Chelsfield Advisers LLP v Qatari Diar Real Estate Investment Company & Anor [2015] EWHC 1322 (Ch)

[2015] EWHC 1322 (Ch)

Case No HC2014-000693

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 15 May 2015

Before

RICHARD SPEARMAN Q.C.

(sitting as a Deputy Judge of the Chancery Division)

Between

CHELSFIELD ADVISERS LLPClaimant

(1) QATARI DIAR REAL ESTATE INVESTMENT COMPANYDefendants

(2) QATARI DIAR DEVELOPMENT COMPANY (UK) LIMITEDDefendant

John McGhee QC (instructed by Mishcon de Reya LLP) for Claimant

Alain Choo-Choy QC (instructed by Hogan Lovells International LLP) for Defendants

Hearing Hearing dates: 13 and 23 March 2015

Judgment

RICHARD SPEARMAN Q.C.:

Introduction

[1]This is an application for summary judgment in respect of an agreement relating to the proposed redevelopment of the site of the embassy of the United States of America in Grosvenor Square (“the Property”), which is due to be relocated in 2018 as part of the major development of the south side of the River Thames in the vicinity of Battersea Power Station. It raises the question of whether and in what circumstances a contract may be subject to an implied term or condition that it will only continue in existence for so long as a relationship of mutual trust and confidence subsists between the parties.

[2]John McGhee QC appeared for the Claimant (“Chelsfield”) and Alain Choo-Choy QC for the First Defendant (“QDREIC”) and the Second Defendant (“QDDC”). I am grateful to both Counsel for their clear and helpful submissions (which occupied, in all, 60 pages of written argument, and, with full pre-reading, over one day of court time).

The parties

[3]Chelsfield is one of a number of affiliated entities (“the Chelsfield group”) which are engaged in the acquisition, management, financial structuring and development of major real estate assets in London and Paris. QDREIC is a company incorporated under the laws of Qatar and is one of a group of companies established by that country’s sovereign wealth fund to co-ordinate the fund’s real estate development priorities. QDDC was established to manage that group’s projects in the United Kingdom.

Background and outline of the dispute

[4]In 2008 the Chelsfield group and an entity which is unrelated to the parties to the present dispute, namely Qinvest LLP, were accepted by the US government as preferred joint bidders for the purchase and development of the Property. However, QDREIC subsequently bought out the interest of Qinvest LLP in that arrangement.

[5]QDREIC and the Chelsfield group then agreed that they would not purchase and develop the Property together as a joint venture. Instead:(a) QDREIC would buy out Chelsfield’s interest, and

(b) once the Property had been purchased by a QDREIC group company, QDDC would provide development management services to that QDREIC group company in relation to the subsequent development, and Chelsfield or a member of the Chelsfield group would, in turn, provide such services to QDDC.

[6]On 1 November 2009, Chelsfield, QDREIC and QDDC entered into an agreement in writing styled “Development Fees Agreement” (“DFA”). The DFA(a) refers to the events summarised above,

(b) provides that Chelsfield and QDDC will enter into a “Development Management Agreement” (“DMA”) for the provision of development management services in relation to the Property and the development of the same,

(c) records that the “Buyout Fee” payable to Chelsfield for agreeing to withdraw from the acquisition and development of the Property, and instead enter into the DMA with QDDC, was £15,000,000, and

(d) provides that in the event that Chelsfield and QDDC (acting reasonably and with all due expediency and in good faith) have not agreed the terms of the DMA within 5 months they are to be determined by an expert.

[7]On the same day, QDDC entered into a contract with the US government for the purchase of the Property (and its leaseback pending relocation of the embassy in 2018).

[8]In addition to the “Buyout Fee”, the DFA provided (by Clause 2 and Schedule 1) that QDDC would pay Chelsfield(a) an “Arrangement Fee” of £5,000,000 for the services which Chelsfield had performed in connection with the acquisition and development of the Property, and

(b) a “Costs Contribution” of up to £1,500,000 in reimbursement of the costs that it had incurred. These payments were all duly made by QDDC.

[9]Clause 3 of the DFA provided that QDDC would appoint Chelsfield as development manager pursuant to a DMA in consideration of(a) “Development Management Fees” of £100,000 per month for the first three years of the period until planning permission was obtained and

(b) “Planning Incentive Fees”, which were capped at £20,000,000 and were to be calculated by reference to the amount of permitted floorspace authorised by the planning permission obtained for the development of the Property.

[10]Clause 4 of the DFA provided that, on completion of the sale and leaseback of the Property pursuant to the contract made between the US government and QDREIC (“Completion”), QDDC would pay Chelsfield an “Advance Planning Payment” of £10,000,000. This was an advance on the Planning Incentive Fees to which Chelsfield would be entitled under the DMA, and there was provision for refunding the whole or part of that sum if the Planning Incentive Fees turned out to be less than that sum.

[11]Clause 4.2 of the DFA provided that if Chelsfield was of materially weaker covenant strength at Completion than it was at the date of the DFA, it would provide QDDC with reasonable security for the potential repayment of the Advance Planning Payment.

[12]Clause 13 of the DFA set out various circumstances in which QDDC was entitled to determine the DFA. These were all, in essence, insolvency events, and it was not in dispute at the hearing before me that none of these circumstances applied.

[13]QDREIC was referred to in the DFA as “Guarantor”, and, by Clause 14 of the DFA, it guaranteed the performance by QDDC of its obligations under the DFA.

[14]The parties began negotiations over the form of the DMA in 2010. QDDC’s solicitors (“Hogan Lovells”) prepared a draft which was sent to Chelsfield on or about 5 August 2010. Chelsfield’s then solicitors (“Herbert Smith”) sent it back to Hogan Lovells with their amendments on 1 September 2010, and Hogan Lovells returned it to Herbert Smith with further amendments 8 October 2010. The parties met to discuss the matter, following which, on 10 November 2010, a schedule was prepared identifying 7 key points that remained in dispute.

[15]There was then a substantial pause, of the order of 2.5 years. The explanation for this may be that, at that stage, Completion was not due to take place for some time. Completion in fact took place on 28 August 2013.

[16]On 30 July 2013, in the run up to Completion, the group chief operating officer of QDREIC, Naaman Atallah, sent an email to the chairman and chief executive of Chelsfield, Robert Burrow, asking Mr Burrow to provide(a) a proposed scope of services for the DMA

(b) details of Chelsfield’s staff and resources and

[17]Between 29 August 2013 and 23 September 2013 there was correspondence between Mr Burrow for Chelsfield and the group chief executive officer of QDREIC, Khaled Al Sayed, regarding those three points. Mr Burrow’s position was that(a) it was premature in advance of the DMA being entered into to prepare a detailed scope of services

(b) Chelsfield was entitled to delegate the provision of services under the DMA to other members of the Chelsfield group and

[18]Mr Al Sayed took, in short, a diametrically opposed position on all three points.

[19]On 27 September 2013 QDDC provided Chelsfield with a draft DMA (which included a proposed scope of services) which differed in a number of respects from the form of DMA discussed between the parties in 2010 and indicated that, if the terms of the DMA could not be agreed, the matter would need to be referred for expert determination as provided for under the DFA. Without prejudice negotiations followed, but they failed to achieve a resolution. Chelsfield then responded on 27 February 2014.

[20]A schedule of terms in dispute was prepared and the parties met in order to seek to reach agreement. However, no agreement was reached. Accordingly, pursuant to the DFA, QDDC applied to the RICS for the appointment of an expert. This resulted in the appointment of Mr Tony Bingham MRICS FASI (“the Expert”) on 6 May 2014.

[21]The Expert gave directions, and the parties exchanged submissions on 26 June 2014 and counter submissions on 21 July 2014. The submissions covered (among other things)(a) the scope of the services to be provided by Chelsfield under the DMA

(b) whether Chelsfield was to be entitled to delegate the provision of services to others and

(c) whether QDDC was entitled to require Sir Stuart Lipton (who had a major role at Chelsfield at the time the DFA was entered into) to be a “Key Person” under the DMA.

[22]The Expert raised the question of his suitability as an expert to determine the matter. However, on 25 July 2014 Hogan Lovells indicated that QDDC was happy that he should continue with his determination, and on 31 July 2014 they agreed with his request that he should have an extension of time to make his award.

[23]Hogan Lovells for QDDC and Chelsfield’s new solicitors (“Mishcon de Reya”) sought to agree a list of issues which was submitted to the Expert in almost agreed form on 1 September 2014. At the Expert’s suggestion, a meeting was due to take place between him and the parties on 2 October 2014 in advance of his determination. On 15 September 2014, Hogan Lovells suggested that a telephone conversation take place with the Expert in advance of that meeting to discuss the precise purpose of the proposed meeting. The telephone conversation took place on 17 September 2014. On 19 September 2014, Hogan Lovells confirmed the arrangements for the meeting to take place on 2 October 2014 (although asking to move the time of the meeting on that day).

[24]While all this was going on, discussions had been continuing between the parties regarding the payment of the Advance Planning Payment and QDDC’s contention that Chelsfield was required to provide security for its possible repayment if it exceeded the amount of the Planning Incentive Fees earned by Chelsfield under the DMA. On 27 February 2014 Chelsfield wrote formally to QDREIC setting out its claim to the Advance Planning Payment, and enclosing an expert accountant’s report in support of its contention that its covenant strength had not deteriorated between the date of the DFA and Completion so that it was not required to provide security for repayment. Because this dispute was not covered by the provision for determination by the Expert that was contained in the DFA, Chelsfield indicated that court proceedings would be commenced for determination of this dispute if agreement could not be reached.

[25]Between 14 April 2014 and 7 August 2014, there was correspondence between Hogan Lovells and Mishcon de Reya. In sum:(a) Hogan Lovells repeated the demand for security,

(b) Mishcon de Reya offered a bank guarantee without prejudice to its contention that none was required,

(d) Mishcon de Reya suggested that this concern could be dealt with by offering to extend the guarantee for a further period.

[26]This was not acceptable to QDDC. In the result, Chelsfield started separate proceedings (“the Advance Planning Payment Claim”) on 18 August 2014, seeking(1) payment of the Advance Planning Payment of £10,000,000,

(2) a declaration that Chelsfield was not required to provide security for repayment, and

(3) in the alternative, a declaration that the bank guarantee which Chelsfield had provided was sufficient security.

[27]On 23 September 2014, and on Chelsfield’s case without any prior warning to Chelsfield, QDDC wrote to Chelsfield indicating that QDDC had lost trust and confidence in Chelsfield’s ability to deliver under the DFA and DMA and that accordingly QDDC was treating the DFA as at an end. On the same day, QDDC served its Defence in the Advance Planning Payment Claim contending (among other things) that because of the termination of the DFA it was not liable to make this payment.

[28]On the following day, Hogan Lovells wrote to the Expert cancelling the meeting with him that had been due to take place on 2 October 2014. Since that time, QDDC has refused to agree that the Expert can proceed with his determination.

[29]Chelsfield did not accept that QDDC had determined the DFA, and, on 14 October 2014, it began the present proceedings, seeking(1) a declaration that the DFA remains in existence and has not been determined;

(2) an order requiring QDDC to instruct the Expert to complete his determination of the terms of the DMA;

(3) an order requiring QDDC to execute the DMA once the Expert has determined its terms; and

(4) damages.

[30]On 12 November 2014, Chelsfield issued the application which came before me, seeking summary judgment on all but item (4) of those heads of relief.

The evidence

[31]Chelsfield relied on the witness statements of Daniel Joseph Levy, a partner in Mishcon de Reya, dated 12 November 2014, and Mr Burrow dated 18 February 2015. QDREIC and QDDC relied on two witness statements of Mr Al Sayed, dated 19 January 2015 and 11 March 2015, and a witness statement of Jassim bin Hamad N Al Thani dated 23 March 2015. As appears from these dates, some of this evidence was served in response to other evidence, and the witness statement of Mr Al Thani was served after the hearing began and, at least in signed form, only on the second day of the hearing.

The issues

[32]The issues are:(1) Whether QDDC has any real prospect of succeeding on its pleaded contention that, on the proper construction of the DFA and/or by way of a term to be implied into the DFA “(i) the continuation of the DFA must have been intended to be conditional upon the continued existence of a relationship of trust and confidence between Chelsfield and QDDC; and (ii) upon the breakdown of the said relationship of trust and confidence as described in QDDC’s letter dated 23 September 2014, the DFA must have been intended to be terminable upon either party’s request” (see paragraph 10 of the Defence and Counterclaim – which, before me, was the subject of an application for permission to amend arising from the arguments that I heard, but which remained unaltered in this regard).

(2) If the first issue is answered in the affirmative, whether QDDC has any real prospect of succeeding on its case that, as a matter of fact, there was a breakdown of the relationship of trust and confidence between Chelsfield and QDDC.

(3) If QDDC fails on one or both of those issues, whether Chelsfield is entitled to a mandatory order requiring QDDC to instruct the Expert to complete his determination of the terms of the DMA pursuant to Clause 3.3 of the DFA.

(4) If Chelsfield succeeds on the third issue, whether it is entitled to a mandatory order requiring QDDC to sign the DMA forthwith once its terms have been determined by the Expert.

[33]If QDDC fails on the first issue, the second issue does not arise. If the case gets as far as the third issue, and Chelsfield fails on the third issue, the fourth issue does not arise.

[34]As the above distillation suggests, Mr Choo-Choy’s submissions concentrated on whether his clients have a “real prospect of successfully defending the claim or issue” (CPR 24.2(a)(ii)) rather than on whether there is some “other compelling reason why the case or issue should be disposed of at a trial” (CPR 24.2(b)).

