Irina Abramovich v Cynthia Hoffmann
| Jurisdiction | England & Wales |
| Judgment Date | 14 February 2019 |
| Neutral Citation | [2019] EWHC 509 (Ch) |
| Docket Number | Case No: HC-2016003376 |
| Court | Chancery Division |
| Date | 14 February 2019 |
[2019] EWHC 509 (Ch)
In The High Court Of Justice
Chancery Division
7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Mr M H ROSEN QC (sitting as a Judge of the Chancery Division
Case No: HC-2016003376
Mr S Grodzinski QC, Mr J WILSON & Mr D Isenberg appeared on behalf of the Claimants
Mr A Chichester-Clark appeared on behalf of the Defendant
I am now going to give judgment in relation to the application of the defendant, Cynthia Hoffmann, to reamend her defence and counterclaim in proceedings brought against her by Irina Abramovich and various French companies associated with Ms Abramovich.
Introduction
These proceedings were commenced in November 2016. They relate to Ms Hoffmann's engagement or employment by Ms Abramovich and her companies as a senior executive in her personal and family office. They had been preceded by an Employment Tribunal claim brought by Ms Hoffmann against Ms Abramovich on 29 January 2016 in which she claimed unfair dismissal from that alleged employment. In the course of those proceedings, the employment appeal tribunals, there was a deal of correspondence and other related communications as regards the parties' tax affairs and in particular in relation to the payment by Ms Abramovich to Ms Hoffmann gross of any UK tax over the five years or so of their relationship.
Ms Hoffmann served a defence and counterclaim on 5 May 2017 and since amended. There are numerous issues between the parties. On the part of the claimant, these relate first to alleged breaches of duties by Ms Hoffmann set to have resulted in a breakdown of trust and confidence, justifying the termination of the relationship and leading to very significant loss and damage. Secondly, it is said that Ms Hoffmann is liable to make restitution of tax which was paid by Ms Abramovich following the correspondence to which I have referred and arising from the failure to deduct or pay UK tax from Ms Hoffmann's remuneration. It is in relation to that second aspect that most of the argument on the application for permission to amend arises.
In addition, as part of the counterclaim, Ms Hoffmann claims that the present proceedings were initiated or conducted solely (or in the alternative predominantly) for a collateral purpose, namely to stymie and/or put pressure on her in relation to her employment claim and to bring them to an end, those employment proceedings having been stayed in favour of the High Court proceedings.
The trial has been fixed and is now listed, as I understand it, for 5 to 21 March of this year, in other words to commence less than three weeks from today. The application for permission to amend was first issued in mid-January of this year subsequent to the exchange of witness statements for the trial. By the then-proposed re-amendment, the defendant, Ms Hoffmann, in effect abandoned very significant parts of her previous defence to the tax restitution claim. She had from the outset contended that no income tax was due in the UK in respect of her remuneration because she was resident in and/or performed most of her days of service as regards Ms Abramovich not in the UK but in Switzerland, which is her home country.
In paragraph 137.1 of her pleading, Ms Hoffmann said that, as a result of her being resident and domiciled in Switzerland for tax purposes and the principal part of her duties having been performed abroad, ie outside the UK, she paid tax where appropriate on her earnings under the contract in Switzerland. That of course featured also in the abuse of process counterclaim, it being said in effect there was no income tax due from her or from her employer and her employer had manipulated the matter as far as the revenue was concerned in order to pay the tax in excess of £400,000 in respect of which she claimed restitution for an improper purpose, namely to stymie the unfair dismissal compensation claim.
The proposed reamendments
That was subject, under proposed reamendments as at 15 January 2019, to very substantial changes in order to continue to plead defences based on facts of tax liability and tax payments, including questions of remittance payments or the remittance basis for taxation, also to claim a new defence which remains alive to the tax restitution claim and to add a new complaint in relation to 2,000 Swiss francs allegedly expended in legal fees arising from transactions between Ms Hoffmann and her employer in connection with a handbag.
After the exchange of evidence in relation to the then-proposed amendments of last month, the defendant and her legal team re-thought the appropriate course for her going forward and served a revised form of re-amendments within the last few days (I think at the end of last week). That abandoned much of the remaining tax restitution defence and also abandoned the handbag fees claim but maintained what has been called the estoppel/contract defence, which is the main subject matter of the amendment application as it stands today.
The evidence in relation to the application consists of two witness statements from Mr Nabarro of Ms Hoffmann's solicitors and a witness statement from Ms Berger of Ms Abramovich's solicitors. There have been substantial and commendable skeletons from both sides and I am grateful to the legal teams and the advocates both for their written and their oral submissions today.
Procedural principles
There is no significant dispute as to the relevant procedural law in relation to amendments. It is accepted that the proposed amendment is very late, coming as it does more than two years after the original defence and counterclaim and only a matter of weeks before a trial which is already going to be complicated enough.
In the decision of Carr J in Quah Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm), which was referred to by Sir Geoffrey Vos with approval in Nesbit Law Group LLP v Acasta European Insurance [2018] EWCA Civ 268, it was said that:
“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 [I stress ‘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.”
Then, having mentioned previous authority, Carr J continued:
“Drawing these authorities together, the relevant principles can be stated simply as follows:
(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 [that is a reference to what was regarded as the pre-CPR approach to these questions]. 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 [that proposition and the definition of a very late amendment is of obvious importance in considering the approach to the matter in general, which does not depend solely on the merits or otherwise of amendments];
(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...
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