This is an application by the claimant for summary judgment for £755,643.60 pursuant to CPR Part 24. The application is resisted.

The material before the court consists of six full lever arch files and four full ring binders. There are two detailed skeleton arguments (the claimant’s having been provided late, after repeated chasing by my clerk). Included amongst the ten files are two lengthy witness statements from Mr John Hewitt, in support of the application, and five statements provided on behalf of the defendant in opposition to the application. The two statements of Mr Edward Guerra alone run to 50 pages. I have been provided with two summary bills of costs, which indicate that the claimant has incurred about £93,000 in pursuing this application, and the defendant has incurred just over £200,000 in opposing it.

Despite such lavish expenditure on costs, the parties estimated that this hearing would take just two hours. At no time during the run-up to the hearing did either party indicate to the court that the allotted hearing time was too short or that there might be a risk that the hearing would over-run. Neither party indicated to the court that any pre-reading was necessary.

In the event, of course, given the vast amount of documentation, extensive pre-reading was required. I was able to carve out about half a day for that task. Even with the benefit of that pre-reading, the hearing itself, as was sadly inevitable, took the entirety of Friday 7^th November. That was only possible because another judge kindly agreed to take the application that I was due to hear in the afternoon. The overrun meant that this judgment had to be reserved. In all, I would estimate that, rather than the 2 hours estimated, this application has taken up about 3 days of court time: in the light of the fact that the parties have spent just under £300,000 on the application, that is not perhaps surprising.

Two points need to be made arising out of this sorry history; one is practical, the other is a matter of principle.

The practical point is that the parties’ failure to inform the court that pre-reading was required, and that the 2 hour slot was plainly and obviously inadequate, caused extensive disruption to the court. The TCC understands that it is not always possible to give an accurate time estimate for complex hearings, and that, once the evidence has been exchanged for a hearing such as this, it may become apparent that further time will be needed. But in those instances, the first thing that the parties need to do is to inform the court. If the court knows there is a risk that the time estimate will be exceeded, or that a judge will need time to prepare a reserved judgment, then the necessary arrangements can be made. A complete failure to keep the court informed is not only discourteous, but it creates havoc for the court and its other users. It is also a flagrant breach of the parties’ obligations under the CPR.

There may be a reluctance on the part of the parties in such a situation to inform the court of a longer estimate, because of a perceived risk that the hearing might then be adjourned. In fact, in my experience, that is a very rare event in the TCC. With enough warning, re-jigging the Friday diary will almost always be possible to ensure that the hearing is effective. But such indulgence will not be granted in the future if, as here, the estimate is woefully lacking, and the court concludes that the parties have deliberately kept it ignorant of the real position.

The point of principle is this. It might be said that a case which involves so much material and so much evidence cannot possibly be suitable for a claim under CPR Part 24, and that the application should have been dismissed without further ado. In some types of dispute, there may be force in such an observation. However, until the court has been through the material, no matter how detailed, it may not be possible to say whether the defence that is revealed there meets the test of ‘real prospect of success’ required under CPR Part 24 or, even if it does, whether the defence raised can only be described as ‘possible’, with the result that a conditional order may be appropriate under r24.6.

In commercial cases, it is all too easy for a party who wishes to avoid summary judgment under CPR Part 24 to put in lengthy statements, and exhibit numerous documents, in the hope that the court will conclude that the issues will have to be dealt with at a trial, and that summary judgment is inappropriate. That risk is particularly acute in the TCC, where parties often need no invitation to swamp the court with extraneous documentation. It is therefore incumbent upon the court to consider the parties’ submissions on the material provided and to see whether, no matter how detailed the documentation, the necessary tests have been made out.

That, therefore, is the task which I am obliged to undertake in this Judgement. I do so in this way. At Section B below I set out the relevant terms of the contract between the parties. At Section C below, I set out the relevant events. I deal with the applicable principles under CPR Part 24 at Section D below. Thereafter, at Sections E, F and G, I analyse the three principal issues between the parties that arise on this application. There is a short summary of my conclusions at Section H.

The defendant sublet the performance of some of these services, principally those relating to quantity surveying and project management, to the claimant. It does not appear to be disputed that the claimant provided their services to the defendant between the period of 18^th April 2006 and 24^th February 2008.

Despite this lengthy period, the parties failed to conclude a detailed contract. Although it appears that they were negotiating the terms of such a contract, it was never finally agreed. Thus their relationship was governed by a variety of documents which sit rather uneasily together.

The principal document governing the relationship between the parties was the Amended Interim Agreement dated 29^th November 2006. That document was in the form of a letter from the defendant to the claimant. For present purposes, the material parts of the letter were as follows;

“Based on that [Main] Contract we intend to execute a Subcontract with you by 20^th December 2006 in general accordance with the Consultant Agreement we have discussed subject to agreeing all outstanding matters by this date.

We have attached a copy of this draft Consultant Agreement as Exhibit A to this letter which forms the basis of this Amended Interim Agreement and authorisation to continue your work on the Master Plan and Concept Design Phase of the project under the terms and conditions outlined herein.

In addition to the terms and conditions set out in the proposed documents it is further agreed that:

1.

This Amended Interim Agreement is limited to your scope of basic services relating to the Master Plan and Concept Design phase of the Project. A Consultant’s Responsibility Matrix which outlines your Basic Services responsibilities as further described in Appendix A to the Contract is attached to this letter as Exhibit B together with the said Appendix A to the Contract as Exhibit C.

2.

Your basic services compensation under this Interim Agreement is £2,440,324. You will not be required to perform services under this Interim Agreement in excess of this sum without prior written agreement. You should invoice us in accordance with the established procedures as generally described in Appendix D to the Contract. We have attached a copy of that Appendix D to this letter as Exhibit D. We will pay you within five days from payment to us of sums due to you….

4.

Our obligation to pay compensation to you under this Interim Agreement is limited to the extent we received corresponding compensation for those services from the Client….

8.

Pending the execution of a Consultant Agreement between us, we authorise you to continue with your basic services for the Master Plan and Concept Design Phase. For the avoidance of doubt your sole obligation is to exercise that degree of care, skill and diligence in carrying out of these services as may be reasonably expected from you as qualified professional experts in the engineering and construction industry. You will only be liable to the extent you fail to do so and then only to an aggregate liability of £1,220,162. …”

It is unnecessary for me to set out very much of Exhibit A referred to within (and attached to) the letter. However, a number of the Articles are relevant to this application. These include:

Exhibit D contained the extracts from the Main Contract. It is unnecessary to set those out here. Clause 7 was concerned with invoicing. In this respect I note that paragraph 12 of the claimant’s Particulars of Claim sets out the procedure adopted by the parties in practice in relation to the rendering and payment of invoices. The defendant does not dispute that this was the practice that was adopted, at least up until the time of the disputed invoices. Paragraph 12 reads as follows:

“1)

Jacobs would submit an application for payment with full supporting details to SOM for review and approval. Supporting documentation consisted of a Document Deliverable Register (‘DDR’) setting out what drawings or executed activity had been carried out. Prior to April 2007, Jacob’s submitted DDR’s monthly, but from April 2007 submitted them weekly.

