England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
(MOORE-BICK J)

		Royal Courts of Justice The Strand London
		2 December 1998

LORD JUSTICE WALLER:

On 25th November 1998 we dismissed the plaintiffs' application for leave to appeal. This is the judgment of the court giving our reasons.

Introduction

This is an application for leave to appeal three orders made by Moore-Bick J. The first order was made on 12th November, and the second and third on 17th November 1998. Those dates were the fourth and sixth days of a trial in the Commercial Court which had been fixed to start and did start on 9th November 1998. The time estimate for the trial had been 20 days when it was fixed, and the estimate by the commencement was 24 days.

By the first order the judge refused the plaintiffs leave to amend the re-amended points of claim. By the second he refused leave to deliver certain voluntary particulars expanding the basis on which the plaintiffs sought to put their quantum meruit case; and by the third order he refused leave to amend the re-amended points of claim on an application which differed only in minor respects from that the subject of his first order.

The proceedings

The proceedings arose out of attempts to secure trade with Iraq in the realisation that (subject to limited exceptions and only then with the appropriate permissions) while sanctions against Iraq persisted no concluded trading contracts could be made. The action commenced on 26th January 1996 at which stage the plaintiffs were advised by experienced leading and junior counsel as to the formulation of their claim. [Those counsel it should be said were not Mr Brodie QC nor Miss Gallafent who were only instructed shortly before the trial commenced]. The points of claim as originally served pleaded the following claim as we will try and summarise it. It was asserted that the plaintiffs were appointed agents by a letter dated 3rd November 1992, in relation to negotiations between the defendants and ITP (the Ministry of Transport and Communications - Iraqi Telecommunications and Post, a department of the Government of the Republic of Iraq). Those negotiations related to the supply of telecommunications systems and equipment in two phases, the more immediate being humanitarian and the longer term being the supply of equipment and services for a ten year network expansion. It was alleged that the plaintiffs were appointed as agents to negotiate with ITP (the agency appointment) and as countertrade agents to negotiate the countertrade required to finance the supplies negotiated under the agency appointment. The following were alleged as express terms of the agreement:

1. that the plaintiffs would be paid 10% of actual receipts of the second defendant pursuant to any contracts that might be executed during the term of the agency appointment;

2. that the plaintiffs and the second defendants would execute an agreement substantially in a form already agreed for the Ukraine in relation to the agency appointment;

3. that the plaintiffs would receive 10% of the actual receipts of the second defendants pursuant to contracts financed by the countertrade agreements;

4. that the terms of the countertrade appointment would be reduced to writing; and

5. that the period of the agreements would be the period of what was called the "framework agreement", i.e. the agreement expected to be negotiated between the second defendants and ITP once the parties were free to conclude the same as a result of the lifting of sanctions.

The points of claim then alleged that the plaintiffs had made certain efforts to broke the agreements between the defendants and ITP (without any specific averment as to the time period), but alleged that the defendants had repudiated the above agreements by signing an agreement with another agent in February 1995. That repudiation it is alleged the plaintiffs had accepted. Damages were claimed for the loss of opportunity to earn fees under the agency and countertrade appointments. The matter was put that way because of course there had been no lifting of sanctions and thus although certain memoranda of understanding had been signed between ITP and the defendants, no contracts of any kind had been signed between those two.

On the basis of the above case the plaintiffs applied for Order 14 judgment. Their application was dismissed by Rix J, but it follows that it must have been sworn that the plaintiffs believed that the above represented accurately their case, and that there was no defence to that case.

Resulting from something said by Rix J during the currency of the Order 14 hearing, so we were told by Mr Brodie QC for the plaintiffs, on 9th May 1996 the plaintiffs served an amended points of claim claiming in the alternative to their contract claim a quantum meruit. That claim was made on the basis that the plaintiffs were entitled to receive a reasonable sum for services rendered at the request of the defendants. Further and Better Particulars of that claim were ultimately delivered on 23rd December 1997 quantifying the claim at £5,462,658.42, (£2,892,818.42 on account of expenditure and £2,569,840 as a reasonable consultancy fee). The defendants pressed immediately, and have, it would seem, continued to press, for the production of underlying documents to support this claim.

The claim for a quantum meruit was expanded by an amendment made on 21st January 1998, that amendment being made in conjunction with an amendment to the contract claim. By new paragraphs 6A and 6B of what for convenience we will call the original points of claim, the plaintiffs alleged that following a letter written by their solicitors on 6th November 1992 which expressed an understanding that the 3rd November 1992 letter was intended to be a confirmation of an agreed contractual obligation, and to which the defendants did not reply, all parties conducted themselves on the basis of an underlying assumption that the 3rd November letter gave rise to an immediately binding and continuing obligation on the part of all parties upon the terms pleaded at that stage in the points of claim. The quantum meruit claim was at the same time expanded to claim in the alternative the expenditure, particulars of which by that stage had been given, on the grounds either (a) that it was wasted or futile by virtue of the defendants' repudiation, or in the further alternative (b) on the basis that if the defendants did not share the underlying assumption pleaded in paragraph 6B, then the plaintiffs had rendered the services by mistakenly assuming that they did.

