Contractual Interpretation – Leave It To The Court

In Great Dunmow Estates Limited v Crest Nicholson Operations Ltd & Ors [2019] EWCA Civ 1683, the Court of Appeal held that (1) matters 'agreed' by parties during the process of expert determination did not have contractual effect where the main contract contained an anti-informal variation clause and that (2) the court retained jurisdiction to construe the contract defining the expert's role, where this jurisdiction was not excluded in the main contract.

Background

A conditional contract for the sale of land (the "Contract") between the buyer, Crest Nicholson Operations Limited and Crest Nicholson Plc ("Crest Nicholson") and the seller, Great Dunmow Estates Limited ("GDEL") gave rise to a dispute as to the purchase price of the relevant land. Pursuant to the Contract, an independent expert was appointed to resolve the dispute (the "Expert"). Following the Expert's directions, the parties produced a Statement of Agreed Facts (the "Agreed Facts") to include an agreement that the date on which the land was to be valued (the "Valuation Date") was "the date that the expert issue(d) the determination". The Expert instructed independent Counsel to determine various legal issues. Although not specifically instructed to advise on the Valuation Date, Counsel considered that under the Contract, the Valuation Date was not the date of the Expert's valuation but rather the "Challenge Expiry Date" (defined in the Contract as "3 months and 5 days after the grant of planning permission"). Crest Nicholson resiled from its position as set out in the Agreed Facts to the position advised by Counsel.

At first instance, HHJ Kramer held that (1) the parties were bound by the Valuation Date agreed in the Agreed Facts which had binding legal force and (2) the Expert did not have exclusive jurisdiction to determine the Valuation Date himself, on the basis that the court's jurisdiction had not been excluded by the Contract. Crest Nicholson appealed on the grounds (amongst others) that (1) the Agreed Facts were not intended to have binding contractual effect (2) the court's jurisdictions to determine the Valuation Date had been excluded by the Contract.

Court of Appeal's decision

Contractual Effect of the Agreed Facts

In the Court of Appeal, Patten LJ held that the Agreed Facts did not have contractual effect. The purpose of the Agreed Facts was to inform the Expert about what remained in issue between the parties' own valuers but it did not prevent the parties from...