2)

SOM rolled up all its sub-contractors/consultants applications for payment together with SOM’s application for payment and sent it to QP for approval.

3)

Once SOM had obtained approval from QP, SOM would instruct Jacobs either orally or in writing to submit an invoice for a certain amount. The invoices would be submitted in pounds sterling converted from Qatar Rials at an exchange rate of £1 to QR 6.45. The invoiced amount was in arrears for services which had been provided by Jacobs to SOM, typically, two or three months earlier.

4)

Jacobs received payment from SOM once SOM had been paid by QP.

In these proceedings, the claimant claims in excess of £4m due from the defendant by way of fees for the services provided. However the claim under CPR Part 24 is limited to three of the seven disputed invoices. Those three invoices are:

On 8^th January 2008, Mr Edward Guerra of the defendant instructed the claimant to submit invoices for services rendered during September and October 2007. In accordance with the procedure noted in paragraph 16 above, he identified the amounts to be invoiced for those two months. The invoices were issued the next day. In early March, the September invoice (number 14) was paid. The October invoice, in the sum advised by Mr Guerra, is noted in paragraph 17 (a) above, and is the first of the disputed invoices.

The same e-mail from Mr Guerra also informed the claimant that the defendant had agreed the November valuation with QP and would tell the claimant the sum to invoice for November 2007 “in the next few days”. That did not happen. However, after a certain amount of chasing by the claimant, the sum to be invoiced was communicated by Mr Guerra to the claimant. An invoice in that agreed amount, namely £265,085.02, was raised on 31^st January 2008 (see paragraph 17 (b) above).

The circumstances surrounding the third invoice (paragraph 17 (c) above) are more complicated. Mr Hewitt of the claimant maintains, at paragraph 12 of his first statement, that the sum to be invoiced was provided to him by Mr Guerra in a telephone call on 15^th February 2008, following numerous attempts (which are recorded in the e-mails) to obtain the correct figure. Mr Guerra says, at paragraph 15 of his first statement, that the figure was simply the figure that had been submitted to QP in respect of the claimant’s December services. He denies that he instructed the claimant to issue an invoice in this sum.

There is a further dispute which renders invoice 17 different from invoices 15 and 16. In respect of invoices 15 and 16, there is no dispute that the sums claimed by the claimant have been paid to the defendant by QP. But there is unequivocal evidence from the defendant’s witnesses that the sum claimed in the December 2007 invoice has not been paid by QP, and that this is because QP consider that they have in fact overpaid for the November services. This is a point which is explored in greater detail below. However, I find on the material before me that, whilst QP have paid the defendant in relation to the full sums claimed by the claimant in respect of invoices 15 and 16, they have made no payment in relation to the sum claimed in respect of invoice 17.

There is a vague suggestion in the defendant’s statements that they convened a meeting with the claimant some time in late January or early February in which they expressed some concerns about the claimant’s performance. However there is no direct evidence of such a meeting (Mr Kennedy, the defendant’s solicitor, refers to it without identifying the source of his information) and there are no contemporaneous records of the meeting. I therefore decline to make any findings as to whether such a meeting took place and, if so, the nature of the discussion.

On the other hand, there is no dispute that, at a meeting on 19^th February in London, the defendant terminated the claimant’s contract, effective from 24^th February 2008. Although there is no contemporaneous record of this meeting either, it is agreed that it was not suggested at the meeting that the defendant was terminating the claimant’s contract because of alleged poor performance on the part of the claimant. The highest that it is now put by the defendant is that they told the claimant that “this just isn’t working”.

On 22^nd February, the defendant wrote to QP informing them of this decision. The relevant parts of the letter read as follows:

“On Tuesday 19^th February, I met with Jim Thomas to inform him of our intention to end our contractual relationship with Jacobs Engineering. This decision was taken following careful review of the quality of their services and interface with SOM throughout the initial and Schematic Design phase of the project…

It became clear, over the course of our work together, that Jacobs could not provide the resources necessary to fulfil their contractual obligations. As an example, the quality of construction cost estimating became a particular cause for concern…

I should note that I have made a commitment to Jacobs not to publicly criticise them. This letter is issued on the understanding that you and I will carefully control its contents”.

On the same day, the claimant (Mr Thomas) wrote to the defendant (Ms Ashley O’Connor). The relevant extracts from that letter read as follows:

“This letter endeavours to record two discussions between Skidmore Owings and Merrill and Jacobs Engineering.

The first occurred on Tuesday 19^th February 2008 at the SOM London offices. It was held by yourself, Peter McGill and myself. The result of the discussion was a notice that SOM was ‘terminating for convenience’ the relationship between SOM and JE on the Qatar Petroleum Complex Project. SOM sought JE’s cooperation in effecting a handover of the ongoing responsibilities from ourselves to others. I replied that Jacobs would cooperate within reason to handover duties but only upon receipt of monies due. I suggested a week of ‘business as usual’ with a following month of handover activities.

If past due monies were not received within the week of ‘business as usual’ by 26^th February 2008, all JE work would cease and no handover activities would be performed.

…..

Subsequently to the Tuesday meeting, you and I held a telephone call on Wednesday 20 February 2008. In that call I reiterated Jacobs position that payment must be received to allow ongoing agreed activity or transfer of any information or work product. If payment was not received by 26^th February 2008, work and transition activities would cease….

In addition to the discussions outlined above there are other elements to address and agree with respect to a ‘termination for convenience’. They may include but are not limited to:

•

An agreement between SOM and JE on what each party can and cannot say about the disengagement

•

What are the deliverables agreed to be handed over to SOM? When would they be handed over (head contract indicated 30 days from termination date)? Who would be the party using and taking responsibility for the content of the delivered work.

•

An agreement for full payment for all services performed.

•

What is the full and final settlement for the work accomplished to date on base contract and pending variations.”

There was no response to this letter. In particular, it was never suggested by the defendant that the termination was for anything other than their convenience, as Mr Thomas had said.

On 29^th February, Mr Guerra spoke to Mr Hewitt to say that he had released payment for the September monies. Mr Hewitt asked him about the October monies and Mr Guerra confirmed that, although the defendant had been paid by QP he had “not been authorised to release payment”. In his internal e-mail of 29^th February, Mr Thomas of the claimant noted his continuing concerns about the outstanding October, November and December invoices.

On 4^th March 2008, Mr Thomas wrote to the defendant setting out “in simple terms” the matters between them, in an attempt at resolution. The letter recognised that there were a number of matters on which the parties needed to reach agreement. Point 1 concerned the transition plan, which the claimant had drafted and attached to the letter. Point 2 concerned payment: the letter sought payment of the October and November monies within 5 days. The letter also enclosed a further copy of the December invoice and sought payment of that within 5 days of the defendant being paid by QP, or within 60 days from the date of the letter. Point 3 identified the termination date as the 24^th February 2008. Point 4 proposed that both parties would be released from their obligations on the project, and Point 5 which dealt with confidentiality, proposing that, if asked, both parties would say that the termination had been for mutual convenience but that, if they were not asked, they would both remain silent.

