QB-2020-004171 - [2025] EWHC 2773 (KB)

The relevant rules in the CPR are as follows:

In EasyAir Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch) (approved by the Court of Appeal in AC Ward & Sons Ltd v Catlin (Five) Ltd [2009] EWCA Civ 1098 at para. 24), Lewison J said the following about summary judgment applications, but the same applies also to strike out applications:

"The correct approach on applications by defendants is, in my judgment, as follows:

“i)

The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 2 All ER 91 ;

ii)

A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]

iii)

In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman

iv)

This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]

v)

However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;

vi)

Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63 ;

vii)

On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725 ."

Guidance as to what is meant in Swain v Hillman by the inappropriateness of conducting a “mini-trial” was provided by the decision of the Supreme Court in Okpabi v Royal Dutch Shell [2021] UKSC 3; [2021] Bus. L.R. 332. Specifically, at [127]–[128] Lord Hamblen JSC stated that the correct approach, when asking whether the position might change from how it appears at the summary judgment stage, was not to ask whether there was a clear prospect that new material will become available before the trial which is likely to give the claimants a real prospect of success, but to ask whether there are reasonable grounds for believing that disclosure may materially add to or alter the evidence relevant to whether the claim has a real prospect of success.

It is not appropriate to strike out a claim in an area of developing jurisprudence, since, in such areas, decisions as to novel points of law should be based on actual findings of fact, Husson v Secretary of State for the Home Department [2020] EWCA Civ 329, per Simler LJ at [63]; Poole Borough Council v GN [2019] UKSC 25 per Lord Reed at [89-90].

Where a statement of case is found to be defective, the court should consider whether the defect can be cured by amendment. If so, the court should refrain from striking out without first giving the party concerned an opportunity to amend, SooKim v Young [2011] EWHC 1781 (QB); Northumbria Healthcare NHS Foundation Trust v Lendlease Construction (Europe) Ltd [2022] EWHC 1266 (TCC) per O'Farrell J [para.14; paras.53-58].

In King v Stiefel [2021] EWHC 1045 (Comm), Cockerill J stated that the Court is not barred from evaluating the evidence, albeit that the Court will be cautious in doing so:

“21.

The authorities therefore make clear that in the context of summary judgment the court is by no means barred from evaluating the evidence and concluding that on the evidence there is no real (as opposed to fanciful) prospect of success. It will of course be cautious in doing so. It will bear in mind the clarity of the evidence available and the potential for other evidence to be available at trial which is likely to bear on the issues. It will avoid conducting a mini-trial. But there will be cases where the Court will be entitled to draw a line and say that -even bearing well in mind all of those points - it would be contrary to principle for a case to proceed to trial.

22.

So, when faced with a summary judgment application it is not enough to say, with Mr Micawber, that something may turn up. Mr Lightman QC referred me to the recent cases of Riley v Sivier [2021] EWHC 79 (QB), at [14] , and Hunt v Times Newspapers [2012] EWHC 110 (QB), at [28]-[29] . Both of those echo long-established authority both pre and post CPR such as the well-known dictum of Megarry V-C in Lady Anne Tennant v. Associated Newspapers Group Ltd [1979] FSR 298 . These are encapsulated in the Court of Appeal's decision in ICI which is itself summarised in Easyair .”

At paras. 23 and following, Cockerill J went on to consider summary judgment in respect of claims in fraud as follows:

“23.

I should deal specifically with the law on summary judgment and claims in fraud, not least because it was at least implicit in the submissions for the Kings that such serious allegations were not suitable for summary determination.

24.

The reality is that while the court will be very cautious about granting summary judgment in fraud cases, it will do so in suitable circumstances, and there are numerous cases of the court doing so. This is particularly the case where there is a point of law; but summary judgment may be granted in a fraud case even on the facts. I have done so in a case heard very close in time to this application: Foglia v The Family Officer and others [2021] EWHC 650 (Comm) , where at [14] I gave some examples of other cases in which this course was also followed. In other cases, such as AAI Consulting Ltd v FCA [2016] EWHC 2812 (Comm) and Cunningham v Ellis [2018] EWHC 3188 (Comm) fraud claims were struck out on the basis that the particulars of claim were inadequate in themselves to support the claims being made.

25.

In terms of the approach to summary judgment in fraud claims Primekings commended to my attention the judgment of Stuart Smith J in Portland Stone Firms Ltd v Barclays Bank plc [2018] EWHC 2341 (QB) at [25] – [29] , in the context of the approach to be taken when faced with an application to strike out a claim in fraud. In summary:

i)

The Court should bear in mind that cogent evidence is required to justify a finding of fraud or other discreditable conduct, reflecting the court's conventional perception that it is generally not likely that people will engage in such conduct.

ii)

Pleadings of fraud should be subjected to close scrutiny and it is not possible to infer dishonesty from facts that are equally consistent with honesty.

iii)

However, in view of the common feature of fraud claims that the Defendant will, if the underlying allegation is true, have tried to shroud his conduct in secrecy, the Court should adopt a "generous" approach to pleadings.”

