Chartbrook Ltd v Persimmon Homes Ltd

Case [2009] UKHL 38


HOUSE OF LORDS SESSION 2008–09
[2009] UKHL 38

on appeal from:[2008] EWCA Civ 183

OPINIONS

OF THE LORDS OF APPEAL

FOR JUDGMENT IN THE CAUSE

Chartbrook Limited (Respondents) v Persimmon Homes Limited and others (Appellants) and another (Respondent)

Appellate Committee

Lord Hope of Craighead


Lord Hoffmann
Lord Rodger of Earlsferry
Lord Walker of Gestingthorpe
Baroness Hale of Richmond

Counsel

Appellant:  Respondent:
Christopher Nugee QC Robert Miles QC
Julian Greenhill Timothy Morshead
(Instructed by Mayer Brown International) (Instructed by Carter-Ruck )

Hearing dates:

31 MARCH, 1 and 2 APRIL 2009

ON
WEDNESDAY 1 JULY 2009

HOUSE OF LORDS

OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT

IN THE CAUSE

Chartbrook Limited (Respondents) v Persimmon Homes Limited

and others (Appellants) and another (Respondent)

[2009] UKHL 38

LORD HOPE OF CRAIGHEAD

My Lords,

1. I have had the privilege of reading in draft the opinion of my noble and learned friend, Lord Hoffmann. Like my noble and learned friend, Lord Walker of Gestingthorpe, whose opinion I have also had the privilege of reading, I agree with all his reasoning and I share Lord Walker’s admiration for the way it has been expressed. For the reasons they give I would allow the appeal.

2. I agree that Persimmon’s argument that the House should take account of the pre-contractual negotiations raises an important issue. Every so often the rule that prior negotiations are inadmissible comes under scrutiny. That is as it should be. One of the strengths of the common law is that it can take a fresh look at itself so that it can keep pace with changing circumstances. But for the reasons that have been set out by Lord Hoffmann I think that the arguments for retaining the rule have lost none of their force since Prenn v Simmonds [1971] 1 WLR 1381 demonstrated, as Lord Wilberforce put it at p 1384, the disadvantages and danger of departing from established doctrine.

3. In the Court of Appeal Lawrence Collins LJ said that the policy reasons for the rule have not been fully articulated: [2008] EWCA Civ 183, para 106. I am not sure, with respect, that everyone would agree with him. Lord Gifford did his best to explain what they are in his dissenting opinion in Inglis v Buttery (1877) 5 R 58, 69-70. When that case came before this House Lord Blackburn said that they set out exactly what he himself thought: (1878) 3 App Cas 552, 577. As Lord Gifford explained, the very purpose of a formal contract is to put an end to the disputes which would inevitably arise if the matter were left upon what the parties said or wrote to each other during the period of their negotiations. It is the formal contract that records their bargain, however different it may be from what they may have stipulated for previously

4. Lord Blackburn clearly saw no conflict between the exclusionary rule and Lord Justice Clerk Moncreiff’s proposition that the Court was entitled to be put…

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AGLC
Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38
Case
[2009] UKHL 38
Decision Date

CaseChat Overview and Summary

Chartbrook Limited, a landowner, entered into an agreement with Persimmon Homes Limited, a housebuilder, for the development of a residential and commercial property in Wandsworth, London. The agreement included a formula for calculating the price to be paid by Persimmon for the land, which comprised a total land value and an additional residential payment (ARP). The dispute centered on the interpretation of the definition of ARP in the agreement. Chartbrook argued that the ARP was to be calculated as 23.4% of the price achieved for each residential unit in excess of the minimum guaranteed residential unit value, less certain costs and incentives. Persimmon argued that the ARP should only be paid if the price achieved for a residential unit exceeded the minimum guaranteed residential unit value, in which case the ARP would be the difference between 23.4% of the achieved price and the minimum guaranteed residential unit value. The House of Lords considered whether the pre-contractual negotiations could be taken into account in interpreting the contract and whether rectification was available if the written agreement did not reflect the parties' prior consensus. The House of Lords held that the pre-contractual negotiations were inadmissible in interpreting the contract, as the rule excluding such evidence was well established and served the interests of economy and predictability in contractual disputes. The House of Lords also held that rectification was available if the written agreement did not reflect the parties' prior consensus, which was to be determined objectively. However, the House of Lords allowed Persimmon's appeal on the ground of the correct construction of the contract, as the agreement did not mean what Chartbrook contended it meant. The House of Lords concluded that the ARP was to be calculated as the difference between 23.4% of the achieved price and the minimum guaranteed residential unit value, if the achieved price exceeded the latter. The House of Lords allowed Persimmon's appeal and dismissed Chartbrook's claim.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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