England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURTS OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand London WC2A 2LL
		10th November 2009

MRS JUSTICE PROUDMAN:

1. This is the trial of a preliminary issue ordered by Briggs J on 13^th October last. The issue is as to whether the action has been finally settled as the Defendant, Mrs Blackwell, contends, or whether it has not, as the Claimant, Bellway Homes Limited contends.
2. The Claimant's position is that the parties came very close to, but failed to reach, the complete agreement necessary to dispose of the action. The Claimant is represented by solicitors, Speechly Bircham LLP, and counsel, Mr Edward Denehan. The Defendant is in person, but with the court's permission her daughter, Miss Georgina Blackwell, as on previous occasions, addressed the court on the Defendant's behalf. Mrs Blackwell, Miss Blackwell and Mr Crittenden, a solicitor employed by Speechly Bircham LLP, have all made witness statements and been cross-examined as to the facts relevant to the preliminary issue.

BACKGROUND

3. Under and by virtue of a transfer dated 7^th April 2008 the Claimant is the registered owner of land adjoining the north and east of the garden AT the Defendant's land, 9 Parsonage Street, Halstead, Essex. The Defendant lives at the premises where she also runs a hair and beauty salon. Miss Blackwell works in the salon but lives elsewhere. Under the Transfer of 2^nd September 2003 by which the Defendant acquired her land, it was made subject to a reservation whereby the vendor (and the Claimant as its successor in title) is entitled to enter her land to do certain works to the wall which adjoins her land to the north and which was the back wall of an old factory. For the purposes of this action that wall is known as the north wall.
4. The Claimant is in the process of developing its land and the development involves the partial demolition of the north wall. In November 2008 the Claimant gave the Defendant notice that it intended to exercise its rights of entry for the purposes of these works but the Defendant, through her then solicitors, made it clear that she was not prepared to permit entry. On 23^rd March 2009 the Claimant sought entry for its workmen, but the Defendant again refused. The Claimant, after unsuccessful attempts at persuasion and negotiation, issued proceedings on 20^th July 2009 and served an application notice seeking interim relief.
5. The application came on before me on 30^th July 2009. It was not at first clear to me whether the Defendant denied the Claimant's right to enter because of some point of construction of the reserved right. However, the Defendant admitted that the right was exercisable in the context of the present development. What was and is plain is that the Defendant's objection was based on a lack of trust. She believes that the Claimant wished to enter her land not merely to do works to the north wall but also to demolish the wall to the east of her property. For the purposes of this action that wall is known as the east wall. She believes that scaffolding erected by virtue of the right of reservation will be used for both purposes, and that if and when, as a result of demolition of the north wall, the east wall becomes unsafe, the Claimant will say it has to use the scaffolding to prevent damage to her land, that is to say for necessary salvage purposes.
6. It was equally plain that the Claimant accepts as a matter of law, as it must, that its right of entry does not extend to works to the east wall. It gave assurances through counsel that it was able to demolish the east wall from its own land and has never had any intention of using its right of entry in relation to anything other than works to the north wall. On that basis I saw no valid objection to the interim relief sought by the Claimant and made an order as asked, ordering also that the Defendant pay the costs of the application. Those costs are claimed to amount to over £20,000 although they have not yet been subjected to assessment.
7. It is also relevant to note at this point that there had been a party wall award which did not directly affect the north wall or the east wall but related to the boundary which is the continuation of the east wall down to junction with Parsonage Street. That award expired, I am told, last September.
8. The Defendant admits in her defence and counterclaim filed on 14^th September 2009 that the Claimant can enter her land for the proposed works to the north wall, but continues to maintain that the Claimant cannot do so to carry out works to the east wall, and she claims relief including an injunction in respect of that matter, although the Claimant disavows any right or intention to do so.
9. On the same day, 14^th September, the Claimant entered the Defendant's land and started to erect scaffolding. The Defendant contends that it is far in excess of what is necessary for works to the north wall and that what the Claimant is actually doing bears out all her fears. She applied without notice to the Claimant to Morgan J on 16^th September for an order, which he made, that the Claimant's works be limited to the north wall. On 18^th September she issued an application notice seeking an order that the excess scaffolding be removed and that the Claimant be restrained from demolishing the east wall whilst unsafe to do so. Briggs J heard that application but the time estimate was evidently too long for the Applications Court. In addition to giving directions for filing and serving evidence, he made an order restraining all works on the Defendant's land pending the hearing of the application as an application by order.
10. The matter came back before Briggs J on 13^th October 2009. However, on that occasion the Defendant alleged that the whole matter had been compromised by agreement in the interim. Briggs J accordingly gave directions for the trial of the preliminary issue that is before me today. Those directions included an order for disclosure which Briggs J indicated was to include disclosure of minutes of the board meeting at which the Claimant decided not to settle the action. However, Mr Denehan's instructions are that no written record was made at or of that meeting.