[35]In particular, although disclosure and exchange of witness statements for trial have not yet taken place, Mr Choo-Choy did not submit that further evidence would or might emerge if these proceedings progress to trial which would be likely to have a material bearing on the merits of his clients’ case concerning the first issue. He said:

“There is no suggestion that there is not enough factual matrix before the court [on that issue]”

The principles applicable to applications for summary judgment

[36]Mr Choo-Choy submitted, without demur from Mr McGhee, that, in the context of a summary judgment application by the claimant, “a real prospect of success” means a prospect which is more than fanciful or imaginary and which is better than merely arguable, but which does not need to equate to a probability of success at trial. To resist such an application successfully, the defendant only has to show that his defence carries some degree of conviction, even if it appears on the available evidence that the defence will probably fail at trial. The test is absence of reality in the defence, rather than probability of a successful defence at trial. Moreover, in this context, the Court deprecates the conduct of mini-trials on the facts. Mr Choo-Choy submitted that the relevant principles are adequately summarised at note 24.2.3 of Volume 1 of the White Book 2014, but in addition he referred to Three Rivers District Council v Bank of England (No. 3)

[2001] 2 All ER 513

at [87]-[97] (Lord Hope) and [158]-[160] (Lord Hobhouse) and ED&F Man Liquid Products Ltd v Patel

[2003] EWCA Civ 472

at [2]-[10] (Potter LJ).

[37]The judgment in Hughmans (A Firm) v Dunhill

[2015] EWHC 716 (Ch)

was handed down on 20 March 2015, between the first and second days of the hearing in the present case. In that case Arnold J said at [176] that the relevant principles are “conveniently summarised” (in the context of defendants’ applications) by Lewison J in Easyair Ltd v Opal Telecom Ltd

[2009] EWHC 339 (Ch)

at [15]:

“As Ms Anderson QC rightly reminded me, the court must be careful before giving summary judgment on a claim. The correct approach on applications by defendants is, in my judgment, as follows: i) The court must consider whether the claimant has a ‘realistic’ as opposed to a ‘fanciful’ prospect of success: Swain v Hillman [2001] 2 All ER 91; ii) A ‘realistic’ claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel[2003] EWCA Civ 472 at [8]. iii) In reaching its conclusion the court must not conduct a ‘mini-trial’: Swain v Hillman. iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]. v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5)[2001] EWCA Civ 550. vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63. vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent’s case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant’s case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd[2007] EWCA Civ 725.”

[38]At [177], Arnold J stated:

“This summary was cited with approval by Etherton LJ (as he then was, with whom Sullivan LJ and Wilson LJ, as he then was, agreed) in AC Ward & Son v Catlin (Five) Ltd [2009] EWCA Civ 1098, [2010] Lloyds Rep IR 301 at [24].”

[39]Calland v Financial Conduct Authority

[2015] EWCA Civ 192

is another recent decision, in which judgment was handed down on 13 March 2015 (the first day of the hearing before me). In that case, the Court of Appeal had occasion to emphasise some of the above principles. The defendant’s application for summary judgment failed before the Deputy District Judge, but succeeded on appeal before a Recorder. The Court of Appeal dismissed a second appeal by the claimant, observing that the only defect in the Recorder’s judgment related to the delay in delivering it. Lewison LJ (with whom Laws LJ and Bean LJ agreed) said at [28]-[29]:

“28. … The fact that some factual or legal questions may be disputed does not absolve the judge from her duty to make an assessment of the claimant's prospects of success. As Lord Hobhouse put in Three Rivers District Council v Governor and Company of the Bank of England (No 3)[2003] 2 AC 1 at [158]: “The important words are “no real prospect of succeeding”

. It requires the judge to undertake an exercise of judgment. He must decide whether to exercise the power to decide the case without a trial and give a summary judgment. It is a “discretionary” power, i.e. one where the choice whether to exercise the power lies within the jurisdiction of the judge. Secondly, he must carry out the necessary exercise of assessing the prospects of success of the relevant party. If he concludes that there is “no real prospect”, he may decide the case accordingly. …Whilst it must be remembered that the wood is composed of trees some of which may need to be looked at individually, it is the assessment of the whole that is called for. A measure of analysis may be necessary but the “bottom line” is what ultimately matters.” (Emphasis added) “The important words are “no real prospect of succeeding”. It requires the judge to undertake an exercise of judgment. He must decide whether to exercise the power to decide the case without a trial and give a summary judgment. It is a “discretionary” power, i.e. one where the choice whether to exercise the power lies within the jurisdiction of the judge. Secondly, he must carry out the necessary exercise of assessing the prospects of success of the relevant party. If he concludes that there is “no real prospect”, he may decide the case accordingly. …Whilst it must be remembered that the wood is composed of trees some of which may need to be looked at individually, it is the assessment of the whole that is called for. A measure of analysis may be necessary but the “bottom line” is what ultimately matters.” (Emphasis added) 29. In evaluating the prospects of success of a claim or defence the judge is not required to abandon her critical faculties. As Potter LJ put it in E D & F Man Liquid Products Ltd v Patel

[2003] EWCA Civ 472

, [2003] CP Rep 51 at [10]:

“It is certainly the case that under both rules, where there are significant differences between the parties so far as factual issues are concerned, the court is in no position to conduct a mini-trial: see per Lord Woolf MR in Swain v Hillman[2001] 1 All ER 91 at 95 in relation to CPR 24. However, that does not mean that the court has to accept without analysis everything said by a party in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporary documents. If so, issues which are dependent upon those factual assertions may be susceptible of disposal at an early stage so as to save the cost and delay of trying an issue the outcome of which is inevitable: see the note at 24.2.3 in Civil Procedure (Autumn 2002) Vol 1 p.467 and Three Rivers DC v Bank of England (No.3) [2001] UKHL/16, [2001] 2 All ER 513 per Lord Hope of Craighead at paragraph [95].”

[40]I was not referred to these cases by either side. However, I mentioned them at the hearing.

[41]In any event, as they contain up to date statements of principle endorsed by the Court of Appeal, which, moreover, do not conflict with the broad and uncontentious propositions to which I was referred by Mr Choo-Choy, I consider that I must be guided by them.

The DFA

[42]Before discussing the issues it is convenient to set out those parts of the DFA which I have not already paraphrased above and which are of greatest relevance to the way the parties argued the case before me:

“1 DEFINITIONS AND INTERPRETATION In this Agreement: 1.7 “Development” means the carrying out of any substantial works to the whole or any substantial part or parts of the Property for which Planning Permission for the whole or relevant part or parts of the Property is required and all related and ancillary works; 1.8 “Development Management Agreement” means the agreement for the provision of development management services in relation to the Property and the Development, which shall be agreed between QDDC and Chelsfield in accordance with clause 3; 1.9 “Development Management Fees” shall have the meaning set out in Schedule 2; 1.14 “Planning Incentive Fees” shall have the meaning set out in Schedule 2; 1.16 “Planning Period” means the period for working up designs, submitting applications and seeking to achieve Planning Permission for the Development, commencing on a date to be specified by QDDC (and notified to Chelsfield in writing) such date to fall between the date of this Agreement and the date one month following Completion and ending on the earlier of 1.16.1 the obtaining of Planning Permission; and 1.16.2 the date 5 years from the date of commencement of the Planning Period, or such later date as may be agreed between the Parties; 1.17 “Planning Permission” means detailed planning permission in respect of the whole or any substantial part or parts of the Property granted pursuant to an application submitted by or on behalf of QDDC or the Guarantor or the Purchaser or their respective successors in title and assigns to the Contract or the Property and in relation to which the period for Judicial Review or any other Statutory Challenge has expired without such Judicial Review or Statutory Challenge being instigated or, if instigated, that the relevant court proceedings have been finally determined resulting in the validity of such planning permission being upheld (and references to the seeking and obtaining of Planning Permission shall be construed accordingly); 2 … 3 DEVELOPMENT MANAGEMENT 3.1 QDDC shall appoint Chelsfield (or a member of its Group approved by QDDC acting reasonably) as development manager pursuant to the Development Management Agreement to provide development management services in relation to the Development, in consideration for inter alia the Development Management Fees and the Planning Incentive Fees. 3.2 QDDC and Chelsfield shall acting reasonably and with all due expediency negotiate with one another in good faith to agree the form of the Development Management Agreement as soon as reasonably possible following the date of this Agreement, but for the avoidance of doubt both Parties confirm that the following terms are agreed: 3.2.1 The fees payable under the Development Management Agreement shall be the Development Management Fees and the Planning Incentive Fees; and 3.2.2 The term of the Development Management Agreement shall be for the entire duration of the Development, but with an option for QDDC to terminate the Development Management Agreement at the end of the Planning Period without, subject to clause 3.2.1, any further payment by QDDC. 3.3 In the event that the terms of the Development Management Agreement have not been agreed between QDDC and Chelsfield by the date 5 months following the date of this Agreement, either of them shall be entitled to refer the matter to the Expert for determination and the following provisions shall apply … 4 ADVANCE PLANNING PAYMENT 4.1 On Completion, QDDC shall pay to Chelsfield the Advance Planning Payment. 4.2 If at the time of Completion, Chelsfield is of materially weaker covenant strength than as at the date of this Agreement, Chelsfield shall, on reasonable prior request by QDDC, arrange for QDDC to be provided with reasonable security for the potential repayment of the Advance Planning Payment. 4.3 In the event that the Planning Incentive Fees are less than £10,000,000 (ten million pounds) in total, Chelsfield shall refund to QDDC the amount by which the Advance Planning Payment exceeds the total achieved Planning Incentive Fees on the date 10 Working Days following the Planning Incentive Fees Calculation Date. 4.4 QDDC and the Guarantor agree that they (and the Purchaser) will act in good faith in relation to the seeking of the Planning Permission in the Planning Period and the Planning Incentive Fees, and that they will not (and will procure that the Purchaser will not) take any deliberate steps the purpose of which is to avoid, delay or depress the triggering, calculation and payment, or amount of any Planning Incentive Fees (and will (and will procure that the Purchaser will) use all reasonable endeavours to procure that their (and the Purchaser’s) successors in title and assigns to the Contract or the Property do the same). 5 CONTRACT 5.1 The Guarantor (in consideration of Chelsfield entering into this agreement) shall in good faith use all reasonable endeavours to achieve or procure achievement of Completion of the Contract in accordance with the terms of the Contract, and in particular agrees as follows … 11 ASSIGNMENT None of the Guarantor, QDDC or Chelsfield shall assign, sub-contract or sub-licence all or any part of any of its benefits, rights or obligations, interests or licences under this Agreement without the prior written consent of the other Parties. 13 DETERMINATION 13.1 QDDC may determine this Agreement by written notice to Chelsfield to that effect in the event that any of the following events occur in relation to Chelsfield which shall not have been set aside or rectified within 20 Working Days: (a) Chelsfield shall have an order made or resolution passed for its winding-up; (b) Chelsfield enters into voluntary winding-up other than for the purpose of re-organisation whilst solvent; (c) the appointment of a provisional liquidator to Chelsfield; (d) presentation of a petition in respect of Chelsfield (which is not contested within the 20 Working Day period referred to above following presentation) or a meeting is convened for the purpose of considering a resolution for winding up; (e) dissolution of Chelsfield (whether or not after winding up); (f) if a resolution is passed or any other step is taken by Chelsfield for the appointment of an administrator, or an administrator is appointed, or a petition or application for an administration order is presented in relation to Chelsfield; (g) if a receiver (which expression shall without prejudice to the generality thereof include an administrative receiver) is appointed over all or any of the assets or of the income arising from all or any of the assets of Chelsfield; (h) Chelsfield is unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986; or (i) if any meeting of Chelsfield is convened pursuant to section 123 of the Insolvency Act 1986 to consider a proposal for a voluntary arrangement under Part I of such Act, and in such event (subject to clause 13.2) this Agreement shall immediately cease and determine. 13.2 The determination of this Agreement shall be without prejudice to any other rights or remedies of either Party against the other for the breach non-observance or non-performance of any of their obligations under this Agreement. 15. ENTIRE AGREEMENT AND SEVERANCE 15.1 The Guarantor, QDDC and Chelsfield confirm that this Agreement represents the entire understanding, and constitutes the whole agreement, between them with respect thereto and, without prejudice to the generality of the foregoing, excludes any warranty, condition or other undertaking implied at law or by custom. 16. RELATIONSHIP OF PARTIES Nothing in this Agreement and no act or conduct by the Guarantor, QDDC and Chelsfield pursuant to this Agreement or otherwise in accordance with the Arrangement shall constitute or be deemed to constitute a partnership or joint venture between the Parties or shall give any Party the power to bind the other Parties. In this Agreement: 1.16.1 the obtaining of Planning Permission; and 1.16.2 the date 5 years from the date of commencement of the Planning Period, or such later date as may be agreed between the Parties; 3.2.1 The fees payable under the Development Management Agreement shall be the Development Management Fees and the Planning Incentive Fees; and 3.2.2 The term of the Development Management Agreement shall be for the entire duration of the Development, but with an option for QDDC to terminate the Development Management Agreement at the end of the Planning Period without, subject to clause 3.2.1, any further payment by QDDC. (a) Chelsfield shall have an order made or resolution passed for its winding-up; (b) Chelsfield enters into voluntary winding-up other than for the purpose of re-organisation whilst solvent; (c) the appointment of a provisional liquidator to Chelsfield; (d) presentation of a petition in respect of Chelsfield (which is not contested within the 20 Working Day period referred to above following presentation) or a meeting is convened for the purpose of considering a resolution for winding up; (e) dissolution of Chelsfield (whether or not after winding up); (f) if a resolution is passed or any other step is taken by Chelsfield for the appointment of an administrator, or an administrator is appointed, or a petition or application for an administration order is presented in relation to Chelsfield; (g) if a receiver (which expression shall without prejudice to the generality thereof include an administrative receiver) is appointed over all or any of the assets or of the income arising from all or any of the assets of Chelsfield; (h) Chelsfield is unable to pay its debts within the meaning of section 123 of the Insolvency Act 1986; or (i) if any meeting of Chelsfield is convened pursuant to section 123 of the Insolvency Act 1986 to consider a proposal for a voluntary arrangement under Part I of such Act, and in such event (subject to clause 13.2) this Agreement shall immediately cease and determine. 18 GOVERNING LAW 18.1 This Agreement shall be governed by, and construed in accordance with, English law. 18.2 The Courts of England shall have exclusive jurisdiction in relation to any claim, dispute or difference concerning this Agreement and any matter arising therefrom … ”

Issue (1) – the implied term or condition of mutual trust and confidence (a). Parties’ submissions

[43]Mr McGhee made the following principal submissions with regard to the term pleaded in paragraph 10 of the Defence and Counterclaim (“the implied term”):(1) The DFA itself (which was negotiated by Herbert Smith on behalf of Chelsfield and Hogan Lovells on behalf of QDREIC and QDDC) contains no support for the implied term. On the contrary: (a) in Clause 13 of the DFA the parties addressed in detail the circumstances in which QDDC was to be entitled to determine the DFA; (b) if they had intended that QDDC should be entitled to determine the DFA on the basis of a breakdown in trust and confidence they would have included that in Clause 13, but they did not do so; and (c) it is clear from Clause 15 that the parties considered that all terms of their agreement had been spelled out in the DFA.

