SPI North Ltd v Swiss Post International (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Henderson,Lewison LJ |
| Judgment Date | 17 January 2019 |
| Neutral Citation | [2019] EWCA Civ 7 |
| Docket Number | Case No: A3/2018/1585 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 January 2019 |
[2019] EWCA Civ 7
Lord Justice Lewison
and
Lord Justice Henderson
Case No: A3/2018/1585
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
CHANCERY DIVISION
HIS HONOUR JUDGE KLEIN (sitting as a High Court Judge)
[2018] EWHC 1706 (Ch)
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Vikram Sachdeva QC (instructed by Milners Solicitors) for the Appellant
Mr David Drake (instructed by Peters & Peters LLP) for the Respondents
Hearing date: 29 November 2018
Approved Judgment
Introduction
According to CPR rule 16.5(1), the defendant must state in his defence:
“(a) which of the allegations in the particulars of claim he denies;
(b) which allegations he is unable to admit or deny, but which he requires the claimant to prove; and
(c) which allegations he admits.”
Although the rule does not use the language of “non-admission”, it is I think still common practice in a professionally drawn defence for the pleader to state that a particular allegation in the particulars of claim is “not admitted”, when the intention is to say that the allegation falls within paragraph (1)(b) as one which the defendant is unable to admit or deny, but which he requires the claimant to prove. So used, the expression is a convenient form of shorthand, provided that the requirements of the sub-paragraph are not thereby overlooked or watered down. Under the CPR, unlike the previous Rules of the Supreme Court (“RSC”), a non-admission may only properly be pleaded by a defendant where he is, in fact, unable to admit or deny the allegation in question, and therefore requires the claimant to prove it.
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 delay, difficulty or inconvenience, by reference to records and other sources of information which are under his control or otherwise at his ready disposal. Furthermore, in the case of a corporate defendant, which can only act through human agents and has no mind of its own, its actual knowledge must clearly be understood as that of its individual officers, employees or other agents whose knowledge is for the purposes of applying rule 16.5 to be attributed to it, in accordance with the relevant rules of attribution: see the well-known observations of Lord Hoffmann in Meridian Global Funds Management Asia Limited v Securities Commission [1995] 2 AC 500 (PC) at 506–507. But does paragraph (1)(b), properly construed, go further, and require a defendant to make reasonable enquires of third parties before it can be said that he is “unable” to admit or deny a particular allegation? That is the novel question of principle which arises on this appeal.
The judge (His Honour Judge Klein, sitting as a judge of the High Court in the Business and Property Courts) answered this question in favour of the defendants, which are both UK companies, when dismissing an application by the claimant for an order striking out their defence unless it was amended to comply with rule 16.5. The argument before him revolved around a list of thirteen alleged breaches of paragraph (1)(b) where according to the claimant the defendants had improperly pleaded a non-admission in the defence which counsel had settled on their behalf. In some, but by no means all, of those instances, it was said that the defendants would, or at least might, have been able to admit the relevant allegation had they taken reasonable steps to contact certain key individuals who had been closely involved in the transactions in issue as employees of the defendants, but had subsequently left their employment.
After hearing oral argument for the best part of a day, the judge gave an extempore judgment of which we have the approved transcript: [2018] EWHC 1706 (Ch). He expressed his conclusion as follows, at [18]:
“Taking all these matters into account, as a matter of principle, I have concluded that a defendant is not required, before being able to make a non-admission, to have made reasonable inquiries. Instead, in my view, consistent with Mr Drake's submission, I have concluded that a defendant can properly make a non-admission based on his own knowledge. In the case of an individual that would be his own knowledge and may well be, as Mr Drake contends, information he has reminded himself of by looking through and making reasonable inquiries of his records. In the case of a corporate defendant, the non-admissions are based on the corporate knowledge.”
The claimant now appeals to this court, with permission granted by the judge. In the short written reasons which he gave for granting permission, the judge observed that there is no authoritative decision on the issue, and that while, in construing CPR rule 16.5, a court is required to have regard to the overriding objective in rule 1.2, this court might weigh the various elements of the overriding objective differently from the way he had weighed them, leading to the conclusion that the claimant's construction of rule 16.5 should be preferred.
