Shafiq Malik v Henley Homes PLC

Summary judgment may be granted where the defence is arguable but has no real or realistic prospect of success. The court assesses the evidence available on the application and need not assume that a fuller trial investigation will alter the outcome where the evidence is already complete and further disclosure is speculative.

In commercial disputes concerning an alleged oral agreement, contemporaneous documents and inferences from known or probable facts may carry greater weight than oral testimony. A lack of documentation may be particularly significant where the alleged agreement is insufficiently particularised. Commercial unworkability may support an inference that an agreement was not made, but it is not conclusive. Case-management considerations do not justify leaving liability for trial where it can properly be determined summarily.

The claimant, a shareholder and former director of the defendant, sought summary judgment for liability to repay loans exceeding £2 million and an interim payment. The defendant accepted that loans had been made and that its indebtedness was substantial, but contended that repayment required the agreement of all three shareholder-lenders under an alleged oral agreement made in about 2001.

The claimant argued that the alleged agreement was contradicted by the company’s accounts and other contemporaneous documents, unsupported by the defendant’s evidence, and commercially unworkable. The central issue was whether the defence had a real prospect of success, or whether there was some other compelling reason for liability not to be determined summarily.

1. Summary judgment granted on liability. The defence was arguable, but it did not meet the relatively low threshold of having a real or realistic prospect of success.
2. The alleged oral agreement was not supported by the contemporaneous documents or the defendant’s other evidence. The 2001 and 2002 accounts did not record it, and there was no evidence that the relevant figure in the 2002 accounts included the loans. The ledger repeatedly referred to directors’ loans rather than a shareholders’ loan account.
3. The audited accounts were material objective evidence. The explanation that the loans were recorded as repayable within one year because there was always a prospect of repayment within that period was unconvincing. No evidence of the asserted accountancy practice was provided.
4. The alleged agreement was inadequately particularised. The terms relied on in the defence and solicitors’ letter differed from those described in the witness evidence. The passage of time did not satisfactorily explain the absence of detail or documentation. Documents said to support the defendant’s case were, at best, neutral.
5. The court was unpersuaded that a trial or further disclosure would alter the position. The defendant identified no additional factual evidence and only speculated that further documents might emerge. Effective case management required an issue capable of summary determination to be decided at that stage.
6. Commercial unworkability may point against the existence of an alleged agreement, as recognised in Loveridge v Loveridge, but it was not conclusive. The court therefore did not rely on that consideration alone.
7. The court deferred argument on any interim payment and costs.