Mears Ltd v Shoreline Housing Partnership Ltd [2013] EWHC 27 (TCC)

[2013] EWHC 27 (TCC)Case No HT 12 209
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 17 th January 2013
Before
MR JUSTICE AKENHEAD
Between
MEARS LIMITEDClaimantSHORELINE HOUSING PARTNERSHIP LIMITEDDefendant
Luke Wygas (instructed by Ashfords) for ClaimantMarc Rowlands QC (instructed by Cobbetts LLP) for DefendantHearing Hearing date: 17 December 2012
JUDGMENT
[1]The Defendant, Shoreline Housing Partnership Ltd (“SHP”) seeks summary judgment against the Claimant, Mears Limited ("Mears"), alternatively to strike out the Particulars of Claim as disclosing no reasonable grounds for bringing its Claim. Alternatively a conditional order is sought requiring Mears to pay a sum of money into court and costs because it "has no real prospect of succeeding on the claim and there is no other reason why the claim should be disposed of at trial." The Basic Facts[2]Whilst I do not intend to make any findings which are binding ultimately on the trial judge, these facts have been culled from the pleadings and the (unnecessarily) voluminous documentation which both parties have lodged in connection with this application.[3]SHP has a substantial amount of properties for which it needs a facility to repair and maintain. It wanted to retain contractors to carry out what is called responsive maintenance for these properties. Responsive maintenance can vary from changing a washer on a leaking tap to more complex repair or maintenance work. Over the last 20 or 30 years in this country, responsive maintenance for large organisations, for instance supermarket chains, has become very popular. The basis is often that the client and the contractor are linked by computer and when some urgent or less urgent work is required, a request or instruction is issued to the contractor which then goes to the relevant site and does the work. SHP’s computer system was called “Anite". Typically, the contracts list all the typical types of work, usually separately costed, so that there is a standard charge for the standard types of work and the contractor will charge accordingly.[4]By way of a competitive tender, Mears bid for what has come to be called the Responsive Maintenance Contract (the "R&M Contract") and, it asserts, it "won the tender" in March 2009. This was to replace an existing contract between SHP and a company called SPS. Between then and July 2009 when Mears actually began to carry out the work, a number of the key events upon which Mears’ case depends occurred or are said to have occurred.[5]The tender was to be and was based on the use of the NEC 3 term service contract June 2005. It was treated as a public procurement subject to the Public Contract Regulations. Tenderers were required to price a "Price List” running to 87 pages which contained under 18 different Sections a substantial number of different types of work. For example, on page 72 there were set out items for electrical work of renewing fluorescent fittings or pull switches in shower units. Quantity, unit, rate and price columns were provided with the rate and price to be filled in by tenderers. Section 17 was to deal with "emergency callout works" both out of hours and not out of hours. Mears’ quoted rates for "Emergency call out works other than out of hours service" and "Emergency call out works out of hours service" were £35.85 and £42.37 respectively.[6]It seems that, subject to contract, Mears’ tender was accepted in or about March 2009 and over the next three months there were some continuing discussions between the parties. The main events with which this case is mainly concerned are said to have occurred in May and June 2009. It is asserted by Mears (in its Amended Particulars of Claim) that:(a) The parties took part in a "process mapping exercise" to discuss the practicalities as to how the project was to proceed.(b) This exercise identified that the Schedule of Rates upon which the accepted tender was based was “not complete with regard to reactive repairs or maintenance". There were, it is argued, no "appropriate rates" in the Schedule for such work and therefore Mears would have to charge for such on an individual basis based on labour and materials utilised and that the number of inspections of work completed would be higher than desirable.(c) There were three meetings on 21 May 2009 between Mears and SHP. The “Third 21 May Meeting" was attended by Messrs Lester and Critchley for Mears and Clarke and Tomkinson for SHP and was "called specifically to discuss the Composite Codes” with regard to the reactive repairs or maintenance work discussed at an earlier meeting that day when it had been identified that these codes "had to be agreed before Mears could start work". Proposals for these Composite Codes were discussed and there was "agreement as to how to proceed": Mr Critchley would draft a document to explain how the Composite Codes would operate, this document becoming known as the Composite Codes Explanation Document ("CRED”). Mr Tomkinson was "satisfied with the figures to be used for the Composite Codes as they were derived from the Price List which was the basis for the tender and were auditable".(d) At this meeting "Mr Lester asked Mr Clarke and Mr Tomkinson if it would be necessary to amend the R&M Contract to take account of Composite Codes” and “Mr Tomkinson (with whom Mr Clarke agreed) stated that there was no need to amend the R&M Contract and that Mears would be paid the Composite Codes (when appropriate), even though the Composite Codes were not included in the original Price List, if the CRED was agreed by both parties”.