Neutral Citation Number: [2011] EWCA Civ 15
Case No: A3 2010/0722
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE 
CHANCERY DIVISION
NEWCASTLE UPON TYNE DISTRICT REGISTRY
MR JUSTICE DAVID RICHARDS

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 20/01/2011
Before:

THE MASTER OF THE ROLLS
LORD JUSTICE LLOYD
and
LORD JUSTICE GROSS
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Between:

	BELLWAY HOMES LTD	Claimant 	
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	BEAZER HOMES LTD	Appellant	

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Christopher Pymont Q.C. (instructed by Walker Morris) for the Appellant
Jonathan Gaunt Q.C. (instructed by Dickinson Dees) for the Respondent

Hearing date: 13 December 2010
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Judgment

Lord Justice Gross: 
INTRODUCTION
1.	The Appellant/Defendant (“Beazer”) appeals from the judgment of David Richards J, dated the 4th March, 2010 (“the judgment”), on a preliminary issue, granting the Respondent/Claimant (“Bellway”) a declaration that:
“ … the Defendant is obliged by clauses 3.1 and 3.2 of the Shareholders Agreement dated 26th July 1991 between (1) Bellway Homes Limited, (2) Leech Homes Limited and (3) Bradview Limited to exercise its voting rights in Leebell Developments Limited in such a way that the Claimant receives a disposal of land from the Middle Warren site which is sufficient to rectify the imbalance in the values of the land disposed of to Bellway and Beazer from the Cramlington site;”
The Judge further ordered that, in default of agreement, there should be an inquiry as to the land at Middle Warren to which Bellway was entitled under the declaration. 
2.	The background to the Shareholders Agreement dated 26th July, 1991 (“the Shareholders Agreement”) is uncontroversial and was helpfully summarised in the judgment as follows:
“2.  In the late 1950s, the decision was taken to develop a number of new towns in the North-East, including Cramlington in Northumberland. Unlike other developments, Cramlington was a private venture. The freehold of the land was vested in William Leech (Investments) Limited (WLI). Under a succession of agreements with WLI, the new town was developed in stages by companies within two housebuilding groups, the Bellway Group and the Leech Group.  Under these agreements, the two groups would develop agreed areas of land under individual 99-year leases which would then be assigned to the residential plot buyers. 
3.  In 1990/91 WLI decided to sell its remaining land at Cramlington. The Bellway and Leech groups agreed to form a joint venture company to acquire the land and allow its development in the same manner as before.  A dormant company in the Bellway Group called Bradview Limited (the company) was used for this purpose. Its name was in due course changed to Leebell Developments Limited.
4.  The arrangements between the parties were and remain governed by …[the]…Shareholders Agreement…to which the parties were Leech Homes Limited, Bellway and the company. The shares owned by Leech Homes Limited were later acquired by Beazer Homes Limited, which has always accepted that it is bound by the shareholders agreement in place of Leech Homes Limited, and I will use ‘Beazer’ to cover them both.”
3.	It may be noted that both Beazer and Bellway are subsidiaries of well-known groups of companies engaged in property development, particularly for residential occupation.  The Shareholders Agreement was thus made, and dealings pursuant thereto were conducted, between market professionals. 
4.	The Shareholders Agreement provided, insofar as presently material, as follows:
“1.  Definitions
‘Development’       all demolition and clearance operations and all excavation building and other construction works and all associated drainage and infrastructure works for the development of land in the Counties of Northumberland, Durham, Cumbria, Tyne and Wear, Cleveland and North Yorkshire in accordance with this Agreement
3.  Business of the Company
3.1  The business of the Company shall be:
(a) to acquire land and premises in the Counties of Northumberland, Durham, Cumbria, Tyne and Wear, Cleveland and North Yorkshire and obtain all planning permissions and other approvals and licences necessary for the Development of such land and premises ……
(b)  to develop or procure the Development of such land and premises
(d)  to dispose of the whole of or any part of such land and premises (whether by sale exchange or by lease then sale including disposals to the A Shareholders [Beazer] and B Shareholders [Bellway] in parcels of equal value as near as may be unless the Shareholders shall otherwise agree) and otherwise deal with such land and premises as the Shareholders shall think fit.
