SPI North Ltd v Swiss Post International (UK) Ltd & Anor (Rev 1)

Under rule 16.5(1) of the Civil Procedure Rules 1998, a defendant must admit or deny an allegation when able to do so. A defendant is unable to admit or deny an allegation when its truth is outside the defendant’s actual or attributed knowledge and cannot be ascertained rapidly from information readily available to it.

The rule imposes no general duty to make reasonable enquiries of third parties, including former corporate officers or employees, before requiring the claimant to prove an allegation. A challenge to a non-admission must establish that the defendant was actually able to admit or deny the particular allegation. Merely showing that reasonable enquiries could have been made is insufficient.

The claimant alleged that the defendants had breached a commercial agreement concerning postal services and had induced those breaches. It applied to strike out the defence unless thirteen pleaded non-admissions were amended to comply with rule 16.5 of the Civil Procedure Rules 1998. Some of the disputed matters might have been clarified by contacting former employees who had participated in the relevant transactions.

His Honour Judge Klein dismissed the application, holding that a defendant could base a non-admission on its own knowledge and was not first required to make reasonable enquiries. His decision was reported at [2018] EWHC 1706 (Ch).

The central issue on the claimant’s appeal was whether a defendant must make reasonable enquiries of third parties before pleading that it is unable to admit or deny an allegation.

1. Appeal dismissed. Rule 16.5(1)(b) of the Civil Procedure Rules 1998 imposes no general duty to make reasonable enquiries of third parties before a defendant states that it is unable to admit or deny an allegation. Henderson LJ gave the judgment, with which Lewison LJ agreed.
2. A defendant must admit or deny an allegation where able to do so. A non-admission is proper only where the defendant is genuinely unable to admit or deny the allegation and requires the claimant to prove it. A defendant is unable to do so when the allegation’s truth or falsity lies outside its actual knowledge, including knowledge attributed to a corporate defendant, and cannot rapidly be ascertained from documents or other sources at its ready disposal.
3. The short timetable for filing a defence is incompatible with a general obligation to complete all reasonable third-party enquiries. Wider investigation and refinement of the issues can occur through requests under Part 18, disclosure and witness statements. A rule requiring reasonable enquiries would also create uncertain satellite disputes about their appropriate scope.
4. A defence must be verified by a statement of truth. Information obtained from a third party may require evaluation, testing and correlation with other material before it can responsibly support an admission or denial. That process may be unrealistic within the period allowed for filing the defence.
5. Rule 16.5(1) does not impose an independently enforceable process requirement concerning enquiries. To justify striking out a defence for an improper non-admission, a claimant must establish that the defendant actually had, or could have had available, knowledge making it able to admit or deny the particular allegation. Proof that reasonable enquiries were not made is insufficient.
6. The complaints concerning the thirteen non-admissions did not justify relief. Some were trivial or harmless. Although aspects of the defence concerning pricing allegations might have been embarrassing as originally framed, the defendants had sufficiently clarified their position through further information, and the claimant’s application rested instead on the rejected contention that former employees had to be approached before the defence was filed.

• Court of Appeal (Civil Division): By [2019] EWCA Civ 7, dismissed the claimant’s appeal and affirmed the dismissal of its application concerning the pleaded non-admissions.
• High Court, Chancery Division: His Honour Judge Klein, sitting as a High Court judge, dismissed the application to strike out the defence unless amended, holding that rule 16.5 imposed no obligation to make reasonable enquiries before pleading a non-admission: [2018] EWHC 1706 (Ch).