The Secretary of State for Health & Ors v Servier Laboratories Ltd & Ors

Permission to amend a defence should be refused only where the proposed amendment has no real, rather than fanciful, prospect of success. Whether a claimant acted reasonably to mitigate loss is ordinarily a question of fact, assessed in all the circumstances. Knowledge of the relevant wrongdoing is highly material, but cannot safely be formulated as a fixed legal requirement. Mitigation may potentially apply to intended loss. Contributory negligence may be available for breaches of Articles 101 and 102 TFEU, although not for an intentional tort. Questions of causation, remoteness, mitigation and contributory negligence are interconnected tools for limiting liability and are generally unsuitable for summary determination where material facts remain to be investigated.

The claimants alleged that Servier unlawfully delayed generic entry into the United Kingdom market for Perindopril, causing them to pay excessive prices. Servier applied under CPR rule 17.1(2)(b) to re-amend its defence to plead that the English claimants had failed to encourage switching to cheaper generic ACE inhibitors. It also sought to rely on failure to mitigate, contributory negligence, causation and remoteness.

The English claimants opposed only the prescribing-related amendments, arguing that they were legally incapable of succeeding. The central issue was whether those proposed defences were reasonably arguable and therefore should be permitted to proceed to trial.

1. Permission to amend. The proposed amendments were governed by the real-prospect-of-success test applicable on summary judgment. A proposed amendment should be disallowed only where it is fanciful or has no real prospect of success. The court must avoid a mini-trial, while considering evidence reasonably expected to be available at trial.
2. Mitigation. The doctrine arises only after the relevant breach of duty has occurred. The pleaded claim was reasonably capable of being characterised as specific infringements producing sequential losses, rather than a fresh infringement on every purchase. The prescribing argument therefore could properly be advanced as failure to mitigate.
3. The question whether a claimant took all reasonable steps is one of fact. Knowledge of the circumstances giving rise to the breach is highly relevant, but the extent of knowledge required varies with the case and cannot safely be stated as a rule of law. The pleaded knowledge of cheaper generic alternatives was sufficient to make the defence reasonably arguable.
4. The submission that mitigation cannot apply to intended loss was unsuitable for summary determination and was strongly arguable against. The authorities on deceit and fraudulent misrepresentation showed that mitigation may apply when the defendant intended the relevant loss.
5. The nature of the pleaded causes of action did not clearly exclude mitigation. Mitigation may operate as an aspect of causation, and the European authority concerning Articles 101 and 102 TFEU did not establish that mitigation was unavailable.
6. Contributory negligence. Breaches of Articles 101 and 102 TFEU were breaches of statutory duty falling within “fault” under section 4 of the Law Reform (Contributory Negligence) Act 1945. The defence was unavailable for the intentional tort, but was potentially available for the competition-law claims. The pleaded causal connection and the argument that the claimants acted as Servier intended were fact-sensitive and reasonably arguable.
7. Causation and remoteness. The prescribing argument was not incapable in principle of breaking the chain of causation. Whether it did so, and whether the loss was too remote, depended on the evidence at trial. The court granted permission for all the disputed amendments.