On 22nd January 1998 on the summons for directions, detailed orders were made in relation to exchange of witness statements and expert reports so as to enable the case to be ready for trial for the first available date after 1st November 1998, the time estimate being 20 days. The direction on experts' reports for example gave the plaintiffs leave to serve an expert's report as to damages and quantum meruit not later than 30th June 1998, the defendants to have leave to serve one in reply not later than 31st July, with a further direction for the experts to meet between 1st September and 15th September 1998 to identify where they agreed and disagreed with supplementary reports to follow by 21st September 1998. There was also ordered a pre-trial review to take place in the week commencing 1st October 1998, and the parties were directed to lodge a signed pre-trial check list in standard form in accordance with the Commercial Court Guide on or before 21st September 1998. The 9th November 1998 was ultimately fixed as the date for trial.

The plaintiffs' check list duly served in September 1998 included in answer to the questions "Do you intend to amend your pleadings?; If so, when"?-- "Yes. Leading Counsel recently instructed expects to advise amendments to Plaintiff's pleadings which are likely to be ready by 16 October. These amendments are not expected to be as to substance".

The Commercial Court Guide further provides that the counsel who is to represent the parties at the trial should attend the pre-trial review to enable an informed discussion to take place (see rule 17.4 of the Guide). On this occasion the counsel on that review did not include Mr Brodie, and although in addition to the question of security for costs which clearly was a matter of substance, further detailed directions were given so as to ensure the bringing of the case to trial on 9th November without problems, there is no reference in those directions to amendment of the points of claim. The impression with which the court and the defendants must have been left was that no amendment of substance was to be forthcoming, and the trial would commence on 9th November 1998 without further complication.

In fact there was delivered to leading counsel for the defendants, and only on 27th October 1998, a document that on its face appeared to show that an application would be made for leave to abandon large parts of the previously pleaded case and insert a different case. The case sought to be abandoned was that which was the subject of the original points of claim on which the Order 14 summons had been issued. What was not sought to be abandoned or amended in any way was a claim that if no binding agreement was reached the plaintiffs had a claim for a quantum meruit. Furthermore, there was no suggested amendment to that part of the case at all save that the plea relating to any misconceived underlying assumption as to the existence of a contract now related to the terms of the contract as it was now sought to allege them to be.

It was not suggested that the cause of the proposed amendment was the discovery of some fact previously unknown or some change in the law as it had previously been thought to be, but simply that leading counsel to whom a brief had recently been delivered felt that part of the case as previously pleaded would fail, and that he felt that the case as sought to be put by amendment was the only arguable basis on which it could be put.

Much time was expended before us and before the judge explaining that the proposed amendment did not produce such a radical alteration to the plaintiffs' case as might at first sight appear; indeed Mr Brodie suggested that all in essence the plaintiffs were doing was accepting the case on the 3rd November letter pleaded by the defendants which should thus cause them no difficulty. The problem is that a wholesale abandonment of a previously pleaded case does lead one to start from the position that a radical alteration is intended. In the proposed amendment it is true that it is still the letter of 3rd November 1992 which is relied on. The points of difference in the proposed amendments as compared with what was previously pleaded seem to be as follows:-

1. The plaintiffs are asserted to have been appointed as advisers as opposed to agents.

2. As advisers they are alleged to have certain functions including promoting the defendants' interests in Iraq, and participating in negotiations which would appear to be rather similar to those which an agent would have been expected to fulfil.

3. In contrast to it being alleged that the plaintiffs were already appointed as agents entitled to receive 10% of the proceeds, and 10% of actual receipts under contracts financed by a countertrade, such arrangements to be formalised in written agreements, the obligation imposed on the defendants is alleged to be that it was in the future to enter into the representative agreement entitling the plaintiffs to 10% and a countertrade agreement that would entitle the plaintiffs to receive a further 10% of proceeds received under contracts thereby financed, the duration of which agreements was to be the term of the "framework agreement", i.e. that expected to be signed as between the defendants and ITP.

4. It is alleged that there were implied terms (a) as to exclusivity and (b) "that pending lifting of the sanctions or authorisation by the United Nations thereunder neither the plaintiffs nor the first and/or second defendants could terminate the adviser agreement without reasonable cause and reasonable notice".

