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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Chelsfield Advisers LLP v Qatari Diar Real Estate Investment Company & Anor  EWHC 1322 (Ch) (15 May 2015)
Cite as:  EWHC 1322 (Ch)
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Royal Courts of Justice
Strand, London, WC2A 2LL
B e f o r e :
(sitting as a Deputy Judge of the Chancery Division)
| CHELSFIELD ADVISERS LLP
|(1) QATARI DIAR REAL ESTATE INVESTMENT COMPANY
(2) QATARI DIAR DEVELOPMENT COMPANY (UK) LIMITED
Alain Choo-Choy QC (instructed by Hogan Lovells International LLP) for the Defendants
Hearing dates: 13 and 23 March 2015
Crown Copyright ©
RICHARD SPEARMAN Q.C.:
Background and outline of the dispute
(1) Whether QDDC has any real prospect of succeeding on its pleaded contention that, on the proper construction of the DFA and/or by way of a term to be implied into the DFA "(i) the continuation of the DFA must have been intended to be conditional upon the continued existence of a relationship of trust and confidence between Chelsfield and QDDC; and (ii) upon the breakdown of the said relationship of trust and confidence as described in QDDC's letter dated 23 September 2014, the DFA must have been intended to be terminable upon either party's request" (see paragraph 10 of the Defence and Counterclaim which, before me, was the subject of an application for permission to amend arising from the arguments that I heard, but which remained unaltered in this regard).
(2) If the first issue is answered in the affirmative, whether QDDC has any real prospect of succeeding on its case that, as a matter of fact, there was a breakdown of the relationship of trust and confidence between Chelsfield and QDDC.
(3) If QDDC fails on one or both of those issues, whether Chelsfield is entitled to a mandatory order requiring QDDC to instruct the Expert to complete his determination of the terms of the DMA pursuant to Clause 3.3 of the DFA.
(4) If Chelsfield succeeds on the third issue, whether it is entitled to a mandatory order requiring QDDC to sign the DMA forthwith once its terms have been determined by the Expert.
The principles applicable to applications for summary judgment
"As Ms Anderson QC rightly reminded me, the court must be careful before giving summary judgment on a claim. The correct approach on applications by defendants is, in my judgment, as follows:
i) The court must consider whether the claimant has a 'realistic' as opposed to a 'fanciful' prospect of success: Swain v Hillman  2 All ER 91;
ii) A 'realistic' claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel  EWCA Civ 472 at .
iii) In reaching its conclusion the court must not conduct a 'mini-trial': Swain v Hillman.
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at .
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5)  EWCA Civ 550.
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd  FSR 63.
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd  EWCA Civ 725."
"28. The fact that some factual or legal questions may be disputed does not absolve the judge from her duty to make an assessment of the claimant's prospects of success. As Lord Hobhouse put in Three Rivers District Council v Governor and Company of the Bank of England (No 3)  2 AC 1 at :
"The important words are "no real prospect of succeeding". It requires the judge to undertake an exercise of judgment. He must decide whether to exercise the power to decide the case without a trial and give a summary judgment. It is a "discretionary" power, i.e. one where the choice whether to exercise the power lies within the jurisdiction of the judge. Secondly, he must carry out the necessary exercise of assessing the prospects of success of the relevant party. If he concludes that there is "no real prospect", he may decide the case accordingly. Whilst it must be remembered that the wood is composed of trees some of which may need to be looked at individually, it is the assessment of the whole that is called for. A measure of analysis may be necessary but the "bottom line" is what ultimately matters." (Emphasis added)
29. In evaluating the prospects of success of a claim or defence the judge is not required to abandon her critical faculties. As Potter LJ put it in E D & F Man Liquid Products Ltd v Patel  EWCA Civ 472,  CP Rep 51 at :
"It is certainly the case that under both rules, where there are significant differences between the parties so far as factual issues are concerned, the court is in no position to conduct a mini-trial: see per Lord Woolf MR in Swain v Hillman  1 All ER 91 at 95 in relation to CPR 24. However, that does not mean that the court has to accept without analysis everything said by a party in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporary documents. If so, issues which are dependent upon those factual assertions may be susceptible of disposal at an early stage so as to save the cost and delay of trying an issue the outcome of which is inevitable: see the note at 24.2.3 in Civil Procedure (Autumn 2002) Vol 1 p.467 and Three Rivers DC v Bank of England (No.3)  UKHL/16,  2 All ER 513 per Lord Hope of Craighead at paragraph ."
"1 DEFINITIONS AND INTERPRETATION
In this Agreement:
1.7 "Development" means the carrying out of any substantial works to the whole or any substantial part or parts of the Property for which Planning Permission for the whole or relevant part or parts of the Property is required and all related and ancillary works;
1.8 "Development Management Agreement" means the agreement for the provision of development management services in relation to the Property and the Development, which shall be agreed between QDDC and Chelsfield in accordance with clause 3;
1.9 "Development Management Fees" shall have the meaning set out in Schedule 2;
1.14 "Planning Incentive Fees" shall have the meaning set out in Schedule 2;
1.16 "Planning Period" means the period for working up designs, submitting applications and seeking to achieve Planning Permission for the Development, commencing on a date to be specified by QDDC (and notified to Chelsfield in writing) such date to fall between the date of this Agreement and the date one month following Completion and ending on the earlier of1.16.1 the obtaining of Planning Permission; and1.16.2 the date 5 years from the date of commencement of the Planning Period,
or such later date as may be agreed between the Parties;
1.17 "Planning Permission" means detailed planning permission in respect of the whole or any substantial part or parts of the Property granted pursuant to an application submitted by or on behalf of QDDC or the Guarantor or the Purchaser or their respective successors in title and assigns to the Contract or the Property and in relation to which the period for Judicial Review or any other Statutory Challenge has expired without such Judicial Review or Statutory Challenge being instigated or, if instigated, that the relevant court proceedings have been finally determined resulting in the validity of such planning permission being upheld (and references to the seeking and obtaining of Planning Permission shall be construed accordingly);
3 DEVELOPMENT MANAGEMENT
3.1 QDDC shall appoint Chelsfield (or a member of its Group approved by QDDC acting reasonably) as development manager pursuant to the Development Management Agreement to provide development management services in relation to the Development, in consideration for inter alia the Development Management Fees and the Planning Incentive Fees.
3.2 QDDC and Chelsfield shall acting reasonably and with all due expediency negotiate with one another in good faith to agree the form of the Development Management Agreement as soon as reasonably possible following the date of this Agreement, but for the avoidance of doubt both Parties confirm that the following terms are agreed:3.2.1 The fees payable under the Development Management Agreement shall be the Development Management Fees and the Planning Incentive Fees; and3.2.2 The term of the Development Management Agreement shall be for the entire duration of the Development, but with an option for QDDC to terminate the Development Management Agreement at the end of the Planning Period without, subject to clause 3.2.1, any further payment by QDDC.
