Persimmon Homes Ltd v Woodford Land Ltd

An expert determination clause covering any dispute may nevertheless exclude issues which only a court can determine. Rectification falls outside such a clause because it is discretionary, retrospective and cannot be achieved by an expert’s determination. Where a properly pleaded rectification claim depends on questions of contractual construction, or is closely connected with an estoppel claim requiring detailed factual investigation, the court may determine those matters to avoid inconsistent decisions and because they are unsuitable for expert determination. Separate disputes that do not depend on the rectification claim remain subject to the expert clause.

Persimmon sought declarations concerning the construction and operation of an agreement for the sale and purchase of a development site, clarification of an earlier expert determination, and declarations concerning an NHBC certificate. It also claimed rectification and, alternatively, estoppel by convention. Woodford applied to strike out or stay all claims except rectification, relying on the agreement’s dispute resolution clause requiring disputes to be referred to an expert.

The court had to determine the scope of that clause and whether the non-rectification claims were sufficiently connected with the rectification claim to remain before the court.

1. Application partly granted. Woodford’s application succeeded in relation to heads (1) and (3) of the relief, but failed in relation to heads (2) and (5).

2. Clause 18 was expressed in wide and general terms. Its references elsewhere in the agreement were for convenience and did not confine its operation. Subject to the rectification exception, disputes arising between the parties were to proceed through the two-stage process of referral to parent-company directors and then, if unresolved, determination by an expert.

3. Rectification was outside the expert’s jurisdiction. It was a discretionary remedy available only from the court and had retrospective effect, so that the document was read as if originally rectified. An expert could not produce that legal effect: Craddock Bros v Hunt [1923] 2 Ch 136.

4. There was no presumption in favour of expert determination. Applying the approach in Barclays Bank PLC v Nylon Capital LLP [2011] EWCA Civ 826, the question was one of construction and commercial intention. Where a properly pleaded rectification claim had a reasonable prospect of success, the court should also determine contractual construction issues on which that claim depended. Otherwise, conflicting decisions by the court and expert could result.

5. The estoppel claim also remained for trial. It was factually closely connected with rectification and inherently unsuitable for expert determination because it required detailed factual investigation. By contrast, the dispute about what the expert had previously decided and the dispute concerning the NHBC certificate were separate matters within clause 18 and had to be referred to the expert.

The judgment refers to earlier rectification proceedings between the parties, reported as Woodford Land Ltd v Persimmon Homes Ltd [2011] EWHC 984 (Ch). Permission to appeal that earlier decision had been granted, with the appeal due to be heard in January 2012.