432. Chartbrook Ltd V Persimmon Homes Ltd [2007] EWHC 409 (Ch); [2008] EWCA Civ 183; [2009] UKHL 38

Interpretation of contract – sale price of land expressed as a formula – evidence of prior negotiations led on question of rectification – such evidence determinative of interpretation

 The facts

Owners sold land to developers who parcelled out residential and commercial units for sale.

In anticipation of a favourable market, owners were to recover an additional payment expressed as “23,4% of the price achieved for each residential unit in excess of the minimum guaranteed residential unit value less costs and incentives”.

Owners contended that the formula equalled the percentage of the sum arrived at by deducting the minimum value and the costs and expenses from the price.  Developers, on the other hand, who had to pay, contended that it meant the amount by which the percentage of the price exceeded the minimum value, less costs and expenses.  Owners’ sum was conveniently for them, significantly higher than that of the developers.

Evidence of prior negotiations, lead by developers in support of their claim for rectification, showed that, by their outward expression in correspondence, both parties intended the additional payment to be computed according to the developers’ interpretation.

 Findings

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