Author: Nicola Sharp
27 March 2023
5 min read
Nicola Sharp of Rahman Ravelli outlines the key issues from two attempts this month to resolve cases in this manner.
It is rare for summary judgment to be granted in fraud proceedings. Judges are often reluctant to decide a civil fraud case summarily, even if it looks on paper be a cast-iron case.
As Sir Igor Judge PQBD said, “experience teaches us that on occasion apparently overwhelming cases of fraud and dishonesty somehow inexplicably disintegrate.” (Wrexham Association Football Club v Crucialmove ITD  EWCA Civ 237) In many cases, it will take a full trial to uncover fraud and to establish the requisite dishonesty on the part of the defendant.
Strike out is also not without its difficulties. It can be tempting for a defendant faced with a claim which is thinly pleaded to seek to strike out the claim in its early stages. But some defendants confuse a pleading which discloses no reasonable grounds for bringing the claim (which may be liable to be struck out) with a pleading which, although not fully particularised, nevertheless discloses a cause of action if the facts pleaded can be established.
Additionally, there’s a need for caution in fraud cases when deciding cases summarily. As Clare Ambrose underlined when sitting as a Deputy High Court Judge, “where there are allegations of dishonesty which cannot be conclusively determined, for instance by a conviction, then the court should not make a finding summarily and that all the facts and nuance needs explanation.” Rahbarpooor v Suliman  EWHC 2686
Despite all of these challenges, the High Court granted summary judgment and strike out in two separate, unrelated applications this month. In this article we look at the reasons why these applications were granted.
Application by the Defendant
In Complete Facilities Solutions Ltd v Livingstone Consulting Ltd & Ors, the High Court heard an application brought by three of the defendants to strike out the claim against them, or alternatively ask for summary judgment, in the case of Complete Facilities Solutions Ltd v Livingstone Consulting Ltd & Ors  EWHC 571 (Ch).
The three defendants in question were directors and the allegations were levelled against them in their personal capacity. The claimant accused each of the directors of procuring breach of contract, deceit, conspiracy to injure and joint tort feasorship.
The allegations against the directors were struck out for the following reasons:
Even if the claims had survived the strike-out application, the Judge considered that none of them had more than merely fanciful prospects of success on the law and facts to warrant a full trial, and that there were no other compelling reasons for the allegations to proceed to trial. On that basis, summary judgment was granted.
The main point to be taken from this is that if a defendant has been accused of fraud and thinks that the allegation has no merit, it is possible to strike it out if they can show:
As it was described in Playboy Club v Banca Nazionale  EWCA Civ 2025, “Courts regard it as improper, and can react very adversely, where speculative claims in fraud are bandied about by a party to litigation without a solid foundation in the evidence.”
This is a reminder that fraud claims are serious. If there is no basis to bring them, a defendant may be successful in strike out and summary judgment.
In Gupta & Anor v Shah & Ors  EWHC 540 (Ch), the High Court heard another application for summary judgment or, alternatively, a striking out of parts of the defences. In this case, it was brought by the claimant.
The underlying case is quite extraordinary. The claimant, Dr Gupta, was defrauded out of US $14 million by Mr Shah. Dr Gupta thought he was investing in a lucrative scheme, but instead the defendants (Mr Shah, his wife and sons) simply dissipated the money, paying substantial sums to themselves and other entities.
In this case, the claimant’s application for summary judgment was granted for the following reasons:
The claimant also applied to strike out the only defence in law raised by the defendants, who pleaded an elaborate case of illegality. In a few wild assertions, the defendants alleged that:
The Judge described these allegations as “so woefully short of particularisation in respect of a very serious matter that it should not be allowed to stand.” Accordingly, these paragraphs of the defence were struck out.
However, the claim against Mrs Shah for knowing receipt and dishonest assistance was not decided summarily. The Judge decided that an insufficiently strong case was presented to establish that Mrs Shah was a conspirator at the outset. That meant that there was work to do to establish when she acquired any relevant degree of knowledge.
The Judge recognised that establishing that knowledge is a sophisticated exercise in the circumstances, and considered the chances of her establishing a defence based on ignorance were more than fanciful, if only marginally. Bearing in mind the complexities involved, and the significance of the dishonesty, the Judge concluded that these matters should be considered at a trial.
As a claimant, it is very unusual to be granted summary judgment in a fraud claim. It happens in cases where the evidence pleaded is sufficiently powerful and the defendant’s response is unable to deal with it (see Foglia v Family Officer Ltd & Ors  EWHC 650 (Comm)).
In Gupta, the factors that contributed to overcoming that hurdle were:
Although it is a major task to achieve summary judgment or strike out of fraud claims, the courts are willing to do so where it is clear that a full trial is not necessary.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.