EUI Limited (t/a Admiral) v Vaughn Smith

On an appeal from interlocutory decisions, a pleaded allegation of dishonesty should be struck out only where the pleaded facts cannot support it. The court assumes pleaded facts to be true but scrutinises whether they justify the allegation. Dishonesty may be inferred where the pleaded untruths are obvious and demonstrable, particularly when supported by contextual facts and a plausible motive.

Summary judgment is inappropriate where disputed expert evidence, the meaning and effect of a report, or the parties’ intentions require trial. An unlawful means conspiracy may be tacit and inferred from overt acts; no express agreement is required. A non-very-late amendment should generally be permitted unless the claim has no real prospect of success or the balance of justice otherwise requires refusal.

EUI brought a Part 20 claim against Mr Smith, who had prepared an engineering report stating that a motorcycle involved in an accident was undriveable and beyond economical repair. EUI alleged deceit and unlawful means conspiracy, contending that the report dishonestly attributed damage to the accident and supported substantial credit-hire losses.

HHJ Saunders refused to strike out the claim and refused reverse summary judgment. Mr Smith appealed. EUI also applied to amend its Part 20 Particulars of Claim. The issues were whether the dishonesty, deceit and conspiracy allegations were adequately pleaded and had a realistic prospect of success, and whether permission to amend should be granted.

1. Appeal dismissed. The refusal to strike out the Part 20 claim and to enter reverse summary judgment was upheld. Permission was granted to EUI to amend its Part 20 Particulars of Claim.
2. On strike out, the court assumed the pleaded facts to be true but assessed whether they justified the allegation of dishonesty. EUI pleaded that the accident was benign, that the motorcycle suffered no significant damage and remained driveable, and that none of the seven listed parts had been damaged or required replacement. Those pleaded facts, together with the report’s conclusion that the motorcycle was undriveable and beyond economical repair, were sufficient to support an allegation that the report contained obvious and demonstrable untruths.
3. The report was capable of being read as attributing the listed parts and the resulting write-off to the accident. Its references to the accident date, insured, claim number, impact location, pre-accident damage, new materials and CPR Part 35 expert duties made Mr Smith’s contrary interpretation a matter for trial.
4. The allegations that the report was intended to deceive EUI and that EUI suffered loss were adequately pleaded. EUI only needed to plead that it was influenced by the misrepresentation and had incurred expenses, including counter-fraud costs.
5. The conspiracy claim was also adequately pleaded. Applying Kuwait Oil Tanker Co SAK v Al Bader (No 3), an express agreement was unnecessary. A tacit combination and common intention could be inferred from overt acts, provided the parties were sufficiently aware of the surrounding circumstances and shared the same object.
6. Reverse summary judgment was inappropriate. The parties relied on materially conflicting expert evidence about roadworthiness, causation and the significance of the missing belly pan. Whether the report was dishonest, deceitful and causally connected with the alleged loss required a trial under the Easyair principles.
7. The proposed amendments were not “very late” in the relevant procedural sense because no trial date was imperilled. They clarified and particularised the existing case, arose from the same or substantially the same facts, and did not create unfair prejudice. The limitation objection failed, including because the claim was based on fraud and section 32 of the Limitation Act 1980 postponed the commencement of limitation until discovery or reasonable discoverability of the fraud.

• High Court (King’s Bench Division): appeal from HHJ Saunders’s orders and judgment dismissed. EUI was granted permission to amend its Part 20 Particulars of Claim.
• County Court at Central London: HHJ Saunders dismissed the applications to strike out and for reverse summary judgment in the reserved judgment dated 20 April 2023, following the hearing on 7 December 2022.
• Permission to appeal was initially refused by Mr Justice Martin Spencer on 18 January 2024, but was granted by Mr Justice Mould on renewal on 20 March 2024.