Sheriff Appeal Court dismisses inadequately pled claim by contractor seeking £110k from property developer

About this case:

• Citation:
  [2024] SAC (Civ) 24
• Judgment:
  External link
• Court:
  Sheriff Appeal Court
• Judge:
  Sheriff Principal N A Ross

LHP Solutions Ltd, the appellant and original defender in the action raised by contractor Spartan Specialist Services Ltd, argued that the case pled by the pursuer was so under-pled as to be materially prejudicial. The pursuer had sought £110,878.04 for works carried out for the defender in two properties in Ayrshire, and cross appealed on an aspect of its case rejected by the sheriff.

The appeal was heard by Sheriffs Principal Sean Murphy KC and Nigel Ross, along with Appeal Sheriff Thomas McCartney. Howie KC and Jain, advocate, appeared for the defender and appellant and Steel, advocate, for the pursuer and respondent.

Essential details

It was averred by the defender that it did not know or admit that the works claimed for by the pursuer had been carried out, but if they were it was under a joint venture agreement between the defender’s director and a director of the pursuers, as individuals. The contract was averred by the pursuer to be regulated by the Housing Grants, Construction and Regeneration Act 1996, with statutory payment provisions having been triggered in the absence of an agreed payment regime.

The defender sought debate on the basis it did not have fair notice of the basic elements of the alleged oral contract. It also challenged two alternative cases based on an implied term of reasonable remuneration in the event that the 1996 Act did not apply, and a case based on unjust enrichment. Following debate, the sheriff decided that the averments of contract and of unjust enrichment were sufficiently relevant and specific to give fair notice. He repelled the pursuer’s averments relating to payment under the 1996 Act as irrelevant.

Senior counsel for the defender submitted that the pursuer had failed to provide knowledge of elementary facts and context to the extent of material prejudice. The pursuer knew, or should know, what it intended to prove in relation to material dates, times, places, and persons present. None of these essential details had been shared, nor had an explanation been provided for why the sum claimed in unjust enrichment was reasonable.

It was accepted by counsel for the pursuer that there was no indication of when the contract was entered into. The lack of averment reflected uncertainty on the evidence, but this would be remedied in evidence at proof. Consensus must have been reached prior to the work beginning, and that date was pled.

Plainly hobbled

Sheriff Principal Ross, delivering the opinion of the court, said of the presence of consensus: “If the existence or extent of the oral contract is disputed, the party relying on contract must approach proof with a clear idea, and having given clear notice, of when consensus was reached, and the terms agreed. The defender must be informed of those facts in advance. The proof is an exercise in establishing, amongst other things, those essential points.”

He continued: “Flimsy pleading tends also to obstruct the analytical rigour required by, and of, the court. It is likely to be necessary to consider fine detail, such as the specific words used. That exercise may be the difference between a binding contract and a genuine misunderstanding, or an unjustified unilateral assumption. Consensus requires the knowledge and participation of all parties. While it would not normally be necessary to plead the fine details of a conversation, it is absolutely necessary that parties know where to look for them.”

Noting the lack of detail in the pursuer’s account of the contract’s creation, the Sheriff Principal said: “Looking at the specific averments in this case, the unanchored reference to ‘discussions’ creates further uncertainty. The pleadings give no hint as to the relevance of these to the contract. At common law, pre-contract negotiations are not a competent source of evidence to provide a gloss on the final terms of the contract. This unfocused pleading is likely to create the conditions for objections to inadmissible evidence during proof.”

He concluded: “In this action, the defender denies any contract, and pleads an alternative explanation for any works carried out. In our view the defender’s preparations are plainly hobbled by inadequate notice. It faces the near-impossible task of proving a negative, without limit of time, space or evidence. It is not given notice, far less fair notice, of the very foundation of the action.”

The appeal was therefore allowed, and the action dismissed.