England and Wales High Court (Technology and Construction Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT

		St. Dunstan's House
		16th May 2005

 


MR. JUSTICE JACKSON:

1. This judgment is in three parts: Part 1, Background; Part 2, The Application to Strike Out; Part 3, Decision.

Part 1: Background

2. The claimant in these proceedings, to whom I shall refer as Atos, is an information technology services provider. The defendant in these proceedings, to whom I shall refer as Avis, is a company which provides car rentals across Europe and the Middle East as well as elsewhere in the world. On the 19^th December 2003 Avis and Atos entered into a contract known as the Master Services Agreement ("the MSA" for short) whereby they agreed that Atos should provide services in connection with Avis's programme of reform of its financial systems and processes, and that Avis should carry out work in order to enable Atos to carry out those services. Avis chose, and the MSA accordingly specified, Enterprise Resource Planning, known for short as "ERP". Enterprise Resource Planning was a software product to be supplied by a company called People Soft. It was intended that ERP would replace Avis's existing on-line accounting system (known as "OLAS") and Human Resource system (known as "HR"). The object was the establishment by Avis of a system that aligned the financial systems and processes, support functions, of Avis's business so that they were standardised, and the creation of a shared Pan-European business service centre. This Pan-European business service centre was to be located in Budapest. It was to serve as a shared centre for all Avis's European operations, and for the roll-out of the new ERP and HR system in the first instance to pilot countries. The pilot countries were to be Germany and Hungary.
3. Unfortunately there were problems during the period that this contract was being performed by the parties. It is no part of this court's function today to delve into those problems or to express any view as to where the rights or wrongs may lie. Suffice it to say that delays occurred and also a decision was made that work on the expenses system should be de-coupled from work being done on the revenue system.
4. Both parties took the view that the other was at fault and that shortcomings in performance by the other party had caused or largely contributed to the problems and delays.
5. On the 19^th October 2004 Ms. Judith Nicholson, the company secretary and head of the legal department of Avis, sent a letter to Atos setting out various breaches of contract. In that letter Ms. Nicholson asserted that those were repudiatory breaches, and Ms. Nicholson stated that Avis accepted the repudiatory breaches and thereby brought the contract to an end. In the letter Ms. Nicholson also asserted in the alternative, a right to terminate the MSA pursuant to the express provisions of clause 4 of the MSA.
6. Atos did not accept that it had committed repudiatory breaches of the agreement. Atos did not accept that there was any contractual right of termination under clause 4. Atos took the view that Avis's letter dated the 19^th October was itself a repudiatory breach of contract which Atos purported to accept. Thus, the situation arose that both parties were asserting that the MSA had come to an end, and both parties were asserting that the other party was responsible for the termination of the MSA. Both parties asserted substantial financial claims either for breach of the MSA or under the provisions of the MSA. Very broadly, if I may deal with matters broadly for present purposes, Avis was asserting a claim in the region of £30 million and Atos was asserting a claim in the region of £10 million.
7. It can be seen from this summary of the facts that since both parties had financial claims, either party was in a position to go first in any legal proceedings and to assume the mantle of claimant, leaving the other party to be defendant and counterclaimant.
8. Against that background, since attempts at negotiation and mediation were unsuccessful, the parties turned their attention to litigation. In the event, it was Atos who issued a claim form and brought proceedings against Avis, asserting that Avis had repudiated the MSA and advancing a number of claims against Avis for breach of contract and so forth, and asserting Atos's financial claims against Avis.
9. These proceedings were begun by a claim form which was issued on the 3^rd March 2005. That claim form was followed by a particulars of claim which, inclusive of schedules, runs to approximately 60 pages and sets out Atos's claims at some length and in some detail.
10. Avis took the view that Avis was the natural claimant in these proceedings and that Atos's particulars of claim was unsatisfactory in a number of respects, and would obstruct the just disposal of the proceedings. Accordingly, in order to bring these contentions before the court, Avis issued an application to strike out the particulars of claim.

Part 2: The Application to Strike Out

11. By an application notice dated the 3^rd May 2005 Avis applied for an order in the following terms:

"1. The particulars of claim be struck out.

