Tameside Metropolitan Borough Council v. Barlow Securities Group Services Limited

Promissory estoppel requires a clear and unequivocal promise or representation that a party will not enforce a legal right. Courts cannot create certainty by resolving an ambiguous conversation in favour of estoppel. An agreement settling the final account of a building contract does not, without clear language, amount to an agreement that the parties will act as though a final certificate had been issued, particularly where the certificate also protects against claims concerning defective work and materials. For limitation purposes, where separately completed parts of a non-sectional building contract have been delivered into possession and certified as practically complete, causes of action concerning those parts may accrue on their individual completion dates. An architect is not in breach of the contractual obligation to issue a final certificate before receiving the documents needed to calculate the final balance, unless the contractor requests a certificate recording an agreed nil balance.

Tameside sued Barlow Securities Group Services Limited for defects in 106 houses and associated works constructed under a JCT building contract. The contract was initially formed by agreement and was later executed under seal. The Technology and Construction Court determined preliminary issues concerning estoppel, limitation, final certification and alleged breach arising from the absence of a final certificate.

The judge held that Tameside was estopped from relying on the absence of a final certificate, that claims concerning houses covered by the first two practical completion certificates were statute-barred, and that the parties’ agreement to draw a line under the account had the effect of treating a final certificate as issued. Tameside appealed, and Barlow relied on a respondent’s notice concerning alleged breach by Tameside.

Appeal allowed in part. The court allowed Tameside’s appeal on Issue 7, dismissed its appeal on Issue 4, and dismissed Barlow’s appeal on Issue 9.

1. Estoppel. Promissory estoppel, however formulated, requires an express or implied promise or representation that is clear and unequivocal. It is not the court’s function to resolve an ambiguous conversation to create such a representation. The evidence that the parties had agreed to draw a line under the account was imprecise and concerned the monies owing and further accounting work.
2. The final certificate had two distinct functions under the JCT contract: certifying the final balance under clause 30(6)(b), and providing conclusive evidence concerning the quality of materials and workmanship under clause 30(7)(a)(i). The parties had not addressed the latter function. It was therefore an impermissible inference that settlement of the account meant that the parties would act as if a final certificate had been issued. No estoppel was established.
3. Limitation. The agreement under seal operated retrospectively, so breaches occurred when the relevant work was carried out. Nevertheless, delivery of possession and separate practical completion certificates for particular houses meant that claims concerning those houses could be brought from their individual practical completion dates. The limitation conclusion concerning the first two groups of houses was upheld.
4. Final certificate. On the facts, the architect was not in breach of clause 30(6). The documents required for calculation of the final balance had not been received, and Barlow had not requested a final certificate recording the agreed nil balance. Issue 10 therefore failed because no breach had been established.

The court declined to determine Issue 8. Costs of the hearing and appeal were granted to the applicants, and leave to appeal was refused.

• Court of Appeal (Civil Division): allowed Tameside’s appeal on estoppel; dismissed its appeal on limitation; dismissed Barlow’s appeal on alleged breach concerning the final certificate.
• Technology and Construction Court, Queen’s Bench Division, Salford District Registry: preliminary issues determined by HH Judge Gilliland QC on 24 September 1999. The judge found estoppel and held that only claims concerning the first two groups of practically completed houses were statute-barred.