Bleasdale & Anor v Forster

The claimants sued the defendant for fraudulent misrepresentation (alternatively breach of contract) arising from investments in Stay Put Tag Limited. The defendant applied for summary judgment under CPR Part 24 (rule 24.2) seeking dismissal or strike out of the fraud allegations. The court held that summary disposal was inappropriate.

The judge applied the familiar Part 24 principles (including the requirement that the claimant have a "realistic" as opposed to a "fanciful" prospect of success) and emphasised that the case involved contested oral representations, a voluminous documentary record and credibility issues which required oral evidence and cross-examination. The alleged central representation — that SPTL had obtained a £750,000 contract with Southern Cross — and other representations were matters of fact and impression that could not safely be resolved on the documents alone.

Accordingly the application for summary judgment/striking out of the pleaded fraud was dismissed because there was a real prospect of success for the claimants on the fraud allegations and there was a real risk of summary injustice if the matters were determined without trial.

Background and parties:

• The claimants, Ms Kathleen Bleasdale and Mr John Cariss, invested in Stay Put Tag Limited (SPTL), a company founded and initially managed by the defendant, Ms Deborah Forster, to exploit an RFID-based laundry identification device (the Stayput Tag).
• By mid-2007 SPTL had multiple small shareholders; Ms Forster held 81 of 200 shares and was the managing director until early 2008.

Nature of the claims and relief sought:

• The claimants pleaded fraudulent misrepresentation inducing two investments (a share purchase/loan package in August 2007 and a convertible loan in December 2007) and alternatively breach of contract. Damages were sought for the alleged fraud.
• The defendant applied for summary judgment under CPR Part 24 and/or strike out under CPR Part 3.4 to remove the fraud allegations so that only the contract claim would remain.

Key factual material:

• A central document was a letter dated 27 June 2007 from the defendant to Ms Bleasdale stating, among other things, that the company had "got £750,000 contracts" (allegedly with Southern Cross after a successful pilot).
• The claimants relied on oral representations (telephone conversations on 13 July and 24 December 2007) and draft management accounts, draft financial statements and a cash flow/sales forecast to support the two investments.
• The alleged fraud was said to have been discovered in March 2008 when the new managing director spoke to Southern Cross and was told there was no such contract in place.

Procedural posture and issues the court had to decide:

• The application before Henderson J was to decide, on paper, whether the fraud allegations had "no real prospect of succeeding" and should therefore be summarily dismissed or struck out, or whether they should proceed to trial.
• The principal issues framed were: whether the alleged representations were made; whether they were false; whether the claimants relied on them and were induced to invest; and whether the documentary material already disclosed precluded the claimants' account.

Court's reasoning and conclusion:

• The court reviewed and applied established Part 24 authorities and reiterated caution against conducting a mini-trial on documents alone where oral evidence and credibility will be decisive.
• The judge concluded that the case did not turn on a short point of law but on contested factual matters including oral representations and credibility of witnesses; the documents did not demonstrate that the claimants’ case was inherently incredible or without real substance.
• Because the fraud allegations formed part of a continuous course of dealings and because resolution required oral evidence and credibility findings, summary judgment was inappropriate and there was a real risk of summary injustice if the fraud claims were struck out.

Other remarks: The judge recorded procedural history about disclosure and a post-hearing exchange of submissions and refused to re-open the hearing on the basis that the late material would, at best, provide cross-examination material and would not have changed the conclusion that the fraud allegations should proceed to trial. The related Companies Act 2006 section 994 petition and other claims were to be tried together with the action.

The application for summary judgment and/or strike out of the fraudulent misrepresentation allegations is dismissed. Henderson J concluded that the fraud claims raised contested issues of fact, including oral representations and witness credibility, which could not be safely resolved on the papers without a trial; there was a realistic prospect of the claimants succeeding on the fraud allegations and a real risk of summary injustice if the case were disposed of summarily.