PM Project Services Ltd v Dairy Crest Ltd [2016] EWHC 1235 (TCC)

Case No HT-2016-000040[2016] EWHC 1235 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 13/06/2016
Before
MR JUSTICE EDWARDS-STUART
Between
PM PROJECT SERVICES LIMITEDClaimantDAIRY CREST LIMITEDDefendant
Mr James Bowling (instructed by Weightmans LLP) for ClaimantMr Simon Henderson (instructed by Eversheds LLP) for DefendantHearing Hearing date: 20 th May 2016
JudgmentIntroduction
[1]This is an application by the Claimant (“PM”) for summary judgment against the Defendant (“Dairy Crest”) in relation to three separate claims:(1) An invoice dated 18 December 2015 for £784,661.97 due under a Deed of Variation made between PM and Dairy Crest in about March or April 2015.(2) Seven invoices relating to “Change Orders” issued to PM by Dairy Crest with an aggregate value of £29,532.(3) Seven invoices relating to construction management and additional preliminaries with a total value of £420,036.76.[2]All three limbs of the application are opposed by Dairy Crest. The second and third limbs of the application were supported by the witness statement of a Mr Dean, to which were exhibited documents running to over 750 pages. Unfortunately, the page references in Mr Dean’s witness statement are different from those in the bundle prepared for the hearing and the original page numbers have not been retained. Thus, when Mr Dean refers to a TS01 Report dated 8 December 2015 at paragraph 22 of his witness statement, which is said to be found at pages 174-186 of his Exhibit MD6, this is of little help because that exhibit starts at page 400. Although it is not obvious, a careful perusal of the exhibits reveals that there is an index to each exhibit inserted behind the cover sheet. If one works one’s way through the index for Exhibit MD6, the TS01 Report is shown as being at page 24. It is, in fact, at page 428 of the bundle. It is not at page 424, as one might expect, because a spreadsheet running to 4 numbered pages has been inserted immediately behind the index.[3]In the application notice it was stated that three hours would be needed for the hearing, although it was in fact listed for half a day. It was suggested that three hours would be required for pre-reading, although in my view this estimate would have been on the low side even if the application bundles had been properly paginated. As it was, any sensible pre-reading was derailed by the manner of the pagination of the exhibits to Mr Dean’s witness statement. After about two hours of reading the papers I concluded that the handicap presented by the pagination would prevent the necessary amount of reading taking place before the hearing. I therefore said at the outset of the hearing that I was not prepared to hear the second and third limbs of the application, but that I would hear the first (which did not rely on the evidence of Mr Dean). That is what happened: but, even so, the hearing of that claim alone took 1 hour and 45 minutes. If I had decided to embark on a hearing of all three limbs of the application, there is no prospect whatever that it could have been finished in a morning.[4]I have directed that when this judgment has been handed down the bundles are to be returned to PM’s solicitors in order that the witness statement of Mr Dean can have the correct bundle references inserted. The costs of that exercise and any costs thrown away by the necessity to adjourn the second and third limbs of the application must be borne by PM.[5]PM was represented by Mr James Bowling, instructed by Weightmans LLP, and Dairy Crest was represented by Mr Simon Henderson, instructed by Eversheds LLP. I am grateful to them both for their helpful and succinct submissions.

The test for summary judgment

[6]It is accepted that the burden under CPR 24.2 is on a claimant to show that any defences advanced have “no real prospect of success”, which means having prospects of success that are more than fanciful and which is not merely arguable.

