PM Project Services Ltd v Dairy Crest Ltd

For summary judgment, the claimant must show that the defence has no real prospect of success. A defence is unsuitable for summary determination where disputed facts, contractual interpretation, estoppel, repudiation or a substantial counterclaim require a trial.

A contractual variation requires agreement on sufficiently certain terms and consideration. A promise to suspend enforcement of contractual rights may nevertheless give rise to equitable estoppel. Detriment is not invariably required. The relevant question is whether, having regard to the parties’ dealings, it would be inequitable to enforce the strict rights, particularly where reasonable notice of withdrawal was not given.

PM Project Services applied for summary judgment on three groups of invoices owed by Dairy Crest under a management services framework agreement and a later deed of variation. The first claim concerned a £784,661.97 payment, described as the balloon payment.

PM had indicated in a meeting and subsequent emails that it would defer invoicing until completion of its role or the relevant mechanical, electrical and pipework works. PM later issued the invoice. Dairy Crest alleged that the invoice was premature, relied on the promise, and had substantial claims against PM.

The court heard only the balloon-payment claim. The central issues were whether the parties had bindingly varied the contract, whether PM was estopped from enforcing its contractual right, and whether those issues could fairly be determined summarily.

1. Summary judgment test. Under Civil Procedure Rules 1998, rule 24.2, PM had to show that Dairy Crest’s defence had no real prospect of success. The court could not resolve factual disputes or determine issues requiring a trial on the evidence available.
2. Variation. The October 2015 communications did not create a binding variation. The parties had not agreed the period of deferment, which was a crucial term. Dairy Crest’s alleged forbearance also did not amount to consideration because it had not been communicated as consideration and no particular remedy had been identified. The reasoning in Collier v P & MJ Wright (Holdings) Ltd [2007] 1 WLR 643 supported the absence of consideration.
3. Promissory estoppel. PM’s statements clearly led Dairy Crest to believe that PM would defer invoicing until completion of the relevant works. The promise was intended to be taken seriously. Following Hughes v Metropolitan Railway (1877) 2 App Cas 439, the question was whether enforcement would be inequitable in light of the parties’ dealings. Applying the approach in Societe Italo-Belge v Palm and Vegetable Oils (Malaysia) SDN. BHD. [1981] 2 Lloyd’s Rep 695, detriment was not necessarily required. Reliance could consist of inaction, and inequity might arise when a promise was withdrawn without reasonable notice.
4. There were triable issues concerning completion of the works, withdrawal of the promise, the parties’ alleged repudiation of the contract, and Dairy Crest’s potentially substantial counterclaim. PM’s application for summary judgment on the balloon payment was therefore dismissed, with permission to defend. The other two limbs were adjourned.