that any problems were noted from the outset. In her evidence Ms McGuinness insisted that she had seen raw sewage in the area of the soakaway but I am quite satisfied that she is mistaken about this, because no-one else has reported seeing this and there is no photographic or other contemporaneous documentary evidence to support it.

It is also the case that Mr Collins did not undertake any system for the regular cleaning of the septic tank. Given that details of the tank remain unknown it is not possible to ascertain what the manufacturer’s recommendations would be as regards the regularity of cleaning out. Mr Moran suggests [A672] that it should be cleaned and de-sludged annually. Mr Collins said, and I accept, that he did not anticipate the need for regular clearing out based on his previous experience with the septic tank at Poplar Cottage. However it is now known that in fact the septic tank was not cleared out from May 2011 when Mr Collins and his family moved into occupation until at least subsequent to February 2014, when Mr Collins’ solicitors confirmed it had not been emptied since Mr Collins had moved in [COR132]. Thereafter it has, it appears, been regularly cleaned out.

On 27 August 2013 Mr Whittle undertook an inspection at the same time as a drainage specialist undertook a CCTV survey of the system – although this survey did not extend to the soakaway. His first report of 4 October 2013 noted [§6.5.4] that the ground around the soakaway was saturated “leaving contaminated water lying on the surface of the ground/grass”, and he attributed this to the insufficient design capacity of the soakaway to deal effectively with the water entering it. He did not take any photographs of the affected area, nor did he suggest that there was an offensive smell. He suggested separating the foul from the surface water systems with two separate soakaways or, if not feasible, installing a sewage treatment plant and discharging the surface water into a watercourse.

Mr Moran was duly instructed by Fairhurst and inspected the property on 20 November 2013 producing his first report on 11 December 2013. He was not supplied by Mr Collins with Mr Whittle’s report and, thus, had to work on the bare description of the defect given in the Scott Schedule. He did note that the site was waterlogged and, although he did not refer to having observed any contamination in the area of the soakaway, he did attach photographs including one which he described as showing “black sludge in evidence”. Nonetheless he expressed the view that there was no defect and no reason to undertake any remedial works.

In December 2013 Mr Whittle produced a supplementary report referring to water sample tests undertaken on contaminated water in the vicinity of the soakaway, which confirmed that they contained sewage waste, and repeating the views expressed in his first report.

In February and again in April 2014 there were joint inspections at the property, the first when both Mr Moran and Mr Whittle were present and the second when Mr Whittle was not, but Mr Moran and Mr Aryas-Manesh were, present. I have been shown video recordings made of the second inspection. Both parties rely on them. Fairhurst invites me to conclude that Mr Collins admitted in one of the recordings that the soakway had been damaged during his brother Michael digging in an attempt to locate the pipe. Mr Collins particularly draws my attention to the extent of the black sludge visible in the attenuation tank and the ground around the tank and the soakaway. He is also particularly exercised by Mr Moran’s failure in his subsequent report to record the presence of the black sludge in the attenuation tank or in the adjacent farmer’s field and his failure to accept that there were obnoxious smells in these areas, when he vigorously asserts that there were.

Mr Moran in his subsequent report did accept that at around 18.5m from the attenuation tank there was an area of soft boggy ground where there was black sludge, which he speculated may have been caused by damage to the pipework, although he also noted that a CCTV survey of the soakaway showed no obvious defect within it. In short, he maintained his view that there was no defect with the design or the installation and that insofar as there was any problem it was due to a lack of regular cleaning and/or damage to the pipework, and that is the view he has continued to maintain.

In March 2014 drainage contractors engaged by Mr Collins recommended that a Klargester type sewage treatment plant should be installed, discharging direct to a ditch or watercourse [A9/1821]. Their recommendation involves the discharge from the Klargester being kept separate from the surface water drainage system, although they suggested that this should also be discharged into a ditch or watercourse.

I have already referred to the letters from the Environment Agency of 5 June and 10 July 2014. Mr Collins is entitled to say, in my view, that they demonstrate that there was a problem, observed by the Environment Agency in May 2014, with a septic discharge on the site itself where the ground was saturated, and also pooling on the adjacent farmland. He is also entitled to say that they required steps to be taken to address the escape onto adjoining land. He is also entitled to say that they were happy to endorse the revised scheme Mr Whittle puts forward. However it is also right to note that the Environment Agency are very careful not to express any opinion as to the cause of the problem, and they say that the reasons could be “inadequate equipment, land or maintenance or a combination”.

The position as at the date of the site visit was that there was no apparent problem with the septic tank itself, with the pumping chamber or with the pressurised pipe leading to the attenuation tank. The attenuation tank itself was full of water, but did not appear particularly foul smelling. The length of the garden running along the eastern side of the boundary, where the soakaway is sited, is undoubtedly waterlogged with vegetation indicative of such conditions. Approximately 20m from the attenuation tank there was standing water with black sludge below the standing water, and there was a particularly unpleasant smell in that area. Although I would not say that this was the only area where there was black sludge or an unpleasant smell was present it was certainly not the case all the way along the full 50m length of the soakaway, and the problem appeared to me at least to be relatively localised. There was no indication of any black sludge in the adjacent farmer’s field.

I now express my conclusions. I am satisfied that there is a problem with the foul and surface water drainage system. I accept that Mr Collins has sought to overstate the problem, and that he has not helped himself by trying to persuade Building Control and the Environment Agency to condemn the foul and surface water drainage system for his own purposes in this litigation. Nonetheless it is apparent that there is a problem with contamination in the area of the attenuation tank and soakaway and that there has previously been some escape of contamination into the adjacent farmer’s field. I am satisfied therefore that doing nothing is simply not an option if Aldford View is to be sold as a house which has been passed by Building Control and the drainage system approved by the Environment Agency with no further risk of prosecution or – albeit remote – risk of claim in nuisance by the adjacent farmer.

I am not satisfied that the problem is explained simply by a localised escape from the outfall pipe or therefore that the most probable explanation is that there was a fracture of the pipe in that location. That is because: (a) there is no positive evidence of this and the CTTV survey did not reveal anything to that effect, (b) I do not accept that the problem was quite as localised as Mr Moran asserted; (c) Mr Moran offered no explanation as to what could have caused the fracture – as Mr Whittle said in order for there to be significant leakage there would have to be significant damage causing a significant disconnection, far above and beyond what Mr Fairhurst rather opportunistically suggested might have been damage caused when Mr Collins and his brother were excavating with a spade to locate the soakaway. It may very well be that the excavations to unearth the pipe will have damaged the geotextile and disturbed the stone surround in that area, thus allowing more of the black sludge to find its way into the surrounding soil there. It may also very well be that this area is particularly susceptible to waterlogging so that the black sludge is retained there under water all year round and never benefits from aerobic treatment or thus dissipation.

I am however not satisfied that there is any defect in the design or the installation of the septic tank itself or the pumping chamber or the attenuation tank or the pipes connecting these installations. Whilst the evidence as regards the septic tank is not satisfactory, it has not been proved that it is defective or undersized. It is just as likely in my view that the black sludge in the attenuation tank and the soakaway is explained by the absence of regular de-sludging prior to 2014. No detailed inspection or survey has been undertaken of the design and construction of the attenuation tank or soakaway to confirm the suggestion that they have been laid into the clay beneath the topsoil. These allegations appear to have only surfaced in any detail, if at all, for the first time in the course of the trial. I am not satisfied that there is any basis for any substantial criticism of the installation of the attenuation tank or the soakaway in this respect, or that it is in any way relevant to the problem of contamination.

I am satisfied that the cause of the problem is a combination of one or more of the following:

I am also satisfied that the problem has been worse in the period up to summer 2014 due to Mr Collins’ failure to clean out the septic tank on a regular, annual, basis. I am not finding that he was negligent in not having the tank cleaned out more frequently, but I am satisfied that this was causally significant because otherwise the amount of effluent entering the attenuation tank and the soakaway would be and has more recently been significantly less as, thus, has been the extent of the problem.

Fairhurst contends that it is not possible for me to make a positive finding that the initial design fell below the standard to be expected of a competent drainage engineer, or that this was the sole or a significant cause of the problems. I am asked to bear in mind that a detailed design drawing was produced and submitted to Building Control, who approved the design, both as a drawing and on site during installation. I am also asked to bear in mind that even now Building Control have not condemned the design or stated that without a percolation test on the topsoil layer the design cannot be relied upon. I am also asked to bear in mind the lack of regular cleaning, in the absence of which it is said that the system would have worked adequately.

Fairhurst also contends that it is not possible for me to make a positive finding that the installation fell below the standard to be expected from a competent drainage contractor, or that this was the sole or a significant cause of the problems. It must accept that there is evidence that the attenuation tank and the soakaway were not installed in the area shown by the drawing and that the herringbone pattern was not used. However it contends that there is no positive evidence that the conditions in the area where the soakaway was laid are any, or significantly, worse than in the area where they should have been laid, or that the absence of a herringbone pattern makes any difference when one considers that the total length of drain is still the same.

I am unable to accept these submissions. In my judgment it is apparent that the decision to install a septic tank undertaking primary treatment only, and to combine the outfall from the septic tank with the surface water to be discharged via an attenuation tank into a soakaway which depended on the ground conditions being sufficiently dry to allow secondary treatment of any effluent to occur, was a high risk decision which depended on the designer and the installer, and Fairhurst as the contractor with overall responsibility, being satisfied that the ground conditions were appropriate. It is clear that the design as put forward by Mr Aryas-Manesh depended on the ground in which the soakaway was to be laid not being waterlogged other than for short periods of time. However it is readily apparent from the evidence that Mr Fairhurst was well aware by autumn 2009 of the waterlogged state of the land. There is no evidence that anyone conducted any or any proper testing of the conditions in the area where the soakaway was actually laid. In particular there is no evidence that anyone considered the impact of the surface water being discharged into that area in addition to the existing rainfall. There is no evidence that anyone made contact with Mr Aryas-Manesh as the designer to ask for confirmation that the soakaway could properly be installed in one straight run without a herringbone adjacent to the boundary.

I am satisfied that a properly designed and installed scheme would either have needed to be one where the soakaway was laid in an area and to a design where it could confidently be expected that ground conditions were sufficiently dry through sufficient of the year to enable secondary aerobic treatment to occur notwithstanding the impact of discharging surface water into that area as well as any outfall from the septic tank, or one where the septic tank was designed and installed as a waste water treatment plant, so that if there was a problem it would not be a problem involving effluent which had only undergone primary treatment. In short, I am satisfied that a high risk strategy was adopted, presumably to save time and costs, and implemented without proper control by Fairhurst, so that Fairhurst is responsible for the problems which have now, foreseeably, occurred.