(2) The argument (based on paragraph 29 of the first witness statement of Mr Al Sayed) that “trust and confidence between the parties to a development management agreement is crucial as they have to work closely together” is not persuasive. While (a) a DMA will contain obligations on the part of each party designed to ensure that (among other things) they work together to achieve the development of the property, (b) a DMA may also include obligations of good faith and fiduciary obligations, and (c) breach of one of those obligations may, if sufficiently serious, entitle the innocent party to determine the DMA for breach, nevertheless it is inconceivable that the parties should objectively have intended that one party should be entitled to determine a DMA (in reliance on which the other will or may have invested significant time and resources) just because that party had lost trust and confidence in the other party in circumstances where the other party was not in breach of any obligation under the DMA.

(3) It is illuminating that the draft DMA submitted by QDDC which formed the basis of the Expert’s determination did not contain any provision entitling QDDC to determine the DMA in such circumstances, and at no point in its submissions to the Expert has QDDC ever suggested that such a term should be included.

(4) If the parties had intended such a term to be part of the DFA then there would have been all the more reason to include it in the DMA.

(5) Even if such a term were to be implied into the DMA, it does not follow that it should be implied into the DFA. Chelsfield’s only remaining obligations under the DFA are (a) by Clause 3.2 to act reasonably with all due expediency and in good faith to negotiate the form of the DMA and (b) by Clause 4.2, in the event that the covenant strength of Chelsfield is materially weaker at Completion than at the date of the DFA, to provide reasonable security for repayment of the Advance Planning Payment. Whatever the position under the DMA, there can be no basis for asserting that the performance of these obligations requires that a term be implied into the DFA giving QDDC the right to determine the DFA on the grounds that it has lost trust and confidence in Chelsfield in addition to its right to determine for repudiatory breach or pursuant to Clause 13 of the DFA.

(6) Mr Choo-Choy had produced no authority in support of the implied term. The reliance of QDREIC and QDDC on cases where an employer was held to be under an obligation not to destroy the relationship of trust and confidence between it and its employee is misplaced. Those cases do not support the submission that (without breach of a promissory obligation on the part of one party to the contract to the other) any type of contract is to be regarded as conditional on the continued existence of a relationship of trust and confidence between the parties so as to entitle one party to terminate the contract merely because it no longer has trust and confidence in the other party to the contract.

[44]Mr Choo-Choy submitted, in summary:(1) The nature of the relationship intended to be created between QDDC as promoter of the development project and Chelsfield as intended development manager pursuant to the terms of the DFA (and subsequently the DMA once its terms were agreed under Clauses

3.1 and

3.2 of the DFA or determined by the Expert under Clause

3.3 of the DFA) – as evidenced by the terms of the DFA and the agreed terms of the draft DMA in negotiation between the parties – was such that the parties could only have objectively intended and been reasonably expected to continue to work with each other on the project in circumstances where they continued to have trust and confidence in each other.

(2) At a minimum, QDDC has a real prospect of establishing the implied term at trial.

(3) By the second half of September 2014, the relationship between QDDC and Chelsfield had irretrievably broken down as a result of multiple and substantial disagreements between them, including, in particular, disagreements as to: (a) the intended scope of development management services under the DMA and the intended term of the DMA; (b) the fees intended to be payable to Chelsfield under the DMA, in particular, during the post-Planning Period; (c) Chelsfield’s ability to provide the development management services using its own staff and resources (i.e. without delegation or sub-contracting to third parties, whether or not part of the Chelsfield group); (d) the need for Chelsfield to provide satisfactory security in respect of the Advance Planning Payment of £10,000,000 under the DFA, especially in light of its “flimsy” financial condition; and (e) a whole host of other terms of the DMA (i.e. in addition to the dispute as to intended scope of development management services and fees payable under the DMA and the intended term of the DMA).

(4) The nature and extent of those disagreements was such that (a) QDDC made a referral to the Expert under Clause 3.3 of the DFA, (b) Chelsfield brought the Advance Planning Payment Claim against QDDC and QDREIC, and (c) QDDC ceased to have the necessary trust and confidence in Chelsfield and no longer wished to continue to work with Chelsfield (pursuant to the DFA or the DMA).

(5) Accordingly, by letter dated 23 September 2014, QDDC informed Chelsfield that it was treating the DFA as at an end and indicated that it would not enter into and complete the DMA with Chelsfield.

(6) Since QDDC has at least a real prospect of succeeding in its contention that the DFA is subject to the implied term and that there is no longer a relationship of trust and confidence between the parties, there is a real argument that QDDC has lawfully determined the DFA. No summary judgment should therefore be granted in terms of the declaration sought by Chelsfield.

[45]Before developing these submissions, Mr Choo-Choy made a number of submissions concerning the provisions of the DFA and the inter-action of those provisions with the intended terms of the DMA:(1) With regard to the intended scope of development management services under the DMA, Mr Choo-Choy submitted, by reference to Recitals C and D and Clauses 1.7 and 1.8 and

3.1 of the DFA, that Chelsfield is to provide development management services in relation to the whole of the Development (as defined) (i.e. in relation not just to the planning stage, but also the whole of the construction stage of the project).

(2) With regard to the intended term of the DMA, and by reference to Clause

3.2 of the DFA, he submitted that the DMA is to last for the entire duration of the construction stage, unless QDDC exercises the option to terminate the DMA at the end of the Planning Period (as defined in Clause 1.16), and that the development management services under the DMA were intended to last until completion of the construction and related and ancillary works to the Property.3.2.1 and Schedule 2, that the fees that were to be payable under the DMA had already been agreed as set out in Clause 3.2.1 and Schedule 2 of the DFA.

3.2.2 are “for the avoidance of doubt … agreed” in connection with the terms of the DMA, it necessarily follows that they are not “terms of the [DMA] [which] have not been agreed” for the purposes of Clause 3.3 of the DFA and are not therefore matters which can be contractually referred for determination (or which can be contractually determined) by the Expert pursuant to Clause 3.3. He relied on the judgment of Lightman J in British Shipbuilders v. VSEL Consortium Plc

[1997] 1 Lloyd’s Rep 106

at 109: “[q]uestions as to the role of the expert, the ambit of his remit (or jurisdiction) and the character of his remit (whether exclusive or concurrent with a like jurisdiction vested in the Court) are to be determined as a matter of construction of the agreement”.

(3) With regard to the fees, he submitted by reference to Clauses 1.9 and 1.14 and

(4) With regard to the Expert’s remit under Clause

3.3 of the DFA, Mr Choo-Choy submitted that because Clause 3.2 provides that the matters addressed in Clauses 3.2.1 and

(5) He further submitted that, since the Expert’s remit or jurisdiction under Clause 3.3 is only to determine the terms of the DMA which have not been agreed between QDDC and Chelsfield, the Expert has no authority to determine or to make a contractually conclusive and binding determination as to (a) the proper construction of the terms of the DFA, or (b) the determination of terms of the DMA that have already been agreed between QDDC and Chelsfield, whether expressly or impliedly, as a result of the terms of the DFA. On the contrary, matters that fall within either or both of the above categories are matters for determination by the Court pursuant to Clause 18.2 of the DFA.

(6) Mr Choo-Choy submitted that the ascertainment of the Expert’s proper remit under Clause 3.3 is important because it is relevant to the question whether the Court, if satisfied to the requisite degree of proof on Chelsfield’s summary judgment application that the DFA remains in existence and that QDDC’s purported early termination of the DFA was unjustified, should go on to exercise its equitable discretion to order the resumption and completion of the expert determination process under Clause 3.3.

(7) With regard to the personal nature of the intended relationship under the DMA, Mr Choo-Choy submitted that (a) in the context of a substantial property development, the relationship between, on the one hand, the project client or promoter and, on the other hand, the project professionals including a development manager requires the establishment of a close working relationship and on-going consultation, discussion, inter-action and co-operation at a personal level between client and professional, typically over a significant period of time and (b) such close co-operation and so forth is only workable if the parties have mutual trust and confidence in each other. He submitted that aspects of such a relationship will be fiduciary or equitable in nature and/or akin to that of principal and agent, and that the relationship of mutual trust and confidence between the parties is at the heart of all such personal relationships.

(8) Mr Choo-Choy submitted that the personal nature of the relationship intended to be created pursuant to the DMA is also evidenced by the provisions that were agreed between QDDC and Chelsfield in connection with the negotiation of the draft DMA prior to the referral to the Expert, which covered a broad range of matters. He cited by way of example a large number of provisions contained in the revised draft DMA which was produced on Chelsfield’s behalf on 27 February 2014. The provisions that he relied upon included (among others): (a) Chelsfield’s duty to act in the best interests of QDDC under draft clause 3.5(c), (b) Chelsfield’s duty not to obtain any financial advantage from any other person in carrying out the Services other than through the Development Management Fees and Planning Incentive Fees under draft clause 3.5(d); (c) the mutual duty of good faith owed by each party to the other in relation to the performance of their respective obligations under the DMA under draft clause 3.7; (d) the giving of advice and making of recommendations by Chelsfield to QDDC, including the setting out of all relevant considerations and recommendations as to the available courses of action under draft clause 4.5(a)-(b); and (e) Chelsfield making available to QDDC the full benefit of its experience, skill, expertise and judgment in relation to the Services and having regard to professional codes of conduct and/or guidelines under draft clause 4.5(e)-(f).

[46]In support of the submissions summarised in paragraph 44(1)-(2) above, Mr Choo-Choy began with the proposition that the process of contractual implication is merely one aspect of the process of construction of the relevant contract as a whole: Attorney-General of Belize v Belize Telecom

[2009] 1 WLR 1988

, especially at [16]-[27]. At [26], Lord Hoffmann referred to the conditions which have to be satisfied before a term is to be implied, as set out in BP Refinery (Westernport) Pty Ltd v Shire of Hastings

(1977) 180 CLR 266

(Lord Simon of Glaisdale at 282-283):

“(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that ‘it goes without saying’ (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.”

At [27] Lord Hoffmann said:

“The Board considers that this list is best regarded, not as series of independent tests which must each be surmounted, but rather as a collection of different ways in which judges have tried to express the central idea that the proposed implied term must spell out what the contract actually means, or in which they have explained why they did not think that it did so. The Board has already discussed the significance of “necessary to give business efficacy” and “goes without saying”

. As for the other formulations, the fact that the proposed implied term would be inequitable or unreasonable, or contradict what the parties have expressly said, or is incapable of clear expression, are all good reasons for saying that a reasonable man would not have understood that to be what the instrument meant.”

[47]In Mediterranean Salvage & Towage Limited v Seamar Trading & Commerce Inc (“The Reborn”)

[2009] 2 Lloyd’s Law Rep 639

, Lord Clarke MR referred with approval to this approach at [8]-[14]. Lord Clarke MR observed at [10] that, at [17] of his judgment, “Lord Hoffmann made the important point that the question of implication arises when the instrument does not expressly provide for what is to happen when some event occurs. The most usual inference in such a case is that nothing is to happen. If the parties had intended something to happen, the instrument would have said so. Otherwise, the express provisions of the instrument are to continue to operate undisturbed.” Having quoted much of [21]-[27] of Lord Hoffmann’s judgment, Lord Clarke MR said at [15] that Lord Hoffmann “is not in any way resiling from the often stated proposition that it must be necessary to imply the proposed term. It is never sufficient that it should be reasonable”. Lord Clarke MR then considered (among other authorities) the decision of the House of Lords in Liverpool City Council v Irwin

[1977] AC 239

and the decision of the Court of Appeal in Philips Electronique Grand Public SA v British Sky Broadcasting Limited [1995] EMLR 472, before concluding at [18]:

“The significance of both [these cases] is that they both stress the importance of the test of necessity. Is the proposed implied term necessary to make the contract work?”

[48]Mr Choo-Choy suggested that the objective intention of the parties in the present case could be tested by asking whether, in circumstances where a breakdown of trust and confidence between the parties produced the result that Chelsfield no longer felt able to co-operate and work closely with QDDC:(a) Could it be that Chelsfield would still then be compelled to continue to work with QDDC pursuant to the DFA and/or DMA?

