Revoke a summary judgement

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Revoke a summary judgement

We successfully appealed against a summary judgment. Our clients, the defendants, were a firm of London insurance brokers. The claimants, a firm of national insurance lenders.

The concept of summary judgment

A summary judgment is where a court grants a pre-trial judgment, since there is no good reason for a trial. Usually there is no genuine issue about the material facts, and one party is clearly likely to win.

We appealed to the Court of Appeal to set aside the summary judgment. Our appeal succeeded. Consequently our client:

  • Continued its defence against the main claim;
  • Pursued their counterclaim against the claimant for loss of profits;
  • Claimed their costs of the initial summary judgment hearing;
  • Claimed their costs incurred for the appeal hearing;
  • Introduced a third party as a further defendant; following
    • The claimant’s disclosure of documents.

Events leading up to the summary judgment

The claimant, the firm of national insurance lenders, lends money to people taking out insurance policies, to pay their insurance premiums. Between 2009 and 2013, our client was the sole agent for the claimant. Our client had the claimant’s authority. A formal agency agreement was in place.

The facts of the claim

In late 2013, the claimant issued a claim:

  • Alleging our client withheld monies;
  • Claiming damages for:
    • Breach of agency,
    • Breach of trust, and
    • Fraudulent misrepresentation.

Our client’s defence was that it:

  • Did not transfer or deal with the funds direct;
  • Had no knowledge of monies being withheld;
  • Had only followed the terms of the agency agreement relating to transfer of funds.

Claimant adopts the wrong case tactics

The claimant applied for an immediate summary judgment. This was on the grounds that:

  • Our client’s defence had no reasonable prospects of succeeding;
  • There was no compelling reason for a full trial.

The High Court granted the summary judgment in favour of the claimant. We appealed.

Our arguments in the Court of Appeal

In the Court of Appeal, we argued the summary judgment should not have been granted, because the proceedings:

  • Were complex;
  • Turned on fundamental conflicts between the parties; and
  • Required various witnesses to account for their actions.

The High Court judge was wrong to:

  • Bring proceedings to an end; and
  • Conduct a mini-trial on the current evidence.

The need for a full trial

A full trial was required because:

  • Important oral evidence had to be given; and
  • A mini-trial was an inappropriate method of dealing with the summary judgment application.

What’s more, the allegations were serious. The defendants should be given the opportunity to rebut the claimant’s dishonesty and fraud allegations. And finally, our client suspected the involvement of an intermediary, but needed time to confirm this.

Court of Appeal revokes summary judgement

The Court of Appeal allowed our appeal. The Court of Appeal stated that:

  • It would be wrong to not interfere:
    • Where a judge had erred in principle,
    • Even if our client’s defence had little chance of succeeding.
  • There were compelling reasons for a full trial, e.g. the reputation of our clients.
  • The High Court judge was wrong to conduct a mini-trial on the facts.

The Court of Appeal:

  • Awarded our client their costs for the initial hearing and the appeal.
  • Set directions for the management of the dispute resolution.

Later our client’s suspicions were confirmed by disclosure. An intermediary first received our client’s payments, who then paid the claimants through a chain of commission agreements. We successfully applied to the court to add the intermediary as an additional defendant.

Addressing dispute resolution correctly

Businesses should understand litigation procedures and dispute resolution tactics. The claimant must now pay a large costs bill, due to their overly aggressive approach.

Our approach is to first consider the big picture, then focus on the most appropriate road to dispute resolution. Alex Kleanthous is the partner heading the dispute team. Alex has a breadth of experience relating to summary judgment applications, both for applicants and respondents.