On the hearing of the appeal, we had the benefit of full written submissions, supplemented by commendably brief and focused oral arguments, from the same counsel who appeared below, Mr Vikram Sachdeva QC for the claimant and Mr David Drake for the defendants.
The background
(1) Facts
The claimant, SPI North Limited, was incorporated on 6 April 2010. At all material times it has been engaged in the postal services industry in the UK.
The first defendant, Swiss Post International (UK) Limited (“SPI UK”), is a UK subsidiary of the Swiss Post group of companies.
On or around 1 September 2010, the claimant and SPI UK entered into a written Premium Partner Agreement (“the PPA”), under which the parties agreed to enter into a business relationship for an indefinite period. The general purpose of the PPA was to enable SPI UK to increase its market share of “Swiss Post” branded delivery services to customers in the northern part of the UK, by granting the claimant the exclusive right to sell the relevant products in a defined territory on mutually advantageous terms. Detailed provision was made for the prices which SPI UK would charge to the claimant for its products, leaving the claimant free to charge its customers whatever prices it chose. The claimant was to pay SPI UK a royalty of 5% of its turnover generated by sale of the branded products. As one would expect, the PPA also made detailed provision for other features of the commercial relationship between the two companies. Article 12 expressly recorded their “mutual intention only to establish relations of commercial co-operation”, and that no relationship of agency should exist between them.
The PPA was signed on behalf of SPI UK by Paul Taylor and Nicholas Frazer, who were respectively the company's CEO and commercial director. Article 21 of the PPA provided that all notices and other communications between the parties should be sent to Wendy Holt at SPI UK, and to Mark Brodigan and Nicholas Hall at the claimant. Ms Holt was then the partner and relationship manager at SPI UK, while Mr Brodigan and Mr Hall were directors of the claimant and had signed the PPA on its behalf.
In 2012 the Swiss Post group entered into a joint venture with the French La Poste group which was intended to combine their respective cross-border mail activities, subject to certain exceptions and subject to approval by the relevant regulatory authorities. Clearance for the joint venture was duly obtained from the European Commission in July 2012. On 31 December 2013, the trade and assets of SPI UK were transferred to the second defendant, Asendia UK Limited, an affiliate of the La Poste group which had previously been called La Poste UK Limited. “Asendia” was the brand name of the new joint venture.
The claimant's case is that the Asendia joint venture entailed breaches by SPI UK of the PPA, and that the second defendant induced SPI UK to commit those breaches. In the present action, which was begun by a claim form issued on 31 May 2017, the claimant says it has suffered loss which it estimates (on a loss of profit basis) as between £1.2m and £2.3m, or (on a loss of capital value basis) as between £9.8m and £17.4m. In its amended particulars of claim dated 15 August 2017, the claimant relies on various express provisions of the PPA, but also alleges implied terms that SPI UK would support the Swiss Post brand and the claimant's use of it, and would not derogate from its grant to the claimant. In addition, it is alleged that a collateral agreement on prices was reached between Ms Holt and Mr Frazer of SPI UK and Mr Brodigan and Mr Hall of the claimant, to the effect that the prices of goods and services charged by SPI UK to the claimant would always follow certain prescribed formulae, with either no or limited mark-ups.
As to the dates when these discussions took place, the amended particulars of claim say this:
“26…. The dates of the said discussions, apart from that referred to in paragraph 27 below, cannot be provided pending disclosure of the diaries and email systems of Wendy Holt and Nick Frazer, to which the defendants have access. Upon disclosure further particulars will be provided.
27. In or around late 2009 the First Defendant's Wendy Holt gave a presentation to the directors of the Claimant where the above formulae were confirmed.” It is then alleged that the terms so agreed were applied in calculating the prices granted to the claimant until January 2013. Paragraphs 30 to 32 then rely on the same material to make alternative allegations of promissory estoppel, estoppel by convention, rectification for...
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