Clutterbuck & Anor v Cleghorn

A claimant must prove the alleged wrong, causation and loss on the balance of probabilities. Serious allegations require cogent evidence, although the civil standard remains unchanged. In a commercial dispute, documentary evidence, admitted facts and inherent probabilities may properly be given greater weight than recollection of conversations. Contractual terms are construed from their language read in the documentary, factual and commercial context known to both parties when the contract was made. Commercial common sense may assist where language is genuinely uncertain, but cannot be used to rescue a party from a bad bargain. A claim based on delay must plead and prove the relevant delay, its cause, its effect and the loss said to result. Unsupported valuation, construction-defect and loss allegations cannot succeed.

The claimants alleged that they had been induced by fraudulent or negligent misrepresentation to enter into a joint venture agreement concerning the redevelopment of a London property. They also claimed £50,000 said to be repayable under the agreement and guarantee, damages arising from an additional borrowing facility, damages for delay, and damages for defective work.

The defendant, sued as judicial factor to the deceased developer’s estate, denied liability and relied on the contractual terms, causation, loss, pleading deficiencies and lack of expert evidence. The court determined the construction issues and the factual and evidential questions arising from each head of claim.

1. Misrepresentation. The claimants failed to prove the alleged prior agreement that the property had an agreed value of £3.45 million. The contemporaneous documents and their conduct were inconsistent with that case. They had seen, or through their solicitor had access to, the facility letter before signing the joint venture agreement. The misrepresentation claim therefore failed.
2. £50,000 claim. The £50,000 was advanced as a loan to WPL to fund the deposit required by the Grosvenor Estate. It was not deferred consideration payable under clause 1(e) of the joint venture agreement. Any repayment obligation formed part of the separate loan arrangement and fell outside the deceased’s contractual guarantee. The claim failed.
3. Equity release. The additional £1 million borrowing breached clause 5 of the joint venture agreement because it was not necessary to complement the agreement. The defendant’s estoppel argument failed: charging WPL’s interest in the property was materially different from the claimants’ charge over their own prospective interest. However, WPL was entitled to borrow further sums to obtain the balance of the Westbrooke Flats Value. In any event, the defendant proved that the deceased and his estate had funded the development by more than the equity release and associated finance costs, so no recoverable loss was established.
4. Delay and defects. The claimants failed to prove deliberate delay, that the property could and should have been completed and sold by March 2008, or that it would then have achieved £8 million. They also failed to prove that the alleged delay caused the claimed borrowing and interest loss. The defects claim failed for want of proper particularisation, expert evidence and proof that any defect caused a reduction in value.
5. The claim was dismissed in its entirety.

First-instance judgment. The judgment records earlier interlocutory proceedings and an appeal concerning other parts of the claim, but no appeal from the decision determined here.