(b) Would Chelsfield then not be able to terminate its appointment at all until the expiry of the term of the DMA as described in Clause 3.2.2?

[49]Mr Choo-Choy argued that, in that situation: “It would be wholly unrealistic, if not absurd, to suppose that the parties’ intention would have been that Chelsfield would remain obliged to continue working for QDDC even when the relationship of trust and confidence between them had broken down. The parties’ presumed intention must have been that, if the relationship broke down, either party should be able to walk away from the relationship without thereby being in breach of contract”.

[50]In offering up this answer, Mr Choo-Choy accepted that there would have to be a genuine breakdown in the relationship of trust and confidence, and “A mere assertion by Chelsfield that such breakdown had occurred could not be presumed to accord with the parties’ objective intention”. He submitted, however, that if there was proof of a genuine breakdown in the relationship, it is hard to suppose that the parties would still have intended that Chelsfield should be obliged to continue working with QDDC until the expiry of the full term of the DFA/DMA.

[51]With regard to the duration of the DFA, Mr Choo-Choy acknowledged that there is no express term governing the duration of the DFA: Clause 13 deals with the circumstances in which it might be terminated early but does not otherwise indicate how long the DFA would last. He submitted, however, that, given the subject-matter of the DFA and in particular its provisions for the appointment of the development manager and the Advance Planning Payment (which was made on account of Planning Incentive Fees payable under the DMA)(a) “it is reasonably clear that the DFA was impliedly intended to last at least until the expiry of the DMA” and

(b) accordingly, the duration of the DFA is “inextricably bound up with the duration of the DMA as provided for in Clause 3.2.2.”

[52]Building on the above foundation, Mr Choo-Choy further submitted as follows:(1) If it cannot have been objectively intended that Chelsfield should be forced to continue to work for QDDC if the relationship of trust and confidence between them broke down, and if it is to be reasonably presumed that the parties must have intended that Chelsfield should be able to bring the relationship to an end without thereby being in breach of either the DFA or DMA, why should it be presumed that QDDC was not intended to have a similar entitlement in the event of a genuine breakdown in the relationship of trust and confidence between them?

(2) Given the personal nature of the relationship, a mutual entitlement to terminate the parties’ relationship in the event of a breakdown in the relationship of trust and confidence between them is not only reasonable to imply, but obvious and necessary if the contract between the parties is to work. The contract is simply unworkable without trust and confidence between the parties, and if such trust and confidence no longer exists, it can hardly be supposed that the parties nevertheless intended that they should be forced to continue to work together.

(3) There is no issue of lack of clarity in the expression of the implied term. As pleaded by QDDC (see paragraph 32(1) above), the entitlement to terminate only crystallises upon the breakdown in the relationship of trust and confidence.

(4) Clause

13.1 of the DFA does not state that it contains the only grounds on which the DFA could be terminated or otherwise indicate that it is exhaustive as to the circumstances in which the DFA might be terminated. On the contrary, Clause

13.2 expressly provides that termination of the DFA pursuant to Clause 13.1 “shall be without prejudice to any other rights or remedies of either Party against the other for the breach, non-observance or non-performance of any of their obligations under this Agreement”. Moreover, it is clear from the subject-matter of Clause 13.1 that it is solely concerned with the creation of a special right of termination in QDDC’s favour in the event of insolvency related events affecting Chelsfield. There is accordingly no basis for inferring inconsistency between Clause 13.1 and the implied term alleged by QDDC.

(5) There is no inconsistency between Clause 3.2.2 of the DFA and the implied term, just as in the event that the DFA had contained an express term providing for early termination in the event that the relationship of trust and confidence between the parties broke down there would have been no inconsistency between Clause 3.2.2 and any such express term. Such an express term would have dealt with the circumstances in which there might be early termination, while Clause 3.2.2 deals with the expiry of the DMA in the absence of early termination.

[53]In support of his arguments, Mr Choo-Choy relied on the following authorities: Malik v Bank of Credit and Commerce International SA

[1998] AC 20

; Brogden v Investec Bank Plc

[2014] EWHC 2785 (Comm)

at [92]-[93]; J H Milner & Son v Percy Bilton Ltd

[1966] 1 WLR 1582

; and on Cordery on Solicitors at page E/402, paragraph [653].

(b) Discussion

[54]In my judgment, these authorities do not support Mr Choo-Choy’s arguments.

[55]Malik v Bank of Credit and Commerce International SA

[1998] AC 20

concerned the extent to which former employees of a dishonest or corrupt bank could prove in the liquidation of the bank for compensation for financial losses sustained by them allegedly due to the stigma attaching to them by reason of having been employed by such an employer. The House of Lords held that the claimants had an arguable cause of action.

[56]The leading speeches were given by Lord Nicholls and Lord Steyn. Lord Goff and Lord Mackay agreed with both of those speeches. Lord Mustill agreed with that of Lord Steyn.

[57]It was common ground between the parties in that case that the material contracts of employment each contained an implied term to the effect that the bank would not, without reasonable and proper cause, conduct itself in a manner likely to destroy or seriously damage the relationship of trust and confidence between employer and employee (see Lord Nicholls at pages 33-34). Lord Nicholls referred to this (at page 35) as part of “the portmanteau, general obligation not to engage in conduct likely to undermine the trust and confidence required if the employment relationship is to continue in the manner the employment contract implicitly envisages”. The material part of the argument before the House of Lords revolved around three suggested limitations to this implied obligation (summarised by Lord Steyn at page 46 as:(1) that the conduct complained of must be conduct involving the treatment of the employee in question;

(2) that the employee must be aware of such conduct while he is an employee;

(3) that such conduct must be calculated to destroy or seriously damage the trust between the employer and employee).

[58]Lord Nicholls made clear (also at page 35) that the question of whether conduct constitutes a breach of this implied obligation is to be judged objectively:

“The conduct must, of course, impinge on the relationship in the sense that, looked at objectively, it is likely to destroy or seriously damage the degree of trust and confidence the employee is reasonably entitled to have in his employer. That requires one to look at all the circumstances … A breach occurs when the proscribed conduct takes place: here, operating a dishonest and corrupt business. Proof of a subjective loss of confidence in the employer is not an essential element of the breach ..”

[59]Lord Steyn’s speech was to the same effect. He rejected the first two limitations to the implied obligation of trust and confidence that were suggested by the bank, and said that the third suggested limitation was already part and parcel of that implied obligation. In the course of doing this, Lord Steyn (at page 47) approved the following formulation by Mr Douglas Brodie of Edinburgh University “In assessing whether there has been a breach, it seems clear that what is significant is the impact of the employer’s behaviour on the employee rather than what the employer intended. Moreover, the impact will be assessed objectively”. Lord Steyn said that “Both limbs of Mr. Brodie’s observations seem to me to reflect classic contract law principles and I would gratefully adopt his statement”.

[60]Lord Steyn had earlier discussed the implied term of mutual trust and confidence, stating as follows (at pages 45-46):

“The applicants do not rely on a term implied in fact. They do not therefore rely on an individualised term to be implied from the particular provisions of their employment contracts considered against their specific contextual setting. Instead they rely on a standardised term implied by law, that is, on a term which is said to be an incident of all contracts of employment: Scally v Southern Health and Social Services Board [1992] 1 AC 294, 307B. Such implied terms operate as default rules. The parties are free to exclude or modify them … … The evolution of the term is a comparatively recent development. The obligation probably has its origin in the general duty of co-operation between contracting parties: Hepple & O'Higgins, Employment Law, 4th ed. (1981), pp. 134-135, paras. 291-292. The reason for this development is part of the history of the development of employment law in this century. The notion of a ‘master and servant’ relationship became obsolete. Lord Slynn of Hadley recently noted ‘the changes which have taken place in the employer-employee relationship, with far greater duties imposed on the employer than in the past, whether by statute or by judicial decision, to care for the physical, financial and even psychological welfare of the employee’: Spring v Guardian Assurance Plc [1995] 2 AC 296, 335B. A striking illustration of this change is Scally’s case [1992] 1 AC 294 , to which I have already referred, where the House of Lords implied a term that all employees in a certain category had to be notified by an employer of their entitlement to certain benefits. It was the change in legal culture which made possible the evolution of the implied term of trust and confidence. There was some debate at the hearing about the possible interaction of the implied obligation of confidence and trust with other more specific terms implied by law. It is true that the implied term adds little to the employee’s implied obligations to serve his employer loyally and not to act contrary to his employer's interests. The major importance of the implied duty of trust and confidence lies in its impact on the obligations of the employer: Douglas Brodie, ‘Recent cases, Commentary, The Heart of the Matter: Mutual Trust and Confidence’ (1996) 25 ILJ 121. And the implied obligation as formulated is apt to cover the great diversity of situations in which a balance has to be struck between an employer’s interest in managing his business as he sees fit and the employee’s interest in not being unfairly and improperly exploited.”

[61]Accordingly, Malik v Bank of Credit and Commerce International SA

[1998] AC 20

is authority for the proposition that there may be implied by law as an incident of all contracts of a certain description (in that case, contracts of employment) mutual obligations that each party will not conduct itself in such a way as, assessed objectively, is likely to destroy or seriously damage the trust and confidence that is required if their relationship is to continue in the manner that the contract implicitly envisages.

[62]In my judgment, that is a far cry from the implied term for which Mr Choo-Choy contends in the present case, which(a) does not relate to a class of contract in respect of which any such implication has previously been recognised in any decided case to which I have been referred,

(b) does not depend upon one party conducting itself in breach of an implied promissory obligation, and

(c) would give rise to a right to terminate the contract not on the basis of any objective criteria but instead on the subjective basis that the other party genuinely considers that trust and confidence has broken down. In this regard, in argument Mr Choo-Choy made clear that the test for which he contended was that loss of trust and confidence had to be genuine or honest, but did not have to be reasonable.

[63]It is, perhaps, unsurprising that Mr Choo-Choy put the test as he did. The letter of 23 September 2014, by which Mr Al Thani gave notice that QDREIC and QDDC intended to treat the DFA at an end together with their relationship with Chelsfield pursuant to the terms of the DFA, and that they would not enter into the DMA, stated that they had lost all trust and confidence in Chelsfield’s “ability to deliver what is contemplated of [Chelsfield] under the DFA and the DMA” on the following grounds:(1) “[We] have become increasingly concerned about your capability to deliver the development management services on the terms contemplated by the DFA or at all”,

(2) “Our attempts to agree the terms of the DMA with you have been frustrated such that we had to refer the determination of the terms to an independent expert”, and

(3) “Your financial position is poor and you also have not been able to satisfy us that your organisation currently has the capability to manage the development of this world renowned listed building”.

[64]Applying an objective as opposed to a subjective test to these grounds, they seem to me to provide a most unpromising basis for asserting that there has been such a breakdown of trust and confidence as would justify QDREIC and QDDC treating the relationship between the parties or the DFA as being at an end, or refusing to enter into the DMA.

[65]Ground (2) is covered by the express terms of the DFA. Pursuant to Clause 3.2, both QDDC and Chelsfield are obliged to negotiate reasonably, with all due expediency and in good faith; and, in the event that such negotiations do not enable them to agree all the outstanding terms of the DMA within 5 months, each of them is entitled to refer the matter to the Expert for him to determine. It is difficult to see how a failure on the part of Chelsfield to agree terms, which is not said to be unreasonable, tardy, or lacking good faith, and which results in the agreed contractual mechanism for resolving the matter having to be invoked, could reasonably be regarded as giving rise to such a breakdown.

[66]The like considerations apply to the first part of Ground (3). The financial position of Chelsfield is expressly addressed in the DFA. If Chelsfield’s covenant strength deteriorates materially, it is obliged to provide QDDC with reasonable security for the potential repayment of the Advance Planning Payment (Clause 4.2); and QDDC is entitled to terminate the DFA on the basis of various insolvency events concerning Chelsfield (Clause 13). Also, requirements concerning Chelsfield’s ongoing financial strength are, on the face of it, among the matters that the parties could seek to address in the terms of the DMA, and, in default of agreement, put to the Expert for him to determine (Clause 3.3). Where the parties have delineated these protections, and no breach of any term of the DFA is alleged, it is difficult to see how Chelsfield’s allegedly poor financial position could reasonably be regarded as giving rise to such a breakdown.

[67]It is unclear whether the second part of Ground (3) adds anything to Ground (1), or (at least from the letter) what the grounds of concern as to Chelsfield’s capabilities may be. On the face of it, however, and viewed objectively, any such concerns could be met by the terms of the DMA, either as resolved by agreement between QDDC and Chelsfield, or, failing such agreement, as determined by the Expert. Having agreed to a mechanism by which any protections that Chelsfield was unwilling to agree should be determined by the Expert, it seems to me that it is difficult for QDDC (or QDREIC as Guarantor) to be heard to say that there is an entitlement to terminate the relationship because, in spite of all the protections that are agreed or determined by the Expert, there has been a breakdown of trust and confidence. I consider the points made by Mr Choo-Choy as to the provisions of the proposed DMA that had already been agreed between QDDC and Chelsfield (as instanced by the draft produced on Chelsfield’s behalf on 27 February 2014) merely serve to underline that conclusion: they demonstrate the large potential for conferring protections on QDDC vis-à-vis Chelsfield’s capabilities in the terms of the DMA, such that(a) objectively, trust and confidence should not be lacking; and

(b) all reasonable grounds on which they might break down can be catered for by those terms.

