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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Stolkin v Cave [2002] EWCA Civ 320 (4 March 2002) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/320.html Cite as: [2002] EWCA Civ 320

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE NEWPORT COUNTY COURT
(His Honour Judge Thompson QC)

		Royal Courts of Justice Strand London WC2 Monday, 4th March 2002

Monday, 4th March 2002

1. LORD JUSTICE BUXTON: I will ask my Lord to give the first judgment.
2. LORD JUSTICE LATHAM: The respondent is a builder on the Isle of Wight. He discovered a parcel of land for which planning permission had been granted for the construction of 24 houses and bungalows of which only one property had been built because of difficulties over drainage. He realised that there was a way in which the drainage problem could be overcome at modest cost. But he did not have the money to purchase the land. Through a mutual acquaintance, Mr Whale, he was introduced to the applicant, a chartered surveyor. The applicant was prepared to purchase the land and provide finance to enable the respondent to carry out the building work on the basis that the two of them would share the ultimate profit in equal shares. The idea was that each property would be marketed in such a way that the project would ultimately be self-financing from the proceeds of sales. The land itself was to be purchased in two tranches. In December 1996, the applicant purchased the first tranche for £145,000 and was given an option to purchase the second tranche for £174,000 within 18 months. The agreement between the parties to that effect was reached at or about the beginning of September 1996.
3. Work commenced on the site in 1997. By the end of November 1998, eight of the plots had been developed and sold; and the applicant had exercised its option in June 1992 to purchase the second tranche of land. By then, however, two separate problems had arisen. First, the respondent had been prepared to permit changes to the designs of the properties to accommodate the wishes of the purchasers, which had increased the build costs of a number of the properties. The respondent considered that these had, in fact, enabled the properties to be sold at an enhanced value. The applicant was, however, concerned that he was being required to finance increased build costs without proper accounting from the respondent which enabled him to control them. There was no doubt, as the judge found, that the respondent was not good at maintaining contact with the applicant in this respect. Second, the respondent was by November 1998 in significant financial difficulties.
4. The applicant was concerned about the relationship between him and the respondent for those reasons, but was dependant upon the respondent for the construction of the properties then being built. He clearly wished to bring their relationship to an end if he could; and in January 1999 there was a meeting at which the relationship was brought to an end. The applicant's case was that he was entitled to bring it to an end because of the respondent's failure to control the increased build costs, and to keep him properly informed. His case was that the parties agreed to bring the relationship to an end. The respondent's case was that the applicant wrongfully brought the relationship to an end.
5. In his judgment of 15th November 2001 His Honour Judge Anthony Thompson QC held that the applicant was not entitled to bring the relationship between the parties to an end. He held that there had been a contract between the parties which entitled the respondent to a one half share of the profits of the development. He did not expressly deal in his judgment with any distinction to be made between the development of the first and second tranches of the land, but the order that he made had the effect that the applicant was required to account for the profits of the development that had already taken place, and that there was to be an assessment of the lost chance, as it was put by him in argument after judgment, in relation to the development of the second tranche.
6. The applicant today seeks to appeal simply and solely in relation to that last aspect of the judge's order. It is submitted on behalf of the applicant that the judge failed to analyse the agreement between the parties correctly. If he had done so, he would have appreciated (by reason of findings that he himself had made) that there was no obligation upon the applicant to develop the second tranche of land. It follows that there was no obligation upon him either to employ the respondent or to share profits with him as claimed.
7. It is pointed out on behalf of the applicant that the judge was fully aware of the fact that in September 1996, at the time that the agreement was reached, the applicant did not wish to make a full outlay in relation to the land as a whole, but wished to give himself the opportunity to consider matters over a period of 18 months in order to determine whether or not to go ahead with the second tranche. The judge reflected that understanding in two clear passages in his judgment. It is accordingly said on behalf of the applicant that, the judge having acknowledged the existence of those uncertainties, and having further acknowledged in a further passage in his judgment the uncertainties over whether or not the applicant would wish to proceed at any given pace for development of the second tranche, it is open to him to challenge the judgment on the basis that the only conclusion that the judge should have reached was that there was no obligation in relation to the second tranche, which would require him to use the respondent and to share profits with him.
8. As I have already indicated, the judgment itself certainly does not make any finding in relation to the second tranche, which could be said to differentiate between the obligation of the applicant in relation to the first or the second tranche.
9. The explanation, as has been pointed out on behalf of the respondent, is simple. The parties made no distinction between the obligations each of them bore to the other under the two separate tranches. By the amended particulars of claim, the applicant asserted that the contract was for the construction of 23 houses in two phases, and in the re-amended defence and counterclaim that assertion is admitted.
10. It follows that there was no issue for the judge to determine as to there being any distinction between the obligations by the parties in relation to the two phases. It therefore not being an issue, the judge did not have that as an issue to determine. It is also relevant to note that the understanding as to the issues between the parties was carried through into the discussion after the judge's judgment, in which it is clear that the parties both accepted that the consequence of the judge's conclusion was that the respondent was entitled to an account of profits in relation to phase 1, and was entitled, in effect, to damages to be assessed in relation to the future development of phase 2; and agreement was reached and expressed in an order for the resolution of that by way of the appointment of a joint expert.
11. Accordingly, in my judgment there is no prospect of the applicant succeeding in any appeal against the judge's order in this regard.
12. LORD JUSTICE BUXTON: I agree. The judge in this case was faced with an extremely difficult task which, if I may respectfully say so, he discharged with care and diligence. It was no surprise to me to discover from the pleadings that the issue that it was suggested he had not properly dealt with in fact had not been an issue on the pleadings or between parties.
13. I agree with my Lord that there is no prospect of an appeal succeeding in this case. This application is therefore dismissed.
Order: Application dismissed with costs.