The Manchester Ship Canal Company Ltd v The Environment Agency [2017] EWHC 1340 (QB)

[2017] EWHC 1340 (QB)Case No D40MA035
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Venue MANCHESTER DISTRICT REGISTRY
MERCANTILE COURT
Venue Manchester Civil Justice Centre, 1 Bridge street West Manchester M60 9DJDate 7/06/2017
Before
HHJ MOULDER
Between
THE MANCHESTER SHIP CANAL COMPANY LIMITEDClaimantTHE ENVIRONMENT AGENCYDefendant
MS LESLEY ANDERSON QC (instructed by Brabners) for ClaimantMR CHARLES BANNER for DefendantHearing Hearing dates: 30 May 2017
Judgment ApprovedHHJ Moulder :Introduction
[1]This is the judgment on the defendant’s application dated 21 April 2017 to strike out the claim pursuant to CPR 3(2)(a) on the grounds that it discloses no reasonable grounds for bringing the claim and/or for summary judgment pursuant to CPR 24.2 on the ground that the claimant has no reasonable prospect of succeeding on the claim and there is no other compelling reason why the case should be disposed of at trial.[2]The application is supported by a witness statement of Mr Nicholas Hayden dated 18 April 2017 and of Mr Ian Hale dated 19 April 2017.[3]The claim is brought by the claimant which owns and operates the Manchester Ship Canal. The defendant is the Environment Agency, a non-governmental body with responsibility for flood defence. The claimant seeks a declaration that the defendant is liable to compensate the claimant under the terms of an agreement dated 15 November 1963 (the “Agreement”) and made between the claimant and the Mersey River Board (the “Board”). The claimant brings the claim in respect of two incidents of flooding which occurred in June 2012 and December 2015 and which the claimant says caused the rates of flow from the River Irwell to the Manchester Ship Canal to increase significantly.[4]The defendant is the statutory successor to the Board. It denies that it is liable to pay compensation pursuant to the Agreement.[5]For the purposes of this application, the defendant has agreed to the claimant using two expert reports of Mr Andrew Tagg dated 2 March 2017 and 16 May 2017. The claimant has also filed two witness statements in response to the application: the witness statement of Mr Andrew Holloway dated 3 March 2017 and the witness statement of Mr Andrew Rogers dated 17 May 2017.

The Agreement

[6]The Agreement provides for the claimant’s consent to the proposed works to the River Irwell to be carried out by the Board and its agreement to the plans and specifications for such works. (Clause 1 and 2). The dispute arises out of clause 4 which provides: “4. If at any time after the Board have commenced to construct the improvement works the flow of water in the River [Irwell] at a site to be agreed between the Engineer of the Board andthe Engineer or determined by arbitration shall in the course of any flood in any one period of twenty-four hours be at the respective rates hereinafter mentioned the Board will pay to the Canal Company for and in respect of each such period compensation at the respective rates hereinafter mentioned that is to say:- Rate of flow of water. Payment. Exceeding 15,000 cubic feet per second but not exceeding 16,000 cubic feet per second. £1,600 0s. 0d. Exceeding 16,000 cubic feet per second but not exceeding 17,000 cubic feet per second. £3,200 0s. 0d. Exceeding 17,000 cubic feet per second but not exceeding 18,000 cubic feet per second ” £4,800 0s. 0d. [emphasis added]

