Bank Leumi (UK) Plc v Akrill

On an application for summary judgment, the court must not conduct a mini trial to resolve significant factual disputes. It may analyse the evidence and reject assertions with no real substance, particularly where contemporaneous documents contradict them. An improbable factual case may still have a real prospect of success if it is not fanciful or wholly implausible. The same approach applies where post-expiry conduct is relied on to establish an implied loan agreement. An estoppel by convention requires the relevant shared assumption to have been expressly communicated between the parties. Where a defence is improbable but not fanciful, conditional leave to defend may be appropriate, provided any condition is capable of compliance.

Bank Leumi sued Mr Akrill on two personal guarantees and obtained summary judgment in the High Court of Justice, Chancery Division, before His Honour Judge Jarman QC on 29 October 2013. Mr Akrill alleged that oral assurances induced him to give the guarantees and limited the Bank’s right to enforce them. He also contended that post-expiry dealings created a new implied loan agreement requiring reasonable notice before repayment could be demanded, or alternatively that the Bank was estopped by convention from demanding repayment immediately. The appeal concerned whether these defences had been wrongly rejected at the summary judgment stage.

1. Disposition. The appeal was allowed to the extent indicated. The application was remitted to the High Court to determine appropriate conditions for conditional leave to defend. Any condition imposed had to be capable of compliance.
2. Summary judgment. Kitchin LJ applied the approach explained in ED & F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472. A court must not conduct a mini trial to resolve significant factual disputes, but it may analyse evidence and dispose summarily of issues resting on assertions with no real substance, especially where contemporaneous documents contradict them or the outcome is inevitable. The judge also wrongly elided whether the alleged representations were made with whether they were fraudulent.
3. Mr Akrill’s account was improbable, but it was not wholly implausible or fanciful. His evidence, supported in part by his wife’s evidence, raised a conflict that could not be resolved without cross-examination. The guarantees and related documents were powerful evidence for the Bank, but did not make the defence incapable of success at trial.
4. Implied agreement. The judge had failed to address whether the parties’ conduct after 30 November 2011 could support a new implied loan agreement, including a term requiring reasonable notice. That case was also improbable but not fanciful and could not be summarily rejected.
5. Estoppel by convention. The Court agreed that this defence had no real prospect of success. A shared assumption must be expressly communicated between the parties. There was no evidence of such communication.

• Court of Appeal (Civil Division): In [2014] EWCA Civ 907, allowed the appeal to the extent indicated and remitted the application to the High Court for consideration of appropriate conditions.
• High Court of Justice, Chancery Division: His Honour Judge Jarman QC granted the Bank summary judgment on the two guarantees on 29 October 2013 in case no HC13CO1238.