MR JUSTICE BRYAN :
A. INTRODUCTION
- The parties appear before me today on the hearing of applications brought by Al Mashariq for Trading & Contracting Co ("Al Mashariq"/the "Claimant") against HSBC Bank Plc (the "Defendant"). Specifically, by its Application Notice dated 15 November 2024, the Claimant seeks:
(1) That the Defendant's Amended Defence to be struck out (the "Strike Out Application"); and/or
(2) Summary Judgment entered in favour of the Claimant (the "Summary Judgment Application").
- The following witness evidence is before me today in support of the Claimant's application:
(1) The Third Statement of Maneer Ghani dated 13 November 2024.
(2) The First Statement of Mohamed Elhadidy dated 13 November 2024.
(3) The Fourth Statement of Maneer Ghani dated 10 December 2024.
- The Defendant for its part relies upon the Third Statement of Charles Thomson dated 10 December 2024.
- I have had careful regard to the witness statements before me and the exhibits thereto. I remind myself that, by the very nature of the applications before me, I am not conducting a "mini-trial" of the issues that arise on the parties' respective Statements of Case.
- There are three main issues for consideration in the context of the applications that the Claimant has brought:
(1) First, whether it is appropriate to strike out the Defendant's Amended Defence on the basis that it discloses no reasonable grounds for resisting the Claimant's case that the Defendant is estopped from denying the genuineness of what is referred to as a Banker's Draft, that was purportedly issued by the Defendant, the Claimant describing the Defence, in its various iterations, as consisting of a series of non-admissions and bare denials.
(2) Secondly, whether summary judgment should be granted for US$5,750,00.00 (or Sterling equivalent) on the grounds of an estoppel by representation.
(3) Thirdly, and in the alternative, whether summary judgment should be granted on the basis of liability for negligent misstatement with damages to be assessed.
B. BACKGROUND
- The Claimant is a Saudi Arabian company, which provides various services within the construction industry. The Defendant is a well-known Bank with its registered office in England and Wales.
- The dispute arises out of a "Bank Confirmation Letter" and the accompanying "Banker's Draft" (hereinafter the "Banker's Draft") with a face value of US$5,750,000 and bearing the date 17 December 2019, which was purportedly issued by the Defendant but, as has since transpired, is a forgery.
- The narrative account that follows is taken from the contemporary correspondence between the parties, such documentation as the Claimant has relied upon in support of its applications, and the evidence of the Claimant's witnesses. In so far as such evidence raises matters not within the knowledge of the Defendant, the same is not admitted, but it is convenient to set it out as it provides the backdrop to the applications before me.
- At some point in 2019, the Claimant was approached by a Kuwaiti businessman named Mr Ansari, the principal of a Kuwaiti company called United Divon for General Trading & Contracting ("United"), which requested a quotation for the production and supply of 200 portacabins. The Claimant agreed to provide a quotation.
- On 14 November 2019, the President and Chair of the Claimant, Mr Mohamed Elhusseini Mohamed Elhadidy ("Mr Elhadidy") met with Mr Ansari in his office in Kuwait and agreed the terms of the agreement. Mr Elhadidy informed Mr Ansari that he required a validated Banker's Draft, which had to be issued by a First Class International European Bank for the full contracted sum of US$5,750,000, as a precondition for acceptance of the agreement.
- A Purchase Order (was issued by United on the same day, 14 November 2019, to the Claimant (the "Purchase Order").
- Clause 1 of the Purchase Order contains the prices per unit and the total price. These were:
| Description |
Qty |
Unit Price |
Total Price |
| Supply Portable Cabinet Type I, II, III |
150 |
26,000 |
3,900,000 |
Supply Portable 12M 4M as Bath Type IV
|
25 |
35,000 |
875,000 |
| Supply Portable 12M 4M as Bath Type V |
25 |
39,000 |
975,000 |
| TOTAL in USD |
|
|
5,750,000 |
- The portacabins were, as I understand it, bespoke portacabins made to the specific specification under the Purchase Order, and for the purpose of the Purchase Order.
- On 17 December 2019, Mr Ansari attended the Claimant's office in Dammam. He provided what purported to be a Banker's Draft for the full sum, issued by HSBC Bank Plc of 8 Canada Square, London, E14 5HQ. The accompanying Bank Confirmation Letter specified a maturity date of 18 December 2020.
- On the same day, Mr Elhadidy then commenced due diligence to check the genuineness of the Banker's Draft.
- As part of the due diligence process, Mr Elhadidy contacted Mr Bader A Alkaabi, the regional head of the Mid Corporates Eastern Province of The Saudi British Bank ("SABB"), to check whether the Banker's Draft was issued by HSBC and was genuine. SABB is within the corporate group of HSBC.
- Mr Alkaabi of SABB contacted an employee of the Defendant in London via email, seeking such confirmation, in this regard:
(1) At 09:47 on 26 December 2019 Santos Shetty, an employee of SABB, emailed Kieran McAlea, a client service specialist and employee of the Defendant, stating: "I appreciate your support to verify the attached Bank Draft as we discussed".
