MP Kemp Ltd v Bullen Developments Ltd

An expert determination clause referring any dispute on any matter arising out of an agreement may extend beyond disputes expressly identified elsewhere in the contract. It may include an estoppel dispute concerning the valuation methodology under the agreement, even where the estoppel is based on matters external to the written terms. The court should ordinarily avoid ruling pre-emptively on the expert’s decision-making authority or the principles the expert must apply. It may intervene in advance in exceptional circumstances, but the issue is generally hypothetical until the expert has made the determination. Oral variations of a material term in a contract for the disposition of an interest in land require writing under Law of Property (Miscellaneous Provisions) Act 1989, section 2. An estoppel which merely enforces the same oral promise may be vulnerable for the same reason.

The claimant granted the defendant a long-term option over agricultural land. The agreement provided for expert determination by an independent chartered surveyor of disputes arising out of the agreement, including disputes concerning purchase price and transfer terms.

After the defendant sought to acquire a second tranche of land, the claimant alleged that an earlier oral assurance varied the valuation methodology or gave rise to estoppels concerning infrastructure costs. On the claimant’s application, Sales J had granted a without-notice injunction restraining continuation of the expert determination. The issue on the return date was whether the estoppel claims fell within the expert’s remit and, alternatively, whether the court should allow the court proceedings to precede the determination.

1. Disposition. The estoppel claims fell within clause 24 of the option agreement. The proceedings were stayed and the injunction granted by Sales J was discharged.
2. Oral variation. The alleged variations concerned the price payable for land. Price was a material term, and any variation to it required writing under section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. In any event, the proposed variation could alter the price by several million pounds and was plainly material.
3. Construction of the expert clause. The references elsewhere in the agreement to purchase price and transfer terms illustrated the paradigm use of clause 24 but did not restrict its general wording. A dispute about which infrastructure costs were to be included in Market Value arose out of the agreement, whether characterised as construction, fact or estoppel. The surveyor’s expertise and the 20-working-day timetable did not create an identifiable textual exclusion for estoppel claims.
4. Pre-emptive intervention. The distinction was between an expert departing from the parties’ instructions and an expert making an error while following them. The court might intervene in advance to determine the limits of the remit, but would ordinarily decline to do so because the issue was hypothetical until the determination was known. If the expert applied the wrong valuation principles, the claimant could challenge the determination afterwards.
5. Alternative discretionary view. If the estoppel claims had been outside clause 24, the court would still have stayed the proceedings. The claims were arguable but faced serious legal and formidable factual difficulties. Parallel litigation or delaying the expert process would risk duplicated cost, delay and wasted work.
6. Estoppel. The alleged promissory estoppel was substantially equivalent to a contractual variation. Following the reasoning in Actionstrength v International Glass [2003] 2 AC 541, an assurance which merely repeated the unenforceable promise could not ordinarily be enforced by estoppel where that would subvert the statutory writing requirement. The court did not finally determine the point because oral evidence had not been heard.

The judgment was a first-instance decision on the return date of an interlocutory injunction granted by Sales J on 16 April 2014. The injunction was discharged and the proceedings stayed.