British International Investment Plc v Sunny Varkey & Anor

Summary judgment may be granted where the defendant has no real prospect of successfully defending the claim and no other compelling reason requires a trial. The court may permit a claimant to pursue summary judgment before an acknowledgment of service or defence has been filed, including retrospectively, where the defendant has deliberately chosen not to engage with the proceedings and determination on the merits will assist enforcement.

Where parties have agreed to appoint service agents but fail to do so, alternative email service may be authorised if it is likely to bring the documents to the defendants’ attention. Contractual inability to pay does not constitute a substantive defence to a payment obligation. A guarantor is liable in accordance with the guarantee and indemnity.

The claimant sought summary judgment against the purchaser and guarantor of obligations arising from an agreement for the sale and purchase of shares and loan notes in GEMS Africa Limited. The purchaser had failed to pay the loan instalments, the loan had been accelerated, and the guarantor had been demanded to indemnify the claimant.

Neither defendant had acknowledged service, appointed solicitors on the record, served a defence, or attended the hearing. Earlier orders had permitted service by email because the defendants had failed to appoint agreed service agents. The claimant also sought declaratory relief concerning its contractual indemnity and permission to defer assessment of enforcement-related losses.

The issues included whether permission should be given to proceed with summary judgment despite the absence of an acknowledgment of service or defence, whether the claim satisfied the summary judgment test, whether declaratory relief was appropriate, and whether alternative service should continue.

1. Permission to proceed. Under Civil Procedure Rules 1998, rule 24.4, a claimant ordinarily requires permission to apply for summary judgment before an acknowledgment of service or defence has been filed. Following Phillips v Avena [2005] EWHC 3333 (Ch), permission could be granted even though the application had already been issued. It was appropriate here because the defendants had deliberately declined to engage and a merits judgment would facilitate enforcement.
2. Summary judgment. Under Part 24 of the Civil Procedure Rules 1998, the court may determine the claim where the defendant has no real prospect of successfully defending it and there is no other compelling reason for trial. That test was satisfied. The contractual payment default was established, the opportunity to remedy it had expired, and the claimant was entitled to accelerate the loan and claim principal, contractual interest and default interest. The assertion that the defendants lacked liquidity was not a substantive defence. VGL was liable as guarantor.
3. Declaratory relief. Applying the principles summarised in MMD Mining Machinery Developments Ltd v Lang [2021] EWHC 3264 (Comm), the declaration concerning the contractual indemnity served a useful purpose, special reasons existed, and the legal basis for the declaration was established.
4. Service. The agreed service-agent provisions supported alternative service. The email method authorised by the earlier orders, supplemented by two further addresses, was valid and had brought, or would bring, the proceedings and application to the defendants’ attention. The court therefore authorised the same method for further documents and the judgment.
5. Orders. Summary judgment and the declaration were granted. Assessment of the amount of the indemnity was deferred with permission to apply. Costs were ordered to be assessed on the indemnity basis, with an interim payment on account of £100,000 within 14 days.