Kazeminy & Ors v Siddiqi & Ors

Summary judgment should be refused where a pleaded defence has a real, although weak, prospect of success. The court must not resolve disputed credibility issues or determine a difficult construction issue without the evidence available at trial. This remains so where the documentary evidence strongly favours the claimant.

A conditional order may be appropriate where success at trial is possible but improbable. Any payment into court must be proportionate and must not stifle the defence. The defendant bears the burden of providing full and frank evidence of the resources available to meet the order.

The claimants sought summary judgment for more than US$25 million in respect of loans and promissory notes issued to the defendants. The defendants relied principally on an alleged oral agreement that the loans would be repaid only from profits generated by the commercialisation of transport technology.

The claimants argued that the defence was contradicted by contemporaneous agreements and documents, and that evidence of the alleged agreement was inadmissible in proceedings on promissory notes. They also advanced an alternative contractual basis for summary judgment which had not been identified in the application notice. The issues were whether the defences had a real prospect of success and whether a conditional order should be made.

1. Summary judgment. The application for immediate summary judgment was not granted. The court applied the principle in ED&F Man Liquid Products Ltd v Patel [2003] EWCA 472: the claimant had to show that the defence was fanciful or that its failure at trial was inevitable. The documentary evidence made success by the defendants improbable, particularly because the First Defendant had signed the agreement of 4 May 2007 without explaining its apparent inconsistency with the alleged oral agreement. Nevertheless, the court could not fairly determine that his evidence would inevitably be rejected after cross-examination.
2. Construction and admissibility. The court was unable safely to construe the repayment provisions in the earlier written agreements without the background material available at trial. The defence based on an alleged oral agreement could not be dismissed as bound to fail. Although longstanding authorities treated promissory notes as resistant to variation or contradiction by contemporaneous oral agreement, the defendants had an arguable case that the relevant principle was based on the parol evidence rule and might have fact-sensitive exceptions between immediate parties. The issue was left for trial.
3. Alternative claim. The claimants were not permitted to introduce orally an alternative basis for summary judgment founded on the April 2007 agreement, because it had not been advanced in the application notice and the evidence had not been prepared to address it.
4. Conditional order. The court held that a conditional order was available where a defence was possible but improbable. In accordance with Anglo-Eastern Trust Ltd v Kermanshahchi [2002] EWCA 198, the proposed payment into court could not be perfected before the defendants had an opportunity to provide evidence that it would stifle their defence. The defendants had not given full and frank disclosure of their resources. A payment of $25 million was therefore proposed, structured so that no defendant would be ordered to pay more than the amount claimed against it, subject to further evidence as to means.