England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHANCERY DIVISION
(SIR DONALD RATTEE)

		Royal Courts of Justice Strand London WC2 Friday, 8th February 2002

Friday, 8th February 2001

1. LORD JUSTICE JONATHAN PARKER: This is a renewed application by Mr Ian Maxwell (he is not the son of the late Mr Robert Maxwell), the defendant in the action, for permission to appeal against an order made by Sir Donald Rattee on 10 August 2001. By that order, Sir Donald Rattee dismissed the claim made by the claimant in the action, Mr Osama Al Sayed, but subject to the claimant having permission to amend his Particulars of Claim to allege, in effect, a new cause of action based substantially upon the same facts. The order went on to give directions for service of further pleadings, contemplating (as it is accepted is inevitable) a second trial. The claimant was ordered to pay all the applicant's costs of an earlier application for summary judgment made unsuccessfully by the claimant, together with 80 per cent of the applicant's other costs of the claim. The judge made the deduction of 20 per cent to reflect the fact that a defence of illegality had failed. I refused permission to appeal on the papers on 30 November 2001.
2. Mr Egleton of counsel appears for the applicant on this application. He also appeared for him before the judge.
3. The proposed appeal is, of course, not against so much of the judge's order as dismissed the claimant's claim as pleaded, but rather against the grant of permission to amend the Particulars of Claim. The background to the matter is, in summary, as follows.
4. The claimant is a Saudi Arabian national. The applicant is a UK national who had previously, it appeared, engaged in business transactions with various entities in Saudi Arabia. It is common ground that in or about May 1996 an oral agreement was reached between the claimant and the applicant. By that agreement, they agreed that they would cause an English company to be incorporated to procure aviation equipment to be supplied to a Saudi Arabian corporation called Sogerep, which in turn acted as purchasing agent for the Royal Saudi Arabian Air Force.
5. An English company was duly formed pursuant to that agreement, in which the claimant and the applicant took an equal share-holding. The company was called International Logistics Support Ltd ("ILS"). ILS then proceeded to supply Sogerep with aviation equipment.
6. However, a dispute arose between the claimant and the applicant as to the precise terms of their oral agreement. That dispute led to the present action. The claimant pleads that it was a term of the agreement that the applicant personally pay to a company to be incorporated in the British Virgin Islands and owned or controlled by the claimant a sales commission equivalent to the difference between the gross sales value of the aviation equipment sold to Sogerep and the gross profit retainable by ILS as calculated pursuant to the agreement. By his Defence, however, the applicant contends that the sales commission was to be paid not by him personally, but by ILS.
7. It is common ground that a company was duly incorporated in the British Virgin Islands to receive payments of sales commission, that company being called Procurement House Establishment ("PHE").
8. Before the judge the claimant sought primarily an order for specific performance of that term of the oral agreement which, on the claimant's pleaded case, obliged the applicant personally to pay sales commission to PHE. The claimant alleges that under that provision, a sum of around $923,000 remains outstanding.
9. The trial took place before Sir Donald Rattee. After completion of the oral evidence in the course of the closing submissions of Mr Egleton, Mr Higginson, appearing for the claimant, applied for permission to amend the claim so as to plead not an obligation on the applicant personally to pay sales commission to PHE, but rather an implied obligation on him to procure that within reasonable time after receipt by ILS of purchase moneys from Sogerep, ILS would make the payments of sales to PHE on the terms of the oral agreement. The proposed amendment went on to plead breach of that implied term and to claim damages from the applicant in the same sum as that which had featured in the specific performance claim, namely some $923,000.
10. The application for permission to make this amendment was opposed by Mr Egleton, who relied among other things, on the prejudice which would be inherent in a second trial taking place. The judge indicated that he would deal with the question of permission to amend in his judgment when delivered. In due course the judge delivered judgment. In that judgment, the judge commented that the figure pleaded as being the loss suffered by the claimant by reason of the breach of the implied term now sought to be pleaded was not, on its face, sustainable, since the claimant's loss would, on his amended claim, have to be measured by reference to any diminution in the value of his shares in PHE caused by the alleged breach. The judge went on to say this (at page 24D of the transcript of the judgment):

"A further factual inquiry would clearly be necessary to identify this loss, if the proposed new claim were otherwise to succeed. Moreover, it may well be that the new claim, if made, will involve evidence as to the financial position of ILS I at the dates of the alleged breaches of the alleged implied term of the 1996 agreement.

