Jersey Unreported Judgments

Contract - need for certainty in agreements before they become legally enforceable contracts - application to strike out amended Order of Justice by Second Defendant.

[2014]JRC092

Royal Court

(Samedi)

9 April 2014

Before     :

Sir Michael Birt, Kt., Bailiff, sitting alone.

 

Advocate K. Purkis for the Plaintiffs.

H. Sharp QC, Her Majesty's Solicitor General for the Second Defendant.

judgment

the bailiff:

1.        This is an application by the second defendant ("the Minister") to strike out the amended order of justice in so far as it claims against the Minister. The application raises issues relating to the need for sufficient certainty in agreements before they can become legally enforceable contracts.

2.        The Minister's summons states simply that it relies on RCR 6/13 and/or the inherent jurisdiction of the Court. However, no evidence has been adduced by either side and the essence of the Minister's case is that the agreement upon which the plaintiffs rely amounted to no more than an agreement to negotiate and that this is not something capable of giving rise to legally enforceable rights as a contract.

3.        I therefore regard the Minister's application as being brought under Rule 6/13(a), namely that there is no reasonable cause of action. In such cases no evidence is permissible and the facts alleged in the pleading under attack must be taken as correct.  I therefore proceed on that basis and the factual background described in the following section is based upon the amended order of justice notwithstanding that the matters pleaded are of course merely allegations at this stage.

Factual background

4.        The first defendant, formerly known as Waterfront Enterprise Board Limited (to which I shall refer as WEB), was established with the objective of promoting, co-ordinating and implementing a comprehensive strategy for the St Helier waterfront area ("the Waterfront"). The second to fifth plaintiffs are subsidiaries of the first plaintiff ("Harcourt") which is a property development company incorporated in the Republic of Ireland.

5.        In September 2004 WEB announced the initiation of a tender process and wrote to Harcourt amongst others to enquire whether Harcourt wished to express an interest in establishing a "long term development partnership" with WEB for the development of an area of land situated at the Waterfront and known as Esplanade Square ("The Esplanade Square Site"). The order of justice then sets out the subsequent history of the matter, but for today's purposes it is sufficient to say that, following this process, WEB selected Harcourt as its preferred development partner for the Esplanade Square Site and heads of terms were signed on 10^th October, 2006.

6.        At about the same time, various discussions were taking place concerning an adjacent area of land know as Les Jardins site.  Following a review by Hopkins, a firm of architects, WEB decided that, subject to the principle of the Hopkins proposal being approved by the States and formally adopted by the Minister of Planning and Environment as planning policy, the development of the Esplanade Square Site and Les Jardins site should proceed on the basis of the Hopkins proposal, which was that the two sites should be joined together by sinking the main road which divided them through an underground tunnel. The combined site subsequently became known as the Esplanade Quarter.

7.        In due course, on 19^th July, 2007, heads of terms ("the Heads of Terms") were signed by the first to fourth plaintiffs and WEB in relation to the Esplanade Quarter. 

8.        In order to appreciate the arguments in this case, it is necessary to set out the relevant provisions of the Heads of Terms. Paragraph 2.23 of the amended order of justice describes certain parts of the Heads of Terms but I propose to set these out in full as taken from the Heads of Terms themselves. In the events which have happened, references to 'the Developer' are references to the fifth plaintiff:-

"3. SUMMARY OF PRINCIPAL TERMS

3.1 These Heads of Terms set out in outline the contractual arrangements (which will involve an open book' approach between the Parties) intended to be entered into between WEB, Harcourt and the Developer in relation to the proposed development of the Property and other areas and associated works (the "Development").

3.2 It is envisaged that the contractual arrangements will be embodied in a development agreement (the "Development Agreement") to be entered into between [the parties] and such other parties as shall be appropriate together with such ancillary documents and contracts to be entered into or (as applicable) passed before the Royal Court of Jersey pursuant to the Development Agreement in order to give full effect to the arrangements contemplated thereby.

3.3 It is agreed that the Public will not be a party to the Development Agreement but any leases and other documents to which the Public is to be a party will be subject to approval by the Crown Officers, the appropriate Ministers of the States of Jersey and where applicable the States of Jersey itself. Various elements of the Development will also be subject to approval by appropriate Ministers of the States of Jersey and the States of Jersey itself. The Development Agreement will be conditional upon the obtaining of all such approvals. The Development Agreement will also require the approval of the Minister for Treasury & Resources.

3.4 By their execution of these Heads of Terms the Parties are hereby agreeing to act in good faith and with all due diligence with a view to seeking to agree the terms of the Development Agreement and the aforementioned ancillary documents and contracts and to enter into the Development Agreements within the timescale referred to in paragraph 6.2.

3.5 WEB shall use its reasonable endeavours to procure the agreement and co-operation of any party that is not a party to the Development Agreement (other than the States of Jersey and/or any Minister, department or office of the States of Jersey who WEB shall not be obliged to endeavour to procure to act in any manner) but whose co-operation and/or participation is required in relation to any ancillary documents, contracts or arrangements contemplated by the Development Agreement.

3.6 Where pursuant to these Heads of Terms or the Development Agreement or any other document contemplated by these Heads of Terms the consent, approval or agreement of WEB is required then, unless expressly stated otherwise, such consent, approval or agreement shall be required to be given in writing and shall not be unreasonably withheld or delayed by WEB.

3.7 Where pursuant to these Heads of Terms or the Development Agreement or any other document contemplated by these Heads of Terms the Developer is required to do something to the satisfaction of WEB or in accordance with WEB's requirements then, unless expressly stated otherwise, WEB shall act reasonably and expeditiously in respect of expressing its satisfaction or in stating its requirements.

3.8 In these Heads of Terms "Acceptable Terms" means terms which are acceptable to the Developer and WEB, both acting reasonably, such acceptability to be confirmed in writing by the Developer to WEB at WEB's request or by WEB to the Developer at the Developer's request, such confirmation not to be unreasonably withheld or delayed.

3.9 In these Heads of Terms, where a document is described to be in "Agreed Form" this means in a form to be agreed by the Developer and WEB, both acting reasonably, such agreements to be confirmed in writing by the Developer to WEB at WEB's request or by WEB to the Developer at the Developer's request, such confirmation not to be unreasonably withheld or delayed.

3.10 Where pursuant to these Heads of Terms or the Development Agreement or any other document contemplated by these Heads of Terms WEB is obliged to act reasonably, it shall, inter alia, be deemed to be reasonable for WEB to act in a manner which it considers to be in its best commercial interests or which it considers to be in the interests of the Public of the Island of Jersey.

3.11 Where pursuant to these Heads of Terms or the Development Agreement or any other document contemplated by these Heads of Terms the Developer is obliged to act reasonably, it shall, inter alia, be deemed to be reasonable for the Developer to act in a manner which it considers to be in the best commercial interests of Harcourt." [Emphasis added]

9.        Clause 4 of the Heads of Terms is headed "The Development Scheme" and clause 4.1 is in the following terms:-

"4.1 Subject to the requirements of the Minister for Planning and Environment of the States of Jersey (the "Minister for Planning"), the Development is to be undertaken in accordance with the development brief set out in Schedule 2 (the "Development Brief"). It is recognised that the Development Brief may be amended with the written approval of WEB and Harcourt."

