While the court has a general power to stay proceedings and there is a presumption that an agreed dispute resolution mechanism will prevail, if particular issues are carved out of the contractually agreed provisions, the court has jurisdiction to determine them.
The High Court has refused to stay proceedings in BL Goodman (General Partner) Ltd v Morris Homes (Midlands) Ltd [2024] EWHC 1129 (Ch).
In November 2013, the parties entered into a contract for a prospective residential development in Coventry which included in schedule 4 a mechanism for calculating overage arising from the development. The defendant subsequently developed the site and sold more than 200 residential units. The overage provisions were triggered in August 2021.
A dispute arose between the parties about the calculation of the overage, with the claimant claiming more than £3m and the defendant arguing that no more than £106,000 was due. The difference arose from the parties’ different interpretation of three particular elements of the calculation process in schedule 4. All accepted that the differences were ones of legal interpretation of the provisions of schedule 4.
The parties also disagreed as to whether the questions of legal interpretation fell within the dispute resolution provisions in the contract. The claimant sought a court determination of various questions of legal interpretation as to the calculations in schedule 4.
The contract was a substantial document drafted by lawyers, but with inconsistent provisions. The word “expert” was defined in the main contract as a person having appropriate qualifications and experience appointed jointly by the parties or in default by the president of the Royal Town Planning Institute in connection with planning matters; the Law Society in connection with the contract or; the Royal Institution of Chartered Surveyors. The scope of the latter role was missing.
However, schedule 4 contained its own dispute resolution mechanism, which provided that any dispute arising out of the calculation of the overage payment was to be determined by an independent surveyor, who was to act as an independent expert, save for disputes in relation to matters of law, which were subject to the courts’ jurisdiction. A detailed mechanism both for appointing the surveyor and determining the dispute was also included.
The judge was satisfied that schedule 4 provided a comprehensive dispute resolution process for determining issues relating to the calculation of overage and specifically carved out issues of law – which included issues of construction and interpretation of the terms of schedule 4 – as matters to be referred to the court. The court had jurisdiction to consider the claim.
Louise Clark is a property law consultant and mediator