3.3 In the event that the terms of the Development Management Agreement have not been agreed between QDDC and Chelsfield by the date 5 months following the date of this Agreement, either of them shall be entitled to refer the matter to the Expert for determination and the following provisions shall apply
4 ADVANCE PLANNING PAYMENT
4.1 On Completion, QDDC shall pay to Chelsfield the Advance Planning Payment.
4.2 If at the time of Completion, Chelsfield is of materially weaker covenant strength than as at the date of this Agreement, Chelsfield shall, on reasonable prior request by QDDC, arrange for QDDC to be provided with reasonable security for the potential repayment of the Advance Planning Payment.
4.3 In the event that the Planning Incentive Fees are less than £10,000,000 (ten million pounds) in total, Chelsfield shall refund to QDDC the amount by which the Advance Planning Payment exceeds the total achieved Planning Incentive Fees on the date 10 Working Days following the Planning Incentive Fees Calculation Date.
4.4 QDDC and the Guarantor agree that they (and the Purchaser) will act in good faith in relation to the seeking of the Planning Permission in the Planning Period and the Planning Incentive Fees, and that they will not (and will procure that the Purchaser will not) take any deliberate steps the purpose of which is to avoid, delay or depress the triggering, calculation and payment, or amount of any Planning Incentive Fees (and will (and will procure that the Purchaser will) use all reasonable endeavours to procure that their (and the Purchaser's) successors in title and assigns to the Contract or the Property do the same).
5.1 The Guarantor (in consideration of Chelsfield entering into this agreement) shall in good faith use all reasonable endeavours to achieve or procure achievement of Completion of the Contract in accordance with the terms of the Contract, and in particular agrees as follows
None of the Guarantor, QDDC or Chelsfield shall assign, sub-contract or sub-licence all or any part of any of its benefits, rights or obligations, interests or licences under this Agreement without the prior written consent of the other Parties.
13.1 QDDC may determine this Agreement by written notice to Chelsfield to that effect in the event that any of the following events occur in relation to Chelsfield which shall not have been set aside or rectified within 20 Working Days:(a) Chelsfield shall have an order made or resolution passed for its winding-up;(b) Chelsfield enters into voluntary winding-up other than for the purpose of re-organisation whilst solvent;(c) the appointment of a provisional liquidator to Chelsfield;(d) presentation of a petition in respect of Chelsfield (which is not contested within the 20 Working Day period referred to above following presentation) or a meeting is convened for the purpose of considering a resolution for winding up;(e) dissolution of Chelsfield (whether or not after winding up);(f) if a resolution is passed or any other step is taken by Chelsfield for the appointment of an administrator, or an administrator is appointed, or a petition or application for an administration order is presented in relation to Chelsfield;(g) if a receiver (which expression shall without prejudice to the generality thereof include an administrative receiver) is appointed over all or any of the assets or of the income arising from all or any of the assets of Chelsfield;(h) Chelsfield is unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986; or(i) if any meeting of Chelsfield is convened pursuant to section 123 of the Insolvency Act 1986 to consider a proposal for a voluntary arrangement under Part I of such Act,and in such event (subject to clause 13.2) this Agreement shall immediately cease and determine.
13.2 The determination of this Agreement shall be without prejudice to any other rights or remedies of either Party against the other for the breach non-observance or non-performance of any of their obligations under this Agreement.
15. ENTIRE AGREEMENT AND SEVERANCE
15.1 The Guarantor, QDDC and Chelsfield confirm that this Agreement represents the entire understanding, and constitutes the whole agreement, between them with respect thereto and, without prejudice to the generality of the foregoing, excludes any warranty, condition or other undertaking implied at law or by custom.
16. RELATIONSHIP OF PARTIES
Nothing in this Agreement and no act or conduct by the Guarantor, QDDC and Chelsfield pursuant to this Agreement or otherwise in accordance with the Arrangement shall constitute or be deemed to constitute a partnership or joint venture between the Parties or shall give any Party the power to bind the other Parties.
18 GOVERNING LAW
18.1 This Agreement shall be governed by, and construed in accordance with, English law.
18.2 The Courts of England shall have exclusive jurisdiction in relation to any claim, dispute or difference concerning this Agreement and any matter arising therefrom "
Issue (1) the implied term or condition of mutual trust and confidence
(a) Parties' submissions
(1) The DFA itself (which was negotiated by Herbert Smith on behalf of Chelsfield and Hogan Lovells on behalf of QDREIC and QDDC) contains no support for the implied term. On the contrary: (a) in Clause 13 of the DFA the parties addressed in detail the circumstances in which QDDC was to be entitled to determine the DFA; (b) if they had intended that QDDC should be entitled to determine the DFA on the basis of a breakdown in trust and confidence they would have included that in Clause 13, but they did not do so; and (c) it is clear from Clause 15 that the parties considered that all terms of their agreement had been spelled out in the DFA.
(2) The argument (based on paragraph 29 of the first witness statement of Mr Al Sayed) that "trust and confidence between the parties to a development management agreement is crucial as they have to work closely together" is not persuasive. While (a) a DMA will contain obligations on the part of each party designed to ensure that (among other things) they work together to achieve the development of the property, (b) a DMA may also include obligations of good faith and fiduciary obligations, and (c) breach of one of those obligations may, if sufficiently serious, entitle the innocent party to determine the DMA for breach, nevertheless it is inconceivable that the parties should objectively have intended that one party should be entitled to determine a DMA (in reliance on which the other will or may have invested significant time and resources) just because that party had lost trust and confidence in the other party in circumstances where the other party was not in breach of any obligation under the DMA.
(3) It is illuminating that the draft DMA submitted by QDDC which formed the basis of the Expert's determination did not contain any provision entitling QDDC to determine the DMA in such circumstances, and at no point in its submissions to the Expert has QDDC ever suggested that such a term should be included.
(4) If the parties had intended such a term to be part of the DFA then there would have been all the more reason to include it in the DMA.
(5) Even if such a term were to be implied into the DMA, it does not follow that it should be implied into the DFA. Chelsfield's only remaining obligations under the DFA are (a) by Clause 3.2 to act reasonably with all due expediency and in good faith to negotiate the form of the DMA and (b) by Clause 4.2, in the event that the covenant strength of Chelsfield is materially weaker at Completion than at the date of the DFA, to provide reasonable security for repayment of the Advance Planning Payment. Whatever the position under the DMA, there can be no basis for asserting that the performance of these obligations requires that a term be implied into the DFA giving QDDC the right to determine the DFA on the grounds that it has lost trust and confidence in Chelsfield in addition to its right to determine for repudiatory breach or pursuant to Clause 13 of the DFA.
(6) Mr Choo-Choy had produced no authority in support of the implied term. The reliance of QDREIC and QDDC on cases where an employer was held to be under an obligation not to destroy the relationship of trust and confidence between it and its employee is misplaced. Those cases do not support the submission that (without breach of a promissory obligation on the part of one party to the contract to the other) any type of contract is to be regarded as conditional on the continued existence of a relationship of trust and confidence between the parties so as to entitle one party to terminate the contract merely because it no longer has trust and confidence in the other party to the contract.
