THE SPI NORTH (NON-ADMISSION IN PLEADING CASE) IN THE COURT OF APPEAL: THE SECOND POINT: COMPELLING EVIDENCE NEEDED AND NO SATELLITE LITIGATION PLEASE

Yesterday’s post on SPI North Ltd v Swiss Post International (UK) Ltd & Anor [2019] EWCA Civ 7  concentrated upon the Court of Appeal guidance in relation to the drafting of a pleading.  However the second point on which the claimant’s appeal  failed is of equal (if not higher) importance.  It was held that even if the defendant had drafted the defence incorrectly there was a major evidential hurdle for the claimant to climb if it wanted to strike out the action on the basis of an incorrect “non-admission”. The paragraph about unnecessary satellite litigation is also worth repeating, it was aimed at the litigation world in general.

THE JUDGMENT

After considering the rules relating to “non-admissions” in detail and finding that the defendants.  Lord Justice Henderson stated that the claimant’s appeal would have failed for a second reason.

  1. For these main reasons, which largely reflect Mr Drake’s cogent submissions for the defendants, I have little hesitation in concluding that the wording of rule 16.5(1)(b) does not import any duty to make reasonable enquiries of third parties before putting the claimant to proof of an allegation which the defendant is “unable to admit or deny”. But that is not the end of the matter, because Mr Drake advanced a further argument against the claimant’s approach which I find equally compelling. The argument was, in short, that rule 16.5(1) does not import a “process” requirement, of which the defendants were arguably in breach and which could for that reason alone have arguably justified striking out the defence (or parts of it) if the offending non-admissions were not remedied. In order to justify such a draconian remedy, submits Mr Drake, it would have been necessary for the claimant to establish, to the civil standard of proof, that the defendants actually could have had available to them knowledge (whether or not derived from third parties) which meant that they were in fact able to admit or deny specific allegations which they had chosen not to admit. In other words, it would not be enough merely to show that the defendants failed to make reasonable enquiries of third parties which they ought to have made. It would be necessary to go further, and to establish that the impugned non-admissions were in fact improper because the relevant allegations should have been either admitted or denied.
  2. I would accept this submission, to which in my view Mr Sachdeva had no convincing answer. More generally, the present case seems to me to provide a good example of the disadvantages inherent in the claimant’s approach to rule 16.5(1)(b), generating unnecessary and expensive inter-solicitor correspondence and satellite litigation at a time when the energy and resources of the parties should be devoted to getting on with the action in a proportionate and cost-effective manner