Submissions

[7]The claimant submits that the defendant’s application should fail for the following reasons: i) it is open to the court to infer on the facts that an agreement was in fact reached, as contemplated by clause 4, between the Engineer of the Board and the Engineer for the claimant; ii) the court can construe the Agreement to mean that it is open to the Engineers to agree the site retrospectively; iii) the requirement for agreement/arbitration can be regarded as a non-essential part of the machinery and the court can substitute its own decision: Sudbrook Trading Estate Ltd v Eggleton [1983] 1 AC 444; iv). the site could be determined by arbitration retrospectively. Was an agreement in fact reached in relation to the site?[8]Counsel for the claimant submits that it is open to the court on the facts to infer that an agreement was in fact reached between the Engineer of the Board and the claimant and this is the most obvious reason why no record exists of such an agreement. The claimant accepts that Mr Hale at paragraph 5 of his witness statement states that “no record appears to exist of any agreement being reached as to the gauging site pursuant to clause 4” but suggests that it is noteworthy that he does not deny that any agreement was made. The claimant submits that it is common ground that the Environment Agency has measured the flows from two sites, the Manchester Racecourse site since 1941 and the Adelphi Weir site since 1935 and submits that it was in both parties’ interests for an agreement to be reached as to the relevant site or sites. Further the claimant relies on clause 7 which reads as follows:
“7. For the purpose of ascertaining the rate of flow of the water in the River [Irwell] at the site agreed or determined in accordance with Clause 4 hereof the Board shall at their own expense contemporaneously with the commencement of the improvement works construct and at all times thereafter maintain in thorough working order to the satisfaction of the [Chief] Engineer [for the time being of the Canal Company] such gauges as shall well and sufficiently record the rate of flow of the water in the river at the said site and the [Chief] Engineer [for the time being of the Canal Company] and all persons authorised by him shall be at liberty at all reasonable hours to inspect and check the said gauges. ”
[9]The claimant submits that clause 7 places the onus on the Board to construct the gauges and record the rate of flow and since it has adduced no evidence to suggest that it did so, the obvious inference is that this is because the Board was happy with the existing sites and counsel for the claimant referred to the second report of Mr Tagg at paragraph 6 who confirms that as far as he is aware there are no other data sources that could be used. Counsel for the claimant therefore submits that the inference is that the Board agreed that it should be Adelphi Weir and/or Manchester Racecourse.[10]For the defendant, counsel submitted that the claimant has not pleaded that an agreement was reached: at paragraph 28 of the “Details of Claim” the claimant notes that the defendant’s position is that there has been no agreement as to the location of the site. The claimant does not assert that there was an agreement but rather that the defendant is liable to compensate the claimant and, inter alia, at subparagraph (iii) pleads:
“the absence of evidence of agreement does not render the agreement as of no effect.”
[11]Counsel for the defendant further submits that even if it were pleaded that an agreement had been reached, there is no real prospect of success as there is no evidence of such agreement and had such an agreement being reached the parties would have had records.

Discussion

[12]I accept the defendant’s submission that its application for strikeout/summary judgment should be considered on the basis of the pleaded case and accordingly it is not open to the claimant to assert that an agreement was reached. Accordingly the claimant fails on this issue to show a real prospect of success on the claim.[13]Even if the issue had been pleaded or an application to amend the pleadings made, it seems to me that there is no real prospect of success on this issue. i) It would appear that the records of the parties have already been checked (paragraph 5 of Mr Hale’s witness statement expressly states that the Environment Agency holds no such record) and have not disclosed an agreement. (Neither the Details of Claim nor Mr Andrew Holloway’s witness statement on behalf of the claimant, dated 3 March 2017 makes any assertion to the contrary). ii) I do not accept that the existence of the two sites at Manchester Racecourse and Adelphi Weir from which measurements have been taken, leads to an inference that the parties agreed that those sites would be used instead of agreeing a new site at which gauges would be constructed. Other than the report of Mr Tagg, there is no evidence before the court to support the submission that the parties agreed that it was not necessary for the Board to construct new gauges as required by clause 7 on the basis that they were happy with the existing sites. Mr Tagg in his second report (paragraphs 5 and 6) suggests that the use of the existing gauges would seem to be a “pragmatic and sensible decision” and that it was “entirely reasonable” that the Company Engineer would have been happy to use either or both gauges. However it seems to me that, as noted by Mr Hale in his witness statement, both the Manchester Racecourse and Adelphi Weir sites were used for river gauging prior to the Agreement. As these sites were in existence, the Agreement could have identified one of them as the relevant site for the purposes of gauging the flows and calculating compensation pursuant to clause 4 had that been the parties’ intention. It did not do so. Instead clause 4 provided for a measuring location to be agreed or determined and clause 7 expressly provides for the construction of gauges at that agreed or determined location. Accordingly whilst Mr Tagg draws conclusions as to what would be reasonable, this is insufficient in my view to establish an inference that an agreement was reached to this effect and the wording of clause 7 requiring the Board to construct new gauges leads to a contrary inference in my view. iii) Mr Tagg’s suggestion in his second report, that the lack of a formal agreement may be because such agreement was “self-evident” to the parties at the time and thus only recorded in meeting minutes or other less formal document (paragraph 6 of his report) is in my view pure speculation and does not appear to be based on any evidence nor in my view is it within the scope of his professional opinion as a civil engineer and a professional in the water environment. I note that no argument was advanced or other evidence adduced that disclosure might reveal any such informal agreement.

