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1.       In Versloot Dredging BV and Another v HDI Gerling Industrie Versicherung AG and others [2016] UKSC 45 the Supreme Court recently held that a ‘collateral lie’ told during an insurance claim (also known as a ‘fraudulent device’) will not be sufficient to invalidate the whole insurance claim.

2.       Whilst the ratio addressed the position at common law, the Court indicated, obiter, that the position would be the same under s. 12 of the Insurance Act 2015 (the ‘2015 Act’), which is due to come into force on 12 August 2016.

The Facts

3.       A vessel suffered irreparable engine damage by the ingress of water to its engine room which was caused by a combination of crew negligence, third party negligence and equipment defects.

4.       One of the key witnesses in support of the claim provided a statement in which he stated that the bilge alarm had sounded but the crew had been unable to investigate or deal with the leak because of the rolling of the vessel in heavy weather.

5.       The collateral lie came in that he explicitly stated that members of the crew had informed him that this was the position and Popplewell J found this to be a “reckless untruth” at first instance. His Lordship held that the motivation for such a lie was frustration with the delay in payment by the insurers and concern because the individual had been advised that the insurers might have had a valid defence under the Inchmaree clause if he admitted that the vessel’s condition could have been a factor.

6.       However, his Lordship continued to hold that the lie was irrelevant to the merits of the claim because the proximate cause was a peril of the sea, namely the fortuitous ingress of seawater through the sea inlet valve during the voyage such that the Inchmaree clause had no application to this peril. His Lordship thus held that the owners had a valid claim regardless of whether or not the crew had failed to act on the bilge alarm but felt constrained by precedent to hold that because there had been fraud in the presentation of the claim the entire claim failed. The Court of Appeal upheld this judgment.

The Decision

7.       Lord Sumption opened his judgment by distinguishing three situations of dishonesty that may arise in the course of an insurance claim:

7.1.    The whole claim has been fabricated.

7.2.    A genuine claim where the amount has been exaggerated.

7.3.    The entire claim may be justified, but the information given in support of it may have been dishonestly embellished.

8.       This case was concerned solely with the third situation; that of the ‘collateral lie’ which his Lordship defined at §1 as:

“a lie which turns out when the facts are found to have no relevance to the insured’s right to recover. The question is whether the insurer is entitled to repudiate a claim supported by a false statement, if the statement was irrelevant, in the sense that the claim would have been equally recoverable whether it was true or false.”

9.       Further, Lord Hughes noted the concept of a ‘fraudulent device’ at §51:

“The issue in this case has been whether that rule extends also to bar the claim where the insured has not invented or exaggerated the claim but has employed what has been termed a “fraudulent device”. By that, in this special context, is meant a lie or other fraud in the presentation of the claim to the insurers, in a case where the underlying claim is in fact good in the amount claimed. Typically the fraudulent device is bogus evidence of some kind advanced in support of the claim in order to bolster it... I gratefully adopt Lord Sumption’s expression, “collateral lie” to describe this situation. In the vernacular, the situation contemplated might be described as the policyholder “gilding the lily”.”

10.     The prior common law position was that the entire claim failed it contained any element of fraud, including fraudulent devices, and was a product of the duty of good faith which applied to all insurance contracts under s. 17 of the Marine Insurance Act 1906.

11.     However, Lord Sumption, at §23 – 26, held that the fraudulent claims rule did not apply to situations of a collateral lie because:

11.1.  It is not a precondition of the insurer’s liability that a claim should be made upon them; rather the right to indemnity arises as soon as the loss is suffered.

11.2.  In this context, there is an obvious and important difference between a fraudulently exaggerated claim and a justified claim supported by collateral lies.

11.3.  Where a claim has been fraudulently exaggerated, the insured’s dishonesty is calculated to get him something to which he is not entitled. The reason why the insured cannot recover even the honest part of the claim is that the law declines to sever it from the invented part.

11.4.  The policy of deterring fraudulent claims goes to the honesty of the claim, and both are parts of a single claim. The principle is the same as that which applies in the law of illegality. The courts will not sever an agreement affected by illegality into its legal and illegal parts unless it accords with public policy to do so, even if each part is capable of standing on its own.

11.5.  However, the position is different where the insured is trying to obtain no more than the law regards as his entitlement and the lie is irrelevant to the existence or amount of that entitlement.

11.6.  In this case the lie is dishonest, but the claim is not. The immateriality of the lie to the claim makes it not just possible but appropriate to distinguish between them.

