Shoreline Housing Partnership Ltd v Mears Ltd

On an application under Civil Procedure Rules 1998, rule 3.4(2)(a), pleaded facts are assumed to be true. The question is whether they disclose a legally recognisable claim, subject to any curable defect. A claim should not be struck out where its success depends on disputed facts requiring trial. An entire agreement clause does not necessarily exclude estoppel or misrepresentation claims, particularly where it does not expressly create a representation-free contractual basis. Whether estoppel is being used impermissibly as a sword, or whether an alleged statement is a representation of fact, may likewise depend on a detailed factual and contractual analysis unsuitable for strike out.

Shoreline Housing Partnership Ltd appealed from Akenhead J’s decision in the Technology and Construction Court, reported at [2013] EWHC 27 (TCC). The judge refused to strike out Mears Ltd’s pleaded claims in estoppel by convention, estoppel by representation and misrepresentation. The dispute concerned alleged common assumptions and representations about whether the parties’ contract required amendment to reflect a pricing structure. Shoreline argued that the entire agreement clause, the use of estoppel as a sword, and the alleged future-looking statements made the claims legally untenable. Leave to appeal was granted by Richards LJ. The central issue was whether the pleaded facts disclosed claims that were bound to fail.

1. The appeal was dismissed. The decision whether to strike out was a discretionary case-management decision, and the Court of Appeal would not interfere where the judge had applied the correct approach.
2. Under Civil Procedure Rules 1998, rule 3.4(2)(a), the court assumes that the pleaded facts are true and asks whether they disclose a legally recognisable claim. Strike out is appropriate only where the claim is bound to fail, subject to whether any defect can be cured by amendment. The court may analyse how the pleaded facts could establish the cause of action; that is not speculation beyond the pleading.
3. It was realistically arguable that the entire agreement clause did not bar the claims. The clause was simple and did not contain the express wording considered in Springwell Navigation v J P Morgan [2010] 2 CLC 705, where the parties had contracted on a representation-free basis. The alleged understanding that the contract did not need amendment, together with subsequent payment conduct, required factual examination. The principle concerning express exclusion of misrepresentation liability in Axa Sun Life Services v Campbell Martin [2012] Bus LR 203 also supported that conclusion.
4. It was arguable that the alleged estoppels could be relied on although pleaded as a sword. The case was not an attempt to create a contract where none existed, as in the situation distinguished by reference to Baird Textile v Marks & Spencer [2002] 1 AER (Comm) 737. The estoppels were said to qualify the terms of an existing contract and to reflect an assumed and shared state of facts or law, consistently with Republic of India v India Steamship [1998] AC 878. The competing approaches illustrated by Amalgamated Investment & Property v Texas Commerce International Bank [1982] 1 QB 84 and Baird Textile could not properly be resolved on uncertain facts at strike out.
5. It was also arguable that the statements that the contract did not need amendment were representations of fact capable of grounding estoppel by representation or misrepresentation. Whether the legal requirements were met was fact-sensitive and had to be determined at trial. Ryder LJ and McCombe LJ agreed with Gloster LJ’s reasons.

• Court of Appeal (Civil Division) [2013] EWCA Civ 639: appeal dismissed.
• High Court, Queen’s Bench Division, Technology and Construction Court [2013] EWHC 27 (TCC): Akenhead J refused to strike out the Points of Claim.