Summary and implications
A concession made by a party in an expert determination under an option agreement resulted in that party losing its remedy in later High Court proceedings1.
- Although the decision of an expert on a question of law is not binding on a court, the expert’s decision is usually binding on the parties under the terms of their contract.
- This means that, although the court may disagree with the expert’s finding on a legal issue, it may not be able to go behind it.
- The range of remedies available from the court may be curtailed by what has already been decided in the context of an expert appointment.
The High Court action followed an expert determination
By the time the Woodford Land case reached the High Court there had already been an expert determination under the terms of the parties’ option agreement.
In the expert determination, Woodford had conceded that the option agreement, as drafted, meant that the cost of affordable housing to be constructed on a proposed development site would fall to them. This was contrary to Woodford’s view of what the option agreement had been intended to say.
Woodford applied to the High Court for rectification of the agreement
Woodford applied to the High Court for rectification of the option agreement. This is a remedy which allows the court to correct a written agreement where the actual words used in it fail to record the parties’ true agreement.
Unfortunately for Woodford, the High Court Judge pointed out the following:
- The expert had decided that the agreement put the burden of the costs of affordable housing onto Woodford. This was based on the concession made by Woodford in the expert determination.
- However the interpretation (or construction) of a written agreement is a matter of law, not a matter for agreement between the parties to the agreement.
- The court was not bound by the expert’s decision – and the Judge decided the option agreement, properly construed, meant that the cost of the affordable housing fell to Persimmon, not Woodford.
- The Court had no power to rectify the agreement – because, in the Court’s view, it already had the effect Woodford claimed.
- The court did consider the rectification claim (in case it was decided it had got the point of law wrong). The Judge decided that, if he had jurisdiction to rule on the rectification issue, he would have decided in Woodford’s favour.
The concession (made by Woodford in the context of the expert determination) that the option agreement put the burden of the cost of affordable housing onto Woodford meant that the expert’s decision on this point was binding on Woodford and Persimmon as a matter of contract. This was the case even though, as a matter of law, the Judge took the opposite view of the effect of the option agreement on the point.
Woodford was left without a remedy because, when it asked the court to rectify the option agreement the court was not bound by the expert’s view on the construction issue. In the court’s view the option agreement, properly construed, already said what Woodford claimed it should have said (ie that the burden of the cost of affordable housing fell to Persimmon). As a result, there was no room for the court to rectify the agreement.
Woodford would have to bear the costs of the affordable housing required to be built at the site.
The moral of the story
Before you start any dispute resolution procedure, make sure you take advice on the way in which the different procedures interact. Otherwise, you risk finding yourself without a remedy.
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