[68]Returning to the authorities, Brogden v Investec Bank Plc

[2014] EWHC 2785 (Comm)

was an employment case concerning bonus payments. At [92], Leggatt J referred to Malik v Bank of Credit and Commerce International SA

[1998] AC 20

as authority for “the overarching obligation implied by law as an incident of the employment contract that an employer will not without reasonable and proper cause conduct itself in a manner calculated or likely to destroy or seriously damage the relationship of confidence and trust between employer and employee”. At [93], Leggatt J said “The obligation of trust and confidence has been described as “undoubtedly the most powerful engine of movement in the modern law of employment contracts”: Freedland, The Personal Employment Contract (OUP, 2003), p.166”. In my view, those passages do no more than emphasise the importance of the obligation of trust and confidence in employment contracts.

[69]In J H Milner & Son v Percy Bilton Ltd

[1966] 1 WLR 1582

the claimants were solicitors who alleged that the defendants in failing to employ them were in breach of contract and claimed damages. The defendants denied liability on two grounds:(a) that there was no agreement with the solicitors, and

(b) if there was any agreement it was an implied term of the same that it could be determined by notice, and that it had been so determined. Fenton Atkinson J ruled in favour of the defendants on both grounds. On the second ground, he held: if there was any agreement of retainer at all, it was not an entire contract; the defendants were entitled to terminate on reasonable notice; and they had done so.

[70]Mr Choo-Choy submitted that the underlying rationale of this decision (on the second ground) is that the defendants were at liberty no longer to carry on the contract because a client’s retainer of a solicitor is an example of a case where, upon the breakdown in the fundamental relationship of trust and confidence between the solicitor and client, either party must have been intended to have a right to bring the relationship to an end on notice without thereby being in breach of contract.

[71]Mr McGhee countered that the case provides no support for the proposition that a contract may be conditional on the continuation of a relationship of trust and confidence between the parties, and indeed the judgment makes no reference to trust and confidence at all.

[72]Mr Choo-Choy’s riposte was to say that Fenton Atkinson J referred (at p1587) to the relevant learning in Cordery on Solicitors and the distinction between an entire contract and a non-entire contract. This prompted Mr Choo-Choy to rely, as further support for the proposition set out in paragraph 70 above, on the following statement concerning “Termination of an entire contract” in Cordery on Solicitors at page E/402 paragraph [653]:

“A solicitor must not terminate his retainer with his client, except for good cause and on reasonable notice. Wrongful termination by the solicitor is a breach of contract. Examples of good reason for termination include … (d) where there is a serious breakdown in confidence between the solicitor and the client, for example, where the solicitor having properly and correctly advised the client, the clients refuses to follow that advice…”

[73]I consider that Mr McGhee’s submissions concerning this case are correct.

[74]As to the above statement in Cordery on Solicitors, this concerns(a) the relationship between a solicitor and a client, and

(b) circumstances in which a breakdown in confidence has in fact occurred due to the conduct of one party (the client) which is unreasonable (in refusing to follow proper and correct advice) and, moreover, which goes to the very heart of the contract of retainer. In my judgment, that statement is of no assistance to QDREIC and QDDC in the present case, in which the relationship between the parties is not one of solicitor and client (or, in my view, analogous to it) and where the implied term for which they contend (i) does not depend upon one party conducting itself in a manner which is unreasonable, let alone inimical to the whole purpose of the DFA, and (ii) would, if correct, give rise to a right to terminate based on subjective criteria.

[75]The dearth of authority in support of Mr Choo-Choy’s arguments casts serious doubt upon the suggestion that it is realistic to contend that the implied term applies to the DMA. In my judgment, however, the position with regard to the DFA is clearer still. In substance, the purpose of the DFA is(a) to record the revised contractual arrangements between the parties (including the obligation on QDDC to appoint Chelsfield or a member of the Chelsfield group to provide development management services pursuant to Clause 3.1),

(b) to set out the sums which Chelsfield has been paid and is to be paid, and the basis on which such payments are to be made (including, if appropriate, the provision of security by Chelsfield),

(d) to provide a mechanism for determining any terms of the DMA which the parties are unable to agree. I consider that there is no basis for asserting that performance of these (or any other) obligations in the DFA should be subject to the implied term.

[76]Many of Mr Choo-Choy’s arguments about the implied term related to the DMA. However, he argued that it would be artificial to distinguish between the DFA and the DMA: the two agreements are extensions of one another, and vital terms of the DFA continue to regulate the relationship of the parties under the DMA. He submitted that if there is an argument that has a real prospect of success that the DMA could be terminated in reliance on the implied term the same applied to the DFA: if it is permissible to walk away from the relationship under the DMA, it is permissible to do so under the DFA.

[77]I do not consider that it is right to regard the DFA as an extension of the DMA, or as having no life that is separate from the DMA (which is another way that Mr Choo-Choy expressed the position), whether on the basis that the DFA records that certain terms of the DMA have already been agreed in the DFA or on any other basis. The DFA is not so much an extension of the DMA as a precursor to the DMA. Further, the DFA does not only operate as a precursor to the DMA but also sets out QDDC’s payment obligations to Chelsfield in respect of matters other than performance of the DMA.

[78]Moreover, there are at least the following differences between the DFA and the DMA:(a) under the DFA, the parties have, at least potentially, different and opposing interests so far as concerns the negotiation of the terms of the DMA, whereas once the DMA is signed it is to be expected that they are, broadly speaking, engaged in a collaboration in which Chelsfield may be expected to act in the best interests of QDDC;

(b) the nature of the parties’ obligations under the DFA differ markedly from what may be expected to be their obligations under the DMA;

(c) to the extent that parts of the DFA (such as Clause 4.3) continue in force after the DMA is made, those provisions do not involve the working relationship between the parties, which will instead be governed by the DMA;

(d) those provisions aside, the DFA is likely to be of much shorter duration than the DMA (although this point should not be exaggerated, because, in accordance with Clause 3.2.2 of the DFA, QDDC has an option to terminate the DMA at the end of the Planning Period); and

(e) the DFA contains a number of express obligations of good faith and the like which seem to me to cover much of the ground that would be covered by the implied term suggested by QDREIC and QDDC and to undermine the case for implication on the basis of spelling out what the DFA actually means (and, in particular, on the basis that the implied term is necessary to make the DFA work), and unless and until the terms of the DMA have been finalised it is not possible to say that this also applies to the DMA.

[79]Accordingly, I consider that the distinction between the DFA and the DMA is real and not artificial. Furthermore, I am not persuaded that even if QDREIC and QDDC have a real prospect of succeeding on the argument that the implied term applies to the DMA (which is a point that I do not have to decide) that the same applies to the DFA.

[80]I am in any event very sceptical about the suggested implication. It seems to me that arguments to like effect as many of the submissions made by Mr Choo-Choy could be made with regard to the implication of a duty of good faith. However, although a duty of good faith is implied by law as an incident of certain categories of contract (including contracts of employment), the general rule in commercial contracts is that “If the parties wish to impose such a duty they must do so expressly” (see Mid Essex Hospital Services NHS Trust v Compass Group UK and Ireland Ltd (t/a Medirest)

[2013] EWCA Civ 200

, Jackson LJ at [105]). I consider that the case is stronger still for saying that if the parties wish to produce the result that each of them has the right to terminate the contract in the event that it loses trust and confidence in the other, even when the other party is not in breach of contract and if that may be unreasonable, then they should do expressly.

[81]Although I attach less weight to them than to the points discussed above, I also consider that Mr McGhee’s arguments about Clauses 13 and 15 of the DFA are more convincing than Mr Choo-Choy’s arguments about the express provisions of the DFA.

[82]For all these reasons, in my judgment QDDC has no real prospect of establishing that the DFA is subject to the implied term, and, on the facts, it follows that Chelsfield is entitled to a declaration that the CFA remains in existence and has not been determined.

Issue (2) – whether there was a breakdown of trust and confidence in fact

[83]In light of my ruling on the first issue, this issue does not arise. However, in deference to the arguments which were addressed to me, I will deal with it as briefly as I can.

[84]Mr McGhee submitted that even if the DFA or the DMA was subject to the implied term, QDDC has no real prospect of succeeding on the contention that the relationship of trust and confidence between it and Chelsfield had broken down. In particular, contemporary correspondence and events are entirely inconsistent with any such conclusion:(1) QDDC’s letter purportedly determining the DFA came entirely “out of the blue”.

(2) The correspondence shows that the parties had been engaged for many months in discussions on the issues upon which they differed and were in the course of seeking to have them resolved by the Expert (so far as they were within the scope of Clause 3.3 of the DFA) and by the court (so far as they lay outside the remit of the Expert).

(3) This correspondence is entirely inconsistent with Mr Al Sayed’s contention that QDDC has lost trust and confidence in Chelsfield. For example: (a) QDDC’s email of 27 September 2013 enclosing a draft of the DMA referred to “our strengthened relationship”; (b) Chelsfield responded saying it would consider this draft “carefully, promptly and in good faith”; (c) QDDC replied thanking Chelsfield for confirming this; (d) when agreement did not result, Mr Patrizio suggested to Mr Burrow that they meet to discuss the matter, and after that meeting he wrote again thanking Mr Burrow for taking the time to meet up, saying that unfortunately they were unable to agree on the outstanding points and saying QDDC would now proceed to get the RICS to appoint an expert; (e) upon the appointment of the Expert, QDDC and Hogan Lovells co-operated in the determination of the Expert up to and including 19 September 2014, two working days before the purported determination on 23 September 2014.

(4) The continued co-operation between QDDC and Chelsfield in seeking to resolve their differences is inconsistent with the contention that QDDC had lost trust and confidence in Chelsfield.

(5) The court is not bound to accept Mr Al Sayed’s evidence, and should reject it on the basis that it is not credible where it is entirely inconsistent with the contemporary correspondence, and where Mr. Al Sayed has made no attempt at all to deal with that inconsistency.

(6) Any suggestion in argument that the true nature of the parties’ relationship might not appear from their open correspondence and that their without prejudice discussions might reveal a different picture should be firmly rejected since it finds no support at all in Mr Al Sayed’s evidence. If that point was to be run, Mr Al Sayed could and should have said in terms that the exhibited correspondence is inconsistent with their without prejudice discussions, but he had not done so.

[85]Mr Choo-Choy submitted that(a) (assuming that QDDC has at least a real prospect of establishing that the implied term exists) whether the implied term is engaged on the facts of this case is a deeply fact sensitive question which is not suitable for summary determination without a trial, and

(b) “there is an abundance of evidence” that the relationship of trust and confidence has in fact broken down between the parties. He argued that the true picture, borne out by the contemporary documents, is as follows: (1) QDDC first asked Chelsfield for its proposed scope of development management services on 30 July 2013, but Chelsfield never provided it, with the result that QDDC had to take the initiative and supplied its proposed scope on 19 September 2013. (2) Chelsfield was provided with a full draft DMA on 27 September 2013, but did not revert with its detailed comments until 5 months later on 27 February 2014. (3) In view of Chelsfield’s very low turnover, profits and net assets, especially compared to the substantial value of the development and indeed the size of the Advance Planning Payment, QDDC asked for Chelsfield’s proposals for security in respect of the Advance Planning Payment on 30 July 2013, but such proposals were not provided until 23 June 2014, almost a year later, and even then were not considered satisfactory by QDDC. (4) By its proposed revisions to the draft DMA, Chelsfield (a) sought to disregard and rewrite terms of the DMA that had already been agreed under the DFA, and (b) suggested extensive revisions that led QDDC to the conclusion that it had no choice (at that stage) but to refer matters to the Expert pursuant to Clause 3.3. (5) On 18 August 2014, Chelsfield commenced formal proceedings against QDDC claiming the Advance Planning Payment, despite the fact that there were ongoing discussions regarding the security to be provided by Chelsfield in respect of that payment and despite the absence of agreement over the terms of the DMA. (6) The tone of the correspondence between the parties has gradually deteriorated over time and become more confrontational. (7) In any event, the fact that QDDC did not rehearse its growing loss of trust and confidence in the correspondence is not determinative: people are often reticent about airing such matters. (8) Chelsfield has consistently failed to demonstrate how it could, through use of its own personnel and resources, deliver the required development management services under the DMA. Understandably therefore, QDDC has no belief in Chelsfield’s ability to deliver the required services. (9) Chelsfield’s “dogged determination” to restrict its development management services to planning matters only, to restrict the term of the DMA to the date of practical completion (rather than final completion) of the construction and related / ancillary works, and to secure the payment of additional fees under the DMA (i.e. over and above the Development Management Fees and Planning Incentive Fees) for services rendered during the post-Planning Period, has only served to precipitate QDDC’s loss of trust and confidence in Chelsfield. (10) All of the above problems have contributed to significant delay in QDDC’s progress of the development of the Property. (11) To the extent that Mr Burrow had attempted to suggest that QDDC has not genuinely lost trust and confidence in Chelsfield and that the professed loss of trust and confidence is only a ploy to avoid the Advance Planning Payment and execution and performance of the DMA, any such suggestion (a) is fully answered by Mr Al Sayed’s second witness statement, and (b) is a matter for cross-examination at trial rather than for summary determination on paper. (12) The suggestion that Mr Al Sayed has “made no attempt at all” to deal with the alleged inconsistency between his first witness statement and the contemporary correspondence is unfounded. Mr Al Sayed has addressed the issue in his second witness statement and highlighted the fact that “the Defendants’ dissatisfaction with the Claimant built up over time”.

[86]I consider that there is force in the points made by Mr McGhee about the inconsistency between the contemporary documents and events and the alleged breakdown of trust and confidence. I also consider that a number of the points made by Mr Choo-Choy do not really go to a breakdown of trust and confidence (or, if they do, they simply serve to illustrate how subjective that concept is as interpreted by his clients, who appear to me to be complaining about Chelsfield exercising rights that it had under the DFA or at common law); and others are based on only part of the story (for example, Chelsfield contends that the delay between 27 September 2013 and 27 February 2014 is explicable, at least in part, because without prejudice negotiations were being conducted during that time). The allegation of a breakdown seems to me to have emerged from the shadows late in the day, and so, in the language of days gone by, to suggest a defence that is shadowy.

