Legal interpretation and causation key issues in Wol (London) LLP v Croydon Investments Limited case

Citation: [2024] EWHC 251 (TCC)
Judgment on

Introduction

In the case of Wol (London) LLP v Croydon Investments Limited & Ors [2024] EWHC 251 (TCC), the Technology and Construction Court (TCC) of the High Court of Justice considered an application by the First Defendant, Croydon Investments Limited, to strike out the Claimant’s Amended Particulars of Claim or alternatively grant summary judgment against the Claimant. This case touches upon several key legal issues, including contract interpretation, the scope of defects covered under a building contract and sale agreement, and principles of causation in construction defects. This article analyses the legal principles applied by Deputy High Court Judge Mr Roger ter Haar KC in his decision.

Key Facts

Wol (London) LLP (Claimant) purchased a property from Croydon Investments Limited (First Defendant) that later revealed substantial defects. The property had been developed by the Second Defendant based on a contract that included collateral warranties with both the Second and Third Defendants. The Claimant alleged that the First Defendant failed to ensure that defects were rectified as per the Sale and Purchase Agreement (SPA) and sought to recover losses from the sale of the property at a reduced value due to these defects.

Croydon’s application hinged on three points:

  1. That the Claimant’s claim did not identify reasonable grounds;
  2. That the liability of Croydon was limited to “snagging” defects;
  3. That the Amended Particulars of Claim did not plead a sustainable case against Croydon on the grounds of causation.

The analysis began with the principle of “realistic” versus “fanciful” prospects of success as laid out in Easyair Ltd v Opal Telecom [2009]. An application for summary judgment should only succeed if the claim has no real prospect of success. The courts should avoid a “mini-trial” at this stage and must consider the evidence presented and what is likely to be available at trial.

The interpretation of contracts was a key legal issue, drawing on Arnold v Britton [2015] UKSC 26. It was important to give primary weight to the language of the provision being construed and to avoid invoking commercial common sense retrospectively. Facts known to both parties at the time of making the contract were relevant for interpretation.

The Judge also considered the concept of “entire agreement,” which emphasizes the primacy of the written contract over prior negotiations or understandings, in line with cases such as Prenn v Simmonds [1971] and Chartbrook v Persimmon Homes [2009].

Furthermore, the application by the First Defendant included arguments of construal of the SPA’s scope of defects, drawing on principles related to comparing different sections of the contract and considering the contractual and factual matrix at the signing of the SPA.

Outcomes

Judge ter Haar KC dismissed the application for summary judgment and strike out on the grounds of contract interpretation and the scope of defects, as there were realistic prospects of success in the Claimant’s interpretation of the SPA – that Croydon had effectively guaranteed the remediation of defects by the Second Defendant.

Notwithstanding, the court recognized Croydon’s point on causation; the Claimant had not explicitly detailed causation against Croydon in their pleadings. Instead of striking out the claim, the court ordered the Claimant to provide a re-amended pleading, clearly outlining their case against Croydon.

Conclusion

The Technology and Construction Court in Wol (London) LLP v Croydon Investments Limited & Ors has underscored the significance of clear and thorough pleading while simultaneously reaffirming foundational principles of contract law. The judgment also highlights the necessity for Claimants to articulate the causal link between the Defendant’s alleged breach and their loss.

The decision is a pertinent reminder that while collateral warranties may provide a route for recovery of damages, they do not preclude the existence of independent obligations under contracts of sale. As this case proceeds to a full trial, it is a reminder of the importance of the clarity in drafting contracts and the articulation of claims within pleadings.