Mogens Alex Bastholm & Ors v Peveril Securities (Dalton Park Retail) Limited & Ors
[2023] EWHC 438 (Ch)
Harworth Estates Investments Ltd v Westfield Park Ltd
11 October 2024
[2024] EWHC 2550 (Ch)
High Court
Two companies argued over extra money owed in a land sale. The extra money depended on permission from the Coal Authority to build on a risky area. The judge decided the permission was given, so the money was owed.
Key Facts
- •Harworth Estates Investments Limited (Harworth) claimed £399,989.06 from Westfield Park Limited (Westfield) as an additional payment under a sale and purchase agreement for York Holiday Park Development.
- •The dispute centered on the interpretation of the agreement regarding payment triggered by a reduction in a Coal Authority designated 'zone of influence'.
- •The holiday park was built on a former colliery site, with concerns about potential liabilities and development restrictions near mineshafts.
- •The Coal Authority's guidance indicated zones of influence were determined by a formula and not subject to case-by-case adjustments.
- •Negotiations led to a reduced purchase price and an agreement for an additional payment if the zone of influence was reduced, allowing more static caravan placements.
- •The Coal Authority subsequently confirmed a reduction in the zone of influence for static caravans but not for permanent structures.
- •Westfield argued that the additional payment wasn't due because the zone of influence wasn't reduced for all development, while Harworth contended that the reduction for static caravans triggered the payment.
- •Harworth also made an alternative claim for rectification of the contract.
Legal Principles
Contract interpretation involves ascertaining the meaning a reasonable person would convey, considering all available background knowledge to the parties at the time of the contract. Previous negotiations and subjective intent are inadmissible, except in rectification claims.
Investors Compensation Scheme v. West Bromwich Building Society [1998] 1 WLR 896; Arnold v. Brittan [2015] AC 1619
Courts should not rewrite the parties' bargain. If the language is unambiguous, the court must apply it.
Al Sanea v. Saad Investments Co Ltd [2012] EWCA Civ 313
Evidence of pre-contractual negotiations is admissible to establish facts known to both parties, elucidate the contract's general object, and prove additional consideration. However, it's inadmissible to infer the contract's meaning.
Lewison: The Interpretation of Contracts; Governor and Company of The Bank of Scotland v. Dunedin Property Investment Co Ltd; Codelfa Construction Pty Ltd v. State Rail Authority of New South Wales; Chartbrook Homes Ltd v. Persimmon Homes Ltd; Globe Motors Inc v. TRW Lucas Varity Electric Steering Ltd; Q-Park v. HX Investments Ltd; Merthyr (South Wales) Ltd v. Merthyr Tydfil CBC [2019] EWCA Civ 526
Outcomes
Judgment for Harworth for £399,989.06.
The court adopted a purposive construction of the agreement, finding the additional payment was due when the Coal Authority confirmed in writing that static caravans could be sited in the previously restricted zone, even though the zone of influence wasn't reduced for all development purposes. The court found that this interpretation reflected the parties' understanding and the transaction's overall purpose.
Rectification claim not addressed.
The court deemed it unnecessary to decide the rectification claim because the construction claim succeeded. However, it noted the rectification claim likely would have failed because the contract wording reflected the parties’ agreed intention.