A very late application to amend a statement of case is an application that threatens the viability of an existing trial date.
The principles to be applied when such an application is made, were reviewed and summarised by Carr J in Quah Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm).
At paragraph 36, Carr J said:
'An application to amend will be refused if it is clear that the proposed amendment has no real prospect of success. The test to be applied is the same as that for summary judgment under CPR Part 24 . Thus the applicant has to have a case which is better than merely arguable. The court may reject an amendment seeking to raise a version of the facts of the case which is inherently implausible, self-contradictory or is not supported by contemporaneous documentation'.
After listing the relevant authorities, Carr J then set out the governing principles:
a) whether to allow an amendment is a matter for the discretion of the court. In exercising that discretion, the overriding objective is of the greatest importance. Applications always involve the court striking a balance between injustice to the applicant if the amendment is refused, and injustice to the opposing party and other litigants in general, if the amendment is permitted;
b) where a very late application to amend is made the correct approach is not that the amendments ought, in general, to be allowed so that the real dispute between the parties can be adjudicated upon. Rather, a heavy burden lies on a party seeking a very late amendment to show the strength of the new case and why justice to him, his opponent and other court users requires him to be able to pursue it. The risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be loaded heavily against the grant of permission;
c) a very late amendment is one made when the trial date has been fixed and where permitting the amendments would cause the trial date to be lost. Parties and the court have a legitimate expectation that trial fixtures will be kept;
d) lateness is not an absolute, but a relative concept. It depends on a review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of the consequences in terms of work wasted and consequential work to be done;
e) gone are the days when it was sufficient for the amending party to argue that no prejudice had been suffered, save as to costs. In the modern era it is more readily recognised that the payment of costs may not be adequate compensation;
f) it is incumbent on a party seeking the indulgence of the court to be allowed to raise a late claim to provide a good explanation for the delay;
g) a much stricter view is taken nowadays of non-compliance with the CPR and directions of the Court. The achievement of justice means something different now. Parties can no longer expect indulgence if they fail to comply with their procedural obligations because those obligations not only serve the purpose of ensuring that they conduct the litigation proportionately in order to ensure their own costs are kept within proportionate bounds but also the wider public interest of ensuring that other litigants can obtain justice efficiently and proportionately, and that the courts enable them to do so.
Later, Carr J said, at paragraph 96:
‘Very late applications for permission to amend in circumstances where a) there is no good reason for the delay and b) amendment would result in real disruption or prejudice to the parties and/or the Court are unlikely to be allowed, irrespective of the merits of the proposed amendment.’
Turning to the facts of the case before her in Goldman Sachs, Carr J said, at paragraph 96:
‘This is such an application. But additionally and in any event, on the facts here the merits of the proposed amendment are not sufficiently compelling as to justify granting permission in all the circumstances.’
She went on to dismiss the application to amend, and acceded to a counter application by Goldmans Sachs to strike out the original case claim. Noting that:
‘this may be seen as a harsh decision…But this is modern-day commercial litigation.’
Considering the facts in more detail, Carr J was presented with an application to amend the particulars of claim, issued (10.2.15) 3 weeks before the trial was due to commence (4.3.15).
The application was supported by the Claimant Ms Quah accepting that, were her application to succeed, she should pay the costs of the amendment and the costs of the action thrown away by the amendment and the adjournment (contractually this was on an indemnity basis) and that any permission should be conditional on a payment of 40% on account of any such reasonable costs.
However, the Claimant’s application was to amend a claim which, since issue (5.11.13) 15 months earlier, had been put on one basis (‘the original case’), but was now to be put on a substantially different basis (‘the new case’) [33-35]; Carr J describing it as ‘…wholly to abandon her existing case and to run a new one…’ (paragraph 44). Such an application would necessitate the vacation of the trial date and a substantial adjournment.