I turn then to Mr Hopkinson’s proposed remedial scheme and alleged costs. I have already observed that Mr Whittle initially suggested separating the foul from the surface water systems with two separate soakaways or, if not feasible, installing a waste water treatment plant and discharging the surface water into a watercourse. I have also noted that the drainage contractors engaged by Mr Collins recommended a waste type treatment plant discharging direct to the ditch with the separate surface water drainage system also discharging into the ditch. Mr Hopkinson’s costed scheme totals £27,885.80. It involves the provision of a waste water treatment plant with the effluent discharging into the pumping chamber to mix with surface water. The combined foul and surface water is then to be pumped to the existing attenuation tank and discharged around 100m to the ditch at the northerly side of the site through a new drain. For that to be done the attenuation tank and the land between the tank and the ditch must be raised to allow the system to work by gravity. This is a very substantial part of the overall claim, items 6 - 9 total over £17,000. In comparison, it appears that around £600 relates to cleaning out the existing system, and around £5,750 relates to the installation of the new waste water treatment plant and its connection.

In my view the proposals as now advanced by Mr Hopkinson have got completely out of hand. If the waste water treatment plant solution is adopted, as seems to me to be appropriate, then all that could be discharged from that plant would be primarily and secondarily treated effluent, which is no risk to anyone. I cannot see any obvious reason why that could not then be discharged into the existing pumping chamber and then to the attenuation tank and soakaway without the need for modification. However if I am wrong and the drainage designer, Building Control or the Environment Agency thought it necessary to provide a separate soakaway direct from the waste water treatment plant away from the existing soakaway, then given that this involves a relatively small quantity of secondarily treated effluent that should present no difficulty. At worst, based on Mr Whittle’s evidence, all that would be necessary would be to construct some form of drainage mound above the water table if the existing ground conditions were not acceptable.

What I do not accept is that it is necessary (or even on current information desirable or feasible) to discharge either the foul water or the surface water into an off site ditch. Whilst I accept that the solution suggested above will not resolve the problem that the soakaway is located in an area prone to waterlogging, that cannot sensibly be said to be a serious problem if there is no black sludge (i.e. only primarily treated effluent) entering the soakaway. It will simply remain a boggy grassy area at the easterly boundary of a large site which could, if necessary, be landscaped off to make it separate from the garden area. I accept that if this solution is adopted it may be necessary for labourers to be engaged to remove the existing black sludge from around the soakaway, but whilst undoubtedly unpleasant work that is unlikely to be expensive work. It should also be noted that to allow Mr Collins to recover for the cost of this would be to enable him to recover through the back door what he has not been allowed to claim through the front door, because in a previous version of the Scott Schedule he had included a claim for £8,000 for land drainage to that ditch, but that claim had been disallowed by HHJ Halbert. Mr Whittle agreed in cross-examination that discharging to a ditch was really to deal with the problem of surface water rather than the problem of foul water.

I am satisfied in all the circumstances that the cost of undertaking a reasonable remedial solution which would allay the concerns of Building Control and the Environment Agency is no more than £7,500, which is the sum I assess for this item.

It is common ground that there was evidence of water staining to ceiling below the location of internal plumbing, indicating that there had been some leakage somewhere in the internal plumbing connected with the shower area to the rear bathroom at first floor level. It was apparent from Mr Goodier’s evidence that he had attempted on a number of occasions to rectify the problem and Mr Whittle confirmed that the area was dry on inspection, so that it appeared that the repairs had been effective. However there is no documentary evidence as to the cost of that remedial work, since Mr Goodier’s invoices have not been disclosed and the experts have therefore been unable to verify either the scope of works or the cost, nor is there any documentary evidence as to the further question raised by Fairhurst, which is that it believes that Mr Collins had made an insurance claim for this damage and, thus, that he has recovered his loss. It was also apparent at the site visit that there was further water damage in the same area. However although in his first report Mr Whittle had recommended [§6.6] that there should be a further investigation and associated repairs, it does not appear that this was ever done.

The claim as made is for £2,500, which is said by Mr Hopkinson in his first report [§5.3.6] to relate to the “release of monies paid by insurers still held by Claimant”. In contrast Mr Bushell in his second report had valued the remedial works already undertaken at £2,140, but said that his instructions were that Mr Collins had already received more than this by way of insurance payment.

The position in my judgment is that Mr Collins has been unable to identify by undertaking the inspections recommended by Mr Whittle that there is a continuing defect for which Fairhurst is liable. The claim for defective work as advanced by Mr Hopkinson must fail on that basis. There might have been a claim for work which was carried out but there is no documentary evidence as to this or as to the vexed question of the insurance claim or payment. I am not persuaded that there is any evidence that Fairhurst could or would have made an insurance claim itself, and on balance I prefer Fairhurst’s case that it was Mr Collins and not Fairhurst which made the insurance claim and received the payment. The end result is that there is no basis for Mr Collins recovering anything for this item.

It appears that these items have been agreed in the sum of £178 and £43.99 respectively, total £221.99. I am satisfied that these are defects where the reasonable cost of rectification is as agreed.

It is agreed that a fire door is required to the first floor bathroom. This ought to have been provided and is, therefore a defect. The cost of £350 is agreed.

Mr Whittle states that this was always intended to be a suspended basin, but proper fixing was not provided, and that whilst a basic temporary solution has been provided it requires a proper permanent support at a claimed cost of £450. Mr Moran’s position is that the support provided is adequate, and that any damage has been caused by misuse. On balance I prefer Mr Whittle’s evidence that further support is necessary, however I also accept and prefer Mr Bushell’s opinion that the provision of support by legs at a cost of £80 is more appropriate than the cost of £450 identified by Mr Hopkinson for more extensive works. My conclusion therefore is that this is a defect for which Fairhurst is responsible and the assessed amount is £80.

Mr Whittle’s complaint is that the tiles have been secured using spot or dab adhesion as opposed to full bed adhesion, which is not satisfactory because it does not provide sufficient fixing in the context of bathroom floor tiles which need to stand the test of time. In his report Mr Whittle refers to one tile having become loose. Fairhurst’s argument is that this has become loose because of stress due to the absence of a threshold fixing in the entrance. At the site visit it was said by Mr Whittle that further loose tiles are now apparent, thus supporting his position. I am satisfied that this is a defect, because it is not satisfactory to spot fix floor tiles in a heavily trafficked area such as a bathroom, as time has shown, and where the reasonable cost of rectification is agreed at £375.

In his report Mr Whittle contended that less than the required thickness of rigid insulation has been provided. In the joint statement he confirmed that this related to a small 5m area, and the cost is agreed at £120. Mr Moran had not been able to gain access to confirm or otherwise the position in this area, and was not satisfied that the complaint had been made out. I accept Mr Whittle’s evidence. It is argued by Fairhurst that even if the defect is present there is no need to undertake remedial works because it is not a matter included by Building Control in its compendious letter of 15 May 2014, but in my view that argument cannot avail them in circumstances where it is not said that Building Control are aware of the matter but have decided that the complaint is not made out. If there is a breach of Building Regulations then Mr Collins as the legal would-be vendor is entitled to say that it should be put right. In my judgment it is a defect for which Fairhurst is responsible and hence the full amount of £120 is recoverable.

These items relate to what Mr Collins, supported by Mr Whittle, contends are defects. Further works to the garage appear below as completion items. As regards these items there are disputes as to whether any work is required and if so whether it is a defect as opposed to a completion item.

The garage as constructed has rendered side walls, the render being applied over concrete blockwork. The complaint is that below dpc level (where render would not be appropriate) there is visible exposed blockwork. It is said that this is visually unappealing and out of character both with the front of the garage and the house, and should be replaced with brickwork. Having seen the garage on the site view I agree, as did Mr Moran in cross-examination, that it is visually unappealing. Mr Moran suggested that steps could be taken to conceal the defect, for example, a row of potted plants planted along the length of the walls, which would adequately overcome any genuine concern that this might affect the saleability of the property. It is also true that the defect is only obvious on the flank adjacent to the house. It was also pointed out that the use of blockwork is not contrary to the plans or to the requirements of the planning permission or contrary to Building Regulations.

Nonetheless, in the context of this property, and taken together with item 23, I am satisfied that it is unacceptable, and that reasonable steps could and should be taken to address it. However I note that the claimed remedial cost of £1,600 is substantial, and prefer Mr Bushell’s assessment, increased a little to £1,000, which is what I award as a defect for which Fairhurst is responsible.

The complaint here is that because the render (see item 22 above) has been laid too low, it has deteriorated, and the stop end is not satisfactory and there should be a drip bead, with brickwork below. I agree, and consider that this is a defect for which Fairhurst is responsible. Again however I prefer Mr Bushell’s valuation, and award £850 as a defect for which Fairhurst is responsible.

It is common ground that the thresholds which have been provided to the entrances to the garage are not satisfactory and are already breaking up, and that they require replacement. Fairhurst argues that these were only ever intended to be temporary thresholds, provided pending completion of the driveway, and that permanent thresholds would have been completed had Fairhurst been allowed to complete the works. However I am satisfied that, as said by Mr Whittle, the problem was caused because the garage slab was not cast so as to construct this threshold from the outset. In the circumstances I am satisfied that it is a defect for which Fairhurst is responsible and that the reasonable cost is as agreed in the sum of £450.

See item 10 above. Mr Moran agreed that the soffits were unacceptable to the front of the garage. Mr Fairhurst contended that this was something which would have been done as a completion item, but my view is that it is a defect, in that it could and should have been done at the time. I prefer Mr Bushell’s valuation and allow £300, which I award in full as a defect.

This is agreed; as is the cost of £203.71. I am satisfied it is a defect which should be awarded in full.

It is said by Mr Whittle that the plasterboard is poorly fitted with inadequate fixings and supports, and that it undulates and is unsightly in its existing condition. Mr Moran accepts this criticism, as seems to me to be correct because it was obvious at the site visit, but contends that it is satisfactory in the context of a garage. It seems to me however to be unacceptable in the context of the triple car garage which is a feature of this property. Mr Whittle suggests that it should be removed and replaced; the remedial cost has been reduced from £1,715 to an agreed figure of £980 for overboarding and skimming. In cross-examination Mr Moran suggested that it could just be scrimmed and sealed, but I am satisfied that the reasonable remedial solution and cost as agreed by the quantity surveyors should be adopted and, hence, I award £980 as a defect for which Fairhurst is responsbible.

It is common ground that the existing staircase does not comply with Building Regulations and must be altered to provide sufficient headspace. As Mr Moran accepted in cross-examination, if a staircase is to be provided, then it must comply with Building Regulations whether or not the room above is intended for habitable accommodation. As to that vexed question, although it is Mr Collins’ case that the garage was always intended to form habitable accommodation, and that Fairhurst should have been aware of this from the plans provided and the discussions, as I have already found I do not accept this. I note that Building Control in their letter dated 15 May 2014 refer to the “unauthorised conversion” of the garage to provide habitable accommodation. Nonetheless, it seems to me that Mr Moran’s concession is a proper one; if Fairhurst constructed a staircase it had to be Building Regulations compliant.

The quantity surveyors had agreed that a reasonable cost for the works outlined by Mr Hopkinson would be £1,000. Although in re-examination Mr Moran suggested that it would be a 2 day job at most to cut out an additional area to form additional headspace, Mr Whittle pointed out in cross-examination that this would depend on not needing to cut into joists, and that would need to be investigated.