(2) At 12:51 on 27 December 2019 Kieran McAlea emailed Santos Shetty: "Apologies Santosh, I recall no discussion around this? What is it you need me to do?".
(3) Santos Shetty replied by email at 10:06 on 27 December 2019: "The attached DD was issued by HSBC UK, our client need confirmation that the draft issued is a genuine one".
(4) Kieran McAlea replied by email at 14:35 on 27 December 2019: "Thanks, you have my support here in confirmation".
(5) Santos Shetty replied by email at 14:39 on 27 December 2019: "Thanks Kieran. Will inform the client that this is a genuine draft and was issued by HSBC UK".
(6) Santos Shetty sent a further email at 14:00 on 27 December 2019: "Further to my email, the team leader and RM team requires a clear answer, if this DD issued by HSBC UK is genuine and good to go. Appreciate if you revert back with clear response to inform the RM team to take it forward with client".
(7) At 17:01 on 27 December 2019 Kieran McAlea emailed Santosh Shetty: "The attached draft was issued by HSBC UK, is genuine and valid" (my emphasis).
- It appears on the evidence before me that this last email was forwarded at some point by SSAB to the Claimant.
- It is now accepted by the Defendant that such statement by its employee, acting in the course of his employment, was made in error in that the Banker's Draft was a forged document which had not been issued by the Defendant.
- The Defendant became aware that the Banker's Draft was a fraudulent document on 29 September 2020, and notified the correct position to SABB on the same day.
- It is the Claimant's case, per its evidence before me, that it started the construction of the portacabins on or around 28 December 2019, and completed them on or around 9 July 2020.
- It is, however, very much a live issue between the parties (as to which the Claimant is put to proof), as to when the 200 portacabins were released to United, and whether this took place before or after the Defendant made its correction to SABB on 29 September 2020. The central importance of this is obvious in the context of causation and loss.
- In its original Particulars of Claim, dated 2 August 2024, at paragraph 17.b, the Claimant pleaded that the 200 portacabins were released on 11 October 2020. Those Particulars of Claim, as one would expect, were settled by counsel and were supported by a Statement of Truth. The Defendant's Defence dated 22 August 2024, at paragraph 11, did not admit the release of the portacabins on the said date, and further, denied that any such release was made in reliance on the Bank's statement to SABB on 27 December 2019 because the Bank notified SABB about the fraudulent nature of the Banker's Draft on 29 September 2020. On that basis, the Defendant would have a complete defence as a matter of causation.
- However, on 29 August 2024, the Claimant amended paragraph 17.b of its Particulars of Claim to read: "the Claimant released the 200 portacabins to United on or around 9 August 2020". Given the central importance as to when the portacabins were in fact released, set against the backdrop of the timing of discovery of the forgery and the change in the Claimant's case (from that in the original Particulars of Claim supported by a Statement of Truth) to an earlier date in the amended Particulars of Claim (and after the Defence had pointed out that the claim failed as a matter of causation) the Defendant submits that the Claimant should have given, and on disclosure will be obliged to give, chapter and verse as to all documentation in relation to the same, and will need to support the same by witness evidence supported by a Statement of Truth with such witness being available for cross-examination on oath.
- After the portacabins were collected (per the Claimant's case) and apparently exported to Kuwait), the Defendant presented the Banker's Draft for payment via SABB.
- In this regard the Defendant could only submit the Banker's Draft once the portacabins had been delivered as Clause 2 of the Purchase Order provided:
"100% after Complete Delivery of the total qty mentioned in the PO through [Banker's Draft]".
(emphasis added)
- Around September or October 2020, Mr Elhadidy was informed by Mr Alkaabi of SABB that there was an issue with the Banker's Draft.
- The Banker's Draft was presented to the Defendant for payment at a time before its stated Maturity Date (of 18 December 2020). In any event, payment was denied by the Defendant on the basis that it was a forged document, and that the Defendant was not liable to make payment thereunder.
- On 25 October 2020, a formal complaint regarding the non-payment of the Banker's Draft was raised with the Defendant. On 10 May 2021, the Defendant confirmed that the Banker's Draft was not genuine and that it would not be paid.
C. THE CLAIM
- On 7 June 2024 the Claimant issued its Claim Form against the Defendant. The only cause of action in the claim form is a claim for negligent misstatement (i.e. alleged Hedley Byrne liability (after Hedley Byrne v Heller [1964] AC 46):
"The Claimant claims damages for loss and damage arising out of the Defendant's negligent misstatement and breach of the duty to the Claimant".
- I will need to return to this in the context of oral submissions made by Mr Higgins, on behalf of the Claimant, during the course of oral argument, but I note at the outset that on its face the Claimant does not advance any cause of action in its Claim Form other than Hedley Byrne type liability for negligent misstatement. In particular, the Claimant has not attempted to bring any cause of action in relation to the Banker's Draft itself, for example on the basis that it was a promissory note, such as to give rise to any claim for specific performance thereof or for the amount said to be due thereunder (which, conceptually, might be accompanied by a plea that the Defendant was estopped by representation from asserting that it was a fraudulent nullity).