Furthermore, the application arose in ‘unusual circumstances’ (paragraph 40). The original case, it was conceded in the application, was unsustainable, and ‘at least material parts of the original case which she has maintained from November 2013 to February 2015...' had '...never been sustainable.’ [41] The original case ‘appears never to have had the support of an expert despite the fact that, as indicated above, Ms Quah knew from at least March 2014 onwards that such support was “crucial”'. Carr J found that ‘Ms Quah was aware from a very early stage that expert evidence was required to support central parts of her claim.’[42] but ‘…nevertheless took the decision not to seek such expert advice at that very early stage… or at any stage before early January 2015, just before the pre-trial review.’ Court directions were then ignored.
Carr J found that ‘…no proper explanation of the reasons for delay, nor has any good reason for the delay been identified.’ The reasons advanced for lateness and delay had been threefold:
a) the new case arose from disclosure and witness statements served on behalf of Goldman Sachs;
b) she had been under tremendous strain from other proceedings and from having been under investigation by the Commercial Affairs Department of the Singapore Police Force, (“the CAD”), with the result that she was not in the right state of mind to monitor the progress of the claim; and
c) lack of funding at some stage around the summer of 2014 to some stage around late December 2014.
Deficiencies were found in the Claimant's explanations. However, in any event, Carr J said as to certain proposed amendments, that they:
‘…could and should have been pleaded from the very outset if they were to be raised at all. There is no good reason for their lateness. At most they would appear to arise out of a fresh examination of possible arguments by fresh counsel. This is precisely the sort of reason that does not find favour with the courts…’ (paragraph 47)
As to the remaining proposed amendments, the delay of 5 months leading up to the application was over ‘…a critical period in the life of the litigation.’ (paragraph 48)
As to the tightness of the timetable, she said ‘The fact that the delay occurred in the context of an expeditious timetable is nothing to the point. The timetable was a reasonable one and was there to be complied with. If anything, the Court's directions made it clear that inertia on the part of the parties in the conduct of the action at any stage was not an option.’
The Court was also dismissive of the points about ‘…Ms Quah's frame of mind over the relevant period' or that 'a lack of funding can explain away the delay.’ The Court found that it was ‘…hard to see why they would have prevented her from monitoring progress of the litigation or from complying with the Court's directions. The timetable was set in March 2014 and the trial date fixed later in the same month. She served witness statements directly by reference to the timetable. She knew that she was not complying with the directions for expert evidence…She was capable of engaging with the litigation had she chosen to….she chose to prioritise other matters. Her capability to engage is demonstrated well by her re-engagement with the litigation once trial became imminent.’ (paragraph 52)
The lack of a full explanation as to the early lack of funding undermined the Claimant on this point.
After consideration of the core allegations in the new case, Carr J stated:
‘…the new case is at best a difficult one on the merits. It is speculative. The documents which Ms Quah has said in the past would be critical to success on the new case do not exist. The new case is inherently implausible, involving as it does not only defiance of instructions from [Goldman Sachs] in New York but also [Goldman Sachs] acting against its own interests which, in terms of realising the best value from the Shares in the face of an imminent crash, would have coincided with those of Ms Quah. There are hurdles on causation (in terms of credibility) and quantum (in terms of the claimed rates of participation).’ (paragraph 83)
On prejudice, Carr J said:
‘…it is common ground that to allow the new case to be introduced would lead to the loss of the trial date fixed a year ago in March 2014 and which Eder J at the pre-trial review refused to adjourn (beyond a week). Indeed, the trial dates have already been lost. The indication is that any new trial would not take place before 2016.’ (paragraph 85)
Carr J rejected the argument that Goldman Sachs ‘…can be compensated by way of costs and would suffer no real prejudice', that 'She is not insolvent and in any event [Goldman Sachs] can be protected by any order granting permission being made conditional on payment of [Goldman Sachs]'s costs. Any prejudice to [Goldman Sachs] is financial only’ (paragraph 86). Carr J said:
‘The submission that [Goldmand Sachs] would suffer no prejudice that cannot be compensated for by way of costs is unsustainable. Even ignoring the fact that an opposing party is never fully compensated for the costs which it incurs (or for business disruption and loss of management time) and even ignoring the doubts as to Ms Quah's ability to pay [Goldman Sachs]' costs (beyond any interim payment), the submission ignores the fact that [Goldman Sachs]'s fully legitimate expectation of trial and disposal of this matter this month will be (and indeed has been) thwarted.’ (paragraph 88)
She continued, at paragraph 90 to 91:
‘…[Goldman Sachs] would suffer real and meaningful prejudice through loss of the trial date on the ground of delay alone. Additionally, there has been, or would be, disruption to the Court and to other court users, with the last-minute loss of a longstanding trial date and the need for a new trial date to be accommodated in 2016.
