Persimmon appeals in remedial works dispute

Persimmon is appealing a High Court ruling that it cannot recover the costs that it incurred in carrying out remedial works on a site that it had purchased for a Hampshire housing development. Rix, Wall and Aikens LJJ are considering the housebuilder’s appeal against the decision of High Court judge Coulson J, in October 2008, that Persimmon could recover only the “notional” cost of a limited number of specified items. In 1999, cement producer Cemex agreed to sell a development site, known as Cherque Farm, Lee-on-the-Solent, in Hampshire to Persimmon for £29.8m. The agreement required Cemex to carry out certain ground restoration works at its own expense. The site was a disused quarry and the works were to be undertaken by Cemex, to Persimmon’s “reasonable requirements”, to enable the housing development to be go ahead. However, Persimmon carried out the works and tried to reclaim the cost from Cemex. Persimmon identified 28 claim items thatit maintained either triggered a price adjustment mechanism so as to decrease the purchase price or entitled it to a cash payment from Cemex. It applied to the Technology and Construction Court for declarations to that effect. Cemex resisted Persimmon’s claim and Coulson J ruled that having regard to all the circumstances and the terms of the sale agreement and in accordance with commercial reality, Persimmon was entitled only to declarations sought in respect of a limited number of specified items. Responding to Persimmon’s appeal against that determination, Cemex’s barrister Thomas Keith said that the judge had not only given “proper effect to the wording of those agreements in their context but had also made commercial sense of them. “They were commercial contracts and the learned judge rightly construed them in a businesslike fashion.” The three-day appeal hearing continues.