- Whilst the Claimant does plead in its Reply that "[f]or the purposes of defending these proceedings, the Defendant is estopped from asserting that the Banker's Draft is not genuine and not valid" and that "the Claimant is entitled to be paid the sum stated on the face of the Banker's Draft by the Defendant", that plea is not tethered to any cause of action in the Claim Form. As I say, however, I will return to this point, given that Mr Higgins in his oral submissions suggested that there was a claim under the Banker's Draft itself advanced in the Claim Form.
D. APPLICABLE LEGAL PRINCIPLES
Strike Out
- Under CPR 3.4(2)(a), strike out is only available if it appears to the court "that the statement of case discloses no reasonable grounds for… defending the claim".
- Practice Direction 3A further provides:
"1.4
A defence may fall within rule 3.4(2)(a) where:
(1) it consists of a bare denial or otherwise sets out no coherent statement of facts, or
(2) the facts it sets out, while coherent, would not amount in law to a defence to the claim even if true."
"1.3
A claim may fall within rule 3.4(2)(b) where it is vexatious, scurrilous or obviously ill-founded".
- The test under CPR 3.4(2)(a) is not the same as the first limb of the test for summary judgment under CPR 24.3. As explained by Chief Master Marsh in UBS AG v Rose Capital Ventures Ltd [2018] EWHC 3137 (Ch) at [22]:
"There was at one time some confusion on the part of UBS about the test that is to be applied on the strike out application. The suggestion was made that the test is the same as under the first limb of CPR 24.2. Reference was made in the skeleton argument to the summary of the principles applicable to that test provided by Lewison J in Easyair Limited v Opal Telecom Limited [2009] EWHC 339 (Ch). But the test under CPR 3.4(2)(a) is different. The applicant must establish that the statement of case shows no reasonable grounds for bringing or defending the claim. The focus is on the statement of case that is under attack. This is different to considering whether the claim or defence has a real prospect of success; the test under CPR 3.4(2)(a) is more stringent than under CPR 24.2. As the notes in Civil Procedure 2018 at paragraph 3.4.2 record, the right approach is that indicated by the Court of Appeal in Hughes v Colin Richards & Co [2004] EWCA Civ 266, namely the court must be certain that the claim (or defence) is bound to fail. And even if the court reaches that conclusion based on the current state of the law, if there is a legal issue in a developing area of jurisprudence, the court may conclude that the issue is best determined against the facts found at a trial in order that it is decided against actual rather than hypothetical facts".
(emphasis added)
Summary Judgment
- CPR 24.3 provides that:
"[A] court may give summary judgment against a claimant or defendant on the whole of a claim or on an issue if—
(a) it considers that the party has no real prosect of succeeding on the claim, defence or issue; and
(b) there is no other compelling reason why the case or issue should be disposed of at a trial".
(emphasis added)
- The applicable principles are well established and are common ground. They are summarised in the oft-cited judgment of Lewison J in Easyair Limited v Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15]:
"i) The court must consider whether the claimant has a 'realistic' as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 1 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] F.S.R. 3;
vii) On the other hand it is not uncommon for an application under Pt 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".
(emphasis added)
See also Friedhelm Eronat v CPNC International (Chad) LTD and others [2024] EWHC 2880 (Comm), in which I further summarised the applicable principles at [4]-[7].
- In Credit Suisse International v Ramot Plana OOD [2010] EWHC 2759 (Comm) at [25] it was identified that:
"The authorities show that for the Court summarily to reject factual evidence as being fanciful it must be 'clear' that it has 'no substance'. This will generally only be the case where the factual assertions made are inherently improbable or incredible and/or are contradicted by the evidence on which they are based and/or by the documents".
- As for principle (vii), on "grasping the nettle" and deciding issues of law, this does not apply to legal issues in developing areas of jurisprudence. In such cases, as stated by Lord Collins in AK Investment CJSC v Kyrgyz Mobil Tel Ltd [2011] UKPC 7 at [84]:
"The general rule is that it is not normally appropriate in a summary procedure (such as an application to strike out or for summary judgment) to decide a controversial question of law in a developing area, particularly because it is desirable that the facts should be found so that any further development of the law should be on the basis of actual and not hypothetical facts".
- This principle is often applied and upheld. See, for example what was said by Floyd LJ in TFL Management Services Ltd v Lloyds Bank plc [2013] EWCA Civ 1415, at [27]:
"I would add that the court should still consider very carefully before accepting an invitation to deal with single issues in cases where there will need to be a full trial on liability involving evidence and cross examination in any event, or where summary disposal of the single issue may well delay, because of appeals, the ultimate trial of the action: see Potter LJ in Partco v Wragg [2002] EWCA Civ 594 at 27(3) and cases there cited. Removing road blocks to compromise is of course one consideration, but no more than that. Moreover, it does not follow from Lewison J's seventh principle that difficult points of law, particularly those in developing areas, should be grappled with on summary applications; see Partco at 28(7). Such questions are better decided against actual rather than assumed facts. On the other hand it may be possible to say that the trajectory of the law will never on any view afford a remedy: see for example Hudson and others and HM Treasury and another [2003] EWCA Civ 1612".