But there is more than prejudice through simple delay to take account of, as a result of the fact that Ms Quah states that she will petition for her own bankruptcy if judgment on the Counterclaim is entered against her.’
Ms Quah was facing many others sets of proceedings and ‘The effect of delay in this litigation is thus potentially to delay her bankruptcy to a point in time after settlement with other creditors so depleting the assets potentially available to [Goldman Sachs]. [Goldman Sachs] would therefore be at risk of incurring further irrecoverable costs on the new case and of obtaining a judgment on the Counterclaim that would be effectively worthless.’ (paragraph 92)
When striking the balance between the competing factors, she concluded that:
‘In the light of the scope and nature of the proposed amendments, the weakness of the new case, the poor quality of the explanations for the delay in advancing it and in any event the lack of any good reason for such delay, and the prejudice resulting to [Goldman Sachs], I am not persuaded that it is a just and proportionate outcome, nor consistent with the overriding objective, that amendment should be permitted. The prejudice to Ms Quah in losing the opportunity to raise a difficult new case is not sufficient to overcome the prejudice to [Goldman Sachs] as set out above in circumstances where there is no good reason properly explained to justify her failure to bring the new case forward in proper time and where that failure is the result of her own decision not to investigate the merits of her case timeously.’ (paragraph 90)
Update
See CNM Estates (Tolworth Tower) Ltd v Carvill-Biggs [2023] EWCA Civ 480 ('CNM'), and the judgments of: (1) Males LJ[1]; and (2) Vos MR and Newey LJ[2], which distingush between 'late' (CNM circumstances) vs 'very late' (Quah circumstances) applications for permission to amend.
SIMON HILL © 2016
BARRISTER
33 BEDFORD ROW
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[1] In CNM Estates (Tolworth Tower) Ltd v Carvill-Biggs [2023] EWCA Civ 480, Males LJ said, under the subheading 'wilful misconduct' (a reference to the allegation sought to be added to the claim - for which permission to amend was sought), at paragraph 47:
'It was common ground before the judge that this was a late amendment, albeit not a “very late” amendment which put a trial date at risk. The applicable principles, which were not in dispute, were conveniently summarised by Mrs Justice Carr in Quah Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm) at [36] to [38], a summary which has been adopted in other cases. It was not suggested that the judge's summary of the applicable principles in this case, which I have set out at [36] above, was mistaken.'
Pausing there, Males LJ said, at paragraph 36 of CNM:
'After hearing argument on the issue of wilful misconduct, the judge gave a further extempore judgment refusing permission to amend. She recorded that the principles applicable to the grant of such permission were not in dispute, said that she had “a general discretion whether to permit an amendment, my essential task being to balance the prejudice to one party if the amendments are allowed against the prejudice to the other if they are disallowed”, and identified the principal relevant factors as being the lateness of the application, any reasons for delay, the adequacy of the pleading and whether it had a real prospect of success, of which the latter two were the most important. As to these, the judge held that the proposed amendment just about set out with sufficient clarity the nature of the case which CNM sought to make, but that the claim was internally incoherent and inconsistent in some respects, such that the claim was “decidedly weak” and “lacks conviction”. She weighed this against other factors, including that in view of the procedural history (which included a series of failures by CNM to comply with orders of the court even before the hearing of the preliminary issue) the Receivers could fairly claim to have been “mucked about”, that the case of wilful misconduct was “a very serious allegation to make against professional people”, and that it had been “raised at the last minute in a claim which has now been ongoing for over four years”, even though the trial was still some way off. Overall, the judge's conclusion was that:
“36. Taking a step back and balancing the factors all in the scales, I cannot regard this as anything other than a claim which is speculative and weak, even if I charitably assume that it is just about pleadable. In my judgment, therefore, it would not be right or in accordance with the overriding objective to allow it to continue for another two or three years occupying court time, which has many other calls on it.”
