Elevar Finance SPV Photon LLC v Sabesan Somasundaram

Strike out and summary judgment are distinct remedies. A defence may be struck out where its pleaded facts, even if true, disclose no legal defence, but a serious live issue of fact ordinarily requires a trial. Summary judgment requires a defendant to have no realistic prospect of success and no other compelling reason for trial. The court must avoid a mini-trial, while testing whether the pleaded and evidential case has real substance. Fraud allegations do not create an automatic bar to summary judgment, but they require particular caution because oral evidence may materially alter the apparent strength of the case. Where tortious claims depend on disputed dealings and mixed questions of fact and law, summary determination is inappropriate. Inadequate particulars under CPR 16.5(2) may justify an unless order rather than immediate strike out.

Elevar Finance SPV Photon LLC sought to strike out the defendant’s amended defence under CPR 3.4(2)(a), or alternatively summary judgment under CPR 24.2, in claims against the sole director and shareholder of Teleunique Solutions Ltd.

The claims alleged fraudulent misrepresentation, procuring breach of contract and conspiracy to injure by unlawful means. They arose from a factoring arrangement under which Elevar purchased receivables owed by Dialog Broadband Networks (Private) Ltd to Teleunique. Elevar alleged that those receivables had been reduced or extinguished by an agreed set-off. The defendant denied that any set-off had occurred and denied the underlying wrongdoing.

The central issues were whether the amended defence disclosed a reasonable defence, whether the evidence showed that the defendant had no real prospect of defending the personal tort claims, and whether the factual disputes could properly be resolved without a trial.

1. Summary judgment. The application for summary judgment was refused. The court applied the principles in Easyair Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), as approved in AC Ward & Sons Ltd v Catlin (Five) Ltd [2009] EWCA Civ 1098. The question was whether the defence had a realistic, rather than fanciful, prospect of success. The court was not to conduct a mini-trial, but could analyse evidence where factual assertions plainly lacked substance.
2. A fuller investigation of the dealings between Dialog and Teleunique might add to or alter the evidence. The contemporaneous material showed persistent payment delays and did not conclusively establish the alleged set-off. The defendant therefore had a real prospect of defending the claims.
3. Fraud allegations. Following Wrexham Association Football Club v Crucialmove Ltd [2006] EWCA Civ 237, fraud did not automatically preclude summary judgment. It was, however, a category of case in which the court should be very cautious, since oral testimony might undermine an apparently strong documentary case. King v Stiefel [2021] EWHC 1045 (Comm) confirmed that summary judgment may be granted in suitable fraud cases.
4. Personal tort claims. The claims raised mixed questions of fact and law. A claim for procuring breach of contract required consideration of whether the defendant had assumed clear personal responsibility for Teleunique’s conduct. The fraudulent misrepresentation claim required proof that he knowingly deceived Elevar. These issues were unsuitable for summary determination.
5. Strike out. The amended defence did not adequately comply with CPR 16.5(2), because it did not set out sufficient reasons for denying the allegations. Immediate strike out was nevertheless disproportionate. The defendant was ordered to file and serve a re-amended defence within 28 days complying with CPR 16.5(2), failing which the defence would stand struck out.