Christiana Properties Ltd v Annauth

Compromise agreements made through agents are construed objectively from the natural and ordinary meaning of the contemporaneous communications. The identity of the contracting parties depends on what those communications conveyed. A person is not made a contracting party merely because a solicitor in fact acted for that person, where the agency was neither communicated nor reflected in the agreement. Correspondence identifying a named client in the singular may therefore establish that the agreement was made with that client alone. Post-contractual internal notes cannot alter the construction of the agreement. Questions concerning practical benefit and estoppel may involve factual matters, but those issues need not be decided where the appeal succeeds on construction.

Christiana Properties Ltd let a shop to Mr Annauth under a 15-year lease. After rent arrears accrued, the lease was surrendered but the liabilities were preserved. In January 2013, the appellant’s debt collection agency agreed correspondence providing for payment of the debt by instalments of £50 per month. The appellant contended that the agreement was made only with Mr Annauth’s sister, who was the guarantor. Mr Annauth contended that it also bound him.

Mr Recorder Levene, sitting in Winchester County Court, held that the agreement compromised Mr Annauth’s liability and dismissed the claim. The appellant appealed. The central issue was whether the January 2013 correspondence objectively established that Mr Annauth was a party to the compromise agreement.

1. The appeal was allowed on ground 2. The conclusion that Mr Annauth was a party to the compromise agreement was overturned. It was unnecessary to determine the remaining grounds.
2. The January 2013 documents were to be construed objectively. Their natural and ordinary meaning was that the agreement was made with the identified client, the guarantor. The correspondence was headed by reference to her, generally used the singular and feminine form, and described her as the person able to make the proposed payments.
3. Even if the solicitors were in fact also acting for Mr Annauth, that agency had not been communicated to the appellant or its agent. It was not reflected in the terms of the agreement and was contrary to their natural meaning. Earlier dealings in which the solicitors had acted for both individuals did not justify treating Mr Annauth as a contracting party.
4. The distinct liabilities of the lessee and guarantor, and the reasons why the appellant might negotiate with either, were less important than identifying what was actually agreed. A post-contractual internal note could not bear on the construction of the agreement. In any event, its plural references were ambiguous and it was not a communication between the contracting parties.
5. The court observed that the additional part-payment ground was not necessarily a pure issue of law, since questions such as practical benefit and estoppel could involve factual matters. Those issues were not decided. An alternative case based on estoppel by convention was also not before the court for decision because the judge had made no finding on it and there was no Respondent’s Notice.

• Court of Appeal (Civil Division): allowed the appeal on ground 2 and overturned the finding that Mr Annauth was a party to the compromise agreement.
• Winchester County Court: Mr Recorder Levene dismissed the appellant’s claim on 25 May 2016, holding that the compromise agreement bound both Mr Annauth and the guarantor.