Lewis Thermal Ltd v Cleveland Cable Company Ltd

Summary judgment or strike-out should be granted only where the claim is fanciful, discloses no viable cause of action, or can be resolved confidently without a trial. The court must avoid conducting a mini-trial and should consider evidence that can reasonably be expected to be available at trial. Caution is especially appropriate where causation, financial performance, expert valuation or disputed factual inferences require fuller disclosure and cross-examination. A claim may have a real prospect of success even where the evidence presents severe difficulties and the pleaded quantum appears unlikely. It is sufficient at this stage that the claimant has a realistic prospect of establishing some loss.

The claimant, to which Guardian’s assigned claim had been transferred, sought approximately £8 million from the defendant for allegedly defective cables. It pleaded deceit and misrepresentation, asserting that the cable problems caused John Lewis and Partners to stop offering Guardian work, leading to insolvency and loss of goodwill.

The defendant applied to strike out the relevant claims or obtain summary judgment. It argued that there was no realistic prospect of proving causation, that Guardian would have become insolvent in any event, and that the £8 million valuation was unsupported. The central issue was whether the evidence established a real, rather than fanciful, prospect of proving causation and some recoverable loss at trial.

1. The defendant’s application was dismissed. The pleaded case was not properly challenged as disclosing no reasonable cause of action. The substantive issue was whether the claimant had no real prospect of success.
2. Under CPR 3.4(2) and CPR 24.2, the court must distinguish a realistic claim from a fanciful one. It must not conduct a mini-trial. It should consider the evidence before it and evidence reasonably expected to be available at trial. A final decision without trial is inappropriate where fuller investigation, disclosure, expert evidence or cross-examination could affect the outcome.
3. There was a genuine factual issue whether the discovery of the cable defects caused John Lewis and Partners to remove Guardian from its tender list or exclude it from further work. The competing evidence could not properly be resolved summarily. The claimant therefore had a real prospect of establishing the alleged causal link.
4. The evidence of Guardian’s insolvency, losses and HMRC liabilities created severe difficulties for the claimant. However, the court could not rule out the possibility that continuing John Lewis work or tendering opportunities might have enabled Guardian to obtain funding and continue trading. The but-for causation issue therefore remained fit for trial.
5. The valuation evidence was substantially vulnerable, and an award anywhere near £8 million appeared unlikely on the material then available. Nevertheless, competing expert evidence meant that the court could not conclude that the claimant’s recoverable loss would be zero. A real prospect of establishing some damages was sufficient for the application.
6. The court took account of late disclosure and warned that outstanding disclosure issues had to be addressed promptly if the trial date was to be maintained.