In my view a reasonable allowance for what I am satisfied is a defect for which Fairhurst is responsible is £500, reflecting a fair balance between the risk that the full works might need to be done and the possibility that lesser works would be all that was necessary.

Summary of defect items

The “completion” items

As regards the completion items there are a number of disputes between the parties as to the individual items, both as regards the existence of incomplete work and whether or not it is work which formed part of Fairhurst’s obligations under the development agreement. There are also a myriad of disputes in relation to the quantification by Mr Hopkinson of the individual items. A number of the claims advanced by Mr Collins have already been resolved by previous order of HHJ Halbert removing a number of items from the Scott Schedule which could never realistically have been regarded as falling within Fairhurst’s scope of works.

Item 31 is within item 40, and item 32 is withdrawn in the Scott Schedule. In any event item 32 is a complaint that the window glass to the bedroom is not compliant, but that is not a matter addressed by Mr Whittle as Mr Collins’ building surveyor expert not addressed in the evidence otherwise or at trial.

It is common ground as between the quantity surveyors [§3.2.1] that this will no longer be required once the porch paving is re-laid to correct levels and, hence, this item is no longer relevant.

Mr Fairhurst has always accepted that the kitchen formed part of the original contract, and that it had been completed by Mr Collins. He also said in re-examination that he had allowed a cost of around £20,000, compared to Mr Collins’ evidence that £30,000 had been allowed.

Mr Hopkinson had valued the kitchen completion costs at around £19,000. He had made an elementary error in referring to a quotation as an invoice and in double counting, so that he had allowed around £17,000 for what appeared to be a total cost (including VAT) of £13,000. He had also allocated invoices to particular works (in this case, for example, an invoice for electrical goods – which transpired to be part illegible - an invoice for catches, and an invoice for the – wrong colour - tiles) when he could not have been sure that they in fact related to those works, and without checking with Mr Collins or qualifying his report accordingly. He had also made the first of many retrospective valuations of the cost of undertaking works on a “fair and reasonable” valuation basis, in this case laying floor tiles, without making any enquiry as to who had undertaken the work, whether it was paid for and if so at what cost and generally whether there was any evidence to support the claim. In short, Mr Hopkinson had adopted an approach of providing a valuation of all costs which were not evidenced by invoices without making it clear that he had not considered whether that was an appropriate approach in the particular circumstances of the case. Thus in this example there was no supporting evidence that Mr Collins had actually incurred £300 labour costs or, if he had, that this would have been a reasonable amount to pay a local tiler to do the work, presumably for cash, in 2011. Finally, he had also allowed items such as kitchen furniture when there was no basis for suggesting that this could ever have formed part of Fairhurst’s scope of work.

It is plain in my view that I am unable to allow the claimed sums simply by accepting the approach or the figures taken by Mr Hopkinson. The question is whether I can and should allow some lesser sum on a broad brush basis. Thus it was put to Mr Fairhurst in cross-examination that a kitchen like that must have cost at least £14,000. Although Mr Fairhurst was not prepared to agree this in the absence of an invoice, and was prepared to accept only that from the photographs he had seen it appeared to look like a decent kitchen, it seems to me that on a broad brush basis £14,000 is reasonable in the context of the quotation which was provided and the evidence as a whole, and particularly by reference to the contemporaneous assessment of Mr Fairhurst in January 2011. In short, the approach I take is to assess the individual claims made by reference to my assessment of the evidence advanced in support and, in particular, taking into account the absence of documents where I would have expected them to have been provided, and also by reference to the January 2011 assessment. As it transpires my total figure is not far from the total figure suggested by Mr Goff in closing submissions, although his approach was to rely solely on his extrapolation of the figures contained in the January 2011 assessment.

Mr Fairhurst accepted in evidence that Mr Collins had undertaken the second fix plumbing and electrics and had supplied the fittings, save only for the toilet, as to which there was an issue. So far as there was a dispute I accept and prefer the evidence adduced of Mr Goodier over that of Mr Ainsworth.

A major difficulty for Mr Collins however is that he has failed to disclose any invoices from Mr Goodier, even though under cross-examination Mr Goodier agreed that invoices had been supplied and, if he had been asked, he could have provided copies.

Mr Hopkinson has valued this item at £1,500 on the basis of some very broad brush figures, which I am satisfied are no more than the most general of assessments of what would be a fair and reasonable sum. My view is whilst I am with some reluctance prepared to allow an assessment on this basis, I should reduce the assessment by one third across the board to reflect my analysis of Mr Hopkinson’s approach, thus allowing £1,000 for this item.

Mr Fairhurst accepted in cross-examination that this work had been completed by Mr Collins. His argument appeared to be that it should not be included because it was not within the scope of the original contract. I accept that there was no detailed discussion or agreement about what flooring was required. I also accept that it is not uncommon to leave the choice of finishes to a later stage because it is something that an intending purchaser may well want to have an input into. However I am satisfied that there was a general discussion and agreement to the effect that floor finishings would be provided as part of the process of completing the house for sale, and thus that Mr Collins should be entitled to recover the cost before the profit is divided. Indeed I note that Mr Fairhurst included allowances for these items in his email of 4 January 2011 in the sum of £4,500.

This is a substantial claim totalling £8,425, and it is almost inconceivable that Mr Collins did not obtain and retain any supporting documents, thus forcing Mr Hopkinson to adopt a retrospective valuation on a broad brush basis. This is particularly surprising since what was disclosed [DD1/2/159] is what appears to be a redacted copy of an invoice or invoices for carpets. I am not persuaded that I should allow any more than Fairhurst’s estimate of £4,500 plus around 25% total £5,625. I am adding 25% to reflect the VAT element on materials which Mr Collins would not have been able to reclaim, and more generally the fact that Fairhurst’s allowances were subject to some subsequent discussion and that there is some evidence that the total, including the kitchen, was agreed should be increased from £28,500 to around £50,000. Even though Mr Hopkinson considered that Fairhurst’s estimate was low, if I am wrong and I have been insufficiently generous Mr Collins has only himself to blame for not producing proper evidence.

I reach a similar conclusion in relation to the oak doors. There is a claim for £3,775.49 without any supporting documents, where Fairhurst had estimated £2,000 at the time. I see no reason for allowing Mr Collins more than £2,000 plus 25%, total £2,500.

Mr Hopkinson valued this item at £3,750, on the basis that his valuation is consistent with what he had been informed by Mr Collins was an agreement he had reached with the sub-contractor whereby Mr Collins undertook certain financial work for the sub-contractor in return for having this work done free of charge. Mr Fairhurst in his witness evidence [WS2§89(ix)] appeared to accept that this work needed to be done and that it had been done and paid for. In the absence of evidence as to the value of the work done free of charge by Mr Collins through his company, I am satisfied that Mr Collins should be held to Fairhurst’s valuation of £1,500 plus 25%, total £1,875.

By the end of the trial it was common ground that there had been a change from a timber staircase to a “feature” steel and glass staircase, which had been instigated by Mr Fairhurst and accepted by Mr Collins, and which had substantially been paid for by Mr Collins.

Although he claims he has spent more, in the absence of invoices Mr Collins has limited the claim to £6,000, being the sum estimated by Fairhurst at the time, to which Mr Hopkinson has added 20% VAT. Since Mr Fairhurst accepted in cross-examination that £6,000 was “about right” and that the work had been well done, I accept that I should allow £6,000 plus 20%, total £7,200.

Mr Hopkinson had undertaken an exercise of ascertaining the paint costs and then applying a labour to paint ratio of 75/25, thereby producing a total of around £4,000, compared to Fairhurst’s email of 4 January 2011 in which he estimated the cost of the outstanding painting works as being around £1,000. However under cross-examination it was apparent that the true paint cost was more like £500, and Mr Hopkinson was prepared to accept that his 20 man days might be considered excessive. In the absence of invoices relating to the cost of the work done, or contemporaneous photographic evidence of the work done, I am satisfied that I should take a conservative approach and reduce the cost to £1,500.

Mr Hopkinson had valued this at £6,132.12 on the basis that Mr Collins had done the remaining 80% of the patio. In cross-examination Mr Fairhurst accepted that Mr Collins had completed the patio; he estimated he had laid approx. 40% and Mr Collins the remaining 60%. Fairhurst’s contemporaneous estimate for the slabs, which I think must mean the patio slabs, was £1,500.

In the absence of any documentary evidence of costs, even for materials given that the claim for materials costs alone is over £2,750, I am satisfied that I am unable to award more than £3,000 even adopting a generous approach.

This is a claim for almost £900. The fencing was, however, erected to replace a hedge planted by Fairhurst and where there was no landscaping design or obligation in the plans. In the circumstances I allow nothing for this item.

At this stage I am only dealing with this as a completion item. There is no claim for items 44 and 52, items 45 and 46 are for fitting a door and window to the side elevation, items 50 and 51 are for work to the first floor room, and item 54 is for guttering to the garage. The total claim amounts to £2,118. These are all estimated items. Since Fairhurst allowed £2,000 to finish the garage it seems to me to be reasonable to allow that amount.

This is a claim for £1,652.25 for supplying and fitting oak skirting and architraves. Again there is no invoice substantiation. Although Mr Fairhurst gave evidence that he had supplied the materials which were ready for fitting, I am not aware that Fairhurst has produced any invoices to record the supply of these items. In the circumstances, and doing the best I can, I reduce the claim by around 50% down to £825.

This is a claim for £420 to supply and fix one door to a laundry room, which is undocumented and appears high. It is contested by Mr Fairhurst in his witness evidence as not being part of his scope of works, and I agree and thus allow nothing.

This is a claim for £420 to skim and box in exposed steel, which Fairhurst accepts in principle. It is undocumented and appears high and I reduce by one third to £280.

This is a claim for £250 to fit the porch roof and lead flashing. Fairhurst accepts that the felt and flashing was fitted by Mr Collins and I allow two thirds, £165.

It is agreed that Mr Collins provided these slabs. The claim is for £220, again undocumented, and I allow £145.

This is a claim for £4,404.44, where the materials cost is documented but the fitting cost of £1,600 is not. Fairhurst’s case is that it was never part of the original scope, and that these were installed in May 2011 as part of Mr Collins’ unilateral decision to stage and occupy the house. I accept this argument, and award nothing. If I had awarded anything I would have discounted the labour estimate by around one third and allowed £3,900.

This is a claim for £2,532.28 which appears from Mr Hopkinson’s report to be a claim for the cost of removing rubble which Mr Collins said was left by Fairhurst and preparing the filed for sowing. There is an invoice for the digger / dumper showing that it was hired over 11 days in March 2012, a full year after Mr Collins took occupation, and the other costs are undocumented. Mr Fairhurst’s evidence was that this was rubble left over from the demolition of the original bungalow.

It seems to me that in the absence of clear evidence that rubble was left by Fairhurst and that these substantial costs related only to removing that rubble, when the clear implication is that this was Mr Collins clearing, ploughing and grassing the substantial field a full year after taking occupation (the latter being outside Fairhurst’s scope in any event) I am unable to allow this claim. If I had, I would have reduced the claim to £2,000.