(1) The nature of the relationship intended to be created between QDDC as promoter of the development project and Chelsfield as intended development manager pursuant to the terms of the DFA (and subsequently the DMA once its terms were agreed under Clauses 3.1 and 3.2 of the DFA or determined by the Expert under Clause 3.3 of the DFA) as evidenced by the terms of the DFA and the agreed terms of the draft DMA in negotiation between the parties was such that the parties could only have objectively intended and been reasonably expected to continue to work with each other on the project in circumstances where they continued to have trust and confidence in each other.
(2) At a minimum, QDDC has a real prospect of establishing the implied term at trial.
(3) By the second half of September 2014, the relationship between QDDC and Chelsfield had irretrievably broken down as a result of multiple and substantial disagreements between them, including, in particular, disagreements as to: (a) the intended scope of development management services under the DMA and the intended term of the DMA; (b) the fees intended to be payable to Chelsfield under the DMA, in particular, during the post-Planning Period; (c) Chelsfield's ability to provide the development management services using its own staff and resources (i.e. without delegation or sub-contracting to third parties, whether or not part of the Chelsfield group); (d) the need for Chelsfield to provide satisfactory security in respect of the Advance Planning Payment of £10,000,000 under the DFA, especially in light of its "flimsy" financial condition; and (e) a whole host of other terms of the DMA (i.e. in addition to the dispute as to intended scope of development management services and fees payable under the DMA and the intended term of the DMA).
(4) The nature and extent of those disagreements was such that (a) QDDC made a referral to the Expert under Clause 3.3 of the DFA, (b) Chelsfield brought the Advance Planning Payment Claim against QDDC and QDREIC, and (c) QDDC ceased to have the necessary trust and confidence in Chelsfield and no longer wished to continue to work with Chelsfield (pursuant to the DFA or the DMA).
(5) Accordingly, by letter dated 23 September 2014, QDDC informed Chelsfield that it was treating the DFA as at an end and indicated that it would not enter into and complete the DMA with Chelsfield.
(6) Since QDDC has at least a real prospect of succeeding in its contention that the DFA is subject to the implied term and that there is no longer a relationship of trust and confidence between the parties, there is a real argument that QDDC has lawfully determined the DFA. No summary judgment should therefore be granted in terms of the declaration sought by Chelsfield.
(1) With regard to the intended scope of development management services under the DMA, Mr Choo-Choy submitted, by reference to Recitals C and D and Clauses 1.7 and 1.8 and 3.1 of the DFA, that Chelsfield is to provide development management services in relation to the whole of the Development (as defined) (i.e. in relation not just to the planning stage, but also the whole of the construction stage of the project).
(2) With regard to the intended term of the DMA, and by reference to Clause 3.2 of the DFA, he submitted that the DMA is to last for the entire duration of the construction stage, unless QDDC exercises the option to terminate the DMA at the end of the Planning Period (as defined in Clause 1.16), and that the development management services under the DMA were intended to last until completion of the construction and related and ancillary works to the Property.
(3) With regard to the fees, he submitted by reference to Clauses 1.9 and 1.14 and 3.2.1 and Schedule 2, that the fees that were to be payable under the DMA had already been agreed as set out in Clause 3.2.1 and Schedule 2 of the DFA.
(4) With regard to the Expert's remit under Clause 3.3 of the DFA, Mr Choo-Choy submitted that because Clause 3.2 provides that the matters addressed in Clauses 3.2.1 and 3.2.2 are "for the avoidance of doubt agreed" in connection with the terms of the DMA, it necessarily follows that they are not "terms of the [DMA] [which] have not been agreed" for the purposes of Clause 3.3 of the DFA and are not therefore matters which can be contractually referred for determination (or which can be contractually determined) by the Expert pursuant to Clause 3.3. He relied on the judgment of Lightman J in British Shipbuilders v. VSEL Consortium Plc  1 Lloyd's Rep 106 at 109: "[q]uestions as to the role of the expert, the ambit of his remit (or jurisdiction) and the character of his remit (whether exclusive or concurrent with a like jurisdiction vested in the Court) are to be determined as a matter of construction of the agreement".
(5) He further submitted that, since the Expert's remit or jurisdiction under Clause 3.3 is only to determine the terms of the DMA which have not been agreed between QDDC and Chelsfield, the Expert has no authority to determine or to make a contractually conclusive and binding determination as to (a) the proper construction of the terms of the DFA, or (b) the determination of terms of the DMA that have already been agreed between QDDC and Chelsfield, whether expressly or impliedly, as a result of the terms of the DFA. On the contrary, matters that fall within either or both of the above categories are matters for determination by the Court pursuant to Clause 18.2 of the DFA.
(6) Mr Choo-Choy submitted that the ascertainment of the Expert's proper remit under Clause 3.3 is important because it is relevant to the question whether the Court, if satisfied to the requisite degree of proof on Chelsfield's summary judgment application that the DFA remains in existence and that QDDC's purported early termination of the DFA was unjustified, should go on to exercise its equitable discretion to order the resumption and completion of the expert determination process under Clause 3.3.
(7) With regard to the personal nature of the intended relationship under the DMA, Mr Choo-Choy submitted that (a) in the context of a substantial property development, the relationship between, on the one hand, the project client or promoter and, on the other hand, the project professionals including a development manager requires the establishment of a close working relationship and on-going consultation, discussion, inter-action and co-operation at a personal level between client and professional, typically over a significant period of time and (b) such close co-operation and so forth is only workable if the parties have mutual trust and confidence in each other. He submitted that aspects of such a relationship will be fiduciary or equitable in nature and/or akin to that of principal and agent, and that the relationship of mutual trust and confidence between the parties is at the heart of all such personal relationships.
(8) Mr Choo-Choy submitted that the personal nature of the relationship intended to be created pursuant to the DMA is also evidenced by the provisions that were agreed between QDDC and Chelsfield in connection with the negotiation of the draft DMA prior to the referral to the Expert, which covered a broad range of matters. He cited by way of example a large number of provisions contained in the revised draft DMA which was produced on Chelsfield's behalf on 27 February 2014. The provisions that he relied upon included (among others): (a) Chelsfield's duty to act in the best interests of QDDC under draft clause 3.5(c), (b) Chelsfield's duty not to obtain any financial advantage from any other person in carrying out the Services other than through the Development Management Fees and Planning Incentive Fees under draft clause 3.5(d); (c) the mutual duty of good faith owed by each party to the other in relation to the performance of their respective obligations under the DMA under draft clause 3.7; (d) the giving of advice and making of recommendations by Chelsfield to QDDC, including the setting out of all relevant considerations and recommendations as to the available courses of action under draft clause 4.5(a)-(b); and (e) Chelsfield making available to QDDC the full benefit of its experience, skill, expertise and judgment in relation to the Services and having regard to professional codes of conduct and/or guidelines under draft clause 4.5(e)-(f).
