James Hay Pension Trustees Ltd.& Ors v Hird & Ors

Summary judgment is appropriate where the defendant has no real prospect of success and there is no other compelling reason for a trial. The court must avoid a mini-trial, but need not accept assertions contradicted by contemporaneous documents.

Rectification requires convincing proof that the instrument fails to record the parties’ continuing common intention, supported by an outward expression of accord. A party alleging unilateral mistake must show that the other party knew of the mistake and that it would be unconscionable to rely on the instrument. An alleged wider partnership between some parties cannot, without a pleaded and evidential basis, alter the contractual rights of trustees who were parties to a separate partnership deed.

The claimants, trustees of the Repton Securities Directors Pension Scheme, sought summary judgment concerning their entitlement under a partnership deed made with Kean Hird. The deed provided for a partnership between JHPT and Mr Hird to carry on the business of special partner in the South Downs Partnership, with profits divided between Mr Hird and the Pension Scheme.

The defendants contended that the deed was subject to an overarching partnership involving Mr Hird, Mr Molyneux and others. They alternatively sought rectification, relying on an alleged common understanding that the proceeds would be brought into account across the wider business and that the Pension Scheme’s return would be limited. The central issues were whether those contentions had a real prospect of success and whether any compelling reason required a trial.

1. Summary judgment. Under CPR Part 24.2, the court must consider whether the defendant has no real prospect of successfully defending the claim and whether there is any other compelling reason for a trial. A real prospect is more than fanciful. The court must not conduct a mini-trial, but may reject assertions contradicted by contemporaneous documents.
2. Enforcement of the deed. The claimants were entitled to summary judgment. There was no arguable basis for refusing to enforce the Partnership Deed according to its terms. The documents showed that any proposal to secure the Pension Scheme only a fixed return had been abandoned, and that Mr Hird knew the Pension Scheme’s participation depended on Mr Molyneux having no interest in the investment.
3. Overarching partnership. The existence and accounting effect of any wider partnership were left for trial between Mr Hird and Mr Molyneux. However, there was no pleaded or evidential basis for treating it as binding on the claimants as trustees. Any accounting between the alleged wider partners did not affect the Pension Scheme trustees’ initial right to the relevant funds.
4. Rectification and related pleas. The rectification case had no real prospect of success. Mr Hird did not allege that he signed under a mistake, did not allege that any mistake was shared by JHPT, and identified no continuing common intention or outward expression of accord. There was also no basis for unilateral mistake, variation or estoppel. The variation contention was abandoned at the hearing.
5. Remedy. The court would hear further argument on the form of order. Only legitimate expenses of the partnership constituted by the Partnership Deed could be charged against the receipts. The partnership was to be dissolved, subject to provision for any genuine partnership expenses and possible retention of funds.