2. The claimant have liberty to file and serve replacement particulars of claim, providing that such replacement particulars are served by 4 p.m. on 23^rd May 2005 …"

Avis's application was brought pursuant to r.3.4 of the Civil Procedure Rules 1998, as well as the inherent jurisdiction of the court. Rule 3.4 of the Civil Procedure Rules provides, so far as material for present purposes, as follows:

"(2) The court may strike out a statement of case if it appears to the court that …

(b) that the statement of case is an abuse of the court's process or is otherwise likely to obstruct the just disposal of the proceedings;"

12. The grounds of application as set out in the application notice read as follows:

"The particulars of claim are an abuse of the court's process and are otherwise likely to obstruct the just disposal of the proceedings."

These grounds were amplified in a witness statement by Mr. Stephen Baker, a partner in the solicitors firm Olswang, who act for Avis in these proceedings. The grounds have been further refined and reformulated in the skeleton argument of Mr. Lawrence Akka, who is counsel for Avis. These grounds have been developed and explained this morning. I shall give my own brief summary of these grounds.

13. The first ground is this: the particulars of claim contain a number of matters which really need not be pleaded in the particulars of claim at all. For example, the particulars of claim address a contention that Avis was entitled to and did terminate the MSA pursuant to clause 4 of the MSA. That is no longer part of Avis's case. Also it is said that user acceptance testing will come into the case but in a different way from that which is addressed in the particulars of claim. The second ground, which really follows on from the first ground, is that a number of matters in the particulars of claim are dealt with in an inappropriate way. It is said that Atos has misunderstood Avis's position in some respects; in other respects, Avis's position has moved on from that which was outlined in correspondence. Thirdly, it is said that the particulars of claim contain a number of matters which are pure reply points, things which should be pleaded in the reply and which should not feature in the points of claim, and are premature if they feature in the points of claim. Thus it is said one has the disadvantage that ultimately Atos's pleaded case will be ascertainable by looking at approximately half of the particulars of claim in conjunction with the whole of the reply. Fourthly, it is said that there are a number of detailed factual allegations set out in the particulars of claim about matters which Avis will address in their defence and counterclaim, and the consequence of this is that Atos will want, in Mr. Akka's phrase, "to have another go" at these matters, and so one will have an untidy double pleading of Atos's case on these factual matters. Fifthly, it is said that if the particulars remain as they stand and the pleadings go forward from this base, ultimately one will have a set of pleadings which makes it more difficult for Avis to set out its case and which will make it more difficult for the court to identify, understand and resolve the differences between the parties.
14. In oral argument Mr. Akka did not pursue the first limb of the application, namely that the particulars of claim were an abuse of the court's process. Very sensibly, he concentrated his submissions on the second limb, namely that the particulars of claim was likely to obstruct the just disposal of the proceedings. That then is the substance of the application to strike out which this court must address.