Summary of completion items

Fairhurst’s claim for payment for the works undertaken

The claim as initially advanced was not detailed in any meaningful way, being a claim for the £150,000 initial estimate, plus the alleged shortfall of £19,000 in relation to Mr Collins’ £30,000 contribution, plus an unspecified claim of £45,000 for variations, which were themselves not fully particularised.

Fairhurst did not rely on the schedule of costs produced in January 2011. It was not until January 2014 that Fairhurst provided a detailed schedule of its claim, setting out details of all invoices claimed, both those which had been paid and those which still remained outstanding, and identifying those which Fairhurst now accepted had been incorrectly claimed. Mr Collins relies upon the initial inclusion of incorrectly claimed invoices as undermining the credibility of Fairhurst’s claim, and I accept that it does not reflect well on Fairhurst that it did include items which it subsequently had to accept should not have been claimed. However it should also be recorded that the quantity surveyors have agreed that the claim as now presented does not include any duplication of invoices, contrary to Mr Collins’ pleaded case.

The claim as now advanced totals £193,456.58, made up as to £142,214.58 for construction costs including materials, subcontractor costs and the like, PAYE labour costs of £47,877 and £3,395 for diesel. It is thus £13,456.58 greater than the contract sum of £180,000 although it does not allow any credit for the cost of completing the works which were not done by Fairhurst prior to leaving site.

Before delving into the detail of this claim I must remind myself that, given the pleaded case and my findings as to the contract terms, it is not open to Fairhurst to make a claim for the total cost of the works on a cost reimbursement basis. Fairhurst must establish that it is entitled to the payment of the original contract price and to payment for variations. I indicated in my note to the advocates prior to closing submissions that it might in principle be open to Fairhurst to argue that its total costs could be advanced as a “global” claim on the basis that they all related to the contract works and variations and to no other cause. Wisely, it seems to me, given the admissions in contemporaneous emails that there were a number of reasons for the delay and the overspend above and beyond variations, Mr Goff did not take up that invitation, and instead invited me to accept that Fairhurst was entitled to the contract sum plus the value of the variations as assessed by Mr Bushell.

Mr Bushell identifies two variations, namely the changes to the garage and the changes to the porch. In his first report he estimated the cost of both as being £32,450, with details appearing in his priced bill of quantities as Appendix 10 to that report. Although he has added VAT to that sum, it is quite clear that this would not be appropriate given that Fairhurst would not have claimed or passed on any VAT anyway.

Although Mr Fairhurst had, in his email dated 25 January 2011 [DD1/36] identified 11 separate reasons for the overspend, the garage and the porch were the first and the second respectively. The third was the drainage works which, I accept, was a variation, however in the absence of a properly quantified claim for whatever the extra cost is said to be I am unable to value it. The fourth is the involvement of John Smith which is obviously not a variation in itself and whilst changes instigated by him may be there is no properly detailed or quantified claim made for these. The same is true for items 5 (dealings with planning department) 6 (staircase), 7 (radiators), 8 (rainwater goods), 9 (patio area), 10 (lighting system) and 11 (sound system).

Mr Hopkinson contends in his report [§5.1.1.1-4] that the cost effect of the variations as a whole was neutral. However I regret to say that this appears to me to be an opinion reached on the basis of a most superficial of assessments, without any obvious attempt being made to value the individual variations, and I am unable to place any weight upon it. He did, at [§5.1.8] proceed to consider the variations to the garage separately, but his valuation is fatally flawed in that it excludes any element of work said to be defective, regardless of the severity and remedial cost of the alleged defect, and it makes no attempt to value the changes by reference to the changes in the design as submitted for the pre-contract planning permission compared with that submitted subsequently and as actually undertaken.

Regrettably the quantity surveyors were not able to discuss these items in their joint discussion or hence address it in their joint statement due to time constraints.

Mr Collins contends that the fatal flaw in Mr Bushell’s approach is that he has failed to assess what the cost would have been for building the garage or the porch to the original design. That is a well made point as regards the porch, as Mr Bushell had to accept in cross-examination and, hence, I am unable to allow anything in relation to the £7,500 claimed for this item. Whilst I am reasonably confident that the porch as constructed would have been more expensive that the previous design, in the complete absence of any evidence as to the cost of the original design I think that it would be a step too far to pluck a figure from the air. However it does not seem to me to be a well made point as regards the claim for the variations to the garage in the sum of £24,950, in that items A-E inclusive are all stated to relate to the cost of providing a room above the garage which as Mr Bushell maintained in cross-examination, and as I have already held, formed no part of the original design. Thus there is no reason why credit should be given for these elements of the claim.

Mr Bushell did however accept in cross-examination that item D included allowances for heating installations, which were not in fact provided, and for electrical installations which Mr Collins contends that he provided. Because this point had not previously been addressed by Mr Hopkinson, Mr Bushell was unable to provide an estimate of the credit which should be given. I consider that in round terms a deduction of £2,500 is not unreasonable and does broad justice as between the parties, resulting in a revised figure for the variations to the garage of £22,450.

Although it is submitted on behalf of Mr Collins that, standing back, this is far too high when one considers the basis cost estimate for the construction of the garage, in my view Mr Bushell was justified in making the point that this does involve the creation of an additional floor of living quality standard space over what is on any view a substantial sized garage, so that the total amount is not in itself overly surprising.

If I had not been able to rely on Mr Bushell’s analysis, I would have had to consider whether I could approach the matter on the basis that since Fairhurst’s claim only exceeds the original £180,000 by £13,456.58, I could award that excess on the basis that I can be satisfied that the total cost of the genuine variations plainly exceeds that amount. I do not consider that I can. I am satisfied that the total cost of the genuine variations does exceed that amount, however I do not consider that this forms a proper basis for including such an amount in the claim. That is because the £13,456.58 does not, on analysis, have anything whatsoever to do with the variations; it is simply part of a composite claim for the whole construction costs which I have already held is irrelevant to the contractual basis of the claim and, moreover, which gives no credit for completion costs. It would be completely irrational therefore to adopt the £13,456.58 as a rational award for variations.

It follows, in my judgment, that the maximum claim which Fairhurst can advance is £180,000 plus the reasonable cost of variations to the garage in the sum of £22,450, total £202,450. I will need to decide what to do about completion costs and the cost of remedying defects once I have addressed the arguments about the circumstances of termination.

Before I do that, however, and because it was addressed in the evidence and argued, I should deal briefly with Mr Collins’ points about the actual costs which Fairhurst said it incurred.

First, I consider the supporting documentation. In cross-examination Mr Fairhurst described his paperwork as “superb”. I accept that the invoices upon which he now relies provide a solid evidential platform for his claim for £142,214.58 for construction costs.

Insofar as it is said that Fairhurst is not entitled to recover costs represented by invoices which have not been paid, I reject that argument. There is no evidence that any of these invoices have been written off by the suppliers. I am satisfied that Mr Fairhurst is entitled to recover the invoices which he still owes Thorncliffe and that he is entitled to recover on behalf of Fairhurst Developments Limited the invoices which it still owes. It is clear, for example, that Falcon are still very keen to recover the balance of their costs from Fairhurst.

Furthermore, as I have already made clear, I entirely reject any suggestion emerging from cross-examination of Mr Cartridge that Thorncliffe’s invoices had concealed the discount to which Fairhurst was entitled as a valued customer of Thorncliffe. I also reject the complaint made by Mr Hopkinson that Fairhurst failed to obtain a reasonable discount either through negotiation with Thorncliffe or through obtaining supplies from a larger supplier. It does not seem to me that I could treat as unreasonable the approach taken by Fairhurst as a small builder to exploit the benefits of its close relationship with Thorncliffe.

There were a number of other criticisms of Fairhurst’s construction costs claims, some in Mr Hopkinson’s report and some only emerging for the first time when they were put to Mr Bushell in cross-examination, and in circumstances where neither Fairhurst nor its team had the opportunity to investigate and address them beforehand. In short, I am not persuaded that there is any basis for these criticisms. I accept Mr Bushell’s opinion that this is a well produced claim, made on an excel spreadsheet with supporting invoices cross-referenced. I also accept that Mr Bushell has conducted a reasonable analysis of the claim, albeit that he has not purported to re-measure it, and has expressed himself satisfied with it on reasonable grounds. In particular, I accept that the diesel costs are properly claimed and quantified even though this is one of the few cases where there are no supporting invoices. I also reject Mr Hopkinson’s other criticisms of the claim, other than the £165 which is agreed (see the joint statement at [§2.3.3.2]).

I am afraid however that I am unable to agree with Mr Fairhurst’s assessment of his paperwork as superb in relation to its claim for labour costs. Fairhurst does not have any invoices to support the claim for labour costs. Fairhurst relies upon Mr Fairhurst’s 2009 diary to arrive at his sub-contract labour costs for the period May through to November 2009. It is unsatisfactory however that Mr Fairhurst has not disclosed the cash book for the year commencing 1 December 2008, so that a cross-check could be made between his diary and that cash book. When asked why not he simply replied, unconvincingly it seemed to me, that he did not think it was relevant or important.

I have also already decided that I must reject Mr Fairhurst’s evidence that he did not keep a diary for 2010 or 2011. Fairhurst relies upon its cash books for the year commencing 1 December 2009 and 1 December 2010 to show the payments made to his sub-contract labour over that period. It also relies on its PAYE statements, which have been disclosed. Mr Fairhurst accepted that the cash book covered the whole of Fairhurst’s business, not just that relating to Aldford View. Whilst I am critical of the failure to disclose the diary, I do accept that there is no positive evidence from Mr Collins or any other source which indicates that Fairhurst was actually undertaking a substantial amount of work on other substantial projects over this period. In particular there is no evidence from the 2009 diary that in late 2009 Fairhurst still had other ongoing projects underway, and no reference in the communications from July 2010 onwards to Fairhurst working on other jobs, whereas (and in contrast) there is reference in later emails to Fairhurst taking on insurance repair work in 2011. My attention has not been drawn to invoices referring to work being done on other projects in 2010. If Fairhurst was indeed working on other substantial projects in 2010 then I would have expected Mr Collins to have been aware of it. If I had needed to decide the point I would have accepted that the substance of the claim is properly made out in that the claim does not include amounts, particular elements for labour, which relate to other projects. Whilst I have been critical of Mr Hopkinson’s reduction of the labour element down to £40,000 as being both arbitrary and unsubstantiated, it may in fact be that if I had been forced to decide between awarding labour costs in full or awarding nothing due to the probability that some small element of the costs related to other projects I might well have been tempted to adopt his figure, albeit for different reasons.

Who was in breach and in what respects as at early 2011? Was Fairhurst guilty of misrepresentation? Was Mr Collins’ decision to remove Fairhurst from site justified?

