Eco Quest Plc v GFI Consultants Ltd (In Liquidation) & Ors

Applications to strike out or obtain summary judgment require the court to assess the pleaded case as it stands, separately from any earlier interlocutory finding that there is a good arguable case. Fraud must be pleaded clearly and with particularity, including the representation relied upon, its falsity and the intended reliance where relevant. A case should not be summarily determined where material factual disputes or arguable issues of construction require a trial. A claimant benefiting from freezing injunctions must pursue the proceedings promptly. Failure to put the pleaded case in order within the required time may justify discharge of the injunctions and refusal of permission to amend.

The claimant alleged that the defendants induced investments in a Brazilian teak plantation by fraudulent representations and that investment monies were held on trust. Following earlier freezing and tracing orders, the defendants applied to strike out parts of the claim or obtain summary judgment, and later applied to discharge the freezing injunctions. The claimant sought permission to amend its particulars of claim, substantially out of time.

The court considered the adequacy of the pleadings, the prospects of the deceit and trust claims, the claimant’s delay, and whether the proposed amendments should be permitted.

1. Dismissal application. The earlier Salter judgment had addressed only whether the injunctions should continue and whether there was a good arguable case. It did not validate the pleadings or prevent applications to strike out or for summary judgment.
2. Fraud allegations must be pleaded clearly and particularly. The original current-option representation lacked an allegation that the defendants intended reliance and was struck out unless amended. The future-option representation was vague and failed to plead an actionable representation as to past or present fact, and was struck out. The Maos Seguras control representation lacked pleaded particulars of falsity and was also struck out.
3. The pleaded suite representations were fundamentally defective because statements concerning future intentions had not been pleaded as representations of existing intention, with corresponding falsity. The letter representations, however, were adequately pleaded. Read with the accompanying trust documents, the letters arguably represented that the claimant had acquired a beneficial interest in identified plots of the contracted size and quality.
4. Summary judgment was refused on the remaining deceit allegations. The evidence raised issues concerning whether meetings occurred, whether options existed, the truth of the representations and the defendants’ honesty. Those matters could not fairly be resolved summarily. The trust claim also raised an arguable Quistclose-type issue: the contractual purpose, separation of funds and repayment obligation were matters requiring determination.
5. A claimant obtaining a freezing order must pursue the action as rapidly as possible. The claimant failed to comply with the deadline for seeking permission to amend and gave an unsatisfactory explanation for its delay. The freezing injunctions were therefore discharged.
6. Applying the three-stage approach in Denton v TH White Ltd [2014] EWCA Civ 906, the default was serious and significant, the reasons were inadequate, and the circumstances did not justify an extension of time. Permission to amend was refused in relation to the original current-option representation and the proposed Intended Scheme Representations, but granted for limited clarifying amendments.

The dismissal application was granted to a limited extent. The discharge application was granted in full. Consequential orders were to end the freezing injunctions and strike out the specified parts of the particulars of claim.

The judgment records earlier interlocutory decisions, including the Salter judgment and refusal of permission to appeal by the Chancellor. Those decisions concerned continuation of the injunctions and did not determine the present applications.