Mehdi v Bates aka Muhammad Rafiq

Summary judgment is unsuitable where the identity of the contracting parties depends on genuinely disputed evidence and the claimant has a real prospect of proving liability. A written agreement between individuals may coexist with performance through companies or other entities. The evidence must determine whether personal liability was retained or replaced by a fresh corporate contract. Competing invoices, payments and pleadings may create an issue requiring trial, particularly where expert evidence is relevant to the nature and effect of the agreement. Under the Civil Procedure Rules 1998 Part 24(2), such an issue should not be finally resolved summarily.

The claimant appealed from summary judgment entered by His Honour Judge Ellis in the Croydon County Court on 23 March 2001. That decision reversed a district judge’s earlier orders allocating the case to a track and giving directions for trial.

The claimant relied on a written Is-tisna’a agreement signed by the two individuals and alleged that the respondent was personally liable, with performance carried out through companies. The respondent contended that the agreement was made between ContinuNet Ltd and Eight Gates Inc, or that an earlier oral contract had replaced the written agreement. The central issue was whether the contractual parties and the effect of the written agreement could properly be determined under the summary judgment procedure.

1. Appeal allowed. The Court of Appeal unanimously held that the issue whether the claimant had contracted personally with the respondent, or with the respondent’s company, was unsuitable for summary determination under Civil Procedure Rules 1998 Part 24(2).
2. Per Waller LJ, the claimant had a real prospect of establishing personal liability. The only written agreement before the court was signed by the two individuals. Expert evidence supported the view that the Is-tisna’a agreement could constitute a binding and enforceable business contract. The alleged earlier oral contract was disputed, and the surrounding evidence did not clearly establish that one had been formed before the written agreement of 20 December 1999.
3. English law did not prevent individuals from agreeing to be personally bound while arranging for contractual performance through companies or other entities. The arrangement might instead have replaced the original liability with a fresh contract between the companies, but that competing argument required determination at trial.
4. The invoices and account statements, payments made by companies, and references to corporate entities provided evidence pointing in different directions. They did not justify concluding summarily that the companies alone were contracting parties. The issue required a trial, including expert evidence concerning the nature and effect of the religious agreement.
5. Sedley LJ agreed with Waller LJ and stressed that litigation should be managed cooperatively so that the real commercial dispute could be tried. Waller LJ suggested that the companies should be joined and that reciprocal guarantees could remove the technical contracting-party issue. This was case-management guidance rather than a necessary determination of liability. Simon Brown LJ agreed, observing that the outcome of the contracting-party issue was impossible to forecast and that its resolution would incur disproportionate further costs.
6. The order of His Honour Judge Ellis was set aside and the district judge’s decision reinstated. The respondent was ordered to pay the claimant’s costs of the appeal. The district judge’s costs order was replaced by no order as to costs, save that £750 of the respondent’s costs were to be costs in the cause.

• Court of Appeal (Civil Division): In [2001] EWCA Civ 1948, the appeal was allowed and the summary judgment order was set aside.
• Croydon County Court: His Honour Judge Ellis gave summary judgment for the respondent on 23 March 2001, reversing the district judge’s earlier procedural orders.
• District judge: The case was allocated to an appropriate track and directions were given for a trial.