"The Board considers that this list is best regarded, not as series of independent tests which must each be surmounted, but rather as a collection of different ways in which judges have tried to express the central idea that the proposed implied term must spell out what the contract actually means, or in which they have explained why they did not think that it did so. The Board has already discussed the significance of "necessary to give business efficacy" and "goes without saying". As for the other formulations, the fact that the proposed implied term would be inequitable or unreasonable, or contradict what the parties have expressly said, or is incapable of clear expression, are all good reasons for saying that a reasonable man would not have understood that to be what the instrument meant."
(1) If it cannot have been objectively intended that Chelsfield should be forced to continue to work for QDDC if the relationship of trust and confidence between them broke down, and if it is to be reasonably presumed that the parties must have intended that Chelsfield should be able to bring the relationship to an end without thereby being in breach of either the DFA or DMA, why should it be presumed that QDDC was not intended to have a similar entitlement in the event of a genuine breakdown in the relationship of trust and confidence between them?
(2) Given the personal nature of the relationship, a mutual entitlement to terminate the parties' relationship in the event of a breakdown in the relationship of trust and confidence between them is not only reasonable to imply, but obvious and necessary if the contract between the parties is to work. The contract is simply unworkable without trust and confidence between the parties, and if such trust and confidence no longer exists, it can hardly be supposed that the parties nevertheless intended that they should be forced to continue to work together.
(3) There is no issue of lack of clarity in the expression of the implied term. As pleaded by QDDC (see paragraph 32(1) above), the entitlement to terminate only crystallises upon the breakdown in the relationship of trust and confidence.
(4) Clause 13.1 of the DFA does not state that it contains the only grounds on which the DFA could be terminated or otherwise indicate that it is exhaustive as to the circumstances in which the DFA might be terminated. On the contrary, Clause 13.2 expressly provides that termination of the DFA pursuant to Clause 13.1 "shall be without prejudice to any other rights or remedies of either Party against the other for the breach, non-observance or non-performance of any of their obligations under this Agreement". Moreover, it is clear from the subject-matter of Clause 13.1 that it is solely concerned with the creation of a special right of termination in QDDC's favour in the event of insolvency related events affecting Chelsfield. There is accordingly no basis for inferring inconsistency between Clause 13.1 and the implied term alleged by QDDC.
(5) There is no inconsistency between Clause 3.2.2 of the DFA and the implied term, just as in the event that the DFA had contained an express term providing for early termination in the event that the relationship of trust and confidence between the parties broke down there would have been no inconsistency between Clause 3.2.2 and any such express term. Such an express term would have dealt with the circumstances in which there might be early termination, while Clause 3.2.2 deals with the expiry of the DMA in the absence of early termination.
"The applicants do not rely on a term implied in fact. They do not therefore rely on an individualised term to be implied from the particular provisions of their employment contracts considered against their specific contextual setting. Instead they rely on a standardised term implied by law, that is, on a term which is said to be an incident of all contracts of employment: Scally v Southern Health and Social Services Board  1 AC 294, 307B. Such implied terms operate as default rules. The parties are free to exclude or modify them
The evolution of the term is a comparatively recent development. The obligation probably has its origin in the general duty of co-operation between contracting parties: Hepple & O'Higgins, Employment Law, 4th ed. (1981), pp. 134-135, paras. 291-292. The reason for this development is part of the history of the development of employment law in this century. The notion of a 'master and servant' relationship became obsolete. Lord Slynn of Hadley recently noted 'the changes which have taken place in the employer-employee relationship, with far greater duties imposed on the employer than in the past, whether by statute or by judicial decision, to care for the physical, financial and even psychological welfare of the employee': Spring v Guardian Assurance Plc  2 AC 296, 335B. A striking illustration of this change is Scally's case  1 AC 294 , to which I have already referred, where the House of Lords implied a term that all employees in a certain category had to be notified by an employer of their entitlement to certain benefits. It was the change in legal culture which made possible the evolution of the implied term of trust and confidence.
There was some debate at the hearing about the possible interaction of the implied obligation of confidence and trust with other more specific terms implied by law. It is true that the implied term adds little to the employee's implied obligations to serve his employer loyally and not to act contrary to his employer's interests. The major importance of the implied duty of trust and confidence lies in its impact on the obligations of the employer: Douglas Brodie, 'Recent cases, Commentary, The Heart of the Matter: Mutual Trust and Confidence' (1996) 25 ILJ 121. And the implied obligation as formulated is apt to cover the great diversity of situations in which a balance has to be struck between an employer's interest in managing his business as he sees fit and the employee's interest in not being unfairly and improperly exploited."
"A solicitor must not terminate his retainer with his client, except for good cause and on reasonable notice. Wrongful termination by the solicitor is a breach of contract. Examples of good reason for termination include
(d) where there is a serious breakdown in confidence between the solicitor and the client, for example, where the solicitor having properly and correctly advised the client, the clients refuses to follow that advice "
Issue (2) whether there was a breakdown of trust and confidence in fact
(1) QDDC's letter purportedly determining the DFA came entirely "out of the blue".
(2) The correspondence shows that the parties had been engaged for many months in discussions on the issues upon which they differed and were in the course of seeking to have them resolved by the Expert (so far as they were within the scope of Clause 3.3 of the DFA) and by the court (so far as they lay outside the remit of the Expert).
(3) This correspondence is entirely inconsistent with Mr Al Sayed's contention that QDDC has lost trust and confidence in Chelsfield. For example: (a) QDDC's email of 27 September 2013 enclosing a draft of the DMA referred to "our strengthened relationship"; (b) Chelsfield responded saying it would consider this draft "carefully, promptly and in good faith"; (c) QDDC replied thanking Chelsfield for confirming this; (d) when agreement did not result, Mr Patrizio suggested to Mr Burrow that they meet to discuss the matter, and after that meeting he wrote again thanking Mr Burrow for taking the time to meet up, saying that unfortunately they were unable to agree on the outstanding points and saying QDDC would now proceed to get the RICS to appoint an expert; (e) upon the appointment of the Expert, QDDC and Hogan Lovells co-operated in the determination of the Expert up to and including 19 September 2014, two working days before the purported determination on 23 September 2014.
(4) The continued co-operation between QDDC and Chelsfield in seeking to resolve their differences is inconsistent with the contention that QDDC had lost trust and confidence in Chelsfield.
(5) The court is not bound to accept Mr Al Sayed's evidence, and should reject it on the basis that it is not credible where it is entirely inconsistent with the contemporary correspondence, and where Mr. Al Sayed has made no attempt at all to deal with that inconsistency.
(6) Any suggestion in argument that the true nature of the parties' relationship might not appear from their open correspondence and that their without prejudice discussions might reveal a different picture should be firmly rejected since it finds no support at all in Mr Al Sayed's evidence. If that point was to be run, Mr Al Sayed could and should have said in terms that the exhibited correspondence is inconsistent with their without prejudice discussions, but he had not done so.
(1) QDDC first asked Chelsfield for its proposed scope of development management services on 30 July 2013, but Chelsfield never provided it, with the result that QDDC had to take the initiative and supplied its proposed scope on 19 September 2013.
