Mogens Alex Bastholm & Ors v Peveril Securities (Dalton Park Retail) Limited & Ors

A contractual expert-determination procedure must be invoked in accordance with the parties’ agreement. Where rights under the contract have vested in a trustee in bankruptcy, the bankrupt cannot exercise those rights as though they had revested on discharge. A request made by only some contractual parties is invalid where the contract requires joint action.

“Development” means physical development works where that is the contractual definition. Planning permission is not development works and will not be added by implication. A request to appoint an expert must be made within a reasonable time; the Limitation Act 1980 governs court proceedings, not the contractual request itself.

The claimants were former shareholders, or a trustee in bankruptcy, asserting rights under a 2000 payment deed providing for overage on development of Phase 2 land. The deed contained an expert-determination mechanism for disputes about valuation.

An application was made to RICS in 2014 by the former shareholders described as the Matthew Fox Consortium. The trustee in bankruptcy had not consented to being a party to that application. The court had to determine the validity of the reference, the meaning and timing of “Development”, limitation, the defendants’ liability under later deeds of covenant, and whether declaratory relief was appropriate.

1. Expert appointment. The Payment Deed required all persons comprising the “Seller” to join in an agreement or request for the appointment of an expert. It contained no majority rule, and no binding majority agreement was proved. Following Mr Dunn’s bankruptcy, his contractual rights vested in Mr Pagden under sections 306 and 436 of the Insolvency Act 1986 and did not revest on discharge. Mr Pagden did not consent to being a party to the RICS application. The application and purported appointment were therefore invalid.
2. Development. “Development” meant physical development works. The construction of car parking extending onto Phase 2 land commenced in April or May 2002 and constituted development. Planning permission, planning applications and an arboricultural assessment did not constitute development works and no term could be implied to that effect.
3. Timing and payment. The principal Phase 2 works commenced after expiry of the 15-year Phase 2 Period and could not trigger payment. The earlier car-parking works could in principle trigger the contractual process, but the relevant land value was below the £4 million threshold required by the clause 6.2 formula and clause 6.6 collar. A valuation would therefore be academic.
4. Limitation and reasonable time. The contractual power to request an expert was subject to a requirement that the request be made within a reasonable time. Section 9 of the Limitation Act 1980 did not govern the request itself, although once a valid request was made there would be 12 years to enforce the appointment by court proceedings. Any reasonable period for a fresh request concerning the 2002 works had long expired.
5. Other matters. The 2013 Deed of Covenant made the first defendant liable for relevant Payment Deed liabilities concerning Phase 2, including liabilities arising from development before that deed, although the covenantor’s own liability commenced on entry into the deed. Questions concerning whether development had occurred and when were jurisdictional matters for the court, not valuation questions for an expert.
6. Declaratory relief was appropriate. The court declared the parties’ rights and directed a further consequentials hearing to settle the form of order and related matters.