Liberty Homes (Kent) Limited v Kanagaratnam Rajakanthan & Ors

A statement of case must identify the contractual basis of a claim with sufficient clarity for the defendant and court to understand the case to be met. This includes pleading how the contract was formed, its material express or implied terms, the works or services supplied, the sums claimed and how they were calculated. A final account need not be pleaded to the last detail, but basic facts cannot be left to expert evidence or pre-action correspondence.

An unpaid contractual debt does not, without more, establish unjust enrichment. The claimant must identify an established unjust factor. A guarantee is secondary liability and is unenforceable absent the writing required by Statute of Frauds 1667. Security for costs may be ordered where the claimant’s financial position and asset transfers satisfy the applicable rule, and a freezing injunction does not itself provide security.

The claimant brought multiple claims against members of two related families and associated companies arising from construction works, consultancy, rent and a loan. The defendants applied to strike out parts of the Particulars of Claim, obtain summary judgment on certain claims and obtain security for costs.

The applications concerned whether the contractual and restitutionary claims were adequately pleaded, whether alleged guarantees were enforceable, and whether the claimant’s financial position and transfers of property justified security for costs. The central issues were the minimum content required in a construction claim and the circumstances in which unjust enrichment or guarantee claims could proceed.

1. Strike out and pleading. The Particulars of Claim failed to comply with CPR Part 16 and its Practice Direction in several final account claims. They did not adequately identify the parties, formation and terms of the alleged contracts, the scope of works, the contractual basis of entitlement or the calculation of the sums claimed. The pleadings were struck out, but the underlying claims were preserved with an opportunity to re-plead.
2. A construction final account need not be pleaded to the last detail, but it must state the basic facts: the original scope and price, additional or varied works, the sums claimed for them and the contractual basis of payment. The claimant could not shift the burden to defendants by relying on correspondence, requests for further information or bare denials.
3. Unjust enrichment. An unpaid contractual claim does not itself establish an unjust factor. The claimant must identify a recognised unjust factor. The unjust enrichment claims in the Four Oaks, Foxley Lane, care-home and 14 Arden Grove claims therefore disclosed no reasonable grounds. The Loan and Consultancy claims were allowed a further opportunity because their unusual or unclear factual circumstances warranted clarification.
4. Guarantees. The pleaded references to standing in as guarantor or surety described secondary liability. No enforceable guarantee was pleaded or evidenced in writing. The relevant guarantee claims were struck out. The use of the word indemnity did not alter the substance of the pleaded case.
5. Security for costs. The requirements of CPR Part 25.13(c) and (g) were satisfied. The claimant had divested itself of substantial assets and had not shown that security would probably stifle the claim. A freezing injunction was not security for costs and did not neutralise the relevant risks. Security of £150,000 was ordered to the first case management conference, with liberty to apply for further security.