Conclusion

[14]I do not accept that the absence of evidence of any agreement leads to an inference that the Board was happy with the existing sites and in effect had decided to dispense with the identification of a new site and the construction of gauges. There may be many reasons why the Agreement has not been performed in accordance with its terms and the evidence before the court does not lead to an inference that an agreement had been reached.[15]In order to defeat the application the claimant has to show a case which is better than merely arguable. In my view for the reasons set out above any claim (assuming an amendment to the current pleadings) based on an alleged agreement would have no real prospect of success. As a matter of construction of the Agreement is it open to the parties to agree the siteretrospectively?[16]Counsel for the claimant submitted that there was nothing in clause 4 which prevented the agreement as to the site from being retrospective and that the court should imply a term that the parties should cooperate to ensure the performance of their bargain.[17]Counsel for the defendant submitted that even if it were possible to construe clause 4 as allowing for an agreement or arbitration at this point in time, it would be a process to inform going forward and would not allow for a retrospective calculation. Counsel submitted that the sequence of events is prescribed by the Agreement: firstly there is an agreement as to the site (or a determination by the arbitrator); secondly an installation of the gauges in accordance with clause 7; thirdly a requirement for readings to be taken and recorded pursuant to clause 8; finally if the flows exceed the rate specified in clause 4 the provisions for payment apply. Counsel submitted that clause 4 was inextricably linked with clause 7. Counsel for the defendant submitted that the location and nature of the gauges are critical. He referred to the witness statement of Mr Hale and the need for bespoke gauges. Mr Hale’s evidence is that the flow information from the Adelphi Weir site is considered unreliable.[18]Counsel for the claimant submitted that it was artificial to describe this as a necessary sequence of events. Counsel submitted that the purpose of clauses 4 – 8 was to give effect to the compensation provisions in the Agreement which counsel described as a quid pro quo for the claimant consenting to the works taking place.