On 6^th March 2008, the defendant sent a notice confirming the termination. It was headed ‘Termination Services’ and referred back to the meeting on 19^th February 2008. It referred to the parties working together amicably to resolve any issues associated with the claimant’s departure from the project. It made no mention of any default.

On the same day, 6^th March 2008, Mr Thomas of the claimant e-mailed Ms O’Connor of the defendant dealing with a number of the ongoing arrangements. It chased agreement to the payment terms in the claimant’s letter of 4^th March, namely payment of the October and November invoices within 5 days, and payment of the December invoice within 60 days at the latest.

On 10^th March 2008, the defendant wrote to the claimant. The letter was in the following terms:

“I appreciate your continued cooperation as we transition efforts on the Qatar Petroleum Complex Project. As the payment terms of this closeout are of utmost importance to Jacobs, and we are committed to a smooth transition, SOM propose the following payment and transfer plan.

Regarding payments for bills paid by QP, SOM commits to paying Jacobs for October 2007 and November 2007 invoices. October payment of £332,043.42 can be released immediately upon acceptance of this agreement. Payment for our November invoice was very recently received from QP (marked March 3 2008) and as SOM has a “net 30 days” protocol £265,085.02 due to Jacobs will be paid by 1^st April 2008.

In addressing future payments you have forwarded to me your December 2007 invoice of £158,515.16, however SOM has not received payment for our December invoice from QP. Additionally we have yet to receive billings for efforts completed in January and February 2008. Payment of these fees is conditional on the acceptance of materials by our clients at Qatar Petroleum and subject to reconciliation by SOM and QP based on approval of deliverables and agreement of percent complete.

These payments are also contingent upon Jacobs continued support in the transitions of efforts on this project. Further, it is particularly important that Jacobs release consultants to continue their efforts and we require fire Consultant JGA and in-country interface QDC be encouraged to work with SOM going forward on this project.

Attached please find a revised transition schedule. Omitted from your schedule was a date of transfer regarding civil, traffic and infrastructure engineering. I asked that you worked with Edward Guerra in SOM’s London office to facilitate scheduling these transition meetings”.

The claimant wrote to the defendant on 12^th March 2008. It was a response to the letter of 10^th March. The relevant parts of the letter read as follows:

“We would like to close out our involvement on the QPCP. We believe there are four current contract issues to resolve: 1. Payment terms, 2. Transition Programme, 3. Final Release and 4. Confidentiality. The four issues are integral to each other and I need concurrent resolution.

We are in receipt of your 10^th March letter addressing payments and the scheduling of handover sessions. In response we outline below our position on the four issues:

1.

Payment

Your letter offers to release immediately our past due October payment of £332,043.42 and pay the agreed November invoice of £265,085.02 by 1^st April 2008, contingent upon the continuing support of Jacobs and transitioning the work to a new SOM project team. Despite our understanding that the implied contract between SOM and Jacobs has a requirement we be paid within the first of 5 days of your receipt of funds or 60 days from your receipt of our invoice, we are prepared, in an attempt to resolve all issues between us, to accept your offer of payment for the October and November invoices. We however reserve our position on the terms of the contract in the future should we not be able to effect this agreement.

You are correct that a December invoice of £158,515.16 was forwarded to you. It was sent on 18^th February 2008. The amount was as advised by your Mr Edward Guerra on 15^th February 2008. We are entitled to payment of the invoice the earliest of either 5 days of receipt of funding from QP or 60 days from the invoice (18^th April 2008). As you have noted the January and February invoices had not been submitted. My previous correspondence suggested that sessions be held between SOM and JE to agree the progress for January and February. The first of these was held last week, another is planned for this week. Hopefully the team will be able to agree. If agreement is not achieved we will issue the invoices this Friday. We understand that payment to SOM is conditional upon QP’s acceptance of percentage complete. It is essential that we be involved in the final determination discussions with QP to facilitate this.

2.

Transition Programme

We have reviewed the attached plan for the transition session. Assuming mutual understanding on payment terms we offer the following comments:

[The letter then sets out a list of detailed comments/proposals on the transitional arrangements]

3.

Confidentiality

We proposed on the 4^th March ‘if asked, each party would say the determination was for mutual convenience, both parties being content with each other’s performance. If not asked we would remain silent’. Please confirm your agreement.

4.

Release

On release, we propose the following as part of the release: ‘Each of SOM and Jacobs hereby waive, abandons and withdraws all and any claims of whatsoever nature, past present or future, whether in contract, tort or otherwise against each other in relation to the Consultancy Services and the Project’. Please confirm your agreement.

Please advise by close of business today that we have a mutual understanding or where we have differences in need of resolution so that we can continue our transition preparation efforts.”

On 19^th March 2008, Mr Brett Atherton of the claimant e-mailed Miss O’Connor dealing with a variety of points. The e-mail stated:

“While we are yet to reach a full agreement on all the steps and terms, I want to outline the path we are on to help keep us close along the way in sincere hope of reaching an agreement soon.”

The letter goes on to identify two “sticking points”, the first being the release agreement and the second being the absence of payment of the October, November and December 2007 invoices.

The final relevant exchange of e-mails occurred in mid to late April when, following a meeting on 3 April, at which Ms O’Connor agreed to recommend payment of the October, November and December invoices to her superiors, Mr Thomas again chased for payment of those invoices. Ms O’Connor inadvertently replied by sending Mr Thomas an internal e-mail which said:

“ And another fun thing to deal with. Peter [McGill] really does not want to pay these guys but I think withholding payment on really old invoices will be more trouble than it is worth”.

When she realised her mistake, Miss O’Connor told Mr Thomas that, although the e-mail had not been intended for him, “it lets you know where we are”. On 22^nd April 2008, Mr Thomas e-mailed Miss O’Connor to say: “We have repeatedly requested promised response to our proposals for final settlement/release language to no avail. We have made little progress to collection of past due accounts or closure. This puts us in a tedious position. My earlier belief that we could successfully agree the settlement and collect monies due has eroded to a belief that SOM has no desire or interest in resolution…”

The parties’ present position makes clear the extent of the gulf between them. The claimant is seeking £4.7 million odd by way of unpaid fees. There are seven relevant invoices, including the three which are the subject of this application for summary judgment. The defendant on the other hand contends that no further sums are due to the claimant and that it has a bona fide set off and counterclaim for amounts in excess of £1m, together with a much more global cross-claim for $1.5m, both of which are said to arise out of the defaults now alleged against the claimant.

CPR Part 24.2 provides as follows:

“The court may give summary judgment against a claimant or defendant on the whole of a claim or on a particular issue if-

a)

it considers that-

1)

that claimant has no real prospect of succeeding on the claim or issue; or

2)

that defendant has no real prospect of successfully defending the claim or issue; and

b)

there is no other compelling reason why the case or issues should be disposed of at a trial.”

Pursuant to CPR 24.6, when a court determines a summary judgment application, it can give directions as to the filing and service of a defence, and further directions about the management of the case. Such directions may include a conditional order pursuant to paragraph 5.2 of the Practice Direction supplementing Part 24. The note at paragraph 24.6.6 of the White Book makes plain that such a conditional order may be made requiring a party:

“a)

to pay a sum of money into court; or

b)

to take a specified step in relation to his claim or defence as the case may be, and which provides that that part of his claim will be dismissed or his statement of case will be struck out if he does not comply.”

