Actionstrength Limited (t/a Vital Resources) v International Glass Engineering In.Gl.En. SpA & Ors

The House of Lords dismissed the appeal. The court held that an oral promise by a party to 'answer for the debt' of another falls within section 4 of the Statute of Frauds 1677 and is unenforceable unless evidenced by a signed writing. The appellants relied on estoppel to avoid the statutory bar, but the House held that, on the pleaded facts, there was no representation or conduct by the alleged guarantor beyond the bare oral promise which could found an estoppel. Allowing estoppel in these circumstances would effectively nullify the statute. The decision surveys the relationship between the Statute of Frauds, the equitable doctrine of part performance and estoppel.

The claimant (Actionstrength), a labour-only subcontractor, alleged that the employer (St-Gobain) orally promised to ensure payment of sums due from the main contractor (Inglen) so that Actionstrength would not withdraw labour from a construction site. Actionstrength sought to enforce that oral undertaking as a guarantee after Inglen became insolvent. St-Gobain relied on section 4 of the Statute of Frauds 1677, which requires guarantees to be evidenced in writing, and applied for summary judgment. The judge at first instance refused summary judgment; the Court of Appeal held the oral undertaking to be a guarantee within section 4 and allowed the appeal, dismissing the estoppel argument. Actionstrength appealed to the House of Lords, advancing estoppel (but not proprietary estoppel or part performance) as a means to circumvent the statutory requirement.

The principal issues were:

• Whether the alleged oral undertaking amounted to a guarantee caught by section 4 of the Statute of Frauds; and
• Whether estoppel could prevent St-Gobain from relying on the statutory requirement of a signed memorandum.

The House accepted, for present purposes, that the oral undertaking was a guarantee within section 4. It considered whether estoppel could be founded on the pleaded facts. The Lords held that estoppel requires some representation, inducement or conduct beyond the mere making of the unenforceable promise; the bare oral promise relied on by Actionstrength was insufficient. The court emphasised that to allow an estoppel in this common factual setting would subvert the statutory protection Parliament had deliberately retained. The House therefore dismissed the appeal and affirmed that, save in exceptional circumstances involving additional representation or conduct, the Statute of Frauds bars enforcement of oral guarantees.

Appeal dismissed. The House held that the alleged oral undertaking constituted a guarantee within section 4 of the Statute of Frauds 1677 and, on the pleaded facts, there was no representation or additional conduct by St-Gobain capable of estopping it from relying on the statutory requirement of a signed memorandum; permitting estoppel on those facts would undermine the statute.

Mitting J refused summary judgment on a Part 24 application. The Court of Appeal allowed St-Gobain's appeal and held the oral undertaking to be a guarantee within section 4 ([2001] EWCA Civ 1477; reported [2002] 1 WLR 566). Leave was granted to the House of Lords, which dismissed the appeal ([2003] UKHL 17).