Discussion

[19]The court’s task in construing the contract is to “ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on a parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning” Wood v Capita Insurance Services Ltd [2017] UKSC 24 Lord Hodge JSC at paragraph [10].[20]Counsel for the claimant stressed that the purpose of the Agreement (as set out in the Recitals) was to allow the Board to carry out works to the River Irwell and as the works would increase the velocity of the flow of water causing additional siltation and increasing the cost of the dredging, the Agreement provided for the claimant to give its consent in return for payments by the Board in satisfaction of claims which the claimant might otherwise be entitled to bring against the Board for compensation in respect of any increase in the dredging costs caused by reason of the construction of the improvement works (clause 6).[21]There are two issues of construction: firstly the point in time at which the agreement as to the site has to be made and secondly whether that agreement can have retrospective effect. As to the point in time at which the agreement is made pursuant to clause 4, clause 4 on a natural reading would suggest that the site could be agreed at any time as the words of the clause read:
“if at any time after the Board have commenced to construct the improvement works the flow of water in the River at a site to be agreed… shall… be at the respective rates hereinafter mentioned the Board will pay… compensation…”
[22]However clause 7 states that:
“…the Board shall at their own expense contemporaneouslywith the commencement of the improvement works construct and at all times thereafter maintain… gauges as shall well and sufficiently record the rate of flow of the water in the river at the said site...”
[emphasis added] Thus the clear wording of clause 7 provides for the gauges to be constructed “contemporaneously with the commencement of the improvement works” and in order for this to occur, I infer that any agreement under clause 4 would therefore have to be reached at the outset of the improvement works.[23]Applying the principles of construction laid down in Wood, the suggested meanings of clause 4 have to be checked against the provisions of the contract and its commercial consequences investigated. Taking clause 4 in the context of clauses 7 and 8, it is clear that the objective meaning of the language is that there was a sequence of events: and the new gauges were to be constructed contemporaneously with the commencement of the works and not at any point subsequent to that. This is entirely consistent with the commercial purpose of the Agreement which was to ensure that the claimant would be compensated for any additional costs which it incurred following the improvement works carried out by the Board. To interpret clause 4 as meaning that an agreement could be reached at any point in the life of the Agreement would require the court to disregard the word “contemporaneously” in clause 7 and in my view there is no basis for such an approach given that the wording of clause 7 is plain and the conclusion, that the agreement was to be reached at the outset of the works, is consistent with business common sense.[24]Since the language of the clauses is in my view clear that the agreement was to be reached at the outset, the question of whether a subsequent agreement could have retrospective effect does not apply. It seems to me however that were a subsequent agreement permitted as a matter of construction, the intention of the parties as expressed in the language of clause 4, 7 and 8, was that the site would be agreed, gauges would then be installed and measurements taken. It would in effect be to rewrite the agreement and not to construe the existing contract, if the court were to find not only that the agreement could be reached after the commencement of the works but that any calculation of compensation could be based on data provided retrospectively.[25]In the course of oral submissions, counsel for the claimant submitted that the court could interpret clause 4 as a right for the claimant to designate a site which therefore the claimant could waive and which would allow the parties to use the existing data retrospectively. Counsel submitted that the purpose of the Agreement is to ensure that there is reliable data from which to calculate compensation and the calculation of compensation could therefore be done retrospectively or if necessary by an arbitrator. I do not accept the submission that clause 4 should be interpreted as a right which the claimant can waive. Clause 4 clearly provides a mechanism for the flow of water to be measured and for compensation to be calculated. The provision is not expressed as an option for the benefit of the claimant and it would seem to me to be wholly artificial to interpret clause 4 such that the claimant could waive that part of clause 4 which refers to the requirement to agree a site but still retain the benefit of the payment provisions in clause 4. The claimant would be seeking to waive the requirement for an agreement as to the site and the construction of the new gauges but to maintain the agreement for the payment of compensation. Even were I to accept a purposive construction to the Agreement (on the basis that it is part of a statutory enactment), I do not think this would entitle the court effectively to rewrite clause 4 in the manner which the claimant contends.[26]Accordingly for the reasons stated above in this section, in my view there is no reasonable prospect of the claimant succeeding on this issue.

The requirement for agreement/arbitration can be regarded as a non-essential part of themachinery

[27]Counsel for the claimant submitted that the court should construe the Agreement to mean that the agreement as to the site is not fatal to the operation of the clause and should rule that either the Adelphi Weir site or the Manchester Racecourse site should be used. Counsel submitted that the requirement for an agreement or arbitration should be regarded as a “non-essential part” of the machinery and the court should substitute its own decision. Counsel relies on the decision of the House of Lords in Sudbrook. Counsel accepted that this was not a “price” case but submitted that the question is whether there is a way of carrying out a measurement to give effect to the purpose of the contract and submitted that the data exists.[28]Counsel for the defendant submitted in summary that: the decision in Sudbrook was in the context of a situation of deadlock; clause 9 of the Agreement provided for the arbitrator to be appointed by the President of the Institution of Civil Engineers which indicates that the identification of the site needs to be by an engineer and not a lawyer; the claimant seeks to rely on the data from Adelphi Weir rather than the site at Manchester Racecourse but Mr Hale in his witness statement states that the Adelphi site is “unreliable at high flows”. Counsel submitted that clauses 1 to 3 of the Agreement are separate from clauses 4 to 8 and that the Agreement would still be operative even if compensation was not payable under the Agreement as a result of the failure to agree a site.[29]The claimant submits that clauses 1 to 3 granting consent cannot be viewed as separate from clauses 4 to 8 and refers to the wording of clause 1 that consent to the construction of the improvement works is expressed to be “upon the terms and conditions hereinafter contained”. Counsel submits that the main purpose is that the Board were procuring valuable consent and the court should give effect to the quid pro quo of compensation. It could not have been intended that the contract should be interpreted to allow the Board to have consent to proceed with the works but without the claimant receiving compensation, especially if the construction of the Agreement is held to be that there was only one opportunity to agree the site and activate the compensation mechanism. Counsel for the claimant submitted that “but for” the consent of the claimant, the Board could not have done the works and having given its consent, the claimant is entitled to compensation.