[87]In my judgment, however, there is no real answer to Mr Choo-Choy’s central point that his clients’ case is supported by witness statements which are verified by statements of truth. If that evidence is true, his clients would succeed at trial on the second issue. Unless it can be said to be of no real substance, they have a real prospect of success on that issue.

[88]Mr McGhee is right that the court does not have to take that evidence at face value without analysis, particularly if it is contradicted by contemporary documents. However, I consider that it would involve conducting a mini-trial to bottom out all the points made by both sides on the documents. I also consider that even if I could be satisfied on a paper trial that all Mr McGhee’s points on the documents are right, it would not properly be open to me to reject that witness evidence as, in effect, comprising deliberate untruths.

[89]The factual assertions here relate to states of mind. In my view, those are matters for trial.

[90]For these reasons, if I had been in favour of QDREIC and QDDC on the first issue, I would have declined to grant summary judgment to Chelsfield on the second issue.

(a) Parties’ submissions

[91]Mr McGhee’s starting point was attractively simple. He submitted that if the court makes the declaration sought by Chelsfield under the first issue, then the court should also make an order requiring QDDC to instruct the Expert to complete his determination of the terms of the DFA. In particular, he submitted that:(1) Clause 12 of the DFA requires the Expert to make his determination within 10 working days of the receipt of written representations and counter representations. The parties have provided these, and accordingly it is only necessary for the Expert to issue his determination.

(2) Although the parties agreed to his suggestion of having a meeting with the Expert (which was abandoned after QDDC’s purported determination of the DFA) there is no requirement for such a meeting to take place under Clause 12 or at all.

(3) Accordingly, in considering whether or not to order that the expert determination be completed, no further co-operation by either party is required (beyond QDDC reversing its instruction to the Expert not to proceed with his determination).

[92]Mr McGhee’s submissions then moved on to addressing QDDC’s arguments to the effect that the Expert ought not to be encouraged to complete his determination since the court should not and would not order QDDC to enter into the DMA once its terms have been so determined. Mr McGhee’s central contention was that QDDC has no real prospect of success in defending either(a) Chelsfield’s claim for an order requiring QDDC to instruct the Expert to complete his determination of the terms of the DMA or

(b) Chelsfield’s claim for an order requiring QDDC to enter into the DMA once its terms have been determined. His arguments contained the following steps: (1) Even if it was right to say that the court should not and would not order QDDC to enter into the DMA once its terms are determined by the Expert, the court ought still to require the Expert to complete his determination because the terms of the DMA will be central to Chelsfield’s claim in damages against QDDC for repudiatory breach of the DFA. Chelsfield’s claim for damages will depend on the level of profit, if any, that it would have made had it entered into and performed its obligations under the DMA. This will depend in turn on the cost to it of performing its obligations under the DMA, as to which difficult questions such as the scope of the services under the DMA and whether it is entitled to sub-contract its services will be of central relevance. If the Expert has not determined the terms of the DMA, the court would need to do so in the assessment of Chelsfield’s claim to damages. As the Expert’s determination is nearly concluded and all that remains is for him to issue his determination, it is clearly more convenient for the court to order that determination to be completed than for it to determine the difficult question as to what the terms of the DMA would have been had it been entered into. (2) QDDC’s contentions - that damages would be an adequate remedy for Chelsfield and that an order for specific performance requiring QDDC to enter into the DMA would not be ordered given the personal nature of the DMA and the necessity for on-going co-operation between the parties - confuse two entirely separate matters: (a) whether an order should be granted that QDDC perform the DFA, including by entering into the DMA in the form determined by the Expert, and (b) whether an order should be granted that QDDC perform the DMA. (3) If QDDC is required to enter into the DMA, it will need to consider whether or not to perform its obligations under the DMA or refuse to do so in repudiatory breach of the DMA. If it refuses to perform its obligations under the DMA, Chelsfield will then need to decide whether to accept that repudiation and determine the DMA or not. If Chelsfield chooses not to accept QDDC’s repudiatory breach it will need to decide whether to seek specific performance of the DMA or to confine itself to a claim in damages. It is therefore premature to consider whether or not the court would order specific performance of the DMA - and no such order is sought in these proceedings. (4) The question with which these proceedings are concerned is whether QDDC should be required to enter into the DMA by way of specific performance of the DFA. To make such an order requires no element of continued co-operation between the parties and is unaffected by the alleged “personal nature” of the DMA. Accordingly, these matters provide no defence to the present claim for specific performance. (5) As to whether an order for specific performance should be made, the test is whether or not it is just, in all the circumstances, to confine the claimant to its remedy in damages: see Evans Marshall & Co Ltd v. Bertola SA

[1973] 1 WLR 349

at 379. It would not be just to confine Chelsfield to a claim in damages for breach of the DFA, since this would be one removed from the real dispute between the parties, which concerns Chelsfield’s rights against QDDC under the DMA which QDDC is required to enter into. It would appear that QDDC is opposing the order requiring it to enter into the DMA because it perceives that if it is not required to enter into the DMA there will be some advantage to it so far as the relief available to Chelsfield or Chelsfield’s measure of damages is concerned. It ought not to be allowed to obtain an advantage in this way.

[93]In response to other points made on behalf of QDDC, Mr McGhee submitted:(1) There is no basis for implying a term in the DFA that the expert determination procedure should not be completed if the court would not order QDDC to perform the DMA once its terms had been determined: either the DFA has not been determined, in which case both parties are required to perform their obligations under it including the requirement to refer the terms of the DMA to expert determination; or the DFA has been determined, in which case the expert determination procedure no longer applies.

(2) In any event, it cannot be regarded as certain one way or the other whether or not the court would order QDDC to perform its obligations under the DMA, since this depends on whether the court would exercise its discretion so as to require specific performance of the obligations under the DMA. It can hardly be expected that whether or not the parties are required to complete the expert determination is to depend on whether on the balance of probabilities the court would be likely to grant or refuse an order for specific performance of the obligations under the DMA at some point in the future.

(3) Chelsfield’s response to QDDC’s argument that no such order should be made since the Expert’s determination would not conclude the matter as regards the scope of services, the fees payable or the term of the DMA (all of which are said to be outside the expert’s remit) is as follows. First, while reserving its position for the future, Chelsfield does not seek to contend for the purpose of the present summary judgment application that these submissions as to the scope of the Expert’s remit are unarguable. Second, Chelsfield makes the following points: (a) since Chelsfield’s position is that these questions are within the scope of the Expert’s remit, the point arises only (i) if the Expert finds against QDDC on one or more of these issues and (ii) if he does so in a way which is material to the net profit Chelsfield would earn if the DMA was entered into – and until the Expert makes his determination, it is not possible to speculate whether that will be the case or not; (b) these issues form only 3 of the 34 agreed issues which the Expert is being asked to determine; (c) the question of the scope of the Expert’s remit was not raised by QDREIC and QDDC at all until the day before the hearing before me commenced – and they participated in agreeing a list of issues and in preparing submissions on the terms of the DMA, including on the question of the scope of the services, fees payable and term of the DMA.

[94]Mr Choo-Choy submitted that even if, contrary to its primary case, QDDC has no real prospect of justifying its purported termination of the DFA (and its consequent refusal to enter into or perform the DMA), the court should in any event refuse at this stage to make the requested orders for specific performance for the following principal reasons.

[95]As regards completion of the expert determination process:(1) On the proper construction of Clause 3.3 of the DFA, the expert determination process is only intended to apply where both parties are ready, willing and able to perform the DMA, or where performance of the DMA can be specifically enforced, whereas neither requirement is met on the present facts. The parties cannot have intended that they should be required to engage in an academic exercise before the Expert, make representations to him, and enable him to determine appropriate terms for the DMA, when (according to QDDC’s submissions) it is already known (i) that the DMA will not be performed and (ii) that its performance will not be specifically enforced by the court. An objective bystander would readily have presumed at the time that the DFA was entered into that the expert determination process would only be invoked and completed when performance of the DMA was intended or compellable by the court.

(2) As a matter of discretion, the court should in any event refuse the order sought (i) pending clarification of certain aspects of the DMA that have already been agreed pursuant to the DFA and are therefore outwith the Expert’s remit (albeit that those matters are being re-argued by Chelsfield before the Expert) and (ii) because the Expert’s determination under Clause 3.3 will not obviate the need for expert evidence with respect to the quantification of damages for breach of contract, which is the only remedy that, on the present facts, Chelsfield can realistically hope to obtain in respect of QDDC’s refusal to perform the DMA.

[96]With regard to compelling QDDC to sign the DMA once its terms have been determined by the Expert, Mr Choo-Choy submitted that the court should refuse to make such an order because:(1) There is no point in requiring QDDC to sign an agreement which it has refused to perform and in respect of which Chelsfield will not be able to get an order for specific performance.

(2) Damages would be an adequate remedy for Chelsfield in respect of QDDC’s non-signature and/or non-performance of the DMA.

(3) It is in any event premature to order specific performance of the signature of the DMA when its full terms are not yet known and the Expert’s determination of the same may be subject to challenge on account of his excess of jurisdiction – the Court should only exercise its discretion to order or not order signature by QDDC after sight of the full terms of the DMA and subject to any challenge that may be made to the validity of the Expert’s determination under Clause 3.3.

[97]Mr Choo-Choy developed his submissions as to why, as a matter of discretion, the court should refuse to secure completion of the expert determination process, at least at the stage of the present application for summary judgment, as follows:(1) Matters which, on the proper construction of the DFA, have already been expressly or impliedly agreed between QDDC and Chelsfield are clearly not matters that are within the Expert’s contractual remit under Clause 3.3. This is clearly the case with respect to (a) the amount of fees payable under the DMA, as defined under Clause

3.2.1 and Schedule 2, (b) the term of the DMA as described in Clause

3.2.2 of the DFA, and (c) the proper scope of the development management services under the DMA, in so far as that can be discerned from the scope of Chelsfield’s appointment as specified in Clause 3.1 of the DFA, the duration of the DMA as prescribed by Clause 3.2.2 of the DFA, and the related definitions of the DMA and the Development in Clauses 1.7 and 1.8 of the DFA.

(2) There are currently serious disagreements between the parties as to what has been already agreed under the DFA with respect to the terms of the DMA. Chelsfield has made submissions to the Expert which effectively seek to vary or disregard the effect of Clauses 3.2.1 and 3.2.2 of the DFA (and by extension other related provisions of the DFA , including Recital D, Clauses 1.7, 1.8 and 3.1 and Schedule 2), in particular, by arguing (a) that the Development Management Fees and Planning Incentive Fees are not the only fees to be payable to Chelsfield under the DMA (Chelsfield argues in particular for the payment of additional fees under the DMA, on an hourly rate basis as set out in Schedule 5 to its 27 February 2014 marked-up version of the draft DMA, in respect of services rendered during the post-Planning Period); (b) that the term of the DMA should end on the date of the Certificate of Practical Completion rather than (as contended by QDDC) on the date of the Final Certificate issued in respect of all of the construction and related and ancillary works to the Property; and (c) that the development management services to be provided by Chelsfield, although they may be provided after the end of the Planning Period, “would relate only to planning” or would not extend beyond services “relating in some way to planning” (such that Chelsfield is, in effect, rejecting the view that the development management services that it is required to provide under the DMA should extend to the management of the construction stage of the project).

(3) While QDDC’s case as to the proper construction of the DFA in the above respects may be disputed by Chelsfield, those disputes are for determination by the court at trial; they are not for determination by the Expert pursuant to Clause 3.3 (nor indeed by the court in the context of a summary judgment application). Unless and until those disputes have been resolved by the court, it does not make sense for the Expert to undertake any further work on other aspects of the disputed terms of the DMA. The precise scope and need for the Expert’s determination under Clause 3.3 is likely to be influenced by, and should therefore await, the court’s determination of the above-mentioned disputes.

(4) For the avoidance of doubt, the issues that it will be necessary for the court to determine in this connection are: (a) whether as contended by QDDC the only fees that should be payable under the DMA are the Development Management Fees and the Planning Incentive Fees as defined in Clauses 1.9 and 1.14 and Schedule 2 of the DFA, or whether as contended by Chelsfield it should be entitled to be paid additional fees in respect of the post-Planning Period as it has contended in its submissions to the Expert; (b) whether, having regard to the provisions of Clause 3.2.2 of the DFA, the term of the DMA should end on the date of the Certificate of Practical Completion or the date of the Final Certificate relating to the construction and related and ancillary works to the Property; and (c) whether, having regard to the terms of the DFA (including but not limited to Clauses 3.1 and 3.2.2), the scope of development management services under the DMA should extend to the entire duration of the Development (i.e. including the construction stage), as contended by QDDC, and comprise development management services in respect of the carrying out of the construction and related ancillary works to the Property, or whether the development management services to be provided by Chelsfield should be limited to services related to planning only as contended by Chelsfield in its submissions to the Expert.

(5) In addition as part of or in connection with its determination of the above issues, the court would have to consider the precise inter-action between the terms of the DFA as already agreed and the intended terms of the DMA, and the extent to which (if at all and contrary to QDDC’s case) it was part of the parties’ bargain under the DFA that it would be within the Expert’s remit to determine terms of the DMA that would contradict the terms of the DFA properly construed and to do so without the consent of both QDDC and Chelsfield. Such clarification with respect to the precise remit of the Expert would be desirable before (and if) he is to complete his determination under Clause 3.3.

