Groveholt Ltd v Hughes & Anor

Summary judgment under CPR Part 24 is appropriate only where the claim or defence has no real prospect of success and there is no other compelling reason for a trial. The court must avoid a mini-trial, especially where disclosure, evidence, third-party material or contractual relationships may affect the result.

Particular caution is required where a successful application would not resolve the disputes between the parties and would instead encourage piecemeal satellite litigation. A prior appellate decision establishing that enhancement costs must be credited against an overage entitlement does not determine the contractual route by which particular costs are recoverable, nor prevent challenges to their amount or characterisation. Those issues may require disclosure and a full trial.

Groveholt sought summary judgment in an action for redemption of a charge and an account of sums secured by it. The charge secured overage payments allegedly due to Mr Hughes under an agreement with Chelverton Properties.

Groveholt was not party to that agreement. It argued that infrastructure and site-assembly costs incurred through later contractual arrangements could be deducted from the overage. It also relied on earlier summary judgment decisions, including the Court of Appeal decision reported at [2005] 2 BCLC 421, and contended that the issue was res judicata.

The central questions were whether the earlier decisions finally determined the relevant deductions and whether the remaining contractual and factual issues could properly be resolved under CPR Part 24.

1. Application dismissed. Groveholt failed to establish either limb of CPR 24.2. The claim had no sufficiently clear basis for summary determination, and there was another compelling reason for the issues to proceed to trial.
2. The Court of Appeal had decided that Mr Hughes’s entitlement to enhanced purchase consideration had to reflect the costs of works required to enhance the value of the land. It had not determined how that principle was to operate under the several agreements, whether costs incurred by later purchasers were deductible, or whether particular costs fell within the relevant contractual provisions.
3. The earlier judgment’s observation that costs might be borne by a subsequent purchaser was not a definitive determination that costs incurred by Groveholt were deductible. The Court of Appeal’s failure to address that observation did not amount to an endorsement of it.
4. Determining the deductions required examination of what works were done, by whom, at what cost, under which contractual relationship, and whether they fell within the infrastructure works contemplated by the Hughes/Chelverton Agreement. Mr Hughes could also raise challenges that would have been available under that agreement, including arguments concerning the works and their cost.
5. The disclaimer under section 178 of the Insolvency Act 1986 did not affect third parties. The Hughes/Chelverton Agreement therefore remained relevant to ascertain the amount secured on the property, but the earlier decision did not resolve the further issues now raised.
6. Disclosure, potentially including material from non-parties, was required. The matter should proceed expeditiously to trial, with costs and a timetable to be addressed subsequently.

The judgment records earlier proceedings concerning Mr Hughes’s unsuccessful summary judgment application. That decision and his appeal were dismissed, with both judgments reported at [2005] 2 BCLC 421. This court held that those decisions did not finally determine the present deduction issues.