Mears Ltd v Shoreline Housing Partnership Ltd

On an application for summary judgment or strike out, the court must decide whether the claim has a realistic prospect of success without conducting a mini-trial. Where the pleaded facts are supported by evidence, contemporaneous documents or subsequent conduct, and factual disputes may turn on witness credibility, the claim should ordinarily proceed to trial.

Estoppel by convention may be arguable where parties expressly share a common assumption, regulate their dealings on that basis, and one party would suffer detriment if the other resiled from it. A representation of present intention may constitute a representation of fact. The possibility that an entire agreement clause may defeat the claim does not justify summary disposal where its effect depends on disputed facts.

Mears Ltd claimed against Shoreline Housing Partnership Ltd in connection with a responsive maintenance contract. Before the written contract was executed, the parties allegedly agreed to use composite codes and rates described in a Composite Codes Explanation Document. The written contract did not expressly permit payment on that basis, but payments were made using the composite rates for approximately six months before Shoreline deducted about £300,000.

Mears relied on estoppel by convention, estoppel by representation and misrepresentation. Shoreline applied under CPR 3.4(2)(a) to strike out the claim or alternatively for summary judgment. The central issue was whether the pleaded facts and evidence disclosed a realistic prospect of success requiring determination at trial.

1. Application dismissed. The pleaded claims were not bound to fail and disclosed a realistic prospect of success.

2. The court applied the summary judgment principles summarised in Khatri v Cooperatieve Centrale Raiffeisen-Boerenleenbank BA [2010] EWCA Civ 397, including the need to distinguish a realistic from a fanciful prospect, to avoid a mini-trial, and to consider evidence reasonably expected to be available at trial. The court should hesitate before finally deciding a case where fuller factual investigation may affect the outcome.

3. The evidence supported an arguable factual case. The alleged agreement was supported by the CRED, the parties’ agreed facts and Shoreline’s use of the composite rates for nearly six months. The court considered that the dispute was likely to turn on the credibility of relevant witnesses and the contemporaneous documents. It was therefore inappropriate to determine the factual strength of the case on the interlocutory material.

4. Estoppel by convention was reasonably arguable. If the pleaded facts were established, the parties may have expressly shared a common assumption, something close to a contract, and regulated their dealings on that basis. The written contract’s entire agreement clause might not defeat the estoppel if the parties had understood and agreed that the contract did not need amendment to reflect the common assumption. The alleged detriment included loss of the opportunity to price the work differently and inability to reconstruct the work for invoicing purposes.

5. The promise to pay and agreement to use composite codes could not readily support estoppel by representation as representations of future intention. However, the alleged representation that the contract did not need amendment could arguably be a representation of fact. A representation of present intention may amount to a representation of fact, following Edgington v Fitzmaurice [1885] 29 Ch D 459. Similar considerations made the misrepresentation claim arguable.

6. The court declined to strike out individual aspects of the pleaded claims in the absence of proper factual investigation. Shoreline’s application for strike out and summary judgment was dismissed.

First instance decision. No prior appellate decision is stated in the judgment.