COMMON GROUND

11. The burden of proving a complete and certain settlement is on the party who alleges it, in this case the Defendant. Further, an agreement to agree cannot form part of a concluded contract unless the terms of the agreement can be objectively established, for example, by reference to a standard of reasonableness, by the court.
12. The negotiations in this case were conducted on behalf of the Defendant by Miss Blackwell, who was at all times authorised to negotiate for her mother. She drafted all the e-mails containing the important negotiations, although her mother was aware of and approved their contents. Negotiations were conducted on the Claimant's behalf by Mr Crittenden. The Claimant accepts that Mr Crittenden had ostensible authority to enter into a concluded settlement with the Defendant through her daughter. What is disputed is whether he did in fact do so.

THE NEGOTIATIONS

13. Although as I have said, the Claimant does not deny that there was ostensible authority, the Claimant alleges that both parties clearly intended that a final agreement between them would be recorded in an order and that until that happened there would be no binding agreement. It seems to me that this statement comprises two distinct allegations. The first, that the parties' agreement would be embodied in a court order, is uncontentious. The second is not and does not automatically follow from the first.
14. The negotiations were expressed to be without prejudice and there is evidence before the court that some considerable care was taken to ensure that the Defendant and Miss Blackwell understood the meaning of that expression. However any agreement reached in the negotiation process was not expressed to be subject to a formal order of the court or otherwise subject to a formal written contract. Nevertheless, it is said by the Claimant that the negotiations were conducted on a basis understood by both parties that only a final form of order or a written contract would be binding.
15. I find that submission unsatisfactory in view of the fact, accepted by Mr Crittenden, that it was nowhere spelt out orally or in writing that offers were subject to formal agreement. I took Mr Crittenden to a letter he had written to Mrs Blackwell on 2^nd October 2009 described as an offer, specifying five numbered terms and stating that the offer was:

"...made with a view to resolving the matter as quickly as possible … allowing both yourself and my client to draw a line under this matter and move on."

That offer did not contain the matters which are now said to be outstanding and unresolved. I asked Mr Crittenden what he thought would have been the effect if (which did not in fact happen) Mrs Blackwell had replied purporting to accept the offer unconditionally. Would there have been a binding agreement? His answer was that there would not as he would have had to refer the agreement to his client for acceptance. He was unable however to point to any indication that Mrs Blackwell had been told that the offer was conditional in this way.

16. Mr Denehan too submitted that there would be no binding agreement, but his analysis was different. He said that there were manifestly other outstanding issues between the parties in relation to the proceedings and the offer could only have been an effort to resolve and then park the issues enumerated in the letter. He accepted that any such resolution could not be final; either there was a whole agreement or there was not. The issues in the letter were not wholly discrete in the sense that they could be settled separately from the other issues. However, he maintained that the correspondence was no more than a continuing process of identifying and trying to resolve the issues as they arose. An important issue was the question of the payment to be made to Mrs Blackwell. Mr Denehan submitted that it was logical to deal with this first, even though he accepted (on the stated hypothesis) that she could have changed her mind about the sufficiency of the payment and might indeed have done so if she conceded other issues at a later date.
17. Mrs Blackwell believed, and was indeed told in writing by Mr Crittenden, that if agreement were reached she would not have to attend court. That is consistent with her understanding that an agreement would take effect as soon as it was reached. The tone of the correspondence (referring to, for example, "if we have not finalised our agreement" in an email from Mr Crittenden of 8^th October 2009 timed at 13.45) supports that approach. It may well be that the Claimant proceeded on the basis of a belief that negotiation would always be subject to confirmation and a court order or other formal written document, but if so, I find that belief was not shared by the Defendant or her daughter, nor was it communicated to them.
18. I do not therefore accept the Claimant's submission that the whole of the negotiation correspondence was conducted on a 'subject to contract' or similar basis. It follows that I must examine the correspondence to see whether or not in fact a complete and final agreement was reached orally as alleged.
19. The relevant negotiations for present purposes started on 24^th September 2009. Initial offers made by the Defendant and the Claimant respectively were rejected out of hand. At an early stage the Defendant dropped her requirement of a piece of land for use as a side passage and the Claimant recognised that the Defendant was looking for a much higher payment in settlement than it had originally offered. For a while negotiations focused on the sum to be paid to the Defendant but it was clear that other terms were also important to both parties. Mr Crittenden's emailed letter of 2^nd October 2009 contains an offer with five numbered terms, namely that both sides' claims would fall away, that the Claimant would have access for works to both the north wall and the east wall, that there would be a lump sum payment, that the Claimant's rights to costs under my order would be abandoned and that the Claimant was to make good any damage to the Defendant's garden caused by the works. Thereafter various letters were exchanged by e-mail about the amount of the lump sum.
20. Agreement was reached on the lump sum at any rate on 7^th October when Mr Crittenden wrote that his clients:

