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Persimmon Homes Ltd v Woodford Land Ltd (2011)

Summary

The parties had intended the court to decide questions of construction of the terms of an option agreement upon which a rectification claim depended, despite the apparent width of a dispute resolution clause in the agreement which provided for any disagreement to be referred for determination by an expert.

Facts

The applicant property vendor (W) applied to strike out or stay an action advanced by the respondent developer (P), save for a rectification claim. P had entered into a put and call option agreement with W relating to the sale and purchase of a development site. W served a notice exercising the put option under the agreement. P paid a deposit and W served a completion report, certificate and satisfactory technical consents. However, the parties were in dispute over the terms and conditions of possible completion, notably over remediation works. Some issues were referred to an expert for determination under a dispute resolution clause in the agreement that provided for any dispute to be referred to an expert if it could not be resolved by directors, and the clause was expressly referred to elsewhere in the agreement. P claimed relief under five heads, namely (i) a declaration as to what the expert decided; (ii) a declaration as to the true meaning of the agreement; (iii) whether the draft NHBC certificate was a satisfactory technical consent within the meaning of the agreement; (iv) whether the agreement could be rectified to reflect the parties common intention; (v) an estoppel claim. The question of construction of the agreement in its unrectified form was determined by an expert, but the court reached the opposite conclusion. W accepted that the rectification claim should go to trial. W submitted that, save for the rectification claim, P's claim should be struck out, since the heads of relief claimed by P, which included issues concerning the construction of the agreement, fell within the expert's remit and were covered by the wording of the dispute resolution clause. P submitted that the dispute resolution clause was not a general provision for dispute resolution by an expert and that it applied only where its provisions were incorporated by reference elsewhere in the agreement.

Held

The dispute resolution clause could not be interpreted as being confined to cases where it was incorporated by reference in other provisions outside the clause. The references to the clause elsewhere in the agreement were for convenience and for the avoidance of doubt. The exclusion of rectification claims from the scope of the dispute resolution clause was significant and showed that the words "any dispute arising between the parties" could not be read literally. There should be no presumption in favour of resolution by an expert, Barclays Bank Plc v Nylon Capital LLP (2011) EWCA Civ 826, (2011) 2 Lloyd's Rep 347 applied. The parties must have been taken to have intended that the court should also be free to decide any question of construction of the agreement upon which the rectification claim depended, as well as any estoppel claim which turned on a detailed investigation of essentially the same facts. Rectification was a remedy that only the court could grant. It was always discretionary in nature and could not be brought about by agreement between the parties, or by the determination of an expert. The question of construction in the second head had to go to trial, because it covered much of the same ground as the rectification claim and the court would need to consider it in the context of the rectification claim. The estoppel claim also had to go to trial, because its factual connection with the rectification claim was so close, and because it was unsuitable for expert determination. The first and third heads both fell within the dispute resolution clause and had to be referred to the expert for determination (see paras 25-34 of judgment).

Application granted in relation to heads (1) and (3); Application refused in relation to heads (2) and (5)

Chancery Division
Henderson J
Judgment date
28 November 2011
References

​LTL 28/11/2011 : [2011] EWHC 3109 (Ch)