Castle Trustee Ltd & Ors v Bombay Palace Restaurant Ltd

Summary judgment should be refused where the defendant has an arguable defence and the court cannot conclude that there is no real prospect of successfully defending the claim or issue under Civil Procedure Rules 1998, Part 24.2(a)(ii). Evidential difficulties caused by late evidence should not automatically determine the application where an application for relief from sanctions remains unresolved. The court may instead grant conditional permission to defend, including conditions requiring payment into court and an application for relief from sanctions.

The claim concerned contractual closure compensation and payment for alleged additional works at a leased restaurant. The claimants applied for summary judgment after the defendant’s solicitors had come off the record, the defendant had entered creditors’ voluntary liquidation, and evidential deadlines had passed. The defendant identified disputes concerning whether additional works were required, the scope and valuation of those works, and the cause of the restaurant’s closure. The court had to determine whether the defendant had a real prospect of defending the claim and, if so, what conditions should attach to permission to defend.

1. The claimants’ application for summary judgment was not granted outright. The defendant had an arguable defence to the claims concerning varied or additional work and closure compensation.
2. Under Part 24.2(a)(ii) of the Civil Procedure Rules 1998, the relevant question was whether the defendant had no real prospect of successfully defending the claim or issue. The court was unable to reach that conclusion. The disputes identified by the defendant were properly arguable, including whether additional works were required because of works sought by the claimants, the extent of the works, and their valuation.
3. The closure-compensation claim also raised an arguable issue as to whether any part of the closure resulted from works requested by the defendant. The defendant maintained that it had not instructed work to the entrance and had no power to order extras. Those matters required determination at trial.
4. It would have been wrong to penalise the defendant for evidential difficulties before its application for relief from sanctions had been heard. Permission to defend was therefore granted conditionally on the defendant lodging and serving an application for relief from sanctions and paying £148,000 into court.
5. Unless those conditions were satisfied, judgment would be entered for the claimants in the sum of £1,258,530.04, with interest to be assessed. The defendant was also ordered to pay the claimants’ application costs, summarily assessed at £24,000.