Reeves v Sprecher & Ors

On a renewed summary judgment application, the court should not ordinarily permit a party to take a second bite at an interlocutory issue already decided. A later application may succeed only where new material is shown speedily and categorically to be conclusive. The court must avoid conducting a mini-trial where the issue depends on disputed facts, oral evidence and cross-examination. A partnership allegation may remain realistically arguable where the parties’ partly oral agreement could have extended beyond particular corporate vehicles and the outcome depends on the facts. Amendments may be refused where they would make a fair trial impracticable, require extensive new disclosure and expert evidence, risk inconsistent decisions with concurrent proceedings, or raise matters principally concerning a foreign company’s internal management.

The defendants sought summary judgment on the claimant’s allegation that he and the first defendant were partners, or alternatively an order striking out the relevant pleading. The application followed an earlier decision by Mr Justice Lewison, reported at [2007] EWHC 117 (Ch) and [2006] 2 BCLC 614, permitting that allegation to proceed to trial. The claimant also sought permission to re-amend his pleadings. Some amendments concerned alleged fiduciary duties; the principal proposed amendment concerned the redemption of his shares in a Nevis company, which was also the subject of proceedings in Nevis.

The central questions were whether the partnership allegation could properly be revisited before trial and whether the proposed amendments could fairly be tried within the existing four-week trial fixture.

1. Summary judgment. The summary judgment application was dismissed. The earlier decision had permitted the partnership allegation to proceed because the agreement was partly oral and partly written, and whether the relationship amounted to a partnership depended on facts to be found at trial. The subsequent disclosure did not provide material that was conclusive or represented a significant change of circumstances.
2. The court applied the approach in Woodhouse v Consignia plc [2002] 1 WLR 2558. Although a second pre-trial application is not automatically barred, the court may grant relief where new material makes the case unanswerable, and may dismiss the application without ceremony unless that is speedily and categorically demonstrated. The present application sought in substance to relitigate the earlier issue and bordered on an abuse of process.
3. The court would not conduct a mini-trial. The disputed terms of the agreement, the significance of pre-contract documents, and the effect of later documents required investigation at trial with oral evidence and cross-examination. The fact-sensitive character of partnership questions was illustrated by Chahal v Mahal [2005] EWCA 898 (CA).
4. Amendments. Permission was granted in principle for amendments pleading fiduciary duties, provided they were tied to existing pleaded breaches or relief. Whether the parties’ relationship could give rise to such duties could not be decided summarily because its legal character depended on facts to be found at trial.
5. Permission to add the redemption claim was refused. The proposed allegations of bad faith, valuation and improper corporate decision-making would require substantial disclosure, expert evidence and additional witness statements. Given the imminent trial, the existing state of preparation and the claimant’s delay, a fair determination was unlikely. The claim was already being litigated in Nevis, creating a risk of inconsistent decisions. Issues concerning the internal management and validity of a Nevis company were matters best suited to the Nevis courts, although the personal contractual and fiduciary claims were not automatically excluded by the foreign-company principle.
6. Permission was granted for the limited amendment concerning the claimant’s removal as a director. The remaining amendments followed from those decisions.

• High Court (Chancery Division). In the earlier interlocutory decision reported at [2007] EWHC 117 (Ch) and [2006] 2 BCLC 614, permission was granted to plead the partnership allegation. The present court dismissed the defendants’ renewed summary judgment application and determined the amendment application as stated above.
• Court of Appeal. Permission to appeal against the earlier order permitting the partnership amendment was refused on 25 June 2007.