Rarity Holdings Limited and David Parkhill [2024] EWHC 1637 (Ch)

Charlie Newington-Bridges acted for the successful respondent in a contract appeal heard by Mr Justice Zacaroli J in the High Court in the case of Rarity Holdings Limited and David Parkhill [2024] EWHC 1637 (Ch).

The recent judgment of Mr Justice Zacaroli J in the appeal to the High Court in Rarity Holdings Limited and David Parkhill was provided in the context of the purchase of a property which had been placed in an auction, where the parties had agreed terms to purchase the property outside the auction. The purchase had not been completed and the issue on appeal was whether or not there had been a total failure of consideration.

Charlie, together with BPE Solicitors LLP (John Carter), was instructed both at trial and in the appeal. At trial it had been found that (1) the contract was void because it failed to comply with s.2(1) of the Law of Property (Miscellaneous Provisions) Act 1989 (by reason of the fact that the written agreement did not incorporate all the terms the parties had expressly agreed); (2) the contract was not made at a public auction (and was not, therefore, exempt from s.2(1)); and (3) the consideration for the payment of the deposit had wholly failed, so that Mr Parkhill’s claim in restitution to recover the deposit succeeded.

The appellant sought to appeal only the third conclusion. On this issue, the Recorder at first instance found as follows:

1. Mr Parkhill accepted in cross-examination that one of the conditions agreed upon when the deposit was paid was that the property was withdrawn from the public auction due to take place the following day;
2. There was, however, no evidence that Mr Parkhill wanted anything other than to secure the property at the price he had agreed upon.
3. The agreed basis of the transfer of the deposit was the transfer of legal rights in the property, and that had failed.
4. Accordingly, there was a total failure of consideration and Mr Parkhill was entitled to the return of the deposit.

In a judgment handed down on 27 June 2024, Zacaroli J held that that in order for a claim in restitution to succeed on the grounds of a “failure of basis”, the failure of basis must be total: see Goff & Jones, the Law of Unjust Enrichment, 10th Ed, at §12-16. As examples of cases where a buyer received benefits from the payment of a deposit to purchase a property additional to the transfer of legal rights in the property, so that there was no total failure of consideration, counsel for the appellant cited Sharma v Simposh Ltd [2011] EWCA Civ 1383, and Rabiu v Marlbray [2016] 1 WLR 5147. However, Zacaroli J found that there was no real prospect of establishing that Mr Parkhill received any benefit independent from and additional to the transfer of legal rights in the property. On a proper analysis, the benefits which counsel for the appellant relied on were benefits which simply flowed from entering into the agreement to purchase the property. In the result, the appeal, which was heard on a rolled-up basis at the same time as the permission to appeal application, failed because it did not get past the permission stage.

Charlie is an experienced commercial litigator, with a strong grounding in contract, commercial and company law. He has acted in some significant recent actions in these areas, including Re HLHP Oriental Food Ltd [2024] EWHC 497 (Ch). Read more here.