12.     As to the necessary connection between the lie and the claim to bring it within the fraudulent device exception, Lord Sumption held that the test was that of materiality in the sense a lie was collateral when it was it did not affect the insured’s right to recover. This was to be distinguished from materiality in the pre-contractual, disclosure context where materiality is defined as that which would affect the decision making of the prudent insurer in concluding the insurance policy.

13.     Lord Hughes summarised the distinction between these two senses of materiality at §91:

“The important difference between the pre- and post-contract (claim) stages lies in the power of decision in the hands of the insurer. Pre-contract, he is free to take or to refuse the risk. A failure of disclosure or false statement deprives him of the opportunity to consider something. If it might have affected his decision, it is “material”. And if he had known the truth, he would have had a perfect right to refuse to issue the policy. Post-contract, the insurer has no such freedom of choice. If the claim is good, he is legally obliged to pay it. A lie told in the making of the claim may well affect his handling of the claim, or the speed at which he pays it, or the inquiries which he calls for, but it can make no difference to his liability to pay. It may well be material (relevant) to his behaviour, but it is immaterial (irrelevant) to his liability. So “materiality” means something different at the two stages. The question is: material to what? For this reason, I respectfully agree with Rix J’s conclusion that the concept cannot simply be transposed to the post-contract situation. It does not migrate unchanged between the two stages, any more than the duty of good faith does”

14.     At §92, Lord Hughes agreed with Lord Sumption’s test of materiality:

“It is therefore possible to say, as Lord Sumption explains, that materiality — used in the different sense of relevance to liability — provides the answer to the issue in the present case. The collateral lie is immaterial to the liability of the insurer. In analysing the issue in that way one is, in a sense, re-stating the question: does a collateral lie defeat the claim? But one is also focussing on the critical difference between the collateral lie and the false or exaggerated claim. The collateral lie is certainly told with the aim of improving the position of the liar, but in fact and in law it makes no difference to the validity of his claim whether it is accepted or found out. The false or exaggerated claim is also made with the aim of improving the position of the liar, but if accepted it provides him with something to which he is not entitled in law.”

15.     Finally, their Lordships noted the submissions on Article 1 Protocol 1 of the European Convention on Human Rights but given their conclusion on the facts, such issues did not arise and thus they declined to comment. Lord Clarke and Lord Toulson agreed with the majority.

16.     Lord Mance, however, dissented primarily on the basis of policy; namely, that the relationship between insurer and insured is a special one of good faith.

17.     Further, there exists a long, if limited, line of authority in support of the proposition that fraudulent devices are to be included in the stringent legal response to fraudulent claims, which serve as a necessary and justified deterrence to insurance fraud.

18.     In this regard, his Lordship emphasised that the rule encourages integrity and deters fraud in the claims process, which would otherwise be distorted through the time and cost involved in unveiling the fraud and attempting to ascertain its true implications

19.     Finally, his Lordship also disagreed with the majority on the point in time at which materiality should be considered stating that it should be considered at the point when the fraud is made, not what a court would consider material many years later, on the basis that lies only make sense in their context; to hold otherwise overlooks (a) the obvious imperative of integrity on both sides in the claims process and (b) the obvious reality that lies are told for a purpose, almost invariably as here to obtain the uncovenanted advantage of having the claim considered and hopefully met on a false premise.


20.     The majority’s test of materiality may prove problematic in practice:

20.1.  Given that the relevant point in time to apply the test is at trial, it will be uncertain whether or not a lie is material until the fullness of the evidence has been considered and even at that point it may not be possible to predict what view the court will take of that evidence. This will render settlement unlikely, especially given that the penalty for the insured is forfeiture of the whole claim.

20.2.  It is difficult to predict how this will apply to situations where there are numerous heads of loss only one of which has been pursued fraudulently and the fraudulent claim is immaterial to the other heads of loss:

20.2.1. On the one hand, the insured could be viewed as seeking to obtain something to which it was not entitled, namely another head of loss.

20.2.2. On the other hand, the lie is entirely immaterial to the liability under the other, genuine, heads of loss such that, as to those heads of loss, the insured was not trying to claim more than he was entitled to.

20.2.3. In my view, it is likely that the court would hold that the entire claim was fraudulent on the basis that it falls within the line of authority on the exaggeration of loss but it is certainly arguable that the rule on exaggeration should be confined to those circumstances where the quantum of a particular head of loss is exaggerated and that the rule should not apply in light of this new test of materiality.