3.2 Each of … [Beazer] ... and Bellway undertakes to the other:-
(a) to observe and perform and (so far as it is able by the exercise of voting rights otherwise so to do) procure that the Company will at all times perform and observe all the provisions of this Agreement;”
5.	Before proceeding further, it is convenient to mention certain features of the Shareholders Agreement. 
6.	First, the scope of the agreement was not confined to the Development at Cramlington and was not intended only to apply to the land at Cramlington. The Shareholders Agreement was also designed to regulate other land which Beazer and Bellway should seek to acquire and develop through the joint venture company - ultimately Leebell Developments Limited (“Leebell”).
7.	Secondly, in large measure, the tenor of the agreement sought to regulate the business and management of Leebell on a basis of equality.  Leebell was, as noted, a joint venture company; the share capital was held equally by Beazer and Bellway; provision was made for the appointment by each shareholder of an equal number of directors – and there were deadlock provisions applicable at shareholder and board level.  Furthermore, the agreement pointed (unless otherwise agreed) to an equal disposal of land to the shareholders and was operated on the basis of equalisation of the cost of infrastructural and remedial (“remediation”) work relating to developable land (of which, more below).  But all that said, there was no question of any equalisation of the profits of the Cramlington development.  Following disposals of land pursuant to cl. 3.1(d) of the Shareholders Agreement, Beazer’s and Bellway’s profits could (and probably would) diverge, depending on how each shareholder conducted its business and how profitable each parcel of land turned out to be.  Notably, as one witness remarked, it was a “bit of a gamble” as to the quality of land allocated to each party.  
8.	The historical operation of the Shareholders Agreement is not in dispute and can be taken from the very clear summary contained in the judgment.  
“8. There had previously been extensive coal mining in the Cramlington area and substantial areas of the development land had to be remediated…..before development work could take place.  Subject to planning requirements, Beazer and Bellway generally built first on the areas which were easier or cheaper to develop.
9.  Development by Beazer and Bellway did not proceed over equal areas. When further land was needed for development it would be sold to them, not necessarily in equal amounts but often in agreed proportions to reflect the capacity of each to undertake development at that stage.  In terms of cl. 3.1(d)….these were therefore not sales ‘in parcels of equal value as near as may be’, but cases in which the shareholders had agreed otherwise.  Importantly though, they proceeded on the basis that any imbalance would be made up in subsequent sales by the company to them.
10.  Sales of land by the company to the shareholders were not at open market value but on the basis of original cost plus interest, together with payment to another jointly-owned company to cover remediation costs.  Remediation and infrastructure costs for the whole area allocated in each distribution were shared by Beazer and Bellway in proportion to the total area allocated to each of them, not by reference to the work required on any particular piece of land.
11.  Distinctions were not made between different areas on the basis that some were, by reason of location or otherwise, more valuable than others….. Acreage was in effect taken as a proxy for value.  Prior to each distribution, the particular allocation of land would be discussed and agreed between the appropriate directors of Beazer and Bellway.”
9.	I turn next, in chronological order, to the facts of direct relevance to the dispute. In 1995, land at Middle Warren, Cleveland, comprising some 166.5 developable acres was acquired by Leebell and is currently in the course of development by Beazer and Bellway in accordance with the Shareholders Agreement. The significance of this land will presently become apparent.
10.	So far as concerned Cramlington, by 1999, the entire site had been developed with the exception of areas known as 2D(ii) and 3A.  Beazer had, in the event, drawn down its land more quickly than Bellway so that, by this stage, Beazer   had received a total of 294.40 acres whereas Bellway had been allocated 291.05 acres.  
11.	With the intention of redressing this shortfall, by an exchange of letters in September 1999 (“the September letters”) between the parties’ technical directors, Beazer and Bellway agreed on what was also intended to be the final allocation of land at Cramlington.  
i)	For area 2D(ii), Bellway was allocated 1.95 acres and Beazer 3.87 acres;
ii)	For area 3A, Bellway was allocated 11.58 acres and Beazer 6.29 acres;  ironically, in the light of what later transpired, area 3A was then thought to contain more attractive land for development because it was entirely residential whereas area 2D(ii) was zoned for affordable or social housing;
iii)	The upshot was that the aggregate acreage allocated to the parties at Cramlington was equalised (as near as may be): Bellway’s total acreage amounted to 304.58 and Beazer’s 304.56.
