Al-Nesnas v Al-Najar & Ors

Summary judgment requires an issue-specific assessment of whether the defendant has no real prospect of defending the claim or issue and whether any compelling reason for trial exists. In misrepresentation claims, the court must identify each representation and address whether it was made, false when made, fraudulent or negligent, and causative of the transaction. Later evidence, credibility concerns, inaccurate documents or unexplained disappearance of money cannot fill gaps in proof of those matters. Where invested money has been diverted from companies and the defence offers no explanation, that issue may justify summary judgment for repudiatory breach of contract despite disputes about project definitions. Dishonesty need not be finally determined for that contractual conclusion. Damages should be assessed on proper evidence where the measure is uncertain.

The respondent invested approximately £1.6 million under agreements with the first appellant and two associated companies concerning property-development and retail projects. The High Court, in an ex tempore judgment reported at [2017] EWHC 568 (Ch) and a fuller judgment at [2017] EWHC 902 (Ch), granted summary judgment for fraudulent misrepresentation or, alternatively, negligent misrepresentation, ordered repayment and permitted tracing inquiries.

The appellants sought permission to appeal on grounds concerning the adequacy of the findings, the suitability of the claims for summary judgment and the alternative negligent-misrepresentation basis. The respondent relied additionally on repudiatory breach of contract and unjust enrichment. The central issues were whether the misrepresentation claims had been properly analysed and whether the payment order could be sustained on the contractual case.

1. Summary judgment test. Under Civil Procedure Rules 1998 Part 24 r 24.2, summary judgment requires consideration of whether the defendant has no real prospect of defending the claim or issue and whether there is any other compelling reason for trial. The assessment must be directed to the particular pleaded issue.
2. Misrepresentation claims. The judge had not identified the precise representations relied on or separately addressed whether they were made, false when made, fraudulent or negligent, and relied upon to induce the agreements. The representations concerning the other investors and the projects therefore remained capable of being defended. The defence was thin, but that could not compensate for deficiencies in the claimant’s proof. Later emails, inaccurate descriptions of stock-transfer forms, missing shares and evidence suggesting misappropriation might affect credibility, but did not establish that representations made in 2012 or early 2013 were false. The summary judgments on both categories of misrepresentation were unjustified.
3. Contractual case. The evidence showed that the invested money had disappeared from the companies. The defence supplied no explanation or alternative account. Regardless of the precise definition of the projects, the appellants had no real prospect of defending the allegation that the money had been diverted. This established repudiation by the companies of the Shareholders Agreements and by Mr Al-Najar of the oral agreement. It was unnecessary to decide whether the diversion was dishonest. The court declined to decide whether a direct unjust-enrichment remedy against Mr Al-Najar was available.
4. Remedy and procedure. The correct measure of contractual damages was insufficiently explored and was not necessarily the amount invested. Damages were to be assessed on proper evidence. A late witness statement and exhibit were refused under Civil Procedure Rules 1998 Part 52 r 21(2), since they could and should have been placed before the judge below and admission would not accord with the overriding objective.
5. Disposition. Permission to appeal was granted and the appeal was allowed in relation to the payment order. The order was substituted by summary judgment for breach of contract, with damages to be assessed and liberty to apply. The third ground concerning negligent misrepresentation required no determination.

• Court of Appeal (Civil Division) allowed the appeal in relation to the payment order and substituted summary judgment for breach of contract, with damages to be assessed: [2018] EWCA Civ 1619.
• High Court of Justice, before HHJ Walden-Smith, granted summary judgment for fraudulent or alternatively negligent misrepresentation, with repayment and tracing relief. The reasons appeared in an ex tempore judgment at [2017] EWHC 568 (Ch) and a fuller judgment at [2017] EWHC 902 (Ch).