Fairhurst has always accepted that as at early 2011 it had run out of funds to complete the works, which is why it was unable to do so. I am satisfied that work had slowed through autumn 2010 and had come to a stop by mid December 2010 at the latest. I am also satisfied that notwithstanding Mr Fairhurst’s suggestions in his email correspondence of January 2011 that he was still exploring other sources of finance there was no realistic prospect of Fairhurst obtaining further funds at that time to allow it to complete the works, other than through some form of funding secured by Mr Collins on the property. Mr Collins, for perfectly understandable reasons, was not prepared to raise funds secured on Aldford View to provide a loan to Fairhurst.

I am also satisfied that even making the most generous allowance for matters occurring during the course of the development which would have justified an extension of time beyond the 6 months originally envisaged, Fairhurst was in breach of its obligation to complete the works within a reasonable time. I am conscious that I have not had the benefit of any detailed analysis as to the causes of delay and how those which were not Fairhurst’s responsibility impacted on the time for completion. I remind myself that it is for Mr Collins, as the party seeking to establish that Fairhurst was in breach of contract, to prove its case. I also remind myself that it is not the function of a judge, even a judge sitting in a specialist court such as the TCC, to speculate about matters where there is no evidence at all. However I can I am satisfied safely conclude here that even making the most generous allowance for delays due to poor weather and to variations the works ought to have been completed within 12 months of first starting, by mid May 2010 at the latest. It is plain in my view that the substantial periods of inactivity in early summer 2009 and in late 2010 through to early 2010, and the substantial period of reducing inactivity in autumn 2010 followed by the complete cessation of work in December 2010 are all matters for which Fairhurst and Fairhurst alone is responsible. It follows that as at January / February 2011 Fairhurst was in serious breach of its obligation to complete within a reasonable time.

In making these findings I reject Fairhurst’s case that Mr Collins’ breach in failing to pay the £30,000 upfront, and failing to pay for the variations at the time was the primary reason why it ran out of funds and thus was unable to construct the property within the agreed timeframe. This case falls at the first hurdle because I have already concluded that Fairhurst was not entitled to payment of the £30,000 upfront, as opposed to payment in instalments and was not entitled to payment upfront for the cost of the variations. I have held that if Mr Collins was in breach it was only in failing to make further payments of £8,000 over the period March to December 2010.

I should however, since this was extensively explored in the evidence, express my reasons for concluding that even if I was wrong in those two findings Fairhurst would still have been unable to make out its case as to the connection between the non-payment and the delay.

The first immediate difficulty with this argument is that since Fairhurst was expected to put £150,000 in and Mr Collins only £30,000, it would take some explaining to support an argument that the non-payment of the £30,000 at the outset could explain the prolonged delay in completion, so that by mid January 2011, some 1 year 9 months after the development agreement was concluded, there was still around £40,000 of work still to complete.

It is in order to meet that argument that Fairhurst advances the case that the failure to pay the £30,000 upfront impacted not only on its ability to complete Aldford View but also on its ability to complete and thus sell the Rhyl development properties, in circumstances where the proceeds of sale from Rhyl were essential to fund Aldford View. Mr Fairhurst’s evidence appeared to be that this was because monies which were otherwise needed for Rhyl were diverted to this project in order to make up for the shortfall and delay in payment of the £30,000.

However that explanation seems to be to be seeking to have it both ways – either one or other projects was delayed through lack of these funds but it is difficult to see how both could have been by delayed by lack of the same funds. Moreover, this explanation is inconsistent with Mr Fairhurst’s insistence in evidence that Fairhurst did not have a problem with monies, and had access to sufficient funds, until much later heading into late 2010 and early 2011. Thus in cross-examination Mr Fairhurst was insistent that in 2010 Fairhurst had access to, and had used, funds received from the sale of two of the Rhyl development properties, and had also had access to and used a £100,000 loan from Barclays specifically for this development. However if this is so, it is difficult to see how by late 2010 / early 2011 any initial failure to pay the £30,000 upfront, even coupled with a failure to pay for variations, could still have had any causative effect.

In fact the documentary evidence shows that:

Fairhurst has not provided any documentary evidence as to when the Rhyl properties were sold and how much was received. It would have been very easy to obtain the completion statements produced by the conveyancing solicitors and the bank statements confirming receipt of the funds into the Fairhurst Developments Limited bank account. In fact Fairhurst Developments Limited has refused to produce its bank statements covering this whole period. Whilst it is true that Mr Collins failed in a late application for specific disclosure of these records made to HHJ Raynor QC in 2015, that does not mean that I should not have regard to its failure to provide these records on standard disclosure or even on a voluntary basis when considering whether or not it has proved its case in this respect.

It appears to me to be clear that Fairhurst took on the project in the confident expectation that it could obtain sufficient funds and credit from various sources, including its bank, its suppliers, HMRC and Mr Collins, to fund the initial stages until the proceeds from the Rhyl development came in. Unfortunately for Fairhurst, the prevailing market conditions meant that the Rhyl properties did not sell as quickly as it had hoped. Mr Fairhurst’s evidence appeared to be that the first one did not sell until 23 December 2009; that was obviously a lot later than he had expected. He also explained that whilst others sold in 2010, 3 were sold on a deferred payment scheme so that Fairhurst received £100,000 less than expected. The end result, as Mr Fairhurst admitted in his email dated 21 January 2011 [DD1/22] is that funds had been drawn down “more slowly than first anticipated”. That is clearly an admission in my view that Fairhurst had been unable to obtain the funds from the Rhyl development at the times and in the amounts that had been anticipated in April 2009. He was cross-examined as to whether he stood by his further admission in that email that he accepted responsibility for some of the factors which had caused delay. He said not, but it is clear to me that he was being truthful at the time, as he was in his email of 3 days later [DD1/41] where he accepted that the overspend was in part caused by his own “inexperience on such a large project”. Under cross-examination he claimed that both statements were made when he was seeking to cajole Mr Collins into continuing with him with the project, but I do not accept this, and in my view he is now seeking to resile from these statements because he perceives them as damaging to Fairhurst’s case.

In short, I am completely unpersuaded that Fairhurst has established that a failure to pay the £30,000 when allegedly due, even coupled with a failure to pay for variations when the work was done, could be an explanation or justification for Fairhurst’s inability to proceed with or to complete the works from December 2010 onwards.

However I do not accept Mr Collins’ argument that Fairhurst was also guilty of misrepresentation. The evidence is very far from establishing in my view that Mr Fairhurst made any specific representation as to Fairhurst’s means or that it gave any absolute contractual warranty to the effect that it could and would fund the development no matter what. Instead I am satisfied that Mr Fairhurst said, quite honestly and reasonably in the circumstances at the time, that he expected to be able to finance the development from bank borrowing until the Rhyl development completed when he would use the proceeds from that development to complete this project. It is clear from the documentary evidence that the bank was in principle willing to and did extend support to Fairhurst both in relation to Rhyl in 2009 and Aldford View in 2010. The problem was that the Rhyl development did not sell when Mr Fairhurst hoped it would, and Fairhurst was unable to obtain enough finance from other sources to keep the project funded to completion. I bear in mind the opinion evidence of Mr Bushell that Mr Fairhurst may have undervalued the true cost of the works and I am also satisfied that he had not really applied his mind to how he would fund extra costs and variations. The worst that this amounts to is a Micawberish optimism; it is very far in my view from being a misrepresentation. Mr Collins’ repeated insistence that Fairhurst was impecunious if not insolvent from the outset is completely misconceived; the reality is that Fairhurst was a lightly capitalised business which was reliant on good cash flow control to remain operational, but that is very different from being impecunious or insolvent.

It also follows that there is no foundation, even it was pleaded as to which I am far from convinced, that Mr Collins was ever entitled to rescind the contract for misrepresentation as is alleged in Mr Williams’ closing submissions [§37]. Indeed, as explained further below, even if Mr Collins was ever entitled to rescind the contract for misrepresentation or to treat the development agreement as discharged for repudiatory breach, the fact is that Mr Collins never purported to do so in February 2011 or thereafter at any time prior to issue of proceedings or, clearly, in its pleaded case. Instead Mr Collins’ position has been that the development agreement subsists and that he has been and is performing his obligations under the agreement, but that due to Fairhurst’s alleged breaches there is nothing due to it once all matters have been brought into account.

At this stage I should also record that in [§38-41] of his closing submissions Mr Collins has advanced for the first time an entirely unpleaded case raising undue influence. Even if it had been pleaded and raised at trial it would have been hopeless; it is quite inconceivable that the relationship between Mr Collins and Mr Fairhurst, being no more than one of loose friendship and mutual commercial self-interest, could ever fall into any category of relationship where undue influence may be presumed. There is no evidence of any relationship of trust and confidence in the specific sense in which that expression is used in undue influence cases, and no evidence of any undue pressure being placed on Mr Collins to enter into the development agreement, let alone of him succumbing to any such alleged pressure.

Returning to the position as at January and February 2011, I am as I have said satisfied that Fairhurst was in serious and persistent breach of the development agreement. It had failed to complete the works within any reasonable time and was unable to do so because it simply did not have the funds to do so. It was asking Mr Collins to give it time to obtain funds, without giving any indication as to when it could do so, and when the only concrete proposal it had made was that Mr Collins should charge the property to enable it to raise further fund to complete the development, in circumstances where Mr Collins was under no obligation to do so.

I am satisfied that in such circumstances Mr Collins would have been entitled to regard such breach as repudiatory, and to elect to treat the development agreement as discharged by reason of Fairhurst’s breach. In the context of this case the effect of so doing would have been to justify Mr Collins in: (a) removing Fairhurst from site and refusing to call for or to accept any further performance by Fairhurst of its outstanding obligations under the development agreement; (b) completing the outstanding works himself; (c) refusing to pay Fairhurst anything from the proceeds of sale, whether payment for works done or in respect of profit share, on the basis that Fairhurst had, by its own breach, failed to perform its obligations precedent to its entitlement to such payment.

In fact, however, although Mr Collins did on 28 February 2011 make it clear that he was going to complete the works himself and exclude Fairhurst from site, at no time did he state in clear or unambiguous terms that he regarded himself as discharged from any liability to pay Fairhurst for its costs or for any profit share once the property had been completed and sold. Instead, it is clear from the correspondence that he was stating that once the property had been completed it would be sold and there would be a final accounting and division of the proceeds. The parties continued through 2011 to correspond on the basis that this is what would happen. Furthermore, Mr Collins continued to press Fairhurst to continue making contributions to the mortgage payments, and accepted payments, in circumstances where he was contending that Fairhurst was obliged to do so under the development agreement as varied.

The question of acceptance of repudiatory breach and affirmation is addressed in Chitty on Contracts (32^nd 2015 edition) at [§24-001 to 017]. The question in this case is whether what Mr Collins said and did amounted to a communication of acceptance of repudiatory breach or an affirmation. There is, as Chitty recognises, a middle ground where a party will be allowed a reasonable time to decide what to do. However there will come a time, the duration of which will depend on the circumstances of the case, where a failure to make it clear to the contract breaker that the injured party is treating the contract as at an end will in itself amount to an affirmation.