10.      Paragraph 2.23(j) of the amended order of justice goes on to summarise the remaining provisions of clause 4 as follows:-

"(j) Under clauses 4.2 to 4.6 various details as to the content and scope of the Development were provided, including (but not limited to):

(i) The phasing of the Development, which (subject to any requirements of the Minister of Planning) could only be amended with the written approval of the parties;

(ii) The use of the Property;

(iii) The number of parking spaces to be constructed as part of the Development and rents payable therefor by WEB to the Plaintiffs;

(iv) An obligation on the Developer to construct certain roadways and an underpass as part of the Development which would be excluded from any Lease of the Property to the Developer; and

(v) The maximum proportion of the Development which could comprise residential units."

11.      Clause 5 of the Heads of Terms provided that, on discharge of the conditions precedent referred to in the Development Agreement, WEB was obliged to sub-let the whole Esplanade Quarter to the Developer or its wholly owned subsidiaries under one or more 'Property Leases'. Clause 5.3 provides as follows:-

"5.3 A summary of certain of the key provisions of the proposed forms of Property Leases is set out below. The summary is not intended to be exhaustive.

5.3.1 The annual rental payable thereunder will be £1.

5.3.2 Each Property Lease will contain standard tenant covenants but, in particular, the Lessee will be obliged to:

- pay and discharge all rates, taxes, charges and outgoings in respect of the relevant premises;

- repair, maintain, paint, clean etc. all parts of the relevant premises to a standard of good tenantable condition to WEB's satisfaction;

- insure the relevant premises;

- apply all insurance proceeds to reinstatement and make up any deficit;

- not assign or grant underleases without the consent of WEB; and

- yield up the relevant premises in a reasonable state of repair at the end of the term having regard to the age, type and use of the buildings thereon."

12.      Clause 6 of the Heads of Terms dealt with the timetable and the relevant provisions are as follows:-

"6.1 The Developer shall submit an application for outline planning permission to the Minister for Planning in Agreed Form not later than four (4) weeks following the granting of the approval of the States of Jersey to the principle of the Development ("States Approval").

6.2 The Parties shall complete the Development Agreement as soon as reasonably practicable but in any event by not later than 31^st December 2007 or, if later, four (4) months following the granting of States Approval.

6.3 The Development Agreement shall be able to be terminated by WEB in the event that practical completion of the Road System together with ancillary infrastructure and traffic works as envisaged in the Development Brief (including a gateway roundabout at West Park and reconstruction of Les Jardins de la Mer including landscaping and fountains) has not been achieved by the third anniversary of the Lease Date."

13.      Clause 7 of the Heads to Terms is headed "The Development Agreement" and clause 7.1 is in the following terms:-

"7.1 Pursuant to the Development Agreement, the Developer will agree at its cost to carry out the Development in accordance with these Heads of Terms and in accordance with the timetable referred to in paragraph 6. It is envisaged that the Development Agreement will be in an institutional form. A summary of certain of the key provisions of the proposed form of Development Agreement is set out below. The summary is not intended to be exhaustive."

14.      Some of these 'key provisions' were set out in the remainder of Clause 7.  Clause 7.4 provided:-

"7.4 The following will be included in the conditions precedent that need to be satisfied or waived in writing by the Developer or WEB (as the case may be) prior to the Developer being obliged or able to take a lease of the Property (in accordance with the provisions of paragraph 5) and commence the Development:

...

7.4.3 the Developer having entered into an agreement in respect of the funding of Phase 1 with a financial institution acceptable to WEB;

7.4.4 the Guarantee (as defined in paragraph 7.8) having been put in place;"

15.      Under clause 7.8, the Developer was required to procure the giving to WEB of a guarantee in respect of its obligations under the Development Agreement to make certain payments referred to thereunder totalling a maxim of £95M (the "Bond"). The date by which the Bond was to be provided was the date stipulated in clause 7.4, namely prior to the date on which the Property Lease was to be granted pursuant to Clause 5 of the Heads of Terms.

16.      Clause 8 of the Heads of Terms described the payments which were to be made by the Developer to WEB in consideration of the granting of the Property Lease(s). These totalled £50 million payable in three instalments, each instalment to be a certain period following the Lease Date (i.e. the date set out in the Development Agreement when the Esplanade Quarter would be let to the Developer pursuant to clause 5).

17.      Clause 9 of the Heads of Terms dealt with general matters and those which might be thought to be relevant are as follows:-

"9. GENERAL TERMS

9.1 Contracts are to be governed by Jersey law.

9.4 WEB shall be entitled to terminate these Heads of Terms without further obligation or liability in the event that there shall be any change in the ultimate ownership of the developer of Harcourt ...

9.5 In the event that the Development Agreement has not been entered into within four months following the grant of States Approval or prior to 30^th June 2008, WEB shall be entitled to terminate these Heads of Terms without further obligation or liability.

9.7 The entering into of these Heads of Terms shall terminate the provisions of all other agreements which are existing between the parties and/or the Previous Parties or any of them in respect of the Development, the Property, or any part thereof as at the date hereof (including the exclusivity agreement as extended and the confidentiality agreement entered into between WEB and the Previous Parties).

9.8 Each Party will be responsible for its own legal costs in connection with the preparation and negotiation of these Heads of Terms and all relevant contractual documentation."

18.      There is then an execution page which reads "In witness whereof these Heads of Terms have been entered into on the day and year first above written ...".

19.      The Heads of Terms were stated to be subject to the approval of the Minister but it has been accepted by WEB in its answer that the Minister did approve the Heads of Terms on or about 29^th October, 2007. 

20.      The plaintiffs set out their summary of what the effect of the Heads of Terms was at paragraph 2.24(A) - (E) of the amended order of justice as follows:-

"2.24A In the premises, and without prejudice to the final sentence of paragraph 2.23 above, by the July Heads of Terms the Plaintiffs and WEB agreed:

(a) The Plaintiffs would carry out the Development of the land at the Esplanade Quarter which WEB would lease to them and/or the Fifth Plaintiff, pursuant to the Property Lease/s;

(b) The Development would be carried out pursuant to the terms of a subsequent Development Agreement, Property Lease/s and any other necessary formal contract documents;

(c) The key terms of the Development to be included in the Development Agreement and Property Lease/s, which were set out inter alia at:

(i) clauses 4,6,7 and 8 of the July Heads of Terms, and in particular clause 7, which outlined and summarised, non-exhaustively, the key terms to be included in the Development Agreement including the conditions precedent to the grant of any Property Lease; and

(ii) clause 5 of the July Heads of Terms, which summarised, non-exhaustively, the key terms to be included in the Property Lease;

(d) The Plaintiffs would apply for outline planning permission for the Development;

(e) Various elements of the Developments were subject to approval by appropriate Ministers and/or the States of Jersey on which the Development Agreement was conditional. It is averred such agreement recognised the need for planning permission for ministerial input generally and/or further the statutory requirement on the Minister for Planning to consult Ministers affected by the planning proposal pursuant to articles 14 to 17 of the Planning and Building (Jersey) Law 2002;

(f) The Plaintiffs and WEB would negotiate the terms of the Development Agreement in good faith and with all due diligence to enter into it within the timescale provided in clause 6.2 of the July Heads of Terms.

