Summary

In construing the provisions of a commercial property development agreement concerning the payment of profit payments, the court had regard to a letter that it found to contain an offer capable of acceptance, which enabled the constitution of an accepted contract for the proper determination of the correct basis for calculation.

Facts

The court was required to construe the provisions of a commercial property development contract in a claim brought by the claimant firm of property developers (C) against the first defendant investment company (X) and second defendant asset manager (S), an employee of X. C and X had entered into an agreement concerning the development of a commercial property. Under the agreement, C was entitled to receive profit payments from X two years after practical completion of the building works. At all material times X acted through an asset management company (M) and M acted in this regard through S. A dispute arose between the parties as to the proper calculation of the profit payments to which C became entitled. It was C's case that it had sent S a letter concerning the calculation of profit payments that, taken together with the responses from S, constituted an accepted offer to determine the basis upon which the profit payments would be calculated. X disputed that those documents constituted a valid offer capable of acceptance, or in the alternative, argued that S did not have authority to bind X to such a contract.

Held

(1) C's letter constituted an offer to fix the basis upon which the profit payments were to be calculated and was, accordingly, capable of acceptance by X, Chartbrook Ltd v Persimmon Homes Ltd (2009) UKHL 38, (2009) 1 AC 1101 applied. The letter had to be construed in the context of the position of the person who was writing it and the person to whom it was written. Confronted with the letter and corresponding documents, any asset manager with S's experience and knowledge of the relevant development and markets would have realised that the letter was an offer to agree, for the purpose of the calculation of the final profit payment, certain points that had not been part of any agreement between the parties. (2) Having reviewed the evidence and the competing positions, and having regard to S's experience in the field of commercial development, which X appreciated, it was plain that S did have authority to bind X to the contract.

Declaration granted in favour of claimant