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Court of AppealWednesday 23 October 2019

Great Dunmow Estates Limited v Crest Nicholson Operations Ltd & Ors [2019] EWCA Civ 1683

The Court of Appeal has, in Great Dunmow Estates Limited v Crest Nicholson Operations Ltd & Ors [2019] EWCA Civ 1683: (1) held that matters ‘agreed’ in the course of the expert determination could not have contractual effect where the underlying contract contained anti-informal variation clauses which the later ‘agreement’ did not meet; and (2) confirmed that absent indications in the contract to the contrary, the court retains jurisdiction to construe the contract which defines the expert’s role.

The expert in this case was appointed under a conditional contract for the sale of land to value the land at the “Valuation Date”. That date was defined as “the Challenge Expiry Date or (if later) the date of the valuation”. The Challenge Expiry Date had passed, so on a literal reading the Valuation Date appeared therefore to be the date of the valuation.

The parties’ surveyors, in accordance with the expert’s directions, prepared a “Statement of Agreed Facts” which recorded (amongst other things) that the Valuation Date was to be the date of the valuation.

The expert thereafter instructed leading counsel to advise upon a different issue. In providing that advice, counsel noted that the literal reading of clause 6.2 was wrong, and that on a proper construction the Valuation Date should be the (earlier) “Challenge Expiry Date”.

It was found at first instance (and not challenged on appeal) that the expert’s counsel was correct as a matter of construction: the valuation date under the contract should have been the “Challenge Expiry Date”.

Notwithstanding, HHJ Kramer held that the expert should prepare the valuation using the later date, i.e. the date of his valuation, because the Statement of Agreed Facts amounted to a binding contract to that effect. In so holding, HHJ Kramer also held that the Court had jurisdiction to determine these issues; and that the identification of the correct “Valuation Date” was not a matter which the parties has agreed to be within the sole remit of the expert under the conditional sale contract.

Between the trial at first instance and the Court of Appeal’s decision, the Supreme Court decided MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2018] UKSC 24. That confirmed that parties could agree to bind themselves to require certain formalities to vary contracts. The conditional sale contract contained such formalities, that the Statement of Agreed Facts did not meet.

The Court of Appeal therefore held that the Statement of Agreed Facts could not have had contractual effect (the question as to whether it might be given effect by an estoppel has been remitted to the Chancery Division). Whilst not a surprising result following MWB, it is potentially far-reaching. Parties will often seek to ‘agree’ all manner of things with varying degrees of formality in the course of the expert determination process itself. Regard will need to be had to any anti-variation clauses in the governing agreements to be guaranteed of the efficacy of such agreements.

The Court of Appeal continued to consider (obiter) the jurisdiction question. There was some tension between earlier Court of Appeal authorities on the extent of the court’s jurisdiction to address issues of construction which arose in the course of an expert determination (Norwich Union Life Insurance Society v P&O Property Holdings Ltd [1993] 1 EGLR 164 and National Grid Co plc v M25 Corp Ltd [1999] 1 EGLR 164).

It has now been held (judgment of Patten LJ at [43]) that, “[t]he balance of authority is… now firmly in favour of preserving access to the courts to determine this legal issue going to jurisdiction”. Unless there is something in the contract defining the expert’s task that “can be read or implied as making him the sole arbiter” of issues about the extent of his role, the courts will have jurisdiction to determine such questions.

This may open the door to more challenges to expert determinations, and clear words will be required to exclude the court’s jurisdiction if the parties intend the expert to have exclusive jurisdiction to construe the agreement which defines their role.

Jonathan Seitler QC and Tom Roscoe (instructed by Gateley) acted for the successful appellants.

You can read the full judgment here.

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