2.24B It follows from the facts and matters pleaded at paragraph 2.24A above that:

(a) The content of such key terms as aforesaid was agreed:

(b) The wording or precise expression of such key terms might be subject to further negotiation between the Plaintiffs and WEB in good faith and with all due diligence pursuant to clause 3.4 of the July Heads of Terms;

(c) The key terms as aforesaid were not exclusive, and further terms and content could be added to the Development agreement, Property Lease/s and any other contract documentation, over and above the key terms agreed, subject to the same having been negotiated in good faith and with all due diligence pursuant to clause 3.4;

(d) It was expressly agreed and recognised at clause 4.1 that the Development Brief could be amended with the written approval WEB and the Plaintiffs.

2.24C For the avoidance of doubt:

(a) It is recognised that as a matter of law parties to a contract cannot bind themselves never to revisit the terms of their contract by fresh agreement varying, novating or supplanting the terms of their previous agreement; but

(b) Save only in respect of the Development Brief as agreed at clause 4.1 of the July Heads of Terms, any such renegotiation, variation, novation or supplanting of the key terms of the Development Agreement agreed in the July Heads of Terms was neither expressly nor impliedly envisaged by the July Heads of Terms; on the contrary, it was agreed that the key terms of the Development Agreement were agreed as aforesaid; however,

(c) It is possible though not agreed or envisaged by the Plaintiffs and WEB, that during any negotiations carried out in good faith and with all due diligence some amendment to the key terms previously agreed by them in the July Heads of Terms and approved by the Second Defendant might have been negotiated by them, in which case a novel term and/or departure from that previously approved by the Second Defendant would have been negotiated without reference to him.

2.24D In the premises, the purpose of the third limb of clause 3.3 in which the Plaintiffs and WEB agreed that the Development Agreement required the approval of the Second Defendant, was to provide the Second Defendant with an opportunity to review and approve any novel material in the Development Agreement not previously agreed between the Plaintiffs and WEB in the July Heads of Terms.

2.24E For the avoidance of doubt, under the July Heads of Terms whether at clause 3.3 or at all:

(a) The Plaintiffs and WEB did not agree to provide the Second Defendant with any prerogative or power to dictate, overrule or contradict the terms of any Development Agreement, irrespective of their agreement in the July Heads of Terms; these terms remained agreed by the Plaintiffs and WEB and approved by the Second Defendant, subject only to any further agreement arising from the negotiations in good faith and with all due diligence between the Plaintiff and WEB; and

(b) The plaintiffs and WEB did not agree that the First Defendant would be relieved of any obligation to negotiate further in good faith and/or with all due diligence, by reason of any direction, indication or other communication howsoever made of the Second Defendant's intentions in respect of giving or withholding his approval pursuant to clause 3.3 of the July Heads of Terms or otherwise. Were such approval to any matter/s to be withheld, or were any indications given that it would be withheld then they were then obliged to negotiate in good faith and with all due diligence to attempt to agree alternative provisions for the draft Development Agreement which might attract the approval required."

21.      The amended order of justice then goes on to spell out at paragraphs 3 and 4 what WEB's duty was under the Heads of Terms and how it had breached that duty as follows:-

"WEB's duties

3.1 The Plaintiffs aver that the effect of Clause 3.4 of the July Heads of Terms was to impose a binding contractual duty on the parties thereto to negotiate the terms of the Development Agreement in good faith and with all due diligence.

WEB's breaches of duty

4. In breach of the duty pleaded at paragraph 3.1 WEB did not negotiate the Terms of the Development Agreement in good faith and with all due diligence as pleaded at paragraphs 4.1 - 4.11 below."

22.      I would summarise what is then pleaded in paragraphs 4.1 - 4.11 as particulars of the breach of duty as follows:-

(i)        Delays in progressing the draft Development Agreement.

Under this heading it is pleaded that between the signing of the Heads of Terms on 19^th July, 2007 and September 2009 (when the negotiations between the parties broke down completely) there were long periods during which no progress was or could be made towards finalising the draft Development Agreement because of the failure and/or refusal of WEB's advocates to engage constructively with the plaintiffs' advocates in finalising the documentation and it is pleaded that these delays were attributable to instructions given to its advocates by WEB.

(ii)       Inclusion of provisions which did not reflect the July Heads of Terms.

Under this heading it is pleaded that some 20 months after WEB had signed the Heads of Terms and some 13 months after the provision of the first draft of the Development Agreement, WEB sought for the first time to include in the draft Development Agreement provisions which were either inconsistent with the key provisions of the Heads of Terms or were entirely new. Paragraph 4.4 of the amended order of justice sets these out in detail at paragraphs 4.4.1 - 4.4.9.  The latter refers to a requirement by WEB that the Bond should be provided prior to entering into the Development Agreement rather than after entering into the Development Agreement but prior to taking any of the leases. This was a complete change from what was contained in the Heads of Terms.

(iii)      The imposition of conditions with which no developer could conceivably have complied

WEB required written confirmation from a bank or insurance company that it would provide an irrevocable undertaking to provide the Bond if WEB was to continue negotiations. It is pleaded that it was impossible for any developer to comply with this at such an early stage. 

23.      Paragraph 4 of the amended order of justice goes on to plead that WEB's breach of contract was induced by the Minister and gives various particulars. It is not necessary to spell these out as this aspect is not relevant to this strike out application.

24.      Finally the amended order of justice goes on to plead that the plaintiffs have lost the opportunity to carry out the development and earn substantial profits from it. This is estimated at between £77 - £98 million.  That claim is brought against WEB on the grounds of breach of contract and against the Minister for the tort of inducing WEB to breach its contract.  A claim is also made against WEB alone for unjust enrichment, which seeks to recover just the expenditure of the plaintiffs incurred after the Heads of Terms but prior to the breakdown in negotiations in July 2009 when WEB gave Harcourt formal notification of termination of the Heads of Terms.

The test on a strike out

25.      It is important to recall the Court's role on a strike out application. It was conveniently summarised by Beloff JA in Trant-v-Attorney General and others [2007] JLR 231 at para 22:-

"The test on an application to strike out is well established. It is only where it is plain and obvious that the claim cannot succeed that recourse should be had to the court's summary jurisdiction to strike out. Particular caution is required in a developing field of law. Provided that a pleading discloses some cause of action or raises some question fit to be decided by a judge, jurats or jury, the mere fact that a case is weak is not a ground for striking it out. These propositions are vouched for by a wealth of Jersey authority embracing principles deployed by the courts of the United Kingdom, see e.g. In re Esteem Settlement (6) (2000 JLR at 127) (we note en passant that a new regime, arguably more favourable to an application to strike out, has been introduced in England and Wales by the Civil Procedure Rules).

The cases in outline

26.      The Solicitor General submits (correctly) that the Minister can only be liable for the tort of inducing a breach of contract by another (in this case WEB) if there is a valid contract which WEB has breached. He contends that there is no such contract between WEB and the plaintiffs. The only contractual duty of WEB relied upon is the duty "to negotiate the terms of the Development Agreement in good faith and with all due diligence" as set out in paragraph 3.1 of the amended order of justice based upon Clause 3.4 of the Heads of Terms. The sole breach of duty pleaded is that at paragraph 4 of the amended order of justice where it is asserted simply that, in breach of the duty pleaded at paragraph 3.1, WEB did not negotiate the terms of the Development Agreement in good faith and with all due diligence.

27.      The Solicitor General submits that the pleading asserts simply an agreement to agree or an agreement to negotiate and that it is clear as a matter of Jersey law that such an agreement does not amount to an enforceable contract because it is too uncertain.

