Claim No: LM-2023-000318 - [2025] EWHC 1098 (Comm)

This is an application by the Defendant, Independent Vetcare Limited (“IVL”), for an order that particular parts of the Reply and Defence to Counterclaim and some passages of a response to a Request for Further Information be struck out. This application to strike out is based on CPR rule 3.4(2)(a), it being contended that the relevant passages disclose no reasonable grounds for defending the counterclaim.

There is also a claim for summary judgment in respect of certain issues and that the Defence to Counterclaim be dismissed.

The proceedings arise out of the acquisition by IVL of the issued share capital of Easy Direct Debits Limited (“EDD”), a company that assisted veterinary practices to receive direct debit payments from pet owners who were their clients. The acquisition was carried out pursuant to a share purchase agreement dated 28 October 2020 (“SPA”). The vendors of the majority of the shares were the Claimants, who were to be paid part of the consideration based on the performance of the business of EDD after acquisition (so called “earn out” payments). The Claimants seek to recover just over £1.5 million in respect of this consideration which they contend is due and payable. In response IVL contends that no sums are due and has counterclaimed for what it contends is a breach of warranty in respect of the business of EDD. The counterclaim focuses in particular on an alleged failure of EDD to comply with the requirements of the Payment Services Regulations 2017 (“the Regulations”) by obtaining appropriate authorisations to conduct its business.

Both the application to strike out and that for summary judgment focus on one aspect of the counterclaim, namely whether EDD was engaged in the form of regulated activity termed “acquiring payment transactions”. Whereas the strike out application must proceed on the footing that the facts pleaded in the Claimants’ statement of case are true, the summary judgment application addresses the issue of whether there is evidence giving rise to a real prospect of the Defence to Counterclaim succeeding (see, for example, Three Rivers B.C v Bank of England (No.3) [2003] 2 AC 1, at [91] and [121]). However, the approach taken to the summary judgment application in this case is unusual. The focus of IVL is on certain specific issues which are set out at length in paragraph 3 of the draft minute of order that accompanies its application notice.

The question of whether an application for summary judgment can address particular points in this manner has been the subject of two recent first instance decisions. The first is that of Anan Kasei Co. Ltd. v Neo Chemicals [2021] EWHC 1035 (Ch) in which Fancourt J. stated, at [79] to [83]:

“…Mr Cuddigan implied that the difference between preliminary issues and summary judgment was of no consequence because, since Order 14A of the Rules of the Supreme Court 1965 was introduced, it has been possible to seek summary judgment on a question of law and the court will make a final determination of the question raised in an appropriate case.

80.

The difference is not however a matter of semantics, nor has the difference been erased by the development of a broader summary judgment jurisdiction. A party is free to issue a summary judgment application, subject to compliance with the rules, and the court will determine it, whether it depends on an issue of law, fact or mixed fact and law. Whether a preliminary issue should be determined is a matter for the court to decide, and any party may apply for a direction in that regard. The court has various case management considerations and guidance from appellate courts to weigh when deciding whether the overriding objective is best served by directing the trial of a preliminary issue at that stage. The likelihood that resolution of such an issue may assist the parties to settle the claim or part of the claim is one of the relevant considerations, in modern case management.

81.

The justification for allowing the parties to bring forward a summary judgment application is the asserted strength of the case against the respondent and the fact that a final trial of at least part of the claim will be disposed of ( CPR 24PD , para 2(3) : " The application notice or the evidence … must – …(b) state that it is made because the applicant believes that on the evidence the respondent has no real prospect of succeeding on the claim or issue or (as the case may be) of successfully defending the claim or issue to which the application relates, and … states that the applicant knows of no other reason why the disposal of the claim or issue should await trial ").

82.

The "issue" to which rule 24.2 (" the claimant has no real prospect of defending the claim or issue ") and PD24 refers is a part of the claim, whether a severable part of the proceedings (e.g. a claim for damages caused by particular acts of infringement or non-payment of several debts) or a component of a single claim (e.g. the question of infringement, or the existence of a duty, breach of a duty, causation or loss). It is not any factual or legal issue that is one among many that would need to be decided at trial to resolve such a claim or part of a claim. If the determination of an issue before trial has no consequences except that there is one fewer issue for trial then the court has not given summary judgment and the application was not for summary judgment. If it were otherwise, parties would be able to pick and choose the issues on which they thought their cases were strong and seek to have them determined in isolation, in an attempt to achieve a tactical victory and cause the respondent to incur heavy costs liability at an early stage.

83.

The fact that the summary judgment application raises for determination issues of law does not make a relevant difference. Legal issues are often the only relevantly disputed question in a claim or part of a claim. Where the issue of law is relatively straightforward and the court is satisfied that it has before it all relevant material and that a trial judge would be in no better position to decide it, the court generally decides the issue of law finally, on a balance of probabilities, and not merely on the basis of whether the respondent has a realistically arguable case: see per Lewison J in Easyair v Opal Telecom [2009] EWHC 339 (Ch) at [15] . That does not mean that any issue of law can properly be the subject of a summary judgment application”.

This approach was endorsed and applied in the second decision, that of Steyn J in Vardy v Rooney [2021] EWHC 1888 (QB), at [75].

In cases in which an application is made to strike out part of statement of case (as is permissible having regard to CPR rule 3.4(1)) on the grounds that it clearly cannot be maintained as a matter of law, there may be little in substance to distinguish it from an application for summary judgment on a particular point on the grounds that there is no real prospect of the respondent succeeding on that question. Nevertheless the wording of the relevant provisions for strike out and summary judgment is different as is the possibility of having regard to evidence and I note that in the Vardy case Steyn J did address a strike out application despite rejecting the application for summary judgment having regard to the approach taken by Fancourt J in Anan Kasei.

In my judgment the approach adopted in these two cases is one that I should follow. Looking at the list of particular points on which IVL seeks summary judgment in paragraph 3 of its draft order, each is simply a factual or legal issue that constitutes one among many that would need to be determined at trial for the counterclaim to be resolved. This does seem to me to be an instance of a party seeking to pick and choose the issues on which it thinks its case to be strong and to have these determined in isolation and is not properly a summary judgment application. If such specific points were to be addressed on evidence in advance of trial it would need to be by way of an application for the trial of preliminary issues. But no such application has been made in this case.

For these reasons I do not regard the application for summary judgment, as reflected in paragraph 3 of the draft minute accompanying the application notice, to be a viable one. The only application for summary judgment that can properly be advanced is that set out in paragraph 4 of the draft minute, which seeks summary judgment and dismissal of the entire counterclaim and this is the part of that application that I address below. This does not affect consideration of the strike out application, which, as already mentioned, is to be considered without reference to the evidence and involves a different approach.