(2) Chelsfield was provided with a full draft DMA on 27 September 2013, but did not revert with its detailed comments until 5 months later on 27 February 2014.
(3) In view of Chelsfield's very low turnover, profits and net assets, especially compared to the substantial value of the development and indeed the size of the Advance Planning Payment, QDDC asked for Chelsfield's proposals for security in respect of the Advance Planning Payment on 30 July 2013, but such proposals were not provided until 23 June 2014, almost a year later, and even then were not considered satisfactory by QDDC.
(4) By its proposed revisions to the draft DMA, Chelsfield (a) sought to disregard and rewrite terms of the DMA that had already been agreed under the DFA, and (b) suggested extensive revisions that led QDDC to the conclusion that it had no choice (at that stage) but to refer matters to the Expert pursuant to Clause 3.3.
(5) On 18 August 2014, Chelsfield commenced formal proceedings against QDDC claiming the Advance Planning Payment, despite the fact that there were ongoing discussions regarding the security to be provided by Chelsfield in respect of that payment and despite the absence of agreement over the terms of the DMA.
(6) The tone of the correspondence between the parties has gradually deteriorated over time and become more confrontational.
(7) In any event, the fact that QDDC did not rehearse its growing loss of trust and confidence in the correspondence is not determinative: people are often reticent about airing such matters.
(8) Chelsfield has consistently failed to demonstrate how it could, through use of its own personnel and resources, deliver the required development management services under the DMA. Understandably therefore, QDDC has no belief in Chelsfield's ability to deliver the required services.
(9) Chelsfield's "dogged determination" to restrict its development management services to planning matters only, to restrict the term of the DMA to the date of practical completion (rather than final completion) of the construction and related / ancillary works, and to secure the payment of additional fees under the DMA (i.e. over and above the Development Management Fees and Planning Incentive Fees) for services rendered during the post-Planning Period, has only served to precipitate QDDC's loss of trust and confidence in Chelsfield.
(10) All of the above problems have contributed to significant delay in QDDC's progress of the development of the Property.
(11) To the extent that Mr Burrow had attempted to suggest that QDDC has not genuinely lost trust and confidence in Chelsfield and that the professed loss of trust and confidence is only a ploy to avoid the Advance Planning Payment and execution and performance of the DMA, any such suggestion (a) is fully answered by Mr Al Sayed's second witness statement, and (b) is a matter for cross-examination at trial rather than for summary determination on paper.
(12) The suggestion that Mr Al Sayed has "made no attempt at all" to deal with the alleged inconsistency between his first witness statement and the contemporary correspondence is unfounded. Mr Al Sayed has addressed the issue in his second witness statement and highlighted the fact that "the Defendants' dissatisfaction with the Claimant built up over time".
Issue 3 whether QDDC should be required to continue instructing the Expert
(a) Parties' submissions
(1) Clause 12 of the DFA requires the Expert to make his determination within 10 working days of the receipt of written representations and counter representations. The parties have provided these, and accordingly it is only necessary for the Expert to issue his determination.
(2) Although the parties agreed to his suggestion of having a meeting with the Expert (which was abandoned after QDDC's purported determination of the DFA) there is no requirement for such a meeting to take place under Clause 12 or at all.
(3) Accordingly, in considering whether or not to order that the expert determination be completed, no further co-operation by either party is required (beyond QDDC reversing its instruction to the Expert not to proceed with his determination).
(1) Even if it was right to say that the court should not and would not order QDDC to enter into the DMA once its terms are determined by the Expert, the court ought still to require the Expert to complete his determination because the terms of the DMA will be central to Chelsfield's claim in damages against QDDC for repudiatory breach of the DFA. Chelsfield's claim for damages will depend on the level of profit, if any, that it would have made had it entered into and performed its obligations under the DMA. This will depend in turn on the cost to it of performing its obligations under the DMA, as to which difficult questions such as the scope of the services under the DMA and whether it is entitled to sub-contract its services will be of central relevance. If the Expert has not determined the terms of the DMA, the court would need to do so in the assessment of Chelsfield's claim to damages. As the Expert's determination is nearly concluded and all that remains is for him to issue his determination, it is clearly more convenient for the court to order that determination to be completed than for it to determine the difficult question as to what the terms of the DMA would have been had it been entered into.
(2) QDDC's contentions - that damages would be an adequate remedy for Chelsfield and that an order for specific performance requiring QDDC to enter into the DMA would not be ordered given the personal nature of the DMA and the necessity for on-going co-operation between the parties - confuse two entirely separate matters: (a) whether an order should be granted that QDDC perform the DFA, including by entering into the DMA in the form determined by the Expert, and (b) whether an order should be granted that QDDC perform the DMA.
(3) If QDDC is required to enter into the DMA, it will need to consider whether or not to perform its obligations under the DMA or refuse to do so in repudiatory breach of the DMA. If it refuses to perform its obligations under the DMA, Chelsfield will then need to decide whether to accept that repudiation and determine the DMA or not. If Chelsfield chooses not to accept QDDC's repudiatory breach it will need to decide whether to seek specific performance of the DMA or to confine itself to a claim in damages. It is therefore premature to consider whether or not the court would order specific performance of the DMA - and no such order is sought in these proceedings.
(4) The question with which these proceedings are concerned is whether QDDC should be required to enter into the DMA by way of specific performance of the DFA. To make such an order requires no element of continued co-operation between the parties and is unaffected by the alleged "personal nature" of the DMA. Accordingly, these matters provide no defence to the present claim for specific performance.
(5) As to whether an order for specific performance should be made, the test is whether or not it is just, in all the circumstances, to confine the claimant to its remedy in damages: see Evans Marshall & Co Ltd v. Bertola SA  1 WLR 349 at 379. It would not be just to confine Chelsfield to a claim in damages for breach of the DFA, since this would be one removed from the real dispute between the parties, which concerns Chelsfield's rights against QDDC under the DMA which QDDC is required to enter into. It would appear that QDDC is opposing the order requiring it to enter into the DMA because it perceives that if it is not required to enter into the DMA there will be some advantage to it so far as the relief available to Chelsfield or Chelsfield's measure of damages is concerned. It ought not to be allowed to obtain an advantage in this way.
(1) There is no basis for implying a term in the DFA that the expert determination procedure should not be completed if the court would not order QDDC to perform the DMA once its terms had been determined: either the DFA has not been determined, in which case both parties are required to perform their obligations under it including the requirement to refer the terms of the DMA to expert determination; or the DFA has been determined, in which case the expert determination procedure no longer applies.
(2) In any event, it cannot be regarded as certain one way or the other whether or not the court would order QDDC to perform its obligations under the DMA, since this depends on whether the court would exercise its discretion so as to require specific performance of the obligations under the DMA. It can hardly be expected that whether or not the parties are required to complete the expert determination is to depend on whether on the balance of probabilities the court would be likely to grant or refuse an order for specific performance of the obligations under the DMA at some point in the future.