Here, Mr Collins can argue that his communicated decision to undertake the completion works himself and then to exclude Fairhurst from the site amounts to an acceptance of repudiatory breach or, at the very least, was not tantamount to an affirmation of the development agreement. If that was all that Mr Collins had said and did, then I would be inclined to accept at least the latter argument; it would not have been necessary to state in terms that Mr Collins was also not going to pay Fairhurst anything once the property was completed and sold come what may. However that is plainly not what Mr Collins said and did at the time; instead he was making it clear that he wanted Fairhurst to continue to perform what he asserted was its obligation under the development agreement to continue to contribute to the mortgage payments and he was also making it clear that he accepted that there would, after the works had been completed and the house sold, be a final reconciliation of costs and ascertainment of profit share.

Mr Collins has not said that he did not know that he had the legal right to decide whether or not to treat the whole of the development agreement as discharged. Even if he did not, as a layman, know of the doctrine of repudiation and acceptance or affirmation, I am satisfied that he knew enough from his experience of business and property development to know that he had the option of ending the whole contract or keeping it alive whilst completing the work, and that he chose the latter. In relation to affirmation, Mr Collins’ motives in choosing the latter course are irrelevant, as is the question whether or not Fairhurst suffered any prejudice as a result. In fact it appears to me that Mr Collins’ motive for adopting and communicating a conciliatory approach was not to fan the flames any further; it was not in his interests to tell Fairhurst that he was tearing up the development agreement and not going to pay it anything whatsoever because he wanted to retain Mr Fairhurst’s co-operation both generally and specifically in making further mortgage contributions. It also seems to me that Fairhurst did act to its prejudice in making further mortgage payments in autumn 2011, in response to Mr Collins’ suggestion that this would enable him to fund external works and promote the prospects of sale. Furthermore, I have no doubt that if Mr Collins had made it clear, whether in January / February, May or September 2011 that he was treating the development agreement as at an end and would not be paying Fairhurst anything further, Fairhurst would immediately have consulted solicitors and brought proceedings at the time, instead of not taking steps to prevent Mr Collins from moving into the house and allowing Mr Collins time to seek to sell it. Finally, in my view the correspondence and conduct of the parties in autumn 2011 is, considered objectively, only consistent with Mr Collins, having had more than sufficient time to decide what to do about the development agreement going forwards, electing to keep it alive.

Even if I am wrong about that, it is clear that Mr Collins did not respond to Fairhurst’s pre-action letter by contending that the development agreement was at an end. Moreover, whilst as I have stated neither the DCC nor the ACC are completely clear or consistent in their terms, what is clear is that Mr Collins did not, at any point in those statements of case, plead in clear and unambiguous terms that he had elected, or now elected – even if he still could - to treat the development agreement as having been discharged due to Fairhurst’s repudiatory breaches. To the contrary, Fairhurst’s right to recover its costs and its profit share, albeit reduced on account of its alleged breaches and their consequences, was expressly recognised.

In such circumstances I am satisfied that there is no question of the development agreement having been brought to an end by Mr Collins due to Fairhurst’s repudiatory breached; he either affirmed the contract or is to be treated as estopped from contending to the contrary, and that is the basis on which I must decide the case. It also follows that it is open to Fairhurst to argue, as it does, that Mr Collins’ own occupation and/or re-letting of Aldford View and his alleged continued failure to market and sell it themselves amount to breaches of the development agreement, and it is to that argument that I now turn.

Has Mr Collins acted in breach of contract and/or trust since May 2011?

I have taken May 2011 as being the point in time when Aldford View was sufficiently completed for Mr Collins to furnish and move into it and to hold an open day for viewings.

The questions are: (a) whether Mr Collins has taken reasonable steps to market and sell Aldford View; (b) whether the property is saleable at the present time and, if not, why not; (c) whether Mr Collins’ conduct in moving into and occupying and subsequently renting out Aldford View are consistent with his obligations under the development agreement. At this point I must also consider the question in the light of the trust obligation which Fairhurst has pleaded and which Mr Collins has admitted existed, to hold the property on trust for sale for himself and Fairhurst in proportion to the terms of the development agreement.

Has Mr Collins taken reasonable steps to market and sell Aldford View?

There is something of a paucity of evidence about this. I have been provided with copies of sales particulars used by the estate agents instructed by Mr Collins, a local firm known as Thomas Property Group, associated with Rightmove, with whom Mr Collins had contacts. The brochure shows Aldford View in its pristine state, prior to Mr Collins staging the property and moving in.

It is clear that there was no immediate interest, and as early as September 2011 Mr Fairhurst was suggesting in email correspondence [DD1/4] moving estate agents. However, when Mr Collins gave reasons why he thought they should stay with Thomas, Mr Fairhurst did not disagree. By November 2011 Mr Collins had instructed another local estate agency, Minchin Fellows, who had produced draft particulars which both men were impressed with [DD1/1-2]. The particulars [DD1/106T] showed the property in its now furnished state. Rather surprisingly however it appears that Mr Collins decided not to proceed to instruct these estate agents in place of or additional to Thomas, and it appears that Thomas did not update their brochure to show the property in its furnished state until some time later.

Mr Fairhurst has also suggested that the For Sale board produced by Thomas was hidden in an out of the way location, and I am satisfied from the photographic evidence and the evidence of Mr Fairhurst that this is the case. Mr Collins has not provided any disclosure as to his dealings with the estate agents nor has he provided a statement from them explaining the steps they have taken and the interest which has been shown.

Mr Fairhurst’s case is that Mr Collins has demonstrated no interest in selling Aldford View, because he was perfectly happy to move in and rent out his private residence Poplar Cottage. Mr Fairhurst suggests that this was always the plan. I do not accept that it was always the plan. However I do accept that at the beginning of 2011 Mr Collins took the deliberate decision to move into Aldford View once it had been completed, whilst renting out Poplar Cottage. I do not accept Fairhurst’s suggestion that Mr Collins had taken the deliberate decision not to sell Aldford View at this stage. I am satisfied that he would happily have sold Aldford View in 2011 had an acceptable offer been made for it. I do however accept that Mr Collins having rented out Poplar Cottage and moved into Aldford View was now in a much stronger financial situation than he had been, with his mortgage payments on Aldford View being covered, so that he had nowhere near the same financial incentive as did Mr Fairhurst to sell Aldford View sooner rather than later. I am also satisfied that after a time Mr Collins perceived it as being in his interests, especially once litigation was threatened and then begun, to take no active steps to market and sell the property, other than simply to leave it on the estate agents’ books. He was not even interested in ensuring that the estate agents particulars contained updated pictures of Aldford View in its “staged” state, despite his insistence that he had done this on advice specifically with a view to making it more attractive and more marketable.

I am also satisfied that Mr Collins’ decision to let Aldford View to tenants in autumn 2014 was taken in the conscious knowledge that it would make Aldford View all but unsaleable at any acceptable price. Mr Collins knew full well, as he admitted, that Aldford View would effectively be used as a house in multiple occupation. He must I am satisfied have known that this would mean that Aldford View would never look remotely attractive to anyone willing to pay a premium for a newly finished upmarket detached residence. He has never explained his reasoning other than to suggest that it was because of difficulties in letting Poplar Cottage. The inevitable inference is that whilst he was willing to take a risk in letting Aldford View on such a tenancy he was not willing to take a similar risk in letting Poplar Cottage on similar terms.

I should also refer to Fairhurst’s criticism of Mr Collins’ dealings with Building Control and the Environment Agency. In short, it is said that Mr Collins has deliberately stirred up trouble with a view to ensuring that Aldford View cannot be sold due to the absence of a final certificate issued by Building Control and the correspondence from the Environment Agency as to the need to take steps to address the escape of sewage from the site. I do not accept this. I accept that Mr Collins has acted in some ways unwisely in seeking to persuade Building Control and the Environment Agency to support his criticisms of the drainage design and installation. However I am satisfied that this is because Mr Collins genuinely believes, not without cause as I have found, that there are real problems with the system which must be addressed and resolved, and which he genuinely believes are Fairhurst’s responsibility. I do not consider that Mr Collins is cynically manufacturing a problem so as to ensure that he wins this case and maximises his return, whereupon he will quietly forget about the problem.

Can the property be sold at the present time and if not why not?

Mr Collins claims at WS2§33 that in the absence of Building Regulations approval the property cannot be sold and that this is not his fault.

However, having regard to the conclusions I have reached as regards the defective work, and in particular my conclusions in relation to the foul and surface water drainage system and the position of Building Control and the Environment Agency in relation thereto, I am satisfied that there would be no difficulty in Mr Collins obtaining Building Regulations approval once appropriate remedial works are undertaken. I accept Mr Moran’s evidence that as regards the outstanding matters identified by Building Control in the letter dated 15 May 2014 [BC28] they will either be satisfied once the remedial works are undertaken or, insofar as any remain Fairhurst’s responsibility, could without difficulty be addressed by his proposal of a constructive meeting between someone such as Mr Whittle and a representative of Building Control.

When asked about this, Mr Collins said that his reasons for not undertaking appropriate remedial works related to the existence of this litigation, being firstly Fairhurst’s steadfast refusal to accept that any such defects exist, and a desire not to cover over the allegedly defective work, and secondly the financial pressures exerted by the litigation. Whilst not wishing to minimise the impact of litigation such as this on a private individual such as Mr Collins, I am unable to accept these explanations, for the following reasons:

In the circumstances it is my conclusion that Mr Collins has failed without reasonable excuse to take reasonable steps to undertake the necessary remedial works since May 2011 and is in breach of his obligations under the development agreement and the trust as a result insofar as the consequence of that is that Aldford View is unsellable.

I reach the same conclusion in relation to Mr Collins’ assertion at WS2§34 that since the Architect’s Certificate has been withdrawn the property cannot be sold. It is true that in November 2012 Mr Gratton wrote to Fairhurst, copied to Mr Collins as occupier, to say that due to non-payment of his fees the building warranty was being withdrawn. Mr Gratton has still not been paid in full by either party, although he has been paid £400 by Mr Collins. His fees ought to have been paid by Fairhurst in the first instance, although I am satisfied that since this was not part of the original estimate they would have been recoverable as an extra. However it is plain from Mr Gratton’s evidence that there is no obstacle to cover being reinstated so long as Mr Gratton is able to inspect to confirm that all items have been satisfactorily completed and the outstanding fees paid. It appears from the statement of account sent by Mr Gratton to Mr Collins in December 2012 [C1281] that the outstanding cost is £1,106.09 plus interest and a further inspection fee of £267.90 and thus, in context, a relatively modest amount.

In closing submissions [§66] Mr Collins submitted that a difficulty was that Mr Gratton had not been able to inspect or thus guarantee the works up to dpc level. However this was not put to him and, in any event, the document relied upon, being the inspection certificate dated 5 March 2010 [C/1283] records, correctly, that the foundations and works up to dpc level had been inspected and approved by the building inspector. All that Building Control require – see the letter dated 15 May 2014 – is verification as to the suitability of the materials used below dpc. Insofar as this relates to the frost resistant bricks it is addressed above; insofar as it relates to anything else there is no evidence that this could not be provided. This is a paradigm example of an issue which could easily be resolved by a meeting between someone such as Mr Whittle and a representative of Building Control.