The facts

[7]These can be summarised quite shortly. PM is a consultancy which carries out design and project management in construction projects. Dairy Crest is a well-known manufacturer of food products. It has a factory at Davidstow in Cornwall.[8]In about 2012 Dairy Crest decided to construct two new facilities at Davidstow. To this end it entered into a Management Services Framework Agreement (“MSFA”) with PM. Each project was the subject of an Assignment Order under the MSFA. The order values were about £20 million and £45 million, respectively. For present purposes, the relevant main contractor was a company known as “Rotary”, which was responsible for the mechanical, electrical and pipework (“MEP”) aspects of the projects. The initial indications of PM’s fees for its engagement were about £3.5 million for the two projects.[9]The projects ran into considerable delay and, in or about late March or early April 2015, the parties entered into a Deed of Variation (“DOV”). By this deed two projects were merged into a single Assignment Order. The effective date of the DOV was 25 March 2015. It appears that when it was entered into the parties hoped, if not expected, that Rotary would complete its work by 8 July 2015. The parties agreed that PM would be entitled to payment of a further £784,661.97 in respect of services provided or to be provided as set out in the DOV. This was to be paid on the earlier of(a) the date of completion by Rotary of its MEP works or(b) 8 October 2015. This payment was known, for reasons which I never discovered, as the “balloon payment” and it is the claim for this that forms the first limb of the application.[10]The DOV provided also that in the event that completion was not achieved by 8 July 2015, PM would be entitled to further payment for services performed after that date. Some of those services are the subject of the second and third limbs of PM’s application.[11]The DOV made no provision for deferment of the balloon payment beyond the long stop date of 8 October 2015. In addition, it was expressly made payable in full 14 days after submission of an invoice, without set-off or deduction.[12]Unfortunately, Rotary did not achieve completion by 8 July 2015 and by September 2015 it had become clear that completion was still some way off. There was a high level meeting to discuss the position on 28 September 2015. The meeting of 28 September 2015[13]This meeting was attended by Mr David Murphy, the CEO of PM, and Mr O’Connell, a director of PM, and Mr Mark Allen, CEO of Dairy Crest, and Mr Mike Barrington, Supply Chain Director at Dairy Crest. For almost all the meeting they discussed current issues on the project and ways of dealing with them. It seems that Dairy Crest’s team came armed with a written presentation, which had been prepared in some detail. However, neither party prepared any form of agenda for the meeting; I was told by Mr Bowling that Dairy Crest’s written presentation took PM by surprise.[14]I can take up the account of what happened towards the end of the meeting from the witness statements of Mr O’Connell and Mr Barrington. Mr O’Connell said this, at paragraph 16 of his witness statement:
“Towards the end of the meeting, Mr Allen raised the matter of PM’s invoice for the sum of £784,661.97 due under the Deed of Variation. I recall that Mr Allen said, “you’re not going to issue that are you?” or words to that effect. As the tone of the meeting had been cordial, Mr Murphy responded by saying “yes we [ie. Mr Murphy and I] will delay invoicing of this payment” or words to that effect.”
[15]Mr Barrington’s version, at paragraph 26.3 of his witness statement, is as follows:
“At the end of the meeting, I recall that Mark Allen did say something along the lines of “one other thing, I take it you are not going to bill us for your final payment, given everything we have said?”
. I agree that paragraph 16 of Mr O’Connell’s statement is accurate and in particular that Mr Murphy confirmed that PMG would delay the invoicing of the Balloon Payment. However, what is missing from John O’Connell’s recollection is the remainder of the exchange. Mr Murphy, having agreed that PMG would delay the invoicing of the Balloon Payment then went on to ask whether Dairy Crest would pay (the Balloon Payment) eventually; to which Mark Allen replied “we will have to talk about that nearer at the time” and Mr Murphy replied “fair enough” (or words to that effect).”[16]In my view it is quite clear from this that no indication was given by PM as to the period for which submission of the balloon payment invoice would be deferred. However, it is clear also that the promise to defer presentation of this invoice was not some throwaway remark by Mr Murphy. This is evidenced by the fact that following the meeting, on 2 October 2015, Mr O’Connell sent an e-mail to Mr Barrington in which he said:
“Just to circle back to our meeting of 28th September 2015. . . . We also acknowledge your commitment to maintaining your payment regime in respect of our monthly invoicing schedule. As a gesture of commercial goodwill from PM Group to Dairy Crest, we confirm our offer to defer issuing our invoice for the sum of £784,661.97 until the date of Completion, as per the DOV.”
