Parker and Another v SJ Berwin & Company LLP & Aother
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE HAMBLEN |
| Judgment Date | 17 December 2008 |
| Neutral Citation | [2008] EWHC 3017 (QB) |
| Court | Queen's Bench Division |
| Date | 17 December 2008 |
| Docket Number | Case No: HQ06X01996 |
[2008] EWHC 3017 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand,
London, WC2A 2LL
The Hon. Mr Justice Hamblen
Case No: HQ06X01996
Jeremy Stuart-Smith QC and Clive Wolman (instructed by Freeth Cartwright LLP) for the Claimants
Bernard Livesey QC (instructed by Reynolds Porter Chamberlain) for the Defendants
Hearing dates: 1/12/2008 – 3/12/2008
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
MR JUSTICE HAMBLEN :
Introduction
The Claimants are businessmen with a love of football and of Leicester City Football Club [“the Club”] in particular. In 2000, after boardroom differences at the Club that had seen them forced to resign as directors at the end of 1999, they determined that they would attempt to take over the PLC that ran the Club. To that end they were introduced to the Second Defendant, Mr Metliss, who was a partner in the well-known London firm of SJ Berwin & Co.
The Claimants' case is that Mr Metliss assured them that he could and would obtain the necessary funding for a bid as well as providing necessary legal work to support it; that he and his firm accepted the Claimants' retainer; that in the event they took no effective steps to progress the necessary funding or to progress the bid in the period to the end of 2000, and that they did not at any stage advise the Claimants of the lack of progress.
By the beginning of December 2000 the Claimants say that they were disillusioned with the service that was being provided. The First Claimant, Mr Parker, ended his participation in the retainer but the second Claimant, persevered with SJ Berwin. At that stage, although the Claimants had been jointly pursuing their intention to make a bid for the Club, no bid had been made. Mr Parker continued the attempt to put together a bid package with the assistance of Linklaters, to be funded by Barclays. He got as far as commencing due diligence; but the bid ran out of time when the Club committed to rebuilding its stadium on financial terms that were unacceptable to Barclays. Mr Kinch, still using SJ Berwin, thought that he had obtained a source of funding from an organization called Tolmie, but when the time came in April 2002 to draw down the funds, it became clear that there were none and that Mr Kinch had been the victim of a fraud. The Tolmie transaction is the subject of a separate action brought by Mr Kinch against The Rosling Partnership, the firm of solicitors who acted for Tolmie on the transaction.
The Claimants' case against the Defendants is that they committed themselves to substantial expenditure with a view to taking over the Club, but that their expenditure was wasted as a consequence of their failure to comply with their obligations.
The Claimants also make various claims arising out of Mr Metliss's involvement in three different disputes involving the press.
The present proceedings were issued shortly before the limitation period expired and have proceeded in a dilatory and fragmented fashion, largely due to the failings of the Claimants' solicitor, Mr Ewin of Freeth Cartwright. In particular:
a. Proceedings were commenced on 11 July 2006, right at the end of the limitation period, and service of them was then delayed until 9 November 2006, the end of the period for service;
b. The Claim Form was served on 8 th March 2007 – without the Particulars of Claim.
c. Since then there have been various interlocutory orders made against the Claimants in respect of the clarification and progression of the claim but the upshot is that nearly two and a half years since the issue of the proceedings they are still at the pleadings stage.
Mr Ewin has now been replaced by Mr Balen of Freeth Cartwright who states that Freeth Cartwright were subsequently notified that Mr Ewin was receiving medical treatment and has left the firm.
This procedural history of the case to date is regrettable and the Defendants pray it in aid in relation to the exercise of the Court's discretion in respect of the applications presently before the Court. Those applications are as follows:
a. The Claimants' application to amend their Particulars of Claim and the Claim Form; and
b. The Defendants' application to strike out parts of the Particulars of Claim.
The relevant principles
Where an application is made to amend it is necessary for the applicant to demonstrate that it is appropriate for the court to exercise its discretion to permit the amendment.
