CA 2024 002410 - [2025] EWCA Civ 1374

A claim for £399,989.06, being the Released Land Value, plus interest was commenced and the matter came before HHJ Klein. He summarised the background and the central parts of the witness evidence at [2] - [38] of his judgment. He noted at [35] that the witness evidence had been of limited assistance in relation to the question of construction although he had considered it all, together with the documents to which he was referred and counsels’ submissions, before reaching a decision.

Having considered the authorities in relation to the interpretation of contracts and the relevance of the factual context in that exercise, the judge concluded at [43] that Schedule 4 cannot be given its plain meaning in two respects. First, because it contemplated the reduction or release of the Zone of Influence. He stated at [44] that “. . . according to the CA guidance note [the Guidance Note] there is no question of the area of a zone of influence being reduced, otherwise than by a dataset being updated. In particular, there is no question of the area of a zone of influence being reduced because of a case-by-case judgment made by the Coal Authority, for example, because of local geological evidence and representations made to it by an interested party.” (The judge had already recorded, at [8], that it followed from the Guidance Note: “. . . that, unless a dataset used for the standard formula happens to be updated , a zone of influence appears, from the CA guidance note, not to be capable of being adjusted.”)

Secondly, he held at [45] that: “on a plain reading of the restrictive covenant in clause 5 of Schedule 4, and taking into account the definition in Schedule 4 of the Zone of Influence, a definition which identifies the land in question as being that previously designated by the Coal Authority as a zone of influence, even if the Zone of Influence was removed (released) entirely, no development or parking could take place on the land which was, at the time of the Sale Agreement, designated by the Coal Authority as a zone of influence. Such a reading would defy commercial common sense.” The judge concluded that “a more purposive construction of Schedule 4 is, therefore, required” [46].

In resolving the question of construction, he held that the following factual background was admissible and relevant:

“47.

. .

i)

the Bowl (the area of the zones of influence) was marketed as a site for static caravans;

ii)

the only permitted development of the Bowl was as a site for static caravans;

iii)

the parties believed (wrongly it appears, . . . ) that:

a)

what areas of land are designated by the Coal Authority as zones of influence is a matter of judgment for the Coal Authority;

b)

the judgment of the Coal Authority is whether or not development in an area around a mineshaft is high risk;

c)

whatever a planning permission provides, development in a zone of influence cannot take place without the Coal Authority’s consent (which had not been obtained in this case); and

d)

the Coal Authority has the power to re-designate land as not being a zone of influence even when the standard formula determines it to be such.

Mr Flannigan is likely to have believed this because of what he is likely to have been advised by Mr Breathnach (particularly after Mr Breathnach spoke with Mr Parry), and Mr Massie is likely to have believed this because of what Mr Flannigan is likely to have told him during their conversation about the reduction in initial purchase price;

iv)

in circumstances where Mr Massie and Mr Flannigan had this same belief, the initial purchase price for the holiday park was reduced from £3 million to £2.6 million.”

Having done so, the judge decided at [48] that on a proper construction of clause 3.1 of the Agreement, the Released Land Value became due when the Coal Authority confirmed in writing that it had decided that the siting of static caravans within the Zone of Influence (save for on the mineshaft protective capping slabs) was not objectionable, as it did in the 15 September Letter.

He set out the basis for his conclusion at [49] – [51]. In summary, he held that a reasonable reader would appreciate that the general object of the transaction was a sale of the Bowl for the siting of static caravans and that they could not be placed in a zone of influence unless the Coal Authority did not object. They would also understand that Schedule 4 of the Agreement provided for additional payment if the Coal Authority made a written decision allowing static caravans to be sited in the Bowl.

He also concluded that clause 5 of Schedule 4 “was likely to have been intended to reflect the position as the parties understood it” [50]. As a result, he held that on its proper construction, clause 5 “. . . does not now prohibit any part of the Bowl being used to site static caravans, save for that area which the Coal Authority continues to maintain, by the 15 September [L]etter, may not be developed in that way (that is the area of the mineshaft protective capping slabs).”

Further, the judge made clear at [52] that his conclusion was not altered if Mr Jackson (counsel for Westfield) was right. This was because part of the relevant background was that the parties understood that the Coal Authority could remove land from a zone of influence and accordingly, his conclusion was consistent with Mr Jackson’s submissions. He went on at [53] to state that his conclusion was reinforced if Mr Jackson is right because: “[L]ogically, if the Coal Authority can remove land entirely from a zone of influence, there is no obstacle to it permitting limited development of such land, so removing it from a zone of influence for particular purposes.”

In the circumstances, the judge observed that it was not necessary for him to reach a decision in relation to the alternative rectification claim. He stated, however, that he was doubtful that it could have succeeded [55]. He noted that the outcome of that claim would have been likely to depend upon the email from Ms Toolan of 20 August 2021 and the response from Mr Breathnach of 25 August 2021 as the outward expression of accord necessary for a rectification claim. He stated that the emails established that the parties’ intended agreement in relation to an additional payment was the same as clause 3.1 of Schedule 4 and therefore, the rectification was likely to have failed [57].