SUMMARY JUDGMENT AND STRIKING OUT: COMPLEX ISSUES CANNOT BE DECIDED SUMMARILY
The decision of Peter Smith J in Emerald Supplies Ltd -v- British Airways PLC  EWHC 3514 (Ch) highlights the difficulties in seeking summary determinations or striking out of cases and issues in complex cases. The judge declined to grant summary judgment or strike out parts of the case in circumstances where these issues were best determined at trial.
The defendants made an application for striking out/summarily dismissal of the claimant’s claims of unlawful means conspiracy and unlawful interference; by way of response the claimants applied for two contentions of law in the defence to be declared incorrect, struck out or summarily dismissed. Both applications were made pursuant to CPR 3.4(2) and CPR 24.
The judge reviewed the test for summary judgement and striking out in some detail.
- The Court has a discretion to strike out a statement of case under CPR 3.4 (2) (inter alia) if it appears to the Court:-
“That the Statement of Case discloses no reasonable grounds for bringing or defending the claim…….”
- Similarly, the Court has a discretion whether to give summary judgment against a Claimant or Defendant on the whole of the claim or on a particular issue if:-
“(a) it considers that:-
i) That Claimant has no real prospect of succeeding on the claim or issue; or
ii) That Defendant has no real prospect of successfully defending the claim or issue and (b) there is no other compelling reason why the case or issue should be disposed of at a trial”
- Thus both parties seek to invoke the Court’s discretionary power to remove from the litigation issues at this early (for this action) stage.
- The principles are well known: the Respondent to such application has to show some prospect that has a chance of success which must be real and not false, fanciful or imaginary. See the notes in the White Book paragraph 24.2.3. Particular reference should be made to the observations of Mummery LJ in The Bolton Pharmaceutical Company 100 Ltd v Doncaster Pharmaceuticals Ltd  EWCA Civ 661.
QUESTIONS OF LAW
- Both applications involved a question of law. The consideration of a question of law at these stages of proceedings is always a difficult one. As the notes under the above mentioned paragraph of the White Book show a Court is encouraged to determine what it calls “a short point of law or construction”. Such consideration necessarily takes place before the evidence has been heard. There is authority for the proposition that a case should not go forward simply because there is a possibility of some further evidence arising (ICI Chemicals and Polymers Ltd v TTE Training Ltd  EWCA Civ 725).
- Against that it has long been the case that the purpose of a summary judgment procedure does not involve a mini trial. Further as Mummery LJ said in the Bolton case, a trial Judge as the decision maker will generally have a better grasp of the case as a whole because of the added benefits of hearing the evidence tested or receiving more developed submissions and having more time in which to digest and reflect on the materials provided.
- These applications in my view cannot be described as giving rise to a short point of law. At the end of the hearing I intimated that I would adjourn the Defendants’ application to be relisted (if it so wished) after it and the Claimants had provided disclosure.
- Having given that indication to the parties I asked them whether the Claimants’ application should be similarly adjourned. The Claimants unsurprisingly were against that. However whilst they were supported in that stance by BA and Daniel Beard QC (Cathay Pacific Airways and Singapore Airlines) together with Tom Sebastian, the Part 20 Defendants who were represented by Mr Pushpinder Saini QC (Thai Airways) and Daniel Jowell QC (Air Canada, Deutsche Lufthansa AG, Lufthansa Cargo AG, Swiss International Airlines AG, LAN Cargo SA, LATAM Airlines Group SA, Scandinavian Airlines, SAS AB, SAS Cargo Group A/S, Societe Air France, KLM NV, Martinair Holland NV, Air France-KLM, Korean Airlines Co Ltd) favoured an adjournment. The basis for the adjournment was the alternative set out in CPR 24 that there was some other reason for not acceding to the application. That in my view was the fact that the Defendants’ application should be adjourned.
- The two applications in my view are inexorably linked together. Further I am unpersuaded that it is appropriate to deal with the difficult questions of law raised by the Claimants’ application at this time. This is the more so when the pleadings have not yet closed, disclosure has not taken place and evidence has not been served. As will be seen further in this judgment the whole basis for each claim is not yet fully investigated.