- As for CPR 24.3(b), where the trial will involve "at least materially overlapping issues" to those up for summary determination, and there is "a risk that the facts as found could throw a different light on the position as it might now be thought to be" that constitutes a compelling reason for declining to give summary judgment: see Malik v Malik [2019] EWHC 1843 (Ch) at [51] per Falk J:
"Essentially, these are at least materially overlapping issues to those the court would need to resolve to determine whether the flat was held on trust for Vaqar. There must be a risk that the facts as found could throw a different light on the position as it might now be thought to be, and that can be in principle be a compelling reason – compare Iliffe v Feltham Construction [2015] EWCA (Civ) 715, referred to in the White Book at 24.2.4."
Estoppel by Representation
- There are three elements to a plea of estoppel by representation (see Misrepresentation, Mistake and Non-Disclosure (6th ed., 2023):
(1) that a party made a representation of fact;
(2) the representor intended the representee to rely upon it (albeit negligence can satisfy this element); and
(3) the representee did rely on it to its detriment.
- It is well-established that estoppel by representation acts as a rule of evidence, which prevents the person estopped from denying the existence of a fact. However, the representee cannot found an action upon it: see National Westminster Bank Plc v Somer International (UK) Ltd [2002] QB 1286 at [36]:
"There is no doubt that the preponderance of legal authority and judicial dicta at the highest level favours the view that estoppel by representation is a rule of evidence rather than of substantive law: see Low v Bouverie [1891] 3 Ch 82 at 105per Bowen LJ ('Estoppel is only a rule of evidence: you cannot found an action upon estoppel . . . [It] . . . is only important as being one step in the progress towards relief on the hypothesis that the defendant is estopped from denying the truth of something which he has said.') and see to similar effect per Lord Russell of Killowen in Nippon Menkwa Kabushiki Kaisha (Japan Cotton Trading Co Ltd) v Dawson's Bank Ltd [1935] 51 Lloyd's Rep 147 at 150; see also per Viscount Haldane in London Joint Stock Bank Ltd v MacMillan [1918] AC 777 at 818("it is hardly a rule of what is called substantive law in the sense of declaring an immediate right or claim. It is rather a rule of evidence, capable not the less on that account of affecting gravely substantive rights."); finally, per Lord Wright in Evans v Bartlam [1937] AC 473, [1937] 2 All ER 646 at 484 of the former report ('estoppel is a rule of evidence that prevents the person estopped from denying the existence of a fact')."
(emphasis added)
Negligent Misstatement
- A claimant must establish four elements in a claim for damages for negligent misstatement:
(1) The defendant owed the claimant a duty of care;
(2) The defendant breached that duty;
(3) Causation – which, amongst other matters, requires the claimant to prove that it relied on the negligent misstatement (otherwise no loss could be caused thereby); and
(4) Loss – including that the claimed heads of loss were caused by the claimant's reliance on the misstatement.
- As is well-established, when a party seeking information from a party possessed of a special skill trusts him to exercise due care, and that party knew or ought to have known that reliance was being placed on his skill and judgment, a negligent misrepresentation will give rise to an action for damages for financial loss caused thereby, so called Hedley Byrne liability derived from the case of Hedley Byrne v Heller [1964] AC 465.
E. SUBMISSIONS
Strike Out
- 28. In its submissions, the Claimant submitted that the Defendant's Amended Defence should be struck out pursuant to CPR 3.4(2)(a) and/or (b), on the basis that it discloses no reasonable grounds for resisting the Claimant's case that the Defendant is estopped from denying the genuineness of the Banker's Draft in these proceedings. The Claimant submitted that PD3A, 1.4 provides for striking out a defence that consists of bare denials, and that this is such a case. This is because the Defendant's Amended Defence consists of non-admissions, which carry less weight than bare denials.
- In response, the Defendant submitted that the Claimant failed to grapple with the high threshold required for a successful strike out application. In addition, the Claimant's reliance on PD3A, 1.4(1) is misconceived because the Amended Defence is coherent and the Defendant is entitled to put the Claimant to proof by pleading non-admission on questions of reliance and causation. As I shall come on to, I can deal with strike out briefly because Mr Higgins, on behalf of the Claimant, realistically indicated, during the course of oral argument, that the Strike Out Application was not pursued.
Estoppel by Representation
- The Claimant submitted that the elements of an estoppel by representation are satisfied because the Defendant represented that the Banker's Draft was genuine and valid, and that the Claimant relied on this to its detriment, with the result that the Defendant is now estopped from denying that the Banker's Draft was genuine and valid.
- In contrast, the Defendant submitted that estoppel by representation acts as a rule of evidence, which prevents the person estopped from denying the existence of a fact. However, applying National Westminster Bank Plc v Somer International (UK) Ltd supra at [36], the Claimant cannot found a cause of action upon it.
- In any event (and fatally) for the purpose of summary judgment, the Claimant has not advanced any cause of action in the Claim Form to which any plea of estoppel by representation could be of potential relevance.
