Mears Ltd v Shoreline Housing Partnership Ltd
Citation:  EWHC 27 (TCC),  EWCA Civ 639,  EWHC 1396 (TCC)
This case concerned a repair and maintenance contract for the several thousand properties operated by Shoreline; Mears was the successful tenderer. The tender was priced on the basis that for each individual task Mears would charge on a cost plus fee basis and that every six months this would be reconciled against the contractual Schedule of Rates which specified the value of each type of task. Mears would be entitled to the value of the tasks and would benefit from a further payment which reflected the extent to which the cost plus fee pricing was lower than the value price. If the cost plus fee pricing was greater than the value then Mears would owe the difference to Shoreline.
However, it was some 9-10 months after Mears was successful before the contract was finalised. During this time there were further negotiations around the various rates used to price work. Shoreline’s call centre staff had experienced difficulties allocating the correct code to the work which was necessary. Therefore, the parties agreed, in a supplementary document, that a simplified system of Composite Rates would be used by Shoreline’s staff when allocating work to Mears. These rates would then represent both the sum charged by Mears and the sum which would be paid by Shoreline ie there would be no six-monthly reconciliation.
The contract was operated for a six month period on the basis of these Composite Rates and the full contract was eventually agreed. However, it had not been amended to reflect the shift to Composite Rates instead of the Schedule of Rates. It had retrospective effect such that it covered the six month period during which Mears was carrying out work for Shoreline. It contained an entire agreement clause.
Towards the end of the six month period Shoreline determined that it had been overpaying Mears and withheld some £300,000 which Mears claimed was due to it. Shoreline claimed that the correct basis for pricing the work done was the Schedule of Rates. Mears maintained that it was the Composite Rates.
Mears issued a claim, alleging estoppel by convention, estoppel by representation, and misrepresentation. Shoreline denied the claims and sought to rely on the contract, including the entire agreement clause. Shoreline applied to have the claim struck out as disclosing no reasonable ground for bringing the claim.
Akenhead J noted that Mears’ Particulars of Claim had been poorly drafted, but nevertheless dismissed the application on the basis that sufficient evidence had been produced by Mears to support an arguable case on its claim. This finding was upheld by the Court of Appeal (Gloster, McCombe and Ryder LJJ).
At trial, Akenhead J found largely in favour of Mears. He found that the evidence supported a shared understanding that the Consolidated Rates were to be the basis of Mears’ charging and Shoreline’s payments; estoppel by convention was therefore made out. For the same reasons he found in favour of Mears on estoppel by representation and misrepresentation. However, he rejected Mears argument that the duty of good faith which was to be found in the contract could prevent Shoreline from relying on an express term of the contract viz the entire agreement clause.
Counsel: Marc Rowlands QC appeared on behalf of the Defendants.