Al Mashariq for Trading and Contracting Co v HSBC Bank Plc

Strike out and summary judgment require different thresholds. Strike out is appropriate only where the statement of case discloses no reasonable grounds and the defence is bound to fail. A defendant may put the claimant to proof by non-admissions on matters principally within the claimant’s knowledge.

Estoppel by representation is a rule of evidence, not a cause of action. It may operate defensively, but a claimant cannot found an independent claim upon it. On a negligent misstatement claim, duty and breach may be determined summarily where admitted, but reliance, causation and loss ordinarily require disclosure, witness evidence and trial where material factual disputes remain.

The claimant sought to strike out the defendant’s amended defence and obtain summary judgment concerning a forged banker’s draft for US$5,750,000. The claim form advanced damages for negligent misstatement. The claimant nevertheless relied on estoppel by representation and argued that the defendant was estopped from denying the draft’s genuineness.

The defendant admitted that it owed a duty of care and that its employee’s confirmation that the draft was genuine was inaccurate and in breach of duty. It disputed reliance, causation and loss, including the date on which the claimant released 200 portacabins and whether the claimant knew of the forgery. The court therefore considered the proper scope of strike out, estoppel by representation and summary judgment.

1. Strike out. The defendant’s amended defence pleaded coherent facts and was entitled to make non-admissions concerning reliance and causation, matters principally within the claimant’s knowledge. The strike-out application was not pursued at the hearing and in any event failed. It was dismissed.
2. Estoppel by representation. The claim form pleaded only negligent misstatement in tort. It did not plead a contractual or instrument-based claim under the banker’s draft. The words referring to breach of duty did not create such a claim. Estoppel by representation could not attach to an unpleaded cause of action and could not itself found an action. The summary judgment application based on estoppel was dismissed.
3. Estoppel could potentially operate defensively in a claim under the banker’s draft, but no such claim had been brought. Any claim actually pleaded was for compensatory tort damages, intended to place the claimant in the position it would have occupied had the negligent statement not been made.
4. Negligent misstatement. The defendant’s admissions established the duty of care and breach. The court therefore declared that the defendant owed the claimant a duty of care in respect of the pleaded statements and that those statements breached the duty.
5. Reliance, causation and loss could not fairly be determined summarily. Material questions included the date of release of the portacabins, whether SABB had communicated the correction before release, mitigation, the appropriate measure of damages, construction costs, the value of the portacabins and alleged lost profits. Disclosure, further evidence and cross-examination were required. Summary judgment on those issues was refused and they were left for trial.
6. The claimant was ordered to pay the defendant’s costs of the applications. The defendant’s costs were summarily assessed at £63,250.

First-instance decision. No prior appellate decision was stated in the judgment.