Prospects of success - and failure

District Judge John Mitchell on how the court will deal with the merits of a case on applications to set aside and strike out and for summary judgment

In Barrett v Universal-Island Records (2003) The Times, 24 April, Mr Justice Laddie pointed out that summary judgment (whether under the Civil Procedure Rules 1998 (CPR), rule 3.4 or part 24) deprives a party of his normal entitlement to a full trial.

To justify doing this at an early stage the court had to have 'a high degree of confidence' that the case would not succeed at trial.

The Court of Appeal has twice recently examined summary judgments.

Prospects of success

When a court is deciding whether to set aside a judgment obtained in default of appearance or defence under CPR rule13.3(1), or at a hearing which a party did not attend (CPR rule 39.3), or whether to give summary judgment against either a claimant or defendant under CPR part 24, it has to consider whether the relevant party has 'a real prospect' of successfully defending the claim or (as the case may be) succeeding on the claim.

In ED & F Man Liquid Products Ltd v Patel and another [2003] EWCA Civ 472; (2003) The Times, 18 April, the Court of Appeal considered the meaning of these deceptively simple words.

Pre-Woolf courts adopted a variety of phrases when discussing the necessary conditions for summary judgment under the Rules of the Supreme Court, rule 14: 'an arguable case', 'any reasonable prospect of success', 'a realistic as opposed to a fanciful prospect of success', 'a defence which carries some degree of conviction'.

In Swain v Hillman [2001] 1 All ER 91, Lord Woolf said that the words of CPR rule 24.2 did not need amplification, 'they speak for themselves.' He continued: 'the word "real" distinguishes fanciful prospects of success...[it directs] the court to the need to see if there is a "realistic" as opposed to a "fanciful" prospect of success.'

ED & F Man Liquid Products was concerned not with rule 24.2 but the power under rule 13.3 to set aside a default judgment.

The defendant relied on the pre-Woolf position and the distinction drawn between the two situations by Sir Roger Ormrod in Alpine Bulk Transport Co v Saudi Eagle Shipping Co Inc [1986] 2 Lloyd's Rep 221, namely that 'it would be surprising if the standard required for obtaining leave to defend (which has only to displace the claimant's assertion that there is no defence) were the same as that required to displace a regular judgment of the court...'.

Mr Patel argued that the test to be applied when assessing his prospects was whether he had an arguable case.

However, the phrases in rules 13.3 and 24.2 are identical and unsurprisingly Lord Justice Potter held that the draftsman may be taken to have contemplated a similar test under each rule.

'I regard [Lord Woolf's] distinction between a realistic and a fanciful prospect of success as reflecting the observation in Saudi Eagle that the defence argued must carry some degree of conviction.

Both approaches require the defendant to have a case which is better than merely arguable.' He pointed out that the only significant differences between rules 24.2 and 13.3 is that in the former the overall burden of proof rests on the applicant whereas under the latter the defendant has to satisfy the court that there is good reason why a judgment regularly obtained should be set aside.

'That being so, although generally the burden of proof is in practice of only marginal importance in relation to the assessment of evidence, it seems almost inevitable that, in particular cases, a defendant applying under CPR 13.3(1) may encounter a court less receptive to applying the test in his favour than if he were a defendant advancing a timely ground of resistance to summary judgment under CPR 24.2.'

Assessing the prospects

As was explained in Swain, the power to give summary judgment is an important one which helps to further the overriding objectives in appropriate cases.

It achieves expedition, avoids using the court's resources on cases for no purpose and is in the interests of justice.

If a party has a case which is bound to fail, then it is in that party's interests to know as soon as possible.

At the same time a party has the right to have his claim or defence properly considered.

Lord Woolf added that rule 24 'is not meant to dispense with the need for a trial where there are issues which should be investigated at the trial'.

In ED & F Man Liquid Products, the Court of Appeal explained how the prospects of success should be investigated:

- The court should not conduct a 'mini-trial'.

- The court does not have to accept without analysis everything said by a party in his statements.

In some cases it may be clear that there is no real substance in what is said especially if contradicted by contemporary documents.

- If the defendant has admitted the debt or made payments on account with full knowledge of the facts, a judge will be justified in taking such acknowledgements into account.

No reasonable grounds

Under CPR rule 3.4, the court may strike out a statement of case on the ground, among others, that it discloses 'no reasonable grounds for bringing or defending the claim'.

In Partco Group Ltd v Wragg [2002] EWCA Civ 594; [2002] BCLC 323, the Court of Appeal held that the test applied to cases which are unwinnable on the merits as well as to those which were misconceived or, on the facts pleaded, bound to fail.

- In deciding whether to exercise the power, the court should have regard to the overriding objective.

- The court should be slow to deal with single issues where there will need to be a full trial on liability involving oral evidence or where summary disposal may delay the final hearing because of appeals.

- Summary disposal will often be inappropriate in complex cases.

If the application involves prolonged serious argument, the court should decline to hear it unless it harbours doubts about the soundness of the statement of case and is satisfied that striking out will remove the necessity of a trial or will substantially reduce its burden.

- It is inappropriate to strike out claims in developing areas of law.

In such cases, decisions should be based on actual findings of fact.

- It is important to preserve a degree of latitude when deciding whether the issues of fact are disputed and when it is reasonable to suppose that evidence may emerge which will enable a party to establish his case in a 'fact sensitive' area.

District Judge John Mitchell sits at Bow County Court