12.	In making this allocation, land known to be unsuitable for development had already been excluded.  In this sense it follows, on any view, that the parties were dealing with what they thought was developable land (after appropriate “remediation”).     However, in forming an opinion as to what was developable land, the parties relied on their own judgment; there had been no independent investigation, detailed structural survey or other formal assessment as to the suitability of any of areas 2D(ii) or 3A for development.  Moreover, although outline planning permission had been granted for the whole of the Cramlington site years previously – and, prior to the September letters, meetings had taken place with local planning officers - full planning permission had not been given.  As is common ground, neither party anticipated that full planning permission would be refused; the parties had not before encountered such a refusal and the September letters (and, for that matter, the Shareholders Agreement) were silent in this regard.
13.	Subsequent to the September letters, the area 2D(ii) land was disposed of by Leebell to Beazer and Bellway for development and, so far as this Court is aware, has been developed. 
14.	Unfortunately, however, the local planning authority refused full planning permission for area 3A, in essence, on the ground that development might displace methane gas into areas already developed. Although for some years the point was canvassed with the local authority, there was no change of heart and the planning application was ultimately withdrawn in June 2003.  In consequence area 3A could not be developed, with the result that the imbalance in Cramlington acres developed by the parties (to put the matter neutrally) was exacerbated rather than eliminated.  While Leebell remains ready and willing to transfer to Bellway its allotted 11.58 acres, Bellway, for understandable reasons, has not taken up the allocation.   As already underlined, refusal of full planning permission was not something either foreseen by the parties or dealt with in the September letters.
15.	It is now time to return to the land at Middle Warren, mentioned earlier – and which the parties are continuing to develop, pursuant to the Shareholders Agreement.  
16.	By this route, I come to the core of the dispute between the parties.  It is Bellway’s contention, apparently first intimated in May 2006, that Leebell should make a disposal of land from the Middle Warren site sufficient to rectify the “imbalance between the values” of the land disposed of to Bellway and Beazer from the Cramlington site. As is common ground, there is land available at Middle Warren to do so, if such a disposal is provided for and required under the Shareholders Agreement.    Beazer, however, resists the Bellway claim, contending that any such adjustment is neither provided for nor permissible under the Shareholders Agreement; Beazer further contends that any resulting inquiry would by now be unworkable, with the passing of years and changes in value over time. 
THE JUDGMENT
17.	David Richards J held in favour of Bellway; his reasoning proceeded as follows.
18.	First, the Shareholders Agreement was not confined to the development at Cramlington; instead it expressly contemplated that there might be a number of developments.
19.	Secondly, disposals of land to the shareholders were to be in parcels of land of equal value unless otherwise agreed. In the Judge’s view, for this provision to be workable, “equal value” had to be objectively ascertainable and referred to:
“ …the open market value of the relevant parcels of land at the date of disposal. In relation to the land at Cramlington the parties agreed to use acreage as a proxy for value, but it does not appear that this was intended to produce any significant difference in the respective market values of the total areas allocated to each. ”
20.	Thirdly, the parties had in fact agreed to disposals of Cramlington land to them in parcels of unequal value – but, on the basis, that the party which received a smaller allocation would in due course be entitled to “catch up” through a further disposal in its favour of parcels of unequal value.
21.	Fourthly, the parties intended the final allocation of land at Cramlington, agreed through the September letters, to be the means by which Bellway caught up.   The Judge said this:
“If at the date of disposal it had received its intended share of developable land, I agree with Mr. Pymont QC for Beazer that Bellway could not complain of a subsequent change in its suitability for development. However, it seems clear that area 3A was not developable at the date of disposal….”
The old mine workings were present and well-known and there was no suggestion of any “subsequent change in the local authority’s policy of giving planning permission”.  Planning permission had in fact been refused within a relatively short period.
22.	Fifthly, the final allocation of land at Cramlington did not therefore achieve what the parties intended.  Beazer had accepted that if in September 1999, area 3A was known to be incapable of development, it would have been excluded and Bellway would have been entitled to make up its shortfall from area 2D(ii). 