These features have led to an exacting standard applied to a case of fraud or dishonesty even at the pleading stage. In Hersi v Lord Chancellor [2018] EWHC 946 (QB) at paras. 135-136, it was stated as follows:

“135.

Supperstone J said in Baxendale-Walker, supra, para 70, that where the court is being asked by the Claimant to allow allegations of serious wrongdoing against reputable professionals to go to trial, the Claimant has the burden at trial of persuading the court to the standard of proof required to prove the most serious of allegations (see Secretaryof State for the Home Department v Rehman [2003] 1 AC 153 at para 55). That is why an allegation of fraud must be supported by cogent evidence and why the court usually begins with the assumption that an innocent explanation will be preferred (ibid. at paras 54-55; and Jafari-Fini v Skillglass Ltd [2007] EWCA Civ 261 at para 49).

136.

I agree with the Lord Chancellor’s submission that the Appellants have done little more than make bare assertions of dishonesty by the LAA’s employees. They have provided no particulars of any malice or dishonesty, and no explanation whatsoever as to why the conduct complained of is only consistent with dishonesty and not with any innocent explanation. This is not conduct which intrinsically suggests fraud or deceit in any way. As such, they have failed to plead properly essential particulars of his claim” (emphasis added).

There is one potential distinction between the position in relation to an application for summary judgment under CPR r. 24.2 and an application to strike out under CPR r. 3.4(2)(a) . As just noted, under CPR 24 evidence is admissible to show that the pleaded allegations are fanciful – albeit that the court will be very cautious about rejecting a claimant's factual case at the summary judgment stage.

When considering an application to strike out however the facts pleaded must be assumed to be true and evidence regarding the claims advanced in the statement of case is inadmissible. This is noted in Terry Allsop v Banner Jones Limited [2021] EWCA Civ 7 by Marcus Smith J (giving the judgment of the Court of Appeal) at [7], citing the judgment of Arnold LJ in Libyan Investment Authority v King [2020] EWCA Civ 1690, at [96]:

"In contrast with the applications under CPR 3.4(2)(b) , the applications under CPR 3.4(2)(a) and CPR 24.2 are concerned with the merits of the claim, specifically whether the claim meets the (low) threshold of what I shall call "reasonable arguability". Although it can be said that there is no material difference between the test applied by these two provisions, there is an important distinction between CPR 3.4(2)(a) and CPR 24.2 , in that an application under CPR 24.2 can be supported by evidence, whereas an application under CPR 3.4(2)(a) should not involve evidence regarding the claims advanced in the statement of case."

In JSC Bank of Moscow v Kekhman [2015] EWHC 3073 (Comm) at [15]-[22] referring to Three Rivers at [186] per Lord Millett, Flaux J (as he then was) said:

“17.

The fullest statement of the relevant principles upon which Mr Swainston QC relied is that of Lord Millett from [184] onwards:

“184.

It is well established that fraud or dishonesty (and the same must go for the present tort) must be distinctly alleged and as distinctly proved; that it must be sufficiently particularised; and that it is not sufficiently particularised if the facts pleaded are consistent with innocence: see Kerr on Fraud and Mistake 7th ed (1952), p 644; Davy v Garrett (1878) 7 Ch D 473 , 489; Bullivant v Attorney Genera; for Victoria [1901] AC 196 ; Armitage v Nurse [1998] Ch 241 , 256. This means that a plaintiff who alleges dishonesty must plead the facts, matters and circumstances relied on to show that the defendant was dishonest and not merely negligent, and that facts, matters and circumstances which are consistent with negligence do not do so.

185.

It is important to appreciate that there are two principles in play. The first is a matter of pleading. The function of pleadings is to give the party opposite sufficient notice of the case which is being made against him. If the pleader means “dishonestly” or “fraudulently”, it may not be enough to say “wilfully” or “recklessly”. Such language is equivocal. A similar requirement applies, in my opinion, in a case like the present, but the requirement is satisfied by the present pleadings. It is perfectly clear that the depositors are alleging an intentional tort.

186.