"agree to £75,000. I will e-mail you shortly with the documents required to complete the deal and dispose with (sic) the court proceedings."

However it soon appeared that no agreement was concluded at that point because Mrs Blackwell wrote by e-mail timed at 14.17, setting out what she said had been agreed on 8^th October 2009 and this letter included two matters which had not been referred to in the letter of 2^nd October, as follows:

4 "That the east and north wall will be wholly demolished and an old red brick wall be constructed in replacement at a height of three metres."

7 "The right of transfer shall be removed from both of our land registry transfers once works are completed."

21. Mr Crittenden responded at 15.21 on the same day querying what was meant by point 7 but refuting point 4 outright. It was said that there would not be a complete replacement but only a reduction in the height of the wall plus stabilisation works on the basis that the right of entry was only to do such works as the Claimant deemed necessary. Mrs Blackwell responded at 15.38 that she wanted the walls demolished and that point 7 went with this: access to maintain the existing wall would in her view be unnecessary once there was a new wall. Mr Crittenden responded at 16.27 in terms that showed that his clients were not prepared to demolish the whole wall. However, he said that subject to instructions he did not see removal of the right of access as a problem on the basis that the completed wall would be covered by the Access to Neighbouring Land Act. In that email he went on to mention (for the first time in this part of the correspondence) a party wall award in effect reviving the earlier award. He said:

"Finally, my clients have asked that there is a clause put in the order compelling you to sign the reissued party wall agreement. I would appreciate it if you would let me know if you have any objection in this regard?"

22. Mrs Blackwell replied at 16.48 that she was still unhappy with the wall simply being lowered, that she required confirmation of the removal of the access right and asked for further information about the party wall award. She said:

"Please could you explain further what your client is requesting in regard to the Party Wall Act, the award has expired and needs to be reissued. I previously did not have to sign the award, it is simply a process of the surveyors completing a new award."

23. While continuing to refuse to knock down the wall, Mr Crittenden responded at 16.56 that the Claimant wanted:

"The party wall award to be reissued, for you to have agreed to it, and for it to have been signed off as soon as possible and they want this drafted into the order."

24. On the following day, Friday, 9^th October 2009, there was a flurry of telephone calls recorded in two attendance notes, one by Mr Crittenden and one by Miss Blackwell. It is clear that at approximately 3.40pm Mrs Blackwell conceded the point about reduction as opposed to demolition and rebuilding of the wall. This reflected instructions from the Claimant to Mr Crittenden at 12.36pm:

"We have no further offer to make Mrs Blackwell … it is a take it or leave it option! We are not prepared to build the wall."

There had been a discussion about bundles for the court on the application that was listed for Tuesday, 13^th October. Mr Crittenden records Miss Blackwell as saying:

"GB then stated that she was happy to conclude a deal on the basis of Bellway simply reducing the height of the wall providing Bellway were happy that the wall would be stable."

25. Miss Blackwell's record of this conversation was not very different. She said:

"I agreed to concede and allow the wall to be lowered but made it clear that if it is not sustainable Bellway will be liable for repairing or replacing it."

This latter point reflected something Mr Crittenden had already dealt with in his 16.27 email of the previous day.

26. The principal outstanding point was therefore the party wall issue. The respective notes made by the parties of the relevant discussion reads as follows.

Mr Crittenden on a call to the Defendant at 5.20pm:

"THC spoke to GB and they discussed the terms of settlement. A point that Bellway asked THC to confirm was how to deal with the signing of the new party wall agreement which Belway wanted as part of any settlement. THC stated that he would be seeking an order that SB had it signed within 3 days of the order being signed. GB pointed out that it wouldn't be SB who signed it (but the surveyor) and that a new schedule of conditions would have to be drawn up between the surveyors. THC said that he would take instructions on how best to deal with that point."