Negligent Misstatement
- The Claimant submitted that the facts of the case establish the special relationship between the parties that engages the Hedley Byrne principles, and that the Defendant is liable thereunder for the monetary amount claimed alternatively in damages.
- By its recent draft amendment to the Defence, the Defendant now admits that it owed a duty of care to the Claimant and that it breached that duty. However, it denies reliance, causation and loss and puts the Claimant to proof of the same. It submits that none of these matters are suitable for summary determination, that disclosure and witness evidence will be required and will need to be tested at trial, and that such matters are accordingly not suitable for, or capable of being, determined on a summary basis.
- By way of riposte, the Claimant submits that there is no real prospect of the Defendant establishing that the Claimant delivered the portacabins after the Claimant was aware that the Banker's Draft was fraudulent (or it was fixed with the knowledge of SABB) in relation thereto. In any event, even if that could be established, the Claimant would still have a substantial claim in damages, as the 200 portacabins were a bespoke order (made in reliance on the genuineness of the Banker's Draft), and there would have been no immediate buyer for the same.
F. DISCUSSION
- I will first deal with the Strike Out Application before returning to consider the Summary Judgment Application and the claims for summary judgment based on Estoppel by Representation and Negligent Misstatement.
Strike Out
- As I have already set out, the focus in an application to strike out is on the Statement of Case that is under attack and the court must be certain that the defence is bound to fail (UBS AG v Rose Capital Ventures Ltd [2018] EWHC 3137 (Ch) at [22]). This would clearly impose a high threshold, certainly higher than the first limb of a summary judgment test, before the court will strike out a defence.
- In the event the Strike Out application was not pursued before me. However I received written submissions on it, and I will deal with it briefly. I am satisfied that the Defendant's Amended Defence pleaded coherent facts and that it is entitled to plead a non-admission on the questions of reliance and causation, and by doing so, to put the Claimant to proof. It is the Claimant, not the Defendant, who has the burden of proof (see ED&F Man Liquid Products Ltd v Patel [2003] EWCA Civ 472 at [9]). By the very nature of such matters, they are only within the knowledge of the Claimant, and as such the Defendant is neither in a position to, or obliged to, plead any positive case in relation thereto. It may be that after disclosure and/or service of witness evidence it will be possible to make amendments to the Defence either to make admissions, or to advance a positive case by way of defence. But I am satisfied in any event that the Defendant cannot be criticised for the non-admissions and denials it makes in relation to matters not within its knowledge but which are within the knowledge of the Claimant, and the Defendant is entitled to put the Claimant to proof of such matters.
- Accordingly, the Strike Out Application fails, and is dismissed.
Estoppel by Representation
- In my judgment, the Claimant's claim for summary judgment on grounds of estoppel by representation is misconceived. No relevant cause of action is advanced in the Claim Form to which any plea of estoppel by representation could attach, or be of relevance. The plea in the Claim Form clearly is, and is limited to, a claim for negligent misstatement.
- In the course of his oral submissions, Mr Higgins suggested that there was a claim under the Banker's Draft in the Claim Form. I referred him to what was pleaded, which is, "[t]he Claimant claims damages for loss and damage arising out of the Defendant's negligent misstatement and breach of its duty to the Claimant". That is clearly a claim for negligent misstatement in tort. Mr Higgins suggested that the words "and breach of its duty" amounts to a claim (in contract) under the Banker's Draft. That suggestion is, with respect, untenable and indeed unarguable. It is clear that the reference to duty relates to a claim in tort, namely the fact that the Claimant owed a duty not to make a negligent misstatement and had breached that duty. That can also be seen from the claim for damages and the value of the claim, which is a damages claim, not a claim for a sum allegedly due under a promissory note.
- As is stated in the White Book in the Notes to CPR 16.2.1:
"The claim form should identify the tort, breach of contract or other civil wrong complained of. In Nomura International Plc v Granada Group Ltd [2007] EWHC 642 (Comm) C obtained the issue of a claim form which was in general terms in order to cover any claim C may have against D if C was subsequently sued by X: C had not decided which claim to pursue against D but commenced proceedings merely to protect its position on limitation; the claim form was struck out as an abuse of process".
(emphasis added)
- Notwithstanding the pleas in the Reply (and quite apart from the fact that any cause of action should be advanced and claimed in the Claim Form) the pleas in the Reply are simply untethered to any relevant cause of action, and no cause of action based on the Banker's Draft itself is advanced in the Claim Form. Accordingly, the numerous references to reliance by the Claimant on the Banker's Draft to its detriment, and to estoppel by representation in the Reply, in the witness statements, and in the Claimant's Skeleton Argument, does not further, or support, any pleaded cause of action.
- In such circumstances, the Summary Judgment Application based on Estoppel by Representation must be dismissed.
- I would only add that it is well established that estoppel is a shield, not a sword and a claimant cannot found an action upon it (see National Westminster Bank Plc v Somer International (UK) Ltd [2002] QB 1286 at [36]). Even if the estoppel were established it would not found a cause of action. The potential relevance of any estoppel would be in the context of the defence of any cause of action sought to be advanced by the Claimant under the Banker's Draft. In that context, it is conceptually possible that the Defendant might be estopped from denying the validity of the Banker's Draft as the result of any statement made by it as to its validity.