5 It is now alleged by just altering the numbering somewhat, that following the letter from the plaintiffs' lawyer on behalf of the plaintiffs dated 6th November 1992, all parties acted on the assumption that the 3rd November letter gave rise to an immediately binding and continuing contractual obligation on the terms as now pleaded.

6. It is alleged that the plaintiffs then performed certain tasks as advisers most of which had been previously relied on. There is a new allegation in paragraph 14.2.1.4 that the Memorandum of Understanding between ITP and the defendants was sufficiently detailed to give rise to a fully binding contract once sanctions were lifted, and a new plea in paragraph 14.1 that a series of meetings were organised.

It is right to recognise what is the underlying difficulty with the plaintiffs' case on the 3rd November letter however it is pleaded (and we are not referring at this stage to the quantum meruit claim at all). The plaintiffs appreciate that they cannot establish an actual entitlement to any money unless (a) the framework agreement has been entered into, and (b) they can establish a contractual right to receive a percentage of the receipts. Since sanctions have never been lifted they are not in a position to establish (a). What accordingly they seek to do is to establish a continuing contractual relationship still in existence in 1995 under which the defendants would be bound if sanctions were lifted to recompense the plaintiffs and which they allege the defendants have repudiated and which repudiation they have accepted. This they assert gives rise to a damages claim for lost opportunity. The question at any trial would accordingly be: was there ever in being a binding contractual relationship under which the plaintiffs were legally bound to pay recompense to the plaintiffs, and if there was, was there still in being such a contractual relationship at the time when on the plaintiffs' case the defendants repudiated the same? As first pleaded the claim was comprehensible, if difficult, in that the allegation was that the plaintiffs had been appointed on terms that they would be entitled to a percentage of receipts if a contract between ITP and the defendants was signed. In that context the question would arise as to whether if there was a binding agreement it was terminable in any way by notice or by virtue of the fact that no agreement between ITP and the defendants had been signed within a certain period. But as pleaded in the amendment, albeit a similar question might arise as to the terminability of the agreement on notice, a more extensive and different investigation would almost certainly have to take place as to what happened during the period 1993 through to 1995 in order to establish whether whatever agreement (if any) had been reached in November 1992 still existed in 1995. Had the agreement lapsed through effluxion of time? Had circumstances changed to an extent which frustrated the agreement? Was the agreement only terminable for reasonable cause? If so, did the defendants have reasonable cause and did they terminate the agreement at a time when such reasonable cause existed? Did the defendants give reasonable notice, the reasonableness of that notice to be judged by reference to the terms as now pleaded and not the previous terms?

The suggestion that the plaintiffs in their amendment were simply adopting the position that the defendants themselves had taken up in their defence is demonstrably inaccurate. The defendants time and again in their defence deny the existence of any binding obligation at all and indeed deny that the plaintiffs were ever appointed as advisers (see Re-Amended Points of Defence para 6(4)(ii) and (iii); para 12(2)(i) and (ii); and para 13(5)(i)(a)). As an alternative case it is true that one can, as Mr Brodie suggested, spell out suggested constructions of the 3rd November letter which equate more nearly with the way that the plaintiffs would seek to amend their claim, but far from assisting the plaintiffs it seems to us that it makes their position just as difficult. First, any alternative construction put forward did not, it should be stressed, contain any of the implied terms now sought to be alleged, and thus the investigations that would have to be done to meet that case would still need to be carried out. Second, if there were any merit in the suggestion that the idea for amendment came from the defence, then the plaintiffs had been put on notice of that suggestion many months before the trial.

Mr Brodie submitted that the question of reasonable notice was already an issue. It is true that the defendants were pleading that the contract (if any) as alleged in the original pleading was determinable on reasonable notice, but where a different contract is alleged what is reasonable notice and in what circumstances it can be determined become quite different questions. The assertion that whatever was agreed was terminable only on reasonable cause never appeared in the case prior to the proposed amendment, and leads to quite different investigations on the facts as already indicated.

There are also now alleged terms as to the functions of an adviser (said to be express but in reality implied) and further implied terms pleaded to which evidence of the factual matrix might well be admissible in respect of the necessity or otherwise of such terms. Mr Brodie submits that the defendants always appreciated that the factual matrix was important and took us to the defendants' skeleton on the Order 14 proceedings. But the defendants, having obtained statements from their witnesses on the previously pleaded basis, would need to examine what changes would be needed to meet the new case.

