North & Anor v Brown & Anor

A contractual promise to provide money ordinarily requires the promisor to procure its transfer, rather than to perform a personal service. Unless the wording or nature of the contract makes personal performance essential, the promisor may arrange payment through a bank, company or other third party. This is vicarious performance of the promisor’s own obligation. It does not alter the contracting parties or give the third party contractual rights. It must be distinguished from assignment or novation. Principles concerning contracts involving personal skill, competence or qualifications do not automatically apply to agreements to pay money.

Mrs Clothier and Mr Brown signed a written loan agreement under which Mr Brown would make monthly payments, secured against her property, with interest and repayment on her death. The payments were arranged through a company controlled by Mr Brown and his then wife, and were recorded as wages although Mrs Clothier was not employed by the company. After her death, Mr Brown sought repayment from her estate.

The Oxford County Court, HHJ Charles Harris QC, rejected the claim, holding that the agreement required Mr Brown to perform personally and did not permit delegation. The appeal concerned whether payment by the company constituted vicarious performance of Mr Brown’s obligation, or an impermissible assignment or novation, and whether the nature of a money-payment contract required personal performance.

Appeal allowed. Lord Justice Lewison gave the judgment, with Lord Justice Stanley Burnton and Lord Justice Maurice Kay agreeing.

1. The county court had conflated vicarious performance with assignment or novation. Vicarious performance is a means by which one contracting party performs its own obligations through a third party. It does not give the third party rights under the contract or make it a contracting party. The distinction was explained by reference to Nokes v Doncaster Amalgamated Collieries Ltd [1940] AC 1014. The passages relied on below concerned substitution of a contracting party, not vicarious performance.
2. The agreement was one for the provision of money. Its essential object was to procure the transfer of money to Mrs Clothier. The depersonalised nature of money meant that the identity of the person or entity effecting the transfer was not material. Nothing in the wording or nature of the agreement precluded Mr Brown from arranging payment through his bank or company.
3. The principle in British Waggon Company and the Parkgate Waggon Company v Lea & Co [1879] LR 5 QBD 149, concerning work or services selected for individual skill, competence or personal qualifications, applied to service contracts. It did not govern a contract to pay money. Davies v Collins [1954] 1 All ER 249 (CA) similarly concerned services, namely cleaning an army uniform.
4. The company’s payments were referable only to the agreement between Mr Brown and Mrs Clothier and discharged Mr Brown’s contractual obligation. Any fiduciary accounting issue between Mr Brown and the company was separate and did not affect the claim against the estate.

• Court of Appeal (Civil Division): In [2012] EWCA Civ 223, allowed the appeal.
• Oxford County Court: HHJ Charles Harris QC held that Mr Brown’s obligations required personal performance and that he could not delegate them.