Part 3: Decision

15. I can, for my part, see force in the observation that in retrospect it would have been better if Avis had been claimant and Atos had been defendant in these proceedings. If, hypothetically, both parties had come before me before proceedings were begun, and I know they could not do this, and had asked, "Who do you think should go first?", I would have expressed the view that a more tidy set of pleadings would probably result if Avis went first. That, however, is not the issue which I must address today. The issue which I must address is whether the particulars of claim should be struck out. Mr. Akka's application to strike out the particulars of claim is not made with a view to bringing the proceedings to an end; on the contrary, it is made with a view to promoting the orderly exchange of pleadings and the orderly management of the litigation which is getting under way between these two parties. Mr. Akka submits that the appropriate way to plead the particulars of claim would be as follows: Atos should plead the contract; Atos should plead that in October 2004 Avis ceased to cooperate with Atos and sent a letter purporting to terminate the MSA; Atos should then plead that, by its conduct, Avis was in repudiatory breach, which breach was accepted by Atos; Atos should then set out the remedies claimed. Mr. Akka submits that Atos should serve a relatively short particulars of claim which would occupy no more than a few pages, and then Avis could set out the full extent of its positive case in a defence and counterclaim. Thereafter, Atos could plead in a reply and defence to counterclaim precisely and specifically to Avis's case as it really is, rather than have a pleading which only partially addresses the true nature of Avis' case. So the application which I am dealing with is an application which is driven by case management considerations; it is not driven by what one might call the traditional motives for a strike out application.
16. I can see force in the observation made by Mr. Akka that, as the pleadings stand, they will be somewhat untidy and they will be somewhat more difficult to use than might be the case in other circumstances. It seems to me that if the pleadings go ahead from the present particulars of claim Avis will plead a defence and counterclaim as follows: Avis will set out its positive case in relation to what happened in the course of this contract; Avis will set out its positive case in respect of misrepresentation; Avis will set out its positive case in respect of repudiatory breaches, termination and so forth; and Avis will set out its financial claims. There will then be a reply and defence to counterclaim. I anticipate that in that reply Atos will refer to and rely upon some of the allegation in the particulars of claim. Atos will then go on to set out its positive case insofar as not set out in the particulars of claim. It seems to me inevitable that, either expressly or by implication, Atos will make it clear that parts of the particulars of claim are no longer relevant to the issues between the parties. There will then no doubt be a reply to defence to counterclaim, and that will bring the pleadings to an end.
17. In argument I asked Mr. Akka whether he would be able to do justice to Avis's case, if he were to plead his defence and counterclaim in response to the particulars of claim in its present form. In answer, Mr. Akka very fairly conceded that he could do justice to Avis's case. It seems to me that that concession was inevitable and properly made, even though it was supplemented by Mr. Akka's submission that the pleadings would be confusing and more difficult in the future for all to use.
18. Mr. Nicholas Baatz Q.C., who appears for Atos, places reliance upon that concession in argument made by Mr. Akka. Mr. Baatz submits that in the light of that concession it cannot be said that the second limb of r.3.4(2)(b) of the Civil Procedure Rules is satisfied. Mr. Baatz concedes that the word "obstruct" in that rule does not mean absolutely prevent. On the other hand, Mr. Baatz submits that the word "obstruct" does mean impede to a high extent. He bases that submission upon the fact that rule 3.4(2)(b) formulates two alternative grounds for striking out a statement of case. In my view, Mr. Baatz is correct in that submission. A court will not strike out a statement of case merely because that statement of case would generate some untidiness in the pleadings. A court will not strike out a statement of case merely because one will end up with a bundle of pleadings, some parts of which are redundant. A court will only strike out a statement of case pursuant to the second limb of rule 3.4 (2)(b), if the statement of case is such as to prevent the just disposal of the proceedings or, alternatively, such as to create a substantial obstruction to the just disposal of the proceedings. It seems to me that if one has a somewhat untidy bundle of pleadings or statements of case, counsel and the judge will rapidly become familiar with which parts of those pleadings are redundant and which parts are relevant. If one has the kind of pleadings bundle which I foresee in the present case, there will be no true obstacle to the just disposal of the proceedings.
19. There is no decision which either counsel has drawn to my attention in which the court has struck out a statement of case upon grounds of the kind relied upon by Mr. Akka in this case. Furthermore, in my judgment, it would be wrong in principle for this court to strike out the particulars of claim on the grounds put forward by Mr. Akka. I quite accept, as Mr. Akka points out, that this court must give directions in order to serve the overriding objective as set out in Part 1 of the Civil Procedure Rules. I very much have in mind those provisions of Part 1 which Mr. Akka read out in the course of oral argument. Nevertheless, it is not appropriate for the court to step down into the arena and to tell either party how to plead its case. If there are infelicities in the pleadings or if some parts of the pleadings have to be disregarded because one party's case is re-pleaded in the reply in a different but permissible manner, well, the court must live with that.
20. I have come to the conclusion that I do not have jurisdiction to strike out the particulars of claim on the basis proposed by Mr. Akka. Alternatively, if I am wrong and if I do have jurisdiction, in my judgment, it would be a wrong exercise of this court's power to strike out on the grounds proposed. For all of these reasons, Avis' application to strike out is dismissed.