28.      Advocate Purkis does not dispute the general proposition that a mere agreement to agree or to negotiate in the abstract does not give rise to an enforceable contract. But she submits that that is not the position here. The key terms of the Development Agreement had been agreed and had been set out in the Heads of Terms as pleaded in the amended order of justice. The Development Agreement had to include these key terms, albeit that they would be fleshed out. Clause 3.4 of the Heads of Terms was not therefore an agreement to negotiate in an open-ended fashion but was an agreement to flesh out, by the agreed date, the necessary detail (required for a project of this magnitude) in relation to the agreed key terms.  If this were not binding, what was the point of the Heads of Terms? And what would be the point of any developer ever agreeing heads of terms prior to agreement of the final contract? The effect of clause 3.4 was that the parties were contractually obliged to negotiate in good faith to achieve the already agreed key terms of the Development Agreement as set out in the Heads of Terms. It would be a breach of that agreement to insist on the introduction of provisions which were inconsistent with the agreed key terms.  The factual situation in this case therefore was very different from an open ended agreement to negotiate and it followed that there was sufficient certainty for clause 3.4 of the Heads of Terms to be legally enforceable.

Discussion

(i) Jersey authorities

29.      The requirements of  Jersey law for the creation of a valid contract are set out in the judgment of Bailhache, Bailiff in Selby-v-Romeril [1996] JLR 210 at 218 in the following terms:-

"In our judgment, it may now be asserted that by the law of Jersey, there are four requirements for the creation of a valid contract, namely (a) consent; (b) capacity; (c) an "objet"; and (d) a "cause." Counsel for the defendant submitted that here there was no objet. He referred us again to Pothier (op. cit., Part 1, Chapter 1, para. 53 at 27):

"Les contrats ont pour objet, ou des choses que l'une des parties contractantes stipule qu'on lui donnera, & que l'autre partie promet de lui donner; ou quelque chose que l'une des parties contractantes stipule que l'on fera, ou qu'on ne fera pas; & que l'autre partie promet de faire, ou de ne pas faire."

In essence, the objet of a contract (or more precisely the obligation which the contract creates) is the content of what the party undertakes. As to the content of the undertaking, it is the rule that it must be sufficiently certain. Pothier (op. cit., Part 1, Chapter 1, para. 137, at 59) states: "Pour qu'un fait puisse être l'objet d'une obligation, il faut aussi que ce que le débiteur s'est obligé de faire, soit quelque chose de déterminé."

30.      The Court went on to consider the facts of the case and concluded at 219:-

"We do not doubt that there was some discussion and indeed agreement between the parties as to the necessity of works of repair and renovation outside that which was agreed in writing. This is clear from the fact that the defendant did in fact sanction and pay for some such repairs and renovations. But we do not believe that there was ever any clear understanding as to the extent of those works which were to be carried out at the cost of the defendant. ... We think that the truth is that there was never any real meeting of minds or free agreement of wills, and indeed we might have arrived at the same conclusion on that basis. ... We are not satisfied on the evidence that there was any clear commitment by the defendant to meet the cost of repairs and renovations undertaken by the first plaintiff off his own bat. The objet of the obligation of the defendant was in our judgment insufficiently certain to give rise to a valid contract."

31.      The importance of the requirement for certainty is to be found in a number of Jersey cases. In Osment-v-Parish of St Helier [1975] JJ 205, the facts were that Mr Osment was considering moving from his longstanding employment at the Parish of St Helier to the Parish of St Lawrence and a question arose as to his pension rights. In that connection the Constable of St Helier wrote to the Constable of St Lawrence a letter which included the following:-

"... I write to say that I would be prepared to consider in principle a negotiated arrangement, bearing in mind Mr Osment's service with St Helier. The details of such an arrangement would best be left until we know precisely how the proposed States Contributory Scheme, which is going to be adopted in St Helier, will come into operation. When that is known, we can arrange how to apportion the eventual pension between yourselves and our parish."

32.      The headnote records the Court of Appeal as deciding that an agreement to negotiate terms and reach later agreement on details was not sufficiently certain to constitute a binding contract and I agree that this is an accurate reflection of the judgment of Le Quesne JA. He pointed out that the letter left the question of the contribution to be arranged, fixed or agreed at a later stage and this was insufficiently certain to have contractual effect.

33.      In Jersey Automatic Company Limited-v-HA Gaudin and Company Limited [1980] JJ 159, a question arose as to whether the parties had agreed the terms of a lease.  The Court found that, although a number of matters had been agreed, there were still left over a number of matters that had yet to be agreed. Crill, Deputy Bailiff went on to say this at 166:-

"Accordingly, we are unable to find that there was an agreement for a lease. It was in fact nothing more than an agreement for an agreement and in King v King (1980) 41 P and CR 311, Nourse J had this to say about such agreements:-

'It was settled law that an agreement to agree terms which were not themselves agreed was void for uncertainty. The classical authority for that proposition in the present century was the judgment of Mr Justice Parker in Vaughan Hatzfelt-Wildenburg v Alexander [1912] 1 Ch 284, 289 as explained by Lord Justice Sargant in Chillingworth v Esche [1924] 1 Ch 97, 113. That explanation was approved by Lord Buckmaster in May and Butcher Limited v The King [1934] 2KB 17,20. If, therefore, there was an agreement to sell or let at a price or rent to be agreed, that agreement was unenforceable unless a provision fixing the price or rent in default could be implied. ... A case where such an implication was made was Foley v Classique Coaches Limited [1934] 2 KB 1.'"  [Emphasis added]

34.      In Bennett-v-Lincoln [2005] JLR 125 an issue arose as to whether the parties had compromised a dispute between them. According to the judgment (para 24) although there had been a significant measure of compromise, there had not been a complete agreement on the points of dispute. Bailhache, Bailiff went on to say this at paragraph 36:-

"As counsel for the defendant rightly contended, on analysis this is no more than an agreement to agree. It is not possible to say that the first element of a binding contract, namely consent, in the sense of a meeting of minds, was present. Subsequent correspondence serves only to confirm that this element of the alleged compromise agreement was absent. The parties never agreed how to split the stock nor how it was to be valued. ..." [Emphasis added]

35.      Finally, so far as Jersey cases are concerned, in Mirpuri-v-Bank of India [2010] JRC 129, the Court struck out the defence and, in the course of doing so, it said this at the conclusion of paragraph 29:-

"In our judgment, such a term is not sufficiently certain. It would not necessarily be possible from such a vague term to establish whether the plaintiff was or was not in breach of the term in any particular case."

36.      In my judgment, these cases establish as a matter of Jersey law that, considered in the abstract, an agreement to agree or an agreement to negotiate an agreement is not sufficiently certain to give rise to a contractual obligation. It is true that Bailhache, Bailiff in Bennett-v-Lincoln considered it as a matter of consent (and in Selby-v-Romeril indicated in passing that, although the decision was reached on the basis of insufficient certainty, it might also have been on the basis of a lack of consent) and in some cases that may well be so. However, in other cases the parties will undoubtedly have agreed (i.e. consented) to negotiate or to seek to reach a contractual agreement and there would have been the necessary meeting of minds. I think therefore that in such cases the preferable analysis is that the object of such an agreement is simply too uncertain for it to amount to an enforceable contract.

(ii) English authorities

37.      The Solicitor General referred to a number of English authorities. The Jersey law of contract is not of course identical to that of English law but, in this particular area, they appear to be to similar effect and the English judgments contain some useful analysis as to why a simple agreement to agree is not sufficient to constitute an enforceable contract.