There is no doubt that the amended pleading presented a very different case to the defendants and those advising the defendants. Furthermore it can hardly have come as a surprise to those advising the plaintiffs that a late amendment which completely reformulates the claim would be resisted. Equally when a case has been prepared with witness statements and experts' reports on one way of putting the case, it is harsh to criticise advisers of the defendants for asserting that they would need some period in which to examine the extent to which the amendments affected them and their witnesses. The periods laid down for production of witness statements and experts' reports are there so that they can be served on the other side in good time and so that the conduct of a trial can be as expeditious as possible. Forcing a party to look again at those statements and the experts' reports at the same time as conducting the trial is not fair or conducive to the efficient conduct of the trial.

Mr Brodie's submission before the judge, and before us, was to the effect that it was almost as a matter of right that an amendment should be allowed at almost any time provided the other party could be compensated in costs, and he referred us to the notes in the Supreme Court Practice 1999 20/8/6 and the familiar dicta there quoted, particularly that of Bowen L.J. in Cropper v Smith (1884) 26 ChD 700 at 710-711 where he said:-

"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 .... 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 grace.... 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."

We are doubtful whether even applying the principle stated by Bowen LJ, the matter is as straightforward as Mr Brodie would seek to persuade us. But, in addition, in previous eras it was more readily assumed that if the amending party paid his opponent the costs of an adjournment that was sufficient compensation to that opponent. In the modern era it is more readily recognised that in truth the payment of the costs of an adjournment may well not adequately compensate someone who is desirous of being rid of a piece of litigation which has been hanging over his head for some time, and may not adequately compensate him for being totally (and we are afraid there are no better words for it) "mucked around" at the last moment. Furthermore, the courts are now much more conscious that in assessing the justice of a particular case the disruption caused to other litigants by last minute adjournments and last minute applications have also to be brought into the scales.

Take this very case. By attempting to make a last minute amendment a trial has had to be interrupted by argument over some days, the challenge to the judge's order has had to be dealt with by the Court of Appeal as a matter of urgency with serious disruption to its list and other litigants, and if the amendment was allowed there would have to be a further delay in the trial coming on and/or a last minute lengthening of the trial which may cause serious inconvenience in the Commercial Court and thus to other litigants.

The appreciation of the injustice to other litigants and the damage to parties in trials being delayed which cannot adequately be compensated by an order for costs has led the court to a more interventionist approach in the management of trials, and has furthermore led to appellate courts being very reluctant to interfere with decisions of judges who with all those interests in mind have taken decisions at interlocutory stages. Mr Brodie referred us to the judgment of Millett LJ in Gale v Superdrug Stores Plc [1996] 1 WLR 1089 at 1098E where he said this:-

"Litigation is slow, cumbersome, beset by technicalities, and expensive. From time to time laudable attempts are made to simplify it, speed it up and make it less expensive. Such endeavours are once again in fashion. But the process is a difficult one which is often frustrated by the overriding need to ensure that justice is not sacrificed. It is easy to dispense injustice quickly and cheaply, but it is better to do justice even if it takes a little longer and costs a little more.

The administration of justice is a human activity, and accordingly cannot be made immune from error. When a litigant or his adviser makes a mistake, justice requires that he be allowed to put it right even if this causes delay and expense, provided that it can be done without injustice to the other party. The rules provide for misjoinder and non-joinder of parties and for amendment of the pleadings so that mistakes in the formulation of the issues can be corrected. If the mistake is corrected early in the course of the litigation, little harm may be done; the later it is corrected, the greater the delay and the amount of costs which will be wasted. If it is corrected very late, the other party may suffer irremediable prejudice.

The general principles which govern the court's approach to an application to amend the pleadings is to be found in the well known and often cited passage in the judgment of Bowen L.J. in Cropper v Smith (1884) 26 ChD 700, 710-711, with which A.L. Smith L.J. expressed his "emphatic agreement" in Shoe Machinery Co. V Cutlan [1896] 1 Ch. 10, 112."

He then quoted the passage already set out above and continued

"There are numerous other authorities to the same effect. In Clarapede & Co. v Commercial Union Association (1883) 32 W.R. 262, 263 Sir Baliol Brett M.R. said:

"however negligent or careless may have been the first omission, and, however late the proposed amendment, the amendment should be allowed if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs; ..."

I do not believe that these principles can be brushed aside on the ground that they were laid down a century ago or that they fail to recognise the exigencies of the modern civil justice system. On the contrary, I believe that they represent a fundamental assessment of the functions of a court of justice which has a universal and timeless validity."

In the same case Thorpe LJ at 1101E said to rather different effect:-

"Authority as to the practice in the High Court more than a century ago cannot recognise the demands and exigencies of the civil justice system as it is today."

We share Millett LJ's concern that justice must not be sacrificed, but we believe his view does not give sufficient regard to the fact that the courts are concerned to do justice to all litigants, and that it may be necessary to take decisions vis a vis one litigant who may, despite all the opportunity he or his advisers have had to plead his case properly, feel some sense of personal injustice, for the sake of doing justice both to his opponent and to other litigants.

