Standard Bank Plc v Al Jaber

On an application for summary judgment, a defendant must show a realistic prospect of successfully defending the claim or another compelling reason for a trial. A court need not permit a trial where the proposed defence depends on late, speculative or internally inconsistent evidence.

Promissory estoppel requires a sufficiently arguable representation and cannot ordinarily compel a party to extend an alleged promise beyond its terms. An implied term must satisfy business efficacy or obviousness. A speculative counterclaim or unpleaded assignment does not provide an arguable set-off.

The claimant sought summary judgment under Part 24 against the defendant as guarantor of facility agreements made with companies in the MBI Group. The defendant accepted the guarantees, the demands and substantial unpaid liabilities, but advanced successive proposed defences and counterclaims.

These included promissory estoppel based on an alleged assurance concerning a Sukuk refinancing and standstill; an implied term concerning the bank’s relationship with an introducer; and an implied-term claim concerning foreign-exchange trading losses. The central questions were whether any defence had a realistic prospect of success and whether there was any other compelling reason for a trial.

1. Disposition. Judgment was entered for the claimant. The defendant’s application under CPR Rule 34.3 was dismissed. The court found no realistic prospect of success in the estoppel defence or in the proposed set-off and counterclaims.
2. Estoppel. The contemporaneous correspondence and the defendant’s conduct were overwhelmingly inconsistent with the alleged oral representation that the bank would refrain from enforcing the loans and guarantees. The alleged statement that signing the Sukuk mandate would stop demand letters did not amount to the pleaded representation. The suggested implication that enforcement would be suspended until 15 April 2010 and then extended until refinancing occurred was a novel use of estoppel as a sword rather than a shield.
3. Implied term. The proposed term concerning the introducer could not realistically be implied into facility agreements and guarantees entered into after the introducing agreement. It was neither obvious nor necessary for business efficacy. The alleged breach, loss and causation were also inadequate and speculative.
4. Foreign exchange. Although losses may have occurred, the evidence identified MBI International as the account holder and the defendant as its authorised signatory. The proposed case that the losses had been covered by a JJW loan, or that claims had been assigned to JJW and later to the defendant, was unsupported speculation. Further witness evidence would not unlock an otherwise arguable defence.
5. Other compelling reason. The protection against conditional leave stifling a genuine defence did not assist because the proposed defences were fanciful or speculative. No other compelling reason for a trial existed.