38.      The leading English case is Walford v Miles [1992] 1 All ER 453. In that case there was a lockout agreement between the parties i.e. an agreement whereby the sellers agreed not to negotiate with any other party than the plaintiff during the period of the lockout agreement. The difficulty was that the agreement contained no time limit. To overcome this difficulty the plaintiffs said that there was an implied term that the sellers would negotiate in good faith with the plaintiffs. The House of Lords rejected this proposition. Lord Ackner, who gave the sole judgment, began by approving the observations of Lord Denning MR in Courtney and Fairbairn Limited v Tolaini Bros (Hotels) Limited [1975] 1 All ER 716 at 720 where he said:-

"If the law does not recognise a contract to enter into a contract (when there is a fundamental term yet to be agreed) it seems to me it cannot recognise a contract to negotiate. The reason is because it is too uncertain to have any binding force ... It seems to me that a contract to negotiate, like a contract to enter into a contract, is not a contract known to the law ... I think we must apply the general principle that when there is a fundamental matter left undecided and to be the subject of negotiation, there is no contract."

Lord Ackner went on to say this at 460:-

"Before your Lordships it was sought to argue that the decision in the Courtney & Fairbairn Ltd case was wrong. Although the cases in the United States did not speak with one voice your Lordship's attention was drawn to the decision of the United States Court of Appeals, Third Circuit in Channel Home Centers Division of Grace Retail Corp v Grossman (1986) 795 F2d 291 as being 'the clearest example' of the American cases in the appellants' favour. That case raised the issue whether an agreement to negotiate in good faith, if supported by consideration, is an enforceable contract. I do not find the decision of any assistance. While accepting that an agreement to agree is not an enforceable contract, the United States Court of Appeals appears to have proceeded on the basis that an agreement to negotiate in good faith is synonymous with an agreement to use best endeavours and as the latter is enforceable, so is the former. This appears to me, with respect, to be an unsustainable proposition. The reason why an agreement to negotiate, like an agreement to agree, is unenforceable is simply because it lacks the necessary certainty. The same does not apply to an agreement to use best endeavours. This uncertainty is demonstrated in the instant case by the provision which it is said has to be implied in the agreement for the determination of the negotiations. How can a court be expected to decide whether, subjectively, a proper reason existed for the termination of negotiations? The answer suggested depends upon whether the negotiations have been determined 'in good faith'. However, the concept of a duty to carry on negotiations in good faith is inherently repugnant to the adversarial position of the parties when involved in negotiations. Each party to the negotiations is entitled to pursue his (or her) own interest, so long as he avoids making misrepresentations. To advance that interest he must be entitled, if he thinks it appropriate, to threaten to withdraw from further negotiations or to withdraw in fact in the hope that the opposite party may seek to reopen the negotiations by offering him improved terms. Mr Naughton, of course, accepts that the agreement upon which he relies does not contain a duty to complete the negotiations. But that still leaves the vital question: how is a vendor ever to know that he is entitled to withdraw from further negotiations? How is the court to police such an 'agreement'? A duty to negotiate in good faith is as unworkable in practice as it is inherently inconsistent with the position of a negotiating party. It is here that the uncertainty lies. In my judgment, while negotiations are in existence either party is entitled to withdraw from these negotiations at any time and for any reason. There can be thus no obligation to continue to negotiate until there is a 'proper reason' to withdraw.  Accordingly, a bare agreement to negotiate has no legal content."

39.      It is true, as Advocate Purkis emphasises, that the House of Lords was considering the implication of a duty to negotiate in good faith, but it seems to me that the reasoning is equally applicable where there is an express duty to negotiate in good faith.

40.      The Privy Council has recently endorsed Walford v Miles in National Transport Co-Operative Society Limited v The Attorney General of Jamaica [2009] UK PC 48 where Lord Neuberger said this:-

"59. The Government's case is that its obligation to publish a new fares table under clause 32(a) of the Franchise Agreements was varied, and in effect suspended, by virtue of paragraph 7(b) of the second agreement. The correctness of the contention ultimately turns, in the Board's view, on whether the concept of "the necessary improvements" in this latter clause is too vague or unclear to give rise to a contractually binding provision, or, to put the point another way, whether it amounted to an agreement to agree, or to negotiate, because the nature of those improvements could not and cannot sensibly be identified unless and until the parties had agreed them, or at least agreed a mechanism for determining them - and that never happened.

60. Courts are reluctant to hold that a provision in a document which is plainly intended to have contractual effect is of no effect in law because it is too vague or uncertain. As Lord Wilberforce said in Cudgen Rutile [1975] AC 520, 537F "in modern times, the courts are readier to find an obligation which can be enforced, even though apparent certainty may be lacking as regards some term such as the price, provided that some means or standard by which that term can be fixed can be found." Further, as Lord Wilberforce observed in another case, this time in the House of Lords, Prenn v Simmonds [1971] 1 WLR 1381, 1385 the court is not limited to interpreting the words of a contract in a vacuum, but should "inquire beyond the language and see what the circumstances were with reference to which the words were used, and the object, appearing from those circumstances which the person using then had in view".

61. Having said that, the principle that an alleged contract is ineffective or unenforceable in law because it is too vague, or because it constitutes an agreement to agree, or an agreement to negotiate, is well established, and remains an important principle: see Walford v Miles [1992] 2 AC 128 and the cases cited therein, including Courtney & Fairbairn v Tolani Bros [1975] 1 WLR 291."

41.      The Privy Council went on to hold that the provision in question was too vague and uncertain to have contractual effect. In passing, Lord Neuberger made the observation at para 63:-

"However, paragraph 9 assists the Society's case to this limited extent, that it undermines the notion that all terms of the second agreement were intended to have legally binding effect, a point which receives a little further support from the title of the second agreement: 'Heads of Agreement' is often used to describe a document which is not intended to have legally binding effect, although it should be added that it is common for the parties to intend, and for the courts to decide that such a document has such an effect. ..."

42.      The Solicitor General also referred to two further cases in an attempt to show that, even where some matters were agreed, an agreement to negotiate the remaining matters did not give rise to an enforceable contact. Thus in Abballe v Alstom UK Limited [2000] WL 331 020, it was contended by the plaintiff that the agreement under dispute provided that the parties would proceed to develop the project in question; that they would negotiate in good faith the outstanding details of a consortium agreement, the essential details of which had already been agreed; and that after such details had been negotiated, they would enter into a consortium agreement generally in the form of the defendant's model consortium agreement embodying both the already-agreed essential terms and the negotiated details. Judge Lloyd QC struck out the claim on the basis that, on the particular facts of the case, there was still no enforceable agreement on the basis of Walford v Miles. However, it is right to point out that this application to strike out was made under the English Civil Procedure Rules where, as Beloff JA indicated in Trant in the extract cited above, the threshold for striking out is perhaps somewhat lower than in this jurisdiction.

43.      The Solicitor General also referred me to the case of Barbudev v Eurocom Cable Management Bulgaria Eood, [2011] EWHC 1560 (Comm). This was a judgment given after a full trial. Amongst many other matters, there was a side letter (quoted at para 50 of the judgment) which said:-

"In consideration for you agreeing to enter into the Proposed Transaction and to sign the Transaction Documents, the Purchaser hereby agrees that, as soon as reasonably practical after the signing of the Agreement by all Parties, we shall offer you the opportunity to invest in the Purchaser on the terms to be agreed between us which shall be set out in the Investment Agreement and we agree to negotiate the Investment Agreement in good faith with you."