A conditional order is appropriate if the court concludes that it is possible that the defence may succeed but that it is improbable that it will do so. Olatawura v Abiloye [2002] EWCA Civ 998 sets out the courts approach to conditional orders where there is an unpromising defence, and the circumstances in which it is appropriate for a sum to be paid into court, or for one party to give security for the other’s costs.

As for the test under CPR 24.2, a defendant in these circumstances needs to demonstrate that the defence has a real prospect of success; in other words that it is better than merely arguable (International Finance Corp v Utexafrica Sprl [2001] CLC 1361. On the one hand, it is not appropriate to conduct a mini trial on a Part 24 application (see Swain v Hillman [2001] 1 All ER 1991); on the other hand, it is necessary for the court to undertake at least some investigation into the evidence so that a proper conclusion can be reached as to whether or not the defendant has a real prospect of successfully defending the claim.

In my judgment, any potential tension between these two imperatives is resolved by the comments of Lord Hobhouse of Woodborough in his speech in Three Rivers DC v Bank of England (3) [2001] 2 All ER 513, at 568. He said that at the trial, the test was which party’s case was more probable (having regard to the burden of proof), but that this was not the position under CPR Part 24. For the purposes of summary judgment, he said, “the criterion… is not one of probability; it is absence of reality”.

It is convenient to take the claim in respect of invoice 17 (the December 2007 services) first. It is the claimant’s case that, regardless of the circumstances in which the invoice came to be raised, and regardless of the payment position as between QP and the defendant, the claimant is entitled to be paid the sum invoiced within 60 days of the date of the invoice pursuant to Article 10.4. Accordingly, it is said that the sum is now due.

The defendant raises two points in defence of this claim. First, the defendant alleges that paragraph 4 of the Amended Interim Agreement is in conflict with Article 10.4, because paragraph 4 was a clear ‘pay-when-paid’ provision. The defendant maintains that paragraph 4, being specific, must over-ride the general provision in Article 10.4. Since the evidence is plain that this sum has not been paid by QP to the defendant, the defendant submits that they therefore have no liability under the Amended Interim Agreement to make any payment to the claimant. Secondly, the defendant says that, in any event, their liability under the Amended Interim Agreement is limited to sums “due” to the claimant and that no sum is due because of the evidence that, if full credit is allowed for the October and November invoices as claimed, the claimant will have been overpaid, such that no sums are due in respect of the December 2007 invoice.

For the reasons set out below I have concluded that the defendant has a real prospect of success on both of these submissions and that, as a consequence, there can be no question of ordering summary judgment in respect of invoice number 17. My reasons for that view are set out below.

There is plainly a conflict between paragraphs 2 and 4 of the Amended Interim Agreement of the 29^th November 2006, and Article 10.4 in Exhibit A. Paragraph 4 of the Amended Interim Agreement is a clear ‘pay-when-pay’ provision. It also links back to paragraph 2 of the same document which again clearly envisages a situation in which the defendant will pay the claimant only once the defendant has received those monies from QP (“we will pay you within 5 days from payment to us of sums due to you”).

It is equally clear that Article 10.4 of Exhibit A, whilst envisaging a primary position which is also ‘pay-when-pay’, provides for a ‘longstop’ date of 60 days, regardless of whether or not the defendant has been paid by QP. Since there is a conflict between these two provisions, which takes priority?

In my judgement, it is at the very least possible that the Amended Interim Agreement must take priority. First, that document contains the agreed terms pursuant to which the services were being provided by the claimant to the defendant. It is a specific agreement, designed to regulate the parties’ ongoing relationship until such time as they agree a complex contract. Exhibit A, on the other hand, is merely a work in progress; a draft which has not yet been concluded. The Amended Interim Agreement makes plain that Exhibit A is relevant merely as ‘the basis of’ the Amended Interim Agreement, and no more.

Thus, the pay-when-paid provision is part of the specific agreement reached between the parties, whilst the 60 day longstop is in a draft agreement which has not yet been agreed, and which is attached to the letter simply because it forms ‘the basis of’ the specific agreement. It is a trite rule of construction that terms specifically agreed by the parties must take priority over general provisions: see Homburg Houltimport v Agrosin Private Ltd [2003] 2 WLR 711, HL. In such circumstances, given the conflict, it is plainly arguable that the pay-when-pay provision must trump the 60 day longstop provision.

Secondly, it seems to me that this may well be a sensible commercial conclusion in the circumstances. After all, the Amended Interim Agreement was just that: a temporary arrangement that was agreed as regulating the relationship until such time as a detailed contract could be put in its place. Pro tem, it made a lot of sense for the defendant to agree to pay the claimant only on the basis of a pay-when-pay agreement: hence paragraphs 2 and 4 of the letter. But, once the parties had agreed a complex contract, it was appropriate for the defendant to take a more relaxed view of its relationship with the claimant and to agree the 60 day longstop, regardless of its own payment position with QP. Since no complex contract was ever entered into, it is the interim arrangement which is the only relevant contract for present purposes.

Accordingly, I accept Mr Nissen QC’s submission that the defendant has a real prospect of showing that the sums claimed in the December invoice, which have not been paid by QP to the defendant, are not therefore due and payable by the defendant to the claimant.

There is a second reason why I have concluded that summary judgment cannot be appropriate in relation to the December invoice. I have been taken to the evidence which demonstrates that, in December, QP reviewed the percentage progress on a number of tasks which the claimant was carrying out, and revised them downwards from the stated percentage completion in November. I have been shown the spreadsheets which indicate, in red, those percentage reductions. Those reductions were made by QP, not the defendant. Their overall effect is that, allowing full credit for the October and November invoices, on QP’s analysis, no sum is due to the claimant in respect of the December 2007 invoice and that, on this basis, there has in fact been an overpayment of £28,177.16.

Of course, it may very well be that, when these matters are tried out, the claimant may be able to demonstrate that the QP percentages are wrong and that they are due some or all of the sums claimed via the December 2007 invoice. But for the purposes of CPR Part 24, my only concern is to see whether or not there is a real prospect of the defendant defending this head of claim. Because the ultimate employer has said that no sums are due to the claimant in respect of the December invoice, the defendant has thereby demonstrated a real prospect of success.

Accordingly, for these two separate reasons, I conclude that the defendant has a real prospect of successfully defending the claim on invoice 17 and I decline to grant summary judgment in the amount of that invoice, namely £158,515.16. The remainder of this judgment is therefore concerned only with the claim on the October and November 2007 invoices, which come to a total of £597,128.44.

It was an inherent part of the claimant’s presentation of this application that, in the events of February to April 2008, there was a separate agreement pursuant to which the defendant agreed to pay the claimant for the October and November 2007 invoices, and that those sums would be due regardless of the possible existence of a set off and counterclaim. Although I think Mr Nissen QC is right to say, at paragraph 18 of his skeleton, that the claimant “has been somewhat equivocal as to whether it contends if there was a separate legally binding agreement”, there can be no doubt that the existence of such an agreement does indeed form a central plank of the claimant’s case. During his oral submissions, Mr Sears QC said in terms that the claimant’s letter of 12^th March 2008 (paragraph 31 above) accepted the defendant’s offer in respect of payment, as set out in their letter dated 10^th March 2008 (paragraph 30 above). This was the kernel of the separate agreement alleged by the claimant.

