Beauty Star Ltd v Janmohamed

A mediated settlement agreement must be construed as a whole. Where confirmation of specified invoice schedules is a precondition to an account, the account is taken by reference to those confirmed schedules, even if invoices were later found to have been omitted. A court cannot rewrite the bargain to achieve a fairer result after a mistake in implementation. An order directing parties to appoint an accountant pursuant to the agreement does not, without clear wording, make that accountant a court-appointed expert under the Civil Procedure Rules. Where the parties agree to be bound by the accountant’s report, clerical or transpositional errors do not release them from that agreement; any remedy lies against the accountant.

The parties entered into a written mediation agreement to resolve long-running disputes concerning invoices and payments for beauty products. The agreement required the claimant to confirm that specified schedules recorded all invoices issued during the relevant period, after which an account was to be taken.

The claimant later alleged that invoices had been omitted and sought rescission or rectification. HHJ Faber dismissed the rectification claim, construed the agreement by reference to the confirmed schedules, and held that the parties were bound by the appointed accountant’s report.

The Court of Appeal granted permission on the interpretation of the account and on whether a subsequent court order made the accountant a court-appointed expert under CPR Rules 35 or 40.

The appeal was dismissed. Lord Justice Davis gave the leading judgment, with Lord Justices Ryder and Laws agreeing.

1. Construction of the mediation agreement. The agreement had to be read as a whole. Paragraph 2 required confirmation that the schedules attached to the Reply and Defence to Counterclaim accurately recorded all invoices issued during the specified period. That confirmation was a precondition to the account under paragraph 3. The account was therefore confined to the confirmed schedules and the monies paid during the period. It did not require a matching exercise involving invoices outside those schedules.
2. No rewriting of the bargain. The omission of invoices resulted from the claimant’s later mistake in confirming its schedules, not from any ambiguity in the agreement itself. The court could not rewrite the bargain to produce a result considered fairer or more commercially reasonable in light of subsequent events or mistakes in implementation.
3. Effect of the District Judge’s order. The order directing the parties to appoint an accountant had to be read in the context of the mediation agreement. Its reference to appointment pursuant to paragraph 3 of that agreement strongly indicated that the accountant was appointed under the agreement, not as a court-appointed expert under the Civil Procedure Rules Rules 35 or 40. The order’s recital that the scheduled invoices were the only invoices in dispute reinforced that conclusion.
4. Binding effect of the report. The accountant’s report was binding because the parties had agreed to be bound by it. Alleged clerical, transpositional or arithmetical errors did not amount to a departure from the terms of appointment sufficient to release either party. The approach in Jones v Sherwood Computer Services plc [1992] 1 WLR 277 governed. Any remedy lay against the accountant, rather than through reopening the account between the parties. The trial judge was correct in all respects.

• Court of Appeal (Civil Division): Permission was granted on limited issues concerning the construction of the mediation agreement and the status of the appointed accountant. The appeal was dismissed.
• Central London County Court: HHJ Faber, on 28 February 2013, dismissed the rectification claim, construed the mediation agreement by reference to the confirmed schedules, and held that the parties were bound by the accountant’s report.