44.      The letter went on to provide that such terms would include certain specified matters. It was submitted by the claimant that these points were set in stone and not covered by the obligation to negotiate in good faith, so that there was accordingly an enforceable agreement. Blair J held that the letter constituted an agreement to agree, which was therefore unenforceable. As a matter of construction of the document he considered that the agreement to negotiate in good faith extended not merely to the proposed Investment Agreement but also to matters such as the price to be paid and the percentage to be acquired; in other words he did not agree that there were certain matters which were set in stone. At paragraph 97 he quoted with approval from Edwin Peel in Contract Formation and Parties (2010 edition):-

"an agreement to negotiate in good faith is unenforceable and is no more enforceable when it is couched in terms of an agreement to use best or reasonable endeavours to agree. When the parties have entered into an agreement which is otherwise enforceable, it will not become unenforceable simply because the parties have agreed to negotiate any outstanding terms, but the agreement to negotiate is not itself enforceable. Such an agreement may be 'enforceable' where the parties have set out objective criteria, or machinery for resolving any disagreement, but the reality is that the agreement to negotiate is then irrelevant and the court simply completes the agreement by reference to such objective criteria or the machinery stipulated. In summary, for all the emphasis in some cases that Walford v Miles ... only involved a 'bare' agreement to negotiate, the fact remains that no agreement to negotiate in good faith is enforceable as a matter of English law."

His decision was upheld on appeal.

45.      A case which gives a slightly different perspective is Petromec Inc v Petroleo Brazilieiro SA [2005] EWCA Civ 891. That case featured a number of contracts that related to the purchase and upgrading of a vessel that constituted the world's largest offshore oil production platform. The main point of the appeal concerned whether a complex agreement to agree - a memorandum of agreement (MOA) - was a legally binding contract. The Court of Appeal agreed that it was not. The MOA contemplated the execution of a complex series of interlocking contractual arrangements to be made in future, including the involvement of parties other than those who were party to the MOA and was too uncertain or incomplete to constitute a binding legal agreement. However, the Court of Appeal then went on to consider a different agreement that related to the upgrade of the vessel. This was otherwise a binding contract, but featured a clause that the defendant would pay the "reasonable extra cost" of the upgrade and that those costs would be "negotiated in good faith". The Court held that this negotiation clause was enforceable and the judgment of Longmore LJ contained some useful passages as follows:-

"115. This brings me to the question whether an express obligation to negotiate in good faith is enforceable or not. Anything I say on this topic is not essential to the disposition of the appeal but in deference to the arguments presented, I would like to say a few words.

116. The traditional objections to enforcing an obligation to negotiate in good faith are (1) that the obligation is an agreement to agree and thus too uncertain to enforce, (2) that it is difficult, if not impossible, to say whether, if negotiations are brought to an end, the termination is brought about in good or bad faith, and (3) that, since it can never be known whether good faith negotiations would have produced an agreement at all or what the terms of any agreement would have been if it would have been reached, it is impossible to assess any loss caused by breach of the obligation. ..."

46.      The Court went on to conclude that, in the particular facts of that case, none of these objections were of great force because the obligation was contained in an agreement which was itself undoubtedly legally enforceable and there would be an appropriate mechanism to assess 'the cost'. Furthermore it was clear what agreement would have been reached had the negotiations taken place. The Court distinguished Walford v Miles on the basis that, in that case, there was no concluded agreement at all since everything was subject to contract and there was in any event no express agreement to negotiate in good faith. Longmore LJ concluded by saying this at paragraph 121:-

"That shows the difference from the present case. Clause 12.3 of the Supervision Agreement is not a bare agreement to negotiate. It is not irrelevant that it is an express obligation which is part of a complex agreement drafted by City of London solicitors and issued under the imprint of Linklater and Paines (as Linklaters were then known). It would be a strong thing to declare unenforceable a clause into which the parties have deliberately and expressly entered. I have already observed that it is of comparatively narrow scope. To decide that it has 'no legal content' to use Lord Ackner's phrase would be for the law deliberately to defeat the reasonable expectations of honest men, to adapt slightly the title of Lord Steyn's Sultan Azlan Shah lecture delivered in Kuala Lumpur on 24th October 1996 (113 LQR 433 (1977)).  At page 439 Lord Steyn hoped that the House of Lords might reconsider Walford v Miles with the benefit of fuller argument. That is not an option open to this court. I would only say that I do not consider that Walford v Miles binds us to hold that the express obligation to negotiate as contained in clause 12.4 of the Supervision Agreement is completely without legal substance."

47.      Finally, in terms of English cases on this particular point, Advocate Purkis referred me to the case of Donwin Productions Limited v Emi Films Limited [1984] Lexis citation 01 and also reported in the Times 9^th March 1984. In that case the parties entered into an oral agreement based upon a letter but which envisaged the drawing up of a distribution agreement. Subsequently, negotiations over the terms of the distribution agreement foundered and the plaintiff brought an action based upon the letter. The question arose as to whether it was a legally enforceable agreement. Pain J held that the parties had intended to create a legally enforceable agreement and that the letter contained all the necessary ingredients for a contract even if it was somewhat rough and ready. He held however that by necessary implication, there was a term in that contract that the parties would negotiate in good faith about the further terms to be inserted in the full distribution agreement. He stated that he did not consider that he was precluded by authority from implying such a term once a firm agreement had been made and a fuller agreement was in contemplation.

48.      The Solicitor General sought to distinguish that case on the basis first, that the judge found that there was a firm agreement about distribution and that it was merely one of the terms of an otherwise binding contract that the parties would negotiate the full distribution agreement in good faith; and secondly, it preceded Walford v Miles and had to be read subject to the decision of the House of Lords in that case.

(iii) French law

49.      I was referred to the Code Civile and to some cases decided under French law which suggest that a duty to negotiate may give rise to a cause of action even if there is no contract formed (see Article 1382 of the Civil Code). This, however, seems to be on the basis of a délit or quasi-délit rather than a contractual obligation and is therefore of no assistance in establishing the Jersey law of contract. Furthermore, it seems clear from the material submitted by the Solicitor General that the French courts have not found it easy to establish a sensible basis for deciding when there might be a claim in such cases and when there will not.  This may well point to the undesirability of following French law down this path. In summary, I do not consider that French law assists in ascertaining the law of Jersey in the area which I am considering.

Good faith

50.      The parties submitted considerable material on the topic of good faith. Much of this material was aimed at showing that, under French law (and therefore, it was submitted by Advocate Purkis, Jersey law), there is an implied term in all contracts that the parties will act in good faith in relation to the performance of the contract. With respect to the parties, I did not find this aspect of the material to be particularly helpful. The Heads of Terms state expressly that the parties will negotiate the terms of the Development Agreement 'in good faith' and therefore the question of the implication of any term to such effect simply does not arise.

