Barclay Pharmaceuticals Ltd v OPD Laboratories Ltd & Ors

A defence should be struck out only where it discloses no reasonable grounds for defending the claim. Summary judgment requires there to be no real prospect of successfully defending the claim and no other compelling reason for trial. The court must avoid conducting a mini-trial, although an improbable defence may still justify conditional leave to defend. Where evidence establishes breach of a contractual licensing warranty for some goods, but leaves arguable issues about the contracting parties, the goods covered, liability for goods not yet delivered, or the proper scope of an indemnity, the court may grant conditional leave rather than determine those issues summarily.

Barclay Pharmaceuticals Limited, trading as Trident Pharmaceuticals, claimed losses from OPD Laboratories Limited arising from the repackaging of imported pharmaceutical products. The claim was advanced as damages for breach of warranty or as a debt under an indemnity clause in a written repackaging contract.

OPD Laboratories initially disputed the existence of a contract and raised other defences. The evidence established that a contract existed, but raised questions about whether all products were supplied by Trident Pharmaceuticals or whether some belonged to AAH Pharmaceuticals plc, whether losses relating to products not yet delivered were recoverable, and the proper interpretation of the indemnity. The claimant applied to strike out the defence and for summary judgment.

1. Strike out. The application to strike out the defence was dismissed. The pleaded contention that no contractual relationship existed, if true, would provide a reasonable ground for defence, even though the evidence made it unlikely to succeed.
2. Applicable summary judgment principles. Under CPR 3.4, a defence may be struck out for failure to show reasonable grounds. Under CPR Part 24.2, summary judgment may be ordered only where the defendant has no real prospect of successfully defending the claim and there is no other reason for trial. The court must not conduct an impermissible mini-trial. An improbable defence may nevertheless justify conditional leave to defend.
3. Contract and warranty. The evidence clearly established a contract between Trident Pharmaceuticals and OPD Laboratories. Under the contract, goods delivered by Trident Pharmaceuticals to OPD Laboratories for repackaging were subject to the contractual conditions, including the warranty that OPD Laboratories held the required parallel-import licences. For products shown to have been supplied by Trident Pharmaceuticals and repackaged by OPD Laboratories, the failure to hold the relevant licence constituted breach of warranty.
4. Arguable issues. It remained arguable that some products had been supplied to AAH and delivered by Trident Pharmaceuticals only as AAH’s agent. It was also arguable whether the warranty extended to losses concerning products not yet delivered, and what losses were recoverable under the indemnity clause. Those issues should not be determined summarily.
5. Order. OPD Laboratories was granted conditional leave to defend. The condition was payment into court of £360,000 by 4 pm on 11 July 2014. The sum reflected outstanding invoices owed to OPD Laboratories and the arguable claim concerning products not yet supplied. The parties were directed to attempt to agree the form of order.