Reeds Solicitors (A Firm) & Anor v Norwich Union Insurance Ltd & Ors

On an application for summary judgment, a claim should proceed where the evidence gives it a realistic prospect of success. A case may be weak and still satisfy that threshold. In an alleged oral agreement case, the court must assess the evidence as a whole and avoid finally resolving contested factual or contractual questions. Later written agreements, entire agreement clauses, non-binding language, or discrepancies in the alleged terms may make the claim difficult, but do not justify summary disposal where a trial could establish the alleged bargain or collateral promise. The appeal should therefore be allowed and the matter proceed to trial, without a binding determination on the merits.

Reeds Solicitors (A Firm) and Chantal Reed alleged that Norwich Union Insurance Ltd and Hill House Hammond Ltd had agreed that approximately 80 per cent of relevant legal expenses insurance claims would be referred to the solicitors for five years. The defendants disputed the alleged oral agreement. Later written agreements contained no such term and included entire agreement provisions, while a separate letter was expressed to be binding in honour only.

The High Court, before His Honour Judge Hughes, concluded that the claim had no prospect of success and disposed of it summarily. The central issue on appeal was whether the evidence was incapable of establishing the alleged oral agreement, whether as part of the later contractual arrangements or as a collateral contract.

Appeal allowed. Longmore LJ gave the leading judgment. Clarke LJ and Ward LJ agreed with his reasons and the disposal.

1. The question on the defendants’ summary judgment application was whether the claimants had no realistic prospect of success. A claim which appeared weak, and which faced substantial evidential and legal difficulties, was not necessarily a claim with no realistic prospect.
2. Miss Reed’s evidence, read as a whole and together with the pleaded case, did allege an oral assurance concerning the volume and duration of referrals. The absence of a further reference to the assurance in one paragraph of her witness statement was not a fair basis for rejecting the claim summarily.
3. The court was not required at this stage to decide whether a binding commitment had arisen at the November 2002 meeting. The alleged commitment might have become contractual when the written agreements were finalised. If an oral agreement were established at trial, it might form part of a contract which was partly oral and partly written, or constitute a collateral contract.
4. The effect of the entire agreement clauses, the non-binding comfort letter, the absence of the later subsidiaries when the oral agreement was allegedly made, the termination provisions, and differences in the alleged percentage referrals were matters for assessment at trial. They were potentially forceful final-trial arguments, but did not eliminate the realistic prospect of success.

The Court of Appeal emphasised that its observations were not binding on the trial judge and that it should say no more about the merits than necessary. The matter was to proceed to trial. Costs were deferred, the case was to be listed before a High Court judge if possible, and further orders were to be agreed by counsel.

1. Court of Appeal (Civil Division): appeal allowed; the summary disposal was set aside and the matter was directed to proceed to trial. [2005] EWCA Civ 343
2. High Court, Queen’s Bench Division: His Honour Judge Hughes held that the claimants had no prospect of establishing the alleged oral agreement and granted summary judgment for the defendants.