23.	Sixthly, the Judge concluded:
“It is therefore only if the allocation of land at Cramlington must necessarily be divorced from the allocation of land at Middle Warren that the course of dealing between the parties would not result in Bellway’s shortfall being made up from land at Middle Warren.  There is….. nothing in the shareholders agreement which dictates this result. The terms of cl. 3.1(d) do not do so. Having embarked on disposals of parcels of unequal value, on the basis that the balance would subsequently be redressed, the agreement does not ….prevent that arrangement being carried forward from one development to another. Equally, there was no agreement between the parties that the allocation agreed in September 1999 was to be a final and binding settlement of their respective entitlements, irrespective of whether the whole or parts of the land then allocated was capable of development. ”
24.	The Judge accordingly granted Bellway the declaration sought, in the terms set out at the beginning of this judgment.  He was satisfied that the declaration did not pose insuperable problems so as to make it unworkable.  It was neither necessary nor appropriate for him to go further; a valuation process would be needed to give effect to the declaration.
THE RIVAL CASES
25.	For Beazer, Mr. Pymont QC developed his impressive submissions as follows.  The Judge had fallen into error because the agreed allocation at Cramlington was final.  The Shareholders Agreement did not provide for any subsequent re-allocation; moreover, the re-allocation contemplated by Bellway and set out in the declaration granted by the Judge was contrary to the Shareholders Agreement.  
26.	The requirement of equality of value arose upon (and only upon) each disposal under cl.3.1(d) of the Shareholders Agreement.  Up until September 1999, the disposals had been “on account”; the September letters equalised the imbalance, interpreting rather than varying the Shareholders Agreement.  The parties were allocating what both thought was developable land. Those arrangements were final and intended to be so.  In the light of the September letters and the disposals made pursuant thereto, there was no question of the parcels being re-valued subsequently in the light of any changes (or perceived changes) in value.  Even if the doctrine of mistake was relevant (which it was not), there had been no mistake as to pre-existing facts.  The unexpected refusal of planning permission came subsequently. Once the disposals had been agreed or made (or, presumably, Leebell was in a position to make the disposal), the risk and reward involved in developing the land passed to the transferee.   The parties could have waited to see what the outcome of the planning application would be; instead, they had proceeded in September 1999 by taking a view on the outcome, without any reservation in the event that it was unfavourable.  In doing so, Bellway took the risk and, as it transpired, its expectation proved wrong.    There were real difficulties in making some compensatory disposal of Middle Warren land now even if it was at all workable to do so; but, over and above those practical difficulties, any such unequal disposal now was not agreed and so would be contrary to cl. 3.1(d) of the Shareholders Agreement.
27.	Mr. Gaunt QC, for Bellway, likewise impressively, submitted that the Judge was right and that the appeal should be dismissed.  By the September letters, the parties intended to equalise the parcels of land allotted at Cramlington, so that each would have received in aggregate land of roughly equal value.  In so doing, the parties were seeking to implement rather than vary the Shareholders Agreement.  In the event, the September letters failed to achieve their intended purpose. However, the Shareholders Agreement remained in force and land was available at Middle Warren (to which the Shareholders Agreement applied) to be allotted to Bellway so as to even up the allocation between the parties.  The Shareholders Agreement therefore remained capable of performance with such adjustment as was appropriate (to reflect changing values and the time which had passed); that should now be done; the 5 acre shortfall reflected some 50 houses, perhaps worth £5 million to Bellway. 
28.	While the September letters had been intended to achieve finality at Cramlington – unsurprisingly, as there was no further land to develop at Cramlington – that begged the question of what was to happen in the wholly unexpected circumstances which had arisen.  There was no or no good reason why Bellway was “bound” by the September 1999 allocation if that allocation failed to give effect to cl. 3.1(d). 
29.	As to cl. 3.1(d) of the Shareholders Agreement, on its true construction and as a matter of its operation, the clause did not require equality of value upon each relevant disposal. It looked instead to the aggregate of parcels disposed to shareholders being of equal value. 
