England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE CCRTF 95/1844/C

(HIS HONOUR JUDGE SIMPSON )

Royal Courts of Justice

Strand

London WC2

Wednesday 2nd October 1995

B e f o r e:

LORD JUSTICE STAUGHTON

LORD JUSTICE SWINTON THOMAS

LORD JUSTICE JUDGE

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PRUDENCE MAUTHOOR

Appellant

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THF DELAP & ASSOCIATES LIMITED

Respondent

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(Computer Aided Transcript of the Palantype Notes of

Smith Bernal Reporting Limited, 180 Fleet Street,

London EC4A 2HD

Tel: 0171 831 3183

Official Shorthand Writers to the Court)

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MR PETER LEIGHTON (Instructed by Messrs Silvers EC1M 4RH) appeared on behalf of the Appellant

MR T GUPTA (Instructed by Messrs Bates Wells and Braithwaite EC1M 6HA) appeared on behalf of the Respondent

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J U D G M E N T

(As approved )

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©Crown Copyright

Wednesday, 2nd October, 1996

JUDGMENT

LORD JUSTICE STAUGHTON: Mrs Mauthoor, the defendant, together with a Mr Delap and a Mr Patel or the companies which any of the three of them owned, had shares in a company called Forvus Forecasting Limited.

On 23rd September 1992 there was, on any view, an agreement as to some of those shares. On that date Mrs Mauthoor made out a cheque in favour of the plaintiff company, THF Delap & Associates Limited; the cheque was for £7000. It was presented on 19th October 1992, and dishonoured with the remark that payment had been countermanded. The Delap company thereupon started an action in the Queen's Bench Division against Mrs Mauthoor on 17th October 1992. They claimed the £7000 as money due for dishonour of the cheque.

The defence initially filed on behalf of Mrs Mauthoor said that there had been a total failure of consideration. The way it was put was that there had been an agreement between

Mr Delap, Mr Patel and Mrs Mauthoor, that in consideration of the cheque the Delap Associates would transfer all their shares in the Forvus Forecasting Company to Mrs Mauthoor; and it was said that contrary to the terms of that agreement the Delap company was not a shareholder in the Forvus Forecasting Company, and no shares had been transferred. It is open to question, as Lord Justice Judge raised in the course of the argument, whether that is still part of Mrs Mauthoor's case -- but we need not enter upon that because it is overtaken by later events.

On the night before the trial on 24th October 1995 before Judge Simpson in the Mayor's and City of London Court, notice was given of an application for leave to amend the defence and the application was indeed made the following day before the judge. The amendment sought to add a plea of economic duress. The way that it was put was as follows:

"...the defendant drew the cheque in favour of the Plaintiff by reason of duress which was exerted upon her by Tim Delap and Upi Patel in that the said Patel unlawfully threatened to withdraw from the agreement to sell his shares to the Defendant and to sell them to another company called SGI a software supplier with whom Forvus Forecasting Limited was then in dispute who would then vote with the said Tim Delap to wind up Forvus Forecasting Limited. At that time the Plaintiff was indebted to Forvus Forecasting Limited to an extent which was not then known by the Defendant until the accounts of the company had been inspected by the company's auditor."

Paragraph 6:

"The said Delap and the said Patel pursuant to their unlawful threat insisted that the Defendant write a cheque in favour of the Plaintiff forthwith and the Defendant gave the cheque to the Plaintiff under duress in the fear that the said Patel would withdraw from the said agreement and that he and the said Delap would ensure that the company which was the Defendant's sole source of income and livelihood would be wound down."

So, what Mrs Mauthoor was seeking to say there was that on 23rd September there had been an agreement at any rate that

Mr Patel would transfer his share or shares to her. After that agreement was made, but on the same day, there was a threat that it would not be performed unless Mrs Mauthoor gave a cheque for £7000 to the Delap company. This was, it is said, an unlawful threat because it was a threat to break a contract which had only been made minutes or hours before. The judge refused leave to amend the defence. I will come to the reasons for his decision later; that was on 24th October.