Having regard to the late stage at which the application to amend was made, it would not have been possible to deal with the point at this trial. I reserved judgment on the application and said that I would deal with it in this judgment, which I now do. Mr Higginson realistically accepted that the application was made very late and that it should have been made at a very much earlier stage of the proceedings. It does not depend in any way on anything which emerged only in the course of the trial. However Mr Higginson rightly referred me to the decision of the Court of Appeal in Cobbold v London Borough of Greenwich [1999] EWCA Civil 2074, 9th August 1999, in which Peter Gibson LJ at paragraph 10 of the judgment restated well-established principle as follows:

'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.'

Not surprisingly, Mr Egleton resisted the application on the ground that it was inexcusably late. I agree that it is, but in my judgment, without expressing or implying any view as to its prospects of success, I think it appropriate to give leave for the proposed amendment on the basis that, if it does raise a good point, it is one which the claimant should have the opportunity to have determined, if this is possible without unfair prejudice to the defendant. I think it is possible, because I think that any prejudice to the defendant of the application being made so late can be compensated by the costs to date of the claim, which has failed, being dealt with by me, after hearing submissions from counsel, at the end of this judgment, without regard to the proposed amendment.

I will give leave for the amendment on terms which I will consider further with counsel. Trial of the new claim introduced by such amendment will have to take place at a later date after all necessary further proceedings and discovery and witness statements have been completed. I will consider with counsel what directions need to be given. I shall dismiss the claims made in the proceedings as presently constituted."

11. By his proposed grounds of appeal, the applicant contends first, that the application to amend came far too late. Indeed, the judge recognised that fact. Second, the applicant complains that the application was made on 10 minutes' notice, a different amendment having previously been indicated by Mr Higginson. Third, the applicant contends that the judge failed to consider the prejudice which would be likely to be caused to the applicant as a result of the need for a second trial. Fourth, the applicant further complains that the judge failed to consider whether the proposed amendment amounted to a case in law or had any reasonable prospects of success, and that he failed to consider whether there was any exceptional element which justified the grant of permission to amend at such an inexcusably late stage in the proceedings.
12. In his oral submissions this morning, Mr Egleton has helpfully expanded upon his written skeleton argument in elaborating upon these proposed grounds of appeal. Mr Egleton refers me to a passage from the judgment of Waller LJ in World Wide Corporation Ltd v GPT Ltd & Another 1998 Court of Appeal transcript 1835 and to the Charlesworth v Relay Roads Ltd (in liquidation) & Others [2000] 1 WLR 230 and Sikora v King, an unreported decision of Park J, the transcript being dated 8th October 2001. Relying upon these decisions, Mr Egleton submits that the judge wholly failed to address the issue whether there was anything sufficiently exceptional in the present case which could justify the grant of permission to appeal at such a late stage in the hearing. He submits that the judge did not give the application for permission the close scrutiny which Waller LJ recommends in Worldwide Corporation. He stresses the prejudice which inevitably will be suffered by the applicant having succeeded in the claim pleaded against him at the trial in having to face another trial at some date in the future based on the new amended pleading.
13. Mr Egleton submits that he may well find himself in difficulties in seeking to raise arguments by way of defence to the amended claim which he raised at the trial before Sir Donald Rattee in the context of the original claim and which were unsuccessful at that stage and in that context.
14. As to costs, Mr Egleton submits that he has in fact had no benefit from the costs order made by Sir Donald Rattee (to which I referred earlier). Mr Egleton submits that the appropriate order should have been 100 per cent of the costs on the basis that the entirety of the trial costs had been thrown away by the pleading of, in effect, a new cause of action.
15. The difficulty which Mr Egleton faces - and it is one which he recognises - is that the decision whether to grant permission to appeal was essentially a matter for the judge's discretion. In weighing the various relevant factors, it was for the judge to decide where the justice of the case lay. Despite Mr Egleton's submissions I cannot detect any basis upon which it could be submitted that Sir Donald Rattee fell into any error of principle, or that the order which he made in granting permission was clearly wrong. Whether or not an appeal court would have reached the same conclusion as the judge when faced with Mr Higginson's application is not the relevant test. As I say, I can detect no error of principle nor any such error of reasoning as could possibly justify the interference of the Court of Appeal in the decision which Sir Donald Rattee took to allow the amendment.
16. When I refused permission on the papers I said this:

"The decision to permit the amendment was within the Judge's discretion. I can see no real prospect of his decision being successfully challenged on appeal."

17. Despite Mr Egleton's helpful submissions this morning I remain of that view. It follows that the application is dismissed.
(Application dismissed; no order for costs).