Winch Design Limited v Carl Le Souef

A written commercial contract is construed objectively, giving primary weight to its language while considering the contract as a whole, its purpose, relevant background and commercial common sense. Clear contractual identification of the parties cannot be contradicted by background evidence. Rectification for common mistake requires a shared actual intention and an outward expression of accord. Estoppel by convention requires a communicated common assumption, reliance or material influence, and unconscionability. Where a contract makes staged payments due on specified dates, those payments may be accrued debts even though performance is divided into stages. A contractual right to suspend services for non-payment may defeat a counterclaim based on non-performance.

Winch Design Limited claimed £733,750 from Carl Le Souef under a contract for design services for a luxury residential yacht project. Somnio Superyachts Pty Limited was joined as a Part 20 defendant. The defendants disputed whether Mr Le Souef or Somnio was the contractual counterparty, contended that payment was conditional on performance or project funding, alleged an agreement or estoppel postponing enforcement, and counterclaimed for alleged non-performance and consequential loss.

The court had to determine the proper construction of the Initial Contract and Addendum, the claims for rectification and estoppel, the enforceability of the disputed invoices, the alleged forbearance arrangement, and the counterclaim.

1. Contracting party. The Initial Contract expressly identified Mr Le Souef as Client, defined the parties by reference to him, and was signed on his behalf. The Addendum likewise described the contract as being between Mr Le Souef and Winch. The wording was clear and could not be contradicted by the project’s use of Somnio as a special purpose vehicle or by invoices issued to Somnio. The reasoning in Gregor Fisken Ltd v Carl [2021] EWCA Civ 792 was applied. The claims for rectification and estoppel by convention failed because there was no outward expression of accord or communicated common assumption that Somnio was the counterparty.
2. Payment terms. On an iterative construction of the Contract, the payment schedule and clauses 5.2 and 5.6 made the disputed invoices accrued debts payable within 30 days of invoice. The payment obligation was not conditional on prior substantial performance of the relevant stage. The defendants had also repeatedly acknowledged the debts, although the alternative estoppel analysis was unnecessary.
3. Forbearance. The alleged promise at the October 2021 dinner was rejected on the evidence. The contemporaneous emails did not record it, and the account was commercially improbable. There was therefore no collateral contract or promissory estoppel.
4. Performance and counterclaim. Clause 12.1 entitled Winch to suspend services after notice of non-payment. Winch validly suspended performance and later terminated the Contract. It was not obliged to provide services by fixed dates while the invoices remained unpaid, and the defendants could not rely on their own breach. The counterclaim also failed for defective pleading and lack of evidence of recoverable loss.
5. Judgment was entered for Winch against Mr Le Souef for £733,750, with interest at 3% per annum above Base Rate under clause 5.6. The counterclaim was dismissed.