Great Dunmow Estates Ltd v Crest Nicholson Operations Ltd [2019] EWCA Civ 1683
The Court of Appeal set aside a declaration made by HHJ Kramer sitting as a deputy judge of the Chancery Division (HC-2017-001934) that an agreement varying a contractual valuation date contained in a statement of agreed facts had binding contractual effect. Guy Fetherstonhaugh QC and Toby Boncey acted for the first respondent.
A conditional contract of sale gave rise to a dispute as to how the purchase price should be ascertained. The parties appointed an independent valuation expert pursuant to the contract to ascertain various matters including the Assumed Value of the property. The expert issued directions, including that the parties’ surveyors should produce a statement of agreed facts.
Pursuant to clause 6.2.2 of the contract, the valuation was to be on the basis that the valuation date was to be “the Challenge Expiry Date or (if later) the date of valuation”. In the Statement of Agreed Facts, the parties’ surveyors said: “There is no fixed Valuation Date hence, in the event that the Assumed Valuer of the Property falls to be determined by an Expert, the Valuation Date then becomes the date that the Expert issues the determination.”
The parties’ valuers produced their own reports on that agreed basis.
Counsel was instructed, with the parties’ agreement, as legal assessor to advise the expert in relation to certain legal issues, on the basis that it was agreed that the valuation date should be the date of the expert’s determination.
However, despite those instructions, counsel explained that he considered that the correct valuation date was instead the Challenge Expiry Date. The buyers then changed their position, adopting counsel’s argument. The expert indicated that he would proceed to determine the Assumed Value as at the Challenge Expiry Date.
At first instance, HHJ Kramer held (among other things) that: (1) the expert did not have exclusive jurisdiction to determine the contractual valuation date himself, the court’s jurisdiction not having been excluded by the terms of the contract; (2) on a true construction of the contract, absent the effect of the Statement of Agreed Facts, the valuation date would have been the Challenge Expiry Date; but (3) the parties were bound by the agreement as to the valuation date in the Statement of Agreed Facts, which was intended to have binding legal force, Techno v Allied Dunbar [1993] 22 EG 109 considered.
The appellant buyers appealed on the grounds (among others) that (1) the court’s jurisdiction had been excluded by the contract; (2) the Statement of Agreed Facts was not intended to have binding contractual effect; and (3) if it did, the agreement was of a “special character” so that the expert could release the parties from it.
Patten LJ indicated that, when considering questions of law to be determined by the expert, the “balance of authority is… firmly in favour of preserving access to the courts to determine this legal issue”. The Court of Appeal summarised authorities considering the scope of an expert’s jurisdiction, making clear that that question as to whether the court’s jurisdiction is excluded is ultimately a matter of construction of the parties’ contract. The Court upheld HHJ Kramer’s decision that the contract did not, on the facts, have the effect of excluding the court’s jurisdiction.
After the trial, the UK Supreme Court had handed down MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2018] UKSC 24 (“MWB”). The Court of Appeal found that the Judge’s conclusion that the agreement in the Statement of Agreed Facts was contractually binding could not stand in the face of MWB and clause 30 of the contract, which provided for formalities for variation of the contract, which had not been complied with.
Accordingly, the Judge’s declaration that the parties’ were bound by the valuation date agreed in the Statement of Agreed Facts was set aside, and the Court of Appeal did not need to consider the appellants’ arguments that the Statement of Agreed Facts was not intended to be contractually effective or had a “special character”.
Although, in the event, the parties’ agreement in the Statement of Agreed Facts was contractually ineffective due to clause 30, the Court of Appeal’s decision does not otherwise call into question the Judge’s conclusion that the parties’ agents had reached an agreement in the Statement of Agreed Facts, which was intended to be contractually binding. HHJ Kramer’s decision remains authority for the proposition that an agreement contained in a statement of agreed facts could in principle be contractually binding.
The case has been remitted back to the Chancery Division for further directions.
A copy of the judgment can be found here.
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