(6) Moreover, it is in any event wrong to suppose that the determination of the terms of the DMA is essential to the task of quantifying Chelsfield’s damages for breach of the DFA and/or DMA (this being the only realistic remedy that Chelsfield can hope to obtain in respect of non-performance of the DMA). The expert determination under Clause 3.3 is not in the nature of a quantification of damages, and a quantum expert would likely be required in any event in connection with the court’s quantification of damages, even with the benefit of the Expert’s determination of the terms of the DMA. There would be no real saving in costs as a result of completing the expert determination under Clause 3.3. Specifically: (a) the damages to which Chelsfield might be entitled in respect of the non-performance of the DMA would be damages for lost profits or, more precisely, damages for the loss of a chance of making profits; (b) the quantification of those profits or the valuation of the lost chance of making them would be largely driven by (i) the amount of Planning Incentive Fees that Chelsfield would or might have earned under the DMA (depending upon the amount of authorised floorspace pursuant to a Planning Permission) and (ii) the costs likely to be incurred by Chelsfield in earning those fees; (c) neither (i) nor (ii) above would be determined by the Expert pursuant to his determination under Clause 3.3; (d) indeed, in so far as the fees payable under the DMA and the term of the DMA have already been agreed pursuant to Clauses 3.2.1 and 3.2.2 of the DFA, item (i) above is outwith the Expert’s jurisdiction in any event; (e) accordingly, it would be necessary for the parties to call development management (including planning) expert evidence at trial with respect to the above two matters in order to enable the court to quantify the damages to which Chelsfield might be entitled; (f) there is therefore no particular merit in the Expert under Clause 3.3, rather than the parties’ respective experts in these court proceedings, expressing a view as to the appropriate terms of the DMA in so far as those still remained in dispute during the course of these proceedings; and (g) indeed, there is much to be said for allowing the parties’ court experts to address the appropriateness of the remaining disputed terms of the DMA as well.

[98]Mr Choo-Choy referred to British Shipbuilders v VSEL Consortium Plc [1997] 1 Lloyd’s Rep. 106, at 109. In that case, Lightman J summarised the legal principles governing the status of decisions of an expert in 5 numbered propositions, stating under item 5:

“[the] Court has jurisdiction ahead of a determination by the expert to determine a question as to the limits of his remit or the condition which the expert must comply with in making his determination, but (as a rule of procedural convenience) will (save in exceptional circumstances) decline to do so. This is because the question is ordinarily merely hypothetical, only proving live if, after seeing the decision of the expert, one party considers that the expert got it wrong. To apply to the Court in anticipation of his decision (and before it is clear that he has got it wrong) is likely to prove wasteful of time and costs – the saving of which may be presumed to have been the, or at least one of the, objectives of the parties in agreeing to the determination by the expert.”

[99]Finally, Mr Choo-Choy submitted that:(1) The present case is exceptional, because it is already clear from the substance of the arguments so far advanced before the Expert, with respect to three important areas (namely (a) amount of fees payable under the DMA, (b) term of the DMA and (c) proper scope of intended development management services under the DMA), that there is a real risk of the Expert trespassing onto matters which have already been agreed by the parties under the DFA, the proper construction of which is clearly not within the Expert’s remit. Thus, far from pointing to judicial non-intervention in this case, considerations of procedural convenience and cost saving militate strongly in favour of the prior clarification by the court of the Expert’s remit in relation to the three important areas already highlighted, so as to obviate the risk of a subsequent time-consuming and expensive challenge to the contractual validity of the Expert’s decision in those areas.

(2) The arguments summarised above, considered separately and even more clearly when considered collectively, are sufficiently meritorious to justify the court’s refusal at this stage of the order for specific performance of the expert determination process under Clause 3.3, either on the ground that QDDC has a real prospect of successfully resisting such relief at trial or on the ground that there is some other compelling reason for a trial.

(b) Discussion

[100]That the question of the scope of the Expert’s remit was not raised by QDREIC and QDDC until a very late stage is borne out by the fact that it was the subject of an application before me for permission to amend the Defence and Counterclaim, which was not opposed by Chelsfield subject to the usual terms as to costs. The amendment takes the form of adding (among others) paragraphs in the following terms:

“13.2A Yet further or alternatively, there should be no expert determination of the terms of the DMA unless and until the full extent of the terms of the DMA already agreed, either expressly or impliedly pursuant to the terms of the DFA (including Recital D and clauses 1.7, 1.8, 1.9, 1.14, 3.1, 3.2, and Schedule 2 thereof), has been established herein, in particular with regard to: 13.2A.1. whether as contended by QDDC the only fees that should be payable under the DMA are the Development Management Fees and the Planning Incentive Fees as defined in clauses 1.9 and 1.14 and Schedule 2 of the DFA, or whether as contended by Chelsfield it should be entitled to be paid additional fees in respect of the post-Planning Period; 13.2A.2. whether having regard to the provisions of clause 3.2.2 of the DFA the term of the DMA should end on the date of the Final Certificate (as QDDC contends) or the date of the Certificate of Practical Completion (as Chelsfield contends) relating to the construction and related and ancillary works to the Property; and 13.2A.3. whether, having regard to the terms of the DFA (including but not limited to clauses 3.1 and 3.2.2 thereof), the scope of development management services under the DMA should extend to the entire duration of the Development (i.e. including the construction stage) and comprise development management services in respect of the carrying out of the construction and related ancillary works to the Property (as contended by QDDC), or whether the development management services to be provided by Chelsfield should be limited to services related to planning only (as contended by Chelsfield). For the avoidance of doubt, the Defendants’ case is that the above issues are the subject of existing agreement between the parties pursuant to the terms of the DFA (properly construed) and are therefore outside Mr Bingham’s remit as expert under clause 3.3 of the DFA … 17. In light of the matters set out in paragraph 13.2A above, the Defendants hereby counterclaim for declarations that: 17.1. on the proper construction of the terms of the DFA (including Recital D and clauses 1.7, 1.8, 1.9, 1.14, 3.1, 3.2, and Schedule 2 thereof), the following terms of the DMA have already been agreed pursuant to the terms of the DMA, namely: 17.1.1. that the only fees that should be payable to Chelsfield under the DMA in consideration of Chelsfield’s provision of development management services are the Development Management Fees and the Planning Incentive Fees as defined in clauses 1.9 and 1.14 and Schedule 2 of the DFA; 17.1.2. that the duration of the DMA should be until the date of issue of the Final Certificate relating to the construction and related and ancillary works to the Property; and 17.1.3. that the scope of development management services to be provided by Chelsfield under the DMA should extend to the entire duration of the Development (i.e. including the construction stage), and should therefore comprise development management services in respect of the carrying out of the construction and related ancillary works to the Property and not be limited to services related to planning only; 17.2. on the proper construction of clause 3.3 of the DFA: 17.2.1. the jurisdiction or remit of any expert appointed thereunder to determine the terms of the DMA does not extend to determination of the matters set out in paragraph 17.1 above; and 17.2.2. any purported determination by any such expert of any of the said matters would be neither conclusive between nor binding on either of Chelsfield or the Defendants under clause 3.3.8 of the DFA.” 13.2A.1. whether as contended by QDDC the only fees that should be payable under the DMA are the Development Management Fees and the Planning Incentive Fees as defined in clauses 1.9 and 1.14 and Schedule 2 of the DFA, or whether as contended by Chelsfield it should be entitled to be paid additional fees in respect of the post-Planning Period; 13.2A.2. whether having regard to the provisions of clause 3.2.2 of the DFA the term of the DMA should end on the date of the Final Certificate (as QDDC contends) or the date of the Certificate of Practical Completion (as Chelsfield contends) relating to the construction and related and ancillary works to the Property; and 13.2A.3. whether, having regard to the terms of the DFA (including but not limited to clauses 3.1 and 3.2.2 thereof), the scope of development management services under the DMA should extend to the entire duration of the Development (i.e. including the construction stage) and comprise development management services in respect of the carrying out of the construction and related ancillary works to the Property (as contended by QDDC), or whether the development management services to be provided by Chelsfield should be limited to services related to planning only (as contended by Chelsfield). For the avoidance of doubt, the Defendants’ case is that the above issues are the subject of existing agreement between the parties pursuant to the terms of the DFA (properly construed) and are therefore outside Mr Bingham’s remit as expert under clause 3.3 of the DFA … 17.1.1. that the only fees that should be payable to Chelsfield under the DMA in consideration of Chelsfield’s provision of development management services are the Development Management Fees and the Planning Incentive Fees as defined in clauses 1.9 and 1.14 and Schedule 2 of the DFA; 17.1.2. that the duration of the DMA should be until the date of issue of the Final Certificate relating to the construction and related and ancillary works to the Property; and 17.1.3. that the scope of development management services to be provided by Chelsfield under the DMA should extend to the entire duration of the Development (i.e. including the construction stage), and should therefore comprise development management services in respect of the carrying out of the construction and related ancillary works to the Property and not be limited to services related to planning only; 17.2.1. the jurisdiction or remit of any expert appointed thereunder to determine the terms of the DMA does not extend to determination of the matters set out in paragraph 17.1 above; and 17.2.2. any purported determination by any such expert of any of the said matters would be neither conclusive between nor binding on either of Chelsfield or the Defendants under clause 3.3.8 of the DFA.”

[101]However, the fact that these contentions have made a late arrival on the scene does not mean that they have no real prospect of success. On the contrary, for the purposes of the present application, Mr McGhee accepted that they are arguable; and that is consistent with Chelsfield not opposing the application for permission to amend the Defence and Counterclaim (instead of resisting that application on the grounds that the amendments seek to introduce a pleaded case that has no realistic prospect of success at trial).

[102]Once that point is reached, I do not consider that it is a satisfactory answer to Mr Choo-Choy’s submissions that it would be wrong for the court to order QDDC to instruct the Expert to complete a determination of the terms of the DMA which includes three important issues which are at least arguably outside the remit which QDDC agreed that he should have for Chelsfield to say(a) that these are only 3 out of 34 issues which (at least hitherto) the parties have agreed to ask the Expert to determine or

(b) that asking the Expert to determine these issues may not matter to QDDC, either because the Expert agrees with QDDC about them, or because, as it transpires, his determination is not material to the net profits that Chelsfield would earn if the DMA was entered into.

[103]If, on the true construction of the DFA (which I am not asked to determine on this summary judgment application), and as is accepted for present purposes to be at least realistically arguable, the parties have expressly agreed that certain matters should not be referred to the Expert, I consider that it would be surprising for it to be a proper exercise of the court’s discretion to make a mandatory order at the behest of one party which requires the other party to instruct the Expert to determine those very matters. I was not referred to any authority which supports such a result. That conclusion is not affected by the consideration that, until they fell out, both parties may have been proceeding on the basis that their agreement did not exclude these matters from being referred to the Expert for determination. What counts is whether the point is sound, and not when it emerges.

[104]Conversely, if there is a genuine dispute about the limits of the remit of an expert, and he is in a position to proceed and wants to proceed with his determination, it may be that the court would, or should, be slow to restrain him from continuing with his determination, for the reasons given by Lightman J in his fifth principle discussed above. However, that is not the present case. To my mind, it is very different from this case.

[105]In my judgment, that is sufficient to determine the third issue against Chelsfield.

[106]In addition, however, I consider that Mr Choo-Choy was right to question the utility of making the order sought by Chelsfield in the present case. I am in no position to decide – and I do not believe that Mr McGhee suggested that I could or should decide – that the Expert’s determination of other issues would not, or might not, be affected by his determination of one or more of the above important issues which may, on the proper construction of the DFA, fall outside the ambit of his remit. In those circumstances, it seems to me that making an order that has the effect of getting the Expert to proceed with his determination(a) is not likely to assist the court with resolving the terms of the DMA that the parties would have entered into if the DFA had continued to be performed, and

(b) on the contrary, is likely to be a recipe for disaster, and to provide fertile ground for further issues between these parties, which are already plentiful enough. I am also unpersuaded that this would assist with the quantification of Chelsfield’s damages or save costs in the long run: on these points, I prefer the arguments of Mr Choo-Choy.

[107]In these circumstances, the remainder of the points made by Mr McGhee do not, in my judgment, assist Chelsfield. Further, I do not need to resolve the argument about whether it was an implied term of the DFA that the parties should not be required to complete the expert determination process in circumstances where, whatever its final terms, the DMA was not going to be performed by both parties and could not be specifically enforced.

[108]For these reasons, Chelsfield is not entitled to summary judgment for an order requiring QDDC to instruct the Expert to complete his determination of the DMA. Issue 4 - whether QDDC should be required to sign the DMA once it has been finalised

[109]In light of my ruling on the third issue, the fourth issue does not arise. However, for the like reasons as apply in respect of the second issue, I will deal with it as briefly as I can.

[110]As Mr McGhee’s submissions on the third issue overlapped with his submissions under this head, I have already summarised some of the latter submissions above. Mr McGhee further submitted with regard to the fourth issue:(1) If QDDC was ordered to enter into the DMA, there must be at least some prospect (a) that an entity of the reputation of QDDC would decide to perform rather than default on its obligations, further or alternatively (b) that if QDDC did not perform its obligations, the court would order specific performance of those obligations.

(2) Chelsfield’s case that even if the court would not order QDDC to perform its obligations under the DMA, it still ought to require QDDC to enter into the DMA is supported by C H Giles & Co Ltd v Morris

[1972] 1 WLR 307

. The fact that in that case the contract which one party was ordered to enter into was not a contract with the other party to the proceedings but was instead a contract with a third party is of no consequence: it formed no part of the reasoning for the decision, and it is difficult to see why in principle it should matter whether or not the other party to the contract happens to be a party to the proceedings in question.