20.3.  It is unclear whether or not, as a matter of practice, there will be a de minimis rule applicable to material lies to ensure consistency with the rule on fraudulent exaggeration. It may be that future courts hold that the lie was material, in the sense that it sought to effect liability, but was so small as to be regarded de minimis and will not invalidate the claim.

21.     As a result of the difficultly in applying the test of materiality, it is likely to take longer to conclude insurance claims which raises difficult questions regarding the implied term that all insurance claims will be paid within a reasonable period of time (as to be implied into all insurance contracts next year under the Enterprise Act 2016):

21.1.  It is unclear whether an insurance company would be justified in taking a long period of time attempting to prove that a lie is material to the claim.

21.2.  This is especially difficult because the majority held that the lie is only to be assessed at trial with the fullness of evidence such that, presumably, an insurance company could be regarded as justified to hold out to trial without settlement to see whether the lie was truly collateral or not.

21.3.  The irony for the insured therefore could be that in telling a collateral lie in an attempt to speed up the process, as was the motivation in this case, their conduct leads to further delay in circumstances where the insurer may be less accountable for that delay under the implied term.

22.     The judgment forms part of the general shift towards a more insured-friendly regime, as seen in the Insurance Act 2015 and the Enterprise Act 2016, and may lead to higher premiums.

23.     As to the court’s ability to police fraud following this judgment:

23.1.  The key sanction is likely to be costs but this will be interesting to apply because it will be the successful party, the insured, that will be punished in costs. The sanction is likely to be that they obtain no costs or, whilst they may be entitled to their costs in relation to the genuine claim, they will have to pay those costs relating to the insurer’s enquiries into their collateral lie. This is a slightly odd situation because ordinarily costs are used to punish the unsuccessful party where they have behaved poorly in the conduct of the dispute such that the successful party obtains indemnity costs or a wasted costs order. This shift in dynamic is likely to make negotiating settlement more difficult.

23.2.  The court noted that there is limited prospect of being prosecuted and thus the criminal law is unlikely to play a significant role.

23.3.  As noted above, the court may take a more sympathetic view of the insurer’s conduct in handling the claim such that they will be less inclined to find a breach of the implied term to pay within a reasonable period of time, as introduced by the Enterprise Act 2016.

24.     In conclusion, it is easy to sympathise with an insured that tells a collateral lie with a view to expediting payment; however, once we move away from having a clear rule that fraud avoids a claim, practical difficulties arise and it is perhaps fortunate that, in the words of Lord Mance, this is a “relatively rare case”.

Andrew Dinsmore

Andrew Dinsmore has been selected as one of only three junior barristers under 10 years call to sit on the ComBar Brexit Working Group 1 to consider the impact of Brexit on the conflict of laws; in particular Andrew has been appointed to a sub-group which will focus on the UK’s options for the allocation of jurisdiction. 

This blog post first appeared on Practical Law Arbitration Blog on 6 October 2016.

The arbitration environment in India has historically suffered from a number of issues, two of which have been particularly serious. The first has been the attitude of the courts towards arbitration. Over the years, there have been many complaints about delay in the courts doing anything at all about arbitration once seised, and about perceived interference to an unjustified extent in arbitration. These problems may be alleviated to some extent with the passage of the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act, 2015 and the Arbitration and Conciliation (Amendment) Act, 2015 (the 2015 Acts).

The second serious problem has been the preference in India towards ad hoc arbitration. This has led to the domination of arbitration by retired judges, and no institutional assistance or oversight in the arbitral process generally. The seat of international arbitration involving an Indian party has not always been India. London was historically the main seat chosen, but in recent years there has been a marked shift eastwards towardsSingapore. A number of reasons for this are usually cited, some of which are more convincing than others: perceptions of cheaper costs, quicker resolution, and the impression of still being “in Asia”, such that business culture may be better appreciated by the tribunal.

There are first class arbitration lawyers and arbitrators in India, and this has been the case for many years. What traditionally has been lacking is a home grown arbitration institution. The London Court of International Arbitration (LCIA) India was active for a number of years but has been disbanded. The Singapore International Arbitration Centre (SIAC) maintains a liaison office in India, but this appears to be largely to assist SIAC arbitrations and to market SIAC.

