Stroude v Beazer Homes Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Mummery,Mr Justice Munby |
| Judgment Date | 17 March 2005 |
| Neutral Citation | [2005] EWCA Civ 265 |
| Docket Number | Case No: A3/2004/0644 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 March 2005 |
[2005] EWCA Civ 265
Lord Justice Mummery and
Mr Justice Munby
Case No: A3/2004/0644
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
MR JUSTICE RIMER
Royal Courts of Justice
Strand, London, WC2A 2LL
MR TIMOTHY FANCOURT QC (instructed by Nabarro Nathanson) for the Appellant
MR GREGORY HILL (instructed by Marrons) for the Respondent
There are two points of interest in this appeal, one procedural and the other evidential. They both arise out of a dispute on the meaning of a written agreement made on 16 October 2000 pursuant to s106 of the Town and Country Planning Act 1990 (the s106 Agreement) and the Highways Act 1980 in connection with a proposed development at Longstanton in Cambridgeshire. The development included the construction of the Longstanton Bypass linked to the phasing of the development of the whole site.
The parties to the s106 Agreement were (1) the South Cambridgeshire District Council, as the local planning authority, (2) the Cambridgeshire County Council, as the local highway authority and as owner of certain land, (3) Mr Peter Stroude, as owner of certain land, (4) Mr & Mrs Cartwright, as owners of certain land, and (5) Beazer Homes Limited (BHL), who had entered into agreements with the owners to buy land from them subject to the grant of planning permission. Two of the parties to the s106 Agreement, Mr Stroude and BHL, negotiated with one another in September and October 2000 on matters of collaboration and contribution relating to the development, but never reached a concluded agreement. They are now in litigation about the construction of the s106 Agreement.
An order made by Rimer J on 15 March 2004 contains a ruling sought by the claimant, Mr Stroude, that
"… evidence of proposals and negotiations for a proposed contribution agreement and/or a collaboration agreement…is not admissible for the purpose of construing the Section 106 Agreement made on 16 October 2000 and mentioned in the Particulars of Claim."
BHL is, along with two associated companies, a defendant to the proceedings. The Beazer companies have been part of the Persimmon Group of companies since 2001. BHL is also a respondent to two interlocutory applications by Mr Stroude. The first in time was dated 28 November 2003 and sought summary judgment on Mr Stroude's claim that he has the right to enter on certain land in order to construct the Longstanton Bypass. The estimated 1 day hearing was floating for 25/28 March 2004. The second application dated 3 March 2004 was for a ruling that evidence of the parties' subjective intentions and of their negotiations for the separate collaboration agreement between Mr Stroude and BHL, in anticipation of the development for which planning permission had been granted, is inadmissible in ascertaining the meaning of the s106 Agreement.
BHL appeals, with the permission of Jonathan Parker LJ granted on 15 April 2004, against the ruling of Rimer J. The summary judgment application has not been heard pending the determination of this appeal.
Procedural point
Mr Stroude's application for a ruling on the inadmissibility of evidence of subjective intentions and negotiations was made under CPR Part 32.1(1) shortly before the summary judgment application was due to be heard. Mr Stroude made the summary judgment application under CPR 24 on the ground that BHL has no real prospect of successfully defending the action.
Under Part 32.1 the court has power to "control the evidence by giving directions" as to the issues on which it requires evidence, the nature of the evidence which it requires to decide these issues and the way in which the evidence is to be placed before the court. Obviously the court can use its controlling power to direct that, on the basis of an exclusionary rule, certain evidence may not be given. It is also expressly provided in Part 32.1 that the court can use its power to exclude evidence that would otherwise be admissible, for example in order to save costs and to cut delays.
Although the judge's initial instinct was that the ruling on evidence would probably have been better left to the judge hearing the summary judgment application, he proceeded to determine it, as at the hearing both parties preferred him to rule on it at the earlier stage.
Although no procedural objection has been raised on the appeal and there is no question of this court rejecting the appeal on the procedural ground, I should express my reservations about the future use of the procedure adopted in this case.
