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Summary Judgment: A Practical View from the Bar

Reproduced from Practical Law with the permission of the publishers. For further information visit www.practicallaw.com or call 020 7542 6664.

In
his monthly column, James Bickford Smith reconsiders the familiar debate about
where summary judgment applications will be appropriate in light of the Court
of Appeal’s judgment in Allied Fort
Insurance Services Limited and others v Creation Consumer Finance Limited
[2015]
EWCA Civ 841.

James
is a barrister at Littleton Chambers specialising in commercial and employment
law.

Debates
over whether or not to apply for summary judgment are familiar to all
litigators. Their impressive ability to divide opinion may stem from the fact
that most litigators will have had first-hand experience either of cases where
such applications have ended in unexpected failure and judicial brickbats, or of
cases where judges have unexpectedly struck out defences or claims that were
confidently expected to survive such scrutiny. It is human nature for those
with the former experiences to be nervous about summary judgment applications and
for those with the latter to be keen to turn the tables on future opponents.

The leading authorities to be considered when re solving such debates are very familiar. In addition to Swain v Hillman and another [1999] EWCA Civ 3053 and ED&F Man Liquid Products Ltd v Patel and another [2003] EWCA Civ 472, commonly cited recent re statements include Easyair Ltd (trading as Openair) v Opal Telecom Ltd [2009] EWHC 339 (Ch) and Mellor v Partridge and another [2013] EWCA Civ 477.

As
important as these authorities remain, however, it is always of some value to
monitor recent trends in Court of Appeal decisions. Even if these are
fact-specific, they do often give a useful clue as to current approaches.

In
this context, the decision in Allied Fort
Insurance Services Limited and others v Creation Consumer Finance Limited
[2015]
EWCA Civ 841 Civ 841 (see Legal update, Summary judgement application in complex case (www.practicallaw.com/3-6178806)) is of interest for the dicta and forensic lessons to be drawn from it. The question that merits some further
reflection thereafter is why, notwithstanding such dicta, parties may well continue to bring the type of applications
deprecated in the judgment.

Allied Fort Insurance Services Limited and others v Creation Consumer Finance Limited: the facts

The
facts of the case are complex (itself a warning sign in the context of summary
judgment), but can be summarised very briefly as follows. Creation is a lender.
Allied Fort was Creation’s agent for some ten years. After the termination of
the agency, Creation brought claims for damages for breach of
agency, breach of trust and/or fraudulent misrepresentation. It sought accounts
and inquiries into the dealings of all the defendants (who included several
individuals and companies) because they were alleged to have been in knowing
receipt of Creation’s money since February 2008.

Integral
to most of the defences served was the contention that Creation had given
express or implied consent to the use of a series of umbrella agreements at the
heart of the claim. That contention was denied.

A
six to seven-day trial was then listed. Seven months before trial, however,
Creation issued applications for summary judgment. There was the usual flurry
of witness statements, some of which appear to have been more relevant than
others. A key issue dealt with in the statements, however, was whether there
had been express or implied consent to the use of the umbrella agreements.

Shortly
before the summary judgment hearing, counsel for Creation submitted a skeleton
argument contending that the umbrella agreements could be divided into type 1
and type 2 agreements. It was said that while Creation accepted it could not
secure summary judgment on type 1 agreements, it could on type 2 agreements.
That contention was ultimately accepted by the judge after a hearing lasting
three days.


The court’s decision

The
Court of Appeal held that:

  • The judge had not been entitled to enter summary
    judgment.
  • Despite the meticulousness of his judgment and a
    correct self-direction to Mellor v
    Partridge
    , the judge had, in fact, conducted a mini-trial.
  • The case turned on stark disputes of fact,
    notably over consent, that needed to be resolved at trial.
  • Furthermore, the disputed allegations of
    dishonesty advanced in the particulars of claim tended against summary judgment,
    whether or not they were formal elements of the causes of action on which
    summary judgment had been entered.

Etherton
C encapsulated his reasoning as follows:

“As
I have said, the deputy Judge’s judgment is a model of conscientiousness. This
is, however, a classic example of the type of case in which the judge should
have resisted the siren call to bring the proceedings or a significant part of
them to an early end before a full trial, no doubt with the best of intentions
to save costs, resources, and the time of the court and of the parties.