I have concluded that there was no separate agreement of the kind alleged by the claimant. The principal reason for that view is based on the content of the relevant documents, which I have set out, in some detail, in paragraphs 24-33 above. It seems to me that, on any reading of that correspondence, no agreement of the kind alleged can be identified. In particular:

Accordingly, I am bound to conclude on the facts that no separate agreement was reached between the parties in relation to the payment of the October and November invoices. Both parties dealt with the payment of these invoices as part and parcel of the resolution of all of the outstanding matters that existed between them. Contrary to Mr Hewitt’s second statement, I find that the question of payment was not a separate matter, but was an integral part of achieving an overall settlement. Although they came close, they never reached any final agreement on the matters outstanding.

I should also say that, in order for a claimant in these circumstances to demonstrate an appropriate stand-alone agreement, which would not have been subject to the normal rules of set-off, I would have expected such a term to have been expressly agreed by the parties, or to be the only possible inference to be drawn from the surrounding circumstances. There is no evidence of any agreement to exclude set-off here, whether express or implied. Thus even if, contrary to my primary conclusion, the parties had reached agreement about the payment of the October and November invoices, I consider that such an agreement would still have been subject to the normal rules of set-off, because those rules had not been expressly or impliedly excluded.

For all these reasons, therefore, I conclude that there was no separate, standalone agreement between the parties in respect of the payment of the invoices for the October and November services. Thus the remaining issue for me to decide is whether, in respect of the total claim on those invoices of £597,128.44, the defendant has a real prospect of successfully defending that claim by way of set off and counterclaim.

It is convenient to take the alleged overpayment first because, strictly speaking, this is not an item of counterclaim but an item of pure defence. I have already referred at paragraphs 48-49 above to the circumstances in which this overpayment is alleged to have occurred. It is, in truth, more properly described as an overvaluation point. For the reasons noted there, I am bound to conclude that the defendant here raises an item of defence with a real prospect of success. The value of the overvaluation is £28,177.16. It is convenient to deduct that from the total due for the October and November invoices, to give the maximum amount of the claim against which the defendant has to demonstrate a real prospect of successfully raising a counterclaim. £597,128.44 less £28,177.16 is £568,951.28. That is the maximum sum due to the claimant under CPR Part 24, subject to a consideration of the defendant’s counterclaim.

On behalf of the claimant, Mr Sears QC variously described the counterclaim as manufactured, spurious and a claim to be treated with considerable caution. His basic premise was that no counterclaim existed until the last few weeks, in which period a counterclaim had been manufactured with the sole purpose of avoiding summary judgment. Mr Nissen QC, on behalf of the defendant, justified the late provision of the material by pointing out that this was a large and complex project that was still ongoing and that, in such circumstances, it was hardly surprising that many of the claims had only emerged recently.

I have concluded that I must treat this counterclaim with considerable scepticism. Its nature, and the circumstances in which it was produced, lead me to regard it (in the words of paragraph 24.6.6 of the White Book) as unpromising. There are four general reasons for that conclusion.

First, I note that, at the time that the claimant’s contract was terminated, there was no suggestion by the defendant to the claimant that the claimant was in breach of contract or had failed to perform in accordance with its terms. It is true that, at the meeting on 19^th February, the defendant expressed the view that “this just isn’t working”, a view which appears to have been triggered by the discovery that the project was likely to cost more than had previously been thought. That is a point to which I return below. But there is a major difference between saying to somebody, who is merely providing services on demand, as here, that the arrangement was not working and bringing it to an end, and making specific allegations of defective or poor performance. Save for a few isolated instances, the defendant did not make allegations of that kind against the claimant before or at the time of termination, despite the fact that, if such allegations were well-founded, that was the obvious time for them to be made.

This is, of course, a point which is reinforced by the provisions of Article 17 of Exhibit A. That envisaged termination occurring in one of three ways, none of which occurred here. That explains why the termination itself was a matter of consensus; it had to be. If the defendant wished to terminate for default, then a prior notice was required. There was never any such notice.

Secondly, I find that the majority of the criticisms now made by the defendant have only been made, for the first time, in the statements produced in answer to this application for summary judgment. In other words, they have not been made until the eleventh hour, when the defendant faces the prospect of paying out a significant sum to the claimant. A judge will inevitably be suspicious of a counterclaim produced, essentially for the first time, in such circumstances. Even allowing for the fact that this is a complex and ongoing project, I would have expected such allegations, if they were bona fide, to have been made some months ago.

Thirdly, there is the defendant’s letter of 8^th August 2008. This was the first time that the defendant had made any clear claims against the claimant. What is interesting about this letter is that, although one or two of the matters raised in the letter are pursued now (such as counterclaim item no. 6, the traffic analysis), a number of them, such as the claim in respect of the A1 package (then said to be worth £400,000), do not now form any part of the counterclaim raised against the claimant. In other words, even when the defendant finally got round to formalising a counterclaim against the claimant, it contained various heads of claim which, three months later, are no longer pursued. That suggests an inherent lack of credibility in the cross claims being advanced by the defendant: if large claims can be asserted in August and abandoned by November, who is to say that the same will not happen to the claims which are raised now, for the first time, in defence of the summary judgment application?

Fourthly, there is the absence of any independent or third party evidence in support of the allegations of breach, on which the counterclaim is founded. Now it might be said that it is not for a defendant, at the outset of proceedings, to demonstrate that it has a real prospect of success by referring to expert or other third party corroborative evidence. But in my judgment, that must depend on the circumstances. Here, the allegations are that the claimant failed to act with reasonable care, skill and diligence (paragraph 8 of the Amended Interim Agreement, referred to at paragraph 14 above). Those are allegations of professional negligence, which ordinarily require expert evidence in order to be formulated by counsel, let alone proved. Moreover, in this case, the defendant has apparently engaged other consultants to complete and/or validate the work performed by the claimant, and are therefore in a good position to provide to the court the views of those consultants, and a record of the criticisms (if any) that they have made of the work originally undertaken by the claimant. After all, these consultants have been in place for 6 months or more, and the majority of the sums counterclaimed are said to be fees incurred by these very consultants.

And yet, there is no evidence from any of these consultants that supports any of the criticisms now made by the defendant of the claimant’s performance. There are no references to their advice, that this or that aspect of the claimant’s work fell below the standard to be expected of a reasonably competent QS or Project Manager. That is a notable omission which, in my eyes, seriously undermines the credibility of the items now raised by the defendant by way of counterclaim.

Of course it is important not to forget that this is a large and ongoing project and that it is quite possible that at least some of the detailed allegations now being made against the claimant will not have been immediately apparent at the time of the termination or, perhaps, immediately thereafter. But it is a question of degree. In my judgment, the circumstances surrounding the late emergence of the counterclaim, and the evidential deficiencies noted above, clearly justify the conclusion that the counterclaim is generally unpromising. It is therefore necessary to look carefully at each of the relevant items of the counterclaim to consider whether that head of claim has a real prospect of success and, even if it does, whether that prospect is only a possibility, and not more. The correctness of this approach is, in my view, confirmed by a particular aspect of this dispute, linked specifically to the termination of the contract, which has not been properly addressed by the defendant.