(e) The CRED was then circulated on 22 May 2009 being subsequently discussed and agreed at the Core group Meeting on 27 May 2009.(f) SHP and Mears met again on 2 June 2009 where the agreement to use the Composite Codes (as explained in the CRED) was again recorded.[7]The CRED, drawn up by Mears, was a six page document which contained an "Overview", "Objectives" and "Solution". Material parts are as follows: “Overview The SHP Customer Contract Centre (CCC) has historically raised jobs by selecting a number of codes that they deem to represent the repair that the tenant has explained to them. This is a time consuming process, and as a result of limited technical knowledge within the team, is often a pointless exercise as the whole repair has to be varied anyway… In the past, the operations team has attempted to manage and plan the service based on the front end order that is raised by the CCC. In the main this has proved unsuccessful. The misdiagnosis also results in considerable frustrations for the Craftworkers. The whole process has [led] to a fractious relationship between SPS and the CCC. …it became evident that a new streamlined ordering process needed to be established… Objectives 1. To develop a set of composite codes that allow call takers to raise a job quickly, allocate an appointment, and relieve the necessity for a complex schedule of rates… 3. To reinforce cost certainty on Anite and offer SHP the ability to project and control the repairs budget. Solution 1. Establish a single code that will allow call takers to identify trade and appointment time, and give a broad description of work. 2. Ensure that this single code covers getting an operative to site, and effecting minor repairs and establishing solutions. 3. Additional codes will then be used to complete larger jobs. 4. Average additional codes by trade and priority will be included on the original order to cover this and offer SHP greater cost certainty. Unlike the original single code this average rate will be replaced with actual rates once the craftworkers are on site. 5. This average cost will be reconciled monthly with actual usage figures…" There were then set out what were called "Initial Ordering Rates" for Emergency, Urgent and Routine works which for each of them were £35.85, £42.37 and £42.37 respectively. The "Average Additional Work Rates" were identified as “£0” in the attached tables but Pages 5 and 6 provided information about Average Additional Work Rates and as to how they were to be calculated and a "Worked Example" for Brickwork was provided. …it became evident that a new streamlined ordering process needed to be established… Objectives

Solution

[8]The parties agreed that the starting date for the R&M Contract should be 20 July 2009 and indeed from that date Mears began to provide services running into many thousands of different items of work. The final terms of the R&M Contract were negotiated and it was finally signed, sealed and delivered by both parties in early January 2010, although it was backdated to 20 July 2009. At some stage thereafter, SHP deducted some £300,000 on the basis that payment should not have been made on the Composite Code basis. This was later referred to in the Particulars of Claim as "the Deduction".[9]At least for the purposes of the current applications, both parties accepted the following:(a) The CRED was agreed between the parties before the R&M Contract came into effect.(b) The Composite Rates were agreed between the parties before the R&M Contract came into effect.(c) Mears was paid on the basis of the Composite Rates after the R&M Contract came into effect for some 5-6 months.(d) At some stage after the R&M Contract was signed, sealed and delivered in early January 2010, SHP deducted from sums otherwise due to Mears sums paid to Mears by it on the basis of the Composite Rates.(e) The R&M Contract as signed, sealed and delivered does not permit payment to Mears on the basis of the Composite Rates.[10]It is unnecessary to set out the R&M Contract in any detail other than the following:(a) Clauses 12.3 and 12. 4 stated: “12.3 No change to this contract, unless provided for by the conditions of contract, has effect unless it has been agreed, confirmed in writing and signed by the Parties. 12.4 This contract is the entire agreement between the parties."(b) Clauses 50, 51 and 52 provided for payment to of "Defined Cost" and Clause 53 providing for a system whereby there was to be a pain/and gain sharing arrangement between the parties.[11]In October 2010, SHP instituted an adjudication which sought decisions on different issues between the parties including whether "the Total of the Prices is determined only by reference to the Price List codes specifically as set out in the Contract…" This raised the issue which is at least partly in dispute between the parties in this litigation. It seems that the adjudication proceeded on the basis that only legal issues of interpretation arose and indeed that is referred to in the adjudicator's decision dated 10 November 2010. These Proceedings[12]The Claimant issued its proceedings in the TCC on 4 July 2012. Its initial Particulars of Claim were, at least in some respects, infelicitously drawn. In broad terms the pleading set out the history as above but was based on four grounds: a "Responsive Contract" created before July 2009, an amendment to the R&M Contract and estoppel whereby SHP was estopped from withholding the Deduction, such estoppel being by representation.