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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Dandara South East Ltd v Medway Preservation Ltd & Anor [2024] EWHC 2318 (Ch) (10 September 2024) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2024/2318.html Cite as: [2024] TCLR 8, [2024] EWHC 2318 (Ch) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
____________________
DANDARA SOUTH EAST LIMITED |
Claimant |
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- and - |
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(1) MEDWAY PRESERVATION LIMITED (2) MEDWAY PRESERVATION & DEVELOPMENT LIMITED |
Defendants |
____________________
Dalton Hale (instructed by Warners Law LLP) for the Defendants
Hearing date: 24 July 2024
____________________
Crown Copyright ©
Master Brightwell :
i) It contends that, on its true construction, the expert determination provision does not extend to the present dispute.
ii) It also contends that the Contract has now come to an end, and the expert determination provision in the Contract is not separable from it.
iii) Regardless of the separability of the expert determination provision, the claimant also argues that it is plainly unsuitable for the resolution of the dispute between the parties and contends therefore that the court should refuse to grant a stay as a matter of discretion.
The relevant provisions of the Contract
'7.14 The Seller and the Contractor shall instruct the Employer's Agent to give to the Buyer not less than ten (10) Working Days' notice (an Inspection Notice) of each of the dates upon which he intends to inspect the Earthworks with a view to issuing the Practical Completion Statement.
7.15 The Buyer and the Buyer's surveyor will be entitled to accompany the Employer's Agent on each such inspection and the Seller and the Contractor shall instruct the Employer's Agent to allow the Buyer and the Buyer's surveyor to make representations at such inspection as to why in the view of the Buyer or the Buyer's surveyor the Practical Completion Certificate should not be issued and the Buyer shall confirm the representations in writing to the Seller within five (5) Working Days of the inspection and the Seller will procure that the Employer's Agent shall have due regard to the same but the issue or non-issue of the Practical Completion certificate will be in the sole professional discretion of the Employer's Agent.
7.16 If the Employer's Agent decides (having taken into account any such representations) not to issue the Practical Completion Certificate then he shall subsequently give to the Buyer not less than five (5) Working Days' notice of the date upon which he intends to re-inspect the Earthworks with a view to issuing the Practical Completion Certificate and this procedure will be repeated in each case as often as may be necessary.
7.17 Subject to the foregoing provisions of this clause having been observed by the Seller the Practical Completion Statement will be conclusive evidence binding on the parties hereto (save in the case of manifest error) of the Practical Completion Statement that the Earthworks have been practically completed for the purpose of this contract.
7.18 Forthwith following the issue of the Practical Completion Certificate the Seller shall procure that the Employer's Agent to issue a copy of it to the Buyer and to the Buyer's Conveyancer. […]".'
'28. Disputes
28.1 Any dispute or difference between the parties as to any matter under or in connection with this contract shall be submitted for the determination of an expert (the Expert) and the following provisions of this clause 28 shall apply to any submission and to any other matter required to be dealt with by the Expert.
28.2 The Expert shall be appointed by the parties jointly, or in default of agreement within ten (10) Working Days after either party has given to the other a written request requiring the appointment of an Expert, by (depending on the nature of the dispute or difference) the President of the Royal Institute of Chartered Surveyors or the President of the Law Society or their respective nominees (and so that if the parties cannot agree as to which type of Expert is appropriate this shall be decided by a person nominated by the President of the Law Society or his nominee on the application of either party) on the request of either party who shall appoint an independent chartered surveyor or (as the case may be) a solicitor with appropriate experience of dealing with matters of the type which are the subject of the dispute between the parties;
28.3 The Expert so appointed:
(a) must act as an expert and not as an arbitrator;
(b) must afford the parties the opportunity within reasonable time limits to make representations to him (verbal and/or written as such party may elect);
(c) must inform each party of the representations of the other;
(d) must afford each party the opportunity within reasonable time limits to make submissions to him (verbal and/or written as such party may elect) on the representations of the other;
(e) must notify the parties in writing of his decision with reasons as quickly as practicable, and,
(f) may take whatever independent advice he considers necessary.
28.4 The fees and expenses of the Expert including the cost of his nomination and appointment shall (unless he otherwise directs) be borne equally by the parties;
28.5 The Experts determination is to be conclusive and binding on the parties save in the case of manifest error or omission; and
28.6 Either party may pay the share of the Expert's fees and expenses due from the other on behalf of the other if such share is not paid by the due date for payment in which case the amount so paid plus all incidental expenses shall become a debt due and immediately payable to the paying party from the other.
