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

At the pleading stage, strike-out, permission to amend and summary-judgment applications may turn on whether the proposed case has a realistic prospect of success or discloses reasonable grounds for defending. Contractual arguments need not be likely to succeed; it is sufficient that they are reasonably arguable on the express terms and commercial structure of the agreement. Broad statements of contractual purpose do not necessarily displace a detailed competing construction. Amendments are consequential where they respond in substance to a significant change in the opposing pleading. A pleading is not embarrassing merely because it denies an allegation on the basis of inherent implausibility, provided the opposing party understands the case it must meet.

The claimant sought to strike out parts of the defendants’ re-amended defence and obtain summary judgment on contractual claims arising from a Premium Partner Agreement. The defendants contended that their amendments were consequential upon amendments to the particulars of claim and that their construction of the agreement disclosed reasonable grounds for defending.

The applications concerned the meaning of the agreement, the alleged significance of Swiss Post branding and group membership, delegation of contractual performance to a related company, the scope of consequential amendments, and whether parts of the defence were legally embarrassing.

1. Disposition. The claimant’s application for summary judgment was refused. The re-amended defence was permitted to stand. The parties were directed to agree or submit competing draft orders, including costs.
2. For strike-out, permission to amend and summary judgment, the relevant question was whether the defence had reasonable grounds or a realistic prospect of success. The court applied the approach identified in the earlier judgment in the same litigation, reported as [2019] EWHC 2004 (Ch).
3. The defendants’ construction of the agreement disclosed reasonable grounds for defending. The agreement could plausibly be understood as providing delivery services rather than branded goods, with the claimant acting as principal towards its customers. The references to Swiss Post branding did not make it clear that the defendants had to apply that branding to the second leg of delivery.
4. The agreement did not expressly require the first defendant to remain a Swiss Post subsidiary. The words describing it as a subsidiary could reasonably describe its status when the agreement was made. The agreement was not necessarily unworkable after the corporate changes, and the issue required consideration of the evidence at trial.
5. The defendants also had reasonable grounds to argue that there was no free-standing obligation to commercialise the products, that performance could be delegated in principle, and that the related company might have performed the obligations as agent or subcontractor. Whether it actually did so required evidence.
6. “Consequential” amendments were to be given their ordinary meaning consistently with the overriding objective. It was inappropriate to examine every change line by line for strict necessity. A significant change in the claimant’s pleading justified correspondingly significant changes in the defence. The amendments were therefore consequential.
7. The challenged pleading was not embarrassing. It clearly denied the alleged representations and explained that the denial was based on inherent implausibility without enquiries having been made. The claimant knew the case it had to meet.

• High Court (Chancery Division): an earlier order permitted amendments to the particulars of claim and consequential amendments to the defence. The decision is reported as [2019] EWHC 2004 (Ch).
• Court of Appeal: an interlocutory judgment in the same litigation is reported as [2019] EWCA Civ 7.
• High Court (Chancery Division): the present applications were refused or dismissed as applicable, and the re-amended defence was allowed to stand.