51.      Where the material is helpful is in assisting on what one means by 'in good faith'. It is, in my judgment, clear that, in both the civil law and English law, the exact nature of an obligation of good faith depends upon the context of the particular contract. For example, Domat, Les Loix Civiles Livre 1 Titre 1, Section III at XII says this:-

"Il n'y a aucune espèce de convention, ou il ne soit sous-entendu que l'un doit à l'autre la bonne foy, avec tous les effets que l'équité peut y demander ; tant en la manière de s'exprimer dans la convention & toutes les suites. Et quoyqu'en quelques conventions cette bonne foy ait plus d'étendue & en d'autres moins ; elle doit être entière en toutes, & chacun est obligé à tout ce qu'elle demande, selon la nature de la convention, & les suites qu'elle peut avoir. Ainsi, dans la vente la bonne foy forme un plus grand nombre d'engagemens que dans le prêt d'argent. Car le vendeur est obligé à délivrer la chose vendue. A la garder jusqu'à la délivrance : A la garantie : A la reprendre si elle a des défauts qui soient tels que la vente doive être resolue. Et l'acheteur a aussi ses engagements, qui seront expliquez en leur lieu. Mais dans le prêt d'argent, celuy qui emprunte d'est obligé qu'à rendre la même somme & les intérêts, s'il ne paye au terme après la demande."

In translation:-

"There is no species of contract in which it is not understood that one owes to the other good faith, with all the effect that fairness (équité) can demand in respect of it, both as to the manner of expressing oneself in the contract as well as for the performance of what is agreed and everything which flows from it.  And while in some contracts this good faith may have greater extent and in others less; it must be complete in all, and each is obliged to everything it requires, according to the nature of the contract and the consequences it may have. Thus, in a sale, good faith has a greater number of requirements than in a loan of money. For the seller is obliged to deliver the thing sold, to preserve it until delivery, to guarantee it, to take it back if it has faults such that the sale must be cancelled. And the buyer also has obligations which will be explained in their place. But in a loan of money, he who borrows is only obliged to repay the same sum, and interest if he does not pay on time after demand."

52.      The position appears to be similar under English law in those cases where there is an express term to act in good faith.  In Compass Group UK and Ireland Limited (t/a Medirest) v Mid Essex Hospital Services NHS Trust [2013] All ER (D) 200, [2013] EWCA Civ 200, there was an express term for the parties to cooperate with each other in good faith in relation to various matters mentioned in the contract. The headnote of the All England Report states:-

"It was settled law that there was no general doctrine of good faith in English contract law, although a duty of good faith was implied by law as in incident of certain categories of contract. If the parties to a contract wished to impose such a duty, they had to do so expressly. Further, the content of a duty of good faith was heavily conditioned by its context." [emphasis added]

53.      At paragraph 110, Jackson LJ approved the statement by Auld LJ at para 41 of the judgment in Street v Derbyshire Unemployed Workers Centre [2004] EWCA Civ 964, [2005] ICR 97 as follows:-

"Shorn of context, the words "in good faith" have a core meaning of honesty. Introduce context, and it calls for further elaboration. Thus in the context of a claim or representation, the sole issue as to honesty may just turn on its truth. But even where the content of the statement is true or reasonably believed by its maker to be true, an issue of honesty may still creep in according to whether it was made with sincerity of intention for which the act provides protection or for an ulterior and, say, malicious purpose. The term is to be found in many statutory and common-law contexts, and because they are necessarily conditioned by their context, it is dangerous to apply judicial attempts at definition in one context to that of another."

54.      Jackson LJ went on to quote from a judgment of Vos J in CPC Group Limited v Qatari Diar Real Estate Investment Co [2010] EWHC 1535 (Ch) where he held at paragraph 246 that, having regard to the context, the content of the obligation to act "in utmost good faith" was:-

"to adhere to the spirit of the contract, which was to seek to obtain planning consent for the maximum Developable Area in the shortest possible time, and to observe reasonable commercial standards of fair dealing, and to be faithful to the agreed common purpose, and to act consistently with the justified expectations of the parties."

55.      I am content for present purposes, to assume that the phrase 'in good faith' in the Heads of Terms means to be faithful to the agreed common purpose and to act consistently with the justified expectations of the parties.

Decision

56.      I have to say that I see considerable difficulties in the plaintiffs' path. I consider that Jersey law is clear in that a mere agreement to negotiate is not enforceable. There is clear authority to that effect in Jersey and the reasons for the rule (as summarised by Longmore LJ in the passage quoted at paragraph 45 above and in the judgment of Lord Ackner quoted at paragraph 38) may be thought to be persuasive.  The addition of the words 'in good faith' cannot in my judgment convert something that is too uncertain to have contractual effect into something which is of sufficient certainty to constitute a legally enforceable obligation. The only contractual duty relied upon in the amended order of justice is that set out in Clause 3.4 of the Heads of Terms which commits to the parties to "... act in good faith and with all due diligence with a view to seeking to agree the terms of the Development Agreement ...".  The Solicitor General submits with considerable force that this is on its face nothing more than an agreement to agree or negotiate and it is therefore of no contractual effect. The only breach of contract relied upon is the breach of that obligation. 

57.      However, I remind myself that I am not sitting to decide the case having heard all the evidence as to the factual matrix in which the Heads of Terms were made, it being well established that the factual matrix underlying an agreement may well be relevant to its interpretation. Such factual matrix must also be relevant in some cases in ascertaining the intention of the parties (viewed objectively) and whether they intended to enter into a legally enforceable agreement. I may only strike out the claim if it is plain and obvious to me that the claim cannot succeed. As indicated by Beloff JA in the passage referred to at para 25, the mere fact that I might think the case is weak and may fail at the end of the day is not sufficient to allow me to strike out the claim and thereby prevent the plaintiffs from having the opportunity to present their case in full.

58.      The plaintiffs' case is that this is not a mere agreement to agree or negotiate. Rather, it is that the parties agreed, in binding fashion, the key terms of what would be in the Development Agreement (and for that matter the leases). They then, as pleaded at paragraphs 2.24A - E of the amended order of justice, contracted to limit the scope of any future or further negotiation in respect of those key terms. Thus the duty to negotiate in good faith required negotiations which would not effectively negate the key terms (unless this were mutually agreed), but, on the contrary, required them to seek to negotiate to implement the key terms by fleshing them out and negotiating such other details as might be necessary for a full agreement. Thus an attempt to repudiate or negate a key term would amount to a breach of an enforceable contract.

59.      It seems to me that, to succeed on this application the Solicitor General must persuade me that it is unarguable that an agreement along the following lines is enforceable. A and B agree in a written agreement the essential terms of how a development is to be carried out. They agree that there has to be a full contract which will flesh out these provisions and they commit to negotiate the full agreement in good faith. They then specifically provide in the written agreement that they consider that certain core terms are essential and that any negotiations cannot vary them (unless both sides agree). They state specifically that they accept that negotiations might founder on the detail of the core terms or on other matters to be included in the full agreement and that no claim would arise on this basis because it is too uncertain. But they also specifically agree in the written agreement that, should one party repudiate any of those core terms in the course of the negotiations, or seek to introduce terms which are inconsistent with them, this would give rise to a claim for breach of contract, because the parties specifically intended that this aspect of the agreement would have contractual effect. I cannot accept that such an agreement would not even arguably be of legal effect.  It seems to me it must be arguable that such a specific and limited agreement would be sufficiently certain to have contractual effect.

60.      I understand the Solicitor General's point that in this case there is no specific statement in the Heads of Terms that the parties had reached a binding agreement to undertake the development in accordance with the key terms and that the only binding agreement is said to be the agreement to negotiate. The situation in this case may not be exactly as I have described in the preceding paragraph. Nevertheless, it seems to me that it is arguable that, whilst it is not stated in such express terms, the agreement which the plaintiffs seek to rely on in the present case is to like effect as that summarised in the preceding paragraph. Accordingly, I do not feel sufficiently confident of the lack of merit in the plaintiffs' case to conclude that I can properly strike it out.

