Persimmon Homes Ltd v Woodford Land Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Henderson |
| Judgment Date | 28 November 2011 |
| Neutral Citation | [2011] EWHC 3109 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC11C02474 |
| Date | 28 November 2011 |
[2011] EWHC 3109 (Ch)
Mr Justice Henderson
Case No: HC11C02474
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, Fetter Lane
London EC4A 1NL
Mr Christopher Pymont QC (instructed by Walker Morris) for the Claimant
Mr John McGhee QC (instructed by Clifford Chance) for the Defendant
Hearing date: 18 October 2011
Introduction
On 18 October 2011 I heard an application by the defendant, Woodford Land Ltd ("Woodford"), asking the court to strike out, or alternatively to stay, the whole of the claim brought against it in the present action by the claimant, Persimmon Homes Ltd ("Persimmon"), with the exception of a claim for rectification which Woodford accepts should go to trial. This is my judgment on that application.
The present action, which Persimmon began by a claim form issued on 19 July 2011, is the latest instalment in a long-running dispute between the parties relating to the sale and purchase of a development site in Doncaster. Details of the background to that dispute, and the circumstances in which Woodford (as seller) and Persimmon (as purchaser) entered into an agreement dated 27 February 2006 ("the Agreement") for the grant of put and call options over the site, may be found in the judgment which I handed down on 15 April 2011 in a different rectification claim concerning the terms in the Agreement which dealt with the costs of providing affordable housing: see Woodford Land Limited v Persimmon Homes Limited [2011] EWHC 984 (Ch), particularly at [1] to [29].
For present purposes, it is relevant to note three features of those earlier proceedings.
First, neither side contended that the court lacked jurisdiction to hear and decide a claim for rectification of the Agreement, despite the apparent width of the dispute resolution clause in the Agreement which provides for any disagreement between the parties to be referred for determination to an expert.
Secondly, the question of the true meaning of the term which Woodford was asking the court to rectify, as a matter of construction of the Agreement in its unrectified form, had been referred to an expert (Mr John Male QC), who had decided it in favour of Persimmon (with the consequence that the costs of affordable housing were deductible from the purchase price, and thus fell to be borne by Woodford as the seller). The purpose of Woodford's rectification claim was to achieve the opposite result, namely that the costs of affordable housing would be both paid and ultimately borne by the purchaser, Persimmon.
Thirdly, although neither side had come to court expecting to argue the question of construction, because it had already been determined by Mr Male in a manner that was contractually binding on them, I took the view that the court still had to consider the question as an essential preliminary to the rectification claim, and that Mr Male's determination, although binding as a matter of contract between the parties, did not and could not bind the court. The reason why the court could not ignore the question of construction was that if the Agreement on its true construction already had the meaning for which Woodford contended, there would then be nothing for the court to rectify. By the end of the hearing, this analysis was common ground between the parties, and I therefore began my judgment by considering the question of construction. I decided it in favour of Woodford, and thus in the opposite way from Mr Male (before whom Woodford had, in effect, conceded that Persimmon's construction was correct). This had the unfortunate result, from Woodford's point of view, that the rectification claim then had to be dismissed, although I held (obiter) that, if I were wrong on the question of construction, the rectification claim would have succeeded.
After I had handed down the judgment, and an order had been drawn up recording my decisions on construction and rectification, but before I had heard argument on costs and consequential issues, Woodford belatedly decided that it wished to challenge the analysis summarised above, and to contend either that the court was bound to deal with the rectification claim on the footing that Mr Male's determination on the construction question was correct, or (alternatively) that the equitable remedy of rectification could and should be granted in the particular circumstances of the case, even if the court would have decided the question of construction in Woodford's favour. I refused Woodford permission to reopen the matter at such a late stage, and also refused Woodford permission to appeal. However, permission to appeal was subsequently granted by the Court of Appeal, and the appeal is due to be heard in January 2012.
