G & A Properties (UK) Ltd v Rolland & Anor

On a late summary judgment application, the court must assume that served factual and expert evidence will be established at trial. A claim should be dismissed summarily only where it has no real prospect of success.

The construction and effect of a widely drafted settlement agreement may raise factual issues, including knowledge, reliance, concealment and inducement. Those issues may make summary determination inappropriate. A shareholder cannot recover loss that merely reflects loss suffered by the company, subject to the narrow exception where the company has been disabled from pursuing its own remedy. On an amendment raising limitation issues, permission will usually be refused where limitation is reasonably arguable, but the issue may be adjourned to trial in unusual circumstances.

The judgment concerned related applications for summary judgment or strike-out and permission to amend shortly before trial. The claims arose from investments in nightclub companies and alleged fraudulent misrepresentations, diversion of company assets and breaches of directors’ duties.

The defendant relied on a widely expressed settlement agreement and contended that the claims were compromised. The defendant also relied on the rule against reflective loss and limitation objections to proposed amendments. The central issues were whether the claims had a real prospect of success, whether the settlement agreement could summarily bar them, whether some claims were reflective losses, and how proposed limitation issues should be dealt with.

1. Summary judgment. Because the applications were made after factual and expert evidence had been served, the evidence had to be assumed to be established at trial. The relevant question was whether the claims had a real prospect of success.
2. Settlement agreement. Although a settlement may compromise claims unknown to the parties, the construction and effect of this agreement depended on factual matters, including the parties’ knowledge, the alleged concealment, inducement and the circumstances in which the agreement was made. Those matters could not be summarily determined. The settlement therefore did not, at this stage, preclude all claims.
3. Inducement and corporate claims. The individual and company misrepresentation claims were dismissed where there was no evidence of reliance or inducement. Claims by shareholders or parent companies for loss caused by breaches of duties owed to subsidiaries disclosed no relevant duty and were also barred by the rule against reflective loss. The principle in Prudential Assurance Co Ltd v Newman Industries Ltd (No 2) [1982] Ch 204, approved in Johnson v Gore-Wood (A Firm) [2002] 2 AC 1, applied. The claimed exception did not assist because the companies had not been disabled by the defendant from pursuing their own remedies.
4. Claims by the company to which duties were owed. SH Brentwood’s direct breach of duty and misfeasance claims were not reflective-loss claims and had a real prospect of success. They were allowed to proceed to trial.
5. Amendments and limitation. A proposed new claim was prima facie subject to limitation and did not arise from the same or substantially the same facts. Ordinarily, a reasonably arguable limitation defence would lead to refusal of the amendment. In the unusual circumstances, including the imminent trial and existing evidence, the applications concerning the proposed amendments were adjourned to trial.
6. Mr Norcross’s claims, NIL’s settlement-agreement misrepresentation claim, SHG’s claims and SH Brentwood’s settlement-agreement misrepresentation claim were dismissed. The remaining amendment applications were adjourned. Costs orders were made in relation to the dismissed claims, with other costs reserved or costs in the case.