[17]In his witness statement Mr O’Connell said very candidly that the words “until the date of Completion, as per the DOV” were not said at the meeting, but that he added them to the e-mail in order to “place some certainty on what would otherwise be an “open-ended” statement”. In my view it is clear that the statement made by Mr Murphy during the meeting, as varied or qualified by Mr O’Connell’s e-mail, was one that was intended to be taken seriously by Dairy Crest and was made in the clear knowledge of PM’s entitlement to the balloon payment 14 days after 8 October 2015, subject only to the submission of an appropriate invoice. When PM said unequivocally that it would defer its invoice to a date beyond 8 October 2015, I find that it was clearly intending that the statement should be taken at face value and relied on by Dairy Crest.[18]Mr Barrington replied to Mr O’Connell’s e-mail on 6 October 2015. In that e-mail he said this:
“In light of the delay to completion, I welcome your agreement to delay the invoicing for the final fee payment of £784,661.97. My understanding from our meeting is that this will be 3 months after project completion (i.e. in line with the original principle in the DOV) . . . .”
[19]Mr O’Connell replied on 12 October 2015 in the following terms:
“The concession we made, in good faith, regarding the timing of the invoice we will issue for the final fee payment of £784,661.97, was that we will defer raising that invoice until completion of our role on the project as per the DOV. There was no intention of deferring that invoice by an additional three months after completion. . . . To be clear, I would like to reiterate that we agreed at the meeting to defer the invoicing for the final fee payment of £784,661.97 until completion of our role in the project, as per the DOV. This is the extent of the commercial gesture we have made to Dairy Crest. This is, of course, contingent on timely payment of our on-going monthly invoices by Dairy Crest.”
[20]There were further e-mails between Mr O’Connell and Mr Barrington in which each maintained his position without making any concessions to the position of the other.[21]On 18 December 2015 PM apparently took the view that Rotary had achieved completion and issued its invoice for the balloon payment. This received the following response from Dairy Crest in a letter dated 22 December 2015:
“We acknowledge receipt of your invoice no. 309105772 dated 18 December 2015 of the sum of £784,661.97 plus VAT, however, we consider that this invoice has been issued prematurely and contrary to an agreement reached between us. At a meeting on 28 September 2015 it was agreed, as subsequently set out in the e-mail of Mr John O’Connell of PMG of [28 September] The date of 28 September is clearly an error: however, the time of the e-mail is correct. 2015 at 15.59, thus: “… We agreed at the meeting to defer the invoicing for the final fee payment of £784,661.97 until completion of our role in the project, as per the DOV . . . This is, of course, contingent on timely payment of our on-going monthly invoices by Dairy Crest.”
