John Lobb Ltd v John Lobb SAS

On an application for strike-out or reverse summary judgment, the court should not finally determine a developing or unsettled area of law where the claim has a real prospect of success and material factual issues require trial.

The elements of common mistake cannot be treated as conclusively settled by the formulation in The Great Peace [2002] EWCA Civ 1407. The relevant inquiry may require comparison between the assumed and actual states of affairs, including whether performance would be essentially or radically different, rather than merely impossible. A contractual recital acknowledging ownership does not necessarily allocate the risk of that assumption proving wrong.

A declaration that a contract is void for common mistake may fall outside the limitation regime for claims founded on simple contract.

The claimant and defendant entered into the 2008 Agreement governing ownership and use of John Lobb trade marks. The claimant sought declarations that the agreement was void ab initio for common mistake and that it beneficially owned the marks outside France.

The defendant applied to strike out the claim under CPR rule 3.4(2)(a), or alternatively for judgment under CPR rule 24.2. It argued that the claim was bound to fail because the agreement allocated the relevant risk, performance was not impossible, and the claim was time-barred under sections 5 and 32(1)(c) of the Limitation Act 1980.

The central issues were whether the claim had a real prospect of success and whether the common-mistake and limitation issues could properly be resolved without a trial.

1. Application dismissed. The defendant had not shown that the claim was bound to fail or that it had no real prospect of success. The claim was unsuitable for summary disposal because the relevant legal principles were unsettled and their application depended on findings of fact and construction of the 2008 Agreement in its admissible context.

2. The court declined to treat the formulation in The Great Peace [2002] EWCA Civ 1407 as a complete or finally settled statement of the doctrine of common mistake. The formulation in Triple Seven MSN 27251 Ltd v Azman Air Services Ltd [2018] 4 WLR 97 showed a different emphasis, including whether the actual state of affairs made the contract essentially and radically different from what the parties believed. The claimant’s case therefore could not be rejected merely because the agreement had been capable of performance.

3. The starting point for risk allocation was construction of the contract, applying the approach in Associated Japanese Bank (International) Ltd v Crédit du Nord SA [1989] 1 WLR 255. Although recital G and clause 1.3 recorded the parties’ shared understanding that the defendant owned the marks, the agreement did not specify what would happen if that understanding proved wrong. The claimant therefore had a real prospect of establishing that the contract did not allocate that risk.

4. The court treated the limitation issue as involving two separate questions: whether the claim was founded on the agreement and whether it was based on an accrued cause of action. A claim seeking a declaration that a contract was void for common mistake was arguably neither. The court distinguished claims seeking contractual relief from claims establishing that no contract, breach or cause of action existed, and from claims concerning legal status.

5. The defendant had not established that section 5 of the Limitation Act 1980 barred the claim. Any restitutionary claim arising if the claimant succeeded might raise separate limitation questions, but that did not determine the present application.