As I have indicated above, there can be no dispute that the claimant’s contract was terminated ‘for convenience’; in other words, the contract was terminated by mutual consent, as opposed to being terminated against the claimant’s will as a result of an allegation by the defendant of breach of poor performance. That view is, in any event, confirmed by the nature of the contract between the parties which, for the reasons set out in Section B above, is really just an on-demand contract for services which could have been terminated by either side at any time without notice.

The circumstances of that termination therefore, have this effect. It is inevitable that when somebody in the position of the defendant terminates a contract for services such as those being provided by the claimant, on a project like this, he will incur additional costs in replacing the old consultant with the new. Another professional will inevitably need to validate at least some of the work performed by the claimant before incorporating it into his own work or relying upon it. That additional validation will cost money for which the defendant will be responsible; there could be no question of such sums being recoverable against the claimant because such sums were incurred solely as a result of the decision to terminate. These termination costs do not therefore give rise to a counterclaim. What might give rise to a counterclaim are not the costs of termination, but the costs incurred by the defendant to re-perform tasks which the claimant failed to do, or which the claimant did, but did badly.

I did not understand this distinction to be disputed by Mr Nissen QC. However, in my judgment, it gives rise to a difficulty for the defendant on this application. As Mr Nissen QC accepted, there were a number of items of counterclaim where the sums being counterclaimed were said to arise due to the need for “completion and validation” of the services previously performed by the claimant. If the costs of completion can be linked to an alleged breach to the part of the claimant, then those costs would clearly fall to be taken into account in assessing the reality of the counterclaim’s prospects of success. But if such costs arise from the inevitable validation which was necessitated by the original decision to terminate, they are not recoverable. What happens if the costs counterclaimed are not broken down between these two (very different) causes?

Mr Nissen QC said that it was not for the defendant to put the heads of loss into what he called “the right conceptual bucket”; that this was something for the trial. I do not accept that. We need to remember what it is we are comparing these items of counterclaim against. We are comparing them against a claim for sums which the defendant has already agreed are due; which have already been paid to the defendant by QP; and which relate to services performed by the claimant a year ago. In those circumstances, in order now for the defendant to avoid summary judgment in respect of such sums, the defendant needs to demonstrate that there are items of counterclaim which have a real prospect of success. And that means that the defendant needs to demonstrate a real prospect of successfully arguing that the particular item of additional cost counterclaimed is the result of a breach on the part of the claimant, and not the inevitable consequence of the defendant’s decision to terminate the claimant’s contract ‘for convenience’.

It always used to be said that a defendant was obliged, in order to avoid summary judgment, to “condescend to particulars”. The change from RSC Order 14 to CPR Part 24 does not, in my judgment, affect that basic obligation. In a case where a defendant wishes to cross-claim the cost consequences said to have been incurred as a result of the breaches of the other party, then the defendant needs to demonstrate that those consequences do arise from the breach, and not from an event (in this case the termination) which could not in principle give rise to a counterclaim.

I am confirmed in this approach by a consideration of the type of losses that the defendant may suffer as a result of the alleged breaches on the part of the claimant. This is a case in which the claimant’s principal failure is said to be inadequate cost-estimating of one sort and another. It is always very difficult to identify loss caused by an early under-estimation of cost: see the discussion in Copthorne Hotel (Newcastle) Ltd v Arup Associates 12 Const LJ 402. If the true cost of a project or an element of the work is, say £1 million, what loss flows from an earlier statement that it would cost £800,000? Likewise, it is difficult to pinpoint loss due to non- or poor performance of services when the provision of those services is abruptly cancelled part way through their performance. In both instances, the only demonstrable loss may be the extra manhours worked by the defendant carrying out further estimation exercises that should not have needed to be redone, or the additional costs of other consultants engaged. But since extra hours and/or additional consultant’s costs will have been caused by the termination anyway, those that flow from the alleged breaches must be separately identified to have any prospect of being recovered.

Accordingly, armed with the necessary scepticism about (and concerns as to the evidential basis of) this counterclaim (Section G2 above), and mindful of the requirement that the defendant must demonstrate a real prospect of successfully arguing that the alleged loss arises from the alleged breaches, and not its own decision to terminate (Section G3 above), I turn to consider the nine individual heads of counterclaim.

The crucial allegations are that the claimant’s design was incomplete and wrongfully involved the location of transformers over occupied space. It is the defendant’s case that this was a defect because transformers should never be put over occupied space. In response, amongst other things, the claimant maintains that they made it plain that the space below the transformers was to remain sterile pending design development. They also say that the design was as advanced as it could be, given the outstanding information.

The loss said to flow from these alleged breaches is quantified at £262,205.72. There is no cogent explanation as to how such a huge sum could be said to have been incurred as a result of one element of scheme design which has not yet been finalised, let alone the subject of any construction work, and the vague allegations of incomplete work, which in any event suffer from the difficulty noted in Section G3 above.

Given the relatively low hurdle of ‘real prospect of success’ in CPR Part 24, I am prepared to accept that, on the material before me, the defendant has a real prospect of successfully demonstrating that the design needed changing, and may not have been as complete as it ought to have been. I should say that this is largely because of the detailed evidence set out by the defendant’s Mr Grice, at paragraphs 9 to 27 of his statement, a full analysis which is not replicated for many other items in the counterclaim. But because this was not an item of counterclaim that had been asserted before this application; because it was plainly the subject of ongoing design development at the time of termination; and because I am very sceptical as to the quantum alleged (particularly because it seems to me inevitable that further consultant’s fees following termination were inevitable), I would not be prepared to say that this item of cross claim was anything more than a possibility. That is obviously relevant when I come to consider whether or not to make a conditional order.

The defendant’s allegation is that the claimant had failed to progress sufficiently the design of the building automation system. It is the claimant’s case that they had done as much as they could, given the level of available information. The loss claimed is £35,203.

Again, given the low hurdle that the defendant has to get over under CPR Part 24, I would be prepared to conclude that this item has a real prospect of success. Paragraphs 28-38 of Mr Grice’s statement are again sufficient to justify that view. However, I would not be prepared to say this was anything more than a possibility, since the material before the court suggests that this may well be an item of cost which arose out of the termination, rather than any ongoing actionable default on the part of the claimant. The points made in paragraph 75 above are applicable to this item too. Again, therefore, this is an item which may be relevant to the making of a conditional order.

This is an allegation in relation to the claimant’s cost estimating, which I have already dealt with in general terms in paragraph 71 above. It appears that there are two separate allegations. The first is that the claimant’s cost estimating in 2006/2007 was flawed and that this necessitated the involvement of Gleeds in April/May of 2007 to check those particular estimates produced by the claimant. The second area of the dispute is that, in late 2007, new, and much higher, estimates were provided and that the resulting “cost bust” generated a huge amount of concern on the project and lead, at least indirectly, to the termination.

