In the recent case of Great Dunmow Estates Ltd v Crest Nicholson Operations Ltd and another  EWCA Civ 1683, the Court of Appeal considered whether a “Statement of Agreed Facts” agreed by both parties was contractually binding and amounted to a variation of a contract for sale which contained a contractual variation clause (a clause detailing how the parties could lawfully vary the contract). The court also shed light on the ability of an expert jointly appointed by parties to determine the scope of their authority where a contract does not provide for any express rights on an expert relating to questions of law.
Great Dunmow Estates (“the Land Owner”) and Crest Nicholson Operations (“the Developer”) entered into a conditional sale contract (“the Contract”) in which the parties agreed that the land price would be ascertained by an expert on the “Challenge Expiry Date” (i.e. the date on which a planning consent is no longer susceptible to challenge) or, if later, the date of valuation. The expert directed the parties’ surveyors to prepare a Statement of Agreed Facts which recorded that the Valuation Date was the date of the valuation. However, the expert then sought legal advice and concluded that the correct Valuation Date should in fact be the Challenge Expiry Date in line with the provisions of the Contract, not the date of valuation. The Developer then sought to set aside the valuation on the basis that the expert had no jurisdiction to determine the contractual valuation date.
It was found at first instance that the Valuation Date under the Contract should have been the Challenge Expiry Date. Despite this, the High Court held that the expert should prepare the valuation using the later date (the date of valuation), because the Statement of Agreed Facts amounted to a binding contract. The Developer subsequently appealed the decision of the High Court.
At the Court of Appeal, it was held that the expert did not have jurisdiction to decide the valuation date. In reaching this decision, the Court of Appeal took into account the decision of the Supreme Court in the case of MWB Business Exchange Centres Ltd v Rock Advertising Ltd  UKSC 24, which held that parties to a contract can agree to bind themselves to require certain formalities to vary contracts. In Great Dunmow Estates, the Contract contained a provision whereby the Contract could only be varied in a specific way (by a letter of memorandum signed by both parties referring to a particular clause in the Contract and reference to such variation being endorsed on the Contract) and the Statement of Agreed Facts did not meet such formalities, and so the Statement of Agreed Facts had no such contractual effect.
What are the consequences of the decision?
The Court of Appeal’s judgment demonstrates that the scope of an expert’s jurisdiction will be determined by the underlying contract between the parties. Parties may attempt to agree various matters in the course of the expert determination process; however, due regard must be had to any contractual variation clauses in the underlying contract in order to guarantee the legality of such agreements. Parties must adhere to any conditions specified in an express clause to give effect to a variation.
The case also provides a reminder that parties must ensure they agree clear and concise wording in the contract to exclude the court’s jurisdiction if the parties intend the expert to have exclusive jurisdiction relating to a specific matter.
It is also worth noting that had the parties not been bound by a contractual variation clause, then the Statement of Agreed Facts might well have been binding. Parties should also bear this in mind when negotiating variations to a contract.