For the avoidance of doubt, Dairy Crest confirms that the above statement is a correct record of the agreement reached. However, contrary to the above agreement, your invoice in respect of the final fee payment has been issued before the completion of PMG’s “. . . role in the project . . .” . By way of example, we record that PMG have responsibilities outstanding relating to the snagging of the works, are yet to conclude the contractor’s final accounts, and are still to provide a full handover of project documentation including operating and maintenance manuals. This is by no means an exhaustive list of PMG’s outstanding services to be completed. We therefore consider your invoice has been issued prematurely and is therefore not due to be considered for payment. Please confirm that the said invoice is withdrawn pending completion of PMG services. For completeness, this letter also acts as a payment notice for the sum of zero pounds in respect of your invoice no. 309105772 on the basis set out above, namely that the sums claimed in the invoice are by agreement of 28th September not due.”[22]Dairy Crest’s evidence on this application is to the effect that not only had PM not completed its role on the project, but also that Rotary had not achieved completion by 18 December 2015. Indeed, the evidence of a Mr Draper, a procurement consultant engaged by Dairy Crest, was that the MEP works were still incomplete at the time when he made his witness statement on 12 May 2016. He said that an Excel spreadsheet prepared by PM and submitted to Dairy Crest on 22 December 2015 with a view to showing that the MEP works were complete, did not in fact show this: for example, certain items were said to be ready for commissioning, but had not in fact been commissioned by 22 December 2015. Accordingly, Dairy Crest’s case was that, irrespective of which party’s position was correct about the event that triggered the entitlement to the balloon payment, that event had not happened by 18 December 2015.[23]That is an issue of fact that I am in no position to determine on this application: it plainly raises a triable issue for the purposes of an application under CPR Part 24.[24]Further, according to Mr Barrington, PM “walked off site and ceased performing their services on 11 February 2016”. Mr Draper says the same. On one view this suggests that PM repudiated the contract by ceasing performance on 11 February 2016. Alternatively, PM may say that it left site in response to what it saw as repudiatory conduct by Dairy Crest. However, whatever the true position it seems reasonably clear that the contract is now at an end and that it is at least reasonably arguable that neither party remains liable to perform its primary obligations under either the MSFA or the DOV. In that situation each party would be left to its remedy in damages. At any rate, that is the position suggested by the evidence although I am not in a position to make any findings one way or the other: it is an issue that can be determined only at a trial.

Was there a binding variation of the DOV?

[25]Mr Henderson’s primary case was that the exchange of e-mails in October 2015 constituted a binding agreement by which PM agreed to defer submission of the invoice for the balloon payment until, at least, achievement of completion by Rotary. There is, he submits, a triable issue about whether Rotary had achieved completion on 18 December 2015 and so this application in respect of the balloon payment must fail.[26]In my view, there was no binding variation of the contract. This is for two reasons. First, there was no agreement as to the period of deferment of presentation of the invoice for the balloon payment. A failure to agree on such a crucial term of the variation is fatal to any submission that the parties concluded a contract. Second, there was no consideration.[27]Mr Henderson submitted that there was consideration in the form of Dairy Crest’s forbearance at the time to pursue other remedies available to it. There are two difficulties with this submission: first, there is no evidence that any such intention was communicated to PM and, second, there is no evidence as to any particular remedy that Dairy Crest gave up or which it decided not to pursue at the time. Whilst the law does not demand much by way of consideration, it does at least demand that the other party was aware of the consideration being offered and that the consideration is capable of being identified.[28]Mr Bowling referred me to a decision of the Court of Appeal in Collier v P & MJ Wright (Holdings) Ltd [2007] 1 WLR 643, in which an agreement between the applicant and a credit company to accept his proportion of a debt in satisfaction of his joint liability for the full amount of the debt was held to be not binding in law because there was no consideration to support it. However, the court did go on to hold that there was a triable issue as to whether to permit the creditor to resile from his promise to accept the debtor’s proportion would be inequitable where during the ensuing five years the debtor had paid off the full amount of his share on the faith of the agreement.