28.7 The Expert is to consider written and/or verbal representations received from the Seller and the Buyer within 15 Working Days of his appointment and any written and/or verbal counter representations by either party received by the Expert within 10 Working Days of a copy of the initial written representations or details of verbal representations made by one party being provided to the other.
28.8 The parties are to instruct the Expert to issue a decision within 30 Working Days of his appointment.
28.9 The Expert may be discharged and another appointed in their place by or on behalf of the relevant President if:
(a) he dies or becomes unwilling to act or incapable of acting; or
(b) he fails to make and publish his determination within two months of his appointment (or a longer period agreed in writing by the Seller and the Buyer); or
(c) for any reason the President or his nominee thinks fit.'
'17. The September 2023 LEAP Report referred to the prior reports, and to further testing carried out by LEAP, which had revealed localised low strength zones which merited further testing, and elevated methane levels indicating that unacceptable concentrations of ground gases are being generated onsite from the fill material that was bought in to raise levels, concluding:
"Dynamic probing across the site has indicated that further investigation is required, due to the extensive soft/loose areas encountered. Additional probes on proposed plot corners are recommended to help determine possible foundation options for the site. The gas monitoring undertaken to date is very limited, but has recorded elevated and apparently increasing levels of methane. It is recommended that at least 6 months of continuous gas monitoring is undertaken to capture worst case scenario conditions (low and falling pressure). The additional monitoring data is required to determine the gas regime at the site and will inform recommendations any gas protection measures or further monitoring/assessments necessary for the development."'
Construction and separability
'Unless otherwise agreed by the parties, an arbitration agreement which forms or was intended to form part of another agreement (whether or not in writing) shall not be regarded as invalid, non-existent or ineffective because that other agreement is invalid, or did not come into existence or has become ineffective, and it shall for that purpose be treated as a distinct agreement.'
'25 It was submitted by Mr Tozzi that a generous construction should be given to the jurisdiction conferred on the expert by the expert determination clause as an expert determination clause in this respect should be treated no differently to an arbitration clause. It was established in Fiona Trust and Holding Corpn v Privalov [2007] Bus LR 1719 that an approach to the construction of an arbitration clause by drawing a fine distinction between words such as "arising under" or "in relation to" (as had been drawn in the earlier cases) should no longer be made. The approach a court should take was that set out at para 13 of the speech of Lord Hoffmann where he made clear that the construction of an arbitration clause should start on the assumption that the parties, as rational businessmen, were likely to have intended that any dispute arising out of the relationship into which they had entered should be decided by the same tribunal. An arbitration clause should therefore be construed in accordance with that presumption, unless the language made it clear that certain questions were to be excluded from the arbitrator's jurisdiction.
26 It is also clear that where parties have made an agreement for a particular form of dispute resolution, then they should be held to that agreement as Lord Mustill explained in his speech in Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334, 353:
"Having made this choice I believe that it is in accordance, not only with the presumption exemplified in the English cases cited above that those who make agreements for the resolution of disputes must show good reasons for departing from them, but also with the interests of the orderly regulation of internationalcommerce,
that having promised to take their complaints to the experts and if necessary to the arbitrators, that is where the appellants should go. The fact that the appellants now find their chosen method too slow to suit their purpose, is to my way of thinking quite beside the point."
27 However, although parties must adhere to the agreement which they have made, I do not consider that the approach to an expert determination clause should be the same as that which must now be taken to an arbitration clause. The rationale for the approach in the Fiona Trust case is that parties should normally be taken, as sensible businessmen, to have chosen one forum for the resolution of their disputes. As arbitration will usually be an alternative to a court for the resolution of all the disputes between the parties, it would not accord with the presumed intention of sensible businessmen to draw fine distinctions between similar phrases to allow a part of the dispute to be outside the arbitration and allocated to the court.
