Sellers often use overage to maximise the price paid for land with development potential. But transactions involving overage are rarely straightforward and often lead to disputes. Hence the litigation in Maypole Dock Ltd v Catalyst Housing Ltd [2021] EWHC 1742 (TCC).
Catalyst had purchased land from Maypole and had entered into an overage agreement obliging it to seek planning permission to optimise the open-market value of the land and to pay additional consideration on obtaining such permission. It subsequently obtained and implemented consent for a residential development of affordable homes, whose cost exceeded the projected revenue – which relieved it of its liability to pay any additional consideration to Maypole.
Maypole alleged that Catalyst had moved residents from another site to the social housing constructed on the land and had redeveloped the other site to its own advantage – and issued a claim in the Technology and Construction Court, arguing that Catalyst had failed to optimise the open-market value of the land that it had purchased from Maypole. It also alleged that Catalyst had not sought its approval before submitting the planning application and had failed to keep it informed so that it was unable to prevent Catalyst from acting in the way that it had.
The overage agreement contained two clauses dealing with dispute resolution. Clause 18 provided that disputes “relating to or arising out of the calculation of the additional consideration” were to be determined by an independent surveyor. But the court was to have jurisdiction over all other disputes.
Maypole accepted that nothing more was payable under the terms of the overage agreement. And it believed that the court had jurisdiction because it was not seeking additional consideration. It was seeking damages for breach of contract instead. But Catalyst served a notice seeking to refer the dispute to an expert and applied for a stay of the court proceedings. Meanwhile, the RICS appointed an expert – and the parties’ submissions were due within days. So Maypole sought an injunction to call a halt to the expert determination.
Maypole argued that, if it were to refuse to participate in the process, the expert’s decision would almost certainly go against it. And if the court were then to hear the jurisdictional dispute and rule that the expert had had jurisdiction, it would be unable to challenge the expert’s decision. Alternatively, if it were to participate in the process, and the court were then to decide that the expert had not had jurisdiction, it would have incurred wasted costs. So it was being placed in an invidious position.
The judge noted that the court has jurisdiction to determine whether an expert has jurisdiction (Barclays Bank Plc v Nylon Capital LLP [2011] EWCA Civ 826) and distinguished Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25, in which Lord Briggs indicated that, once it is recognised that an adjudicator has jurisdiction, the court should be slow to restrain a party pursuing a contractual right to adjudication. The judge contrasted an adjudicator’s decision, which is temporarily binding, with an expert determination.
Furthermore, it was not the case that an injunction should be granted only if the expert’s lack of jurisdiction is clear-cut. The court was being asked to hold the ring until the jurisdictional dispute, which was due to be heard shortly, was determined and the balance of convenience lay in favour of granting the injunction that Maypole sought.
Allyson Colby is a property law consultant
