Sale of land – Expert valuation – Jurisdiction – Dispute arising about valuation of land in contract for sale – Court determining scope and nature of expert’s jurisdiction in favour of respondent vendor – Appellant purchasers appealing – Whether judge erring in assuming jurisdiction over valuation – Whether judge wrongly construing statement of agreed facts as contractual agreement as to valuation date – Appeal allowed in part
The appellants and the first respondent were parties to a contract for the sale of land at Smith’s Farm, Great Dunmow, Essex which was owned by the first respondent. The contract was subject to a number of conditions, including the agreement or determination of the price calculated in accordance with clause 6 of the contract.
There was a dispute between the parties about the purchase price and how it should be ascertained. The parties were unable to agree the assumed value for the sale. The second respondent, an independent expert appointed to determine the dispute, directed the parties to agree a statement of agreed facts. That statement included the valuation date for the determination of the assumed value. A legal assessor appointed by the second respondent considered that the valuation date should be a different date which favoured the appellants.
When the appellants sought to resile from the statement, the first respondent commenced proceedings seeking a declaration that the second respondent was bound by the statement, and could only make his determination in accordance with it.
The court declared that, on the true construction of the contract, the valuation date was the challenge expiry date. However, the effect of the agreement in the statement of agreed facts was contractual and therefore binding on the second respondent for the purposes of his expert determination. The contract did not exclude the jurisdiction of the court to decide the issues of construction and the effect of the statement of agreed facts and the second respondent did not have exclusive jurisdiction to decide the valuation date issue: [2018] EWHC 1460 (Ch).
The appellants appealed contending, amongst other things, that the judge erred in assuming jurisdiction over the valuation date at all as that was a matter within the expert’s sole and exclusive jurisdiction; and was wrong to construe the statement of agreed facts as amounting to a contractual agreement as to the valuation date.
Held: The appeal was allowed in part.
(1) There was no reason in principle why the parties to a contract could not bind themselves to a specified method for making any subsequent variation to the contract. The parties were to be taken to have agreed that purported variations which did not comply with the relevant conditions were to be invalid. In the present case, clause 30 of the contract provided that it might only be varied or modified in writing by letter or memorandum signed by both the parties or their solicitors specifically referring to that clause and stating that the agreement was varied in the manner specified. The first respondent realistically accepted that those provisions had not been complied with either in relation to the statement of agreed facts or any other dealings between the parties that might be relied upon to support the efficacy of what the parties’ valuers originally agreed. It was clear therefore that the judge’s decision about the effect of the statement of agreed facts and the declaration which he made to give effect to it could not stand and had to be set aside. The case would be remitted back to a judge of the Chancery Division for further directions. It would then be for the first respondent to consider whether it wished to make an application for permission to amend and the judge would need to decide how (if at all) the action should proceed or be disposed of: MWB Business Exchange Centres Ltd v Rock Advertising Ltd [2018] UKSC 24; [2018] EGLR 28 applied.
(2) The scope and nature of an expert’s jurisdiction was determined by the contract between the parties. They determined what the expert was to decide and had it within their power to agree that his decision on those matters should be final without recourse to the courts. The expert had no other source of authority and was unregulated in terms of his powers by statute. The scope of his remit and the finality of his decisions on matters within his authority were therefore dependent on the proper construction and terms of the contract which the parties had made. That included the question whether that very issue of jurisdiction was itself a matter for the expert or one for the court to adjudicate upon. The task of the valuer set out in clause 6.2 of the contract was to ascertain the assumed value of the property as defined. The authority of the valuer was to determine the assumed value at the correct date specified in clause 6.2.2; nothing else. If the valuer produced a valuation as at some other date he would not have carried out the terms of his appointment and his valuation would not be binding upon the parties. Clause 6.2 clearly fell within the category of dispute resolution provisions which did not give the expert exclusive jurisdiction over the scope of his own authority and jurisdiction and which set out the approach and conditions which he had to follow and comply with in order to produce a valuation binding on the parties. The valuer had to correctly determine and apply the valuation date prescribed by clause 6.2.2 and there was nothing in clause 6.2 which could be read or implied as making him the sole arbiter of that question. The balance of authority was firmly in favour of preserving access to the courts to determine the legal issue going to jurisdiction. The only decision of the valuer which was final and binding on the parties under clause 6.2 was one which was based on a correct application of clause 6.2.2: Mercury Communications Ltd v Director General of Telecommunications [1994] CLC 1125, National Grid Co plc v M25 Corp Ltd [1999] 1 EGLR 164 and Barclays Bank PLC v Nylon Capital LLP [2011] EWCA Civ 826 followed. Norwich Union Life Insurance Society v P&O Property Holdings Ltd [1993] 1 EGLR 164 distinguished.
Jonathan Seitler QC and Tom Roscoe (instructed by Gateley PLC) appeared for the appellants; Guy Fetherstonhaugh QC and Toby Boncey (instructed by Mills & Reeve LLP) appeared for the first respondent.
Eileen O’Grady, barrister