[13]The Defence runs to 24 pages, although some 9 pages set out terms of the R&M Contract. It asserted at the beginning that the Particulars of Claim were inadequately particularised, failed to set out cogently or coherently Mears’ case, failed properly to set out the nature or elements of the estoppels relied upon and otherwise was inadequate. Essentially, SHP pleaded that the R&M Contract did not permit payment of the Composite Codes prices and that it was entitled to make the Deduction.[14]A Case Management Conference was fixed for 2 November 2012. It was preceded by the production first of one draft Amended Particulars of Claim which, following strenuous objections, was substituted by a further draft for which permission to amend was given at the CMC. It was made clear by the Defendant that its non-objection to permission to amend being granted was without prejudice to its stated intention of applying to strike it out or to seek summary judgement.[15]On 22 November 2012, SHP issued its application to strike out, alternatively for summary judgement or alternatively for a conditional order requiring Mears to pay money in court. It was supported by a 16 page witness statement from Mr Bessey of SHP’s solicitors which was accompanied by various exhibits, such as the R&M Contract and some of the adjudication documentation and evidence. Much of Mr Bessey’s evidence involves an attempt to show that Mears’ case was confused, contradictory and inconsistent with previous statements and behaviour. That was responded to with two lever arch files of evidence from Mears, comprising three witness statements (Messrs Critchley, Lester and Blake, the latter being a solicitor) and the witness statement dated 22 October 2010 from Mr Lester in the adjudication.[16]So far as the Amended Particulars of Claim are concerned, Paragraphs 10A, 10B, 10C and 10D are summarised at Paragraph 6 above. Paragraph 14 asserts that "SHP was fully involved in the development of the Composite Codes and agreed to use it [sic] in accordance with the CRED”. Various quotations from the CRED follow at Paragraphs 15 and 16. Paragraphs 21 and 22 plead that on dates in September and October 2009 "Mears notified SHP that the Composite Codes had been uploaded on the relevant IT systems being used by the parties" and that by 25 January 2010 “13,605 orders for the work were issued by SHP and Mears under the R&M Contract applying the CRED and using the Composite Codes". Paragraphs 24 to 30 relate more of the history leading up to the Deduction and the dispute between the parties.[17]The Amended Particulars of Claim abandoned expressly the “Responsive Contract" and the amendment to the R&M Contract as a basis of claim and that Paragraph 35 pleads the following (the amendments being underlined): “Estoppel by representation 35A. SHP is estopped from withholding the Deductions. SHP represented that it promised to pay the sums as correctly calculated under the CRED at the meeting on 27 May 2009. Alternatively SHP represented by its conduct that it would pay the sums as correctly calculated under the CRED. Mears will also rely on the representations set out in paragraph 36 below. Mears suffered a detriment as set out at paragraph 37 to 40 below by relying on the representations. Estoppel by convention 35B. Further and or alternatively, the parties at all material times until 25 January 2010 conducted themselves on the common assumption that the Composite Codes would be used as set out in the CRED and that Mears would be paid the Composite Codes where appropriate (as defined in the CRED). It would be unjust or unconscionable for SHP to now deny that assumption. Misrepresentation 35B. Further and or alternatively, Mears relied on the representation of Mr Tomkinson and Mr Clarke that the R&M Contract did not have to be amended even though the Composite Code would be used as set out at paragraph 10C above. 35C. If Mears had been told that Shoreline would rely strictly on the R&M Contract as signed then it would not have agreed to enter into the R&M Contract, unless the Price List included with the R&M Contract was amended to include the Composite Code. 35D. In the premises Mears claims damages for the misrepresentation made by Mr Tomkinson and Mr Clarke at the Third 21 May Meeting." Estoppel by convention

Misrepresentation

[18]Paragraph 36 was headed "Relevant representations" and went on: “Mears will rely, inter alia, on the following representations: 1) SHP represented that it agreed to use the Composite Codes as set out in the CRED. Mears will rely particularly (but not exclusively) on the meetings between the parties on 27 May 2009; 2) SHP represented that there was no need to amend the R&M Contract to include the Composite Code. Mears will rely particularly (but not exclusively) on the Third 21 May Meeting as set out in paragraph 10A to 10C above; and 3) SHP originally paid for the Works in accordance with the Composite Code between 20 July 2009 and 25 January 2010 having audited various jobs which contained Composite Codes, and whilst SHP challenged some costs and or codes it did not challenge the Composite Codes, when used in accordance with the CRED.