Discussion

[30]The decision of the House of Lords in the Sudbrook case related to a clause in a lease whereby the lessees were granted an option to purchase the reversion at a price “no being less than £12,000 as may be agreed upon by two valuers one to be nominated by the lessor and the other by the lessee and in default of such agreement by an umpire appointed by the… valuers.” The lessors refused to appoint a valuer and on the appeal the House of Lords held that on its true construction, the agreement was for sale at a fair and reasonable price and once the options had been exercised, the price was to be ascertained by machinery which was a subsidiary and non-essential part of the contract and the court would, if the machinery broke down for any reason substitute its own machinery, to ascertain a fair and reasonable price.[31]Lord Diplock said at [479]:
“Why should the presence in the option clause of a convenient and sensible machinery for ascertaining what is a fair and reasonable price; which the lessors, in breach of their contractual duty, prevent from operating, deprive the lessees of the only remedy which would result in justice being done to them? It may be that where upon the true construction of the contract the price to be paid is not to be a fair and reasonable one assessed by applying objective standards used by valuers in the exercise of their professional task but a price fixed by a named individual applying such subjective standards as he personally thinks fit, and that individual, without being instigated by either party to the contract of sale, refuses to fix the price or is unable through death or disability to do so, the contract of sale is thereupon determined by frustration. But such is not the present case. In the first place the contract upon its true construction is in my view a contract for sale at a fair and reasonable price assessed by applying objective standards. In the second place the only thing that has prevented the machinery provided by the option clause for ascertaining the fair and reasonable price from operating is the lessors' own breach of contract in refusing to appoint their valuer. So if the synallagmatic contract created by the exercise of the option were allowed to be treated by the lessors as frustrated the frustration would be self-induced, a circumstance which English law does not allow a party to a contract to rely on to his own advantage. So I see no reason why, because they have broken one contractual obligation the lessors should not be ordered by the court to perform another contractual obligation on their part namely to convey the fee simple in the premises to the lessees against payment of a fair and reasonable price assessed by applying the objective standards to which I have referred.”
[32]Lord Fraser expressed his reasoning on this point as follows [483 – 4]:
“I recognise the logic of the reasoning which has led to the courts' refusing to substitute their own machinery for the machinery which has been agreed upon by the parties. But the result to which it leads is so remote from that which parties normally intend and expect, and is so inconvenient in practice, that there must in my opinion be some defect in the reasoning. I think the defect lies in construing the provisions for the mode of ascertaining the value as an essential part of the agreement. That may have been perfectly true early in the 19th century, when the valuer's profession and the rules of valuation were less well established than they are now. But at the present day these provisions are only subsidiary to the main purpose of the agreement which is for sale and purchase of the property at a fair or reasonable value. In the ordinary case parties do not make any substantial distinction between an agreement to sell at a fair value, without specifying the mode of ascertaining the value, and an agreement to sell at a value to be ascertained by valuers appointed in the way provided in these leases. The true distinction is between those cases where the mode of ascertaining the price is an essential term of the contract, and those cases where the mode of ascertainment, though indicated in the contract, is subsidiary and non-essential: see Fry on Specific Performance, 6th ed. (1921), pp. 167, 169, paragraphs 360, 364. The present case falls, in my opinion, into the latter category. Accordingly when the option was exercised there was constituted a complete contract for sale, and the clause should be construed as meaning that the price was to be a fair price. On the other hand where an agreement is made to sell at a price to be fixed by a valuer who is named, or who, by reason of holding some office such as auditor of a company whose shares are to be valued, will have special knowledge relevant to the question of value, the prescribed mode may well be regarded as essential. Where, as here, the machinery consists of valuers and an umpire, none of whom is named or identified, it is in my opinion unrealistic to regard it as an essential term. If it breaks down there is no reason why the court should not substitute other machinery to carry out the main purpose of ascertaining the price in order that the agreement may be carried out. In the present case the machinery provided for in the clause has broken down because the respondents have declined to appoint their valuer. In that sense the breakdown has been caused by their fault, in failing to implement an implied obligation to co-operate in making the machinery work. The case might be distinguishable in that respect from cases where the breakdown has occurred for some cause outside the control of either party, such as the death of an umpire, or his failure to complete the valuation by a stipulated date. But I do not rely on any such distinction. I prefer to rest my decision on the general principle that, where the machinery is not essential, if it breaks down for any reason the court will substitute its own machinery.”
[33]Counsel for the claimant also relied on the decision of the Court of Appeal in Herbert v Doyle [2010] EWCA Civ 1095 for the proposition that the court could substitute its own machinery where the contract had failed. That case concerned an agreement between the claimant, Mr Herbert, and his neighbours, the defendants Mr Doyle and Mr Talati. Mr Herbert wished to redevelop part of his property and reached an agreement with his neighbours concerning the proposed development. One of the issues before the court was in relation to parking spaces where it was alleged the parties had not agreed which parking spaces would be exchanged and that it was not open to the judge to select the parking space. The decision of Arden LJ on this point is set out at paragraphs 70- 72 as follows:
