Larkfleet Limited v Armstrong Energy Limited

On summary judgment, the court may critically evaluate the available evidence, while avoiding a mini-trial. A claim should proceed where the pleaded case has a realistic prospect of success and further evidence may reasonably be available. However, an alleged assurance given in one commercial context does not ordinarily continue indefinitely. A claimant must show that later reliance was reasonable and that the defendant could reasonably have foreseen it. Those inquiries remain distinct. Where circumstances have materially changed, and the claimant makes no attempt to confirm that earlier advice remains applicable, there may be no realistic prospect of establishing the necessary duty of care.

The claimant brought a negligence claim for approximately £7 million, alleging that the defendant negligently advised or assured it that there was little risk in guaranteeing a facility because project revenues would fund repayment. The claimant said it relied on that advice when entering a 2017 Novation Agreement. It also brought a separate claim for £145,973.20, alleging an agreement that money received by the defendant would be offset against sums owed under the novated arrangements.

The defendant applied for reverse summary judgment and/or strike-out. The issues included limitation, duty of care, the existence of the alleged advice, reliance, causation, and whether the alleged Thornborough agreement existed.

1. Summary judgment and strike-out. The court applied the established approach under Civil Procedure Rules 1998 Part 3.4 and Part 24. The court must distinguish a realistic prospect of success from a fanciful one, avoid conducting a mini-trial, and consider evidence reasonably expected to be available at trial. It may nevertheless reject a factual case which is implausible, self-contradictory, or contradicted by contemporaneous documents.
2. Negligence claim. The claimant’s evidence that the advice and assurances were given was weak, oral, and unsupported by documents. It was not, however, so weak that the 2015 advice had no realistic prospect of being proved. The court therefore declined to dispose of the claim solely on that evidential basis.
3. The central difficulty concerned reliance in 2017. Reasonable reliance by the representee and reasonable foreseeability of that reliance by the representor are distinct inquiries. By 2017, the financial circumstances had materially changed, the original debtor was facing insolvency, and the arrangements were being novated. The defendant’s contemporaneous communications were inconsistent with a continuing assurance that the guarantee carried minimal risk. The claimant did not ask whether the 2015 advice remained valid. Even on the most favourable view of the facts, reliance in 2017 could not realistically be reasonable, and the defendant could not reasonably have foreseen it. No relevant duty of care therefore had a realistic prospect of being established.
4. The limitation issue was not summarily determined. The court accepted that it was arguable that reliance on the same advice on a later occasion could give rise to a separate cause of action.
5. Thornborough claim. The claimant’s documentary case was not compelling, but its director’s evidence asserted that an agreement existed. That created a triable issue which required determination at trial.
6. The application succeeded on the negligence claim and failed on the Thornborough claim. The parties were invited to agree an order and directions, with the Thornborough claim considered suitable for the Shorter Trial Scheme.

Not an appeal. No earlier decision is stated in the judgment.