(3) Chelsfield's response to QDDC's argument that no such order should be made since the Expert's determination would not conclude the matter as regards the scope of services, the fees payable or the term of the DMA (all of which are said to be outside the expert's remit) is as follows. First, while reserving its position for the future, Chelsfield does not seek to contend for the purpose of the present summary judgment application that these submissions as to the scope of the Expert's remit are unarguable. Second, Chelsfield makes the following points: (a) since Chelsfield's position is that these questions are within the scope of the Expert's remit, the point arises only (i) if the Expert finds against QDDC on one or more of these issues and (ii) if he does so in a way which is material to the net profit Chelsfield would earn if the DMA was entered into and until the Expert makes his determination, it is not possible to speculate whether that will be the case or not; (b) these issues form only 3 of the 34 agreed issues which the Expert is being asked to determine; (c) the question of the scope of the Expert's remit was not raised by QDREIC and QDDC at all until the day before the hearing before me commenced and they participated in agreeing a list of issues and in preparing submissions on the terms of the DMA, including on the question of the scope of the services, fees payable and term of the DMA.
(1) On the proper construction of Clause 3.3 of the DFA, the expert determination process is only intended to apply where both parties are ready, willing and able to perform the DMA, or where performance of the DMA can be specifically enforced, whereas neither requirement is met on the present facts. The parties cannot have intended that they should be required to engage in an academic exercise before the Expert, make representations to him, and enable him to determine appropriate terms for the DMA, when (according to QDDC's submissions) it is already known (i) that the DMA will not be performed and (ii) that its performance will not be specifically enforced by the court. An objective bystander would readily have presumed at the time that the DFA was entered into that the expert determination process would only be invoked and completed when performance of the DMA was intended or compellable by the court.
(2) As a matter of discretion, the court should in any event refuse the order sought (i) pending clarification of certain aspects of the DMA that have already been agreed pursuant to the DFA and are therefore outwith the Expert's remit (albeit that those matters are being re-argued by Chelsfield before the Expert) and (ii) because the Expert's determination under Clause 3.3 will not obviate the need for expert evidence with respect to the quantification of damages for breach of contract, which is the only remedy that, on the present facts, Chelsfield can realistically hope to obtain in respect of QDDC's refusal to perform the DMA.
(1) There is no point in requiring QDDC to sign an agreement which it has refused to perform and in respect of which Chelsfield will not be able to get an order for specific performance.
(2) Damages would be an adequate remedy for Chelsfield in respect of QDDC's non-signature and/or non-performance of the DMA.
(3) It is in any event premature to order specific performance of the signature of the DMA when its full terms are not yet known and the Expert's determination of the same may be subject to challenge on account of his excess of jurisdiction the Court should only exercise its discretion to order or not order signature by QDDC after sight of the full terms of the DMA and subject to any challenge that may be made to the validity of the Expert's determination under Clause 3.3.
(1) Matters which, on the proper construction of the DFA, have already been expressly or impliedly agreed between QDDC and Chelsfield are clearly not matters that are within the Expert's contractual remit under Clause 3.3. This is clearly the case with respect to (a) the amount of fees payable under the DMA, as defined under Clause 3.2.1 and Schedule 2, (b) the term of the DMA as described in Clause 3.2.2 of the DFA, and (c) the proper scope of the development management services under the DMA, in so far as that can be discerned from the scope of Chelsfield's appointment as specified in Clause 3.1 of the DFA, the duration of the DMA as prescribed by Clause 3.2.2 of the DFA, and the related definitions of the DMA and the Development in Clauses 1.7 and 1.8 of the DFA.
(2) There are currently serious disagreements between the parties as to what has been already agreed under the DFA with respect to the terms of the DMA. Chelsfield has made submissions to the Expert which effectively seek to vary or disregard the effect of Clauses 3.2.1 and 3.2.2 of the DFA (and by extension other related provisions of the DFA , including Recital D, Clauses 1.7, 1.8 and 3.1 and Schedule 2), in particular, by arguing (a) that the Development Management Fees and Planning Incentive Fees are not the only fees to be payable to Chelsfield under the DMA (Chelsfield argues in particular for the payment of additional fees under the DMA, on an hourly rate basis as set out in Schedule 5 to its 27 February 2014 marked-up version of the draft DMA, in respect of services rendered during the post-Planning Period); (b) that the term of the DMA should end on the date of the Certificate of Practical Completion rather than (as contended by QDDC) on the date of the Final Certificate issued in respect of all of the construction and related and ancillary works to the Property; and (c) that the development management services to be provided by Chelsfield, although they may be provided after the end of the Planning Period, "would relate only to planning" or would not extend beyond services "relating in some way to planning" (such that Chelsfield is, in effect, rejecting the view that the development management services that it is required to provide under the DMA should extend to the management of the construction stage of the project).
(3) While QDDC's case as to the proper construction of the DFA in the above respects may be disputed by Chelsfield, those disputes are for determination by the court at trial; they are not for determination by the Expert pursuant to Clause 3.3 (nor indeed by the court in the context of a summary judgment application). Unless and until those disputes have been resolved by the court, it does not make sense for the Expert to undertake any further work on other aspects of the disputed terms of the DMA. The precise scope and need for the Expert's determination under Clause 3.3 is likely to be influenced by, and should therefore await, the court's determination of the above-mentioned disputes.
(4) For the avoidance of doubt, the issues that it will be necessary for the court to determine in this connection are: (a) whether as contended by QDDC the only fees that should be payable under the DMA are the Development Management Fees and the Planning Incentive Fees as defined in Clauses 1.9 and 1.14 and Schedule 2 of the DFA, or whether as contended by Chelsfield it should be entitled to be paid additional fees in respect of the post-Planning Period as it has contended in its submissions to the Expert; (b) whether, having regard to the provisions of Clause 3.2.2 of the DFA, the term of the DMA should end on the date of the Certificate of Practical Completion or the date of the Final Certificate relating to the construction and related and ancillary works to the Property; and (c) whether, having regard to the terms of the DFA (including but not limited to Clauses 3.1 and 3.2.2), the scope of development management services under the DMA should extend to the entire duration of the Development (i.e. including the construction stage), as contended by QDDC, and comprise development management services in respect of the carrying out of the construction and related ancillary works to the Property, or whether the development management services to be provided by Chelsfield should be limited to services related to planning only as contended by Chelsfield in its submissions to the Expert.
(5) In addition as part of or in connection with its determination of the above issues, the court would have to consider the precise inter-action between the terms of the DFA as already agreed and the intended terms of the DMA, and the extent to which (if at all and contrary to QDDC's case) it was part of the parties' bargain under the DFA that it would be within the Expert's remit to determine terms of the DMA that would contradict the terms of the DFA properly construed and to do so without the consent of both QDDC and Chelsfield. Such clarification with respect to the precise remit of the Expert would be desirable before (and if) he is to complete his determination under Clause 3.3.