The views of Lord Griffiths in Ketteman v Hansel Properties [1987] AC 189 at 220 A-H are pertinent. He said:-

"Mr. Ogden submitted that the authorities obliged a judge to allow an amendment no matter how late it was made nor for what reason provided the other party could be properly compensated by an award of costs. He relied upon the authorities set out in The Supreme Court Practice and in particular the decision of Brett M.R. in Clarapede & Co v Commercial Union Association, 32 W.R. 262, 263":

Lord Griffiths then set out the passage we have already cited. He continued:

"This was not a case in which an application had been made to amend during the final speeches and the court was not considering the special nature of a limitation defence. Furthermore, whatever may have been the rule of conduct a hundred years ago, today it is not the practice invariably to allow a defence which is wholly different from that pleaded to be raised by amendment at the end of the trial even on terms that an adjournment is granted and that the defendant pays all the costs thrown away. There is a clear difference between allowing amendments to clarify the issues in dispute and those that permit a distinct defence to be raised for the first time.

Whether an amendment should be granted 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 lies. 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.

Another factor that a judge must weigh in the balance is the pressure on the courts caused by the great increase in litigation and the consequent necessity that, in the interests of the whole community, legal business should be conducted efficiently. We can no longer afford to show the same indulgence towards the negligent conduct of litigation as was perhaps possible in a more leisured age. There will be cases in which justice will be better served by allowing the consequences of the negligence of the lawyers to fall upon their own heads rather than by allowing an amendment at a very late stage of the proceedings."

We recognise that there is the factual difference that the amendment was sought to be made at a later stage than in the present case, but the factors referred to by Lord Griffiths are relevant to the present case.

In MGN Pension Trustees Limited v Invesco Asset Management Ltd & others Lexis 20th December 1993 the Court of Appeal refused leave to appeal from a decision refusing the amendment of pleadings by the judge who was to be in charge of a long trial. Henry LJ said this:-

"In a case such as this the trial judge's task is not only judicial but also managerial. The managerial responsibility is considerable, with the overall costs budget in millions. Consequently, that function is very important in an age where litigation of all sorts at every level is too expensive because unnecessarily long. So judges are not only entitled but encouraged to be pro-active in their trial management and interlocutory appeals are consequently discouraged.

I take as the principles to be applied three short citations from their Lordships in the case of Ashmore v Corporation of Lloyds [1992] 1 WLR 446, [1992] 2 Lloyd's Rep 1. That involved their Lordships considering an interlocutory appeal in litigation roughly comparable in scale to this. First, from Lord Roskill at page 448:

".... in any trial court it is the trial judge who has control of the proceedings. It is part of his duty to identify the crucial issues and to see they are tried as expeditiously and as inexpensively as possible. It is the duty of the advisers of the parties to assist the trial judge in carrying out his duty. Litigants are not entitled to the uncontrolled use of a trial judge's time. Other litigants await their turn. Litigants are only entitled to so much of the trial judge's time as is necessary for the proper determination of the relevant issues."

At page 453 Lord Templeman said:-

"The parties and particularly their legal advisers in any litigation are under a duty to cooperate with the court by chronological, brief and consistent pleadings which define the issues and leave the judge to draw his own conclusions about the merits when he hears the case."

Then his Lordship went on to deal with the over elaboration, and I need not read that passage. He then says:

"In Banque Keyser Ullman S.A. v Skandia (U.K.) Insurance Co. Ltd. [1991] 2 A.C. 249, 280, I warned against proceedings in which all or some of the litigants indulge in over-elaboration causing difficulties to judges at all levels in the achievement of a just result. I also said that the appellate court should be reluctant to entertain complaints about a judge who controls the conduct of proceedings and limits the time and scope of evidence and argument. So too, where a judge, for reasons which are not plainly wrong makes an interlocutory decision or makes a decision in the course of a trial the decision should be respected by the parties and if not respected should be upheld by an appellate court unless the judge was plainly wrong."

In that passage his Lordship was re-phrasing an earlier passage at page 451 when he said:

"In my opinion, when a judge alive to the possible consequences, decides that a particular course should be followed in the conduct of the trial in the interests of justice, his decision should be respected by the parties and upheld by an appellate court unless there are very good grounds for thinking that the judge was plainly wrong."

The judge here had two points concerning the amendment of pleadings. Of course, the judge knows what the pleadings are for; they are to assist in the economical, expeditious and properly focused delivery of justice. It is clear from what he said that the judge thinks the pleadings are already longer than is necessary for that purpose. It seems to me he is the best judge of that."

There is no indication that either Ketteman, MGN Pensions or Ashmore was cited in Gale.