28 In contradistinction expert determination clauses generally presuppose that the parties intended certain types of dispute to be resolved by expert determination and other types by the court (or if there is an arbitration clause by arbitrators). The rationale of the Fiona Trust case does not therefore apply, as the parties have agreed to two types of dispute resolution procedure for disputes which might arise under the agreement. The LLP agreement illustrates this: the parties agreed by clause 26.2 to submit to the exclusive jurisdiction of the English courts, but reserved specific disputes under clause 26.1 to the expert. They carved out of the exclusive jurisdiction of the English courts, to which they had submitted all disputes between the parties, a limited class of dispute. Therefore, quite unlike the position under agreements with arbitration clauses (as exemplified by the Fiona Trust case), the parties have chosen two alternative forms of dispute resolution. There is, therefore, no presumption in favour of giving a wide and generous interpretation to the jurisdiction of the expert conferred by the expert determination clause as the reasoning in the Fiona Trust case is inapplicable. The simple question is whether the dispute which has arisen between the parties is within the jurisdiction of the expert conferred by the expert determination clause or is not within it and is therefore within the jurisdiction of the English court. It is a question of construction with no presumption either way.'
'75 I do not accept that the approach which I have set out is (as Mr Young submitted) 'antithetical to the modern "one-stop" dispute resolution presumption in contractual interpretation'. That presumption is concerned with the interpretation of dispute resolution clauses, as made clear in Fiona Trust. But there is no issue about the interpretation of the arbitration clause in this case….One-stop shopping is all very well, but if the parties have not entered into an arbitration agreement, the shop is not open for business in the first place.'
'5 ….Arbitration is consensual. It depends upon the intention of the parties as expressed in their agreement. Only the agreement can tell you what kind of disputes they intended to submit to arbitration. But the meaning which parties intended to express by the words which they used will be affected by thecommercial
background and the reader's understanding of the purpose for which the agreement was made. Businessmen in particular are assumed to have entered into agreements to achieve some rational
commercial
purpose and an understanding of this purpose will influence the way in which one interprets their language.
6 In approaching the question of construction, it is therefore necessary to inquire into the purpose of the arbitration clause. As to this, I think there can be no doubt. The parties have entered into a relationship, an agreement or what is alleged to be an agreement or what appears on its face to be an agreement, which may give rise to disputes. They want those disputes decided by a tribunal which they have chosen,commonly
on the grounds of such matters as its neutrality, expertise and privacy, the availability of legal services at the seat of the arbitration and the unobtrusive efficiency of its supervisory law. Particularly in the case of international contracts, they want a quick and efficient adjudication and do not want to take the risks of delay and, in too many cases, partiality, in proceedings before a national jurisdiction.
7 If one accepts that this is the purpose of an arbitration clause, its construction must be influenced by whether the parties, as rational businessmen, were likely to have intended that only some of the questions arising out of their relationship were to be submitted to arbitration and others were to be decided by national courts. Could they have intended that the question of whether the contract was repudiated should be decided by arbitration but the question of whether it was induced by misrepresentation should be decided by a court? If, as appears to be generally accepted, there is no rational basis upon which businessmen would be likely to wish to have questions of the validity or enforceability of the contract decided by one tribunal and questions about its performance decided by another, one would need to find very clear language before deciding that they must have had such an intention.
8 A proper approach to construction therefore requires the court to give effect, so far as the language used by the parties will permit, to thecommercial
purpose of the arbitration clause. But the same policy of giving effect to the
commercial
purpose also drives the approach of the courts (and the legislature) to the second question raised in this appeal, namely, whether there is any conceptual reason why parties who have agreed to submit the question of the validity of the contract to arbitration should not be allowed to do so.'
i) This is not a case where the expert determination clause is carved out of the jurisdiction provision, as in Secretary of State for Transport v Stagecoach South Western Trains Ltd [2009] EWHC
2431 (
Comm).
ii) Clauses 28 and 31 are in tension with one another. Clause 28 is not given priority over clause 31. Real substance must be given to the irrevocable agreement to confer exclusive jurisdiction on the courts of England and Wales to resolve any disputes between the parties.
'69 Accordingly, it seems to me that, where a contract requires an expert to effect a valuation which is to be binding as between the parties, and there is an issue of law which divides the parties and needs to be resolved by the expert, it by no means follows that his resolution of the issue is incapable of being challenged in court by the party whose argument on the issue is rejected. As Hoffmann LJ said in [MercuryCommunications
Ltd v Director General of Telecommunications] [1994] CLC 1125, 1140,
"The parties have agreed to a decision in accordance with this meaning and no other. Accordingly, if the decision-maker has acted upon what in the court's view was the wrong meaning, he has gone outside his decision-making authority …"
and it seems to me to follow that the court can review, and, if appropriate, set aside or amend his decision.'
Suitability of clause 28
Conclusion