Then significantly:

"He stated that this and all other matter still undecided between the parties were 'trifling' and that they could be dealt with in the drafting of an order."

Miss Blackwell's version of the conversation is again not substantially different:

"I queried the clause regarding the Party Wall Act as that is in connection to the side of the property and has no relevance to the factory walls or rear garden. Mr Crittenden explained that his client wanted a 3 day limit put on the re-signing of the award. I responded by indicating the impracticability of the time restraint and that it may take more than 3 days, but that I have no objections to the Act being re-signed. Mr Crittenden then said that I would receive the agreement by 11am Monday 12^th October."

Mr Crittenden very fairly accepted in cross-examination that he had said that he would supply his draft by 11am on the following Monday as Miss Blackwell had reported.

27. What happened thereafter was that when no draft agreement or order was forthcoming on the Monday Mrs Blackwell emailed Mr Crittenden to find out why not and whether the Claimant was "revoking their offer." Mr Crittenden replied that the matter had to go before the Claimant's Board of Directors and suggested that Mrs Blackwell prepare "for the moment," to attend court tomorrow. At 17.37 he reported his instructions that: "My client will not be concluding a settlement with you." The Defendant responded that a final agreement had been reached and that Mr Crittenden had confirmed that the Defendant would receive the final paperwork by 11am that morning, 12^th October. Her e-mail concluded:

"I can understand that as we have agreement so close to the hearing it may be necessary to conclude the precise wording at court so we can both confirm to the judge that we have a final agreement, but the terms are not now open to variation."

28. The Claimant's case is that there were still outstanding issues at large between the parties preventing any complete meeting of minds. The first is said to be an outstanding issue over the time period in which a new party wall award was to be signed. Mr Crittenden said (in a letter of 12^th October):

"I stated to your daughter that I wanted you to instruct your surveyor to sign the reissued award within 3 days of the conclusion of an agreement. Your daughter stated that this was not practical given that both my client's surveyor and your surveyor had to agree a new schedule of condition before any award could be entered into. As things were left on Friday evening I was seeking my client's instructions as to how this point would be dealt with."