(3) The assertion that if QDDC was required to enter into the DMA it would act in breach of contract and would refuse to perform its obligations under the DMA was “a submission made in the heat of argument” to which the court should be slow to give credence. QDDC is a leading developer of good reputation, with an involvement in some of the most high profile developments in London at the moment. It would be extraordinary if such an entity would deliberately renege on its commitments. Chelsfield reasonably hopes that, on reflection, QDDC would not deliberately refuse to perform its contractual obligations under the DMA.

(4) In so far as the argument that the Expert might exceed his remit in deciding issues as to the scope of services, fees payable and term of the DMA were also prayed in aid by QDDC in respect of the fourth issue: (a) this point arises only if one or more of these issues is decided against QDDC; and (b) in light of the late stage at which QDDC has sought to question the scope of the Expert’s remit and the fact that it is entirely uncertain whether the point will be material, the matter ought to be dealt with not by refusing an order for specific performance but by giving QDDC liberty to apply if the Expert decides any of the issues in question against QDDC and it then seeks to contend that in doing so he decided that issue contrary to the terms of the DFA and in a manner which exceeded his remit.

[111]Mr Choo-Choy submitted(a) that QDDC has a real prospect of successfully resisting an order that it sign the DMA at trial, further or alternatively

(b) that pending the respective determinations of the court and Expert as described in his submissions summarised below, there is in any event a compelling reason for disposing of the claim for the requested order at trial, or, at least, for disposing of it only after the Expert’s determination of the terms of the DMA and subject to any challenge that may be made to that determination by reference to the true scope of the Expert’s remit under Clause 3.3.

[112]Mr Choo-Choy accepted that it impliedly follows from QDDC’s obligation under Clause 3.1 of the DFA to appoint Chelsfield as development manager pursuant to the DMA that QDDC is under an implied obligation to sign the DMA once the disputed terms have been determined by the Expert. Nevertheless, even if the court was to hold summarily(a) that the DFA remains in existence and

(b) that QDDC is now obliged to instruct the Expert to complete his determination of the terms of the DMA under Clause 3.3 of the DFA, it does not follow that the Court should also order QDDC to sign the DMA forthwith once its terms have been determined by the Expert, effectively by way of specific performance of that implied obligation.

[113]Mr Choo-Choy submitted:(1) No such order should be made unless Chelsfield could demonstrate one or more of the following: (a) that damages for non-signature, and hence non-performance, of the DMA would not be an adequate remedy; (b) that, if signed, Chelsfield would then be entitled to an order for specific performance of the DMA; and (c) that some useful and justifiable purpose would be served by making the order.

(2) None of the above requirements can be demonstrated by Chelsfield at this stage, and nor could they be demonstrated at trial.

(3) First, damages for non-signature and non-performance of the DMA, comprising the loss of a chance of making profits under the DMA, would be an adequate remedy for Chelsfield, and the contrary has not been suggested by Chelsfield or in its evidence.

(4) Second, even if the DMA were to be signed by QDDC, Chelsfield would not be entitled to an order for its specific performance by reason of: (a) the personal nature of the services to be provided and the personal relationship created under the DMA and the absence of exceptional circumstances in this case to justify a departure from the normal rule that no order will be granted for specific performance of such a contract (see paragraphs 17-012 and 17-013 of Snell’s Equity (33rd ed.), which in turn cites Chappell v Times Newspapers Ltd

[1975] 1 WLR 482

); (b) the constant judicial supervision that is likely to be required in respect of both parties’ performance of the DMA over a prolonged period of time (see Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd

[1998] AC 1

, Lord Hoffmann at 12C-13E); (c) the adequacy of damages as a remedy (see paragraph 17-007 of Snell’s Equity, “the inadequacy of the damages threshold test [remains] a significant restriction on the availability of specific performance in English law”, affirmed in Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd

[1998] AC 1

, especially at 11F-G); and (d) the intervening engagement of substitute service providers by QDDC for a number of months, to the knowledge of Chelsfield.

(5) On this last point, it was pointed out that Chelsfield has not sought to restrain QDDC from engaging others in substitution for its services, notwithstanding that Hogan Lovells wrote on 6 November 2014 that “our client [i.e. QDDC] is now pressing ahead with plans for the development of the Property. It is currently setting about appointing a feasibility team to identify and assess various development options for the Property. That team will comprise a number of professional disciplines including, amongst others, architects, structural engineers, planners and historical building consultants. They will be reporting to our client as development manager for the development of the Property.”

(6) In further support of the same point, reference was made to the following evidence in Mr Al Sayed’s second witness statement: “The fact is development management services are required for this project and, as a result of the termination of the DFA, we have had to proceed with the procurement of such services ourselves. Following a detailed and formal tender process, a consultant team has been appointed to complete a feasibility study by the end of March 2015. An architectural competition is also underway to select a leading international architectural practice, to take the project through the concept and scheme design stages and on towards the submission of a detailed planning application at the end of the year. Given the time already spent dealing with the Claimant, we had no choice but to proceed with alternative development management services as quickly as possible. It is simply not viable for the Defendants to not proceed with development activities as quickly as possible.”

(7) Although Chelsfield asserts through the evidence of Mr Levy that the development of the Property is “high profile and prestigious and the Claimant wishes to remain involved”, Chelsfield is not able to secure its continuing involvement in the development for the following reasons: (a) it is not entitled to an order for specific performance of the DMA, and mere signature of the DMA by QDDC would not suffice to ensure Chelsfield’s continuing involvement; and (b) there is no possibility that, if it was required to enter into the DMA, QDDC would perform the obligations under the DMA – the statement of QDDC’s position was not “a submission made in the heat of argument”, but, on the contrary, the witness statement of Mr Al Thani makes it absolutely clear that QDDC has no intention of performing the DMA. In fact, QDDC will not voluntarily agree to perform the DMA and will vigorously resist any claim or application for specific performance of the DMA.

(8) In sum, there is simply no useful and justifiable purpose identified in Chelsfield’s evidence for requiring signature of the DMA by QDDC.

(9) Further, pending sight of the actual terms determined by the Expert (following any preliminary determination by the court as to the three threshold issues canvassed above), it would be premature for the court to consider whether or not to order QDDC to sign the DMA. A fully informed view of whether it would be just and appropriate to compel QDDC to sign the DMA should await (a) determination by the court of those threshold issues and (b) subsequent determination by the Expert of the remaining disputed terms of the DMA.

(10) Finally, the Court should not compel signature of the DMA immediately following the Expert’s determination because there may be a challenge to his remit and hence to the validity of his decision, having regard in particular to the arguments summarised above and on the assumption that those matters do not presently persuade the Court to defer the completion of the Expert’s determination until after determination by the Court of the three threshold issues.

[114]Mr Choo-Choy accepted that in C H Giles & Co Ltd v Morris

[1972] 1 WLR 307

, especially at 316B-319B, Megarry J held that there is a distinction between an order to perform a contract for services and an order to procure the signature of such a contract, and that the mere fact that the contract to be made was one of which the court would not decree specific performance was not a ground for refusing to decree that the contract be entered into. He submitted, however, that this case was very much a decision on its own particular facts:(1) The relevant defendant had in fact consented to an order for specific performance of the signature of a service agreement; and the overall agreement which contained the provision regarding signature of the director’s service agreement was in fact held to be specifically enforceable.

(2) Moreover, it appears to have been assumed by the court that there was some useful purpose to be served by the signature of the service agreement, even if the service agreement on its own would not have been susceptible to an order for specific performance.

(3) It also appears to have been assumed in that case that damages would not be an adequate remedy for the director in the event of non-signature of the service agreement.

(4) Chelsfield is wrong to contend that recognition of the fact that the contract which one party was ordered to enter into was not a contract with the other party to the proceedings but with a third party formed no part of the reasoning for the decision. At 316E-F, in a passage that contains his key reasoning, Megarry J specifically stated that “When that [i.e. signature of the service agreement] has been done, the question of any breach of the service agreement and any remedies for that breach is one between Invincible and Mr. Giles, and not between Invincible and the plaintiff. Invincible, too, is a party neither to the contract [i.e. the contract which had annexed to it the draft service agreement and which was itself the subject of the consent order for specific performance] nor to the action.”

(5) Further, and again contrary to Chelsfield’s arguments, it does matter whether or not the other party to the contract happens to be a party to the proceedings in question. The reason for this is that, without signature of contract, the party seeking signature may not be legally entitled to bring a claim for damages for breach of contract against the non-party. That was the case in C H Giles & Co Ltd v Morris

[1972] 1 WLR 307

(6) The present case, however, is different. Chelsfield has a claim for damages for repudiation of the DFA and non-signature and non-performance of the DMA, whether or not QDDC signs the DMA.

[115]In light of Mr Choo-Choy’s submissions and the evidence to which I have referred above, I regret that I am unable to accept any of Mr McGhee’s submissions.

[116]On the material at present available, I consider that there is no real prospect that, if QDDC was ordered to enter into the DMA, it would decide voluntarily to perform its obligations under the DMA. Nor am I persuaded that there is any real prospect that the court would order specific performance of those obligations. The fact that the terms of the DMA have not been finalised do not prevent me from accepting the force of Mr Choo-Choy’s submissions that(a) damages for non-signature, and hence non-performance, of the DMA would be an adequate remedy;

(b) even if the DMA was signed, Chelsfield would not be entitled to an order for specific performance of the DMA; and

(c) no other useful or justifiable purpose would be served by making the order sought by Chelsfield that QDDC should sign the DMA. The lapse of time since QDDC’s purported termination of the DFA and the fact that QDDC has pressed ahead with plans to engage others in place of Chelsfield by themselves militate against any such order being made.

[117]So far as concerns the adequacy of damages, I am unable to accept that Chelsfield would gain anything of unique or special value by reason of such an order. Requiring QDDC to sign the DMA (when finalised) would not prolong Chelsfield’s involvement in the development, and it is that involvement which might legitimately reflect well on Chelsfield’s reputation. In the real world, the existence of a signed contract which is not going to be performed would have no beneficial impact on that reputation. Further, any public claim by Chelsfield that it still had a connection to the development by reason of a signed contract alone would be potentially misleading and, more likely than not, would lead to a public relations war which would be destructive and of no lasting benefit to anyone.

[118]I accept that, in one sense, it is premature to consider whether the court would order specific performance of the DMA, not least because Chelsfield might decide to seek damages under it rather than an order for specific performance. However, I am not persuaded that getting QDDC to sign the DMA will help Chelsfield on the damages front either: this is where all the arguments about the Expert’s remit, and whether, if he is asked to determine a DMA beyond his remit the terms of it will be tainted, come in again.

[119]Nor am I attracted to the notion that issues about the proper extent of the Expert’s remit should be dealt with not by refusing an order for specific performance but by giving QDDC liberty to apply if the Expert decides any of the issues in question against QDDC and it then seeks to contend that in doing so he decided that issue contrary to the terms of the DFA and in a manner which exceeded his remit. I have some sympathy with Chelsfield in respect of the way in which the defence to its claims has unfolded. However, this is an application for summary judgment. The summary judgment jurisdiction is designed to enable issues to be determined summarily in appropriate cases; it should not be converted into a regime of making orders subject to liberty to apply, which is likely to complicate matters, run up costs, and take up the time of the parties and the court.

[120]I also do not consider that the decision of Megarry J in C H Giles & Co Ltd v Morris

[1972] 1 WLR 307

assists Chelsfield’s case. I accept the submissions made by Mr Choo-Choy that I have summarised at paragraph 114, and especially 114(4)-(6), above.

[121]For these reasons, if I had decided the third issue in favour of Chelsfield, I would nevertheless have held that(a) QDDC has arguments that have a real prospect of success to the effect that when it is finalised the DMA may contain terms to which it has legitimate objections,

(b) although understandable in light of QDDC’s changing defence arguments, Chelsfield’s suggested answer to that problem, namely that the order sought should be made subject to granting QDDC liberty to apply, is not in keeping with the principles which underpin the present application for summary judgment,

(d) no purpose would be served by making an order requiring QDDC to sign the DMA once its terms have been determined such as would justify the making of such an order. Accordingly, I would have declined to grant summary judgment to Chelsfield on the fourth issue.

Conclusion

[122]In summary, Chelsfield succeeds in its application for summary judgment in respect of its claim for a declaration that the DFA remains in existence and has not been determined, but Chelsfield fails in its application for summary judgment in respect of its claims for orders requiring QDDC(a) to instruct the Expert to complete his determination of the terms of the DMA and

(b) to execute the DMA once the Expert has determined its terms.

[123]In these circumstances, the sensible course may be for the outstanding issues in the present claim to be consolidated with, or tried together with, the Advance Planning Payment Claim. In addition, bearing in mind that both sides have succeeded in part on the present application, that there is some connection between the issues in the Advance Planning Claim and the remaining issues in the present claim, and that the overall winner may not emerge until after the trial of all those issues, it may be just and reasonable to order that the costs of the present application should follow the event in that trial. I emphasise, however, that I have not heard any submissions on these matters, and that I am not to be taken as making any rulings on them. If I am asked to do so, I will decide them on the basis of such further submissions as the parties may choose to make.

[124]I invite Counsel to agree a form of order. If and to the extent that they are unable to do so, I will resolve any points that remain outstanding on the basis of written submissions, unless the parties want to make oral submissions, which I will be prepared to hear.

Chelsfield Advisers LLP v Qatari Diar Real Estate Investment Company & Anor [2015] EWHC 1322 (Ch)

The parties

Background and outline of the dispute

The evidence

The issues

The principles applicable to applications for summary judgment

The DFA

(b) Discussion

Issue (2) – whether there was a breakdown of trust and confidence in fact

(a) Parties’ submissions

(b) Discussion

Conclusion

Cited in 2 later judgments