Summary justice: Resisting the siren call

The route from a High Court claim being issued to full trial is invariably neither swift nor straightforward. Parties frequently disagree about whether options such as having split trials to determine liability and quantum, or determining preliminary issues, will allow disputes to be resolved more easily, or simply drag out proceedings further.

It can be tempting to try to circumvent most of this by applying to the court for summary judgment early on. However, the cost consequences of an unsuccessful application can be significant and it is not uncommon for successful applications to be appealed, successfully. At the extreme, a judge may even decide the case against the applicant, if the points raised are points of construction or law. Two cases in recent months have given some useful guidance on the limits of what can be determined at the summary judgment stage, and therefore where this powerful weapon should or should not be deployed.

Optaglio v Tethal: No mini-trial

As the name suggests, an application for summary judgment will only be successful if the judge is able to decide summarily (without the benefit of a full trial), that the relevant party has ‘no reasonable prospect of success’ (CPR 24.1). The courts acknowledge that the evidence at full trial could look quite different to that available during the early stages of a dispute.  For this reason, it is a well-established principle that a court considering a summary judgment application should not conduct a ‘mini-trial’ of the evidence before them at that stage.

This does not necessarily mean that each and every statement made by a party should be accepted, particularly if it is contradicted by contemporaneous documents (ED&F Man Liquid Products Ltd v Patel and another [2003] EWCA Civ 472). This principle was examined recently by the Court of Appeal in Optaglio Limuted v Tethal and another [2015] EWCA Civ 1002.

Optaglio concerned a claim brought against a group of directors for breach of fiduciary duty. The alleged breach was the withdrawal of a patent application relating to nano-electronic components. The directors’ case, in essence, was that the withdrawal of the patent was a precondition to entering into a collaboration with a university spin-out, which was in the company’s best interests. The directors applied for judgment, which was granted at first instance, on the basis that:

• The company perceived that it was on weak ground, and needed the cooperation of the university spin-out;
• The directors had all acquiesced in the decision to withdraw the patent. The suggestion that they were all acting negligently was ‘fanciful’;
• The claim against one of the directors was bound to fail as he was not a party to the decision to withdraw the patent (although he had acquiesced to that decision); and
• In any event, the shareholders had consented to that decision.

In reaching these conclusions, the first instance judge had made certain findings of fact on issues that were in dispute. Relying on ED&F, he found the claimant’s evidence to be contradicted by credible contemporaneous documentary evidence. The claimant appealed the summary judgment.
The Court of Appeal allowed the claimant’s appeal, holding that the first instance judge had been wrong to grant summary judgment. Floyd LJ, giving the leading judgment, did not accept that the contemporaneous evidence was sufficient to satisfy the “high standard necessary for summary judgment“. Whilst the defendants may have been able to prove their case at trial, it was not suitable to make these findings at the summary judgment stage.

Allied fort v Creation: Meticulous, but wrong

If Optaglio is an example how a judge can be tempted to overstep the boundaries of what he is able to assess, it is far from an isolated one. In another recent Court of Appeal case, a similar line of reasoning led to a similar result.

With the benefit of hindsight, the case of Allied Fort Insurance Services Ltd and others v Creation Consumer Finance Ltd [2015] EWCA Civ 841 displayed two obvious hallmarks of a case not suitable for summary judgment. First, the facts of the case were highly complex. Second, the claim involved allegations of dishonesty, which courts are understandably loathed to make any findings on without having seen witnesses being cross-examined.

The Court of Appeal was generally supportive of the way that the first instance deputy judge had gone about his task. His judgement was a “highly conscientious and meticulous” examination of the arguments and evidence put before him. He had also directed himself to the correct authorities and legal test. Having done so, the deputy judge had found that there was a “no more than a fanciful prospect” that a judge at trial would accept the claimant’s evidence, which he considered was “completely contradicted by all contemporaneous documents and events“. However, when it came to it, the Court of Appeal found that the deputy judge had exceeded his remit and set out on precisely the sort of mini-trial that he was keen to avoid. Crucially, the key factual issues in dispute involved conversations between the parties and issues of credibility, which could only be determined at summary judgment in the most exceptional of circumstances. In this case that high test was not met.

Worth a punt?

The difficulty of deciding whether to apply for summary judgment is illustrated clearly by Optaglio and Allied Fort. On the one hand, these cases give a clear message from the Court of Appeal that summary judgment applications are not appropriate where issues of disputed facts are involved. On the other hand, in both of these cases the first instance judge granted the summary judgment application. Had the respondent not appealed in either case, the decision to make an application would have been vindicated. This also illustrates the dilemma of the unsuccessful party: is an appellate court likely to look afresh, with dispassionate eyes, and overturn summary judgment, or is this just throwing good money after bad?

When considering an application for summary judgment, a wise approach is to assume that every fact that the other side asserts will be accepted by the judge. If, even with this concession, it could properly be argued that the other side has no reasonable prospect of success, then it might well be worth applying for summary judgment.

These cases also point towards practical points. If making an application for summary judgment, the applicant should make its case as simply and succinctly as possible. The respondent to a summary judgment application will try to convey the case as being complex and fact dependent.