Kerdene Ltd v Watkins & Ors

On an appeal from a preliminary ruling, the Court of Appeal should not decide an issue where the first-instance court made no findings on material facts and the parties lacked a proper opportunity to address an additional contractual form. If competing forms of conveyance raise interwoven issues, the appeals may be stayed and the first-instance judge permitted to reconsider liability after receiving relevant evidence. Appellate courts generally avoid speculative or academic determinations. A direction to reconsider one contractual form does not reopen unrelated grounds of challenge.

Kerdene Ltd succeeded to rights concerning charges payable by bungalow owners at Merryn Holiday Village. The appeals challenged an order made by His Honour Judge Vincent in the Bodmin County Court on 14 December 2010.

The judge had determined a preliminary issue concerning subsequent purchasers by applying the benefit and burden doctrine to positive covenants. He had assumed that the conveyances were in form A and had made no findings about the availability of the relevant facilities. Form B conveyances later emerged, containing an additional covenant by St Merryn to paint the bungalow every three years.

The central issue for the Court of Appeal was whether the appeals could fairly be determined without permission, argument and factual findings addressing form B and its interaction with form A.

Appeals stayed. Arden LJ gave the leading judgment, with which Pill LJ and McFarlane LJ agreed.

1. The first-instance decision had proceeded on the assumption that all relevant conveyances were in form A. The court had made no findings about the availability of the facilities or other facts relevant to the charges. The form B conveyances raised potentially material issues, including the additional painting covenant, its performance, the effect of any breach on the burden or amount payable, and questions of mutuality and enforcement.
2. The form B appellants had not had a proper opportunity to present those arguments below, and the respondent had not prepared to argue them on appeal. Because the arguments concerning forms A and B were interwoven, the Court of Appeal considered that it should not determine the form A appeals either.
3. The form B appellants were given liberty to apply to HHJ Vincent to determine whether, in the events that had occurred, they were liable under form B. The judge could receive relevant evidence and make appropriate findings of fact. He was also directed to consider whether it was necessary to determine the true interpretation of any disputed expression in the form B covenants.
4. The court emphasised that appellate courts do not generally decide speculative or academic issues. Preliminary issues may be intended to save costs but can become treacherous where factual assumptions remain unresolved.
5. The appeals of the original purchasers were not dismissed at that stage. All appeal costs were reserved. The court strongly recommended mediation and encouraged agreed facts and proportionate case management, including a case conference and, where suitable, paper or video-link hearings.
6. Pill LJ clarified that the process referred back concerned only the effect and interaction of the clauses in the conveyances. It did not reopen unrelated allegations concerning representation or misrepresentation.

• Court of Appeal (Civil Division) — In [2011] EWCA Civ 1781, the appeals were stayed. Form B appellants were given liberty to apply to the first-instance judge, and costs were reserved.
• Bodmin County Court — His Honour Judge Vincent made an order dated 14 December 2010 concerning charges payable by bungalow owners, following a preliminary determination based on the benefit and burden doctrine.