In general, disputes about the admissibility of evidence in civil proceedings are best left to be resolved by the judge at the substantive hearing of the application or at the trial of the action, rather than at a separate preliminary hearing. The judge at a preliminary hearing on admissibility will usually be less well informed about the case. Preliminary hearings can also cause unnecessary costs and delays.
In the present case no good reason is apparent nor has one been advanced for departing from the usual practice. It has not been suggested that this is one of those cases in which the ruling on admissibility would dispose of or abbreviate the substantive application. The practical effect of a split proceeding seeking a pre-emptive ruling has been to hold up the hearing of the summary judgment application. It may well have increased the costs of proceedings. I cannot see what advantage there was in it for anyone.
Extrinsic evidence point: the general principle
The basic legal principles are not in dispute: evidence of negotiations leading to the making of a contract or of the subjective intentions of the parties as to the meaning of the contract is not admissible for the purpose of construing the contract: Prenn v. Simmonds [1971] 1 WLR 1381 per Lord Wilberforce at 1384C-1385H; Reardon Smith Line v. Yngvar Hansen-Tangen [1976] 1 WLR 989 per Lord Wilberforce at 996E-997D ; and Investors Compensation Scheme v. WBBS [1998] 1 WLR 896 per Lord Hoffmann at 912F-913F. Such evidence is not admissible as part of the factual matrix or as relevant objective background of a contract, as it is not helpful in construing a contractual document.
There is, however, a dispute between the parties as to (a) the scope of the exclusionary principles laid down in the authorities and (b) the application of the principles to the facts of this case.
Background Facts
The key question in the summary judgment application is whether it is implicit in the s106 Agreement or there is to be implied into it a term that Mr Stroude is entitled to access over land shown cross-hatched on an agreed plan for the purposes of constructing the Longstanton Bypass. No express right of access was granted to him by the s106 Agreement. At the time of the s106 Agreement the land over which the right of way was claimed was owned by Mr & Mrs Cartwright. They were parties to the s106 Agreement, but they were not involved in the negotiations for the collaboration agreement.
Both before and after the conclusion of the s106 Agreement Mr Stroude and BHL were in negotiation for a separate collaboration agreement, but it was never concluded. A draft of the agreement recites the s106 Agreement. BHL claims that the collaboration agreement was intended to provide for the grant of mutual rights in the nature of easements between Mr Stroude and BHL in relation to the proposed development, including entry onto the relevant land for the construction of the Bypass.
The issue on the admissibility of evidence arose out of the contents of a witness statement served in opposition to Mr Stroude's application for summary judgment. The maker of the statement was Ms Dempster, an in-house solicitor with the Beazer Group of Companies at the relevant time. In 8 paragraphs of the witness statement she made assertions about the negotiations in the summer and autumn of 2000 for the collaboration agreement between Mr Stroude and BHL. BHL wished to rely on this material for the purpose of showing that neither expressly nor by implication in the s106 Agreement was it ever intended by Mr Stroude or BHL to grant any rights of access over the cross-hatched land.
The Judgment
The judge correctly pointed out that the negotiations which BHL sought to rely on were for a different and separate agreement from the s106 Agreement which fell to be construed. Further, only two of the parties to the s106 Agreement were involved in the negotiations for the collaboration agreement. He expressed doubts about the relevance of the evidence of what passed between Mr Stroude and BHL to the issue of a grant of implied rights of access over land which belonged at the material time to third parties, Mr & Mrs Cartwright (see paragraph 18), but he did not exclude the evidence specifically on that ground.
Rimer J also said that he was
"14…not persuaded that the negotiations for the collaboration agreement can fairly be regarded as in the nature of negotiations for the section 106 agreement and as being inadmissible on that ground for the purposes of interpreting the 106 agreement. That is because they were not such negotiations. They were negotiations exclusively between Mr Stroude and BHL for the purposes of a separate agreement between them, and none of the other parties to the section 106 agreement were parties to the negotiations for the collaboration agreement."
He went on to hold that the evidence was inadmissible on the construction of the s106 Agreement, as
" 16…evidence as to what the...
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