It follows, I am satisfied, that this is not and never has been a significant obstacle to sale, on the basis that once the necessary repairs had been undertaken by Mr Collins he could have arranged to pay Mr Gratton and obtain the certificate.

In all the circumstances I can and do conclude that Mr Collins has not taken the steps which he ought reasonably to have taken to market and sell the property over an extended period from May 2011 onwards.

Was Mr Collins’ conduct in moving into and occupying and subsequently renting out Aldford View consistent with his obligations under the development agreement and trust?

I can deal with this shortly given the findings I have already made. In short, I am not satisfied that moving into the house with his family would have been inconsistent with his obligations under the development agreement if Mr Collins had at the same time continued to make assiduous attempts to sell Aldford View as a developer in occupation. If Mr Collins has granted a tenancy to a reputable family on strict terms as to their upkeep of Aldford View and their willingness to allow viewings then I would not have regarded that as a breach. However I am satisfied that after 12 months of occupation without selling Aldford View, and then deciding in effect not to make any concerted effort to market or to sell Aldford View, what was at first reasonable became unreasonable and amounted to a breach of contract and/or trust. I am also satisfied that the grant of a 12 month tenancy agreement to allow Aldford View to be used as a house in multiple occupation was a breach, in that what has in fact happened was all too foreseeable, namely that Aldford View has deteriorated in condition such that there is no realistic prospect of it being sold for the best achievable price in its current state.

What substantive order should be made to give effect to my conclusions in §11 above?

As I have already indicated, in my summary of the pleaded cases, the question as to what orders should be made to give effect to the conclusions I have reached is one which involves the exercise of discretion as regards the claims for specific performance and in relation to the breach of trust. All parties agree that finality is preferable, as long as that finality is in their favour. However, given that on any view steps need to be taken at cost to one or other or both parties before Aldford View can be sold at the best achievable price, and given that it is impossible to predict when a sale might be achieved or (in the absence of valuation evidence) at what likely price, it is not quite so easy to achieve finality as to wish it.

Having raised this question before receiving closing submissions, the position of the parties in their closing submissions was as follows:

Fairhurst’s preference [§66] is to be to order an immediate valuation and then to assess the total amount payable to Fairhurst as damages, leaving it to Mr Collins to deal with Aldford View thereafter as he saw fit.

Fairhurst’s alternative case [§67-68] is that if there is to be a sale it should have conduct of the sale. Fairhurst appears to accept that if this is to happen it will have to undertake the remedial works, and makes the point that if it is do to do so then it would not be right to allow Mr Collins to recover the cost of the defects since that would be to allow double recovery. Fairhurst does not engage with the question as to whether or not it is in a financial position to undertake (and thus to finance) these works up front. It also does not engage with the question as to whether or not it would be right to allow Fairhurst to remedy defects for which it is responsible and for which it has in large part denied responsibility throughout this litigation. It appears to submit that it would be entitled to additional payment for the work involved. That, however, plainly cannot be right insofar as the defects are those for which Fairhurst is responsible in breach of the development agreement, as opposed to further works which are necessary to put the property in a state fit for sale.

Mr Collins’ case in closing submissions [§178-185] is to invite the court to reject any attempt to adjourn the quantification of the claim to obtain valuation evidence and to assess the value of the house as being a maximum of £750,000 assuming no defects, and no more than £500,000 as it is and to proceed to decide the case accordingly. In [§179] of his closing submissions Mr Collins refers to a valuation of £775,000 of Aldford View in good condition, but this has not been disclosed nor was it referred to in the evidence for trial. He also refers to evidence as to the advertised sale price of the adjacent property but, again, there has been no prior disclosure of this nor was it part of the evidence for trial.

Mr Collins also submits [§183, 187] that he intends and will be in a position to undertake the remedial works going forwards and, if necessary, will undertake to do so. He objects to Fairhurst having conduct of the sale [§189], and makes the point that this could result in the mortgage company taking steps to protect their position.

In my view the most appropriate course is to adopt Fairhurst’s primary argument, to decline to make any order for specific performance or for enforcement of the trust and, instead, to award Fairhurst damages for Mr Collins’ breach of the development agreement in failing to take proper steps after May 2011 to market and to sell the property. Those damages would thus include the assessment of the profit share to which Fairhurst would be entitled which, in the absence of an actual sale, could only be assessed by resolving any dispute as to its saleable value by hearing valuation evidence as to the open market value of the property in assumed good condition as at 1 February 2016 (and in particular with the benefit of the full extent of the plot, with all the defects referred to in this judgment remedied, with the benefit of all necessary statutory and other certificates, and with the property brought up to the condition one would expect from a property which had been occupied only by a family of good standing as their private residence and properly maintained since completion).

I am in no doubt that I should decline to accept Mr Collins’ invitation to assess the value by reference to the arguments and evidence he seeks to adduce in closing submissions. Insofar as he might object that it was for Fairhurst to obtain and adduce relevant evidence at trial in relation to the property’s value I reject that on the basis that the pleaded case always included a claim for a declaration that the reasonable and realistic sum should be determined by an appropriately qualified surveyor. Furthermore, perhaps more importantly, it is plain that neither party nor the court has approached case management or trial on the basis that any dispute as to valuation would have to be raised and determined at this trial or not at all. Even assuming that both parties intend to obtain their own valuation evidence and that there is a dispute that can still be resolved in 1 or 2 days of trial time, within a short time frame, and at relatively modest additional cost, which would be dwarfed by the further time and costs which would almost certainly be expended if I was to proceed down the route of making some order for specific performance or the like – see below. Accordingly it is in line with the overriding objective for me to adjourn the quantification of damages in accordance with directions to be given at the hearing to take place hand down judgment. I will consider making an order for sequential exchange of expert evidence, with Fairhurst to produce its evidence first and for Mr Collins to respond, with (of course) a joint meeting and statement of experts. I will also require the parties to make enquiries as to the cost of obtaining valuation evidence and file and exchange costs budgets going forwards (including Mr Collins albeit that he is a litigant in person) so that I can costs manage this remaining element of the case.

In reaching this decision I bear in mind that a particular disadvantage of making an order which would require either Fairhurst or Mr Collins to undertake the specified remedial works prior to seeking to sell Aldford View would be that it would present fertile ground for further disputes which would, given the history of this litigation, inevitably arise, as to whether or not the remedial works had been fully and/or properly undertaken, and as to whether or not the party with conduct had fully and/or properly addressed matters of regulatory compliance and, if not, with what motive. Those disputes would inevitably be said to have an impact on the best achievable sale price and would probably require further input from experts, potentially the building surveyors, quantity surveyors and valuers, to resolve. In short, it would encourage one or other or both of the parties to seek to engage in a further expensive trial of the issues. To that would doubtless be added further disputes as to the marketing of the property and the proper sale price and, potentially, the terms of sale. Such disputes could well lead to any prospective purchaser losing interest. None of this would be in the interests of the parties, let alone of other court users.

Fairhurst’s claim and losses

The value of the works

Given my findings above I am satisfied that Fairhurst should recover the value of the works, including variations, total £202,450. However from this Mr Collins is entitled to deduct and to be paid the cost of completing the outstanding works (£40,115) and the cost of remedying the defects (£16,806.90), total £56,921.90. The net amount which Fairhurst will receive for the works is, effectively, £145,528.81.

This award subsumes within it any claim for the unpaid balance of the £30,000, on the basis that to allow Fairhurst to recover a valuation based on the total contract sum plus a contribution to that sum would be to allow double recovery.

Interest on the above

Fairhurst is entitled to advance a claim for interest but it would have to persuade me that but for Mr Collins’ breaches of the development agreement Aldford View should have sold before now. The question is whether that can be established on the balance of probabilities. In the absence of clear evidence to that effect I am unable to reach such a conclusion. I note that in the 12 month period to June 2012, when I am satisfied Mr Collins would have been ready, willing and able to sell Aldford View had a willing purchaser emerged, there was no interest. Thereafter and up to October 2014 when Mr Collins and his family moved out, whilst I have found that the property was not being actively marketed it was still on the estate agent’s books without apparent interest. It is of course the position that since 2011 the market for properties of this kind has been a difficult one. I do not think that I can be satisfied that Fairhurst and Mr Collins would have been willing to sell the property for a knock down price with a real impact on their profit share unless they had received professional advice that there was no realistic alternative.

In the circumstances I am not satisfied that Fairhurst has proved on the balance of probabilities that it could and should have received its costs any earlier than the current time and thus I am not satisfied that it is entitled to interest on such costs.

Is Fairhurst entitled to share in any notional occupation rent and/or actual rent achieved on Aldford View?

In my view Fairhurst is entitled to share in the benefit of what Mr Collins has obtained by occupying Aldford View rent free and subsequently by way of rental.

Having regard to the findings I have already made, I am satisfied that for the first 12 months from the end of May 2011 Mr Collins cannot be criticised for occupying Aldford View with his family whilst attempting to sell it. However after that I am satisfied that his occupation cannot be justified by reference to any genuine continuing intention to sell, and therefore that he ought to disgorge a half share of the benefit received. I do not have any information as to the rental value which Aldford View could have commanded from 1 June 2012 to 1 October 2014, from when £2,500 pcm was achieved, but I do note that in his email of 10 May 2011 Mr Collins said that the rental achieved on Poplar Cottage would be £2,300 pcm.

In broad terms, based on the limited information I have, I am satisfied that I should assess the value of the occupation rent from 1 June 2012 to 1 October 2014 as being £2,300 and thereafter as being £2,500. Insofar as Mr Collins complains that he could not have obtained the same rental to a family on Aldford View as he did on Poplar Cottage he has adduced no evidence to support such an argument.

From 1 June 2012 to 1 February 2016 (a total of 32 months) the benefit obtained was £2,300 for 16 months (£36,800) and then £2,500 for the remaining 16 months (£40,000), producing a total of £76,800, of which Fairhurst’s half share is £38,400. This liability will continue on a monthly basis at £1,250 until either Aldford View ceases to be occupied (whether by Mr Collins or tenants) or it is sold or damages finally assessed, whichever occurs sooner. If Mr Collins complains that this ignores the cost to him of occupying and renting out Aldford View, he has produced no evidence of any such costs. I am satisfied for reasons given below that he cannot invite the court to consider costs incurred or losses made in relation to Poplar Cottage. It must be remembered that it was in my judgment a breach of an admitted trust for Mr Collins to act in this way. I am also satisfied that Mr Collins cannot seek to deduct his continuing mortgage costs against this liability for substantially the same reasons as set out in paragraph 426 below, in particular the point being that these were costs which under the development agreement Mr Collins would always have had to absorb from his share of the net profit (in the same way as Fairhurst would always have had to absorb its cost of financing its own outlay), and he cannot complain if his mortgage costs are still continuing in circumstances where, as I have found, he has failed in his duty to take reasonable steps to market and sell the property after completion.

