Summary Judgment In Fraud Claims - Update

Author:Mr James George
Profession:Herbert Smith

The Courts are still grappling with the summary judgment provisions of CPR Part 24. Lord Woolf's judgment in Swain v. Hillman [2001] 1 All ER 91 remains an important source of guidance. The distinction between cases which have a "real" as opposed to "fanciful" prospect of success is frequently cited, as is the need to avoid conducting a "mini-trial" on an application for summary judgment. Claimants are therefore only able to obtain summary judgment in clear-cut cases where there is no factual dispute and the law is clear (e.g. Trustor AB v. Smallbone (No. 2) [2001] 3 All ER 987, a case of knowing receipt, and Ball v. Eden Project Ltd (The Times, 6 June 2001), concerning breach of fiduciary duty).

Nevertheless, cases during 2001 have raised new issues and have clearly illustrated the differences between the regimes under the CPR and the old Rules of the Supreme Court. The Courts have begun on occasion to assert their power to award summary judgment of their own motion, and have made increasing reference to the objectives of the CPR. Furthermore, in many of the recent cases which have discussed the meaning of Part 24, it has been the defendant to a fraud claim who has applied for summary judgment - something which was impossible under the old rules. The question in those cases has been whether there is no real prospect of an allegation of fraud being established. As in cases where it is the claimant seeking summary judgment, a real factual or legal dispute will mean that the defendant's application is unlikely to succeed. For example, in Clarke v. Marlborough Fine Art (London) Ltd (The Times, 5 July 2001), the defendant was refused summary judgment because there was a serious question as to whether a fiduciary relationship had developed over a period of several years.

The scope of the Courts' power to award summary judgment has also been considered by the House of Lords, in Three Rivers District Council v. Bank of England (No. 3) [2001] 2 All ER 513, a case concerning the Bank of England's role in the regulation of BCCI. The claim was not for fraud but for misfeasance in public office. However, the cause of action depended on establishing bad faith or dishonesty on the part of the Bank, and the decision is relevant to other types of claim involving dishonesty. The case divided the House of Lords, who dismissed the defendant's application for summary judgment by a bare 3-2 majority, the leading judgments being those of Lords Hope and...

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