Moyses Stevens Flowers Limited v Flower Station Limited & Anor

A defence should be struck out only where the pleaded facts, assumed to be true, cannot constitute a legally coherent defence. Summary judgment requires a realistic prospect of success, assessed without conducting a mini-trial but by critically examining the evidence.

An account may be settled by an express or implied agreement, including a course of dealing. Estoppel by convention requires a sufficiently clear common assumption, reliance and detriment or unconscionability. A concession narrowing the facts relied on is not an admission of the claim. Its withdrawal is governed by the discretionary amendment jurisdiction, requiring a balance of prejudice, timing, prospects and the overriding objective.

The claimant sought an account from a former commonly controlled company in respect of inter-company liabilities. The defendant relied on settled account, estoppel by representation and estoppel by convention, alleging that directors had approved company accounts which recorded the relevant balances and that the parties had thereafter treated those balances as final.

The claimant applied to strike out the defences or obtain summary judgment. Following an earlier hearing, a recital recorded that the defendants relied only on approval of the formal accounts and no other agreement or representation. The defendants applied to withdraw that concession. The court had to determine whether the defences had a realistic prospect of success and whether amendment should be permitted.

1. MSFL’s application. The pleaded facts were capable of constituting defences of settled account, estoppel by convention and, considered together with the other pleas, estoppel by representation. A settled account may arise from mutual debits and credits which are expressly or impliedly agreed, including through a course of conduct. The pleading sufficiently alleged that the accounts were agreed and would not later be reopened.
2. For strike out, the court considered only the pleading and assumed its factual allegations to be true. For summary judgment, the court had to assess whether the defence had a realistic, rather than fanciful, prospect of success, while avoiding a mini-trial. The evidence disclosed a sufficiently arguable case that the parties had treated the balances in successive accounts as settled. The absence of evidence from Mr Marcinko strengthened the defendants’ case at this interlocutory stage. MSFL’s application was therefore dismissed.
3. The estoppel by convention case was adequately pleaded. The alleged common assumption that the accounting position was finally set out in the year-end accounts was sufficiently clear. The pleaded reliance on subsequent dealings and the alleged inequity of resiling from the assumption were also sufficient to justify a trial.
4. The Recital Application. The recital was a concession, not an admission. It narrowed the facts on which the defendants relied but did not admit any part of MSFL’s claim. The application was therefore governed by the amendment jurisdiction under CPR r 17.3, rather than the test for withdrawal of an admission.
5. Although the application was late and MSFL had incurred expense in reliance on the concession, the underlying factual enquiry had been apparent throughout and the defendants’ defence had a realistic prospect of success. Refusing amendment would effectively prevent the defendants defending a claim potentially worth up to £2.5 million. Balancing the prejudice to both parties and the overriding objective, permission was granted to withdraw the concession by amendment.
6. The defendants’ application was allowed and MSFL’s application was dismissed. No further amendment or Part 18 response was directed.