[19]Paragraphs 37 to 40 address "detriment". Paragraph 37 and 38 assert that Mears suffered a detriment because it was paid less at least on an average per job basis for the period 20 July 2009 to 25 January 2010 after the Deduction was made. Paragraph 39 goes on: “Further, Mears can no longer charge what it would have been entitled to charge for the Works under the R&M Contract due to the passage of time. This is on account of, inter alia: 1) the R&M Contract provides that works not provided for on the SOR [Schedule of Rates] (being works which were included in the Composite Codes) would be paid for on the basis of quotations, compensation events and then agreeing prices before the works were completed or alternatively the relevant elements of the works would have been paid on the basis of codes for labour, materials plus fee; in the premises it is not possible to agree the price of 13,605 orders for Works as the work has now been undertaken; 2) the fact that the Works have been covered up or the subject matter of the Works have been subsequently altered or re-used, and 3) It is not now possible to ascertain the full detail of the individual items of the Works particularly given that there are 13,605 orders for Works for the period 20 July 2009 to 25 January 2010 and there are up to 8000 properties or thereabouts across which the works could have been carried out, such that making arrangements to access alone would be disproportionate."[20]In the prayer the Claimant claims:
"1) Damages on account of SHP’s misrepresentation; 2) Interest; 3) Costs; 4) Equitable relief as appropriate."
[21]Further Information has been provided firstly in relation to the original Particulars of Claim. Particulars were given in Responses 13 to 18 of the agreements on which the original pleading was largely based with the agreement said to be reached on 27 May 2009. What turned into Paragraphs 10A to 10C of the amended pleading was pleaded in Response 23, virtually verbatim. Under Paragraph 35 when asked to state the nature of the estoppel relied upon, Response 47 stated:
"at this stage, and without prejudice to relying on any estoppels which are available to Mears on the facts pleaded, Mears relies upon estoppel by convention and estoppel by representation."
[22]A second batch of Further Information was given in relation to the Amended Particulars of Claim. In answer to Request 1 relating to Paragraphs 10A, 10B and 10C ("Please state whether or not the meeting, including any of the representations or agreements alleged to have been made at that meeting, were recorded or otherwise evidenced in writing. If so, please provide copies of all documents in which such meeting, including any of the alleged agreements, are recorded or otherwise evidence"), the response was: “This is a request for detailed evidence and it is not necessary to understand Mears’ case. In the premises it is not an appropriate request for further information. Without prejudice to the previous two sentences, at this stage, Mears is not able to provide copies of all relevant documents as this will include a review of all relevant day books, e-mail accounts and notes. Mears will provide the relevant disclosure in accordance with the court timetable." In relation to the Estoppel by Representation allegations in Paragraph 35 and 36, in answer to Request 5 ("Please state with precision each clear and unequivocal representation of fact (as opposed to future intention, or promise to do something in the future), which was false, relied upon"), the answer was: “SHP represented that there was no need to amend the R&M Contract (which included the Price List) on account of the agreement to use the Composite Codes. Given SHP’s case is now that it would be necessary to amend the R&M Contract (which included Price List) for Mears to be paid under the Composite Codes, the representation was false." In relation to Estoppel by Convention, in answer to Request 12 (“…please state the date on and manner in which such [common] assumption was so shared") Mears pleaded: “The assumption as to the fact that there was no need to amend the R&M Contract was expressly shared between the parties in the third meeting on 21 May 2009. The common assumption that Mears would be paid the Composite Code was expressly stated at the process mapping days, meetings on 21 May 2009 and at the meetings on 27 May 2009 and 2 June 2009." Practice[23]SHP relies for its striking out application only on CPR 3.4(2)(a) that “the court may strike out a statement of case it appears to the court…that the statement of case discloses no reasonable grounds from bringing or defending the claim". Essentially, Mr Rowlands QC on behalf of SHP argues that on the pleaded facts the case based on estoppels by representation and convention and misrepresentation are bound to fail. If that is established in a case like this, there can be no doubt that the Claim would be struck.[24]So far as summary judgement is concerned, the principles are repeated time and again by the Courts, for instance in Khatri v Cooperatieve Centrale Raiffeisen-Boerenleenbank BA [2010]EWCA Civ 397 by Jacob LJ:
“3.There was no dispute as to the principles applicable to a claim for summary judgment. Counsel agreed the recent convenient summary by Lewison J in Nigeria v Santolina Investment [2007] EWHC 437 (Ch): 1. The court must consider whether the defendant has a "realistic" as opposed to a "fanciful" prospect of success. 2. A "realistic" defence is one that carries some degree of conviction. This means a defence that is more than merely arguable. 3. In reaching its conclusion the court must not conduct a "mini-trial". 4. This does not mean that the court must take at face value and without analysis everything that a defendant says. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents. 5. However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial. 6. Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without a fuller investigation into the facts at trial than is possible or permissible on an application for summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case.”
