Bryant Homes Northern Ltd v Thompson

Land sold following exercise of an option — Whether parties to oral agreement bound by covenant contained in option but not in eventual transfer — Whether judge at first instance in error in finding for the respondent on the balance of probabilities — Appeal dismissedThe respondent owned land, upon which were sited three dwellings with septic-tank drainage. In 1994, he gave the appellant an option to purchase part of the land, on condition that the appellant would supply mains drainage to the retained land. The condition was expressed as a primary covenant relating to drainage for 20 houses and a secondary covenant in relation to the existing properties only. In 1995, the appellant exercised the option. The sale was completed by a transfer that omitted the primary covenant. However, the transfer did contain a clause similar to the secondary covenant, and incorporated the standard conditions of sale, which provided that any obligations in the contract that had not been performed at completion were to remain binding. The respondent maintained that it had been agreed orally that both parties were to be bound by the primary covenant, although it did not appear in the transfer. At first instance, the judge found, on the balance of probabilities, that the respondent would not have renounced his rights under the primary covenant, and that prior to the commencement of proceedings the appellant had acted as if bound by it. The judge noted in this context that the appellant had failed to call a primary witness of fact, and accordingly drew an adverse inference, following Wisniewski v Central Manchester Health Authority [1998] Lloyd’s Rep Med 223. He concluded that the parties had indeed made such an oral agreement, and found in the respondent’s favour. The appellant appealed on the ground, inter alia, that the judge had: (i) failed properly to examine the probability of an oral agreement having been reached between the parties; (ii) failed to establish the appellant’s motivation for keeping the primary covenant off its title; (iii) erred in concluding that the chronological sequence of events supported the respondent’s case; (iv) erred in drawing an adverse conclusion as a result of the appellant’s failure to call its witness, since it was only during the course of proceedings that his role in the matter became clear, and thus it was reasonable not to call him; and (v) failed to make clarify his findings of fact as to the disputed content of material telephone calls between the parties. Held: The appeal was dismissed. Although the judge’s findings of fact lacked clarity, he could not be expected to articulate every process in his reasoning. The appellant’s conduct prior to the commencement of proceedings was consistent with its belief in the survival of the primary covenant, and there was ample evidence to support the judge’s preference for the respondent’s case. He was therefore entitled to find for the respondent on the balance of probabilities. The judge was wrong to draw an adverse inference from the appellant’s failure to call a witness, since, following Wisniewski, there was a credible reason for that witness not to have been called. However, the error was not sufficiently substantial as to undermine the judge’s factual findings. John McGhee (instructed by Eversheds, of Birmingham) appeared for the appellant; Derek Wood QC and Stephen Pritchett (instructed by Cobbetts, of Leeds) appeared for the respondent. Vivienne Lane, barrister