61.      There is an additional factor which has influenced me. It seems possible that this may be a developing field notwithstanding the clear existing Jersey and English authority. In Petromec, Longmore LJ quoted Lord Steyn in querying whether Walford v Miles should be revisited. I consider the fact that this may be a developing field is an additional reason for not concluding at this stage (without hearing any evidence) that the plaintiffs' claim is hopeless.

62.      For these reasons, I have on balance been persuaded that it would be wrong to strike out the plaintiffs' case.

Procedural point

63.      Given my decision on the merits, I shall address only briefly the subsidiary point which the plaintiffs raised. In order to consider this point it is necessary to record briefly the history of the litigation.

64.      The action was begun by order of justice dated 13^th July, 2012. WEB filed its answer on 31st August. The Minister applied to strike the matter out by an amended summons dated 20^th September, 2012.

65.      At that stage the order of justice pleaded that the Minister was a party to the Heads of Terms by reason of having approved it.  In an unreported judgment dated 15^th October, 2012 I gave reasons for my holding that the order of justice as pleaded against the Minister disclosed no reasonable cause of action. However, Collas Crill had only very recently assumed representation of the plaintiffs and Advocate James indicated an alternative way in which he wished to plead the case. Accordingly I adjourned the summons and gave directions for the plaintiffs to file a summons seeking leave to amend by 29^th October. The plaintiffs duly filed their summons together with a draft amended order of justice on that date.

66.      That summons together with the adjourned strike out application were listed for further argument on 4^th February, 2013. At the conclusion of that hearing I ruled that I was still not satisfied with the draft amended order of justice as it stood but adjourned it for further amendment. A further amended order of justice was duly produced by the plaintiffs in the form which is now before me. There was considerable correspondence between the parties about this. On 23^rd April, the Solicitor General raised for the first time the point which has been the subject of this hearing, namely that the further amended order of justice did not disclose an enforceable contract because it was merely an agreement to agree or negotiate. Following further correspondence, the Solicitor General agreed on 17^th June that he would not object to the filing of the amended pleading but maintained his point that it disclosed no cause of action and stated that he proposed to apply for determination of the issue as a preliminary issue of law under RCR 7/8. There was then further correspondence and in due course a consent order was signed on 20^th August, 2013 whereby the plaintiffs were given leave to file the amended order of justice and the Minister's summons to strike out was dismissed. However, the Solicitor General then appears to have had a change of mind and, instead of proceeding by way of a preliminary issue of law, he issued a new summons on 20^th September, 2013 seeking to strike out the amended order of justice. That is the matter which came before me.

67.      The plaintiffs submit that bringing a second strike out application to raise arguments capable of being raised during the resolution of the first strike out application amounts to an abuse of process. They rely on the well-known principle established in Henderson v Henderson [1843] 3 Hare 100. This was summarised by Kentridge JA in Ernest Farley-v-Takilla Limited [1992] JLR 54 at 57 as follows:-

"This doctrine, shortly stated, holds that to raise in subsequent litigation matters which (although not raised and decided in earlier litigation between the same parties) could and should have been raised previously, was an abuse of the process of the court. In such circumstances the subsequent action should be struck out, in the absence of exceptional circumstances which would make it unjust to do so."

68.      I have to say that no authority has been produced to me which shows that this principle is applicable to different interlocutory proceedings within the same action. It is more concerned with preventing a party starting a new action relying on a point which he should have raised in a previous action. I would be extremely reluctant to extend its ambit to cover different applications within the same action, not least for the reasons set out at para 71 below.

69.      The plaintiffs referred to the decision of the Court of Appeal in The Federal Republic of Brazil-v-Durant International Corporation [2012] JCA 025 where the Court held that a previous case management decision should not subsequently be revisited just because a better application was made the second time around. Thus at paragraph 18, McNeill JA said:-

"In our opinion, the appropriate test in this jurisdiction, by reference to which the Royal Court exercising its jurisdiction in matters of case management is entitled to entertain a further application on a matter which it has already determined and refused or dismissed, is that there has been a material change of circumstances or that the court, whether innocently or otherwise, has been misled as to the correct factual position, or that the grounds upon which the application is made are materially different from those already considered."

70.      In my judgment, the grounds upon which the present application is made are materially different from that relied upon in the previous application. The focus of the first application was the assertion by the plaintiffs that the Minister was somehow party to the Heads of Terms merely because he had subsequently approved them.  I held that that was a completely untenable argument.  There was no need for the Minister to go on to consider the enforceability of the Heads of Terms themselves. He said that he was simply not a party to it. The nature of the plaintiffs' claim has changed and what is now alleged against the Minister is that he committed the tort of inducing a breach of contract. In those circumstances it becomes very relevant as to whether there was indeed a contract.

71.      In any event, I have to confess to finding the plaintiffs' submission somewhat unattractive. The Minister has not yet filed his answer.  There is clearly nothing to prevent the Minister from filing an answer contending that the Heads of Terms did not amount to an enforceable contract for all the reasons which have been addressed in this hearing. On the plaintiffs' argument, even if I were to have concluded that this was an argument which was bound to succeed, I would have no alternative but to allow the matter to go to trial, with the consequence that the inevitable result (i.e. on this hypothesis a dismissal of the plaintiffs' claim) would be reached only after the expenditure of large amounts of time and money by both sides on a pointless exercise. I consider that the purpose of interlocutory proceedings is to manage the process so that the interests of justice are served. I do not believe that a result along the lines that I have just described would be in the interests of justice. It follows that I do not consider the Minister's application to be an abuse of process such that I should decline to hear the summons.

Authorities

Royal Court Rules 2004.

Trant-v-Attorney General and others [2007] JLR 231.

Selby-v-Romeril [1996] JLR 210.

Osment-v-Parish of St Helier [1975] JJ 205.

Jersey Automatic Company Limited-v-HA Gaudin and Company Limited [1980] JJ 159.

Bennett-v-Lincoln [2005] JLR 125.

Mirpuri-v-Bank of India [2010] JRC 129.

Walford v Miles [1992] 1 All ER 453.

Courtney and Fairbairn Limited v Tolaini Bros (Hotels) Limited [1975] 1 All ER 716.

National Transport Co-Operative Society Limited v The Attorney General of Jamaica [2009] UK PC 48.

Abballe v Alstom UK Limited [2000] WL 331 020.

Barbudev v Eurocom Cable Management Bulgaria Eood, [2011] EWHC 1560 (Comm).

Contract Formation and Parties (2010 edition) Edwin Peel.

Petromec Inc v Petroleo Brazilieiro SA [2005] EWCA Civ 891.

Donwin Productions Limited v Emi Films Limited [1984] Lexis citation 01.

Code Civile.

Domat, Les Loix Civiles Livre 1 Titre 1, Section III.

Compass Group UK and Ireland Limited (t/a Medirest) v Mid Essex Hospital Services NHS Trust [2013] All ER (D) 200, [2013] EWCA Civ 200.

Street v Derbyshire Unemployed Workers Centre [2004] EWCA Civ 964, [2005] ICR 97.

CPC Group Limited v Qatari Diar Real Estate Investment Co [2010] EWHC 1535 (Ch).

Henderson v Henderson [1843] 3 Hare 100.

Ernest Farley-v-Takilla Limited [1992] JLR 54.

The Federal Republic of Brazil-v-Durant International Corporation [2012] JCA 025.