In considering the exercise of its discretion the court should have regard to the overriding objective in CPR 1 and in particular the prejudice that will be caused to the parties (a) if the amendment is allowed and (b) if it is refused.
As stated by Peter Gibson LJ in Cobbold v Greenwich LBC in a passage cited in the notes to the Supreme Court Practice at 17.3.5:
“The overriding objective [of the CPR ] is that the court should deal with cases justly. That includes, so far as practicable, ensuring that each case is dealt with not only expeditiously but also fairly. Amendments in general ought to be allowed so that the real dispute between the parties can be adjudicated upon provided that any prejudice to the other party or parties caused by the amendment can be compensated for in costs, and the public interest in the efficient administration of justice is not significantly harmed.”
Provided that there is a statement of truth verifying the amendment it is not a necessary requirement that a factual amendment be supported by evidence, and I reject the Defendants' contention to the contrary.
Where the merits of a proposed amendment are in issue it is necessary to show that it has some prospects of success. This is likely to turn on whether it has a real prospect of success, the same standard as under Part 24 – see the Notes to CPR 17.3 at 17.3.6 and the cases there referred to. If the Court concludes that an amended claim or defence has no real prospect of success no purpose would be served in allowing the amendment to be made.
Where the amendment involves the addition of a new cause of action after the expiry of the limitation period the requirements of s. 35 of the Limitation Act and CPR 17.4 must be satisfied and it is necessary to show that the new cause of action arises out of “the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings” ( CPR 17.4(2)).
Useful guidance as to whether a claim gives rise to a new cause of action and, if so, whether it arises out of the same or substantially the same facts is to be found in the decisions of the Court of Appeal in Smith v Henniker-Major [2003] Ch 182; [2002] EWCA Civ 762 and Blackburne J in Finlan v Eyton Morris Winfield [2007] EWHC 914 (Ch).
In the Henniker-Major case Robert Walker LJ explored the meaning of “a new cause of action” and held that “in identifying a new cause of action the bare minimum of essential facts abstracted from the original pleadings is to be compared with the minimum as it would be constituted under the amended pleading” [at para. 96].
By contrast, in considering whether the new cause of action arises out of “the same facts or substantially the same facts” he held that “the court is concerned on a much less abstract level with all the evidence likely to be adduced at trial: see Goode v Martin [2002] 1WLR 1828, 1838 approving Hobhouse LJ's observation in Lloyds Bank plc v Rogers The Times, 24 March 1997; Court of Appeal (Civil Division) Transcript No 1904 of 1996: 'the policy of the section is that, if factual issues are in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts” [at para. 96].
As stated by Blackburne J in the Finlan case, this means that “the court should not confine itself to a comparison of the new cause of action with the existing cause of action at the highest level of abstraction —ie, at those facts, and no more, which the claimant must prove to entitle himself to relief —but rather at the whole range of facts which are likely to be adduced at the trial even though many of them may not be essential to the establishment of the claimant's cause of action” [para. 57].
On the application to strike under CPR 3.4(2)(a) and CPR 24 the burden is on the Defendants to prove either that the statement of case discloses no reasonable grounds for bringing the claim ( CPR 3.4(2)(a)) or that there is no real prospect of succeeding on the claim or issue ( CPR 24).
CPR 3.4 (2)(a) gives rise to an examination of the pleadings on the assumption that the pleaded facts will be established. CPR 24 allows for a wider enquiry but does not always do so in practice: see Independents' Advantage Insurance Co v Cook [2003] EWCA Civ 1103 at paras. 6 to 8.
In considering such applications it is relevant to have regard to what the Court of Appeal said in Independents' Advantage Insurance Co v Cook at para. 14:
“The power of the court to strike out a statement of case under CPR 3.4(2)(a) —and the related power to give summary judgment under CPR 24.2 —has an important place in the disposal of claims in accordance with the Civil Procedural Rules. As Lord Woolf M.R. pointed out in Swain v Hillman and another [2001] 1 All E.R. 91, 94b–c, the exercise of those powers, in an appropriate case, gives effect to the overriding objective set out in CPR Part 1:
“… It saves expense; it achieves expedition;...
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