Francesca Perselli successfully resists appeal against refusal of relief from sanctions


15th November 2018

Baby v Carlton Leisure (UK) Ltd [2018] 10 WLUK 498

 

Francesca Perselli appeared for the successful Respondent-Claimant who had obtained judgment in default against the Appellant-Defendant due to non-compliance with an unless order following numerous breaches of court orders.

 

The Appellant sought relief from sanctions on the basis that the Respondent's claim had no real prospect of success. The claim was based on an oral guarantee given by the Appellant in respect of historic and future debts owed by his company to the Respondent. The parties did not enter into a written agreement but at the same time as giving the oral guarantee, the Appellant wrote several cheques in favour of the Respondent, leaving the amount on one cheque blank.

 

The Appellant sought to rely on the Statute of Frauds 1677 which provides that guarantee agreements are not actionable unless evidenced in signed writing. He also argued that there was no consideration for the arrangement and that the blank cheque was not actionable because it had not been completed.

 

The Appellant argued that the merits of his case were so strong that he should be granted relief. Although the merits of the case are generally irrelevant in applications for relief from sanctions, the court may consider them if the case of the party obtaining judgment is so weak that it would not withstand a summary judgment application (RH Prince Abdulaziz Bin Mishal Bin Abdulaziz Al Saud v Apex Global Management Ltd [2014] UKSC 64; [2014] 1 W.L.R. 4495). In order to persuade the court to grant relief from sanctions, the Appellant therefore had to show that he would obtain summary judgment against the Respondent (Actionstrength Ltd v International Glass Engineering [2003] 2 AC 541).

 

The Respondent successfully argued at first instance that the Appellant would not obtain summary judgment. The Appellant was estopped from relying on the Statute of Frauds because he had encouraged the Respondent to rely on the oral guarantee by writing the cheques.

 

The Appellant appealed on the basis that the writing of the cheques was not sufficient to amount to an estoppel because he had told the Respondent at the time that the cheques would bounce as he did not yet have sufficient funds in his bank account. He also invited the High Court to address the issues as to consideration and enforceability of the cheques.

 

Mrs Justice Farbey dismissed the Appellant's appeal, agreeing with the Respondent's submissions that the first instance judge had not erred in finding that the Respondent had a real prospect of success. It was at least arguable that the Appellant was estopped from claiming that his oral guarantee was unenforceable; the continuation of business arrangement and forbearance of the Respondent's right to sue the company were sufficient to amount to consideration; and that the Respondent was still entitled to complete the cheques. These were all questions of fact not suitable for summary judgment. Accordingly, she dismissed the appeal.

 

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