However, that is all set to change. The Mumbai Centre for International Arbitration (MCIA) officially opened this month, although it actually started its first arbitration in advance of the official opening. On 8 October 2016, there is to be a launch conference at which many international arbitration practitioners from around the world will be in attendance. Indeed, theMCIA’s Council comprises some very well-known names in international arbitration from all over the world. It is clear, from a review of its MCIA Rules 2016 (2016 Rules), that considerable care and thought has gone into adopting the current best practices in international arbitration (such as expedition, emergency arbitration and scrutiny of awards), as well as containing some features designed to deal with the problems which have traditionally bedevilled arbitration in India, such as appointing and challenging arbitrators, and consolidation of arbitrations. The lack of scrutiny of awards has also been a serious issue in relation to ad hoc arbitration, as it has in the past led to a variable standard in award writing, with some awards being very well written and others badly written to the extent that enforcement became very problematic. The 2016 Rules will be recognisable to anyone involved in international arbitration as reflecting international best practice. State of the art premises have been created in Nariman Point, in the heart of the city, and it seems that all the facilities that parties would expect have been thought of.

To have an infrastructure and modern rules is, of course, the first step. The next will be to attract parties, and in particular foreign parties, to arbitrate in Indian seated arbitration. This will also necessarily have to include attracting Indian parties back to India from Singapore. Effecting a culture change of this type does not happen overnight, but as centres such as Singapore have shown, with focussed application it can be done. The fee structure for the MCIA certainly looks sufficiently attractive to make users of arbitration look at the MCIA seriously. Cost (and equally the perception of cost) is a particularly significant factor in a choice of arbitral seat (respondents to the Queen Mary University of London (QMUL)/White and Case 2015 International Arbitration Survey identified cost by a considerable margin as the worst characteristic of international arbitration). What will also help is the fact that the 2015 Acts were passed recently as an attempt to redress many of the historical concerns parties have had with India as a seat for international arbitration. The present Indian government is pushing hard to improve India’s rankings for ease of doing business; a 2015 World Bank report ranked India 130 out of 189 countries reviewed. The recent legislative changes, together with the launch of the MCIA, are two concrete steps which many people are hoping will finally lead to India emerging as a serious international arbitration seat.

It will not happen overnight, of course, but there does appear to be genuine excitement and energy surrounding the launch of the MCIA. Domestic arbitration may be easier to attract, but that is not the only type of dispute the MCIA has ambitions of attracting. Large Indian companies with strong bargaining power may now more credibly be able to insist on Indian arbitration with a non-Indian counterparty being written into their contracts. In due course, the ultimate test will be whether two non-Indian companies will be prepared to sign up for Indian seated arbitration at the MCIA.

Respondents to the QMUL/White and Case 2015 International Arbitration Survey also identified “reputation and recognition of the seat” as the most important factor in choice of a seat, and when broken down, the most important reason for preference of a seat was “neutrality and impartiality of the local legal system”. The MCIA has worked hard to address many of the concerns which users of international arbitration all over the world have expressed. It deserves to succeed. Its fortunes will no doubt be closely followed by all in the international arbitration community, including the more established arbitral institutions to which it is now a rival.

Ravi Aswani


1. In Grand China Logistics Holding (Group) v Spar Shipping AS[2016] EWCA Civ 982 a unanimous Court of Appeal ("CA") was firmly of the view that Popplewell J at first instance came to the correct conclusion that the obligation to make punctual payment of hire under clause 11 of the charterparties was not a condition. 

2. The background can be shortly stated.  The shipowners let three vessels on long-term NYPE 1993 charterparties to the charterers, a subsidiary of the guarantor being sued in this case.  When the charterers fell into arrears in paying hire, the shipowners withdrew the vessels, terminated the charterparty by issuing termination notices and began arbitration against the charterers.  However, the charterers went into liquidation and as a result the arbitration was stayed.  Instead, the shipowners brought these proceedings against the guarantor. 

3. In addition to his decision on the condition question above, Popplewell J held that the charterers had renounced the charterparties at the date of the termination notices.  The shipowners therefore succeeded at first instance in their claims for the balance due under the charterparties, loss of bargain damages in respect of the unexpired terms, and the arbitration proceedings' costs.   The guarantors appealed on the renunciation issue and the shipowners cross-appealed the condition issue.   