30.	The parties had agreed the allocation set out in the September letters on the basis that the net areas agreed “were developable”.  There was no question of “taking a view” or of Bellway taking the risk that they might not be; that was not a fair characterisation of what the parties had done.  Alternatively, the matter could be analysed in terms of common mistake:  see, Great Peace Shipping v Tsavliris Salvage Ltd. [2002] EWCA Civ 1407; [2003] QB 679. The parties had been mistaken in agreeing that the area 3A land was developable.  For the avoidance of doubt, Bellway did not seek to go back on the disposals of the area 2D(ii) land effected pursuant to the September letters. 
DISCUSSION
31.	As is plain, the refusal of full planning permission for the area 3A land gave rise to a wholly unexpected situation and one for which the parties had made no express provision.  In considering the rival submissions in this finely balanced dispute, the task of the Court is to assess which proposed solution better reflects the true nature of the parties’ September 1999 dealings, expressed in the September letters and understood in their proper context – namely, that the parties were seeking to interpret or implement the Shareholders Agreement. There is no question of the September letters either constituting a new contract or varying the Shareholders Agreement.    On this appeal, there has been no dispute as to primary fact; either the Judge’s findings have been unchallenged or the primary facts have been agreed throughout. Accordingly, the appeal is concerned with the correctness (or otherwise) of the Judge’s conclusions, by their nature involving inferences from primary facts or matters of construction. 
32.	Some matters are relatively straightforward.  
i)	To my mind, cl. 3.1(d) of the Shareholders Agreement, when dealing with disposals of land to the shareholders, focuses on individual disposals, with a view to achieving equality in value per disposal.  The parties are at liberty to agree otherwise; however, absent such agreement, each disposal to shareholders is intended to achieve equality in value (or as near as may be).  Value is accordingly assessed at the time of the disposal/s in question – here, in late 1999.
ii)	Next and as already underlined, the parties made no express provision for the re-adjustment of the value of the land disposed by Leebell to the shareholders in the event that subsequent difficulties were encountered.  As the Judge noted and agreed, if at the date of disposal Bellway had received its intended share of developable land, it could not complain of a subsequent change in its suitability for development.
iii)	Unlike the earlier “on account” disposals, the disposals of Cramlington land dealt with in the September letters were intended both to bring finality and to restore equality to the allocation of Cramlington land. As Mr. Pymont submitted, these disposals were intended to enable the parties to start at Middle Warren with a clean slate.  Although therefore the Shareholders Agreement was not confined to Cramlington, the intention behind the September letters was to deal only with Cramlington and on the basis of finality. 
33.	As it seems to me, all these matters provide some support for the Beazer case – but are by no means conclusive. Indeed, thus far, there can be no quibble with the reasoning of the Judge.   It remains to consider what, in my view, is the crucial question: namely, that of risk allocation.  
34.	If, as Mr. Gaunt submitted, the parties had agreed the allocation contained in the September letters on the basis that the net areas agreed “were developable”, then, as it strikes me, both the Bellway case and the Judge’s conclusion would be well-founded. On this footing, there would be no question of Bellway taking the risk that its acreage was not developable. The parties had agreed that area 3A land was developable, whereas and at the time of their agreement, it was not. Their efforts to implement the Shareholders Agreement had failed. The difficulties inherent in re-visiting the allocation contained in the September letters after this lapse of time would somehow have to be overcome in order to implement the Shareholders Agreement – whether by analogy with the doctrine of common mistake or as a matter of giving effect to the contract in question.   
35.	If, however, the true analysis is that the September letters entailed no more than the allocation of land which at the time the parties thought was developable land, then the position is very different. If so, there was no “mistake”; each party received its intended share of what both then thought was developable land, even though, subsequently, it turned out not be – a contingency for which the parties had not made any contractual provision. The straightforward conclusion would be that upon disposal of each party’s share – or Leebell standing ready and willing to make the disposal (a party could not improve its position by declining to take up its allocation) – the risk of subsequent changes in the value of the land thus allocated, or its suitability for development, vested in the transferee.  The doctrine of mistake would not suggest otherwise.  If that be right, then the Judge’s conclusion cannot stand and Beazer is entitled to succeed on this appeal.
36.	It may be remarked that the somewhat anodyne terms of the September letters do not themselves assist in the resolution of this controversy.  
37.	I confess to a degree of sympathy with the Bellway case; this was a joint venture and, on the material before us, the parties had operated it relatively informally and amicably over many years. It seems, to me at least, unfortunate that they have been unable to find a commercial solution to the problem which has arisen, without the need for litigation.  
