In Mortgage Express v Countrywide Surveyors Limited  EWCA Civ 1110, Countrywide Surveyors appealed a decision of the preliminary Court regarding the construction of a written agreement (Standstill Agreement).
Mortgage Express, a mortgage lender, contracted Countrywide Surveyors, a valuer, to produce valuation reports. Mortgage Express alleged these reports were not completed with the expected level of skill, care and diligence of a reasonably competent surveyor. It was alleged that Countrywide Surveyor's was at fault in relation to 47 properties, and deceitfully so in relation to 41 of them.
The Standstill Agreement entered into by the parties stated that time would be suspended from the date of the Standstill Agreement for any defence or argument in connection with a 'dispute'. Dispute was defined in the Standstill Agreement as 'any claim or claims directly or indirectly arising out of or in any way connected with the matters referred to in paragraphs 1, 2 and 3' (Background Preamble).
The issue was whether Mortgage Express's claim of deceit fell within the meaning of 'dispute' in the Standstill Agreement, so as to trigger the suspension of time.
The Court determined the correct approach to the issue of construction was to determine what the parties intended by the contractual language used, by ascertaining what a reasonable person would have understood the parties to have meant.
The Court referred to Paragraph 3 of the Background Preamble which expressly mentioned allegations of breach of contract and negligence. Lord Justice Simon determined the definition of 'dispute' was drafted in sufficiently wide terms to extend beyond allegations of negligence and breach of contract alone and as such, deceit must be taken to fall within the meaning of dispute.
The Court concluded the proper construction of the Standstill Agreement was such that if the claims arising 'indirectly' are based upon dishonesty, they will fall within the suspension provisions as they are connected with Paragraphs 1 to 3 and form a 'dispute'.
See Court decision here.