Continuing with Males LJ under his subheading 'Wilful Misconduct', from paragraphs 48 to 50:
'One necessary condition for any amendment is that the claim as amended should have a real prospect of success, which is the same test as applies on a summary judgment application. There is no point in giving permission for an amendment which is fanciful and which has no real prospect of success. In this regard the principal focus must be on the pleading in question and no attempt should be made to resolve disputed matters of evidence (conducting a mini-trial): Okpabi at [103] to [107]. It is, however, appropriate to consider whether a proposed pleading is coherent and contains properly particularised elements of the cause of action relied upon (Elite Property Holdings Ltd v Barclays Bank Plc [2019] EWCA Civ 204 at [42]).
Even if an amendment clears that initial hurdle and has a real prospect of success, whether to allow the amendment remains a matter of discretion. I would accept, however, that in general (and save perhaps in the case of “very late” amendments) it is not appropriate to consider the strength or weakness of the claim as a factor relevant to that exercise of discretion, for the reasons given by the Master of the Rolls and Lord Justice Newey at [69] to [77] of their judgment.
It is therefore necessary to consider whether the proposed plea of wilful misconduct has a real prospect of success....'
Then, after finding some allegations had no reasonable prospect of success (paragraph 50), Males LJ said of the remaining wilful misconduct proposed claims 'I do not think that it is possible by reference to the pleading itself to say that these claims have no real prospect of success.' (paragraph 58). He said he was prepared to allow the appeal as to the refusal to grant permission to appeal on these claims (paragraph 59). Conscious that Vos MR/Newey LJ disagreed with him, Males LJ said little as to the appeal against the refusal to grant permission to amend, to add gross negligence allegations (paragraph 60-62).
[2] In CNM Estates (Tolworth Tower) Ltd v Carvill-Biggs [2023] EWCA Civ 480, Vos MR and Newey LJ said, at paragraphs 66 to 67:
'Males LJ has already referred to three cases: Okpabi v. Royal Dutch Shell Plc [2021] UKSC 3, [2021] 1 WLR 1294 (“Okpabi”), Quah Su-Ling v. Goldman Sachs International [2015] EWHC 759 (Comm) (“Quah Su-Ling”), and Elite Property Holdings Ltd v. Barclays Bank Plc [2019] EWCA Civ 204 (“Elite”).
As can be seen from Quah Su-Ling at [38], the courts have distinguished between “late” and “very late” amendments, a “very late” amendment being one which would cause the trial date to be lost. As Lloyd LJ observed in Swain-Mason v. Mills & Reeve LLP [2011] EWCA Civ 14, [2011] 1 WLR 2735, at [72], “the court is and should be less ready to allow a very late amendment than it used to be in former times, and … a heavy onus lies on a party seeking to make a very late amendment to justify it, as regards his own position, that of the other parties to the litigation, and that of other litigants in other cases before the court”. Quah Su-Ling itself involved an application to make “very late” amendments and, in that context, Carr J thought it appropriate to assess the strength of the new case: see [57].'
As to the facts in CNM, the case was not a 'very late' case, but was a 'late' case. This was made clear in CNM, where Vos MR and Newey LJ said, at paragraph 68:
'No one suggests that permission to amend is sought “very late” in the present case.'
At paragraph 77, Vos MR/Newey LJ in CNM said:
'The general rule is that, except in the case of “very late” amendments, unless it can be seen that a claim has no real prospect of succeeding, its merits should be determined at a full trial.