Morris Homes Ltd & Anor v Cheshire West And Chester Council

A contractual expert determination clause may require every dispute to be referred to an expert while preserving a right to challenge an error of law in the courts. The determination is not thereby merely advisory. Contractual language must be interpreted objectively, with its natural meaning remaining central. Commercial common sense cannot be used retrospectively to improve an arrangement that has worked badly for one party. In a planning obligation, actual sales revenue received from the disposal of the Units may include the economic value of retained or later-disposed legal interests, including freehold reversions and ground rents, where the wording and purpose of the agreement support that construction.

A consortium of construction companies appealed against HHJ Pearce’s dismissal of their CPR Part 8 claim. They sought a declaration that an independent expert’s determination under a 2013 planning obligation was not conclusive and binding because it contained an error of law. The dispute concerned whether Schedule 5’s reference to actual sales revenue included ground rents, retained freehold reversionary interests and later sale proceeds. The respondent also maintained, by Respondent’s Notice, that the appellants were estopped by convention from challenging the determination. The appeal raised questions of contractual interpretation, the relevance of pre-contractual material, the effect of the expert clause and estoppel by convention.

1. The appeal and the Respondent’s Notice were dismissed. The expert’s determination was not wrong in law and remained conclusive and binding under clause 10.4 of the April 2013 agreement.
2. Ground 1 failed. Although the High Court judge referred to three documents connected with the earlier planning obligation, the Court of Appeal found that he had used them only in summarising the evidence, not as pre-contractual negotiations informing construction. The principles in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, confirming Prenn v Simmonds [1971] 1 WLR 1381, were therefore not infringed.
3. Ground 2 failed. Applying the objective approach summarised in Arnold v Britton and Ors [2015] UKSC 36; [2015] AC 1619, the natural meaning of Schedule 5, paragraph 2 was that actual sales revenue focused on the reality of the transaction and was not artificially restricted. Paragraph 1 dealt with the provision of information and did not limit paragraph 2. The phrase “the disposal” was broad enough to include different legal interests in property, including leasehold disposals, retained freehold reversions, ground rents and later sales of those reversions.
4. The construction also served Schedule 5’s purpose of securing contributions towards affordable housing, education and related community needs. Commercial common sense could inform interpretation, but could not displace natural language merely because the bargain appeared imprudent or operated disadvantageously.
5. The Respondent’s Notice failed. Estoppel by convention did not arise because the parties referred the dispute pursuant to their contractual duty, not outside the agreement. Clause 10 required all disputes to be submitted to an expert, while clause 10.4 preserved exceptions for manifest error and error of law. That arrangement did not reduce the determination to an advisory opinion. The principles in ING Bank NV v Ros Roca SA [2011] EWCA Civ 353; [2012] 1 WLR 472, and Republic of India v India Steamship Co Ltd (The Indian Endurance and the Indian Grace) (No. 2) [1998] AC 878, did not establish an estoppel on these facts.

• Court of Appeal (Civil Division): The appeal from HHJ Pearce’s decision dated 8 November 2019 was dismissed. The Respondent’s Notice was also dismissed.
• High Court of Justice, Business and Property Courts in Manchester, Business List (ChD): HHJ Pearce dismissed the claim, holding that the expert had made no error of law and that the determination was conclusive and binding.