Sargespace Ltd v Eustace

Summary judgment is inappropriate where the evidence discloses a genuine factual dispute or a contractual and proprietary issue requiring proper investigation at trial. A defence has a real prospect of success if it is better than merely arguable, although it need not have a prospect exceeding 50 per cent.

Where bridging finance was advanced for a property purchase, it was arguable that the lender’s equitable interest was intended to last only until repayment from the proceeds of an earlier property. Repayment could therefore terminate that interest under the parties’ agreement. The statutory protection for persons dealing with a company in good faith under Companies Act 2006 did not permit summary judgment where good faith and possible director wrongdoing remained disputed. Formality arguments under Law of Property Act 1925 likewise did not provide an unanswerable case.

Sargescape Ltd sought summary judgment against Natasha Eustace concerning a flat and a Range Rover registered in her name. The claimant alleged that it had funded the flat as bridging finance and retained the beneficial interest, and that the vehicle had merely been lent to the defendant. The defendant contended that the earlier property used to repay the finance had been gifted to her, that the bridging loan had been repaid, and that the Range Rover was a gift.

The application raised factual disputes concerning the delivery and meaning of a purported bridging-finance letter, repayment arrangements, ownership of the earlier property, the authority of company directors, and the alleged gift of the vehicle. The central issue was whether the claimant had shown that the defendant had no real prospect of successfully defending either claim and that no compelling reason existed for a trial.

1. Application dismissed. The claimant failed to establish that the defendant had no real prospect of successfully defending either claim.
2. The summary judgment test requires a defence to have a prospect better than merely arguable and not fanciful or imaginary. It need not be more likely than not. The procedure must not prevent genuine disputes from being investigated at trial.
3. As to the flat, there was a factual dispute about whether the defendant received and agreed to the purported bridging-finance letter. Even if it formed a binding contract, it was reasonably arguable that the claimant’s equitable interest was intended to subsist only until repayment of the loan from the proceeds of the earlier property. There was also a real prospect that the defendant could establish that the earlier property was beneficially hers and that the loan had been repaid in full, including any shortfall which Mr Baxendale-Walker had agreed to meet.
4. Companies Act 2006, sections 40 and 41, did not produce an unanswerable case. The defendant was a person dealing with the claimant and was presumed to have acted in good faith. The claimant bore the burden of proving bad faith. Section 41 did not apply because the statutory definition of a connected person did not include a person who had not lived with the director as a partner. Any breach of directors’ duties would potentially give the claimant a remedy against the directors, but would not necessarily affect the defendant’s position without proof of complicity.
5. The argument based on section 53 of the Law of Property Act 1925 did not justify summary judgment. Even if a written disposition of the equitable interest were required, the claimant might be contractually obliged to perfect the defendant’s title after repayment.
6. As to the Range Rover, whether a gift was intended was a factual issue. A single previous gift made by deed did not establish that the same formalities were essential. The unusual assignments between entities controlled by Mr Baxendale-Walker created further questions about ownership and authority. The application was therefore dismissed in respect of both claims.