[29]Accordingly, in my judgment the submission that there was a binding variation of the DOV is hopeless and provides no arguable defence to the claim for payment of the invoice issued in respect of the balloon payment.[30]Mr Henderson’s alternative argument, although not one strongly advanced in his written submissions, was that PM is estopped from enforcing its claim to the balloon payment in the light of what passed between the parties in September and October 2015.[31]This is advanced as an example of the type of situation that falls directly within the principle established by Lord Cairns in Hughes v Metropolitan Railway (1877) 2 App Cas 439. He said that if one party leads the other “to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties.”[32]For the reasons that I have already given I do not have the slightest doubt that in this case PM, by what it said at the meeting on 28 September 2015 and in the subsequent e-mails, led Dairy Crest to believe that it would not enforce its right to present an invoice for the balloon payment on 8 October 2015 and that it would not do so until after completion by Rotary of the MEP works.[33]The question that in my view arises on this application is whether it would be inequitable to permit PM to go back on this promise and to enforce its claim to payment on 18 December 2015 on the assumption that Rotary had not completed the MEP work by that date: this assumption has to be made because I have already found that there is a triable issue as to whether or not Rotary had achieved such completion. If the answer is that it would not be inequitable to allow this, then the issue about Rotary’s completion of the MEP work by 18 December 2015 becomes irrelevant.[34]PM’s answers to this are, first, that PM never intended its promise to be legally binding and, second, that there has to be evidence that Dairy Crest relied on the promise, and that it did so to its detriment, and that neither of these elements is present in this case.[35]Mr Bowling’s first submission is in my view unsustainable. PM clearly intended to make a gesture in order to preserve commercial goodwill in a situation in which that goodwill was obviously deteriorating. In other words, it had an obvious commercial motive for what it did. Second, it must be taken to have intended that its word should be taken at face value in a situation in which both parties knew that PM had a clear right to submit an invoice for the balloon payment on 8 October 2015.[36]However, Mr Bowling’s second submission has more substance. He criticises the evidence put forward by Dairy Crest in relation to reliance which, as he rightly pointed out, consisted of one short passage in the witness statement of Mr Barrington, where he said, at paragraph 30:
“Although I accept that it was not expressly discussed at the time, given the background context to the meeting as set out above, it was in the back of Dairy Crest’s mind, and I believe in the back of the PMG’s, that had PMG not agreed to defer the Balloon Payment, it is very likely that Dairy Crest would have looked to escalate the claims, it had at that time, against PMG. Dairy Crest did not pursue that option because it relied on PMG’s promise and agreement as set out above: there was never any suggestion that this agreement was not legally binding and I am surprised this is now being suggested.”
[37]Mr Bowling submitted that this is quite insufficient to demonstrate any reliance, and certainly not reliance to Dairy Crest’s detriment. However, the difficulty in situations such as this is that reliance by the promisee may well consist of doing nothing: in this case, it is reasonable to infer that in reliance on PM’s promise Dairy Crest did not make any arrangements to pay the £784,661.97 plus VAT within 14 days of 8 October 2015. However, Dairy Crest did not act to its detriment when it relied on PM’s promise - on the contrary, the immediate consequence was that it received a benefit.[38]Mr Bowling referred me to various passages in “The Law of Waiver, Variation and Estoppel” by Sean Wilken QC and Karim Ghaly. These tended to support his submission that Dairy Crest could succeed only if it could show both reliance and detriment. However, the authors of Chitty on Contracts, 32nd edition, make the point, at paragraph 4-095, that “detriment” in the sense relied on by Mr Bowling may not be necessary. In support of this proposition they cite the decision of Robert Goff J in Societe Italo-Belge v Palm and Vegetable Oils (Malaysia) SDN. BHD. [1981] 2 Lloyd’s Rep 695.[39]It is not necessary to refer to the facts of that case, but only to that eminent judge’s approach to an estoppel of this sort, as set out on page 701, where he said:
“I approach the matter as follows. The fundamental principle is that stated by Lord Cairns, viz. that the representor will not be allowed to enforce his rights “where it would be inequitable having regard to the dealings which are thus taken place between the parties”
