Overage – Chartbrook v Persimmon Homes in the House of Lords

The House of Lords has upheld an appeal by Persimmon Homes in the case of Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38. The House of Lords found itself able to interpret an overage agreement between the parties in a way which avoided Persimmon’s exposure to a commercially unrealistic, large overage payment. The case was decided on construction of unclear words. However, the case is perhaps more notable (a) for its reaffirmation of the established rule that evidence of pre-contract negotiations are inadmissible as an aid to the construction and interpretation of contracts (see Prenn v Simmonds [1971] 1 WLR 1381), but (b) for comments made, in obiter, by Lord Hoffmann as to how such pre-contract negotiations may assist in a claim for rectification in proving that the agreement entered into departed from the objectively-viewed prior consensus of the parties.