I have recounted this history because one of the grounds relied on by Persimmon for resisting the present application is its understandable wish to avoid the risk of falling between two stools in the same way as Woodford has done. The only way of avoiding this risk, says Persimmon, is to ensure that any question of construction associated with a claim for rectification of the Agreement is also heard and decided by the court.
The immediate background to the present action is as follows. On 23 February 2011, Woodford served an exercise notice exercising the put option under clauses 4 and 6 of the Agreement. On 2 March 2011 Persimmon paid the deposit of £1,891,400. The purchase price payable by Persimmon on completion is £22,064,000 less the deposit. On or about 11 July 2011, Woodford served Persimmon with what purported to be the Completion Report, Certificate and Satisfactory Technical Consents (in each case as defined in the Agreement) and called for Persimmon to complete the Agreement. However, the Agreement has not yet been completed and the parties remain in dispute about the terms and conditions of possible completion. Among other things, Persimmon contends that Woodford has not discharged all of the conditions precedent to the occurrence of the Completion Date under the Agreement.
The particular focus of the present action is on one aspect of the remediation works which need to be carried out on the site before housing development can begin. This aspect relates to the underlying alluvial soils, which lie above the bedrock and beneath the made ground where the former railway works had been constructed. One bone of contention is which party should bear the responsibility of improving the settlement characteristics of the alluvial soils. Another dispute concerns the adequacy of the Satisfactory Technical Consent from the NHBC tendered by Woodford in purported compliance with clause 27 of the Agreement. The position is again complicated by the fact that a number of issues which bear on these questions were referred to Mr Male for determination in September 2009, and he made his determinations on them in January and March 2010.
In barest outline, Mr Male decided that the specification for the remediation works in Schedule 4 to the Agreement, which Woodford was bound to procure its contractor carried out, did not oblige Woodford to improve the bearing capacity and/or the settlement characteristics of the underlying alluvial soils. Nor was Woodford required to carry out a geotechnical assessment of those soils. Woodford's only obligation was to procure a minimum safe bearing capacity of 50 KN/m2 at the level of 900 mm below ground level, and such capacity related only to the risk of shear failure and not to risk of settlement. Mr Male acknowledged that this construction of the Agreement produced "what some might consider to be an unusual result", but he also noted that there were at least two safeguards for Persimmon in the Agreement which reinforced him in the conclusion which he had reached. The first safeguard was that the Certificate required by clause 27 had to have annexed to it copies of all Satisfactory Technical Consents, which meant confirmation from the Local Planning Authority and Environmental Health Authority and the NHBC that they had no objection to residential development proceeding. The second safeguard was that the Agreement provided for the Environmental Consultant appointed by Woodford to give Persimmon a collateral warranty backed by professional indemnity insurance. Mr Male therefore said:
"Accordingly, it seems to me that properly construed the Agreement does not require Woodford to deal with the settlement issues discussed in this Determination. As I observed at the hearing, it may be able to secure what it wants indirectly because of the need to get the Satisfactory Technical Consents. This is not however a matter for me but for the Local Planning and Environmental Health Authority and the NHBC."
The relief sought in the particulars of claim falls under five heads. First, the court is asked to declare that what Mr Male actually determined in January 2010 was as pleaded in paragraph 25 of the particulars. The gist of this is that:
a) the provisions of clause 27 of the Agreement relating to the Certificate and the Satisfactory Technical Consents are separate and independent from the obligations set out in clause 27 and schedule 4 relating to the remediation works;
b) Persimmon cannot be required to complete the Agreement unless and until it has received a Certificate and Satisfactory Technical Consents, the latter of which must confirm that the relevant bodies have no objection to residential development proceeding; and
c) if the relevant bodies do not give their consent by reason of the settlement characteristics of the underlying alluvial soils, or make their consent conditional upon improvement of the soils or upon further testing or investigation of them, it is then for Woodford to address those concerns and thereby to...
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