The claimant maintains, by reference to the documents, that their estimates in 2006/2007 were the subject of a review by Gleeds, who demonstrated in their review that the claimant’s cost estimates were entirely accurate, such that no criticism was made thereafter. As to the second point, it is accepted that the cost estimates went up but the claimant maintains that this was because, whilst earlier in 2007 they were using the area figures given to them by the defendant (about 440,000 square metres), in later 2007 they were using the area figures taken from the drawings (about 590,000 square metres), with an obvious impact on costs.

The loss that is claimed in relation to this item is £158,079. I am told that the vast majority of that figure is the sum paid to Gleeds who, following the termination, were brought in to replace the claimant in spring/summer 2008 to carry out further costs estimation work.

On the material before me, I am not prepared to say that this item of counterclaim has a real prospect of success. There are four reasons for that. First, it seems to me clear beyond doubt that the cost estimates of 2006/2007 were validated by the Gleeds peer review and that no cogent criticisms of those estimates were or can now be made. Secondly, I consider that the cost bust does look as if it can be linked directly to the increases in the size of the areas in respect of which the cost estimates were being provided. In such circumstances, it is difficult to see, on the material provided by the defendant, how and why that can be said to amount to a breach on the part of the claimant.

Thirdly, and most importantly for these purposes, I reject the suggestion, on the material before me, that the Gleeds 2008 costs (which comprise the vast majority of the sum claimed under this item) could be recoverable as damages for breach of contract. Having terminated the claimant’s contract, the defendant inevitably required the services of a replacement QS. Therefore, I am in no doubt that the sums paid to Gleeds were incurred as a result of the defendant’s decision to terminate the contract, and would not therefore be recoverable against the claimant. Putting the same point another way, the defendant has not demonstrated that any part of the sums paid to Gleeds, and now claimed as damages, arose from the need to re-perform elements of the claimant’s work, or to make good omissions in that work, as opposed to being the inevitable result of the termination.

Fourthly, if there had been default in relation to the claimant’s cost estimation work then, given the time that has elapsed since the termination, and the subsequent engagement of Gleeds, I would have expected to see something in writing from Gleeds that supported an allegation of breach of the reasonable care and skill term at paragraph 8 of the Amended Interim Agreement. But there is nothing whatsoever from Gleeds, or any other expert, to support this allegation of professional negligence. Instead, this item of counterclaim is supported only by the defendant’s Mr Guerra in two, rather repetitive, statements which make no reference to Gleeds’ views or any other expert advice. I do not know whether Mr Guerra is himself even qualified to express a view as to the claimant’s possible breach of paragraph 8 but, even if he is, given his major role in the relevant events on behalf of the defendant, such evidence could not be regarded as independent.

For all those reasons, therefore, I do not consider, on the material provided, that this item of counterclaim has a real prospect of success. I therefore leave it out of account when considering the application for summary judgment. But if I was wrong about that, and this was an item where there was a real prospect of success, the same four reasons would lead me to conclude that its chances of success could only be regarded as possible, so that a conditional order would be appropriate.

The defendant’s allegation is that, because of the cost bust, the project was so seriously over budget that the value engineering exercise had been wholly wasted. There is also an allegation that the claimant did not sufficiently contribute to the value engineering exercises in 2007 and it should not therefore be paid for them.

The claimant says in answer to this allegation that, to the extent that it is said to be the consequence of the cost bust, it is not the claimant’s responsibility, for the same reasons set out under the previous item. As to the value engineering which the claimant performed, the claimant said that the allegation is spurious because it was never suggested that their work was somehow inadequate.

The counterclaim for the wasted costs is put at £27,771.98. However, the counterclaim in relation to the alleged overpayment for value engineering work carried out by the claimant in 2007 is put at the much higher figure of £171,862.

I do not consider that the claim for £27,771.98 has a real prospect of success. It seems to me that this cross-claim is consequential upon the cost bust, and I have already set out in the preceding section how and why I do not believe that that is an item with real prospects of success against the claimant.

I also consider that, on the material before me, the alleged overpayment claim has no real prospect of success. There are three reasons for that. First, the work was carried out in May and September 2007 and, despite Mr Guerra’s detailed statements, there is a complete lack of any contemporaneous criticism of the claimant’s work on this aspect of the project. Secondly, I have already given credit to the defendant for an alleged overpayment/overvaluation. The principal reason that I did that was because the defendant was able to demonstrate that the overvaluation was supported by QP; indeed it was founded on QP’s own reduction of percentage completions. To that extent, it was not self-serving, but supported by a third party. However, the alleged overpayment raised by this item of counterclaim is not supported by a third party at all, which I would have expected it to be if there was anything in it. That leads on to the third point: given the subsequent detailed involvement of Gleeds, I would have expected to see something in writing from them in support of this item if it was going to be pursued. Again, there is nothing from them, so again the claim is supported only by Mr Guerra, whose evidence suffers from the same deficiencies as noted in paragraph 83 above.

For these reasons, I have concluded that this item of counterclaim does not have a real prospect of success. If I am wrong about that, the same reasons would lead me to conclude that any real prospect of success was no more than a possibility and that again this item would be relevant to the making of a conditional order.

The allegation is that the claimant did not carry out any meaningful work in relation to contracting strategy. The criticisms in Mr Guerra’s statements appear to be centred around events (and non-events) in 2007. It is said that, following termination, the claimant has had to engage an outside consultant, Mr Richard Griffiths, who was employed to review and validate the strategy. It is his costs which form the bulk of the sum of £152,533.43 attributed to this item of counterclaim.

The claimant maintains that any deficiencies in the development of the contracting strategy were due to the changes in the completion date. They also make the point that it was always going to be necessary, following the termination, for the defendant to appoint somebody else to carry out this work and that there was nothing to suggest that Mr Griffiths had found any deficiencies in their work.

I agree with the defendant that the argument about the changes to the completion date may be a red herring. But I consider that there is far more force in the point about Mr Griffiths. It is said that Mr Griffiths has spent 26 days between February and May 2008 reviewing and revaluating the claimant’s work in respect of contract strategy. Prima facie, unless it could be shown otherwise, I would conclude that this work would always have been necessary, because of the termination, and the cost of it cannot now be recovered. There is no material from the defendant that could lead me to another conclusion.

Furthermore, if Mr Griffiths had concluded that there were deficiencies in the claimant’s work on contracting strategy, then it would have been the easiest thing in the world for him to say so. A short report from Mr Griffiths, or even just the relevant parts of his review, setting out the alleged errors or tasks which should have been but had not been completed, and identifying the additional work thereby caused, was the obvious supporting material for this head of cross-claim. Its absence means that this is not an item on which I could say the defendant had a real prospect of success.

Accordingly, for present purposes, just as with the two preceding items, I put this item of counterclaim to one side in my consideration of the CPR Part 24 application. In any event, even if I was wrong to do that, I would conclude that the defendant’s prospects of success on this item could only be described as possible, and therefore this again would be an item relevant to the making of a conditional order.

The allegation is that there were defects in the claimant’s work in respect of traffic planning which led to the need for the defendant to carry out some of this work themselves. It is said that a post-termination review was necessary which has revealed problems in the claimant’s work. The value of this item of counterclaim was £156,985.55.