29. It is plain (despite perhaps some ambiguity in the letter to which Miss Blackwell referred in submissions but which did not confuse her at the time) that what the Claimant was asking for was that the award should be finally signed off within three days. However, as Miss Blackwell said, that was a wholly unrealistic time estimate relating to matters outside her mother's control. Mr Crittenden accepted in cross-examination that the three day period was his own requirement rather than a period suggested by his client, intended to pin down the Defendant whom he regarded as difficult. He accepted that he did not take any advice about whether it was a realistic period. He also accepted that, as she said, Miss Blackwell made it clear that her mother agreed to reactivate the party wall award as soon as possible. Finally, he accepted, as I have said, that the matter was left that he would send the Defendant a draft order.
30. In these circumstances it seems to me that the actual timetable was a matter of logistics (depending on advice to be given by Speechly Bircham to the Claimant) as was said in Mr Crittenden's note, rather than a matter of future agreement. Mrs Blackwell agreed that she was willing to enter into a new party wall award and it is, in my judgment, an obvious implication that she was agreeing to take all steps reasonably required to obtain such an award as soon as possible. The timetable falls to be determined by the standard of reasonableness. In my judgment, there was agreement on the party wall issue in the terms which the Defendant submits. I am told, although it is irrelevant for present purposes, that surveyors on both sides are in fact now ready to sign off an award.
31. The second issue on which it is said that there was no consensus was the height of the reduced north wall. Mr Denehan submitted that there could be no agreement without consensus on that point. The Claimant has consistently said that the wall would have to be 2.4m in height. Evidence was given at the earlier hearing before me that the usual height of a garden wall erected by the Claimant is 1.8m, but because of Mrs Blackwell's concerns about being overlooked the Claimant was prepared to raise the height to 2.4m in the present case. I am told that it was also said in that evidence that 2.4m or thereabouts was the highest level at which the wall could be guaranteed to be stable.
32. In the correspondence the Defendant first stated that the new wall for which she was asking was to be 2.4m high. However, in the last letter in which height was mentioned, e-mailed at 14.19 on 8^th October, she asked that the new wall be "in the region of 3m" in height. Mr Crittenden gave evidence that he regarded this as an important unresolved matter as it had been treated as important by the Defendant. However, I note that the height was mentioned in the context of the new wall. It is a fair implication that when the Defendant conceded that there should be no new wall she also conceded the question of height. Her only stipulation was the wall should be stable, and she knew from the earlier evidence that the Claimant's structural engineers considered that about 2.4m was the maximum height for stability.
33. Understandably, Mr Denehan relied heavily on Miss Blackwell's witness statement where she set out terms which she said had been agreed on 9^th October. That statement included several matters which she tearfully accepted under cross-examination had not in fact been expressly agreed. One such term was that the wall would be built to a height of 2.4m to 3m. I have no doubt that the enumeration of so-called agreed points in her witness statement was in some respects an over-egging of the pudding. Some points had not been mentioned and were matters either of explanation of what was agreed (not being overlooked is the principal example) or of reasonable expectation as to what a properly drafted order might say. However, there was no relevant difference between Mr Crittenden and Miss Blackwell as to what was in fact said on 9^th October, and it seems to me that it was what was said that was important, rather than the gloss which Miss Blackwell put on it in her witness statement. In my judgment, 2.4m was the height that was understood for all the reasons I have given. Her expression "of 2.4m to 3m" in the witness statement adds nothing to that because an obligation expressed in those terms is only an obligation to build to the lower height. Height was not by 9^th October a contentious issue and was not raised in the present context until Mr Crittenden mentioned it in his witness statement. In my judgment it was simply left that the height of the capped wall would be at least 2.4m. I also note that the issue as to height did not feature in the very specific offer of 2^nd October, to which I have already twice adverted. The reason why not is because, on the basis of capping the existing wall, it was accepted that the height could only be 2.4m.
34. The third outstanding point is the request by Mrs Blackwell that the lump sum payable to her should be described as "compensatory" rather than "ex gratia". I cannot see that it matters what label the parties put on the sum, since the payment was plainly a contractual term of the compromise. I understand that the reason for the Claimant's stance was to indicate that it did not accept liability for compensation. However, that was a matter which could have been written into a common form release of all claims clause. I agree with the Defendant that she was entitled to assume that this point had been conceded as it was neither mentioned again nor treated as of any importance. It seems to me that it was a matter of drafting only and not one of substance. I do not accept Mr Denehan's analogy with the pink paper notice referred to by Lord Hoffmann in Mannai Investments Company Limited v. Eagle Star Life Insurance Company Ltd [1997] AC 749.
35. It does not seem to me that there was any relevant matter to be agreed outstanding between the parties on that Friday evening. Mr Crittenden himself noted that he told Miss Blackwell that all outstanding matters were trifling and, significantly, that they could be dealt with in a draft, a draft which he accepted he would produce in advance of the hearing. The difference between the parties is that Mr Crittenden says that although all major matters had been agreed, three significant minor ones had not. However, it seems to me that with hindsight he is placing too much importance on matters that he regarded as trifling at the time. It is common for parties to agree terms with a precise timetable and matters of semantics not forming part of the agreement.
36. Mr Crittenden sought to diminish the importance of the word "trifling" in his note on the basis that he did not want to prejudice the outcome of what had been a difficult negotiation. He believed that it was open to him to fill in the blanks, as it were, in relation to such open matters and wait for Mrs Blackwell to dispute them. On the contrary, however, his words indicate to me that there was nothing left for agreement. It was merely a matter of how the agreement that had been reached should be formulated as a matter of wording. It is usual in such cases for a new term sometimes to be inserted by agreement into a complex order at the last moment, because both parties or their counsel see that it is a good idea. However, where agreement has been reached, either party is free to insist on the letter of the original agreement. To me this is just such a case. On that Friday evening it was Miss Blackwell's understanding and the Defendant's understanding that a deal had been done. I believe that although he now genuinely sees matters differently, it was also Mr Crittenden's understanding at the time, subject only to clarification, presumably by counsel, of the wording of the agreement. I suspect that Mr Crittenden considered approval by the Claimant of the terms he had agreed to be a matter of mere formality and that he was as surprised as the Defendant when the Claimant decided not to proceed with them.
37. In my judgment the action was compromised as alleged by the Defendant, on the terms set out at paragraphs numbered 1, 2, the first sentence of 3, 5, 6 and 7 on the last page of Miss Blackwell's witness statement dated 15^th October 2009. However, I will not be held to that precise wording and if the parties agree a better form of wording I will be only too happy to make an order in that form.