Craig Watt: Traditional pleading points can still succeed in the Commercial Court

Craig Watt

According to the Commercial Court’s webpage, the keynote for framing written pleadings in a commercial action is “flexibility”. This reflects the intention that commercial actions should provide a quicker, more efficient and more focused means for resolving commercial disputes. Nevertheless, in the recent case of Westerton (UK) Limited v EDGE Energy Limited [2018] CSOH 9, Lord Bannatyne has issued a potentially significant reminder that:

“In the commercial court, as in any other court, the defender is entitled to a relevant case being pled against him and fair notice of the case pled against him.”

To paraphrase, pleading points can still win out in the Commercial Court.

Westerton (UK) Limited v EDGE Energy Limited

The case itself involved a matter of contractual interpretation. Under a contract between the parties, the defender had agreed to develop a Down Hole Tubular Cutter (“DHTC”) for use in the oil and gas industry. Subsequently, however, the defender began to advertise its own DHTC for sale as an “Edge Tubing Cutter”. The pursuer sought to prevent the defender on the basis that this was a breach of certain terms in the contract which governed intellectual property rights. The defender attacked the relevancy of these pleadings and the case therefore called before Lord Bannatyne for a debate.

According to the defender, the specified contractual terms related only to the defender’s property rights. Crucially, when properly interpreted, the terms did not seek to prevent use by the defender. Accordingly, the defender’s use of any design could not in itself be a breach of the contractual terms and the pursuer’s case should therefore be dismissed as fundamentally irrelevant.

In response, Counsel for the pursuer asserted that:

“the position advanced by Mr MacColl [Counsel for the defender] was based on an outdated and traditional view of the pleadings and amounted to no more than a pleading point which a court such as the commercial court should not uphold.”

In other words, the pursuer’s plea was not limited to a breach of specific contractual terms but was wide enough to give sufficient notice of a case based on breach of the pursuer’s intellectual property rights.

Lord Bannatyne sided with the defenders. In particular, he was not persuaded by the pursuer’s argument that the defender’s argument was no more than a ‘pleading point’. Rather, his Lordship stressed that defenders in the Commercial Court are entitled to fair notice and that, if it is argued that an intellectual property right is breached, the defender is entitled to have that case relevantly pled against him. Accordingly, the defender’s argument went to the core of the pursuer’s case and the action was dismissed.

What lessons can be learned from Lord Bannatyne’s opinion?

Most importantly, it is clear that traditional pleadings points can succeed in the Commercial Court. If the other side’s averments are irrelevant and wholly lacking in specification, parties should have no hesitation in pointing this out and proceeding to debate. We may, as a result, see more actions proceed to debate than previously.

Craig Watt is a solicitor advocate at Brodies