Chartbrook Ltd v Persimmon Homes Ltd [2008] EWCA Civ 183 (12 March 2008)

Chartbrook Ltd v Persimmon Homes Ltd [2008] EWCA Civ 183 (12 March 2008)

The Court of Appeal held that the proper construction of the contract was that Chartbrook was entitled to either the minimum guaranteed sum or 23.4% of the net sales proceeds, whichever was greater, and not to a substantial additional payment as contended by Chartbrook. The court found that Chartbrook's construction made no commercial sense and was inconsistent with the commercial purpose and background of the agreement. The phrase 'minimum guaranteed' indicated that there might be circumstances in which only the minimum would be payable. The court also held that, even if the drafting was ambiguous, business common sense and the commercial context supported Persimmon's construction. The...

Citation
[2008] EWCA Civ 183
Parties
Claimant/respondent: Chartbrook Limited; Defendant/appellant: Persimmon Homes Limited; Part 20 Defendant/second Respondent: Stephen Vantreen
Jurisdiction
England and Wales
Judgment Date
12 March 2008
Procedural Posture
Appeal (civil) / Court of Appeal Judgment on Appeal From High Court (chancery Division)
Outcome
Appeal allowed; judgment for Persimmon Homes Limited
Legal Topics
Interpretation of Contracts, Rectification, Construction of Commercial Agreements, Admissibility of Pre Contractual Negotiations
Contract Law Property Law Interpretation of Contracts Rectification Construction of Commercial Agreements Admissibility of Pre Contractual Negotiations

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Parties

Chartbrook Limited

Claimant/respondent

Persimmon Homes Limited

Defendant/appellant

Stephen Vantreen

Part 20 Defendant/second Respondent

Procedural Posture

Appeal (civil) / Court of Appeal Judgment on Appeal From High Court (chancery Division)

Legal Issues

  1. 1 Proper construction of the 'Additional Residential Payment' clause in a development agreement
  2. 2 Whether pre-contractual negotiations are admissible in construing a contract
  3. 3 Whether the contract should be rectified for common or unilateral mistake

Ratio Decidendi

The Court of Appeal held that the proper construction of the contract was that Chartbrook was entitled to either the minimum guaranteed sum or 23.4% of the net sales proceeds, whichever was greater, and not to a substantial additional payment as contended by Chartbrook. The court found that Chartbrook's construction made no commercial sense and was inconsistent with the commercial purpose and background of the agreement. The phrase 'minimum guaranteed' indicated that there might be circumstances in which only the minimum would be payable. The court also held that, even if the drafting was ambiguous, business common sense and the commercial context supported Persimmon's construction. The...

Court Disposition

Appeal allowed; judgment for Persimmon Homes Limited

Orders

  • The appeal is allowed.
  • The construction of the contract advanced by Persimmon is correct.