- However, for the reasons I have already given, no such claim has been brought in this action. Here, the only claim that has been brought is a claim for negligent misstatement in tort seeking damages alleged to flow from such misstatement. As is rightly pointed out by Ms Zaman for the Defendant, tortious damages are compensatory. They seek damages to put a claimant in the position it would have been in but for the breach of duty (see Clerk & Lindsell on Torts (24th edn. at [26-07] (i.e. as if the Defendant had never said the Banker's Draft was genuine)). Whether or not the Defendant was estopped by representation from stating that the Banker's Draft was a fraudulent nullity, estoppel would not change the remedy available to the Claimant if it were to establish its pleaded claim, which can only be one for compensatory damages.
- Finally, and though not arising before me given that no such claim is advanced, I doubt very much whether any attempted claim for summary judgment would have been appropriate, even had a claim been sought to be made under the Banker's Draft itself, given that an issue of law would probably arise as to whether any estoppel by representation should operate pro tanto. In this context, there are cases where the Court has accepted that estoppel by representation may, on a case-by-case basis, operate pro tanto, including cases where the representee would receive a substantial windfall at the expense of the estopped party, or where other considerations of equity and unconscionability apply (see National Westminster Bank v Somer International (UK) Ltd, supra, at [30] and [48] and at [51]-[59] (per Clarke LJ); and see also Goff and Jones on Unjust Enrichment (2023) at [30-12], [30-17].
Negligent Misstatement
- In the Supplemental Hearing Bundle, the draft Re-Amended Defence dated 12 February contains the following admissions:
"9.2 As to paragraph 16, it is admitted that the Bank owed the Claimant a duty of care in respect of the statements pleaded in paragraphs 10 and 13 of the Amended Particulars of Claim."
…
"15.1 It is admitted that the Bank's statement of 27 December 2019 was inaccurate and made in breach of its duty of care to the Claimant, but as pleaded at paragraph 11A above, the Bank corrected its inaccurate statement on 29 and/or 30 September 2020."
(emphasis added)
- Summary judgment may be granted against a defendant on the whole of a claim or on an issue (CPR 24.3). Two of the issues in this action were (1) whether the Defendant owed the Claimant a duty of care in relation to the statements it made, and (2) whether such statements were made in breach of duty. These issues have now been admitted by the Defendant.
- In such circumstances, I am satisfied that it would be appropriate to grant summary judgment on such issues. However, in circumstances where such duty and breach are now in fact undisputed, the Defendant realistically accepted in the course of oral argument that it would be more appropriate for me to give judgment declaring that the Defendant owed the duty of care to the Claimant in respect of the statements pleaded, and that the statements made were in breach of that duty. I accordingly make such declarations.
- However, that leaves the issue of whether it would be appropriate to grant summary judgment on the remaining issues in the action for negligent misstatement, namely reliance, causation and loss. I am in no doubt whatsoever that it would not be appropriate to do so. Such issues of reliance, causation and loss are not capable of determination on a summary basis without disclosure, witness evidence, and a trial at which such matters can be explored and such evidence tested.
- As already foreshadowed, and as is well-established, a summary judgment application is not an opportunity for the Court to conduct a "mini-trial" (Easyair Ltd v Opal Telecom supra at [15]) and it is appropriate to take into account evidence that could reasonably be expected to be available at trial (see Royal Brompton Hospital NHS Trust v Hammond (No.5) [2001] EWCA Civ 550).
- In relation to reliance, causation and loss, disclosure will be both necessary and important, as will, in all probability, witness evidence, with the result that the issues that remain in relation to reliance, causation and loss, cannot be determined on a summary basis and without trial (see, in this regard, Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] F.S.R. 3).
- Turning to such matters in more detail. With regards to causation, there are at least three key factual questions that I consider will need to be determined at trial, and after disclosure and witness evidence:
(1) First, what is the date on which the 200 portacabins were released to United? If the date is, as was originally pleaded, 11 October 2020, that would potentially give the Defendant a complete defence on causation on the basis that the Claimant knew the Banker's Draft was fraudulent before that. There is likely to be extensive correspondence between the Claimant and United about the delivery and export of the portacabins, and yet no disclosure has been given about such matters despite the date of release being a crucial issue between the parties.
(2) Second, if the portacabins were released after 29 September 2020, had SABB informed the Claimant of the corrected statement? This would raise an additional legal issue, but prima facie the Claimant would be fixed with SABB's knowledge as their agent.
(3) Third, has the Claimant taken reasonable steps to mitigate its loss?
- As to the first two points, the Claimant submits that that the Defendant has no real prospect of proving at trial that the portacabins were released after 29 September 2020 (when the Bank corrected the position to SABB). However, there is currently very limited material before the Court in circumstances where there is likely to be extensive material available, and in the hands of the Claimant, in relation to the delivery and export of the portacabins. Nor do I consider that the Defendant's position is inherently fanciful or improbable so as to meet the high threshold for summary judgment where there is a disputed issue of fact.
