Defendants are not obliged to make reasonable enquiries of third parties before making "non-admissions" in the Defence

Published 14 February 2019

The recent Court of Appeal decision in SPI North Limited v (1) Swiss Post International (UK) Limited (2) Asendia UK Limited [2019] EWCA Civ 7 is a helpful reminder and confirmation of the extent of investigations required for the pleading of a Defence.

The Facts

The Claimant, SPI North Ltd, entered into a written agreement with the First Defendant, Swiss Post International (UK) Ltd, for an indefinite period on or around 1 September 2010 which detailed the terms of their business relationship.

On 31 December 2013, the First Defendant's trade and assets were transferred to the Second Defendant, Asendia UK Ltd. The Claimant's case is that the First Defendant breached the contract by entering into a joint venture with the Second Defendant to provide UK postal services and that the Second Defendant induced the First Defendant to commit those breaches. The parties agree that the contract came to an end in April 2014 as each side accepted the other's repudiatory breach.

Responding to the claim, the Defendants neither admitted nor denied 13 of the allegations pleaded in the Amended Particulars of Claim.

The Dispute

The Claimant made an application to strike out the Defence on the basis that the Defendants had improperly pleaded non-admissions in respect of the 13 allegations and therefore failed to comply with the CPR. The Claimant argued that it was possible, at least in response to some of the allegations, to make admissions had they taken reasonable steps to contact key former employees who had been involved in the transactions in issue.

The question was whether there is an obligation to make reasonable enquiries of third parties before a defendant pleads that he is unable to admit or deny an allegation under CPR 16.5(1)(b).

Court of Appeal Decision

The Claimant's application was refused by the High Court, leading to the Claimant lodging an appeal.

In his judgment, Henderson LJ stated that "clearly, a defendant is now under a positive duty to admit or deny pleaded allegations where he is able to do so, and he may only put the claimant to proof of a fact where he is unable to admit or deny it" within the meaning of CPR 16.5(1)(b). He sought to clarify that a defendant is "unable" to admit or deny an allegation where "the truth or falsity of the allegation is neither within his actual knowledge…nor capable of rapid ascertainment from documents or other sources of information at his ready disposal." In Henderson LJ's judgment, there was no general obligation to make reasonable enquiries of third parties before putting a claimant to proof of an allegation in a Defence.

One of the reasons given for the decision was that the CPR only affords defendants a short period in which to file and serve a Defence, i.e. within 14 days of service of the Particulars of Claim or 28 days if an Acknowledgment of Service is filed. In any event, even though there had been a period of 14 weeks between service of the Particulars of Claim and the Amended Defence, the Court was reluctant to impose an obligation on the Defendants to make wider enquiries.

The Claimant's appeal was dismissed.

Impact

Pursuant to CPR 16.5(1), a defendant must state in its Defence which of the allegations are admitted or denied or, if they are "unable" to admit or deny an allegation, not admitted. Practice Direction 16, paragraph 10.2, requires a defendant to deal with every allegation in this way. Although it would be good practice to address all allegations raised in the pre-action stage of a claim, defendants in clinical negligence claims (and generally) should be aware that there is no obligation to do so.

The Court of Appeal's decision in SPI North Ltd confirms that there is no general obligation/duty on a defendant to make enquiries of third parties before putting the claimant to proof of an allegation. The Defence can be pleaded in a way that is based on the knowledge and information that the defendant has "readily available to him" at the time. The appropriate stage for making detailed enquiries and narrowing the issues further is at the stage of disclosure or exchange of witness statements.

Defendants and their legal representatives should be wary of being drawn into protracted correspondence in relation to allegations that the defendant is unable to admit or deny in the Defence as it may generate unnecessary time and expense which would be more appropriately devoted to continuing with the next steps of the litigation in a proportionate and cost-effective manner.

A further point which the Court touched upon was a reminder that a Defence needs to be verified by a Statement of Truth confirming that the facts stated in the statement of case are true. While this should present no difficulty where the information within the Defence is based on the knowledge of the defendant, the position is more difficult where information has been provided by a third party, a further factor weighing against the imposition of the sort of duty that the Claimant sought to impose in this case.

Our national teams of clinical risk lawyers have extensive experience of supporting and advising healthcare providers in matters just like this and we are on hand to provide advice upon the impact of this decision.