Court of Appeal analysis

4.The essence of the CA's conclusions on the condition issue were summarised in paragraph 65 of the judgment as follows:

i. For both historical and analytical reasons, the CA was not persuaded that the inclusion of the express withdrawal clause provided a strong or any indication that clause 11 of the charterparties was a condition.

ii. As a matter of contractual construction, the charterparties did not make it clear that clause 11 was to be categorised as a condition.

iii. Considerations of certainty, most important though they are, did not sway the CA from this conclusion, in particular given the significant certainty achieved by clause 11 as a contractual termination option, simpliciter and the fact that breaches of clause 11 could range from the trivial to the grave.  Greater certainty would be achieved by categorising clause 11 as a condition but at a cost of disproportionate consequences flowing from trivial breaches – an unsatisfactory balance.

iv. It was sensed that market reaction is generally supportive of the decision of Popplewell J and views it as reassuring.

v. The CA did not regard as significant the arguments advanced on the basis of a general presumption as to time being of the essence in mercantile contracts or those which relied on the anti-technicality clause.

5. As a result, the CA held that The Astra (Kuwait Rocks Co v AMN Bulkcarriers Inc [2013] EWHC 865 (Comm), [2013] 2 All E.R. (Comm) 689)  was wrongly decided on this issue.   In so holding, the CA has seemingly ended a controversy as to the proper categorisation of a payment of hire clause in similar charterparties.  The punctual payment of hire is an innominate term. 

6. Charterers will welcome the decision as it means that trivial delays such as the cited example of a 5 minute delay in the payment of hire will not now lead to the draconian consequence that the whole charterparty can be terminated with charterers becoming liable to pay substantial damages to the shipowners, for e.g. loss of future earnings. However, it should be noted that the vessel could still be withdrawn by shipowners under a withdrawal clause, subject to whether there is an anti-technicality clause and whether it applies.

7. The remedy for shipowners who may wish to escape from a charterparty (perhaps on a rising market or because of charterers' persistent non payment or some other reason) is to:

i. Argue that there has been a breach of this innominate term such that the consequences entitle them, as the innocent party, to treat the contract as at an end.

ii. Argue there has been renunciatory breach, i.e. an anticipatory breach of contract (in advance of the due date for performance).  This can happen where, for example, charterers make clear to the shipowners that they are not going to perform the contract at all or are going to commit a breach of some condition or are going to commit a breach of an innominate term and the consequences will be such as to entitle the innocent party to treat the contract as at an end.  The shipowners can then elect to accept the renunciatory breach at once and to terminate the contract, without waiting for the due date of performance. 

iii. Rely on an express withdrawal clause (subject to any anti-technicality clause) or have inserted in the contract in advance a clear indication that the obligation to pay hire is a condition of the contract. The latter should be carefully done, since it will be assessed on context and the intention of the parties and sometimes even the use of the word "condition" may fail to have the desired effect.

8. In this case the shipowners still won by using the renunciatory breach argument.  The CA was quite clear that the charterers' "...prospective non-performance would unilaterally convert a contract for payment in advance into a transaction for unsecured credit and without any provision for the payment of interest" (paragraph 87(i)).   Given the history of the charterers' late payments, the amounts and delays involved, together with the absence of any concrete or reliable reassurance from either the charterers or the guarantor as to the future, the judge was amply entitled to conclude that the charterers had renounced the charterparties at the date of the termination notices. 

9. Thus, even though shipowners may feel that the CA decision has disposed of one of their potential weapons against charterers, where the issue concerns charterers who repeatedly fail to make payments then shipowners should find some solace in this alternative argument, depending on the precise facts.  Even though punctual payment in the usual course of things will not be a condition,  the Courts will continue to give considerable weight to the fact that shipowners have bargained for hire to be paid punctually in advance and not for some "limping performance and attendant uncertainty" (paragraph 87(i)).

The full article can be found here.

We are delighted to announce that St Philips Chambers has been shortlisted for ‘Regional set of Year’ at the 2016 Chambers Bar Awards.

Chief Clerk Joe Wilson said: “We are honoured to be shortlisted for this award again which comes as a direct result of market feedback compiled for the next edition of Chambers UK.  We always strive to provide clients with the best levels of service and this comes at a time when chambers has also been recognised  with nominations in two categories at the Family Law Awards for ‘Clerking Team of the Year’ and Louise McCabe shortlisted for ‘Junior of the year’.

The 2016 Chambers Bar Awards are being held at the London Hilton Park Lane on Thursday, 27th October 2016.

We are pleased to announce that Head of St Philips Commercial, Ed Pepperall QC, has been appointed a Deputy High Court Judge, authorised to sit in both the Chancery and Queen’s Bench Divisions.

