The National Crime Agency v Nuttall & Ors

Summary judgment in a civil recovery claim is appropriate only where the defendant’s case has no real prospect of success, in the sense that it is false, fanciful or imaginary and lacks reality. The court must not determine complex questions of fact or law requiring a trial. Serious allegations of fraud may require more cogent evidence than usual to satisfy the civil standard, having regard to the improbability and consequences of the allegations. However, the fact that a case involves fraud does not, by itself, provide a compelling reason for trial. Where substantial factual disputes remain, including disputes requiring oral evidence and cross-examination, summary judgment should be refused.

The National Crime Agency brought a Part 8 claim under the Proceeds of Crime Act 2002 seeking a recovery order concerning property registered in the name of Towerdene Estates Ltd. The claim alleged that the property was acquired using a fraudulent mortgage and that the mortgage was later redeemed with proceeds of crime.

Master Davison initially granted summary judgment on the papers. After Towerdene was restored to the Companies House register, that order was set aside by consent because Towerdene’s position had not been fully considered. Deputy Master Hill QC reconsidered the NCA’s application on the evidence filed by both parties. The central issue was whether Towerdene had no real prospect of successfully defending the allegations or whether there was another compelling reason for trial.

1. Application refused. The NCA had not established that Towerdene’s defence was false, fanciful or imaginary, or that it had no real prospect of success. Significant factual disputes remained and required determination at trial.
2. As to the alleged mortgage fraud, the court had not seen the original mortgage application and could not determine who made it or precisely what information was given to Allied Irish Bank. The bank’s letter suggested that its understanding of Amerco’s ownership came partly from company documents and its own searches, rather than solely from representations by the Nuttall brothers. The evidence also left unresolved the ownership position at the relevant time, what had been said about dividends and income, and whether any such income had been declared to HMRC.
3. The bank’s apparent lack of concern when granting the mortgage and accepting redemption monies might, in the full trial context, support Towerdene’s case. Further evidence from the bank might assist. These matters could not fairly be resolved on the present evidence.
4. As to the redemption monies, the chronological movement of the Kotecha funds did not resolve whether those funds were de facto used to redeem the mortgage or were applied to another property. That tracing issue required consideration of all the evidence, including oral evidence and cross-examination.
5. The observations concerning Mr Nuttall in SOCA v Azam [2014] EWHC 272 were given limited weight because he was not a party to that case. The case was materially analogous to The Director of the Assets Recovery Agency v Woodstock [2006] EWCA Civ 741, where grounds for suspicion did not establish that a defence had no real prospect of success.
6. The fact that the case involved fraud did not alone constitute a compelling reason for trial. Nevertheless, the factual disputes themselves justified proceeding to trial. The parties were directed to agree directions for the trial of the claims against Towerdene.