Clifford Stewart Lay & Anor v Independent Vetcare Limited

A summary judgment application cannot be used to isolate individual factual or legal issues which form only part of a claim or counterclaim. Such issues require a preliminary-issue application, unless they dispose of a severable part of the proceedings.

On summary judgment, the court must assess whether the respondent has a realistic prospect of success without conducting a mini-trial. It should decide a short point of law where all necessary material is available, but should refuse summary judgment where fuller evidence at trial could affect the outcome.

On strike out, pleaded facts are assumed to be true and the court must be certain that the case is bound to fail. General pleading may be inadequate, but it is not necessarily a bare denial or legally unsustainable.

The claimants sold the issued share capital of Easy Direct Debits Limited to Independent Vetcare Limited under a share purchase agreement. They claimed deferred earn-out consideration. IVL defended the claim and brought a counterclaim alleging breaches of warranty, principally that EDD had conducted regulated payment activity without authorisation under the Payment Services Regulations 2017.

IVL applied under CPR rule 3.4(2)(a) to strike out parts of the defence to counterclaim and sought summary judgment on specified issues and dismissal of the counterclaim. The central questions were whether the pleaded defence disclosed reasonable grounds, whether the proposed summary judgment issues were suitable for determination in isolation, and whether the defence had a realistic prospect of success.

1. Summary judgment on isolated issues. The application concerning individual factual and legal issues was not a viable summary judgment application. Each issue was only one component of the counterclaim and determination would leave the remaining issues for trial. Following Anan Kasei Co. Ltd. v Neo Chemicals and Vardy v Rooney, such an application was not equivalent to a preliminary-issue application. The court could determine a severable claim or issue finally, but could not permit tactical selection of points for isolated early determination.
2. Strike out. Under CPR rule 3.4(2)(a), the court considered the statements of case without evidence and assumed the pleaded primary facts to be true. It would strike out only if certain that the relevant case was bound to fail, while retaining a discretion to allow amendment. The claimants’ pleadings concerning acquiring payment transactions and the technical-service-provider exclusion were general but not incapable of succeeding as a matter of law. If greater detail was required, the appropriate course was an application for further information.
3. The alternative pleading based on the actual knowledge of specified IVL personnel was permissible. The court lacked sufficient contextual evidence to construe the SPA provisions finally, and post-completion conduct could arguably support an inference of pre-completion knowledge. Those matters required trial investigation.
4. Summary judgment on the counterclaim. Applying the principles in Easyair Ltd v Opal Telecom Ltd, the court accepted that IVL had powerful arguments concerning unauthorised regulated activity, but found a realistic prospect that the defence would succeed. The meaning of actual knowledge required contextual evidence, including the roles of the specified individuals and whether knowledge of relevant facts, rather than legal analysis, was required. There was also a real issue whether the counterclaim could establish more than nominal damages, given EDD’s continued operation after acquisition.
5. The applications for strike out and summary judgment were dismissed. Costs and consequential directions were left for further submissions or agreement.