The deputy Judge was aware of the
correct principles applicable on summary judgment applications because he
referred to the summary of them by Lewison LJ in Mellor. The deputy Judge himself summarised them. As the deputy
Judge said, and has been stated on countless occasions and in cases too
numerous to cite, it is not appropriate on a summary judgment application to
conduct a mini trial in order to resolve conflicts of evidence, especially oral
evidence which, in the ordinary course, would be given and tested by
cross-examination at a trial. That is especially true where the factual
background is complex. Yet, that is precisely what was done by the deputy
Judge.”

(Allied Fort Insurance Services Limited and others v Creation Consumer
Finance Limited
[2015] EWCA Civ 841, at paragraphs 79 and 80.)

Further,
the attempt to create a distinction between elements of the claim that could be
the subject of summary judgment and those that could not was rejected on the
basis inter alia that witness
credibility would be relevant to both:

“… These proceedings turn
on a fundamental conflict of evidence between Mr Khan and Mr Mahmood, on the
one hand, and Ms Hartgrove, on the other. Neither the statements of case, nor
Ms Hartgrove’s affidavit and witness statement nor the witness statements of Mr
Khan and others so far deployed by the parties in the proceedings draw the
distinction between type 1 and type 2 arrangements. The application for summary
judgment itself made no distinction between the two types of arrangement and
was for judgment in respect of the whole claim. The distinction between type 1
arrangements and type 2 arrangements was made for the first time in Creation’s
skeleton argument for the summary judgment hearing with the awareness that
Creation would not succeed in obtaining summary judgment for breach of
fiduciary duty or on the basis of constructive trust for its entire claim. That
tactic could only work, however, in salvaging the summary judgment application
in respect of part of the claim if it is possible to treat the type 1
arrangements and the type 2 arrangements as falling for all forensic purposes
into two separate and hermetically sealed compartments.

That was what the deputy
Judge accepted but it was very unwise in advance of a trial, not least because
that was not how Creation had presented its own case in its statements of case
and its evidence. The credibility of Ms Hartgrove on whether she knew,
consented to and encouraged the type 1 arrangements cannot possibly be said to
be obviously irrelevant as to whether she is also to be believed on her lack of
knowledge, consent to and encouragement of the type 2 arrangements. On the
contrary, if she is disbelieved in relation to the type 1 arrangements, that
may be highly relevant both to her credibility in relation to the type 2
arrangements and as potentially providing some explanation why she acted as she
did in relation to the type 2 arrangements.”

(Allied Fort Insurance Services Limited and others v Creation Consumer
Finance Limited
[2015] EWCA Civ 841, at paragraphs 86 and 87.)

Etherton
C also warned of the practical risks and case management consequences of
summary judgment applications:

“The
dangers of engaging with the short-cut tantalisingly laid before the deputy
Judge in the present case in the form of the summary judgment application were
predictable and have come to pass. The entire proceedings could have been tried
at the six to seven day trial listed for January 2014. Instead, the parties
have incurred the cost of a three day hearing of the application, the cost and
delay of an inevitable appeal, and now the further delay of a six to seven day
trial which will have to be relisted for some future date. In the meantime the
memory of witnesses of events which took place as long ago as 2008 will be
fading.”

(Allied Fort Insurance Services Limited and
others v Creation Consumer Finance Limited
[2015] EWCA Civ 841, at paragraph 1.)

Interestingly,
Etherton C went on to highlight that it will be much more difficult for a party
that has failed to persuade a judge to hear a summary judgment application or
enter summary judgment to appeal, than it will be for a party that has entered
summary judgment to do so:

“… the decision whether
or not to engage at all in the exercise of determining the case summarily
before trial is a discretionary management power. If the court decides not to
do so, that decision can only be challenged on appeal in the same limited
circumstances as any other case management decision.

The position is quite
different, however, if the judge has decided to embark on the exercise and has
reached a decision that the defendant or the claimant has no real prospect of
succeeding at trial. Lord Hobhouse called that “an assessment”. It is
plainly not a case management decision of the usual interlocutory kind since
the judge’s order granting summary judgment finally determines in favour of the
applicant the whole case or that part of it which is the subject of the
application on the basis of the strength of the respective arguments of the
applicant and the respondent on the substantive dispute. Further, it is a
decision which the appeal court is in as good a position as the first instance
judge to make.