(6) Moreover, it is in any event wrong to suppose that the determination of the terms of the DMA is essential to the task of quantifying Chelsfield's damages for breach of the DFA and/or DMA (this being the only realistic remedy that Chelsfield can hope to obtain in respect of non-performance of the DMA). The expert determination under Clause 3.3 is not in the nature of a quantification of damages, and a quantum expert would likely be required in any event in connection with the court's quantification of damages, even with the benefit of the Expert's determination of the terms of the DMA. There would be no real saving in costs as a result of completing the expert determination under Clause 3.3. Specifically: (a) the damages to which Chelsfield might be entitled in respect of the non-performance of the DMA would be damages for lost profits or, more precisely, damages for the loss of a chance of making profits; (b) the quantification of those profits or the valuation of the lost chance of making them would be largely driven by (i) the amount of Planning Incentive Fees that Chelsfield would or might have earned under the DMA (depending upon the amount of authorised floorspace pursuant to a Planning Permission) and (ii) the costs likely to be incurred by Chelsfield in earning those fees; (c) neither (i) nor (ii) above would be determined by the Expert pursuant to his determination under Clause 3.3; (d) indeed, in so far as the fees payable under the DMA and the term of the DMA have already been agreed pursuant to Clauses 3.2.1 and 3.2.2 of the DFA, item (i) above is outwith the Expert's jurisdiction in any event; (e) accordingly, it would be necessary for the parties to call development management (including planning) expert evidence at trial with respect to the above two matters in order to enable the court to quantify the damages to which Chelsfield might be entitled; (f) there is therefore no particular merit in the Expert under Clause 3.3, rather than the parties' respective experts in these court proceedings, expressing a view as to the appropriate terms of the DMA in so far as those still remained in dispute during the course of these proceedings; and (g) indeed, there is much to be said for allowing the parties' court experts to address the appropriateness of the remaining disputed terms of the DMA as well.
"[the] Court has jurisdiction ahead of a determination by the expert to determine a question as to the limits of his remit or the condition which the expert must comply with in making his determination, but (as a rule of procedural convenience) will (save in exceptional circumstances) decline to do so. This is because the question is ordinarily merely hypothetical, only proving live if, after seeing the decision of the expert, one party considers that the expert got it wrong. To apply to the Court in anticipation of his decision (and before it is clear that he has got it wrong) is likely to prove wasteful of time and costs the saving of which may be presumed to have been the, or at least one of the, objectives of the parties in agreeing to the determination by the expert."
(1) The present case is exceptional, because it is already clear from the substance of the arguments so far advanced before the Expert, with respect to three important areas (namely (a) amount of fees payable under the DMA, (b) term of the DMA and (c) proper scope of intended development management services under the DMA), that there is a real risk of the Expert trespassing onto matters which have already been agreed by the parties under the DFA, the proper construction of which is clearly not within the Expert's remit. Thus, far from pointing to judicial non-intervention in this case, considerations of procedural convenience and cost saving militate strongly in favour of the prior clarification by the court of the Expert's remit in relation to the three important areas already highlighted, so as to obviate the risk of a subsequent time-consuming and expensive challenge to the contractual validity of the Expert's decision in those areas.
(2) The arguments summarised above, considered separately and even more clearly when considered collectively, are sufficiently meritorious to justify the court's refusal at this stage of the order for specific performance of the expert determination process under Clause 3.3, either on the ground that QDDC has a real prospect of successfully resisting such relief at trial or on the ground that there is some other compelling reason for a trial.
"13.2A Yet further or alternatively, there should be no expert determination of the terms of the DMA unless and until the full extent of the terms of the DMA already agreed, either expressly or impliedly pursuant to the terms of the DFA (including Recital D and clauses 1.7, 1.8, 1.9, 1.14, 3.1, 3.2, and Schedule 2 thereof), has been established herein, in particular with regard to:13.2A.1. whether as contended by QDDC the only fees that should be payable under the DMA are the Development Management Fees and the Planning Incentive Fees as defined in clauses 1.9 and 1.14 and Schedule 2 of the DFA, or whether as contended by Chelsfield it should be entitled to be paid additional fees in respect of the post-Planning Period;13.2A.2. whether having regard to the provisions of clause 3.2.2 of the DFA the term of the DMA should end on the date of the Final Certificate (as QDDC contends) or the date of the Certificate of Practical Completion (as Chelsfield contends) relating to the construction and related and ancillary works to the Property; and13.2A.3. whether, having regard to the terms of the DFA (including but not limited to clauses 3.1 and 3.2.2 thereof), the scope of development management services under the DMA should extend to the entire duration of the Development (i.e. including the construction stage) and comprise development management services in respect of the carrying out of the construction and related ancillary works to the Property (as contended by QDDC), or whether the development management services to be provided by Chelsfield should be limited to services related to planning only (as contended by Chelsfield).For the avoidance of doubt, the Defendants' case is that the above issues are the subject of existing agreement between the parties pursuant to the terms of the DFA (properly construed) and are therefore outside Mr Bingham's remit as expert under clause 3.3 of the DFA
17. In light of the matters set out in paragraph 13.2A above, the Defendants hereby counterclaim for declarations that:
17.1. on the proper construction of the terms of the DFA (including Recital D and clauses 1.7, 1.8, 1.9, 1.14, 3.1, 3.2, and Schedule 2 thereof), the following terms of the DMA have already been agreed pursuant to the terms of the DMA, namely:17.1.1. that the only fees that should be payable to Chelsfield under the DMA in consideration of Chelsfield's provision of development management services are the Development Management Fees and the Planning Incentive Fees as defined in clauses 1.9 and 1.14 and Schedule 2 of the DFA;17.1.2. that the duration of the DMA should be until the date of issue of the Final Certificate relating to the construction and related and ancillary works to the Property; and17.1.3. that the scope of development management services to be provided by Chelsfield under the DMA should extend to the entire duration of the Development (i.e. including the construction stage), and should therefore comprise development management services in respect of the carrying out of the construction and related ancillary works to the Property and not be limited to services related to planning only;
17.2. on the proper construction of clause 3.3 of the DFA:17.2.1. the jurisdiction or remit of any expert appointed thereunder to determine the terms of the DMA does not extend to determination of the matters set out in paragraph 17.1 above; and17.2.2. any purported determination by any such expert of any of the said matters would be neither conclusive between nor binding on either of Chelsfield or the Defendants under clause 3.3.8 of the DFA."
Issue 4 - whether QDDC should be required to sign the DMA once it has been finalised
(1) If QDDC was ordered to enter into the DMA, there must be at least some prospect (a) that an entity of the reputation of QDDC would decide to perform rather than default on its obligations, further or alternatively (b) that if QDDC did not perform its obligations, the court would order specific performance of those obligations.
(2) Chelsfield's case that even if the court would not order QDDC to perform its obligations under the DMA, it still ought to require QDDC to enter into the DMA is supported by C H Giles & Co Ltd v Morris  1 WLR 307. The fact that in that case the contract which one party was ordered to enter into was not a contract with the other party to the proceedings but was instead a contract with a third party is of no consequence: it formed no part of the reasoning for the decision, and it is difficult to see why in principle it should matter whether or not the other party to the contract happens to be a party to the proceedings in question.
