Jacobs UK Ltd v Skidmore Owings & Merrill LLP

On a summary judgment application, extensive evidence does not of itself make a claim unsuitable for determination under CPR Part 24. The court must examine the material sufficiently to decide whether the defence has a real prospect of success, while avoiding a mini-trial. A defence based on a mere possibility is insufficient, but may justify a conditional order. Where a services contract is terminated for convenience, replacement and validation costs caused by the termination are not recoverable as damages unless the defendant identifies costs caused by an actionable breach. A conditional order may require payment into court where a counterclaim has a real but merely possible prospect of success.

The claimant sought summary judgment for three unpaid invoices arising from professional services supplied to the defendant on a Qatar construction project. The parties had not concluded their intended detailed subcontract and were instead governed principally by an Amended Interim Agreement and related draft contractual documents.

The defendant disputed liability for the December invoice, alleged overvaluation, relied on set-off and counterclaim, and contended that the October and November invoices were subject to no separate payment agreement. The central issues were whether the defendant had a real prospect of successfully defending the claims under CPR Part 24 and whether a conditional order should be made.

1. Summary judgment test. The court applied CPR Part 24. The defendant had to show a real prospect of successfully defending the claim, meaning more than a merely arguable case, but the court was not to conduct a mini-trial. Some investigation of the evidence was nevertheless necessary. The relevant criterion was absence of reality, not probability.
2. December invoice. The Amended Interim Agreement contained a pay-when-paid provision which conflicted with the 60-day longstop in the draft agreement. The defendant had a real prospect of establishing that the specific interim terms prevailed and that the December sum was not due because Qatar Petroleum had not paid it. The defendant also had a real prospect of establishing overvaluation, including an alleged overpayment of £28,177.16. Summary judgment for the December invoice was refused.
3. October and November invoices. The correspondence did not create a separate agreement requiring payment regardless of set-off. Payment was part of a wider proposed settlement which was never concluded. Even if an agreement had been reached, exclusion of ordinary set-off would have required an express term or the only possible inference from the circumstances.
4. Counterclaim. Costs incurred merely because the defendant terminated the services contract for convenience were not recoverable. Only costs attributable to re-performing work which the claimant had failed to perform, or had performed defectively, could potentially support a counterclaim. The defendant therefore had to identify the breach and causal link, rather than rely on undifferentiated completion and validation costs.
5. Disposition. Item 6 of the counterclaim reduced the recoverable amount to £411,965.73. Items 1, 2 and 8 had a real but merely possible prospect of success and justified a conditional order. Summary judgment was entered for £68,766.44, conditional on the defendant paying £343,199.29 into court to maintain those counterclaims. The remaining counterclaim items had no real prospect of success, or at most a merely possible prospect.