- I have taken a similar (and more clearly defined) decision in relation to the Defendants’ application. That is more obviously a case of prematurity as the Defendants’ attack on the Claimants’ pleading and their application for summary judgment is based on an alleged insufficiency of evidence of “intention” (on the part of BA) to harm the Claimants’ interest. It is obvious to me that in a case as complicated as this the Claimants would only be in a position properly to plead the requisite intention after they have had disclosure of BA’s (and the Part 20 Defendants’) internal documentation. In addition there is the possibility of obtaining evidence from non-parties i.e. the freight forwarders who are involved in the transactions as set out below. This is not a “micawberistic” approach condemned by the Court of Appeal in the ICI Chemicals case above. It is a case where in my view the pleadings establish a claim (albeit badly pleaded) which in reality will be substantiated or not, as the case may be, after disclosure has taken place. The Particulars of Claim however in my view do disclose on their face an arguable claim for conspiracy. It is not well pleaded but (doubtless for tactical reasons) BA did not seek further clarification of the vital allegations of wrongful acts done by BA with the intention of harming the Claimants which is the thrust of BA’s application.
- Equally surprisingly the question as to whether or not foreign unlawful acts could found the basis of a conspiracy within England and Wales is a discrete question of law. It is in BA’s (and the Part 20 Defendants) interest if possible to have that question of law ventilated early. A decision in BA’s and/or the Part 20 Defendants’ favour would eliminate a significant part of the claim. Yet neither chose to invoke it but as shall be seen made vague allusions to this area of law in the pleadings. This has led the Claimants to take up the cudgels by their application seeking a negative declaration as to the contentions put forward by BA and the Part 20 Defendants that such actions cannot found the basis of a conspiracy in England and Wales.
REVIEW OF THE CASE LAW AS TO THE APPROPRIATENESS OF SUMMARY JUDGMENT
- Mr Harris QC took me through a number of cases where courts considered an application for summary judgment and/or a strike out of a claim in advance of disclosure was inappropriate on the facts of that case. Thus he referred to KME & Ors v Toshiba Carrier UK Ltd & Ors  EWCA Civ 1190 at paragraphs 10-14 as follows:-
“The judgment of the Chancellor
10 The Chancellor gave a detailed judgment. It is sufficient, however, to say that he was satisfied that the amended Particulars of Claim are apt to raise against the UK defendants both a so-called “follow-on” claim (where liability is based on the findings in the Decision), and a so called “stand-alone” claim (where, so far as is necessary to establish liability, there is reliance on allegations and facts which are not to be found in the Decision itself): for the difference see Enron Coal Services Ltd v English Welsh and Scottish Railway Ltd  EWCA Civ 2 at paragraph  (Lloyd LJ). The Chancellor also found that, in so far as it was necessary to prove knowledge on the part of the UK defendants as to the cartel agreement or arrangements, an initial failure to plead knowledge had been remedied in correspondence between the parties’ solicitors. Bearing in mind certain observations of Aikens J in Provimi Ltd v Roche Products Ltd  EWHC 961 (Comm),  2 All ER (Comm) 683, and of Teare J in Cooper Tire & Rubber Company Europe Ltd v Shell Chemicals UK Ltd EWHC 2609 (Comm), the Chancellor said he had no hesitation in dismissing the applications of the UK defendants insofar as they were based on CPR 3.4(2)(a).
11 So far as concerns the applications for summary judgment against the claimants, the Chancellor examined the principal witness statements on behalf of the UK defendants and noted the absence of evidence from the claimants in response to some of them. He concluded as follows:
“51. … But there has been no disclosure. As the Court of Appeal pointed out in Cooper Tire paragraph 43 the strength of the claimants’ case cannot be assessed, let alone particularised, until after disclosure of documents. The fact that the claimants do not now have evidence to refute that of Mr Weyler or Mr Herold does not enable me to conduct a mini-trial, let alone, predict the outcome of the actual trial. The fact is that these defendants too were part of the same group and were involved in the same economic activity as the undertaking found by the Commission to have infringed Article 101. In my view these defendants have not shown that the claim against them does not have a real prospect of success.”
12 The original and supplementary “skeleton” arguments of the first to fourth defendants on this appeal run in aggregate to 200 paragraphs. There was a further written skeleton argument of the ninth defendant. Substantial oral submissions were made, on behalf of the first to fourth defendants, by Mr Daniel Beard QC and Mr Romano Subiotto QC, ably supported, on behalf of Outokumpu, by Ms Kassie Smith. The oral hearing lasted one and a half days. In the final analysis, I consider that the defendants’ applications and this appeal turn on a short point of interpretation of the claim form, the amended Particulars of Claim and some correspondence and a short and clear point of law.
13 Stripped to its essentials the argument of the appellants is that (1) the respondents’ statements of case do not disclose an arguable cause of action against KME UK, and (2) there is a complete lack of evidence to support key allegations against KME UK such that the proceedings have no real prospect of success. I do not accept the first limb of that argument. I reject the assertion underlying the second limb that the Chancellor’s refusal to grant summary judgment against the claimants was not a proper exercise of judicial discretion.
