England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Rolls Building, 7 Rolls Buildings Fetter Lane, London EC4A 1NL
		11/07/2017

Mr. Justice Teare :

1. This is an application by the First Defendant, Credit Suisse (UK) Limited ("CSUK"), for an order that the claim of the Claimant, Mr. Milos Andric, be struck out or that CSUK be given summary judgment dismissing that claim.
2. The claim arises out of a failed purchase of a property in Canary Wharf. Mr. Andric claims to have become involved in providing finance for the purchase. He claims that his former company, Brova, was induced to become involved in the transaction by false representations made by the Second Defendant, Hans-Olav Eldring, who was employed by CSUK. As a result of the property purchase failing Mr. Andric claims to have suffered loss, in this way. Brova intended to finance the transaction by drawing on an alleged €320m. credit line provided by Banco Espirito Santo ("BES"). In order to secure that credit line Brova was required to pay a deposit of €8.25m. which it did. But when the property transaction did not go ahead Brova lost that deposit and, as a result, lost other transactions. Further, CSUK has not honoured the terms of a guarantee.
3. CSUK says that Mr. Andric faces three unsurmountable hurdles in his claim. First, his case that a deposit was contractually payable to BES cannot succeed. The agreement has not been disclosed and the pleaded case simply cannot succeed. Second, there is no evidence that a deposit has in fact been paid. Third, there is no contractual basis upon which the alleged deposit was forfeited. As a result Mr. Andric cannot prove the alleged loss and his claim is therefore doomed to fail. An order is therefore sought striking out the claim or giving summary judgment dismissing the claim.
4. It is right to note that CSUK's application seeking a strike-out or summary judgment has only been issued after several attempts have been made by CSUK to get Mr. Andric to state his case with clarity and to produce the documents. CSUK says that Mr. Andric's responses have demonstrated that his case cannot succeed.
5. The test to be addressed on applications of this nature (whether for strike-out or for summary judgment) is the same, namely, does the claim have a realistic prospect of succeeding? There is no dispute as to the relevant principles; see Mellor v Partridge [2013] EWCA Civ 477 at paragraph 3 per Lewison LJ and AAI Consulting Ltd. v The FCA [2016] EWHC 2812 (Comm) at paragraphs 58-50 per Mr. Butcher QC. From those principles Mr. Handyside QC, for CSUK, emphasises that the case must carry some degree of conviction. Mr. Cook, for Mr. Andric, emphasises that the court must not carry out a mini-trial.
6. Having considered the submissions of counsel and having been careful not simply to accept what Mr. Andric has said but to use the court's critical faculties in assessing it, I have reached the conclusion that, although his claim faces undoubted difficulties and is, in so far as one can assess its merits now, likely to fail, I am not able to say that its prospects of success are no more than fanciful. In those circumstances it would not be appropriate for me to issue a long and detailed judgment (lest I trespass on the province of the trial judge) but to identify, as shortly as I can, those reasons why the claim has, in my judgment, real and not merely fanciful prospects of success.