This appointment follows Ed’s election last Christmas as a Bencher of Lincoln’s Inn. In addition, Ed, who recently came to the end of his 6-year term on the Civil Procedure Rule Committee, joined the White Book team earlier this year as a contributing editor.

Ed's full CV can be accessed here.

Alexander Rozycki is instructed as led junior in a case in which the Court of Appeal granted permission to appeal in a case of general public importance involving practice and procedure surrounding default judgments.

The Claimant issued a claim against the Defendant for unpaid monies following the completion of construction works. The Defendant filed an Amended Defence and Counterclaim alleging that the works were defective and counterclaimed for damages. The Claimant served witness statement evidence denying the damages claimed, but not a formally pleaded Defence to the Counterclaim. At trial in the Central London County Court, where the Appellant was represented by alternative counsel, the Defendant contended that the Claimant had not filed a Defence to the Counterclaim, and that the Defendant was entitled to default judgment. The Circuit Judge proceeded to grant default judgment on the Counterclaim on the basis that the Claimant had failed to file a formally pleaded Defence.

The Appellant appealed to the Court of Appeal. He argued that there was a point of general public importance arising on the appeal, namely whether, in the absence of a formally pleaded Defence, a witness statement denying damages claimed in the Counterclaim constitutes a "Defence" for the purposes of default judgment under CPR 12.3(2)(b). This was argued in conjunction with para. 1.1 of Practice Direction 12, which states that a Defence includes "any document purporting to be a defence."

Lord Justice Christopher Clarke was persuaded to grant permission to appeal on the basis that the point was of general public importance, raising a point of practice or procedure, in respect of which the Appellant had real prospects of success. His Lordship allowed the appeal to proceed on the condition that the Appellant pay the outstanding interim costs order, which the Appellant agreed to do.

The transcript of the judgment will be available soon.

To view Alexander Rozycki's full CV, please click here.

Wednesday, 11 May 2016 00:00

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Can you agree that a contract can only be varied in writing? This is a question upon which there are conflicting authorities.

The latest case to consider the point is Globe Motors Inc v TWR Lucas Varity Electric Streeting Ltd [2016] EWCA Civ 396. Beatson LJ suggested the answer was “no”.

Litigators should note two things:

1. The law remains uncertain

In Globe, Beatson LJ suggested that anti-oral agreement clauses were not effective. His comments were obiter, but they are likely to be highly persuasive because they followed full arguments and because Underhill and Moore-Blick LJJ expressly agreed with them.

However, the point is not settled. Indeed, it is arguable that a first-instance judge is bound to give effect to an anti-avoidance clause. This is because the Court of Appeal gave effect to an anti-oral agreement clause in United Bank Ltd v Asif (11 February 2000). Ordinarily this decision would bind first-instances judges and the Court of Appeal itself.

In Globe, Beatson LJ suggested that the Court of Appeal was not bound by Asif because Asif was inconsistent with the Court of Appeal's decision in World Online Telecom Ltd v I-Way Ltd [2002] EWCA Civ 413. Beatson LJ considered that, as the Court of Appeal had given two previous inconsistent decisions on the point, it was free to decide between them.

But are Asif and I-Way inconsistent? The ratio of I-Way was simply that it was inappropriate to decide on a summary judgment application whether an anti-oral agreement clause is effective. This is not – of itself – inconsistent with Asif, not least because a court has a discretion whether or not to grant summary judgment.

It remains open to parties to argue that courts of first instance and the Court of Appeal should follow Asif rather than Globe.

2. The evidential effect of anti-oral variation clauses is case sensitive

In Globe, the Court of Appeal suggested that courts would require “strong evidence” before finding that there had been an oral variation in the fact of a anti-oral variation clause.

However, this observation should not be elevated to a rule of law (or, even, a rule of thumb). Everything depends on context.

It is clear that the Court of Appeal did not intend to alter the burden of proof in these cases. The question still remains whether, on the balance of probabilities, the oral variation is proven. The Court of Appeal's point is that a first instance judge may consider that it is unlikely that the parties have made oral variation where they had previously agreed not to do this. But whether this is appropriate, will depend on the context. There may be very good reasons why it is likely that parties have agreed an oral variation although the written contract did not anticipate it. In long-term contracts variations may be required because of changing circumstances. They may, quite understandably, be dealt with less formality than the original negotiations: perhaps because of urgency, or because of increased trust, or because lawyers are not on hand.