Bruce v TTA Management Ltd & Ors

An appellate court reviewing strike-out or summary judgment must distinguish legal conclusions from case-management discretion. A claim should be struck out only where the pleading discloses no reasonable grounds. Summary judgment requires the court to decide whether the case lacks reality and has no real prospect of success, while recognising the limits of deciding disputed issues on limited evidence. A fraud claim may proceed where dishonesty, reliance and causation remain properly arguable and may require disclosure and cross-examination. A non-speaking expert valuation does not necessarily defeat a deceit claim: fraud or collusion may unravel the valuation, although proving loss may be difficult. The appeal was therefore allowed in part.

Mr Bruce appealed against the Chief Master’s order striking out his claims against TTA Management Ltd and its directors under CPR 3.4(2)(a), alternatively granting summary judgment under CPR 24.2. The claims arose from the valuation and purchase of his shares. He alleged that the defendants had failed to provide accurate financial information and had dishonestly represented that commission income would not be received by Management, thereby reducing the valuation.

The appeal concerned whether the breach of contract, conspiracy and deceit claims disclosed reasonable grounds and, on the evidence, had a real prospect of success.

1. Review of the order. The appeal was a review of the Chief Master’s decision. Whether a statement of case discloses reasonable grounds and whether a claim has no real prospect of success are legal conclusions, although caution remains necessary when reviewing case-management decisions.
2. Strike out. The breach of contract claim was sufficiently pleaded. It alleged that accounts supplied to the expert omitted income to which Management was entitled, contrary to the obligation to provide comprehensive, accurate and current financial information. The deceit claim also disclosed reasonable grounds. It was arguable that misleading an independent valuer could give rise to liability to the other party to the transaction, even though the representations were made to the valuer.
3. Summary judgment on contract. The breach claim had no real prospect of success. The parties had submitted the construction issue concerning entitlement to the commission income to the expert valuation process, and an earlier decision had treated that issue as non-justiciable in the circumstances. Further, because the valuation was non-speaking, Mr Bruce could not realistically prove what allowance had been made or that the alleged breach caused loss. The breach claim therefore remained struck out.
4. Summary judgment on deceit. The deceit claim should not have been summarily disposed of. The later restructuring could, in principle, support an inference about an earlier intention; the period between the statements and the restructuring did not make that inference fanciful. It was also arguable that the statements addressed the outcome of the future treatment of the income, rather than merely the mechanics of payment. Fraudulent intent could be inferred from primary facts and was not necessarily resolved by the objective construction of the agreement.
5. The non-speaking valuation was not fatal to the deceit claim. The principle in Campbell v Edwards and its illustration in Parry v Edwards Geldard supported the view that fraud or collusion could unravel a valuation. The deceit claim was not barred by abuse of process, acquiescence or acceptance of the valuation. The appeal was allowed in part: the breach of contract and conspiracy claims remained struck out, while the deceit claim was permitted to proceed to trial.

• High Court (Chancery Division): On appeal from the Chief Master’s order dated 25 April 2014, the court allowed the appeal in part. The breach of contract and conspiracy claims remained struck out; the deceit claim was restored for trial.