The claimant’s defence to this item is by reference to a large number of matters of fact. It is not denied that this was one aspect of the claimant’s performance which the defendant did raise in 2007. It was also included in the 8^th August letter.

It seems to me that the defendant has a real prospect of successfully raising this item of the counterclaim. First, it is neither possible nor appropriate to endeavour to resolve the numerous matters of fact raised by the claimant under this item, and on which their defence would appear to turn. Moreover, despite the absence of third party evidence, this item has the credibility of contemporary complaint which so many of the other items of counterclaim do not. In those circumstances, I am bound to conclude that this was an item of counterclaim with a real and unqualified prospect of success.

The allegation is that the claimant failed to contribute to the quality control and quality plan for the project in order to ensure sufficient and common standards of quality. This rather vague allegation is not particularised with any real clarity in the evidence. There appears to be no doubt that the claimant participated in QA meetings. The loss claimed is £23,944.208.

This is a nebulous allegation which was not made at the time. It is unsupported by any third party evidence. It seems to me that the chances are that these costs would have been incurred in any event because of the termination. It is not therefore possible to say that the item has a real prospect of success, but even if it does, such prospects could only be regarded at the highest as ‘possible’.

The allegation is that the claimant failed to progress various computer models necessary to complete aspects of the scheme design. The loss claimed is £45,679.57. There is a detailed response to this in the claimant’s evidence which, on its face, goes some way to answering the criticisms made by Mr Guerra. It is, however, impossible for me to make findings of fact on an application such as this.

In view of the low threshold under CPR Part 24, and giving the defendant the benefit of the doubt on the factual matters in dispute, I would conclude in relation to this item that it has a real prospect of success, but that such prospects can only be described as possible.

Mr Nissen QC very fairly accepted that this was a global claim designed to accommodate the evidence that $12m will be paid to the claimant’s replacements, and that, of this figure, the defendant has estimated $1.5m will be “for the cost of completing and validating the claimant’s scheme design”.

It seems to me that it would be wrong in principle, for the purposes of CPR Part 24, to take this item into account in any way. First, no specific allegations of breach are made in relation to it. Secondly, it is an entirely global claim. Thirdly, it illustrates neatly the point made in Section G3 above, to the effect that, prima facie, the validation costs are to the defendant’s account, and that if they want to say that particular elements of the costs are in reality the costs of rectifying breaches of contract, then they have to identity those breaches and that causal link. The complete absence of that evidence means that this item of counterclaim, as presently presented, has no real prospect of success.

I have concluded that item 6 of the counterclaim, dealt with at section G4.6 above, has a real prospect of success and that such prospects are not to be qualified by the word ‘possible’; its chances of success are stronger than that. In those circumstances, the value of item 6 of the counterclaim, namely £156,985.55, falls to be deducted from the sum of £568,951.28 which is identified at paragraph 56 above, as the maximum amount due under CPR Part 24. That reduces the maximum amount recoverable by the claimant to £411,965.73.

I have concluded on the material before me that items 1, 2 and 8 of the counterclaim have a real prospect of success. Those items, when taken together, amount to £343,199.29. They therefore give rise to a defence to the claim for the purposes of CPR Part 24, reducing still further the sum recoverable by way of summary judgment to £68,766.44.

However, in relation to items 1, 2 and 8, my conclusion is that the chances of success on these items are no more than possible. It would be inappropriate for me to rank those items any higher than that. Accordingly in accordance with CPR 24.6, that would justify an order requiring the defendant to pay into court the sum of £343,199.29 as a condition to being allowed to continue to pursue their counterclaim. Indeed, in all the circumstances of the case, I consider that such an order is appropriate.

For the reasons set out above, I have concluded that the items of counterclaim 3, 4, 5, 7 and 9 have no real prospect of success and that they are therefore irrelevant to any consideration of the position under CPR 24. However, I am wrong about that, and they have a prospect of success, such prospect is not more than a possibility. My conclusion on these items, therefore, strengthens my view that £343,199.29 should be paid into court by way of a conditional order. Of course, no higher figure would be appropriate, because the £411,965.73 is the maximum amount relevant under CPR Part 24.

On my analysis, therefore, the £411,965.73 is divided up between £68,766.44, which is to be paid to the claimant, and £343,199.29, which is to be paid into court. If I was wrong that items 3, 4, 5, 7 and 9 have no real prospect of success, those items would still only be ‘possible’, and the only consequence would be that the full sum of £411,965.73 would be paid into court, with no sum paid to the claimant.

For the reasons set out in Section E above, I have concluded that the defendant has a real prospect of successfully defending the claim in relation to the December invoice in full. Accordingly, I decline to grant summary judgment in relation to that sum.

The total amount of the October and November 2007 invoices is £597,128.44. For the reasons set out in Section F above, I find that there was no separate agreement between the parties pursuant to which this sum would be paid, regardless of set off and counterclaim.

There is an alleged over-payment to be set off against any sum otherwise due of £28,177.16. For the reasons set out in Section G1 above, I have concluded that the defendant has a real prospect of establishing this alleged over-payment and that this sum falls to be deducted from the sum otherwise recoverable under CPR Part 24. This reduces the maximum amount recoverable to £568,951.28.

For the reasons set out in Sections G2 and G3 above, I have concluded that I must treat the 9 items of counterclaim with considerable of caution and on the basis that, to the extent that the sums counterclaimed are or might be costs of termination, they would not be recoverable. I have applied those principles to my consideration of the individual items of counterclaim.

I have concluded that the defendant has demonstrated that it has a real prospect of establishing item 6. Item 6 is worth £156,985.55. That therefore reduces the maximum recoverable under CPR Part 24 to £411,965.73.

I have concluded that the defendant has demonstrated a real prospect of success in relation to items 1, 2 and 8. They are worth a total of £343,199.29. That figure must be deducted from the maximum recoverable under CPR Part 24, which leaves a residue of £68,766.44. That is the sum in respect of which I will order summary judgment.

In addition, the chances of success in relation to items 1, 2 and 8 cannot be said to be higher than merely ‘possible’. That brings into play CPR 24.6 and would justify the making of a conditional order in relation to the sum of £343,199.29. I consider that such an order is appropriate in all the circumstances of this case.

I have concluded that, on the material before me, the defendant has not demonstrated a real prospect of success in relation to items 3, 4, 5, 7 and 9. They are therefore irrelevant for the purposes of CPR Part 24. If I am wrong about that, and there is some real prospect of success in advancing those items, then I consider that those prospects cannot be regarded as higher than a possibility, and they would therefore only serve to confirm the making of a conditional order.

For all these reasons, therefore, I order summary judgment in the sum of £68,766.44 and that, as a condition to being allowed to maintain their counterclaim, the defendant must pay into court the further sum of £343,199.29.

As discussed at the hearing on 7^th November 2008, I will deal with all ancillary matters at a separate hearing. I apprehend that the principal issue will be costs, the levels of which are so high that both sides must now agree with the defendant’s Ms O’Connor, who months ago expressed the view that “withholding payment on really old invoices will be more trouble than it is worth”.