Court of Appeal confirms defendants not obliged to make enquiries of third parties before pleading non-admissions

The Court of Appeal has rejected an argument that a defendant must make reasonable enquiries of third parties before pleading in its defence that it is unable to either admit or deny an allegation and requires the claimant to prove it: SPI North Ltd v Swiss Post International (UK) Ltd and Asendia UK Ltd [2019] EWCA Civ 7.

A defendant is under a positive duty to admit or deny an allegation where it is able to do so, and may only put the claimant to proof of a fact which it is unable to admit or deny. This decision confirms that a defendant may properly plead that it is unable to admit or deny an allegation where the truth or falsity of the allegation was neither within its actual knowledge (including attributed knowledge in the case of a corporation) nor capable of being easily ascertained from documents or other information at the defendant’s ready disposal. It is not required to undertake investigations beyond that level, including consulting with any third parties.

This is not surprising but is nevertheless a welcome confirmation. A contrary conclusion could have given rise to significant practical difficulties, given the short period allowed by the rules for filing a defence.

Background

Under CPR 16.5(1), a defendant must state which of the claimant’s allegations it admits, which allegations it denies, and which allegations it is unable to admit or deny but requires the claimant to prove.

In the present proceedings, the defendant companies had pleaded that they were unable to admit or deny various of the claimant’s allegations. The claimant applied for the defences to be struck out unless certain of those pleadings were amended, arguing that the defendants would, or at least might, have been able to admit those allegations had they taken reasonable steps to make enquiries of key former employees.

The strike out application was refused at first instance but, as the question had apparently not been the subject of previous authority, permission to appeal was granted.

Decision

The Court of Appeal (Henderson and Lewison LJJ) upheld the High Court’s decision, agreeing with the trial judge’s assessment of the circumstances in which a defendant is entitled to neither deny nor admit an allegation.

Specifically, the court held that a defendant may state that it is “unable to admit or deny” an allegation where the truth or falsity of the allegation is “neither within his actual knowledge (including attributed knowledge in the case of a corporate defendant) nor capable of rapid ascertainment from documents or other sources of information at his ready disposal”.

The wording of CPR 16.5(1) does not give rise to any duty to make reasonable enquiries of third parties before putting the claimant to proof of an allegation. A defendant may plead its case “on the basis of knowledge and information which he has readily available to him during the short period afforded by the rules for filing his defence”.

There were two main reasons for this conclusion:

  • First, the short period laid down by the CPR for filing a defence, regardless of the claim’s magnitude or value (ie 14 days after service of particulars of claim, or 28 days if an acknowledgement of service is filed).
  • Second, the difficulty of drawing a sensible line and, as a result, the endless scope for disagreement about the enquiries which the defendant ought reasonably to make in the limited time available.

A related point, which the court said was of equal importance, was that a defence has to be verified by a statement of truth. That should be straightforward where the contents of the defence are based on the defendant’s own knowledge, but the position may be very different if based on third party information. In particular, as the court noted, making contact with a third party to discuss their knowledge of relevant facts may be only the first step in a complex process which will require the information obtained to be evaluated, tested and correlated with other information available to the defendant. It would often be completely unrealistic to expect such a process to be completed within the short period allowed for the filing of a defence.

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