Instituto de Salud para el Bienestar v Viva Enterprises Limited & Anor

Summary judgment is inappropriate where the court would need to conduct a quasi-trial, weigh incomplete evidence or resolve competing factual inferences. This applies even where serious fraud is alleged and the defendant relies on its reputation, inherent probabilities or documentary evidence. A claim has a real prospect of success where it carries some degree of conviction and is more than merely arguable. Fraud allegations may properly be pleaded by reading the particulars of claim and Reply together, provided facts are pleaded which take the case beyond innocent or negligent breach. Serious allegations may be dismissed summarily where they have no rational basis, but their burdensome character is not itself a reason to dismiss a viable claim.

The claimant, a Mexican state agency, claimed against a UK company and its director arising from the proposed supply of ventilators during the Covid-19 pandemic. It alleged misrepresentation and deceit, breach of contract, proprietary claims and unjust enrichment. The defendants denied making actionable representations, denied dishonesty, disputed rescission and contended that ventilators had been supplied through a third party.

The defendants applied under Civil Procedure Rules 1998, rules 3.4(2)(b) and 24, for strike out and summary judgment. The central issues were whether the fraud and cover-up allegations had a real prospect of success, whether they were adequately pleaded, whether the contractual entire agreement clause excluded misrepresentation claims, and whether the dispute could fairly be resolved without a trial.

1. Application dismissed, except for the adjourned parts. The defendants had not shown that the claimant had no real prospect of succeeding or that there was no other compelling reason for a trial.
2. Summary judgment is not a mini-trial. The court should not weigh competing strands of incomplete evidence, make preliminary factual findings or resolve contested inferences. Disclosure and cross-examination were likely to be significant, and the evidence was capable of developing at trial.
3. The claimant’s allegations concerning the representations, the defendants’ knowledge and state of mind, subsequent correspondence and the alleged cover-up were realistic rather than fanciful. The alleged post-contractual conduct could be relevant to the assessment of the pre-contractual fraud case, and the evidence had to be considered in the round.
4. Although fraud claims may in an appropriate case be dismissed under Part 24 where they have no rational basis or carry no conviction, this was not such a case. The claimant’s pleadings, read as a whole and including the Reply, pleaded sufficient facts to take the allegations beyond innocent or negligent breach.
5. It was not sufficiently clear that clause 35 excluded misrepresentation claims. There was force in the submission that it was an entire agreement clause concerned with contractual promises, but the court did not finally determine its interpretation.
6. The cover-up allegations were properly advanced in the Reply as rebuttal to the defendants’ case, rather than as a separate cause of action. If the defendants wished to respond, the appropriate course was an amended rejoinder.

Not an appeal. The judgment determined the defendants’ application for strike out and summary judgment at first instance.