In the same way as with Mr Collins (see below) Fairhurst is entitled to interest on that sum at 1.5% pa from the mid-point, thus 16 months interest to 1 February 2016 amounts to 2%, total £768, and continuing until sale.

Mr Collins’ claim and losses

On the basis of the findings I have made and the approach I have taken there will be no actual division of actual profits, because Fairhurst will recover its notional entitlement by way of award of damages. However, to ascertain the damages to which Fairhurst is entitled to reflect its loss of profit it is necessary to ascertain what would be deductible from the net sale proceeds (and I will need evidence from the valuer or otherwise as to the costs of sale) in accordance with the development agreement.

The purchase price and stamp duty

These must of course be deducted, and amount to £450,000 plus £13,500, total £463,500 from the notional net sale proceeds. No further deductions fall to be made as regards any further costs incurred in connection with the original acquisition; see paragraph 167 above.

The cost of the works

The costs to which Fairhurst is entitled (£202,450) must also be deducted.

There is no basis or need to deduct the completion costs or the defect costs from this sum when computing the profit share. That is because: (i) the total cost of £202,450 is the cost which would have been incurred absent any breach by Fairhurst; (ii) Mr Collins will recover his completion costs and defect costs from Fairhurst separately and directly, so that in effect Fairhurst will have to absorb the total of these costs and Mr Collins will not lose out due to Fairhurst’s breach of the development agreement in failing to complete the works at all and without defects.

The payments actually made by Mr Collins in respect of the £30,000, namely £16,000, will be deducted, because he would have been entitled to repayment of his £30,000 contribution had the development agreement been performed as envisaged. Mr Collins is not entitled to recover the £16,000 already paid from Fairhurst, as he has contended, because his entitlement under the development agreement is to have his contribution repaid to him from the net proceeds of sale.

There is no basis for deducting any other monies from the net sale price given the terms of the development agreement. However that does not prevent Mr Collins from being awarded other amounts as damages and to setting them off against any liability which he may have to Fairhurst, and I now turn to these.

The cost of the completion and defect rectification works

As I have already said, Mr Collins is entitled to recover these sums, total £56,921.90, from Fairhurst.

The cost of financing the completion and defect rectification works

This raises the issue as to whether or not Fairhurst’s profit share ought to be reduced to 30% to reflect the cost incurred by Mr Collins in raising the funds to undertake these completion works. I am satisfied that since there was never any term in the development agreement which would allow him to do so, and since there was no suggestion or evidence that Fairhurst ever agreed to him doing so, the only way this claim could be advanced would be as a claim for damages by way of indemnity from Mr Fairhurst’s share of the profit on the basis that the cost of financing the completion works was a reasonably necessary and reasonably foreseeable consequence of Fairhurst’s breach in failing to complete itself.

The claim must be considered in the context of the position which faced Mr Collins as at the end of 2010 and early 2011, whereby he was – as I have found – entitled to conclude that Fairhurst was unable through lack of means to complete the works and that the only way of doing so was for him to take on the outstanding work himself. Mr Collins agreed to borrow £70,000 from Mr Wright which he intended, I am satisfied, would provide £20,000 for Mr Collins’ personal use and £50,000 for the envisaged completion works.

At that time he would still, I am satisfied, have been working on the basis that Aldford View should sell for in the region of £1M and that the costs would be around £650,000 - £700,000 (£450,000 plus £180,000 costs – on the basis that he could deduct the cost to complete from Fairhurst’s entitlement – plus stamp duty and sale costs), so that the resultant profit would be in the region of £300,000 - £350,000. It would follow that agreeing to pay Mr Wright 20% of the profit would mean a payment of in the region of £60,000 - £70,000, equating to something like a 100% return on the loan of £70,000. At that time Mr Collins would, I am satisfied, have assumed that the house could be sold within a year, with the consequence that the effective interest rate of the loan would be something like 100%.

On any view that was a startling commitment to accept, dwarfing even the £20,000 commitment which Fairhurst was discussing paying to obtain £50,000 to complete itself, and in my view Mr Collins could only maintain this claim if he could establish that he had no other viable option available to him.

I am satisfied that Mr Collins has wholly failed to satisfy me that he had no other viable option or, and if different, that it was in any way a reasonable step for him to take in the circumstances. I repeat the conclusions I have reached above about his reasons for not undertaking remedial works. I am satisfied that as at January 2011, at a time when Mr Collins had no knowledge of any alleged defects, whether with the drainage or otherwise, it would have made far more sense to raise money from a commercial lender, if necessary by short term bridging loan, to finance the completion works pending a full remortgage on completion than to take on the obligation to Mr Wright which he has. Mr Collins has disclosed his and his company accounts for 2011. I accept that they do not show a consistent pattern of substantial surplus funds. However neither do they paint a picture of destitution and certainly do not support – if this is contended – an argument that Mr Collins would have been unable to afford to take on a further modest mortgage liability. Mr Collins has suggested that his income from his business was affected by early 2011 due to the time and effort he was putting in on Aldford View caused by Fairhurst’s delay; however not only is there no accounting evidence as to this but it appears also surprising since at this point, whilst Mr Collins was pressing for performance by Fairhurst, he had not actually taken over the completion works himself and thus there was no obvious reason why his business should have been affected.

I am satisfied that Mr Collins decided to borrow monies from Mr Wright for two principal reasons. The first was his belief – misconceived as it transpires – that he could unilaterally deduct the 20% profit share from Fairhurst’s 50% entitlement so that it would be cost free so far as he was concerned. The second was his aversion to taking on any further secured lending. Whilst that may not in itself be unreasonable, in my judgment it is unreasonable if the consequence is that instead of doing what appears to be commercially the most sensible thing one takes on what is potentially a huge financial commitment, out of all proportion to the amount borrowed, and then seeks to visit the financial consequences of that decision on the other party.

In those circumstances I am satisfied that Mr Collins is not entitled to claim damages in this regard, and must satisfy whatever claim Mr Wright may have from his own share of the profit in due course.

However I accept that Mr Collins would in principle have been entitled to recover interest on his outlay in completing the work. Given that I am satisfied that he will incur a cost for obtaining the necessary funds, and would have done so had he not made the decision to borrow the money from Mr Wright, then in principle he ought to be able to recover interest on that money. In the absence of any other evidence it seems to me that I should award interest on the £40,000 at the conventional commercial interest rate of base plus 1% (see the discussion at 7.0.17 of the current White Book Service), thus at 1.5% for the time being, from 1 June 2011 (by which time I am satisfied that the expenditure was all incurred). Interest to 1 February 2016 (44 months) would amount to 5.5%, total £2,200, and would continue until the property is sold.

No claim is maintainable since these works have not as yet been undertaken. Insofar as Mr Collins might have wanted to argue that there will be costs associated in raising the funds to do these works he has failed to adduce any evidence in support and hence I am unable to award anything in that regard.

Bringing the property into a saleable state?

Mr Collins cannot recover these costs, because he cannot hold Fairhurst in any way responsible for the general wear and tear of Aldford View over the extended period he has lived there let alone for the deterioration since it was rented out. In that regard I note that Mr Collins extracted a £5,000 deposit from the tenants and, presumably, will be able to use some or all of that to make good any disrepair for which the tenants are responsible.

Nor can Mr Collins recover other elements of loss in relation to completion or defects which he has not pleaded in his Scott Schedule, or which were included at one stage but have subsequently been withdrawn, whether voluntarily or by court order, even if he has subsequently tried to add them to his claim in his closing submissions. This applies for example to Mr Collins’ claims that he has incurred costs of £10,000 in relation to second fix electrics and plumbing, that he has incurred costs in relation to the architect’s fees, in relation to Cam Gas, and in relation to planning costs (which were never Fairhurst’s responsibility anyway).

The mortgage payments

I am satisfied that Mr Collins is entitled to recover the mortgage payments made over the period of delay from May 2010, when I am satisfied that the works ought to have been completed, to May 2011, when Mr Collins moved into the property. That amounts to £18,741.60 (12 x £1,561.80).

I am not satisfied that Mr Collins is entitled to recover the mortgage payments after that date. He chose to rent out Poplar Cottage and move into Aldford View in order to generate income to pay his mortgage on Aldford View, and has achieved the same result subsequently by renting out Aldford View. At that point therefore he took action, on his case, to mitigate the continuing loss he was suffering as a result of the delay in completion. He now says that in fact due to problems with his tenants at Poplar Cottage he did not recover enough to cover the mortgage, and also lost the benefit of informal rent of £500 pcm received from his father for the use of an annexe to Poplar Cottage. However there are a number of reasons why this cannot avail him:

As against that Fairhurst is entitled to credit in the amount contributed to Mr Collins as regards mortgage payments, namely £13,793.

The net position, therefore, is that Mr Collins is entitled to a further £4,948.60.

There will also be interest on the above for 44 months from 1 June 2012 to 1 February 2016 (at 1.5% pa that totals 5.5% and hence £272.17), and continuing until sale.

Other pleaded losses

Mr Collins has also pleaded a claim for the costs incurred in instructing a “planning barrister and planning consultants” to deal with planning and environmental matters. This claim fails because:

Finally, Mr Collins has pleaded a claim for his loss of earnings whilst attending site and not at work. This claim, which Mr Collins accepted in cross-examination that he was not pursuing, would have failed anyway for a number of reasons:

Conclusions

It is precipitate to make any final or interim award of damages unless and until the question of valuation is resolved. In particular I accept that if the valuation shows that there will be a net loss rather than a net profit then I will need to consider how that is to be dealt with in terms of the parties’ respective entitlements. However it is also important to emphasise that whatever happens in the future, in terms for example of what actual costs are incurred by Mr Collins in remedying defects, in terms of what further costs are incurred by Mr Collins in addressing any concerns expressed by Building Control or the Environment Agency, and in terms of the actual sale price which may be obtained for the property, will have no impact on this judgment, because it is not open to the parties to invite the court to re-open matters which have been finally determined on the basis of the pleaded cases and the evidence and submissions placed before the court. That may rebound to Mr Collins’ advantage or his disadvantage, but either way neither part has a right to re-open issues. Given that I cannot make any final or interim award of damages, that means that I cannot deal with the overall question of costs either until after the question of valuation is resolved and a final monetary assessment can be made.

It may however be helpful for me to summarise the effect of the findings I have made thus far in tabular form and which will, I hope, be helpful in enabling the parties to understand the financial effect of the findings I have made.

I will, as I have said, deal with directions at the hand down hearing which is fixed for 5 February 2016.

Finally, I wish to express my gratitude to both counsel for ensuring that the trial was completed within the time allowed despite the myriad of issues which their respective clients wished to argue. I particularly express my admiration of Mr Williams for refusing to allow a fracture to his ankle, suffered during the course of the trial, from preventing him from continuing with the trial. In so doing he was acting in the best traditions of the independent bar. I also, and notwithstanding the criticisms made in relation to disclosure and the preparation of the trial bundles, wish to thank Fairhurst’s solicitors and Mr Collins for working hard to ensure that a manageable trial bundle was provided and that – for the most part - further documents were produced in sufficient number as needed during the course of the trial.