On 1st November 1995, having tried the case on the issues in the unamended pleadings, Judge Simpson gave judgment for the plaintiffs for the amount claimed, that is to say £7000.

Mrs Mauthoor's advisors then launched an appeal which appears, in point of form, to have been an appeal against the judgment at the end of the trial. What they were really complaining about was the judge's order at the start of the trial that there should not be leave to amend. One might have thought that in consequence this was an interlocutory appeal and needed leave which the judge refused, and that it is also out of time because time would run from when leave to appeal was refused. But it has been held that such an appeal does not need leave. If leave to amend is refused in the course of a trial it is therefore easier ti wait until judgment and appeal then, instead of applying for leave to appeal forthwith, which is odd.

No grounds have been advanced for criticising the judge's decision at the end of the trial apart from his refusal to allow leave to appeal at the beginning. Now, as I have said, the question of duress was not raised at all in the defence as originally filed, quite a different point was taken. That is the first ground that gives one cause for thought as to whether the pleadings should be allowed to be amended later. This was not a mere technical amendment or correction of some minor point, it was raising a new issue entirely and as the judge said, 'a serious charge'. Not perhaps a charge of fraud but one that is seriously critical of Mr Delap -- the moving spirit of the plaintiff company. Secondly, it was not a point raised by

Mrs Mauthoor's solicitors at the time, they again took some different point. Thirdly, it is the fact that as a result of the agreement which was certainly made on 23rd September -- although the parties differ as to its content -- Mr Delap gave a cheque for £1500 in favour of the Forvus company. Apparently that had been part of the agreement, and it is said that that was an affirmation of the agreement. All told, it seems to me, that whether Mrs Mauthoor could succeed on a plea of economic duress is, on the facts, extremely doubtful.

I do not enter into the law, We have been referred to passages in Chitty on Contracts, paragraph 7-002, 7-007 and 7-008. Even if the law be as Mr Leighton contends, it seems to me that a plea of economic duress in this case would be speculative in the extreme.

Now I turn to the practice as to allowing amendments to pleadings. The first rule is that it is in the discretion of the judge to allow or refuse an amendment. The second rule is that the discretion is not entirely unconfined; of course there are well established principals. The one that is most important and perhaps best known to all practitioners is that set out at page 359 of the Supreme Court Practice, in a quotation from Bowen LJ in Cropper v. Smith (1883) 26 Ch D 700, page 710:

"Now, it is a well established principle that the object of Courts is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding otherwise than in accordance with their rights. Speaking for myself, and in conformity with what I have heard laid down by the other division of the Court of Appeal and by myself as a member of it, I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or of grace. Order XXVII. rule 1, of the Rules of 1883, which follows previous legislation on the subject, says that, 'All such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy between the parties.' It seems to me that as soon as it appears that the way in which a party has framed his case will not lead to a decision of the real matter in controversy, it is as much a matter of right on his part to have it corrected, if it can be done without injustice, as anything else in the case is a matter of right."

So, if Judge Simpson had refused leave to amend because

Mrs Mauthoor or her advisors had not complied with the rules and he felt they ought to be punished for it, that would have been entirely wrong. Courts do not exist for the purpose of disciplining the legal profession, but to decide the rights of the parties. However, Bowen LJ did add the proviso that it could be done without injustice.

There is a recent and very important decision which enlarges upon that. It is in the speech of Lord Griffiths in Ketteman v. Hansel Properties Ltd [1987] AC 189, page 220:

"Whether an amendment should be ganted is a matter for the discretion of the trial judge and he should be guided in the exercise of the discretion by his assessment of where justice lays. Many and diverse factors will bear upon the exercise of this discretion. I do not think it possible to enumerate them all or wise to attempt to do so. But justice cannot always be measured in terms of money and in my view a judge is entitled to weigh in the balance the strain the litigation imposes on litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes, and the legitimate expectation that the trial will determine the issues one way or the other. Furthermore to allow an amendment before a trial begins is quite different from allowing it at the end of the trial to give an apparently unsuccessful defendant an opportunity to renew the fight on an entirely different defence."

