Erith Holdings Ltd & Ors v Murphy

An oral agreement for waste-removal services may bind a company rather than its owner where the surrounding circumstances, invoicing and payment arrangements show that the company was the contracting party. Personal assurances that a company will pay its debt if it cannot do so constitute a guarantee, not an indemnity, because the promisor’s liability is secondary. A guarantee must comply with section 4 of the Statute of Frauds 1677. An unenforceable oral guarantee cannot impose personal liability. Where an enforceable contract governs the services, a parallel claim in unjust enrichment is unavailable.

The claimants provided waste-clearance services at a site operated by Murphy’s Waste Limited, a company owned by the defendant. They claimed payment from the defendant personally under an oral works agreement, a later revised agreement, an alleged indemnity or guarantee, and a loan arrangement. They also relied on correspondence between solicitors and advanced an alternative claim in unjust enrichment.

The defendant contended that the agreements and loan were made with Murphy’s Waste Limited, not with him personally, and that any alleged guarantee was unenforceable. The central issues were the identity of the contracting party, whether any personal obligation arose, the effect of section 4 of the Statute of Frauds 1677, and whether restitution was available despite the subsisting works contract.

1. The claimants’ claims were dismissed. The works agreement was made by Mr Murphy on behalf of Murphy’s Waste Limited and by Erith Holdings. The invoices were addressed to Murphy’s Waste Limited, and payments were made by that company. Those matters strongly supported the conclusion that the company, rather than Mr Murphy personally, was liable.

2. The October sale proposal did not alter that conclusion. It was subject to contract, did not allocate the deferred consideration between the land and the business, and did not state who would bear the clearance costs if the proposed transaction failed or proceeded on different terms.

3. The alleged revised works agreement was not established on the balance of probabilities. The claimed increase in clearance costs to £1 million was unsupported by contemporaneous documents and had not been communicated to the funders or solicitors.

4. Any assurance that Mr Murphy would pay if Murphy’s Waste Limited failed to do so would be a guarantee rather than an indemnity. The liability would be secondary, arising only upon the company’s failure to pay. Such an agreement could have been supported by consideration, since continued clearance benefited the company and the site, but section 4 of the Statute of Frauds 1677 required it to be in writing or evidenced by a signed memorandum. The alleged telephone guarantee was therefore unenforceable.

5. The £85,000 loan was made by Erith Haulage to Murphy’s Waste Limited. No personal undertaking by Mr Murphy was established. The solicitors’ correspondence did not amount to a clear and unambiguous admission of his personal liability.

6. The unjust-enrichment claim also failed. Although Mr Murphy had benefited from the works, an enforceable works agreement governed the services. Restitution was therefore unavailable.