The appeal is
nevertheless not a rehearing but a review. The degree of respect given by the
appeal court to the first instance judgment is likely to depend on the reason
for the order granting summary judgment. If the reason turns on a pure point of
law, without any material factual dispute, then the appeal court will simply
decide whether the first instance decision was correct or incorrect. The
position may be different where the first instance judge has made an evaluative
judgment on the facts likely to be established at trial or has made a
multi-factorial decision: compare
Trust
Risk Group SpA v AmTrust Europe Ltd
 [2015] EWCA Civ 437at
[31]-[43] and [72]. Even if, however, that distinction is correct in theory, it
is unlikely in practice to be of significance since, on any footing, the appeal
court will interfere if satisfied that the first instance judge has taken into
account immaterial factors, omitted to take account of material factors, erred
in principle or come to a conclusion that was impermissible or not open to him
or her. Conducting an inappropriate mini-trial on disputed facts on a summary
judgment application is an error of principle and, moreover, will usually lead
to a conclusion that the first instance judge was acting outside the area of
permissible reasonable disagreement in concluding that the respondent to the
summary judgment application has no real prospect of success at a trial.”

(Allied Fort Insurance Services Limited and others v Creation Consumer
Finance Limited
[2015] EWCA Civ 841, at paragraphs 101 to 103.)


The countervailing argument

Allied Fort stands as another in the
very long list of examples of cases where ambitious summary judgment
applications succeeded at first instance but failed on appeal. Since I began this
article, that list has been further added to with Optaglio Limuted v Tethal and Hudson [2015] EWCA Civ 1002 (see Legal update, Court of Appeal
guidance on summary judgment test (www.practicallaw.com/0-619-2979)), an appeal decided on materially the same basis as Allied Fort. It is plain, therefore, that a party mounting such an
application faces a risk on appeal even if successful at first instance.

In such circumstances, the question that can
be asked is why such applications continue to be pursued with some regularity.
This is one of the few legal questions that can be answered in one word: money.
If complex cases are complex to litigate to summary judgment stage, they are
even more complex and costly to litigate to trial. The more complex the case
and the longer the trial listing, the greater the financial pressures and the
greater the attraction of a summary judgment application.

Related to the cost and complexity of
preparing for a long trial is the risk of litigation petering out as clients
become frustrated with, for example, delays in the court process or spurious
interlocutory applications. In a multi-handed case involving allegations of
dishonesty, there are the additional risks of unrepresented defendants, legal
representatives going off the record, last-minute applications to adjourn, and
defendants divesting themselves of assets either to evade enforcement or simply
through legal expenditure. These are not the kinds of issues that find their
way before Court of Appeal judges, but they are issues with which practitioners
will be familiar. In this context, it
must be remembered that the potentially high value case that has petered out
following a second adjournment, or where the client is fed up of paying for
conferences spent attempting to decipher correspondence from unrepresented
parties, is as much of a disappointment to a client as the one where a judge
has poured cold water over a summary judgment application.

Accordingly, for all that the Court of Appeal
may deprecate it, the ambitious summary judgment application is not likely to
be leaving us any time soon.


Learning
points

The more practical learning points that
emerge from the recent appellate judgments setting aside summary judgments are,
while familiar, surprisingly often ignored. They include:

  • The need
    to reflect hard before putting in lengthy witness statements in support of such
    applications. This is especially inadvisable if the statement primarily
    consists of argument. This both adds nothing to the case and risks creating the
    impression of factual dispute.
  • The
    importance of a well-focused, even if detailed, skeleton argument that offers
    the judge an easy route to judgment. This can be particularly valuable in a
    case bedevilled by complexity.
  • The
    importance and tactical value of focusing on admissions or inappropriate
    non-admissions (see
    Thomson Ecology
    Limited and another v Apem Limited and others
    [2013] EWHC 2875 (Ch)).
  • The
    importance of keeping oral submissions in support of such applications brief.
  • If
    resisting such applications, the importance of putting in detailed witness
    evidence and a skeleton argument that takes the court through the full range of
    points it needs to decide in the applicant’s favour before it can enter
    judgment.
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