What was referred to in Gale was the Practice Direction (Civil Litigation: Case Management) issued on 24th January 1995 by the previous Lord Chief Justice and Sir Richard Scott V-C. reported at [1995] 1 W.L.R. 508. By paragraph 1 that direction states:-

"The paramount importance of reducing the cost and delay of civil litigation makes it necessary for judges sitting at first instance to assert greater control over the preparation for and conduct of hearings than has hitherto been customary. Failure by practitioners to conduct cases economically will be visited by appropriate orders for costs, including wasted costs orders."

Para 7 provides:-

"Unless the court otherwise orders, there must be lodged with the listing officer (or equivalent) on behalf of each party no later than two months before the date of trial a completed pre-trial check-list in the form annexed to this practice direction."

The check list follows the format used in the Commercial Court for some time and includes a question relating to any intention to amend the pleadings. The whole purpose of that is to prevent last minute amendments which invariably cause disruption to a trial and the listing of cases.

In a further decision of this court Thermaware v Linton & others Lexis Transcript 17th October 1995, Sir Thomas Bingham M.R. having referred to the Practice Direction and to the passages in Ashmore quoted by Henry LJ above said this:-

"Those observations in the House of Lords and the Practice Direction are to be read against growing recognition that the luxurious approach to the expenditure of court time which was indulged in in the past is something which, in the interests of litigants as a whole, simply cannot be any longer afforded. Of course it is true that a judge's procedural decision need not save time or expense. If the learned Judge's resolution of these issues is in favour of Thermawear Limited, it may lead to additional time and expense; so, too, if his decision is in favour of Citroen Wells and that decision is later the subject of successful appeal. But these are matters which fall fairly and squarely within the growing procedural decision-making area accorded to the trial judge."

Henry LJ agreed and added:-

"Many critics believe that the adversarial system has run into the sands in that today delay and costs are too often disproportionate to the difficulty of the issue and the amount at stake. The solution now being followed to that problem requires a more interventionist judiciary, the judge as trial manager. It seems to me important that a judge so acting should be given proper freedom by this Court in which to exercise the powers contained in the practice direction and that the margin of appreciation allowed to him in the exercise of his discretion should be generous."

Thorpe LJ agreed.

These observations not cited in Gale are we suggest also inconsistent with Millett LJ's approach.

On the appropriate attitude of the Court of Appeal we should finally refer to what was further emphasised by Hobhouse LJ in Bristol & West Building Society v Bhadresa & Co, Transcript 7th February 1997 when he said:-

"If case management is to be successful, both the litigants and the appellate courts must trust the judges who are in charge of that case management, and it is only suitable for this Court to review their decisions if it is quite clear that something has gone wrong. This is an application for leave to appeal and it ought not to be granted unless it is quite clear that something has gone wrong."

All the remarks quoted above were in fact concerned with trials outside the Commercial Court. In the Commercial Court the judges have for many years been particularly pro-active in managing litigation brought before it for the benefit of all users. The practice in the Commercial Court is set out in the Guide to Commercial Court Practice set out under Order 72 page 1367 of the Supreme Court Practice. That Guide, it should be stressed, recognises the well established practice that amendments to pleadings will normally be allowed so as to reflect the true issues between the parties by encouraging consent orders. The last sentence of Rule 10.2 says for example "A party should consent to a proposed amendment unless he has substantial grounds for objecting to it". But Rule 10.3 stresses "Late amendments should be avoided and may be disallowed if other parties are prejudiced in a way that a costs order will not adequately compensate."

It is in order to avoid last minute problems which delay the start of trials, or prolong them, or cause adjournments, that the Commercial Court insisted even before the 1995 Practice Direction and still insists that each side's solicitors produce 2 months prior to trial a pre-trial check list. As the Guide says, that is done to assist the parties to check their readiness for trial and "is an important aspect of the efficient organisation of the Commercial Court list" (see paragraph 18.1 of the Guide). It is for that reason also that in a substantial case orders are made for a pre-trial review just prior to the date for trial itself.

Approach to last minute amendments

Where a party has had many months to consider how he wants to put his case and where it is not by virtue of some new factor appearing from some disclosure only recently made, why, one asks rhetorically, should he be entitled to cause the trial to be delayed so far as his opponent is concerned and why should he be entitled to cause inconvenience to other litigants? The only answer which can be given and which, Mr Brodie has suggested, applies in the instant case is that without the amendment a serious injustice may be done because the new case is the only way the case can be argued, and it raises the true issue between the parties which justice requires should be decided.

We accept that at the end of the day a balance has to be struck. The court is concerned with doing justice, but justice to all litigants, and thus where a last minute amendment is sought with the consequences indicated, the onus will be a heavy one on the amending party to show the strength of the new case and why justice both to him, his opponent and other litigants, requires him to be able to pursue it.

