Secker v Fairhill Property Services Ltd & Ors

A collateral contract may exist alongside a contract for the sale of land where it is not itself a contract for the sale of an interest in land and the sale is not conditional upon its performance. It must nevertheless satisfy the ordinary requirements of contract formation: offer, acceptance, consideration, intention to create legal relations and reasonably certain terms. An assurance that a builder is obliged under the NHBC scheme to remedy defects does not, without more, amount to a separate contractual undertaking owed directly to the purchaser. A claim based on an alleged collateral contract therefore fails where the evidence establishes reliance on an existing scheme obligation rather than a distinct promise.

The claimant suffered catastrophic spinal injuries after tripping on an exposed paving edge at her newly built home. She initially pleaded an implied contractual term and later obtained permission to add a claim based on an alleged collateral contract. The implied-term claim was abandoned at trial, and permission to add a tort claim and a claim under the Defective Premises Act 1972 had been refused.

The remaining claim alleged that the second defendant had promised, in return for the claimant buying the property, to remedy defects identified after completion. The central issue was whether that conversation created an enforceable collateral contract and, if so, whether it had been breached.

1. Claim dismissed. The claimant failed to establish the alleged collateral contract.
2. A collateral contract is not technically precluded merely because the principal transaction concerns the sale of land. The alleged collateral contract was not itself a contract for the sale of an interest in land and the sale was not conditional upon its performance: North Eastern Properties Ltd v Coleman [2010] 1 WLR 2715 at [43]-[54].
3. The ordinary requirements of contract formation applied. There had to be offer and acceptance supported by consideration, an intention to create binding contractual relations, and sufficient certainty to identify the parties’ obligations. Informal discussions need not use lawyerly language, but they must have adequate clarity.
4. The claimant’s evidence did not establish a promise by the second defendant to assume a direct contractual obligation to remedy defects if she bought the property. It established that he explained that, as an NHBC builder, he already had obligations to remedy defects under the NHBC scheme. The claimant relied on that scheme as her guarantee, rather than obtaining a separate undertaking.
5. The solicitors’ advice that special contractual conditions would be needed if the vendors were expected to remedy defects supported that conclusion. No such conditions were added.
6. The later evidence that the second defendant said he would come and sort out problems did not establish that the claimant agreed to buy the property in consideration of a separate contractual promise. Since no collateral contract existed, the claim failed.
7. Obiter, the court indicated that, had an appropriate contract and breach been established, the defendants would not have been assisted by Murphy v Brentwood [1991] 1 AC 398 or Lambert v Lewis [1982] AC 225. The court had not heard full argument and expressed no further conclusion.