Show Me the Money!!! It Won’t Be ‘In The Till’
The case of Auden McKenzie (Pharma Division) Ltd v Patel  EWCA Civ 2291 was an appeal against Summary Judgment.
The claimant obtained Summary Judgment against the Respondents for sums approaching c.£16million. The Respondents accepted that the claimant had paid over £13million to companies controlled by the Respondents in Dubai by way of sham invoices.
The cornerstone of the appeal by the Respondents was that if the Company had not paid the sums away through the connected Dubai companies, the Respondents would still have received the money through dividends or some other lawful manner. The Duomatic shareholder ratification defence that the Respondents also initially failed on was not challenged. The first instance decision rejected the Duomatic defence because it was only open to honest and lawful transactions.
The appeal was against the initial judgment which rejected the proposition that it was open to the Respondents to put forward a defence footed on speculation, that they could have taken the money via other lawful means. In other words the money would not have been “in the till” and still available to the claimant company.
The Court of Appeal said that from the vantage point of an application for Summary Judgment the legal arguments needed to be more fully considered based on facts better found at a trial and therefore allowed the appeal.
I would observe that the Court of Appeal did not appear to me to send out any signal that the main appeal would necessarily succeed. It did inter alia appear to consider the reasoning in the first instance decision on the central matter at large was laconic.
Assuming this matter continues further it will be interesting to see if the Court permits speculation and thereby does not “shut its eyes to subsequent events or ignore the reality of what would have actually happened.“. It will also be interesting to see if the Court would be prepared to permit a defence to be run along the lines of: ‘…the actual transaction was unlawful but a lawful transaction could and or would have been undertaken and in view of that the company suffered no loss..’.