14 The appellants’ pleading point rests upon their submission that an essential element of conduct which infringes Article 101 is a meeting of minds or concurrence of wills between rival parties to conduct themselves on the market in a specific way which gives rise to an unlawful agreement. They say that implementation of an unlawful anti-competitive agreement reached between others is not enough, even if the implementation is with knowledge of the agreement. The respondents’ statements of case, they say, do not contain an allegation against KME UK of that essential element.” (per Lord Justice Etherton)
“20 Mr Beard complained that the allegation of KME UK’s knowledge is still insufficiently particularised to comply with CPR 16PD 8.2, but I am satisfied that it is sufficiently pleaded to constitute a valid allegation of infringement of Article 101 by KME UK and, in the particular circumstances of the present case, to withstand an application to strike out the claim or for summary judgment in favour of the appellants. “
31 So far as concerns the appellants’ reliance on the lack of evidence to support the allegations against KME UK in paragraphs 42 and 43 of the amended Particulars of Claim, Mr Subiotto took us to various witness statements on behalf of the appellants in support of the applications to strike out or for summary judgment. I consider that the Chancellor was perfectly entitled to exercise his discretion by refusing summarily to dismiss the claim despite the current paucity of evidence to support the allegations against KME UK.
32 In their letter dated 28 June 2011 to the solicitors for the fifth to eighth defendants the respondents’ solicitors said that “in view of the elaborate steps taken to conceal and ensure the secrecy of the illegal activities of the cartel the Claimants are not in a position to further particularise their case until after the Defendants have made disclosure.” If the underlying allegation is true, that is a fair point. It is clear that KME UK was for a period of time, however short, involved in the supply of the relevant goods to the first claimant. There is exhibited to the 1st witness statement of Ronald McLean an “Agency Agreement” between KME UK and the third defendant, which is consistent with the allegation in paragraph 43.3 of the amended Particulars of Claim. There is no further direct evidence in relation to KME UK. As was stated by the Court of Appeal in Cooper Tire & Rubber Company Europe Ltd v Dow Deutschland Inc  EWCA Civ 864 at paragraph , however, it is in the nature of anti-competitive arrangements that they are shrouded in secrecy and so it is difficult until after disclosure of documents fairly to assess the strength or otherwise of an allegation that a defendant was a party to, or aware of, the proven anti-competitive conduct of members of the same group of companies. That same generous approach was for the same reason taken by Sales J in Nokia Corporation v AU Optronics Corporation  EWHC 731 in dismissing an application to strike out or to grant summary judgment against the claimant in proceedings for damages for infringement of Article 101. That approach is appropriate in the present case prior to disclosure of documents.” (per Lord Justice Etherton)
- Tomlinson and Walker LLJs agreed with that judgment.
- The learned Lord Justices summary in paragraph 32 is particularly relevant. Of course each case where it necessarily involved an exercisable discretion is fact sensitive. No precedent is created by a decision to dismiss an application for summary judgment in a particular case on the grounds that disclosure has not taken place. However the theme of the cases is the same namely that the Claimant cannot complete the details of his case without obtaining disclosure as the missing part of the pleading is peculiarly within the knowledge of the Defendant. In all of these cases it is a matter of demonstrating the Defendant’s state of mind. Thus the search is for evidence of the Defendants’ intention to harm the Claimants in this case. I do not see how that can possibly take place until after the Claimants have had an opportunity to examine the documents on disclosure. As Etherton LJ said in paragraph 32 claims like this are shrouded in secrecy and it is difficult fairly to assess the strength or otherwise of an allegation that a Defendant was a party to or aware of the proven anti- competitive conduct until after disclosure. So the same will apply to the question of the intention of the Defendants’ acts.
- A similar conclusion was reached in the case of Bord Na Mona Horticultural Ltd & Anr v British Polythene Industries Plc  EWHC 3346 (Comm) following the above decisions as follows:-
“29 So far as the application to strike out is concerned, I accept Mr Beal’s submission that Mr Lasok’s submissions overlook two important qualifications, one of general application and the other specifically referable to competition claims. First, the court will not grant an application to strike out a claim unless it is certain that the claim is bound to fail: seeHughes v Colin Richards & Co  EWCA Civ 266, and where any defect in a statement of case is capable of being cured by amendment, the court should refrain from striking out unless it has afforded an opportunity to the party to amend its statement of case. That is a point which becomes of relevance when considering the so-called follow on claim in paragraphs 27 and 28 of the Particulars of Claim.
