Kyndryl UK Limited v Jaguar Land Rover Limited

Key principles and disposition: The defendant's application for summary judgment/strike-out was largely refused. The court held that (i) there is a real prospect that the claimant (Kyndryl) can prove an assignment of the relevant IBM contract rights under the SPA (clauses 2.1, schedule 1 paragraph 6) and that clause 1.11.7 of the DCHA did not necessarily invalidate such an assignment without Jaguar Land Rover's consent; (ii) the claimant has a real prospect of enforcing an alleged Variation Agreement reached by conduct (and alternatively estoppel) to secure a contractual variation reflecting the Services Delta; (iii) the claimant has no real prospect of establishing an express or implied term of the DCHA that would automatically oblige JLR to agree a variation to pay for additional legacy services (the pleaded paragraph 15.2), and summary judgment was given to JLR on that part; and (iv) the claimant was given permission to amend its particulars to particularise its unjust enrichment/free acceptance case. The court applied the established Part 24 and strike-out principles and relevant authorities on uncertainty, contract interpretation and estoppel (including Rock Advertising, RTS Flexible Systems, Mamidoil and related authorities).

Background and parties:

• The claimant, Kyndryl UK Limited (assignee of IBM United Kingdom Ltd under an SPA), provides managed IT infrastructure services. The defendant, Jaguar Land Rover Limited, was formerly an IBM customer under a long-term Data Centre and Hosting Agreement (the DCHA), which terminated on 29 October 2021.

Nature of the application and claims:

• This is a first-instance application by JLR for summary judgment and/or strike-out of Kyndryl’s claims. Kyndryl cross-applied to amend its Particulars of Claim. Kyndryl’s pleaded claims arise from: (a) an asserted Variation Agreement and related contractual entitlements to additional charges for work performed because migration to a shared "Flex" environment did not occur (the "Services Delta"); (b) express or implied terms of the DCHA entitling IBM to a contractual variation in those circumstances; (c) alternative estoppel arguments; and (d) unjust enrichment/quantum meruit (including free acceptance).

Issues framed by the court:

1. Whether Kyndryl validly stands as assignee of IBM’s rights under the SPA to bring the claims (assignment and scope, including whether schedule 1-2 refers to the DCHA and whether paragraph 6 of schedule 1 covers collateral/variation/unjust enrichment claims).
2. Whether any assignment was invalidated by DCHA clause 1.11.7 (the prohibition on assignment without prior written consent and its exceptions).
3. Whether the alleged Variation Agreement is enforceable or void for uncertainty or as an agreement to agree, and whether the DCHA itself contains an express or implied term entitling IBM to a variation in the pleaded circumstances.
4. Whether estoppel can prevent JLR relying on formal change-control formalities to resist enforcement (and the required clarity of representations/promises).
5. Whether Kyndryl can pursue unjust enrichment (including on a free acceptance basis) and whether its pleadings require further particularisation.
6. Limitation and other procedural objections.

Court’s reasoning (concise account):

• Assignment: On the evidence before the court (noting that some schedule entries were redacted), there is a real prospect that the SPA did transfer the DCHA rights to Kyndryl. Paragraph 6 of schedule 1 is capable of covering claims "exclusively arising from" ownership of the DCHA, and the commercial context of a wholesale transfer of the GTS business supports a broad reading. The court therefore refused summary disposal on the assignment issue but held, following interpretative analysis, that if an assignment occurred it would not automatically be void under clause 1.11.7 of the DCHA because the exception for a "transfer within the legal entity of which either party is a part" and a "successor organisation by acquisition" can cover the spin-out/acquisition of the GTS business to Kyndryl.
• Variation Agreement and uncertainty: The court applied the authorities on certainty (May & Butcher; RTS; Mamidoil) and concluded that Kyndryl has at least a real prospect of proving an enforceable Variation Agreement by conduct and that key factual disputes (effective date, calculation of charges, differences between drafts and the Red Schedule) are unsuitable for summary disposal.
• Change-control/no oral modification: The court considered Rock Advertising and held that the distinction between an informal agreement to vary without complying with formalities and an informal agreement to take the formal steps is arguable; it was not appropriate to decide the point finally on summary judgment.
• Express or implied DCHA term: The court concluded Kyndryl had no real prospect of proving the pleaded express or implied term (paragraph 15.2) that JLR would be obliged contractually to agree a variation in the circumstances pleaded; summary judgment was therefore given to JLR on that specific part of the case.
• Estoppel and unjust enrichment: The court declined to strike out the estoppel case as it overlaps with the contract-by-conduct case and permitted amendments to articulate the free-acceptance unjust enrichment case, leaving factual details and particularisation to further pleading/further information and trial.

Procedural outcome: the court granted permission to amend particulars (paragraphs 42A/42B and 69A/69B), granted summary judgment to JLR only on the claim that a term of the DCHA obliged JLR to agree the variation, and otherwise refused summary judgment and strike-out.

This is a first-instance decision. The court dismissed Kyndryl’s claim that there was an express or implied term of the DCHA obliging JLR to agree a variation (paragraph 15.2 of the Particulars of Claim) and granted summary judgment to JLR on that part of the case. In all other respects the defendant’s application for summary judgment and strike-out was refused: the court found Kyndryl has a real prospect of establishing assignment and an enforceable Variation Agreement (or estoppel) and allowed Kyndryl permission to amend its Particulars of Claim to particularise its unjust enrichment/free acceptance case. The court concluded that the remaining contested issues raise factual and legal matters unsuitable for summary disposal and should proceed to trial (and subject to further pleadings and further information where directed).