“70 As to the ninth parking space, while the parties' agreement is silent on the point, it would appear by implication that the ninth parking space was to be identified by Mr Herbert. He failed to do this and the judge took the view that the court was entitled to identify that place. He did so in terms that would allow Mr Herbert the option of substituting another parking space of proper dimensions. The judge does not, however, identify in paragraph 48 of judgment (3) or elsewhere the basis on which he considered that the court had jurisdiction to make the selection which Mr Herbert had failed to make. In my judgment, there was a leap in the judge's reasoning at this point. This court must therefore be satisfied that his conclusion was correct in law. 71 My analysis of the legal situation is as follows. The relevant question is whether, subject to section 2 of the 1989 Act, there was a valid contract. In my judgment, the failure of Mr Herbert to make a selection of the ninth parking space did not in the circumstances of this case mean that there was no valid contract in this sense. The parties agreed by implication that Mr Herbert would choose which parking space would be transferred to the respondents as the ninth parking space, but that was not the limit of the implication to be made. By necessary implication also, the choice had to be made in a reasonable time. 72 If Mr Herbert failed to make the choice, the question arises whether there is by necessary implication a further term that the ninth parking space is such space as the court shall determine to be that intended by the parties to be selected in order to make their agreement fully effective. (I need not consider whether the respondents were entitled to take any steps themselves in this regard as they have not asserted any such right). In my judgment, that question must be answered affirmatively. There is nothing to suggest that the agreement of April 2003 should only take effect if Mr Herbert took the step of identifying the ninth space. That would have given him a unilateral right of veto. The agreement of April 2003 would have been unworkable in practice if the court could not step in to make the limited choice between the remaining parking spaces so as to identify the ninth space.”
[34]I reject the submission of counsel for the defendant that clauses 4 – 8 should be regarded as separate from clauses 1-3 and accept the characterisation of the Agreement as one in which the claimant was to be compensated for the consequences of the works and the consent which it gives in the Agreement to such works. Accordingly I accept the submission that the mechanism for calculating the compensation could be said to be subsidiary to the purpose of the Agreement insofar as it was intended to compensate the claimant for the resulting increased costs caused by the construction work.[35]However I find that in the circumstances of this case both as a matter of law and on the facts, the court is not able to determine the mechanism for calculating the compensation in the absence of an agreement in accordance with clause 4. i) It seems to me that the case of Sudbrook and the other valuation cases are very different in that the court’s conclusion was on the basis that the valuation provisions could be regarded as non-essential because the fair or reasonable value of the property could be ascertained even if the mechanism in the contract failed. So in Sudbrook the court held there was no distinction in practice between an agreement to sell at a fair value without specifying the mode of ascertaining the value, and an agreement to sell at a value to be ascertained by valuers appointed in accordance with the agreement. However in the present case the court is being asked to ascertain the data sources to be used and it is not clear on the facts how such data sources should be identified. In my view the present case is closer to the example given by Lord Fraser where an agreement is made to sell at a price to be fixed by a valuer who is named, or who, by reason of holding some office such as auditor of a company whose shares are to be valued, will have special knowledge relevant to the question of value, where he expressed the view that the prescribed mode may well be regarded as essential. To that extent I accept the submission that the Agreement contemplated that the location of the site would be determined by civil engineers rather than lawyers: the reference in clause 4 is to an agreement being reached between the Engineer of the Board and the Chief Engineer of the Canal Company and as noted above, the Agreement provides that in default of agreement as to the arbitrator, the arbitrator shall be appointed by the President of the Institution of Civil Engineers. This is a decision which is required to be made by those who have an understanding of the issues which would inform a decision as to the location of the site. ii) Although I accept the similarities with the decision of the Court of Appeal in Herbert, where the agreement would have been unworkable in practice if the court could not step in to make the limited choice between the remaining parking spaces so as to identify the ninth space, the significant difference is that in that case, if the court had not intervened to identify the parking space, that would have given Mr Herbert a unilateral right of veto. Counsel for the defendant submitted that the present situation is not one of deadlock and therefore should be distinguished. I accept that submission. In the circumstances of the present case, neither party would appear to be at fault in the sense of being in breach of its obligations under the Agreement; the mechanism existed so the Agreement cannot be said to be unworkable in my view but for whatever reason has not been activated. iii) Even if the court were minded to intervene in order to ensure that compensation could be claimed by the claimant in accordance with the stated purpose of the Agreement, there is no clarity or certainty as to which site the court would designate on the evidence before it. The details of claim (paragraph 30) asserts that the relevant measuring point is the Adelphi Weir and gives as the reasons the fact that the Adelphi Weir is “long-established” and there is “no alternative nor more suitable measurement site” on the river. However this is a site which existed at the time of entering into the Agreement and which the parties did not choose to designate when they entered into the Agreement which might lead to an inference that the parties did not wish to designate it. Further Mr Tagg in his second report (paragraphs 7 to 9) accepts that Adelphi Weir “may not be as accurate for high flows” but notes that there is a “very strong correlation between the flow rates at the two gauges” and recommends the use of a “computational hydraulic modelling” to explain the discrepancy noted in the flows concluding that such modelling “may show” that the Adelphi Weir “may be suitable” for determining the payments. In the alternative he expresses the view that he sees “no reason why the Manchester racecourse gauge cannot be used as the basis for settling the costs”. The evidence of Mr Tagg supports a finding that the location of the gauges cannot be certain such that the court (were there a legal basis for so doing) can identify the site.