30 Second, that where the claim involves damages arising out of infringements of competition law by cartels which by their nature are clandestine and the court is considering an application by an alleged participant in the cartel to strike out a claim prior to disclosure and evidence, the court will tend to allow a more generous ambit for pleadings, where what is being alleged is necessarily a matter which is largely within the exclusive knowledge of defendants, than it might in other cases. I agree that a more generous approach to pleadings is appropriate and has been recognised in a number of such cases. The principles in play are well described by Sales J in Nokia Corporation v AU Optronics Corporation  EWHC 731 (Ch) at [62-67]:
“62. In a case involving an allegation that a secret cartel has operated in breach of Article 101 there is an inevitable tension in domestic procedural law between the impulse to ensure that claims are fully and clearly pleaded so that a defendant can know with some exactitude what case he has to meet (and also so that disclosure obligations can be fully understood, expert witnesses given clear instructions and so on), on the one hand, and on the other the impulse to ensure that justice is done and a claimant is not prevented by overly strict and demanding rules of pleading from introducing a claim which may prove to be properly made out at trial, but which will be shut out by the law of limitation if the claimant is to be forced to wait until he has full particulars before launching a claim. In working out how that tension is to be resolved, it is important to bear in mind the general and long established approach referred to above and the existence of other protections for defendants within the procedural regime, including the following. [He then identifies procedural protections such as requests for further information and summary judgment applications where appropriate, together with the professional obligations of counsel in relation to pleadings]
67. In my judgment, the availability of such procedural protections for a defendant to ensure that a claim is fully and properly explained in good time before trial (as against the possible loss to a claimant of an entire, potentially meritorious claim), indicates that in resolving the tension referred to above and determining whether a cause of action has been sufficiently pleaded in a statement of case (particularly in the claim form and/or the particulars of claim when an action is commenced), the balance is to be struck by allowing a measure of generosity in favour of a claimant. Such an approach is appropriate and in the overall interests of justice and the overriding objective set out in CPR Part 1.1. It is an approach supported by the authorities cited above.”
31 This generous approach to the pleadings in cartel claims has been endorsed by the Court of Appeal, not only in Cooper Tire & Rubber Company Europe Ltd v Dow Deutschland EWCA Civ 864 but most recently by Etherton LJ in KME Yorkshire Ltd v Toshiba Carrier UK Ltd  EWCA Civ 1190 at :
“As was stated by the Court of Appeal in Cooper Tire & Rubber Company Europe Ltd v Dow Deutschland Inc  EWCA Civ 864 at paragraph , however, it is in the nature of anti-competitive arrangements that they are shrouded in secrecy and so it is difficult until after disclosure of documents fairly to assess the strength or otherwise of an allegation that a defendant was a party to, or aware of, the proven anti-competitive conduct of members of the same group of companies. That same generous approach was for the same reason taken by Sales J in Nokia Corporation v AU Optronics Corporation  EWHC 731 in dismissing an application to strike out or to grant summary judgment against the claimant in proceedings for damages for infringement of Article 101. That approach is appropriate in the present case prior to disclosure of documents.”
32 In the case of applications for summary judgment, it is well established that the court should not engage in a mini-trial where there is any conflict of evidence. The dangers of too wide a use of the summary judgment procedure were emphasised by Mummery LJ at [4-18] of his judgment in Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical  EWCA Civ 661.  and  of that judgment seem to me particularly apposite to the present case:
“5. Although the test [whether the claim has a real prospect of success] can be stated simply, its application in practice can be difficult. In my experience there can be more difficulties in applying the “no real prospect of success” test on an application for summary judgment (or on an application for permission to appeal, where a similar test is applicable) than in trying the case in its entirety (or, in the case of an appeal, hearing the substantive appeal). The decision-maker at trial will usually have a better grasp of the case as a whole, because of the added benefits of hearing the evidence tested, of receiving more developed submissions and of having more time in which to digest and reflect on the materials.
18. In my judgment, the court should also hesitate about making a final decision without a trial where, even though there is no obvious conflict of fact at the time of the application, reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case.”
33 The same point was made by Lewison J (as he then was) in Federal Republic of Nigeria v Santolina Investment Corporation  EWHC 437 (Ch), at [4(vi)] citing the Doncaster Pharmaceticals case:
“Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case.””
THE OUTCOME IN THIS CASE
The judge adjourned both applications. His view was that they were heavily fact based. It may be possible for the applications to be renewedd. It was probable that the best place for the arguments was at trial.