Discussion[25]One can look at both parts of the application together. There was a substantial amount of argument, at least in writing and in the witness statements, as to whether or not the factual basis of the Amended Particulars of Claim, and in particular the Third 21 May Meeting, was so unsound and unreliable that it could not stand. I can take this very shortly indeed. Mr Lester and Mr Critchley clearly in their witness statements submitted on this application support the factual assertions made. There are some arguable inconsistencies and it could be argued at trial that the current factual assertions possibly did not see the light of day until the Further Information of the original Particulars of Claim was served (although even that is challenged). However, it is arguably supported by the CRED produced the following day, by the facts agreed for the purpose of this application and by the fact that the Composite Codes formed the basis for payment by SHP for nearly 6 months. What is also at the very least odd is that SHP deployed no contemporaneous evidence, such as from Mr Tomkinson or Mr Clarke, to challenge what Mr Lester and Mr Critchley said. Whilst the original Particulars of Claim were not felicitously drafted and some of what is now pleaded is arguably inconsistent, in the circumstances it would be quite wrong for this Court at this stage without the benefit of mutual disclosure and witness evidence to guess whether and if so to what extent the factual case is weak or strong. I strongly suspect that much will depend on the inherent credibility of Messrs Lester, Critchley, Tomkinson and Clarke. I will therefore proceed upon the basis that sufficient has been produced by Mears on this application to support some arguable factual case.[26]One then moves on to what may well turn out to be an esoteric discussion at an early stage of litigation as to fine principles of law, relating to estoppel and misrepresentation. The basic facts pleaded however are, and I summarise:(a) There was in fact (if not in law) an agreement that the CRED and the Composite Codes should apply and be applied and that there were perceived advantages to both parties in so doing.(b) There was a draft contract around at the time of this agreement which took place in May, possibly going into June, 2009; at the very least there were detailed terms upon which Mears had tendered which were to form the basis of the contract.(c) On Mears’ evidence, it was told and both parties proceeded on the basis that there was or would be no need to amend the R&M Contract terms to reflect the CRED and the Composite Codes and that Mears would be paid on the basis of Composite Codes.(d) The R&M Contract was not amended to reflect this but for the first six months of the Contract operation Mears was paid on this basis. There may be explanations yet to come from SHP as to why it did pay, although those are not particularly well evidenced, albeit I was told that it was only when SHP first did a six monthly check, possibly in the assessment of the pain/gain allowances, that it discovered what it believed were discrepancies.[27]This scenario, if true and factually established, at the very least gives rise to an arguably meritorious position for Mears, both on the facts and the law. What it may well all come down to is a determination of what actually was agreed in May and June 2009. Mr Rowlands QC argued that the CRED properly construed was always only a temporary measure which was to be rationalised by reference to what the actual work done on the various callouts turned out to be. It is not clear at this stage whether the CRED needs to be construed as if it was a contract or contract type document or as simply some reflection of the working understanding which the parties had at the time. What seems to be likely on the evidence, and as broadly conceded by SHP, is that there was some agreement, albeit not a binding contract at such, whereby the CRED and Composite Codes were to be used and deployed, as indeed they were. The real arguments are more likely to revolve what this “agreement” actually was in fact (i.e. did it give rise to an expectation of actual permanent payments which could not be clawed back or was it simply a temporary measure to assist efficiency but which was to be adjusted to reflect the R&M Contract prices?). SHP argues that the CRED and the Composite Codes were used to simplify Mears’ business processes; that may or may not be right, depending on the evidence. There is little or no evidence from SHP as to what any relevant witness might say the CRED and the Composite Codes were for. The explanation, currently unsupported by contemporaneous evidence, that SHP paid out on the Composite Codes without the relevant senior or management staff knowing or appreciating that this was what was going on until late January 2010, is certainly a possibility but it is, currently, undermined by the fact that over £300,000 was paid out to Mears by SHP on many thousands of jobs over a six-month period.[28]I asked Mr Rowlands QC whether English law was so weak that it could not give effect to the “agreement” about the CRED and the Composite Codes. He answered, as any good advocate would, that English law was so strong that it could not allow enforcement of this "agreement". It is therefore necessary, at least briefly at this stage, to review the legal points made by SHP.