Swycher v Vakil & Ors

Permission to appeal may be granted on a discrete contractual issue where there is a real prospect that the lower court misconstrued the obligation in dispute, even though permission is refused on other grounds.

Where parties who have been business associates meet as hostile businessmen to settle their disputes, equity will not ordinarily imply a duty of trust and confidence merely because one party is a solicitor who previously acted for the joint venture. A misrepresentation claim will generally sound in damages rather than rescission where most contractual obligations have been performed. A counterclaim does not justify withholding enforcement of judgment without evidence that it provides a legally sustainable and practically available fund from which the judgment debt can be met.

Mr Swycher obtained summary judgment in the Queen’s Bench Division for sums claimed from Mr Vakil under a 1994 deed settling their business disputes. The judge rejected defences based on duress, undue influence and misrepresentation, but left parts of Mr Vakil’s counterclaim to be pursued.

Following a later hearing, enforcement was stayed as to £600,000, with £900,000 becoming payable within 28 days and the counterclaim liable to be struck out on default. Mr Vakil applied for permission to appeal against both judgments, challenging the deed’s enforceability, the construction of an indemnity concerning payments to the Patels, the treatment of his counterclaim and the costs order. The central questions were whether any ground had a real prospect of success and whether the counterclaim justified further withholding enforcement.

1. Permission and disposition. Permission to appeal was granted concerning the £494,618.82 claimed under clause 5.2 of the deed, because there was a real prospect that the indemnity required payment only of sums which Mr Swycher was legally bound to pay and that the Patel settlement was not within its scope. Permission was refused concerning the £640,800 outstanding under clause 4.1.
2. Duress. The evidence provided an overwhelming basis for rejecting the pleaded case of duress. The delay in challenging the deed, the contemporaneous correspondence and the changing account of the alleged threat meant that there was no real prospect of successfully appealing on this issue.
3. Undue influence. The court distinguished Longstaff v Birtles [2002] 1 WLR 470. The parties here had been business associates and were meeting as hostile businessmen to resolve their differences. Mr Swycher was not acting as Mr Vakil’s solicitor. Equity would therefore not imply a duty of trust and confidence requiring independent advice.
4. Misrepresentation. Rescission was not an appropriate remedy where most obligations under the deed had been performed. Any misrepresentation would give rise to damages.
5. Counterclaim and enforcement. The court would not resolve factual disputes which the judge could not resolve on the permission application. Even assuming asset-stripping of approximately £3.37 million, Mr Vakil had supplied no sufficient legal or evidential basis showing that the counterclaim would produce funds available to satisfy the judgment. The counterclaim therefore did not justify a deduction or further stay.
6. The order requiring payment of £900,000 was to be set aside and replaced by an order for £640,800. Permission to appeal on costs was granted; costs were costs in the appeal; the appeal was stayed pending further directions.

• High Court, Queen’s Bench Division. Sir Oliver Popplewell gave summary judgment on 2 May 2002 for £1,522,676.19 and dismissed most of the counterclaim. On 15 July 2002 he ordered that £900,000 be paid within 28 days, failing which the remaining counterclaim would be struck out.
• Court of Appeal (Civil Division). Permission was granted on the £494,618.82 indemnity issue and on costs, but refused on the £640,800 claim. The enforcement order was varied so that £640,800 was payable.