- These arguments for and against are to my mind heavily fact-based and I do not believe that the factual platform for these legal arguments is clearly established at this stage in the proceedings. Even if it were it seems to me that this is a difficult question of law as it involves careful analysis of OBG in the light of Newson. I do not think that it is appropriate to consider these difficult points at this stage. I am of the view that the matter will become more clear at disclosure on this point also when the Claimants provide disclosure of the incidents of the extra charges. That is likely to be a difficult exercise because charges might not have been merely passed on; a party might have absorbed the costs and given the impression that carriage was free when it was hidden away in the purchase price or it might have been apportioned. None of this is yet revealed.
- I am therefore of the opinion that it is not appropriate to decide this issue at this stage and it should also be part of the adjournment. Whilst the above arguments are interesting, it would in my view be quite wrong given my decision that the matter should be adjourned to attempt to come to any concluded view on these matters. When a Judge decides that a case has to go to trial or has to go to determination of issues at a later stage it is incumbent on him not to attempt to pre-empt any of those matters at the interlocutory stage. That is a trap which the above cases on these proceedings show should be avoided.
- Further, it is not in the interest of the parties to decide something at this stage on these issues. Inevitably, given the size of the claims the loser will appeal and that will add to the delay of this already long delayed action when the matters can be dealt with more expeditiously and clearly at a later stage. I do not believe that there will be a significant increase in costs as the action will continue in a major way whatever the result of this application. There will still be the competition claims and there might well be claims where there is no issue of these surcharges being passed on down the line.
- I therefore conclude that the Defendants’ application should be adjourned until at the earliest after disclosure has taken place. I do not think it is appropriate to dismiss the application because after that disclosure has taken place it is possible that the Claimants are not in a position to provide any particulars to substantiate their claim that BA intended to harm the Claimants.
- That might be a matter of form because even if I dismiss BA’s application now, if, in the light of disclosure it was shown that there was no material put forward by the Claimants, it could in my view make a fresh application to dismiss the claim under CPR 3 or 24.
- That disposes of BA’s application.
THE CLAIMANTS’ APPLICATION
- The Claimants’ application is for a negative declaration. The subject matter of the Claimants’ application was that the torts can be founded on foreign unlawful means. BA denies that and indeed argued that foreign unlawful means cannot be relied upon and that there is no case which says it can. Given BA’s stance it was surprising it did not feature in its own Part 24 Application and that it was so tentatively pleaded in its Defence see paragraphs 121, 127 and 129 (6)…
- I agree that it is surprising that if that was the law none of the extremely learned Judges adverted to it in some way in the various decisions. However it is not definitive. The common law is an evolving jurisdiction and it is regularly not unheard of for new ideas to be thought of or new arguments to be made that challenge assumptions or matters which were never thought to be arguable in the past.
- In my view, this question falls to be decided on the basis that no clear decision has been made after the point has been argued.
- This is an important decision in relation to the law of conspiracy and of course it has potentially a very significant impact on the Claimants’ case. With due deference to the arguments that were put forward to me (including other Counsel to which I have not made reference on this point) I do not think it is appropriate to decide this important point of principle at a summary judgment stage. For that reason I would adjourn the Claimants’ application to trial. It must be appreciated that will not lead to any costs being increased. This point if it is anything provides BA with a defence. It was content for that matter to be left for trial. Therefore refusing the summary judgment application does not increase any costs on its part. From the Claimants’ point of view it will lead to costs but those are costs which the Claimants are anxious to incur because it supports their claim. What one will have however is a trial where the Judge is fully seized of all the issues and is better equipped to deal with all of the arguments. It is not appropriate to deal with it summarily at this stage. That of course is in addition to my decision that this application should be adjourned because of the linkage (summarised above) to BA’s application. No benefit accrues by the parties being locked in to unnecessary interlocutory skirmishes which delay matters and increase costs. The Claimants’ case is based on winning this point at trial. The converse applies to BA but, as I have said, it does not suggest this point should be dealt with summarily; it was content to leave it in the pleadings and no more.
- That conclusion is equally applicable to the second question as to whether or not damages can be recovered in respect of a loss in country B where the law infringed is that of country A. Equally I can see no basis for objecting at this stage to the Claimants’ proposed amendment in paragraph 144 of CPOC in the light of my decision.
- Tempting though it is to decide this issue I am firmly of the view for the reasons I have set out above, that it would not be appropriate so to do. I therefore adjourn the Claimants’ application with liberty to restore at an appropriate time. I suspect that appropriate time is trial but I do not exclude the Claimants seeking to justify restoration at some other stage.