38.	The Court’s task, however, is to deal with the dispute before it and here I find myself, with respect, parting company with the fourth to sixth steps in the reasoning of the Judge, as I have earlier sought to number them.  As a matter of analysis, I am persuaded that the Beazer case is to be preferred; that the risk of the refusal of full planning permission had passed to Bellway and that, accordingly, the appeal must be allowed.
39.	My reasons are these:
i)	In September 1999, whatever the parties’ expectations, as Mr. Pymont correctly submitted, full planning permission was “unknown and at large”.
ii)	There is no evidence that a decision had already been taken that the area 3A land was not developable, or that inquiries by the parties or by a third party (to mention a matter referred to by the Judge) would have revealed that it was not.  The evidence that there had been meetings with local planning officers suggests otherwise; the land was thought to be developable but no final decision on full planning permission had yet been taken.
iii)	The irresistible and natural inference is that, when agreeing the September letters and the disposals pursuant thereto, the parties took a view that the area 3A land would be suitable for development.  No pre-existing facts vitiated that view but, subsequently, it transpired that the parties’ hopes as to full planning permission were mistaken.  Without more, their arrangements embodied in the September letters cannot be construed as an agreement that area 3A land was developable.   
iv)	In September 1999, the parties could have waited to see whether full planning permission would be granted.  They could have reserved their position, in the event that it was not.  Instead, they did no such thing.  They went ahead, inescapably in my judgment relying on their own view as market professionals, with their eyes open.  
v)	Having done so, it seems to me that Bellway assumed the risk of a subsequent refusal of full planning permission.   On this footing, absent some contractual mechanism for re-adjusting the allocation made pursuant to the September letters, the loss must lie where it falls – with Bellway.  That the sphere of application of the Shareholders Agreement is not confined to Cramlington and extends (inter alia) to Middle Warren is neither here nor there.  There is simply no basis for now revisiting the 1999 allocation. 
40.	Despite its apparent harshness for Bellway, this solution both serves to give effect to the parties’ intentions, objectively evaluated and has very considerable attractions in terms of certainty and finality.   
i)	The notion that the parties envisaged re-opening the allocation embodied in the September letters, years after the event, seems most improbable. 
ii)	To do so must involve imposing on Beazer a subsequent unequal disposal in respect of Middle Warren land, without agreement – an exercise encountering obvious difficulty contractually, having regard to the terms of the Shareholders Agreement.  
iii)	Furthermore and although, in agreement with the Judge, I would not be minded to conclude that the inquiry contemplated by Bellway was unworkable, the practical difficulties of now revisiting the 1999 allocation are formidable and ought not to be underestimated; suffice to say that it is again implausible that the parties should have contemplated, let alone intended, any such outcome. 
41.	With respect, therefore, to the Judge’s very clear judgment and despite some sympathy for the position in which Bellway finds itself, I would allow this appeal. 
Lord Justice Lloyd
42.	I agree with the judgments of Gross LJ and of the Master of the Rolls, and I therefore agree that the appeal should be allowed.
The Master of the Rolls:
43.	I agree with Gross LJ that this appeal should be allowed. I propose to express my reasons in my own words, because it is only after considerable hesitation that I have come to a different conclusion from that expressed in David Richards J’s careful and considered judgment and advanced in Mr Gaunt QC’s crisp and well-presented submissions on behalf of Bellway.
44.	Gross LJ has set out the facts very clearly in paragraphs 2 to 16 of his judgment, and I gratefully adopt what he says in that connection.
45.	In my view, the key to this case is to be found in the terms of the Shareholders Agreement. That agreement represents the basis upon which the parties agreed that their relationship would be regulated, and from which their respective rights and concomitant obligations flow. For present purposes, the centrally relevant provision is clause 3.1(d), where the parties agreed:
“To dispose of the whole of or any part of such land and premises (whether by sale exchange or by lease then sale including disposals to [Beazer] and [Bellway] in parcels of equal value as near as may be unless [they] shall otherwise agree) and otherwise deal with such land and premises as [they] shall think fit.”
The reference to “such land and premises” is to the “land and premises in the Counties of Northumberland, Durham, Cumbria, Tyne and Wear, Cleveland and North Yorkshire” mentioned in clause 3.1(a).
