Sale of land – Agent – Summary judgment – Claimant seeking damages against agent alleging breach of fiduciary duty and dishonesty – Defendants applying for summary judgment against claimant – Whether claim having real prospect of success – Claim dismissed
The claimant was an operator of public houses. It had a leasehold interest in the majority of its properties. At the relevant time V Ltd, a property finder and consultant, was retained by the claimant as a property agent to find, and advise on, suitable properties from which the claimant could carry on its business. The claimant paid fees for V’s services.
The claimant alleged that, in relation to two property transactions which took place in 1995 and 1996, the first defendant had dishonestly assisted V in breaches of its fiduciary duties to the claimant. The claimant further alleged that the first defendant had paid a bribe to V in connection with those transactions. The consequence of those transactions was that one or other of the second to fourth defendants had acquired the freehold of a property, in which the claimant had acquired, at the same time, a leasehold interest. The claimant alleged that it would or might have acquired the freehold had V, consistently with its fiduciary duties, advised the claimant that the freehold was available for purchase.
At the time of the transactions, the second to fourth defendants were in the same group of companies and the first defendant was a director of each of them. The claimant contended that the first defendant’s knowledge, acts and omissions were to be attributed to the group. The claimant claimed damages, equitable compensation and an account of profits and interest. The defendants applied to the High Court, inter alia, for summary judgment against the claimant pursuant to CPR, part 24.
Held: The claim was dismissed.
(1) The defendants could not succeed in their applications unless they were able to satisfy the court that the claimant had no real prospect of succeeding in its claim and there was no other compelling reason why the case should be disposed of at a trial. The defendants had to show that the claimant had no more than a fanciful, as distinct from a realistic, prospect of success. In a case which turned on disputes of fact, the summary judgment procedure was inappropriate if it would involve the court conducting a mini-trial on the documents, including witness statements, or undertaking a minute and protracted examination of the documents: Swain v Hillman [2001] 1 All ER 91, Three Rivers District Council v Bank of England (No 3) [2003] 1 AC 1 and Attrill v Dresdner Kleinwort [2011] EWCA Civ 229 applied.
(2) In the present case, the summary judgment applications were inappropriate in principle. They were based on a particular interpretation of facts which were in dispute and, not unusually in the case of allegations of fraud and dishonesty, on the inferences to be drawn from established facts. The alleged inference which the claimant sought to draw had to be assessed in the light of all the documents. On the substantial factual and documentary evidence in the present case and the matters in dispute, this was precisely the type of mini-trial of disputed facts on the documents for which the summary judgment procedure was inappropriate.
(3) The finding of dishonesty depended on how precisely the defendant knew the facts which amounted to the breach of trust and the extent to which his assistance in the transaction involved a commercially unacceptable risk of knowingly implicating himself in the breach. On the evidence, the court was satisfied that the claimant had a real prospect of establishing at trial that, in addition to acquiring tenancies of properties from which to conduct its business, it was also interested in purchasing the freeholds, where that made more financial sense, and had the financial means to do so, matters which were generally known in the market at the relevant time. Further, an agent who had been retained to advise a principal on the acquisition of an interest in property, whether leasehold or freehold, and who had identified a suitable property, potentially placed himself or herself in a position of conflict between interest and duty if he or she then sought to introduce the property to another potential purchaser. In the ordinary course of events, an honest property trader introduced by the agent to the property, as a potential purchaser of the freehold, might be expected to satisfy himself or herself that the agent was acting with the full knowledge and consent of his principal, the prospective tenant. That was particularly so where the agent played a role in the negotiations over the terms of the purchase of the freehold.
Catherine Newman QC, Hugh Evans and Alec McCluskey (instructed by Pinsent Mason) appeared for the claimant; John Wardell QC and Simon Colton (instructed by K & L Gates LLP) appeared for the first defendant; David Wolfson QC (instructed by Mishcon de Reya) appeared for the second, third and fourth defendants.
Eileen O’Grady, barrister