The second principle, which is quite distinct, is that an allegation of fraud or dishonesty must be sufficiently particularised, and that particulars of facts which are consistent with honesty are not sufficient. This is only partly a matter of pleading. It is also a matter of substance. As I have said, the defendant is entitled to know the case he has to meet. But since dishonesty is usually a matter of inference from primary facts, this involves knowing not only that he is alleged to have acted dishonestly, but also the primary facts which will be relied upon at trial to justify the inference. At trial the court will not normally allow proof of primary facts which have not been pleaded and will not do so in a case of fraud. It is not open to the court to infer dishonesty from facts which have not been pleaded, or from facts which have been pleaded but are consistent with honesty. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must be both pleaded and proved.”

18.

His Lordship then analysed the judgment of Thesiger LJ in Davy v Garrett and the judgments of the Court of Appeal in Armitage v Nurse and continued at [189]:

“189.

It is not, therefore, correct to say that if there is no specific allegation of dishonesty it is not open to the court to make a finding of dishonesty if the facts pleaded are consistent with honesty. If the particulars of dishonesty are insufficient, the defect cannot be cured by an unequivocal allegation of dishonesty. Such an allegation is effectively an unparticularised allegation of fraud. If the observations of Buxton LJ in Taylor v Midland Bank Trust Co Ltd (unreported) 21 July 1999 are to the contrary, I am unable to accept them.”

19.

In his reply submissions, Mr Swainston QC put the test which he submitted was to be derived from Lord Millett's speech in these terms:

“…the primary facts must necessarily lead to the inference that Mr Kekhman is guilty of fraud because otherwise and ex hypothesi the primary facts can be consistent with innocence…You don't get to arguability until you've established that there is a proper fraud plea. You don't establish that there is a proper fraud plea before particulars are pleaded which are only consistent with Mr Kekhman being dishonest and which cannot be consistent with Mr Kekhman being honest.”

20.

I agree with Mr Gourgey QC that this overstates what is required for a valid plea of fraud. The claimant does not have to plead primary facts which are only consistent with dishonesty. The correct test is whether or not, on the basis of the primary facts pleaded, an inference of dishonesty is more likely than one of innocence or negligence. As Lord Millett put it, there must be some fact “which tilts the balance and justifies an inference of dishonesty”. At the interlocutory stage, when the court is considering whether the plea of fraud is a proper one or whether to strike it out, the court is not concerned with whether the evidence at trial will or will not establish fraud but only with whether facts are pleaded which would justify the plea of fraud. If the plea is justified, then the case must go forward to trial and assessment of whether the evidence justifies the inference is a matter for the trial judge. This is made absolutely clear in the passage from Lord Hope's speech at [55]-[56] which I quoted above.”

For the purpose of completeness, I shall also quote from Lord Hope’s speech in Three Rivers at [55-56] as follows. At [55]-[56], Lord Hope of Craighead stated the principles as follows:

“55.

As the Earl of Halsbury LC said in Bullivant v Attorney General for Victoria [1901] AC 196 , 202, where it is intended that there be an allegation that a fraud has been committed, you must allege it and you must prove it. We are concerned at this stage with what must be alleged. A party is not entitled to a finding of fraud if the pleader does not allege fraud directly and the facts on which he relies are equivocal. So too with dishonesty. If there is no specific allegation of dishonesty, it is not open to the court to make a finding to that effect if the facts pleaded are consistent with conduct which is not dishonest such as negligence. As Millett LJ said in Armitage v Nurse [1998] Ch 241 , 256G, it is not necessary to use the word “fraud” or “dishonesty” if the facts which make the conduct fraudulent are pleaded. But this will not do if language used is equivocal: Belmont Finance Corporation Ltd v Williams Furniture Ltd [1979] Ch 250 , 268 per Buckley LJ. In that case it was unclear from the pleadings whether dishonesty was being alleged. As the facts referred to might have inferred dishonesty but were consistent with innocence, it was not to be presumed that the defendant had been dishonest. Of course, the allegation of fraud, dishonesty or bad faith must be supported by particulars. The other party is entitled to notice of the particulars on which the allegation is based. If they are not capable of supporting the allegation, the allegation itself may be struck out. But it is not a proper ground for striking out the allegation that the particulars may be found, after trial, to amount not to fraud, dishonesty or bad faith but to negligence.

56.

In this case it is clear beyond a peradventure that misfeasance in public office is being alleged. There is an unequivocal plea that the Bank was acting throughout in bad faith. The Bank says that the facts relied on are, at best for the claimants, equally consistent with negligence. But the substance of that argument is directed not to the pleadings as such, which leave no doubt as to the case that is being alleged, and the basis for it in the particulars, but to the state of the evidence. The question whether the evidence points to negligence rather than to misfeasance in public office is a matter which must be judged in this case not on the pleadings but on the evidence. This is a matter for decision by the judge at trial.”