Approach of the judge

What Mr Brodie must demonstrate is that it is arguable that the judge in this case misapplied the principles and/or was plainly wrong.

Far from him having misapplied any of the principles it seems to us that he directed himself in relation to them impeccably. He recognised that generally amendments will be allowed to reflect the true issues between the parties (page 11 transcript of judgment); he recognised that lateness may not be a ground for refusing leave itself (page 14); he was not persuaded that the consideration by the defendants was as substantial an exercise as Mr Scott QC for the defendants had argued, but thought it would be wrong to require the defendants to proceed to trial without a reasonable opportunity to consider and discuss the implications (pages 19, 21 and 24). He considered the merits of the newly pleaded case and concluded that the case was insubstantial on the basis that the amended pleading was in effect an allegation of an agreement to agree, and he did not feel it necessary to consider other points (page 28).

His view as to the merits of the case sought to be put by amendment seems to us an entirely justified view. Mr Brodie suggests that the original case was hopeless despite the fact that presumably someone thought that it was sufficiently strong to allow the client to swear an affidavit for Order 14 purposes. We are not at all sure if we had to choose between two very difficult ways of putting the plaintiffs' case on the 3rd November letter that we see anything more arguable in the amended version than there was in the original version. The amended version suffers from the serious weakness that it pleads an agreement to agree in plain terms whereas the previous version pleaded that there was an agreement to be put into final form. This was the weakness that the judge identified.

Our view is that the amended version would also suffer from the serious weakness that it seems clearly to have been contemplated by the parties that any agreement between the defendants and the plaintiffs would expire after a certain period of 12 months if sanctions were not lifted and/or an agreement between ITP and the defendants was not signed within that period. A purely advisory agreement of the kind pleaded seems to us to be most unlikely to be as open-ended as the plaintiffs now seek to allege.

We are quite unpersuaded that there is an arguable case either that the judge went wrong in principle or that he was plainly wrong in relation to the first order he made. There was however one point taken before us which was not taken before the judge with which we should deal before concluding our views on this aspect, but the point is better dealt with as a composite point relating to all three applications.

Quantum meruit application

As regards the second order the matter can be taken more shortly. The history of the quantum meruit claim already appears from our recitation of the history of the proceedings up to the stage of the amendment in January 1998. That demonstrates consideration being given by the plaintiffs and their advisers to the way in which the quantum meruit claim could be put both at the time of the first amendment, at the time of the second amendment and during the period while pressure had been put on them to produce the underlying documents to support the claim. Ultimately in response to the proposed amendments to the points of claim delivered to leading counsel on 27th October 1998, a "without prejudice" request for particulars was delivered. In response to that request the plaintiffs confirmed that the quantum meruit claim remained as pleaded save only that the contract relied on as being assumed to exist was the one now sought to be alleged. On the first day of trial some intimation was given by Mr Brodie that he was considering putting the quantum meruit claim on the basis of value of services to the defendants. On the third day of the trial Mr Brodie confirmed that it was his intention to amend the particulars to put the claim on the value basis. On the fourth day of the trial particulars putting the claim on this basis were delivered to which objection was taken. At this stage it was agreed that an informal request for particulars would be served, and that the application to put the claim on this basis would be considered in the light of the particulars delivered. The particulars delivered sought to make the claim by reference to the value received, as the judge put it, "assessed by reference to the value of those services to the defendants, that being assessed by reference to (1) the chances of the defendants obtaining a contract with ITP in due course; and (2) the amount which the defendants would have paid to the plaintiffs over the life of those contracts if they had been entered into....."

The judge applied the same principles as he had previously, and concluded that the defendants would only be able to deal with the new claim if they had adequate opportunity to obtain evidence from their own employees, ex- employees and third parties relating services provided with suggested benefits, and he thought an adjournment of at least one to two weeks would be necessary (page 10 of the transcript of his judgment); an adjournment would be disruptive to all parties and to the court's own schedules (page 11); there was no good reason why such a significant change in position was being made at this late stage (page 11); that a claim that had been £5m and at the trial became £100m bore a striking resemblance to the facts in Perestrello v United Paint [1969] 1 W.L.R. 570 where the Court of Appeal upheld a refusal of leave to amend at the last moment to increase the quantum of damage from £4,000 to £250,000 and he also thought that the claim was still inadequately pleaded (page 15).

He clearly found difficult the basis of the plaintiffs' calculation, a difficulty we share. It may be possible to value services by reference to what a defendant has actually received, but it seems to us unlikely to be possible to value services by reference to a chance that the defendants may receive benefits when that chance depends on so many unknowns including the lifting of sanctions and the entry into a contract some time in the future.

