SPI North Ltd v Swiss Post International (UK) Ltd & Anor (Rev 1)  EWCA Civ 7
17 January 2019
The Court of Appeal considers whether there is an obligation to make reasonable enquiries of third parties before defendants plead that they are unable to admit or deny an allegation under Rule 16 of the CPR.
The Claimant and Defendant were postal services companies who had entered into a Premium Partner Agreement (“the PPA”) in 2010. The general purpose of the PPA was to enable the Defendant to increase its market share of its business to customers in the northern part of the UK. The PPA was signed on behalf of the Defendant by its then CEO and its then commercial director, with all correspondence and notices to be sent to the Defendant’s then partner and relationship manager (‘the Former Officers’).
By 2014, the commercial relationship had broken down and the parties entered into inconclusive pre-action correspondence between January and July 2014. Later in 2014, the Former Officers left the employ of the Defendant.
The Claimant ultimately did not issue proceedings until 2017, and an amended Particulars of Claim was served on 15 August 2017. Of particular relevance was a claim for breach of a collateral agreement regarding pricing negotiated with the Former Officers some time in 2009, or alternatively, at dates which could not be particularised pending disclosure of the Former Officers’ diaries and email systems. An amended Defence was served on 9 September 2017, in which the Defendant essentially pleaded it was unable to admit or deny the allegations, given that the Former Officers had long since left.
In December 2017, the Claimant served a Part 18 request including questions regarding the basis upon which prices for the products had been calculated by the Defendant throughout the term of the PPA. By response, the Defendant stated that much of the relevant documentation had been deleted at around the same time the Former Officers left the Defendant, and it was not yet clear what documents could be retrieved. If, however, the relevant material could be sourced, the process of reconstituting the pricing schedules would be in excess of 40 working hours.
The Claimants did not accept that this rendered the Defendant ‘unable to admit or deny’ the allegations, stating that answers could be given after making enquiries of the relevant witnesses. The Claimant adduced evidence in the High Court that the Former Officers were easily contactable by telephone and were willing to speak with the Defendant. The Claimant further adduced evidence to show that it had received such confirmations from the Former Officers in just over an hour.
The Court of Appeal began with the premise that the CPR imposes a positive duty on defendants to admit or deny pleaded allegations where they able to do so. Unlike the previous Rules of the Supreme Court, a non-admission in a Defence under CPR r 16 may only be properly pleaded where a defendant is, in fact, unable to admit or deny the allegation in question. This premise, however, did not answer the question of what “unable” means.
Plainly, a defendant is able to admit or deny facts which are within his own actual knowledge, or which he is able to verify without undue difficulty or inconvenience, by reference to records and other sources of information which are at his ready disposal. In the case of corporate defendants, the usual rules of attribution apply so that enquiry should be made individual officers, employees, or other agents, in the employ of the defendant when the defence is filed. The instant case, however, concerned former officers of the Defendant, who were properly third parties at the relevant time of filing.
The Court of Appeal found that there is no general obligation to make reasonable enquiries of third parties when filing a defence. Two main reasons were cited in support of this conclusion:
- The procedural timetable contained in Part 7 of the CPR, applicable to all Part 7 claims irrespective of complexity or value, is deliberately short to encourage expedition and the rapid progress towards a trial once an action has been started. It would not be practicable to impose general obligations to make all reasonable enquiries of third parties who may be possessed of relevant material within the general 14-day period for filing a defence. In most cases, would be preferable to follow the Part 7 timetable and leave such matters to later stages in the pre-trial procedure.
- If a general obligation were held to exist, there would be difficulty in drawing a ‘sensible line’ as to the enquiries which a defendant ought reasonably should make in the limited time available and, further, in the absence of any guidance or prescribed steps to be taken in Part 16 and its associated Practice Direction. Given, however, the requirement that a Part 16 defence must be verified by a statement of truth, making contact with the third party would likely be only the first step in a complex process of evaluating all the information available to the defendant. It would, therefore, often be completely unrealistic to expect such a process to be completed within the period allowed for the filing of a defence.
The case serves as a good reminder as to the objectives of the CPR. More specifically, the case reconfirms that purpose of a defence is to define and narrow the issues between the parties in general terms on the basis of information available to the defendant at the time so as to expedite the progression of the case.
Practitioners should note, however, that the judgment expressly did not preclude defendants from making such enquiries if they wish to do so. Claimants should not, therefore, oppose requests for reasonable extensions of time for that purpose if it this would further the overriding objective.