[29]I will turn first to estoppel by convention. In the Law of Waiver, Variation, and Estoppel by Wilken and Ghaly, the editors make at Paragraph 10.01 the simple statement that this will occur where: “(i) the parties have established, by their construction of their agreement or a common apprehension as to its legal effect, a convention basis; (ii) on that basis the parties have regulated their subsequent dealings; (iii) one party would suffer detriment if the other were to be permitted to resile from that convention". The convention is broadly a "common assumption" which must be "expressly shared between" the parties, the party alleging the estoppel must have conveyed "to the other party an understanding that he expected the other party to rely upon it and that “reliance must have occurred in connection with some subsequent mutual dealings between the parties".[30]Reference was also made to Amalgamated Investment and Property Co Ltd v Texas Commerce International Bank Ltd [1984] 1 WLR 84. Lord Denning MR in that case identified what Wilken and Ghaly call the overarching doctrine: “The doctrine of estoppel is one of the most useful and flexible in the armoury of the law. But it has become overloaded with cases…It has evolved during the last 150 years in a sequence of separate developments…At the same time it has been sought to be limited by a series of maxim…All these can now be seen to merge into one general principle shorn of limitations. When the parties to the transaction proceed on the underlying assumption - either of fact or of law - whether due to mistake or misrepresentation makes no difference - neither of them will be allowed to go back on that assumption when it would be unfair and unjust to allow him so to do. If one of them does seek to go back on it, the courts will give the other such remedy as the equity of the case demands". At Paragraph 10.04, the authors identify later cases in the House of Lords which accept broadly that doctrine. They do go on, however to identify some difficulties "despite such powerful authority".[31]At Paragraphs 10.09 and 10.10, they go on: “For the doctrine to be invoked, the assumption at issue must be shared…First, one party must have acted so that ‘across the line’ between it and the other party, a belief or expectation is created in the mind of the other party. Second, the conduct required for there to be a ‘crossing of the line’ is mutually ‘manifest conduct’ all course of dealing which although not a contract must be ‘something very close to it’...the estoppel may be negatived by the terms of any contract between the parties, the most obvious being the presence of an entire agreement clause. Further, there is some debate as to whether estoppel by convention can arise from pre-contractual negotiations, the fact that negotiations are on foot making it unlikely that there will be a sufficient common assumption... It follows that an estoppel by convention will only rise in limited circumstances..." It follows that an estoppel by convention will only rise in limited circumstances..."[32]At Paragraphs 10.13 to 10.18, the editors consider the application of estoppel by convention as a sword rather than a shield. They say that "an estoppel by convention cannot create, in the proper sense of the word, a cause of action" (Paragraph 10.13) but “estoppel by convention will preclude a party from arguing that a particular state of affairs does not exist" (Paragraph 10.14). They refer to two schools of thought: "the historical expansive approach and the Baird approach", referring to a Court Appeal case in 2001.[33]In my judgment, it is and remains reasonably arguable that estoppel by convention may well or at least could have application in this case if the facts as pleaded by Mears are found to exist. Essentially, if such facts exist, there is or was arguably a convention or common assumption between the parties and it was something "close" to being a contract and was therefore "expressly shared between them"; the entire contract clause in the R&M Contract may not negative this assumption because it is said to have been understood and agreed that the contract did not have to be amended to reflect the common assumption or convention. The common assumption continued and was arguably acted upon by the parties for six months from July 2009 until January 2010 in that work was booked on the CRED basis and payments made on the basis of the Composite Codes. There was detriment on Mears’ case because, as it asserts,(a) it lost the opportunity to quote for the 13,000 plus pieces of work and thus secure adequate payment, and(b) it did not keep records so that it can not now recreate for invoicing purposes all the chargeable work. Of course, SHP has its own answers on the facts such as assertions that in fact (i) Mears has been paid for all the work in accordance with the R&M Contract terms and (ii) what was agreed was not intended to give ultimate rights to payment on the Composite Code basis. However, the Court can not resolve those on this application and without the conflicting evidence being tested.[34]One point, and possibly the best point raised at this stage by SHP, is whether and if so how this particular estoppel by convention can be raised by Mears as Claimant as a “shield” and not a sword. However, I do not see this ultimately as a major potential drawback. In essence, the estoppel is to the effect that the deduction made in or about January 2010 should not have been made by reason of the matters which give rise to the estoppel or put another way SHP was and is estopped from maintaining or retaining that deduction.[35]Turning to the case for estoppel by representation, Wilken and Ghaly summarised the elements of this estoppel at Paragraph 9.01 as follows:
