England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE LTA 96/6363/B

COURT OF APPEAL (CIVIL DIVISION)

(MR JUSTICE JACOB )

Royal Courts of Justice

The Strand

London

Thursday 14 November 1996

B e f o r e:

LORD JUSTICE AULD

and

LORD JUSTICE MUMMERY

B E T W E E N :

ROUTESTONE LIMITED Applicant/Plaintiff

- v -

(1) MINORIES FINANCE LIMITED

( Formerly Johnson Matthey Bankers Ltd )

(2) KNIGHT FRANK & RUTLEY (A firm ) Respondents/Defendants

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(Computer Aided Transcription by

Smith Bernal, 180 Fleet Street, London EC4A 2HD

Telephone 0171 831 3183

Official Shorthand Writers to the Court)

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MR STANLEY GALLAGHER (instructed by Messrs Holman, Fenwick & Willan,

London EC3) appeared on behalf of THE APPLICANT

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J U D G M E N T

(As Approved by the Court )

CROWN COPYRIGHT

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LORD JUSTICE AULD: Lord Justice Mummery will give the first judgment.

LORD JUSTICE MUMMERY: This is an application for leave to appeal, following the refusal of a single Lord Justice to grant leave. Leave is sought to appeal against a refusal by Jacob J, on the fourth day of a seven-day trial, of an application for leave to re-amend a Statement of Claim. The action had started in 1991 and related to alleged negligence in the sale of properties by receivers, acting for mortgagees, in November 1986.

The short background to the proceedings is this. The plaintiffs are Routestone Ltd, which owned the freehold reversions of 570 properties in Pimlico, known as the 'St George's Estate'. They were subject to long leases to a company called Central Estates Belgravia Ltd, part of the Berger Group of companies. The Estate was purchased in 1981 for £500,000. The properties were mortgaged. On 6 November 1985 the mortgagees, Minories Finance Ltd (formerly Johnson Matthey) appointed Messrs Bird and Holman as receivers. The mortgagees' power of sale was exercised and the properties were sold in November 1986 to Jaymont UK Ltd for £832,000. Jaymont had earlier, in July 1986, made an offer, which they subsequently withdrew, to purchase the same properties for £3.5 million.

These proceedings were brought by Routestone. The allegations relevant to this application are that there was negligence on the part of the mortgagees and their receivers in selling the properties to Jaymont at an undervalue.

The proceedings came on for trial on Monday 22 April. The application for leave to make the re-amendment was not made by counsel for Routestone until the following Monday, 29 April, the fourth day of the trial. The judge refused leave to re-amend after submissions in support of the application by counsel for the plaintiffs and having heard the defendants' objections.

In his judgment, given on 16 May, the judge dealt with the point of re-amendment briefly at page 19, where he said this:

"One of the factors which may have been taken into account by Jaymont was that the 1981 price had been £500,000. During the trial Mr Trace twice applied to amend the pleadings to allege that Jaymont only found this out through the negligence of one of the defendants. I refused to allow the amendment. It was not simply that it was outrageously late, but that it would have been very unfair. The defendants would surely have wanted to go into this issue further -- for instance by obtaining from Jaymont directly the very evidence which I excluded as hearsay. In any event it is not shown that the £3.5m offer was ever intended to be serious, even though it was got up as such for Mr Kilduff."

The amendment alleged that on 17 July 1986 -- that is after the date when Jaymont had made the initial offer to purchase the St George's Estate for £3.5 million -- the bank, via Mr Bird (one of the receivers), or someone in his office, had disclosed to Jaymont the purchase price of £500,000 paid by Routestone for the St George's Estate in 1981. It was sought to introduce this allegation in support of an argument that it was negligent on the part of the bank or its agents to tip off a prospective purchaser by disclosing the purchase price paid by the mortgagor.

Mr Gallagher, who has only recently been instructed in this matter and was not one of the counsel involved in the trial of this action before Jacob J, rightly accepts that the proposed amendment would have greatly changed the face of the proceedings brought by Routestone. The case pleaded was that there was negligent marketing of the property. He pointed out that the reason for the lateness of the amendment was that the disclosure of the purchase price had only come to the notice of the advisers of Routestone on receipt of a witness statement by Mr Champers which disclosed certain documents and facts. That was not served until 16 April 1996, six days before the start of the trial. Mr Gallagher went on to submit that the judge had not correctly understood the significance of this evidence. He has taken us to the transcript of the fourth day of the trial which, between pages 106 and 116, sets out the arguments advanced by counsel in relation to the application and the judge's questions and comments. The first point made by Mr Gallagher was that the judge appeared to be under the impression that the purchase price paid by Routestone in 1981 could have been discovered by Jaymont from the Land Registry entry.

The further point made by Mr Gallagher is that the judge had given as a reason in his judgment for disallowing the amendment that it had not been shown that the £3.5 million offer by Jaymont, which had been withdrawn, had ever intended to be a serious offer. Mr Gallagher accepted, as he had to, that this was a late application, but pointed out that it appeared from instructions given to him -- and this was supported by some part of the documents -- that there had been informal notice of an intended application to amend between counsel at the start of the trial.

That is a summary of the main points made by Mr Gallagher in support of this application for leave. He has, in his excellent skeleton argument, filled in the factual background in more detail than is necessary to repeat. He has correctly set out the principles that govern the discretion of the court in dealing with an application to amend and the principles which govern appeals to this court against the exercise of such a discretion. We can only interfere with the exercise of this discretion if it can be shown that it was wrong in principle for the judge to refuse this amendment or that the exercise of his discretion was plainly wrong and that he took into account irrelevant matters or left out of account relevant matters. We have to look at what was said on each side about the application and what was said by the judge in his judgment on the application. It is clear that the two reasons why the judge rejected this application were legally sound. First, it was "outrageously late". It was made halfway through the trial when evidence had been heard, substantial costs had been incurred, and the nature of the amendment was such that it was inevitable that, if it were granted, the trial would have to be adjourned in order to allow the defendants to consider the amendment, to make further enquiries about those matters and to obtain more evidence. Secondly, the judge said that it would have been "very unfair". The considerations which I have just mentioned only have to be stated to see how unfair it would be at such a late stage to allow this amendment.

There were other matters advanced by the defendants in argument in objection to the re-amendment: that this was not a particular of negligence at all; that there was no evidence available to support it in the form of a witness statement or a notice under the Civil Evidence Act. Taking all those matters into account, and concentrating on the reasons given by the judge for refusing the amendment, I am unable to agree that this appeal is reasonably arguable. It may be that another judge would have granted the amendment, but that is not the point. Was it plainly wrong for this judge to refuse, on the fourth day of a substantial trial, an amendment to plead a new aspect of the case? I am unable to say that it is reasonably arguably that he was wrong. I would therefore, like the single judge, refuse leave to appeal.

LORD JUSTICE AULD: I agree. The application is therefore refused.

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