Trade Credit Finance No (1) Ltd. & Anor v Bilgin & Ors

Summary judgment is appropriate where the opposing claim or defence has no realistic prospect of success and there is no other compelling reason for trial. The procedure must not become a mini-trial on disputed evidence, particularly where oral testimony and disclosure are material.

A contractual guarantee may preserve liability even where the creditor fails to perfect, enforce or preserve security. A company’s control by an individual does not, without more, establish agency, nominee ownership, a resulting trust or a façade permitting the company’s assets to be treated as the individual’s assets. On a without-notice freezing-order application, material misrepresentation or non-disclosure may not require discharge where the order would properly have been made in any event, but continuation remains exceptional and must be proportionate.

The claimants sought summary judgment against Dinc Bilgin under a guarantee securing instalments payable under a conditional sale agreement for a printing press. Mr Bilgin relied on an alleged oral assurance that enforcement would be suspended pending a proposed sale of the press, and argued that failures concerning title and registration discharged his liability.

The second defendant, Lime Company Limited, sought summary judgment against claims that property transferred to it remained beneficially owned by Mr Bilgin or was held through a façade, nominee arrangement or resulting trust. Mr Bilgin also sought discharge of a freezing order and specific disclosure concerning information supplied by the police.

1. Guarantee. The claimants obtained summary judgment against Mr Bilgin. The guarantee imposed primary-obligor liability and expressly preserved the guarantor’s obligations despite concessions to the borrower, release or non-perfection of security, and invalidity of the borrower’s obligations. The alleged oral assurance raised a factual dispute that could not initially be resolved on written evidence, but the later evidence established that a sale to Merkez was no longer a realistic possibility. The assurance therefore afforded no defence.
2. The arguments based on failure of consideration, fundamental mistake, fundamental breach, misrepresentation and equity failed. The consideration was TCF’s entry into the conditional sale agreement. Any ineffectiveness or non-registration of the retention-of-title provision did not affect the guarantee because clause 2.3 preserved liability in those circumstances.
3. Lime. Lime obtained summary judgment. Joint registration of property, the mortgage obligations undertaken by Mrs Bilgin, the documentary evidence and the transfer for value showed no realistic prospect that Mrs Bilgin was Mr Bilgin’s nominee. Control of a company, even unfettered control, does not itself establish agency, nominee ownership, a resulting trust or an alter ego. Something more is required before separate corporate personality can be disregarded. The evidence showed an effective transfer of the beneficial interest to Lime, supported by a genuine loan obligation.
4. The corporate-veil argument based on Adams v Cape Industries Plc was not sufficient. The relevant passages recorded submissions and did not permit company assets to be treated as an individual’s assets merely because the company was used to protect assets from enforcement of a debt. The claimants’ alternative claim under Insolvency Act 1986, section 423, was identified as the appropriate possible remedy for an undervalue transfer.
5. Freezing order and disclosure. The freezing order was continued, but confined to Mr Bilgin’s assets and his interests in Lime. There was a real risk of dissipation and sufficient urgency for a without-notice application. Material shortcomings concerning Merkez and Mrs Bilgin’s possible interest were found, but the order would properly have been granted in any event and discharge would have been disproportionate. Specific disclosure failed because there was no strong prima facie case of criminal conduct or breach of section 55 of the Data Protection Act 1984.
6. Mrs Bilgin’s application was adjourned. Costs and consequential orders were left for further submissions.