Lowry Trading Limited & Anor v Musicalize Ltd & Ors

Summary judgment may be granted where the defendant has no realistic prospect of defending the issue, provided the court avoids a mini-trial and considers evidence reasonably expected to be available at trial. Particular caution is required where dishonesty is alleged, but that caution does not prevent judgment where the evidential case permits only one realistic conclusion.

For deceit, a representation need only play a real and substantial part in inducing the claimant’s action. Other operative factors, later representations, or an existing contractual obligation to pay do not prevent reliance from being established. Repayment of the principal does not ordinarily discharge a separate tortious claim for deceit, although credit must be given for the payment.

The claimants, investment companies, sought summary judgment against companies and their directors in deceit. The first claimant relied on allegedly forged invoices, bank statements and a purported contract supplied in support of further funding for proposed Dr Dre concerts. The second claimant relied on ticket-sale figures and profit projections said to represent the defendants’ own Snoop Dogg tour, although the defendants contended that the figures came from a third-party event.

The defendants disputed falsity, dishonesty, reliance and loss. They also argued that repayment of £500,000 discharged the first claimant’s claim and that contractual payment obligations prevented inducement. The issues were whether there was any real prospect of successfully defending the relevant deceit claims and whether there was any other compelling reason for trial.

1. Summary judgment test. Under Civil Procedure Rules 1998, r 24.2(a)(ii), the court considered whether the defendants had a realistic, rather than fanciful, prospect of defending the relevant issues. The court was required to avoid a mini-trial, but could evaluate evidence and reject assertions contradicted by contemporaneous documents or unsupported by any realistic evidential basis.
2. First claimant. The documents supplied to the first claimant were forged. The evidence, including genuine bank statements and the absence of any substantive denial, supported that conclusion. The communications showed that Mrs Anderson was involved in supplying the documents and seeking further payment. The natural inference was that she knew of their falsity. The documents were intended, or at least likely, to induce further investment, and formed a real and substantial part of the decision to make the £500,000 payment.
3. The repayment of £500,000 did not discharge the deceit claim. The alleged appropriation was not made contemporaneously with payment, the source of the funds was potentially disputed, and acceptance of repayment of principal was not inconsistent with maintaining a tort claim for deceit and interest. Credit had to be given for the payment.
4. Second claimant. The communications naturally represented that the defendants themselves were organising the Snoop Dogg tour and achieving the stated sales. The defendants supplied no realistic evidential basis for their contention that the second claimant knew the figures related to a third-party event. The representations were therefore false. They were dishonest under the objective standards of ordinary decent people, since they were made while further payments were sought and were intended to secure those payments.
5. The Snoop Dogg representations could induce payments relating to later events and payments made pursuant to an existing contractual obligation. The question was whether they operated on the claimant’s mind, not what would have happened in a counterfactual situation. Other representations did not prevent these representations from being a real and substantial cause.
6. Summary judgment was entered for the first claimant on the relevant £500,000 claim, subject to credit for repayment, and for the second claimant in the sum of £5,151,259.