“First, A makes a false representation of fact to B…Second, in making the representation, A intended or knew that it was likely to be acted upon. Third, B, believing the representation, acts to its detriment in reliance on the representation. Fourth, A subsequently seeks to deny the truth of the representation. Fifth, no defence to the estoppel can be raised by A”
. They go on to say at Paragraph 9.04 that the "weight of authority favours the view that estoppel by representation is a rule of evidence rather than of substantive law. The doctrine does not, in itself, amount to a cause of action."[36]The primary point raised by Mr Rowlands in this context is that the representation here relied upon is not a representation of fact but merely at best one of intention: representations relied upon are a promise to pay, an agreement to use the Composite Code and a representation that there was no need to amend the R&M Contract. Wilken and Ghaly say at Paragraph 9.20: “The representation must be one of fact which is untrue. A representation as to future intention does not give rise to an estoppel by representation. Hence a promise to do something in the future does not trigger the operation of the doctrine even where detrimental reliance has taken place. If such representations are to have legal effect, it must be in contract, waiver, proprietary estoppel or promissory estoppel/equitable forbearance".[37]In the light of the authorities, the promise to pay pleaded in Paragraph 35 can not as such readily support an estoppel by representation, neither can an agreement as such to use the Composite Codes (as pleaded in Paragraph 35 and Paragraph 36(1)). However, it is arguable that the representation by SHP that there was no need to amend the contract which was in the course of being finalised to allow for the Composite Code payments was a representation of fact, albeit that it was an expression of intention. As Wilken and Ghaly say at Paragraph 9.27, a "representation of present intention may amount to a representation of fact" quoting from the well-known case of Edgington v Fitzmaurice [1885] 29 Ch D 459, 483. It could be said therefore that the representation was a continuing one all the way up until the time that the contract was signed, sealed and delivered, there being no suggestion that it was withdrawn; it could be said that the representation was continued by conduct in that the parties acted upon it until January 2010 and there was no amendment to the R&M Contract. It would follow that arguably SHP would be estopped from arguing that the R&M Contract needed amending to reflect the “agreement” relating to the CRED and the Composite Codes.[38]In relation to misrepresentation, similar considerations apply in relation to the representation that the R&M Contract did not have to be amended even though the Composite Codes were to be used, in that there was arguably an expression of intention which was continued by being acted upon and by not being withdrawn. As also for the estoppel by representation, it could be said that, if the representation had not been made or was not withdrawn, Mears would not have entered into a contract which prevented it from recovering payment on the basis of the Composite Codes.[39]It is arguable that the Court could surgically remove some minor elements of the Amended Particulars of Claim; however such has not been argued. In essence, SHP through its Counsel argues that the whole case should be struck out or at least one or more of the three bases of claim should be; he did not argue that individual sub-elements within each of the three bases should be struck out.[40]Although, on the basis of the arguments and evidence put before me, I consider that the case based on estoppel by convention is the strongest of the three, that does not mean that the Court should strike out the other two bases. This judgment will impact upon the judgment at trial and it may therefore be that the estoppel by representation based on an agreement or promise to pay as such will not succeed but I do not think that it is appropriate to cherry pick relatively minor elements, in the absence of a proper factual investigation of what was actually said and done over the period from May 2009 to January 2010. Decision[41]SHP’s application to strike out and for summary judgement is dismissed. This is a case which will ultimately turn on the factual findings which will be made, the nuances of the evidence and the inferences which can be drawn from what the more reliable witnesses say and the contemporaneous documents record.

Cited in 1 later judgment