Plaintiff exercising option to acquire narrow strip adjacent to development site with view to securing access – Price determined by valuer in default of agreement at £130,000 – Plaintiff about to complete – Plaintiff discovering 1975 deed giving then site owner full rights of way over strip – Plaintiff claiming determination not binding because of valuer’s mistake – Claim dismissed
Land in Sawston, Cambridgeshire, belonging to the defendant (D), included an unmade-up road (the strip) capable of affording highway access to a neighbouring area of waste land, Deal Grove. In May 1975 D granted to the then owner of Deal Grove a right of way over the strip for all purposes connected with Deal Grove. In February 1991 the plaintiff (P), having in mind a possible purchase of Deal Grove though unaware of the 1975 grant, entered into an agreement with D whereby, for a nominal consideration, P acquired a five-year option to buy the strip at an “option price” defined as “such sum as represents a fair and reasonable price for the Property (as at date of exercise of the option) assuming that the property were offered on the open market for sale by a willing seller to a willing purchaser”. It was further provided that if the parties failed to reach agreement then “the determination of the Option Price” would be referred to an independent valuer who would act as expert and not as arbitrator.
In July 1992 P bought Deal Grove and in January 1996, still unaware of the 1975 grant, exercised the option. In July 1996 the parties appointed a valuer who received representations from surveyors for both sides who spoke in general terms of frontagers’ rights of way over the strip, but made no specific mention of the 1975 grant. In October 1996 the valuer determined the option price to be £130,000. In November 1996 P became aware of the 1975 grant when D’s solicitors produced a copy of the relevant deed in response to routine requisitions on title. By originating summons issued in March 1997 P sought a declaration that he was not bound by the award and that the price should be determined afresh.
Held Judgment was given for the defendant.
1. The award of a contractually appointed valuer, acting as an expert, was binding on the parties notwithstanding an error on his part, unless the error was such that he had failed to carry out the task prescribed by the agreement: see Jones v Sherwood Computer Services plc [1992] 1 WLR 277 and British Shipbuilders v VSEL Consortium plc [1997] 1 Lloyd’s Rep 106. Since the valuer had valued “the property” as defined in the contract by reference to a plan, the plaintiff could not contend that what he ought to have valued was not so much the strip as the interest of the defendant therein.
2. Moreover, it was far from clear, the award being a non-speaking one, whether a mistake had in fact been made, there being no evidence either way as to what allowance if any had been made for incumbrances.
Kenneth Munro (instructed by Titmuss Sainer Dechert) appeared for the plaintiff; Kim Lewison QC and Janet Bignall (instructed by Beachcroft Stanleys) appeared for the defendant.