The judge directed himself again impeccably and carried out a careful balancing exercise.

In our view there is no prospect of persuading a Court of Appeal that the judge applied wrong principles or was plainly wrong, without regard to the point to which we are still to come.

Third application

Mr Brodie frankly conceded that this was a last ditch effort. He realistically recognised that if he failed to get leave to appeal on the first two orders he was unlikely to achieve it in relation to the third. This proposed amendment contained much that had been in the proposed amendment the subject of the first application. It was likely to fail for that reason alone. In its one variation it also however suffered from the weakness that it alleged an expectation that certain contracts would be entered into as opposed to an obligation flowing from the contracts or an obligation to enter into the contracts. If there was not some binding obligation but only an expectation damages would be likely to be irrecoverable on the principles exemplified by such cases as Lavarack v Woods [1967] 1 QB 278.

Once again it seems to us that it would not be arguable before a Court of Appeal that the judge was plainly wrong or applied wrong principles in not allowing this amendment on the material before him.

Discontinuance

That brings us to the point that Mr Brodie raised for the first time before us. He suggested that he had advised his clients that they could not succeed on the basis previously pleaded, and thus his clients would apply to discontinue and bring further proceedings on the basis of the amendments disallowed in the present action. As we understood it that advice was on the basis that the previously pleaded construction of the 3rd November letter would not succeed, and that as regards quantum meruit there were serious difficulties of proof unless he could put it on the value to the defendants basis. His argument was that if fresh proceedings could be brought, why not allow the amendments in this trial and save the further expense. The answer from Mr Scott was that in fact Mr Brodie would not be allowed to discontinue and bring proceedings on the basis of the disallowed amendments because fresh proceedings would be an abuse of the process of the court. He referred us to Gilham v Browning [1998] 1 WLR 682 and Virgin Management v De Morgan Group Plc Lexis Transcript 24th January 1996. In Gilham the Court of Appeal upheld the striking out of a notice of discontinuance, and the refusal to allow a defendant to choose to be non-suited on their counterclaim. The defendants had failed to get leave to call certain evidence where they had failed to comply with directions for the service of witness statements. They purported to discontinue which under the County Court Rules they could do without leave. That notice was struck out by the judge and he also refused to allow the defendants' application to be non-suited on their counterclaim. The Court of Appeal upheld those decisions. In Virgin the Court of Appeal upheld the order of an Official Referee striking out a second action brought on the basis of a claim for which leave to amend had been refused in the middle of a trial on the ground that the second action was an abuse of process.

In the High Court, Mr Brodie accepts that his clients could only now discontinue with leave and he accepts that the plaintiffs would have to pay the defendants' costs of the action. Mr Brodie did not accept that the above decisions made it difficult for him to get leave to discontinue without the imposition of terms requiring his clients not to bring further proceedings raising the matters for which leave to amend has been refused. He referred to the judgment of the Court of Appeal and the judgment of Sir Thomas Bingham M.R. in Gardner v Southwark [1996] 1 W.L.R. 561 at 569-570. That passage recognised the ability of a plaintiff to bring a second action where a claim had been automatically struck out under the County Court Rules. That did not involve seeking leave to discontinue and we are doubtful whether this judgment could be said to affect the principle which appears to be established by the cases cited by Mr Scott. But since no application is before us to discontinue we hesitate to express any firm view.

In the alternative Mr Brodie submitted that if the authorities indicated that he could not bring a second action that simply demonstrated how draconian the judge's order in this case was and how it must be wrong.

We are not impressed by the dilemma on the horns of which Mr Brodie seeks to place the court. We assume that the judge when making the order contemplated that the plaintiffs would not be able to proceed with the claims they were attempting to make by a last minute amendment. He would not have expected that the plaintiffs would discontinue the present proceedings and try to commence others. The fact thus that the plaintiffs may be prevented from bringing a second action is actually no more draconian a form of order than the judge intended to produce.

If Mr Brodie were right that either (a) the possibility of a party bringing a second action or (b) the possibility of the court not allowing a second action to be brought both leave the court without any alternative but to allow the amendment, then it seems to follow that the interests of justice to the other party and to other litigants simply has no place in the exercise by the court of its discretion. It would follow that a plaintiff must simply have a right to amend at any time prior to the expiry of any relevant period of limitation, provided the pleading was not demurrable, however much inconvenience that causes to the opposition and other litigants. We do not believe that to be even arguably the position, and this final point of Mr Brodie's does not persuade us that he has any arguable point on an appeal.

Conclusion

It is for the above reasons that this application for leave to appeal was dismissed.

ORDER: (Not part of judgment)

Application refused with costs.