Moyses Stevens Flowers Limited v Flower Station Limited & Anor

The claimant sought strike out of the defendant’s defences and alternatively summary judgment in a claim for an account of inter-company liabilities and related remedies. The core contested defences were settled account, estoppel by representation and estoppel by convention, said to arise from the preparation, approval and filing of the companies’ year-end accounts prepared by the parties’ mutual accountants. The court applied the CPR strike-out and summary judgment tests (CPR r 3.4 and r 24.3), and legal principles on settled account and estoppel as summarised in authority cited in the judgment.

Master Brightwell held that the pleaded defences were coherently formulated and, supported by witness evidence from the first defendant and the accountants, had a realistic (not merely fanciful) prospect of success such that summary disposal was inappropriate. The court also held that a recital made at an earlier hearing amounted to a concession narrowing the defendant’s pleaded case but was properly withdrawn by amendment under CPR r 17.3 because the balance of injustice favoured permitting withdrawal: the defence as amended had real prospects and the prejudice of barring the defence outweighed the prejudice to the claimant caused by the belatedness and inconvenience.

Background and parties. The claimant, Moyses Stevens Flowers Ltd (MSFL), and the first defendant, Flower Station Ltd (FSL), traded in flowers and had been under common ownership and control until about August 2020. MSFL claimed an account and repayment of sums paid on behalf of FSL (alternatively restitution or money had and received). The second defendant, Mr David Cohen, was joined later and faces a derivative allegation of breach of fiduciary or equitable duties as a director with accounting responsibilities.

Procedural posture and relief sought. MSFL applied on 23 June 2023 to strike out parts of FSL’s defence and for summary judgment on the pleaded settled-account/estoppel defences. FSL applied to the court on 10 November 2023 for an order declaring the meaning of, or permitting withdrawal of, a recital to an earlier order of 14 April 2023 that had limited the defendants’ case; alternatively FSL sought permission to withdraw the concession contained in the recital.

Issues framed. The principal issues were (i) whether FSL’s pleaded defences of settled account, estoppel by representation and estoppel by convention disclosed reasonable grounds for defending the claim or whether they had no real prospect of success such that strike out or summary judgment should be granted; and (ii) whether the defendants should be permitted to withdraw the concession in the April 2023 recital and thereby rely on the fuller pleaded case and witness evidence.

Court’s reasoning. On strike out and summary judgment the court assessed the pleadings against CPR r 3.4 and the real-prospects test in CPR r 24.3 and relevant authorities. The court concluded that the pleaded case, taken with the contemporaneous witness evidence filed by FSL (notably the first defendant and the accountants), established a coherent basis for inferring an implied agreement or common assumption that year-end statutory accounts between 2016–2019 operated as a settled position such that the accounts would not be routinely re-opened. The judge considered that the defendants’ case was not merely fanciful and that a trial was required to assess inferences and credibility, particularly in the absence of evidence from MSFL’s director who had approved those accounts.

Withdrawal of the recital. The court found the April 2023 recital did constitute a concession narrowing the matters FSL relied upon, albeit not an admission of the claimant’s case. Applying the CPR r 17.3 amendment principles and balancing prejudice, the court allowed FSL leave to amend to withdraw the recital. The judge considered the application late but not very late, that both parties bore responsibility for delay, and that preventing FSL from defending would cause real injustice given the realistic prospects of its defence.

Outcome. The claimant’s strike-out/summary judgment application was dismissed and the defendants were granted permission to withdraw the concession by amendment; the court declined to require further particulars or Part 18 responses in light of the evidence provided.

At first instance the court dismissed the claimant’s application to strike out the defences and for summary judgment and granted the defendants permission to amend so as to withdraw the concession contained in the recital to the 14 April 2023 order. Rationale: the pleaded defences (settled account, estoppel by representation and estoppel by convention) were coherent and, supported by defendant and accountant witness evidence, had a realistic prospect of success; permitting withdrawal of the recital was justified on the CPR r 17.3 amendment balance of prejudice and the overriding objective.