CNH Financial Services SAS v Krecent Traders Ltd & Anor

On an application under Civil Procedure Rules 1998, Part 24, a claim or counterclaim may have a realistic prospect of success yet be sufficiently improbable to justify protection by a conditional order. The court should assess the pleaded case against the contemporaneous documents, the parties’ conduct and the evidential support for the alleged agreement and loss. Where summary judgment or strike out is not justified outright, the court may require payment into court as a condition of allowing the claim or defence to proceed.

The claimant, a finance house, sought summary judgment or strike out of the defendant dealer’s defence and counterclaim concerning an undisputed balance of €1,206,512.72. The defendant alleged, among other matters, a collateral agreement granting most-favoured-dealer terms and a breach of a stock return agreement. It also raised an unpleaded challenge to the claimant’s title to sue under a receivables purchasing agreement. The central issue was whether the counterclaims were sufficiently weak to justify summary judgment or strike out, and, if not, whether a conditional order was appropriate.

1. The challenge to the claimant’s title to sue had remote prospects. The receivables purchasing agreement provided for transfer of the relevant receivables, the defendant had been informed of the arrangement, and the parties had conducted their dealings on the basis that payment was due to the claimant. The court nevertheless considered the counterclaims on the assumption that they could be pursued against both claimant and third party.
2. The alleged collateral agreement was improbable. It was said to confer most-favoured-dealer status across the United Kingdom and the Republic of Ireland, but was omitted from a detailed deed of settlement prepared with legal assistance. That deed stated that the settlement was full and final and the sole agreement concerning the disputes, while expressly preserving only warranty and spare-parts disputes. The alleged agreement was also inconsistent with the deed’s territorial scope and the absence of reliable supporting evidence.
3. The stock return counterclaim was likewise improbable. The defendant’s asserted inspection condition and other requirements appeared inconsistent with the written stock return agreement and its subsequent correspondence. The pleaded quantum also failed to credit the value of stock which would have been returned.
4. Those conclusions did not mean that the counterclaims were fanciful or had no realistic prospect of success. Summary judgment and strike out were therefore refused. Pursuant to Civil Procedure Rules 1998, Part 24 and Practice Direction 5, the defendant was ordered to pay €1.2 million into court as a condition of proceeding.