The alleged agreement between Brova and BES

7. Mr. Handyside stressed, with justification, Mr. Andric's pleading, in which he alleged at paragraph 2.1.3 that there was an agreement in writing dated 28 June 2013 ("the Brova/BES Agreement") pursuant to which BES made available to Brova a credit line of €320m. It was further alleged in paragraph 6.1 that "pursuant to the Brova/BES Agreement, this involved Brova paying to BES a security deposit in respect of the transaction." That deposit was the sum of €8.25m. which was alleged to have been deposited on or about 18 December 2013 by Brova (paragraph 12.4) and forfeited on or about 10 January 2014 (paragraph 13). Mr. Handyside submitted that this case was incoherent, incredible and had no real prospect of success.
8. Mr. Handyside pointed out that when CSUK requested a copy of the Brova/BES Agreement dated 28 June 2013 they were provided with a document which is not an agreement but appears to be a record of a credit line having been agreed. Later, Mr. Andric confirmed, when asked, that the only written agreement is that document. Mr. Handyside therefore submitted that there was no basis for the alleged written agreement in paragraph 2.1.3 of the pleading. Similarly, there was no basis for the allegation in paragraph 6.1 of the pleading that the Brova/BES Agreement contained a provision requiring the payment of a deposit.
9. In those circumstances an order was made by the court (Knowles J.) that Mr. Andric provide an explanation of the Brova/BES Agreement including in particular the terms alleged in paragraphs 2.1.3 and 6.1 of the Particulars of Claim. Pursuant to that order Mr. Andric filed a witness statement dated 23 January 2017. He sought to explain the Brova/BES Agreement in paragraphs 9-14. He explained that Mr. da Silva acted on behalf of Brova when dealing with BES and that BES agreed to extract from Sudan €8.25m., being a sum owed by Steps, a Sudanese company, to Mr. Andric, which sum would stand as a security deposit for a €320m. credit line. He explained that he did not have personal knowledge of the arrangements made but that it was his "understanding" that Mr. da Silva had finalised terms with BES in November/December 2013. Mr. da Silva had confirmed the terms of what became the Brova/BES Agreement over the summer and into the autumn of 2013. He was unable to provide "any further documents" which evidence the Brova/BES Agreement. He said he did not have the Brova/BES Agreement in his possession. He referred, in support of his claim, to a letter from Mr. da Silva dated 8 December 2016. It is difficult to summarise the contents of that letter. It appears to confirm that he had had discussions with BES regarding the extraction of €8.25m. from Sudan and making it available to Brova. But it does not appear to refer to any agreement in writing.
10. In a further statement served (late) for the purposes of this application dated 21 June 2017 Mr. Andric gave a further account of the background to Mr. da Silva's negotiations with BES. He said "Mr. da Silva updated me regularly, mainly by telephone, as to the terms being negotiated, throughout the summer of 2013. As I understand matters, Mr. da Silva had meetings with representatives of BES in and around November/December 2013 where the terms of the agreement between Brova and BES (which I will hereafter refer to as the Brova Credit Line Agreement) were finalised." He said that he understood that it was put in writing but that he did not receive any documents associated with the finalised arrangement. Brova did not have a copy of it. BES retained it.
11. Mr. Handyside submitted that in his second statement Mr. Andric had made a "U turn" and was now alleging that there some other written agreement, "the Brova Credit Line Agreement". I was not persuaded that Mr. Andric was referring to another agreement.
12. Thus Mr. Andric's case appears to be that the Brova/BES Agreement (otherwise described as the Brova Credit Line Agreement) was reached "in or around November/December 2013", that he has no personal knowledge of that Agreement and that he cannot produce it. His information as to the Agreement comes from Mr. da Silva.
13. Mr. Handyside submitted that there is no credible reason to believe that there was an Agreement such as that which has been pleaded. He said that Mr. Andric's case has changed, that evidence of what he has been told by others is not a sufficient basis to establish such an Agreement, that Mr. Andric does not suggest that he will be able to produce the Agreement at trial and that there are no contemporaneous documents which support the existence of the Agreement.
14. I agree that Mr. Andric's case is very weak and unlikely to appear persuasive at trial. It might also be very difficult for Mr. Andric to explain how his claim came to be pleaded as it is given the account of the Agreement in his two witness statements. It is also improbable that Brova (to whose documents Mr. Andric is entitled) apparently does not have a copy of an Agreement pursuant to which it had a credit line of €320m.
15. But for the court now to rule that Mr. Andric's revised case (albeit yet to be pleaded) of an agreement reached in November/December 2013 between BES and Mr. da Silva acting on behalf of Brova is fanciful, with no real prospect of success, would require the court to form the view today that Mr. Andric and/or Mr. da Silva are lying. This would involve a mini-trial.
16. This is not a case where contemporary documents are relied upon to show that Mr. Andric's evidence cannot be true. That is the classic circumstance in which the court is able to say before trial that a claim has no real prospect of success. Instead, it is said that a number of circumstances reveal that his evidence is so deeply improbable that the court can safely rule before trial that his evidence cannot be true. That is permitted in "exceptional cases where the factual context and the legal issues are so straight forward and the probabilities so overwhelming in the light of evidence and other circumstances that it is possible on a summary judgment application to reject a disputed statement of fact of which direct evidence would be given by a witness at a trial"; see Allied Fort Insurance Service Ltd. v Ahmed [2015] EWCA Civ 841 per Sir Terence Etherton C. In the present case Mr. Andric will give evidence of what he has been told by Mr. da Silva and it is likely that Mr. da Silva will also give evidence. Their evidence will face considerable challenges and the claim may well not succeed but I do not consider that the court can fairly reach the conclusion that their evidence is so improbable that it must be rejected today before trial. Further, the circumstances surrounding Mr. Andric's alleged payment of the deposit of €8.25m. are complex and, at least in some respects, are supported by documents. I refer to Mr. Cook's "overview" in his Skeleton Argument (at paragraphs 38-59) of the series of transactions of which Mr. Andric gives evidence. It seems to me that in such a case (and especially where Mr. Handyside has been careful to direct his attacks with forensic precision at just one part, albeit a fundamental part, of Mr. Andric's case) the court should be particularly careful before reaching the conclusion that a claim has no real prospect of success.
17. I have reached the conclusion that it would not be appropriate to reach that conclusion today.