(3) The assertion that if QDDC was required to enter into the DMA it would act in breach of contract and would refuse to perform its obligations under the DMA was "a submission made in the heat of argument" to which the court should be slow to give credence. QDDC is a leading developer of good reputation, with an involvement in some of the most high profile developments in London at the moment. It would be extraordinary if such an entity would deliberately renege on its commitments. Chelsfield reasonably hopes that, on reflection, QDDC would not deliberately refuse to perform its contractual obligations under the DMA.
(4) In so far as the argument that the Expert might exceed his remit in deciding issues as to the scope of services, fees payable and term of the DMA were also prayed in aid by QDDC in respect of the fourth issue: (a) this point arises only if one or more of these issues is decided against QDDC; and (b) in light of the late stage at which QDDC has sought to question the scope of the Expert's remit and the fact that it is entirely uncertain whether the point will be material, the matter ought to be dealt with not by refusing an order for specific performance but by giving QDDC liberty to apply if the Expert decides any of the issues in question against QDDC and it then seeks to contend that in doing so he decided that issue contrary to the terms of the DFA and in a manner which exceeded his remit.
(1) No such order should be made unless Chelsfield could demonstrate one or more of the following: (a) that damages for non-signature, and hence non-performance, of the DMA would not be an adequate remedy; (b) that, if signed, Chelsfield would then be entitled to an order for specific performance of the DMA; and (c) that some useful and justifiable purpose would be served by making the order.
(2) None of the above requirements can be demonstrated by Chelsfield at this stage, and nor could they be demonstrated at trial.
(3) First, damages for non-signature and non-performance of the DMA, comprising the loss of a chance of making profits under the DMA, would be an adequate remedy for Chelsfield, and the contrary has not been suggested by Chelsfield or in its evidence.
(4) Second, even if the DMA were to be signed by QDDC, Chelsfield would not be entitled to an order for its specific performance by reason of: (a) the personal nature of the services to be provided and the personal relationship created under the DMA and the absence of exceptional circumstances in this case to justify a departure from the normal rule that no order will be granted for specific performance of such a contract (see paragraphs 17-012 and 17-013 of Snell's Equity (33rd ed.), which in turn cites Chappell v Times Newspapers Ltd  1 WLR 482); (b) the constant judicial supervision that is likely to be required in respect of both parties' performance of the DMA over a prolonged period of time (see Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd  AC 1, Lord Hoffmann at 12C-13E); (c) the adequacy of damages as a remedy (see paragraph 17-007 of Snell's Equity, "the inadequacy of the damages threshold test [remains] a significant restriction on the availability of specific performance in English law", affirmed in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd  AC 1, especially at 11F-G); and (d) the intervening engagement of substitute service providers by QDDC for a number of months, to the knowledge of Chelsfield.
(5) On this last point, it was pointed out that Chelsfield has not sought to restrain QDDC from engaging others in substitution for its services, notwithstanding that Hogan Lovells wrote on 6 November 2014 that "our client [i.e. QDDC] is now pressing ahead with plans for the development of the Property. It is currently setting about appointing a feasibility team to identify and assess various development options for the Property. That team will comprise a number of professional disciplines including, amongst others, architects, structural engineers, planners and historical building consultants. They will be reporting to our client as development manager for the development of the Property."
(6) In further support of the same point, reference was made to the following evidence in Mr Al Sayed's second witness statement: "The fact is development management services are required for this project and, as a result of the termination of the DFA, we have had to proceed with the procurement of such services ourselves. Following a detailed and formal tender process, a consultant team has been appointed to complete a feasibility study by the end of March 2015. An architectural competition is also underway to select a leading international architectural practice, to take the project through the concept and scheme design stages and on towards the submission of a detailed planning application at the end of the year. Given the time already spent dealing with the Claimant, we had no choice but to proceed with alternative development management services as quickly as possible. It is simply not viable for the Defendants to not proceed with development activities as quickly as possible."
(7) Although Chelsfield asserts through the evidence of Mr Levy that the development of the Property is "high profile and prestigious and the Claimant wishes to remain involved", Chelsfield is not able to secure its continuing involvement in the development for the following reasons: (a) it is not entitled to an order for specific performance of the DMA, and mere signature of the DMA by QDDC would not suffice to ensure Chelsfield's continuing involvement; and (b) there is no possibility that, if it was required to enter into the DMA, QDDC would perform the obligations under the DMA the statement of QDDC's position was not "a submission made in the heat of argument", but, on the contrary, the witness statement of Mr Al Thani makes it absolutely clear that QDDC has no intention of performing the DMA. In fact, QDDC will not voluntarily agree to perform the DMA and will vigorously resist any claim or application for specific performance of the DMA.
(8) In sum, there is simply no useful and justifiable purpose identified in Chelsfield's evidence for requiring signature of the DMA by QDDC.
(9) Further, pending sight of the actual terms determined by the Expert (following any preliminary determination by the court as to the three threshold issues canvassed above), it would be premature for the court to consider whether or not to order QDDC to sign the DMA. A fully informed view of whether it would be just and appropriate to compel QDDC to sign the DMA should await (a) determination by the court of those threshold issues and (b) subsequent determination by the Expert of the remaining disputed terms of the DMA.
(10) Finally, the Court should not compel signature of the DMA immediately following the Expert's determination because there may be a challenge to his remit and hence to the validity of his decision, having regard in particular to the arguments summarised above and on the assumption that those matters do not presently persuade the Court to defer the completion of the Expert's determination until after determination by the Court of the three threshold issues.
(1) The relevant defendant had in fact consented to an order for specific performance of the signature of a service agreement; and the overall agreement which contained the provision regarding signature of the director's service agreement was in fact held to be specifically enforceable.
(2) Moreover, it appears to have been assumed by the court that there was some useful purpose to be served by the signature of the service agreement, even if the service agreement on its own would not have been susceptible to an order for specific performance.
(3) It also appears to have been assumed in that case that damages would not be an adequate remedy for the director in the event of non-signature of the service agreement.
(4) Chelsfield is wrong to contend that recognition of the fact that the contract which one party was ordered to enter into was not a contract with the other party to the proceedings but with a third party formed no part of the reasoning for the decision. At 316E-F, in a passage that contains his key reasoning, Megarry J specifically stated that "When that [i.e. signature of the service agreement] has been done, the question of any breach of the service agreement and any remedies for that breach is one between Invincible and Mr. Giles, and not between Invincible and the plaintiff. Invincible, too, is a party neither to the contract [i.e. the contract which had annexed to it the draft service agreement and which was itself the subject of the consent order for specific performance] nor to the action."
(5) Further, and again contrary to Chelsfield's arguments, it does matter whether or not the other party to the contract happens to be a party to the proceedings in question. The reason for this is that, without signature of contract, the party seeking signature may not be legally entitled to bring a claim for damages for breach of contract against the non-party. That was the case in C H Giles & Co Ltd v Morris  1 WLR 307.
(6) The present case, however, is different. Chelsfield has a claim for damages for repudiation of the DFA and non-signature and non-performance of the DMA, whether or not QDDC signs the DMA.