Relicpride Building Company Ltd v Cordara & Anor

An agreement retaining part of a purchase price pending completion of specified works must be construed as a whole and in its commercial context. Where the retention is held by solicitors as stakeholder and is intended to secure performance, the listed events are not necessarily absolute conditions depriving the vendor of the money indefinitely if one event will never occur. The purchaser may instead have an indemnity or set-off for loss caused by default, with the balance remaining payable as purchase money. A construction producing indefinite holding, return of the money plus damages, or double recovery is unlikely to reflect the parties’ objective intention. The appeal was allowed and remitted for assessment of loss and the amount, if any, payable.

Relicpride, the building contractor, appealed against the judgment of HHJ Bailey in the Central London County Court, which dismissed its claim for payment of a £35,000 retention from the purchase price of a house bought by Mr and Mrs Cordara.

The retention arose under interrelated sale, construction and supplemental agreements. The lower court held that the release clause imposed several preconditions, including completion of a section 106 agreement under the Town and Country Planning Act 1990, completion of snagging works and resolution of planning objections concerning air-conditioning units. Relicpride challenged that construction and argued alternatively that the Cordaras had elected to claim damages rather than rely on non-compliance. The central issue was whether the clause created absolute preconditions to payment or operated as security subject to any loss suffered by the purchasers.

1. Appeal allowed and remitted. The court allowed the appeal and remitted the case for assessment of the Cordaras’ loss and damage and determination of what part, if any, of the retention was payable to Relicpride.
2. Contractual interpretation. The agreements had to be interpreted objectively and as a whole. The question was what a reasonable person with the background knowledge available to the parties would have understood the language to mean.
3. Nature and purpose of the retention. The £35,000 was part of the purchase price, held by the purchasers’ solicitors as stakeholders. It was intended to provide security in the jurisdiction against failures by the vendor or contractor to complete outstanding works and planning matters. The Cordaras were required to give a reasonable opportunity for performance.
4. Effect of default. The clause did not make the retention permanently unavailable merely because one of the specified events failed to occur. Nor did it entitle the Cordaras both to retain or recover the money and to claim damages, which would produce double recovery. If the outstanding obligations were not performed and the Cordaras suffered loss, they were entitled to an indemnity or set-off for that loss. Any balance of the retention remained payable as the outstanding part of the purchase price.
5. The admitted failure to complete the works necessary to satisfy Camden’s objection to the air-conditioning units was sufficient to determine the appeal. It was therefore unnecessary to decide in detail whether the Cordaras’ damages claims amounted to an election. The absence of a completed section 106 agreement and the canopy issue did not require separate determination on the appeal.

• Court of Appeal (Civil Division): Allowed the appeal from HHJ Bailey’s judgment dated 30 August 2011 and consequential order dated 21 December 2011. Remitted the matter for assessment of loss and determination of the amount, if any, payable from the retention.
• Central London County Court: HHJ Bailey dismissed Relicpride’s claim, holding that the contractual preconditions for release of the retention had not been satisfied.