46.	It seems to me that the effect of clause 3.1(d) is, at least in principle, simple and clear. It is that each time any area consisting of, or forming part of, the “land and premises” referred to in clause 3.1(a) is “dispose[d of]” by Leebell, it is to be transferred to Beazer and Bellway “in parcels of equal value as near as may be”, unless they “otherwise agree”.  Accordingly, save where the parties otherwise agree, on any disposal of an area of land by Leebell, there is to be a partition into, and disposals of, two parcels of equal value.
47.	When the parties determined that Leebell should dispose of the land at Cramlington, it is apparent that they decided that the disposal would be effected in stages. It is also apparent that, in relation to all but the last stage, they “otherwise agree[d]” that the partition of each area of land would not be precisely by reference to equality of value, on the basis that a balancing exercise would be carried out at some point. When the final area of land at Cramlington (consisting of lot 2D(ii) and lot 3A) came to be disposed of by Leebell, it seems clear from the September letters, and the witness statements before the Judge, that the parties agreed that that disposal would involve a partition on the basis that (a) there was to be a balancing of the account that had been building up as a result of the previous disposals not having been effected on the basis of equality, and (b) otherwise the primary provision of clause 3(1)(d), namely partition by reference to equality of value, was to apply to the disposal of this final area.
48.	These proceedings arise from the fact that the values of the two parcels of the final area at Cramlington disposed of to Bellway and Beazer (each parcel consisting of part of lot 2D(ii) and part of lot 3A), assumed to be equal  (subject to the balancing exercise) when the partition was agreed in September 1999, were not in fact equal, owing to the subsequent unexpected refusal of planning permission for the residential development of lot 3A, as explained in paragraph 14 above. Bellway’s contention is that, as a result, it is entitled to a transfer of another parcel of “land and premises” held by Leebell under clause 3.1(a), so as to equalise the aggregate values of the totality of the parcels disposed of to Bellway and to Beazer, to “rectify the imbalance in the values of the land disposed of [at] Cramlington”, as the order made below puts it.  
49.	I accept, as did David Richards J, that commercial fairness is better achieved if Bellway is right and it is entitled to rectify the imbalance. On the other hand, I consider that the desiderata of finality and avoidance of practical difficulties, as described by Gross LJ in paragraph 40 above, will be achieved if Beazer is right and Bellway is not entitled to rectify the imbalance. Although commercial fairness, finality, and practicality are not irrelevant to the question of whether Bellway’s contention is correct, the resolution of that question ultimately turns on the parties’ rights and obligations under the Shareholders Agreement, the accord in the September letters, and the subsequent disposals.
50.	The accord in the September letters as to the disposal of lot 2D(ii) and lot 3A, representing the final area to be disposed out of the “land and premises” acquired by Leebell at Cramlington, was reached on the basis primarily envisaged by clause 3.1(d), and not on the basis of the parties “otherwise agree[ing]”, save to the extent of balancing out any previous inequality. And that accord was followed and implemented by the disposal of lot 2D(ii), in part to Beazer and in part to Bellway. Accordingly, at least on the face of it, clause 3.1(d) of the Shareholders Agreement has been performed in relation to the land acquired, and now disposed of, by Leebell at Cramlington, and Bellway’s claim for some further balancing exercise appears to me to be misconceived.
51.	The reference to “value” in clause 3.1(d) must be a reference to the value that the parties agree, at least, as happened in the present case, where they do agree (and, if they could not agree, presumably the valuation would have to be effected by the court, unless the deadlock provisions of clause 10 applied). Ascribing a value to an asset is frequently a difficult exercise, and, even where there is an easily ascertainable price, as with quoted shares, so the exercise is not difficult, the result is always capable of appearing to be fortuitous, sometimes even capricious, with wisdom of hindsight. That is the nature of value, because, at any rate in this sort of context, it means market value. Unexpected changes in the economy, such as the recent banking crisis, or more specific unanticipated events, such as take-over bids in the case of shares, can serve to render a valuation on a particular day appear wholly unrealistic a short time later. 