- The date or dates of delivery will be a key issue but that cannot be determined without full and proper disclosure, not least set against the backdrop of the change in pleaded case as to the delivery date from that in the Particulars of Chaim supported by a Statement of Truth.
- The reality is that the existing evidence is limited and is more nuanced than the Claimant portrays. The Claimant relies upon a witness statement from the Claimant's President, Mr Elhadidy, a delivery note, and what is said to be an argument from common sense, that the Claimant would not have released the portacabins to United had it known that the Banker's Draft was a forgery.
- However, I am satisfied the Bank has a realistic basis for calling this evidence into question, and has reasonable grounds for believing that a fuller investigation at trial, including through disclosure and witness examination, may alter the facts on which the matter would be dealt with at trial, for a number of reasons.
- First, and as already noted, in the original Particulars of Claim, the Claimant pleaded 11 October 2020 as the date of the portacabin release, and that plea was supported by a Statement of Truth. That plea made sense as pleaded in paragraphs 17(b) when read together with paragraphs 18 and 19. Even after receiving specific questions about delivery in the Defendant's Part 18 Request, which ought to have drawn what the Claimant seeks to characterise as an "error" to the attention of the Claimant's legal representatives (not least given that it actually quoted the plea in the Particulars of Claim) there was no immediate change of stance. It is submitted (with some force) that the inference is that the Claimant did not seek to amend its pleading until it saw the Defendant's Defence and understood the significance of this date to causation. Moreover, whilst the Claimant's solicitor has said this was an error by the Claimant's legal representatives, it has never been explained how this error came to be made, or as to the provenance of the 11 October 2020 date, which must have come from somewhere.
- Second, as observed in Thomson 3 at [31], I agree that there are plausible reasons why the Claimant might have released the portacabins after the Defendant made its correction to SABB on 29 September 2020. For example, it is possible that the correction was not passed on by SABB to the Claimant until after the release of the portacabins. It is also unclear as to precisely when the Claimant knew the Banker's Draft was a forgery (as opposed to there being an issue with the Banker's Draft) (see Mr Elhadidy's statement at [22]).
- Third, and fundamentally, one would expect that if the Claimant was correct as to the date of delivery, it would have a substantial volume of documentation and correspondence in relation to the delivery of the portacabins, but the Claimant has not placed any such evidence before the Court or given disclosure of the same. One would have expected this to have been done once it was clear that the delivery date was very much in issue. It is an obvious point, but if the Claimant had arranged for no less than 200 portacabins to be collected by United from its warehouses on 9 August 2020, that is a major logistical exercise, and one would expect it to generate substantial documentation. For example, there might have been emails between United and the Claimant confirming the pick-up date(s), time(s) and arrangements, or records of arrangements being made for United's trucks to have access to the Claimant's site, or discussions and records of any applicable customs forms or duties for the export of 200 portacabins from Saudi Arabia to Kuwait.
- It also seems unlikely, to put matters at their lowest, that it would be logistically possible to pick up/deliver 200 portacabins on one day. That would have required a vast number of vehicles, and it also appears that the portacabins were destined for export to Kuwait. Whether in one operation or not is itself unclear. This would also have impacted upon the number of vehicles involved and the overall timescales. No disclosure at all has been given in relation to such matters, which is a striking omission. It is also clear from paragraph 5 of the Purchase Order that there would have been monthly schedules of work, and monthly progress reports with photographs, yet none of that has been produced. It is also, of course, perfectly possible that there could have been delays in production and delivery. Indeed, that is no doubt one of the reasons why there were such contractual terms in the contract in the first place.
- This is all to be seen in the context of the fact that Mr Thomson, in his statement at [30], drew the Claimant's specific attention to the fact that the Claimant had produced, by way of initial disclosure, only a limited number of documents that did not make out the Claimant's case or resolve the factual dispute between the parties. It is, therefore, all the more surprising that no further documentation has been produced once the matter was put in issue, or indeed that no further evidence in reply was served.
- Fourth, and as the Defendant points out, the original 11 October 2020 date pleaded would appear to accord with the parties' apparent expectations as to when the portacabins would be released, as stated in the Purchase Order dated 14 November 2019. Clause 4 (Schedule) set out the parties' expected schedule for performance, including "One Month from PO Date to submit the detailed Drawing" (i.e., by 14 December 2019), and then "10 Months for Production and Supply" – which would have taken the parties through to 14 October 2020. That is extremely close to the originally pleaded 11 October 2020 date and is therefore entirely consistent with the contractual terms.