The payment of the deposit of €8.25m.

18. After a number of requests Mr. Andric eventually admitted that there was no term in the Brova/BES Agreement which required Brova to pay the deposit. He also accepted that he does not know when, where or how the deposit was transferred by Steps to BES. Mr. Andric's case nevertheless is that the alleged deposit was paid by Steps, a Sudanese company, on behalf of Brova. It was submitted by Mr. Handyside that this is "hopeless" (a) because there is no evidence that Steps owed Brova that sum and (b) because there is no "proper" evidence of such a payment.
19. There is in fact evidence that Steps owed Mr. Andric €8.25m. by way of a settlement agreement, namely, the evidence of Mr. Andric in his first witness statement at paragraphs 19-21. That evidence is said to be unreliable because the sum was first said to be referable to the Steps agreement, which it does not appear to be, and was then explained differently in his second witness statement, with no explanation as to why a different explanation was put forward. It is also said to be incredible that, if there was a settlement agreement, there is no contemporaneous support for it. "Where is the settlement agreement ?" asks Mr. Handyside rhetorically. These are powerful points but in support of Mr. Andric's evidence is a letter from Mr. Taha, a representative of Steps, and a letter from Mr. Mohammed, a Sudanese lawyer. Mr. Taha states that he negotiated, on behalf of Steps, a settlement with Mr. Andric pursuant to which €8.25m. was to be paid to Mr. Andric. Mr. Mohammed, a Sudanese lawyer, has also confirmed the settlement agreement. No doubt many questions can be asked about these letters and of their authors (and some were asked by Mr. Handyside in the course of his submissions) but it is not possible for the court today to dismiss the letters today as unworthy of any probative value.
20. It is also a powerful point that Mr. Andric is unable to produce any banking evidence confirming that Steps has paid €8.25m. Instead he has produced two documents, the "redacted agreement" and the "unredacted agreement" to which BES is party and which refer to the sum of €8.25m. Mr. Andric says that he was asked to sign them by BES to complete the extraction of the sum of €8.25m. from Sudan. These documents raise a great many questions but it would not be appropriate to seek to resolve them in a mini-trial on this application.
21. I accept that it can be predicted that Mr. Andric may well have great difficulty in proving the alleged settlement agreement and the fact of payment but to decide today before trial that he is unable to do so would involve a mini-trial of his evidence which is not appropriate at this stage.

The forfeiture of the deposit

22. Reliance is placed on Mr. Andric's inability to identify any contractual term stipulating that the deposit was non-refundable, the "unusual" nature of the alleged forfeiture (why should it be forfeited if the credit line was not used but not forfeited if it was used?) and on Mr. Andric's "curious" lack of interest in recovering the deposit in the absence of a contractual term requiring its forfeiture.
23. There are however documents which support the suggested forfeiture, namely, letters dated 10 January 2014 and 14 January 2016 from BES which appear to confirm that the deposit of €8.25m. has been lost. Mr. Handyside described these documents as "very odd" and requiring an explanation. They may well justify that description and may well require an explanation but they cannot be dismissed on this application as being incapable of supporting Mr. Andric's case.

Conclusion

24. There are many reasons why CSUK consider that Mr. Andric's claim will fail. But summary judgment is not granted because a claim will probably fail. What must be shown is that the claim has no real prospect of success. In circumstances where Mr. Andric's case is supported by his evidence, which evidence is not shown to be contrary to the contemporaneous documents but is said to be unreliable, albeit for several cogent reasons, the assessment of that evidence must await trial. To dismiss it now as unworthy of belief would require the court to conduct a mini-trial. The authorities show that that would not be appropriate. Having regard to Mr. Andric's evidence and the support it receives from Mr. da Silva, Mr. Taha, Mr. Mohammed and the BES letters his case carries some conviction, albeit not much.
25. In addition to seeking damages in the sum of €8.25m. further losses are sought, which losses are said to flow from CSUK's alleged wrong-doing. The transactions which have given to those losses have been identified in general terms. I did not understand it to be said that the claim for those further losses should be struck out if the principal claim were not struck out. Similarly, if the principal claim were not struck out I did not understand it to be said that the claim under the CSUK letter of guarantee should be struck out.
26. I must therefore dismiss CSUK's application.