. To establish such inequity, it is not necessary to show detriment; indeed, the representee may have benefited from the representation, and yet it may be inequitable, at least without reasonable notice for the representor to enforce his legal rights. Take the facts of Central London Property Trust Ltd v High Trees House Limited [1947] KB 130, the case in which Lord Justice Denning MR breathed new life into the doctrine of equitable estoppel. The representation was by a lessor to the effect that he would be content to accept a reduced rent. In such a case, although the lessee has benefited from the reduction in rent, it may well be inequitable for the lessor to insist upon his legal right to the unpaid rent, because the lessee has conducted his affairs on the basis that he would only have to pay rent at the lower rate; and a Court might well think it right to conclude that only after reasonable notice could the lessor return to charging rent at the higher rate specified in the lease. Furthermore it would be open to the Court, in any particular case, to infer from the circumstances of the case that the representee must have conducted his affairs in such a way that it would be inequitable for the representor to enforce his rights, or to do so without reasonable notice. But it does not follow that in every case in which the representee has acted, or failed to act, in reliance on the representation, it will be inequitable for the representor to enforce his rights; for the nature of the action, or inaction, may be insufficient to give rise to the equity, in which event a necessary requirement stated by Lord Cairns for the application of the doctrine would not have been fulfilled.”[40]In my view, these observations show that Mr Bowling’s primary submission rather misses the point, because the detriment to the promisee in cases such as this often arises, not when the promise is made and relied on, but when the promisor withdraws the promise before the expected or stipulated date (or event), if any, without giving reasonable prior notice of his intention to do so. It is often then, and only then, that the promisee may find himself in difficulty if the promisor is entitled to go back on his promise.[41]In his skeleton argument, at paragraph 41, Mr Bowling made these observations (albeit in relation to a different aspect of his application):
“It is also telling that from 8 July 2015 up to about December 2015 Dairy Crest paid c. £1.237 m for the Construction Management Services and the associated preliminaries of c. £125,500, despite the same alleged shortcomings in the earlier, equivalent invoices. Dairy Crest’s decision to stop paying was thus not driven by any principled and consistent stance in relation to clause 5 of the MSFA. Rather, Dairy Crest is quite candid that it paid because it did not want a dispute over payment which risked PM refusing to continue. It was thus a desire not to “rock the boat” which caused Dairy Crest not to serve clause 5.7 “pay less” notices at the time and crystallise a dispute there and then. Instead, it simply stopped paying.”
[42]I consider that it is reasonable to infer, and it is certainly reasonably arguable, that Dairy Crest relied upon PM’s promise not to issue the balloon payment invoice until completion of the MEP work had been achieved. It seems to me that this submission in Mr Bowling’s skeleton argument may cut both ways. Dairy Crest might not have wished to “rock the boat” because, amongst other reasons, it did not want to give PM any ground for withdrawing its promise not to issue the invoice for the balloon payment.[43]This is clearly a case in which PM did not agree to forego its entitlement to the balloon payment entirely, rather it stated that it would suspend the implementation of its right to issue an invoice for it until a particular event occurred. I can see no reason why PM should not have been entitled to withdraw that promise on reasonable notice: this is because there is no evidence that, had it done so, Dairy Crest would have been any worse off than it would have been if the invoice for the balloon payment had been issued on 8 October 2015.[44]Suppose, for example, that PM had told Dairy Crest on, say, 18 November 2015 that Rotary was taking much longer to complete than it had expected when agreeing to defer the balloon payment and that it therefore proposed to issue its invoice on 18 December 2015 whether or not Rotary had achieved completion. I would have difficulty in seeing how that could be said to be inequitable.[45]However, PM did not give Dairy Crest any notice of its intention to issue its invoice for the balloon payment prior to the achievement of the MEP work by Rotary - which is what it did if Rotary had not in fact achieved completion by 18 December 2015. In these circumstances one question that may arise is whether it would be inequitable to permit PM to rely on the issue of the invoice and to recover the balloon payment. In this context it is perhaps not wholly irrelevant that 18 December 2015 was four working days before Christmas, and that the 14 day period for payment would have expired on 1 January 2016.[46]However, since Dairy Crest refused to pay the invoice on the grounds that it had been issued prematurely, the difficulty to which it might have been put if it had found itself having to raise the money at short notice did not arise. Unsurprisingly, therefore, there has been no evidence as to how difficult it would have been for Dairy Crest to make the balloon payment by 1 January 2016.