Freear v Andrews

Strike-out and summary judgment are distinct remedies. A defence should not be struck out under CPR 3.4 where it advances coherent factual and legal grounds, even if those grounds may ultimately fail.

Summary judgment requires the court to decide whether the defendant has a realistic prospect of success, without conducting a mini-trial. The court must consider contemporaneous documents and evidence reasonably expected to be available at trial. Where the existence or meaning of express or implied contractual terms depends on disputed oral evidence, commercial context and documents, the issue will ordinarily require a trial. The same applies where the basis and alleged breach of a trust require fuller factual assessment.

The claimant sought recovery of £1,342,407 advanced to the defendant for a proposed property investment. He alleged breach of contract, breach of trust and restitution. He applied to strike out the defence under CPR 3.4 or, alternatively, for summary judgment under CPR 24.2 on the contract and trust claims, together with an interim payment if judgment were entered on the trust claim.

The parties disputed whether the agreement made the money repayable on demand, whether the advances were loans or investment capital, the meaning of contemporaneous emails, and the basis of any trust. The central issue was whether those matters could properly be resolved without a trial.

1. Strike-out. The defence disclosed coherent factual and legal grounds. It therefore could not be characterised as incoherent or as disclosing no reasonable grounds for defending the claim. The application under CPR 3.4 was dismissed.
2. Summary judgment principles. The court applied the principles summarised in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch). It had to decide whether the defence had a realistic, rather than fanciful, prospect of success, avoid a mini-trial, assess the effect of contemporaneous documents, and consider evidence reasonably expected to be available at trial.
3. Contract claim. Whether the money was repayable on demand, expressly or by implication, could not be determined summarily. Resolution required consideration of whether the term arose from oral exchanges or documents, commercial common sense, the parties’ understanding of the intended use of the money, whether the transaction was a loan or capital investment, and the meaning and context of the contemporaneous correspondence. Only after those factual issues were resolved could the legal question of incorporation of the term be determined.
4. Trust claim. The basis of the alleged trust and the nature of any breach also required a full assessment of the facts, including matters overlapping with the contract dispute. Summary judgment was therefore inappropriate.
5. The claimant’s applications were dismissed.