- Fifth, Mr Elhadidy says the Claimant presented the Banker's Draft to SABB for payment by late September 2020 because he believed he was entitled to "cash in" the Banker's Draft as soon as the portacabins were released: see Elhadidy 1 at [21]. But that is not consistent with the terms of the Bank Confirmation Letter that accompanied the Banker's Draft. On its face, the Bank Confirmation Letter stated that the Banker's Draft was "[c]allable for same day payment on the day of maturity", which date was "December 18th, 2020" (i.e. the Claimant could not cash it in until then). Indeed, it would be surprising if the Claimant was entitled to call in the Banker's Draft at any time between 17 December 2019 and 18 December 2020, as that would mean that the Claimant had the ability to call in full payment before it had constructed and delivered the portacabins. The Claimant cannot reasonably have thought this was the case because it would be the equivalent to receiving 100% payment in advance, which is hardly something any commercial buyer would agree to.
- These are all matters for disclosure, witness evidence and determination at trial. However, the need for such evidence, and their determination at trial, are strong reasons why, on the evidence before me and also which is likely to exist, it cannot be said that the Defendant has no real prospect of success on reliance, causation and loss, and illustrate why such issues are not appropriate for determination on a summary basis and in advance of disclosure and witness evidence, and determination of the issues at trial..
- The same is true in relation to matters that go to the quantum of loss. In relation to loss, the Defendant has put the following matters in issue:
(1) First, whether the Claimant can claim the face value of the Banker's Draft as damages for the Bank's misstatement?
(2) Second, causation and the proper measure of damages. There are existing, and detailed pleaded issues in this regard that would need to addressed and determined at trial. In this regard, the Defendant pleads that if the Defendant had corrected its misstatement to SABB before the Claimant released the portacabins, whilst the Claimant would then be entitled to claim for its costs of constructing the 200 portacabins, it would have to net off those costs against the value of the 200 portacabins before they were released (which value might exceed the costs of construction, meaning that there was no loss). Equally, if the Claimant failed to take reasonable steps to recover the 200 portacabins (or some of them) from United, the construction costs must be netted off against the value those portacabins would have had when recovered.
(3) Third, on the Defendant's pleaded case, (i) the Claimant must prove the construction costs which are simply asserted in its Part 18 Response without any evidence or breakdown; (ii) the Claimant is not entitled to claim any loss of profits on the 200 portacabins (since it would not have accepted this work on the counterfactual); and (iii) the Claimant must establish the work it turned away to construct the portacabins, and the profits that it would have made on those.
- These too, are issues that can only be determined at trial, after disclosure and witness evidence and which are not capable of summary determination.
- Accordingly, I give judgment declaring that the Defendant owed a duty of care to the Claimant in respect of the statements pleaded, and that the statements made were in breach of that duty. However, all other issues, including as to reliance, causation and loss, are to be determined at trial, and I so order. The Summary Judgment Application accordingly fails and is dismissed.
G. COSTS
- The next matter that arises before me is a question of the costs of the applications which were brought by the Claimant before me today. Ms Zaman, for the Defendant, submits that her client is the successful party: the claim for strike out has failed, the claim for summary judgment on the base of the estoppel by representation has failed, and the claim for summary judgment based on negligent misstatement has also failed. All that has occurred today is that I have been prepared to make declarations in relation to duty and breach of duty. Those were matters, says Ms Zaman, which were already admitted in the witness evidence, and it was clear from the correspondence that such matters had been admitted. There was no need for the Claimant to come to court today to obtain the limited relief that has been obtained.
- In contrast, Mr Higgins, on behalf of the Claimant, whilst realistically recognising that the Defendant is the successful party in relation to the strike out application and in relation to estoppel by representation, submits that he has obtained at least some relief in relation to the negligent misstatement claim today on behalf of the Claimant, and he also draws attention to the preceding history in that regard. He suggests that this should lead to a reduction in the costs awardable to the Defendant, however modest.
- The difficulty, however, with the Claimant's submission, is that it was quite clear prior to this hearing today, and ever since a meeting with Mr Thompson, that the Defendant did admit duty and breach of duty, and it would have been perfectly open, had the Defendant not consented to judgment in relation to that issue (which I am sure it would have done given that it did so today without demur), for the Claimant to make a paper application or, indeed, to make an application for a hearing in order to obtain the limited relief that has now been obtained (which would, I am sure, inevitably have resolved itself without a hearing). I do not consider that there was any need for a hearing purely to determine that, and I do not consider that any part of the costs today in terms of who is the successful party were changed by that. Therefore, in my judgment, there should not be any reduction in the costs recoverable by the Defendant. By that, I mean there should not be any reduction on the basis of any alleged partial success on the Claimant's part.
- Accordingly, the Claimant shall pay the Defendant's costs of and occasioned by the applications bought by the Claimant.
- I am then asked to summarily assess the Defendant's costs on the standard basis. The total amount claimed is £77,386.86. It is well established that the summary assessment of costs is to be undertaken on a broadbrush basis. Mr Higgins makes a number of points, each of which I bear in mind. I do not consider that it is necessary to go into the minutiae of each individual point, an approach which is not encouraged in any event, but the main point was essentially that there was too much time in relation to Mr Thomson's witness statement. Points were also made as to duplication of effort and what was said to be an excessive time on attendance.
- Having had careful consideration to the matters set out in the Statement of Costs, and the submissions made on behalf of the Claimant by Mr Higgins in relation thereto, I summarily assess the Claimant's costs at the figure of £63,250.
