Pavilion Property Trustees Ltd & Anor v Urban & Civic Projects Ltd

Where a contract provides a time-limited mechanism for disputing a calculation, the agreed timetable must be construed and applied objectively. Later calculations do not restart that timetable unless they objectively withdraw or replace the original calculation. A request for reasonably required verification information may affect when a referral period runs, but only if made within the contractual period. Negotiations genuinely aimed at settlement are ordinarily protected by the without-prejudice rule even without express wording. A party’s subjective assumption that time has ceased to run does not establish contractual variation, waiver or estoppel.

The parties entered into a development management agreement concerning a commercial property. The agreement provided for calculation of a profit share, supporting information and referral of any dispute to an independent expert within a specified period. The defendant disputed the claimant’s calculation and later referred the dispute to an independent expert on 5 May 2016.

The claimants contended that the referral was out of time and that the defendant was deemed to have accepted a zero profit share. The defendant relied on later calculations, requests for information, an alleged extension or suspension of time, and promissory estoppel. It also contended that communications after a meeting on 14 January 2016 were open to evidence rather than protected by the without-prejudice rule.

Claim allowed. The defendant’s referral was out of time. Under paragraph 4.4 of Part 2 of Schedule 4 to the development management agreement, the defendant was deemed to have accepted the claimants’ calculation that the profit share was zero.

1. The communications after 14 January 2016 were negotiations genuinely aimed at settling the profit-share dispute. They were therefore protected by the without-prejudice rule as a matter of public policy, although no express agreement to that effect had been made.
2. Later calculations supplied on 9 February and 10 March 2016 did not withdraw, supersede or replace the original calculation supplied on 7 December 2015. They did not restart the contractual timetable.
3. The requests made on 10 March 2016 for executed leases and confirmation concerning the measured areas were reasonably required to verify the calculation under paragraph 4.3. That finding did not assist the defendant because the requests were made after the contractual period for requesting additional information had expired.
4. For completeness, where a timely request under paragraph 4.3 is made, the referral period in paragraph 4.4 runs from provision of the requested information. That conclusion was unnecessary to the result.
5. The parties had not agreed to suspend or extend the 28 January 2016 deadline indefinitely. The defendant’s subjective impression that the deadline had ceased to matter was insufficient.
6. The promissory-estoppel case failed. There was no representation that the claimants would refrain from insisting on the deadline.

The claimants were entitled to judgment.