Glen Dimplex Home Applicances Ltd v Smith & Ors

Summary judgment may be granted in a fraud case where the claim is plain and obvious and the defendant has no real prospect of successfully defending it. The court must exercise particular caution because apparently overwhelming fraud cases can fail at trial, especially where oral evidence may materially affect the result. Serious allegations remain subject to the ordinary civil standard of proof; their seriousness affects the inherent probabilities and the strength of evidence required.

Dishonesty may be established by deliberately closing one’s eyes and ears to the obvious. Tracing is available where misappropriated money can be directly traced into an asset, and it does not depend on proving dishonesty by the recipient.

The claimant’s employee stole more than £2.8 million by diverting supplier payments. She submitted to judgment. The claimant sought summary judgment against her husband, daughter and son-in-law for dishonest assistance, knowing receipt and, concerning Twr Gwyn, proprietary tracing relief.

The husband and daughter denied knowledge of the fraud and relied on their alleged deception by the employee. The defendants also disputed the tracing claim, asserting that the daughter had provided consideration for the purchase of Twr Gwyn by agreeing to sell another property. The central issues were whether the evidential threshold for summary judgment was met and whether the claimant’s money could be traced into Twr Gwyn.

1. Summary judgment principles. The ordinary civil standard of proof applied. The seriousness of allegations affected the assessment of inherent probability and the cogency of the evidence, rather than creating a heightened standard of proof. Summary judgment in a fraud case was permissible, but required particular caution. It was appropriate where the case was plain and obvious, could be decided without a mini-trial, and the defendant had no real prospect of success.
2. Mr Smith. The evidence established that Mr Smith knew of the fraud from the outset. His excessive expenditure, knowledge of substantial gifts and property purchases, and conduct after Mrs Smith’s disappearance supported the inference that he deliberately closed his eyes and ears to the obvious. That amounted to dishonesty under Royal Brunei Airlines v Tan. Summary judgment was therefore entered on the claims concerning the joint accounts: he had dishonestly assisted the breach of trust and had knowingly received funds derived from it.
3. Mrs Lewis. Although the evidence raised serious questions, it was not sufficiently clear at the interlocutory stage that she knew the money came from fraud. The dishonest assistance and knowing receipt claims against her were consequently left for trial.
4. Twr Gwyn. The claimant’s money was traced through three payments into the purchase of Twr Gwyn. Under Foskett v McKeown, the claimant was prima facie entitled to trace its funds into the asset. The alleged agreement to sell the Old Police Station was unsupported by a written contract as required by section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, and no payment of £190,000 was proved. No change-of-position defence was advanced. Twr Gwyn was declared to be held by Mr and Mrs Lewis on trust for the claimant absolutely.