[2025] EWHC 2107 (Comm)

In evaluating the prospects of the First and Second Defendant successfully defending the claim, the task is to determine whether the defences raised by the First and Second Defendants are only “fanciful” or more than that (Khan v Edgbaston Holdings Ltd [2007] EWHC 2444 (QB), para. 15). If on the evidence available the Court has reached the view that the prospects of successfully defending the claim in reality exist and transcend any fanciful hope of success, then the requirements of CPR rule 13.3 are satisfied.

I have in mind the comments made by Potter LJ in ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472; [2003] CP Rep 51, where it was said that the meaning of “real prospect of successfully defending the claim” in the context of CPR rule 13.3 was the same as that used in respect of an application for summary judgment under CPR rule 24.2. Potter LJ however also said that “although generally the burden of proof is in practice of only marginal importance in relation to the assessment of evidence,it seems almost inevitable that, in particular cases, a defendant applying under CPR 13.3(1) may encounter a court less receptive to applying the test in his favour than if he were a defendant advancing a timely round of resistance to summary judgment under CPR 24.2”.

In AMRA Leasing Limited v DAC Aviation (EA) Limited [2022] EWHC 1718 (Comm), Jacobs J said at para. 37:

“An important question on such an application, therefore, is whether the defendant has established that it has a “real prospect” of successfully defending the claim. This means more than a merely arguable case. The distinction between a real and fanciful prospect of success is that the defence sought to be argued “must carry some degree of conviction” (see ED&F Man Liquid Products Ltd v Patel at [8]). The notes to CPR 13.3 in the White Book describe the “major consideration” on an application to set aside as being whether the defendant has shown a real prospect of successfully defending the claim or some other good reason why the judgment should be set aside.”

In my judgment, the First and Second Defendants have established a real prospect of success in their defence of the claim under the personal guarantees contained in the Facility Agreement, because at least on the evidence there are serious issues to be addressed as to whether the Facility Agreement is binding on the First and Second Defendants, having regard to (a) the circumstances in which their signatures were provided, (b) the release of those signatures, and (c) representations said to have been made which induced them to agree to be guarantors, and as to whether the Claimant was entitled to present a demand under the guarantees. I also consider that the First and Second Defendants have a real prospect of succeeding in their arguments on the enforceability of the Facility Agreement and the guarantees under Consumer Credit legislation, even though I have concluded above that the First and Second Defendants are not entitled to rely on this point in support of their application under CPR rule 13.2.

In reaching this conclusion that the First and Second Defendants have a real prospect of successfully defending the claim, I do not have to review each and every defence advanced by the First and Second Defendants, provided that I am satisfied that at least one of those defences has a real prospect of success and is sufficient on its own to defend the claim. I do not therefore propose to conduct an analysis in this judgment of each of the defences advanced in any detail.

I do, however, make the following observations.

First, the majority of the defences - especially defences based on the circumstances in which the First and Second Defendants signed the Facility Agreement and the alleged misrepresentations relied upon - require an assessment of evidence, both documentary and oral evidence - and it is not possible to dispose of these defences at this interlocutory stage. I would add that I do not accept the Claimant’s submission that the representations relied upon in the draft amended Defence and Counterclaim, at para. 29, in support of the defence based on misrepresentation are not representations of present fact; I consider those representations of intention are representations of present fact (Edgington v Fitzmaurice (1885) 29 Ch D 459, 479-480, 482-483).On the other hand, I do not consider that the defence based on the amendments of the Facility Agreement is likely to overcome clause 19.5. That said, I do not propose that the First and Second Defendants should be restricted in how they choose to plead their defences by anything I might say in this judgment or that the Claimant should be restricted in how it responds to any defence.

Second, although there may be instances where the draft amended Defence and Counterclaim is not fully particularised, I am reluctant to dispose of a defence having regard to a draft statement of case on that ground alone, unless it were clear that there was no real prospect of success in respect of the pleaded defence. For the purposes of the present application, the particulars were in my view sufficient.

Third, the fact that the Borrower has admitted his liability is not a consideration which I think carries much weight, especially where there may be various other factors contributing to the Borrower’s decision to settle with the Claimant. Indeed, the First and Second Defendants should be able to defend the claim without being restricted by the Borrower’s own stance, not least because there are material differences between the position of a borrower and a guarantor, and in this case given the possible significance of the relationship between the Borrower and the First and Second Defendants. That is not to say that the Borrower’s stance may not be relied on by the Claimant, for example, for evidential purposes. The mere fact that the Borrower has contractually bound himself not to assist the First and Second Defendants - if that is in fact the effect of clauses 3.4 and 3.5 of the Settlement Deed - is also not a consideration which carries much weight, as the First and Second Defendants may well be able to furnish the evidence required from other sources, including their own evidence.

Fourth, whether the First and Second Defendants were sophisticated individuals and the relevance of any such consideration is a matter best left to trial.

Fifth, the decision made by the Third Defendant in respect of the Claimant’s claim is again not a matter which I consider carries much weight in assessing the First and Second Defendants’ prospects of success.