[47]It is Dairy Crest’s case that the delays after 8 July 2015 were caused by PM’s failure to perform its services properly. Mr Draper said in his witness statement (paragraph 68) that delays caused by PM appear to have been the dominant cause of the delays to the project as a whole from 8 July 2015 to date. Dairy Crest’s evidence indicates that it has a very substantial potential counterclaim against PM for professional negligence, a claim which it says may well be worth £20 million. Of course, all this is denied by PM - but at this stage I cannot see how the claims by Dairy Crest can be dismissed as fanciful.[48]It seems to me that these are all factors which fall to be taken into account when considering whether or not it would be inequitable for PM to insist on its entitlement to the balloon payment following the issue of its invoice on 18 December 2015. It seems to me that this raises issues of fact which cannot be determined fairly on an application for summary judgment, particularly against the background of a potentially very substantial counterclaim against PM. I do not consider that it can be said that Dairy Crest has no real prospect of successfully establishing that it would be inequitable to permit PM to enforce the balloon payment under the December invoice. But if I am wrong about this, I would say that against the background of a potentially very substantial counterclaim, and in particular the allegation that it was PM’s conduct that caused or contributed to the delay in the completion of the MEP works, there is a compelling reason why this issue should not be determined on an application for summary judgment but should be disposed of at a trial.[49]However, Mr Henderson had a further argument which was that PM never purported to resile from its promise; he submitted that, on the contrary, it issued the invoice for the balloon payment in the apparent belief that the condition for its issue, namely completion of the MEP works, had been satisfied. In these circumstances, he submits that PM did not resile from its promise not to issue the invoice for the balloon payment: it just issued it prematurely. If the basis for the issue of the invoice was wrong as a matter of fact, then, submitted Mr Henderson, Dairy Crest was under no obligation to pay it. I understood Mr Bowling’s answer to this submission to be that if PM did not resile from its promise when it issued the invoice (which he did not accept) then it did so, at the very latest, when it issued these proceedings in which it made a claim for the balloon payment.[50]Once PM had issued the invoice and made its demand for the balloon payment, the die was cast. If the MEP works had not achieved completion, then the issue of the invoice amounted to conduct inconsistent with the observance of its promise. PM could, I suppose, have withdrawn the invoice in the face of Dairy Crest’s objection and then given notice of its intention to re-issue the invoice in, say, 14 or 28 days time, but it did not do that. Since it may well be the case that the contract between PM and Dairy Crest was brought to an end on 11 February 2016, I do not consider that by issuing proceedings on 16 February 2016 PM can be taken to have given notice of its intention to withdraw its promise or, were it to be taken to have done so, that Dairy Crest would be under any obligation to pay. If it is the case that one or other party has repudiated the contract and that such repudiation was accepted by the other, which is reasonably arguable in the light of the evidence before the court on this application, then neither side remains liable to perform any of its primary obligations under the contract because these obligations will have become replaced by the secondary obligation to pay damages for breach of contract. But these are all issues that can be determined only at a trial.[51]I consider that Mr Henderson’s further argument is not one that can be dismissed as fanciful. Accordingly, I find that it cannot be said that it has no real prospect of success.

Conclusion

[52]For the reasons that I have now given I consider that Dairy Crest has a real prospect of success in resisting PM’s claim in relation to the balloon payment. Alternatively, if I am wrong in this, I consider that there are compelling reasons why this issue should be disposed of at a trial.[53]Accordingly, PM’s application insofar as it relates to the balloon payment fails and must be dismissed. In relation to that issue, there is to be permission to defend.[54]The second and third limbs of PM’s application are adjourned. If PM is minded to restore them, then it must apply, within 21 days of the handing down of this judgment in final form, to fix a date for that hearing. The time estimate is to be half a day. I have already indicated that PM is to pay any costs thrown away as a result of the need for a separate hearing of those issues.[55]I will hear counsel if there are any questions that cannot be agreed in relation to the form of relief or costs.

Cited in 1 later judgment