HOPE CAPITAL 2 LIMITED v MR STEPHEN MICHAEL JONES

Summary judgment may be granted where the defendant has no real prospect of successfully defending the claim and there is no other compelling reason for trial. The court may consider the prospects of a draft amended defence when determining the application.

A principal is not liable for an agent’s statements merely because an agency relationship is alleged. The defence must identify a recognised basis for liability, such as actual or apparent authority, specific authorisation or ratification, or an assumed responsibility for the agent’s conduct. Contractual non-reliance and guarantee provisions may also defeat pleaded misrepresentation or discharge arguments.

The claimant, a specialist business lender, sought summary judgment and strike-out of the defendant’s defence to a claim under a deed of guarantee and indemnity. The underlying borrower had defaulted on a £2.1 million loan, and substantial sums remained outstanding after secured properties were sold.

The defendant relied on alleged representations concerning independent valuation, statements allegedly made by a co-director and by NCI Resources Limited, an alleged replacement loan agreement, undue influence, and proposed amendments concerning misrepresentation and breach of duty. The central issues were whether those defences disclosed reasonable grounds or had a real prospect of success.

1. Summary judgment and strike-out. The court applied the established summary judgment test under CPR 24.2. There was no practical distinction between that test and the test under CPR 3.4(2)(a) in this case. The court was entitled to consider the draft amended defence and its prospects of success.
2. The alleged representation that lending was conditional on an independent valuation was unsupported by the transcript of the relevant call. The claimant’s evidence also established that independent valuations had been obtained. The proposed defence therefore had no real prospect of success.
3. The allegation that the co-director acted as the claimant’s agent was unsupported. There was no evidence of actual authority, and the defendant accepted that the claimant had done nothing to clothe him with ostensible authority. In any event, clause 6.1.3 of the Guarantee prevented reliance on representations made on behalf of the lender which were not set out in the Guarantee.
4. The alleged replacement loan agreement was unsupported by evidence and, in any event, the Guarantee expressly preserved the guarantors’ liability despite variations, replacement or amendment of the guaranteed obligations, dealings with security, concessions, or acts which might otherwise discharge a guarantor.
5. The bare allegation of undue influence was misconceived because no undue influence by the claimant was alleged.
6. The proposed defence based on statements by NCI disclosed no reasonable grounds and had no real prospect of success. Alleging that NCI was the claimant’s agent was insufficient. The defence did not allege specific instigation, authorisation or ratification, actual or apparent authority for the statements, or that the claimant had assumed responsibility for them. Clause 6.1.3 provided an additional answer.
7. Summary judgment was granted in favour of the claimant against the defendant.