Goodway & Anor v Zurich Insurance Co.

A Tomlin Order may contain implied terms requiring the parties to co-operate, exchange necessary information and act with reasonable speed where its factual and contractual setting establishes a partnering arrangement. Mandatory relief will be refused where the required works are inadequately specified, contractual procedural steps have not been followed, or the parties have mutually failed to implement the compromise. A claim for delay damages fails where the claimant was not ready or willing to perform and cannot show loss. Misrepresentation requires proof of an actionable representation, reliance and resulting loss.

Zurich sought enforcement of performance obligations contained in a Tomlin Order compromising earlier disputes with Mr Goodway and Carabos Ltd concerning membership of Zurich’s Newbuild indemnity scheme, remedial works and payment of £80,000. The claimants sought to set aside the Tomlin Order or recover damages for alleged misrepresentation. They also claimed damages for Zurich’s alleged delay in arranging surveys and issuing final certificates.

The court considered whether mandatory relief should have been granted, whether Zurich had breached the Tomlin Order, whether the settlement was induced by misrepresentation, and when Zurich could seek the outstanding £60,000.

1. The applications and cross-claims were dismissed. The court would not have granted Zurich mandatory relief even if its application had been maintained.

2. The Tomlin Order, read with the 1993 Newbuild scheme, gave rise to implied obligations of mutual co-operation, reasonableness and the exchange of necessary information. The parties were required to implement the arrangements as speedily and economically as reasonably possible.

3. Zurich’s application faced several substantive difficulties. The survey report did not specify remedial works with sufficient precision. It failed to distinguish investigative opening-up work from remedial work. Zurich had not served the required Form 8 notice, and the alleged drainage defect was not ultimately shown to require work. The parties had also mutually failed to implement the settlement, which made equitable relief inappropriate.

4. The claim for delay damages failed. Any delay was mutual. In addition, the claimants were neither ready nor willing to market the properties, provide the required security, undertake the recommended works or remain covered by the Newbuild scheme. Zurich’s delay therefore caused no recoverable loss.

5. The misrepresentation claim failed. No actionable misrepresentation was established. The relevant documents were privileged, did not clearly establish that Zurich’s claim was inflated or dishonest, and had not induced or materially influenced the settlement.

6. Zurich could require the claimants to state whether they would provide the £20,000 security. If they did so, final certificates could issue and the contractual period for payment would begin. If they refused, Zurich could treat them as in breach, claim the outstanding £60,000 without relying on the conditions precedent, and allow a reasonable period for payment.