JBC Distributors Inc & Anor v Peter Mudahy trading as Pak Cosmetic Centre & Anor

Summary judgment and strike out are exceptional where the pleaded case raises a realistic factual dispute. A realistic prospect is more than an arguable case, but the court must avoid conducting a mini-trial. It should consider both the evidence already available and evidence reasonably expected at trial. Where fuller factual investigation, disclosure or oral evidence may affect the outcome, the application should generally be refused. The court may decide a short point of law or construction summarily where it has the necessary evidence and the parties have had a fair opportunity to address it. A counterclaim may proceed despite sparse particularisation if its nature and basis are sufficiently clear, but should be struck out where it discloses neither adequate particulars nor reasonable legal grounds.

The claimants alleged that the defendants had sold counterfeit Jamaican black castor oil products bearing the claimants’ trade marks and had thereby infringed those marks and committed passing off. The defendants denied infringement, maintaining that the goods were genuine and had been purchased from the claimants or authorised suppliers. Their counterclaims concerned unjustified threats, unsold stock and stock allegedly returned by Sainsbury’s.

The claimants applied for summary judgment and/or strike out of the Defence and Counterclaim under the Civil Procedure Rules 1998. The central issues were whether the defence had a realistic prospect of success and whether the counterclaims disclosed reasonable grounds.

1. The application for summary judgment on the claim and for strike out of the Defence was dismissed. Applying the guidance in EasyAir Ltd v Opal Telecom Ltd [2009] EWHC 339 (Ch), approved in AC Ward & Son Ltd v Catlin (Five) Ltd & Ors [2009] EWCA Civ 1098, the question was whether the defence carried a realistic, rather than fanciful, prospect of success.

2. The defence had a degree of conviction and was not perfunctory. Documentary evidence placed relevant factual matters in issue. The alleged differences between the bottles did not conclusively establish counterfeiting at the interim stage, particularly because the defendants disputed the source of the goods and relied on possible changes in packaging and bottling practices.

3. Determination of those issues required fuller investigation, including likely evidence about the defendants’ sources of supply and the claimants’ packaging practices, together with oral examination. The applicant bore a high burden and had not shown with sufficient certainty that the defence could not succeed. The court therefore declined to conduct a mini-trial.

4. The counterclaim for unjustified threats was not struck out. Although sparsely particularised, its nature and basis were sufficiently clear. The counterclaims relating to alleged lost profit on stock and stock returned by Sainsbury’s were struck out because they were not particularised and disclosed no legal basis or reasonable grounds.

5. The parties were strongly encouraged to consider alternative dispute resolution, given the apparently modest sum involved and the likely burden and cost of further evidence and trial.