Hinkel v Simmons & Simmons LLP

Permission to appeal requires a real prospect that the proposed appeal will succeed. In a fraud claim, evidence that a representation may have been false does not, without more, establish that the defendant knew it was false or was reckless as to its truth. Those issues must be kept distinct. Where an allegation of dishonesty is equally consistent with negligence, carelessness, or the defendant having been deceived, dishonesty should not be inferred merely from the seriousness of the allegation. The court may evaluate the inherent plausibility of competing explanations when deciding whether an appeal has a real prospect of success.

The appellant alleged that the respondents, a firm of solicitors, fraudulently represented that they were instructed by the Republic of Iran in connection with a proposed property transaction. The County Court entered summary judgment for the respondents, holding that the fraud pleading did not properly allege knowledge or recklessness and that the evidence did not support an inference of dishonesty.

The appellant sought permission to appeal and relied, in particular, on a draft engagement letter obtained after the County Court hearing. The central issue was whether the existing and new material gave the proposed appeal a real prospect of success.

1. Permission refused. The County Court had entered summary judgment for the respondents and dismissed the fraud claim. The appellant did not show a real prospect of successfully challenging that decision.
2. The County Court had proceeded on the basis that the respondents represented that they were instructed as solicitors by the Republic of Iran. It had accepted that the evidence might support an inference that the respondents were not properly instructed because Dr Azizi might have been an impostor. That conclusion did not establish the separate mental element of fraud.
3. The critical question was whether the respondents knew that the representation was false, or were reckless as to its truth. The County Court was entitled to conclude that the evidence did not properly support that inference. Evidence concerning the possible status of Dr Azizi was relevant but was not determinative of the respondents’ state of mind.
4. The draft engagement letter did not materially improve the appellant’s case. It was unsigned, and its existence was consistent with the respondents still awaiting instructions. The address given for Dr Azizi could support concerns about due diligence, but plausible explanations inconsistent with dishonesty remained available.
5. In applying the guidance of Three Rivers DC v The Governor and Company of the Bank of England (No. 3) [2001] UKHL 16, [2003] AC 1, the court considered that dishonesty should not be inferred where the evidence was equally consistent with carelessness or the respondents themselves having been deceived. The alleged fraud also appeared inherently implausible in light of the absence of any clear financial mechanism and the involvement of more than one solicitor.
6. Other proposed new evidence was either immaterial or plainly available before the County Court hearing. The application was not totally without merit, but no order was made as to the costs of the permission application.

• County Court at Central London: By order dated 10 March 2020, HHJ Dight entered summary judgment for Simmons & Simmons LLP and dismissed the fraud claim.
• High Court (Chancery Division): Mr Justice Adam Johnson refused permission to appeal after an oral renewal hearing. No order was made as to the costs of the permission application.