By Will Cousins, Martin McKeague

Common cause of development dispute

In recent years contractual interpretation (in particular the question as to whether a strict, literal approach to interpreting contractual language, or a more purposive/commercial common sense approach is to be preferred) has prompted several high profile disputes. In recent months there has been a flurry of development disputes, with a number involving the interpretation and operation of overage agreements.

In a developer/housebuilder market that is presently strong, many clients have the funds and appetite to renegotiate or litigate options, conditional contracts, promotion agreements and the like.  The desire to ‘make hay’ while the going is good, progressing as many developments as possible, also involves actively pursuing claims where commercially justifiable.  The longevity of many development agreements and JV arrangements can give rise to disputes, particularly if circumstances and market conditions change.  In the case of, London & Ilford Ltd v Sovereign Property Holdings Ltd, the Court of Appeal has again considered the approach to contractual interpretation.