Smithkline Beecham Plc & Ors v Apotex Europe Ltd. & Ors

Fact-sensitive legal issues should ordinarily be tried as preliminary issues only on agreed or assumed facts. Where pleaded claims involve disputed matters about how the parties conducted their business or the loss allegedly suffered, those matters should not be isolated prematurely.

The court should first determine whether the pleaded case discloses a triable issue under CPR 3.4 and CPR 24. A strike-out or summary judgment application tests whether the claim is arguable on the pleaded facts. A preliminary issue is finally determinative and must be defined with care. The two procedures serve different purposes and should not be conflated.

The judgment concerned directions for an inquiry on cross-undertakings given in patent proceedings. The defendants sought compensation for losses allegedly caused by interim injunctions. Two Canadian companies, which were not named beneficiaries of the undertakings, sought to participate in the inquiry on several alternative bases, including rectification, estoppel, third-party loss and indirect recovery.

The claimants sought to have the Canadian companies joined, or alternatively to have their claims removed, and invited the court to determine preliminary issues concerning their entitlement. The central question was whether those issues could properly be decided before the pleaded case and the evidence concerning the parties’ business arrangements and loss had been developed.

The judgment records that the patent action had been dismissed at first instance, with the patent revoked; the Court of Appeal dismissed the appeal against dismissal but reversed the revocation order.

1. Preliminary issues. The application for preliminary issues was refused. Following the warning in McLoughlin v Jones [2001] EWCA Civ 1743, the court held that complex, fact-sensitive questions should be tried separately only on agreed or assumed facts. The proposed questions concerning the Canadian companies’ entitlement and the precise supply arrangements were not fact-insensitive.
2. Strike out and summary judgment. The threshold question was whether the pleaded claims disclosed a triable issue under CPR 3.4 and CPR 24. That question had to be decided before attempting to determine the extent of any entitlement through a preliminary issue. The court was to assume the pleaded facts for that purpose, without finally resolving disputed factual matters.
3. Different functions. A preliminary issue is an issue in the action, decided finally and once only. Strike out is a means of removing forever an unarguable contention. The criteria and purposes are therefore materially different, and the two procedures must be kept separate.
4. The court directed that the triable-issue question concerning the two Canadian companies be heard at the already listed hearing. All other directions, including any later decision on preliminary issues, were deferred. Costs were reserved to July.

• Court of Appeal: dismissed the appeal against dismissal of the patent action and reversed the order revoking the patent. The judgment gives no citation for that decision.
• High Court (Patents Court): refused the application to determine preliminary issues and directed a threshold hearing under CPR 3.4 and CPR 24.