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Summary judgments: dealing with issues of fact

A recent decision by the Court of Appeal will be of interest to any party considering bringing, or seeking to defend, summary judgment proceedings. The case provides some useful guidance on the extent to which a Court will take into account competing factual submissions. 

Below we summarise the decision and look at how the issue of fact was dealt with at the summary judgment stage.

Background

Our client, Optaglio Limited, a leading company in the hologram security industry, issued proceedings for breach of the defendants' duties as directors. This followed the directors’ decision to withdraw the company's patent application. 

Optaglio lost the summary judgment application in the High Court. TLT were instructed to appeal on a number of grounds, including:

  • that the Judge had misdirected himself as to the grounds of summary judgment; and 
  • that the Judge was not justified in holding that it was not seriously arguable that the withdrawal of the patent application by the defendant directors was a breach of duty.

The Judge at first instance had referred to giving credible contemporaneous material "appropriate weight", and engaged in a process of weighing up and balancing conflicting evidence.

The Court of Appeal agreed that this was an inappropriate direction in the matter of a summary judgment application. 

For an issue of fact to be dealt with at the summary judgment stage, the material must be so convincing that the Court can comfortably conclude that the other party has no chance to disproving it. It is not a question of weighing up competing elements.

In this case, the Judge had found that Optaglio's position in respect of certain key patents was precarious and subject to commercial pressures. There was in fact no contemporaneous material which demonstrated this and significant contradictory evidence. 

It was therefore inappropriate to reach any conclusions on this point before a full trial and the Judge was not justified in doing so.

The Court of Appeal also rejected the defendants' argument that there was a lack of good faith in bringing the claims against the directors, pointing out that once it could be shown that there was an arguable case of loss, it would be an extreme step for any Judge then to prevent a party pursuing the claim.

Comment

The case provides useful guidance on the extent to which a Court will take into account competing factual submissions. 

A Court will not undertake the "weighing" process between competing evidence we would see at trial. For this reason the party seeking summary judgment must be sure that the material submitted is so convincing that the other party has no chance of disproving it. 

Our team continues to advise as the case progresses to trial.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at November 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions on www.TLTsolicitors.com


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