It could be said that the plaintiff company in this case is not an individual person and therefore not subject to the stresses and strains which Lord Griffiths referred to. But

Mr Leighton realistically accepts that Mr Delap is the person who has an interest in this litigation and he would come within Lord Griffiths's description. What Mr Leighton does say is that this case is different because the amendment was applied for at the beginning of the trial rather than after all the evidence had been heard. That is true and as Lord Griffiths indicates that is a distinction, but what we have to consider is whether it is a relevant distinction in this case. One of the matters which we ought to take into account, in my view, is that the trial in this case had been fixed for three earlier occasions in 1995: one in January; the next in May and the third in July. On each occasion the defendant had, in person, applied for an adjournment and on each occasion it was granted. In May the judge had made a final order and in July he made another final order. So there had been a good deal of disappointment already for Mr Delap and one might say a lack of efficient progress by or on behalf of Mrs Mauthoor. She was not legally aided and not represented at that time.

Against that it is said that this proposed amendment was foreshadowed in October 1994 when a witness statement of

Mrs Mauthoor was served on the plaintiff's solicitors. There is a suggestion in it that she was compelled to agree to handing over the cheque. It is open to question whether in truth the witness statement could be said to foreshadow a defence of economic duress. But, even if it did, it does not seem to me that the case for amendment was much better in October 1994 than it was when the application was finally made in October 1995.

At the end of the day one has to ask whether justice required this amendment to be allowed, or more accurately (since we would be interfering with the judge's discretion) whether it is plain that he was wrong in concluding that justice did not require it.

Let us pause for a moment and consider an officious bystander saying to Mr Delap on 27th October 1992 when he issued his writ: "You have here a claim for £7000, not very much money at the rate that lawyers charge. You will very soon have spent that. You must realise that in three years time when you have already incurred a great deal of costs in the belief that Mrs Mauthoor's only defence is a failure of consideration, which you know to be unfounded, she may at the last moment get leave to raise an entirely new defence." What would Mr Delap have said to the officious bystander in that event? First he would say, "I do not believe it." Secondly he would say, "That is not justice." Thirdly he would say, "I will abandon my £7000 and have nothing more to do with the courts."

To my mind that result would not be justice for the reasons which Lord Griffiths indicated in the Ketteman case. Alternatively, one can say beyond a shadow of a doubt that it was in the discretion of the judge in this case to refuse leave to amend. I would accordingly dismiss this appeal.

SWINTON THOMAS LJ: Actions are conducted on the pleadings. When this action came before Simpson HHJ there was no plea of duress in the defence. In the absence of any pleading I would not, for my part, think that the plaintiffs could be expected to foresee that such a defence would be raised. It does not, of course, necessarily follow that an application to amend should be refused. The application has to be seen in its context. The cheque, the subject matter of the action, was drawn on 23rd September 1992 and was stopped on 25th September. So, 3 years have elapsed by the time the case came before Simpson HHJ; at that time there was no allegation of duress in the pleading.

As my Lord has just said, the trial was fixed to be heard on 4th January 1995 and was adjourned. It was fixed again on 10th of May 1995 and adjourned, the judge ordering that that should be a final order. Again, on 13th July it was adjourned, again it was a final order.

Mr Leighton concedes that if the judge had allowed his proposed amendment that would have resulted in a yet further adjournment. In my view that would be very unjust of the plaintiffs. A judge has to weigh all the factors when he comes to exercise his discretion.

I agree with Lord Justice Staughton that the defendant would have had very great difficulty on the basis of her statements in establishing the economic duress in this case. In my judgment it has not been shown that the judge erred in the exercise of his discretion. I agree with everything that has been said by Lord Justice Staughton and I too would dismiss this appeal.

JUDGE LJ: I agree with both judgments.

ORDER: Appeal dismissed with costs.

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