Patel & Anor v Patel & Ors

A defence must address each individual factual allegation in the particulars of claim. A defendant cannot avoid that requirement merely by pleading a positive case which, if established, would defeat the claim altogether.

Under Civil Procedure Rules 1998, r 16.5, the defendant must state whether each allegation is admitted, denied, or required to be proved. A denial must include reasons and, where applicable, the defendant’s different version of events. Rule 16.5(3) applies where the defendant genuinely cannot admit or deny an allegation; it does not excuse a failure to answer facts within the defendant’s knowledge. The court may order a revised defence under its general case-management powers.

The claimants applied for orders requiring the first, second and fourth defendants to amend their defences. The application concerned claims arising from a property-development joint venture, including alleged breaches of contract and fiduciary duty, and alleged knowing receipt.

The claimants argued that the defences contained bare denials and failed to answer individual factual allegations. The defendants contended that a complete positive defence, based on an October 2016 agreement said to release the claimants’ rights, was sufficient, leaving the claimants to prove the unanswered allegations. The issues were whether the defences complied with CPR r 16.5, what form of order should be made, and whether an unless order was appropriate.

1. Construction of CPR r 16.5. The word “allegation” in r 16.5 refers to individual allegations of fact in the particulars of claim, not to the claim or cause of action as a whole. Rules 16.5(1) and (2) therefore require a defendant to deal with each allegation by admitting it, denying it with reasons, or stating that it cannot be admitted or denied and is required to be proved.
2. A positive defence which would, if proved, defeat the claim does not remove the obligation to plead to other factual allegations relevant to the issues. Rule 16.5(3) presupposes a genuine inability to admit or deny the particular allegation. It does not permit a defendant who can answer an allegation to avoid doing so merely by stating the nature of the defence.
3. The defendants’ bare denials of allegations concerning the use of operating companies, the creation and transfer of special-purpose vehicles, alleged breaches of the joint venture agreement, fiduciary duties, the £800,000 loan, and the derivative claim failed to give the reasons required by r 16.5(2)(a). Confidentiality considerations did not excuse non-compliance with the rules.
4. The allegations concerning the factual basis for alleged fiduciary duties went beyond the concise statement required by r 16.4(1). The defendants should not be required to plead to those subparagraphs without a properly justified request for further information.
5. The court had power under CPR r 3(1)(m) to order revised defences. The same orders were made against the first, second and fourth defendants. The defendants were required to state whether the relevant allegations were admitted, denied, or neither admitted nor denied but required to be proved, and to give reasons for denials, including any different version of events. An unless order was premature and was refused.

Not stated in the judgment.