Conclusion

[36]Accordingly I do not accept that the express requirement clearly stated in clause 4 that the site should be agreed between the parties failing which it will be determined by an arbitrator can be regarded in the circumstances as a non-essential term. Further the factual circumstances distinguish it from the authorities where one party is refusing to engage in the negotiations or is otherwise in default of its obligations under the Agreement. The location of the site cannot be determined by the court. In my view for the reasons set out above the claimant has no real prospect of succeeding in its claim on this basis.

The site could be determined by arbitration retrospectively

[37]Counsel for the claimant accepted that the present circumstances are not a valuation case but submitted that there is a way of carrying out the measurement because the data exists. Counsel submitted that the mechanism for identifying the source data is not essential and if the court will not identify the appropriate data source, the identification of the gauges could be determined by an arbitrator.[38]Counsel for the defendant submitted that the court cannot override the express terms of the agreement on the basis of a generic submission of what would be fair.[39]The claimant submits that the matter could be referred to arbitration but where the parties have entered into a contract which is clear on its face it seems to me on the authorities that the task of the court is to ascertain the objective meaning of the language of the contract and not to seek to improve or change the bargain by imposing an alternative solution for a scenario which was not in the contemplation of the parties at the time they entered into the Agreement. Accordingly in my view the claimant does not have a real prospect of succeeding on the claim on this basis.

Conclusion on the defendant’s application

[40]The defendant’s application for strikeout/summary judgment gave rise to points of law and construction on which I am satisfied I have had both the necessary evidence for a proper determination and which the parties have had an adequate opportunity to address in argument and which therefore does not require a full trial. The issue of fact advanced was a straightforward one which was not pleaded and in the circumstances of this case, was appropriate to deal with on a summary basis and does not of itself necessitate a further hearing. For the reasons set out in this judgment, the claimant has no real prospect of succeeding on the claim and the defendant is entitled to summary judgment.

Cited in 1 later judgment