52.	When it comes to development land which has not yet got planning permission, the valuation difficulties can sometimes be particularly acute. In the present instance, difficulties were less likely to arise, since the two parties were partitioning areas of development land between themselves, and, as the Judge said, “acreage was in effect taken as a proxy for value.” In practice, what they agreed in September 1999 was a partition of lots 2D(ii) and 3A into two parcels which (subject to balancing for past inequalities) had, or were at least believed to have, equal values.
53.	In my judgment, there is no reason to think that the two parcels did not have equal values as at September 1999. As at that date, both parties plainly anticipated that planning permission would be forthcoming for lot 3A as it would be for lot 2D(ii). Given that both parties were experienced housebuilders in a substantial way of business in the area, the inference that this must have been the view of the market, at least in the absence of any evidence to the contrary, is very strong. One cannot job forward to some future date when it was first discovered, or even when it was first suspected, that planning permission would not in fact be granted for lot 3A due to the methane gas problem, and retrospectively factor that into the valuation process in September 1999.  
54.	However, that is not the end of the matter, because Mr Pymont QC accepts on behalf of Beazer that the September letters did not give rise to an enforceable contract, not least because of the requirements of section 2 of the Law Reform (Miscellaneous Provisions) Act 1989. Accordingly, argues Mr Gaunt, the balancing exercise left open before the accord contained in the September letters has yet to be performed. That argument would, I think, be difficult to resist if lot 2D(ii) had not been transferred by Leebell, in part to Bellway and in part to Beazer. Clause 3.1(d) is concerned with disposals, as Mr Pymont says, and, as I see it, once any “part” of the “land and premises” is actually disposed of on the primary basis contemplated by clause 3.1(d) (namely agreed equality of value), that is the end of the matter, subject to the possibility of revisiting the question in accordance with the general law (e.g. rescission for fraud or misrepresentation). 
55.	It is true that lot 3A has not been disposed of, but I do not consider that that can affect the outcome. It has no apparent value or utility, and neither party seems to want it or to have any use for it. Lot 2D(ii), the only valuable land in the “part of the land and premises” concerned, has been disposed of, in part to Bellway and in part to Beazer, and they have built houses on their respective parts, and presumably sold off the houses individually. In terms of commercial reality, the relevant disposal was made many years ago, and, subject to the final point to which I now turn, that is the end of it.   
56.	The final point is Bellway’s argument that it is nonetheless appropriate for the question of remedying the imbalance to be revisited on the ground of mutual mistake. As just mentioned, it is possible that, in accordance with general legal principles, a disposal under clause 3.1(d), or an accord pursuant to which the disposal was made, might be rescinded or adjusted (to use a vague and non-technical expression), and I am prepared to assume for present purposes that the accord upon which a disposal took place under clause 3.1(d) could, as a matter of principle, be rescinded or adjusted if it could be established that the accord was based on common mistake.
57.	However, I do not consider that common mistake can assist Bellway in this case. The parties were mistaken in their assessment of the likelihood of lot 3A receiving planning permission at the time of the September letters, but I do not consider that that was a mistake of a sufficiently fundamental character to form the basis for any claim by Bellway. The leading case on the topic is Great Peace Shipping v Tsavliris Salvage Ltd. [2002] EWCA Civ 1407; [2003] QB 679, and consideration of that case demonstrates how the mere fact that the parties to a contract both made a mistake, which was relevant to the contract and would have affected its terms, is insufficient to justify the granting of any relief. 
58.	In this case, the parties each meant what they said in the September letters. The parties each received (or, as lot 3A is still held by Leebell, is entitled and able to receive) the parcels of land that they both agreed in the September letters. There is no reason to think that the values of each parcel at the time of the September letters were not roughly equal, and that is, after all, what clause 3.1(d) stipulates. Full planning permission had not yet been granted for lot 2D(ii) or lot 3A, and, as experienced residential property developers, both parties would have known that the grant of such permission could never be guaranteed, and, even if it was granted, the terms of such permission were unpredictable. Once the accord was made in the September letters and then implemented, the die was cast, and each party took the risk that its parcel might turn out to be less valuable than the other’s parcel, because they both must have been well aware of the uncertainties of the planning process.
59.	For these reasons, which reflect those more fully expressed in the judgment of Gross LJ, with which I agree, I would allow Beazer’s appeal.