England and Wales High Court (Technology and Construction Court) Decisions

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Francois Abballe v. Alstom UK Ltd [2000] EWHC Technology 116 (7th April, 2000)

IN THE HIGH COURT OF JUSTICE

TECHNOLOGY AND CONSTRUCTION COURT

HIS HONOUR JUDGE HUMPHREY LLOYD QC

B E T W E E N:

FRANÇOIS ABBALLE

(trading as G.F.A.) Claimant

-and-

ALSTOM U.K. LIMITED Defendant

(Nos 2 and 3)

Case No 1999 TCC 48

Date 7 April 2000 (reasons given later) and 19 May 2000

1. Following the decision on 24 May 2000 (for the judgment see this website) when the defendant's application pursuant to Rule 3.4 of the CPR to strike out part of the statement of claim on the grounds that the claimant's case that there was an obligation to proceed with a joint venture agreement was allowed, the claimant applied to amend the statement of claim to include a claim for the rectification of the agreement and for a claim based on an implied terms of good faith such as that "the parties should proceed to develop the project subject to each party, if so required by the other party in good faith, entering into a Consortium Agreement in the defendant's model form embodying both the already agreed terms and other appropriate details or alternatively the outcome of Stage 1", including terms derived from Little v Courage (1994) 70 P & CR 469. For the reasons given below (no 2) the applications were refused.

2. Other cases cited included: BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1978) 52 AJLR 20; Walford v. Miles [1982] 2 AC 128; Page One Records v Britton [1968] 1 WLR at page 165; Denmark Productions v Boscobel Productions [1969] 1 QB 699 at pages 729G-730A; Interfoto Library Ltd v Stiletto [1969] 1 QB 433; Timeload v British Telecommunications plc [1995] EMLR 459; Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472; Balfour Beatty Civil Engineering Ltd v Docklands Light Railway (1996) 12 Const LJ 259; Regalian Properties plc v London Docklands Development Corporation [1995] 1 WLR 212 and Blackpool and Fylde Aero Club v Blackpool BC [1990] 1 WLR 1195. A number of articles were referred to including Lord Steyn's paper "Contract Law: Fulfilling the Reasonable Expectations of Honest Men" (1997) 133 LQR 433; Heal: Construction Partnering: Good in Faith in Theory and Practice [1999] 15 Const LJ 167; Groves: Doctrine of Good Faith in Four Legal Systems [1999] 15 Const LJ 265; Colledge: Good Faith in Construction Contracts [1999] 15 Const LJ 288; Harrison & Jansen: Good Faith in Construction Law [1999] 15 Const LJ 346.

3. On this application:

4. Stephen Auld QC appeared for the defendant, the applicant, instructed by Pinsent Curtis.

5. Anthony Speaight QC appeared for the claimant, instructed by Lock and Marlborough.

6. The claimant then put forward another set of amendments based upon an obligation of co-operation. For the reasons set out in Judgment (No 3) permission was given subject to conditions. Lavarack v Woods [1967] 1 QB 278 was cited.

7. On this application:

8. Jeffery Onions QC appeared for the defendant, the applicant, instructed by Pinsent Curtis.

9. Anthony Speaight QC appeared for the claimant, instructed by Lock and Marlborough.

10. Subject to editorial correction the reasons and judgments of His Honour Judge Humphrey LLoyd QC were as follows.

JUDGMENT (No 2)

1. On 24 March I refused to allow the claimant to put forward a claim for damages for reasons which are to be found in my written judgment (which I shall assume has been read). However since I had left the door open to allow his legal advisers to have another attempt further drafts were put forward culminating in the one that I considered on 7 April. Although there was, understandably, comment about the number of drafts of the amendments proposed that had been proferred that fact was not in my view a material consideration. It is not always easy to frame an amendment and it was not as if the successive amendments were repeated shots at getting the facts right. I dealt with two groups of opposed amendments. I refused the claimant permission to amend to introduce new paragraphs 19A-19H of the statement of claim and I again declined to grant him permission to amend in relation to new paragraphs 21A and 51-63. I said that I would if asked amplify the reasons that I then gave. I was so requested and I therefore do so. I shall not annex the amendments as I did on the previous occasion.

11. Rectification

2. Paragraphs 19B-19E set out facts relied on by the claimant in support of case that the agreement of January 1997 did not accurately reflect the common intention of the parties. The key passage is in paragraph 19E(e) in which it was said that in January 1997 the claimant and M Jean-Claude Troullier (then an employee of the defendant) agreed that only if the project were not economically viable would a party be entitled to withdraw but otherwise the parties would proceed with it. (Witness statements from the claimant and M Troullier were filed in order to verify the case and to show that it was in fact tenable.) Paragraph 19F then said that "clause 2 of the letter ought to be rectified to read:

12. Subject to the right of withdrawal under clause 4(viii) herein below both parties shall proceed to develop the project on a non-recourse or limited recourse basis by reference to a detailed programme of activities."

13. Paragraph 19G said:

14. "Alternatively the said clause 2 should be rectified to read:-

Subject to:-

15. (a) the right of withdrawal under clause 4(viii) herein below; and

16. (b) each party, if so required by the other party in good faith, entering into a Consortium Agreement in the Defendant's model form embodying the outcome of stage 1;

17. both parties shall proceed to develop the Project on a non-recourse or limited recourse basis by reference to a detailed programme of activities."

3. The defendant objected to the proposed amendments. There was naturally scepticism about the suggestion that the agreement did not record the true agreement, given that the claimant and M Troullier had had a considerable time to appreciate that the letter agreement was incorrect and that the agreements relied were not corroborated by any document, but there was also an attack on the adequacy of the pleading, on the basis that strong evidence is required for rectification. I do not consider that this objection should be upheld. Until I decided otherwise the claimant thought that the agreement represented his understanding of the arrangements concluded with the defendant. Whilst it is unusual that there is apparently nothing else apart from the word of M Troullier and himself to support the claimant's case a distinction has to be made between the pleading of the case and the evidence necessary to support it. Many cases have failed even though on the pleadings and documents they appeared impregnable and many have succeeded, even though one might not have thought it by looking only at the pleadings. It was accepted that the form of the proposed pleadings was sufficient for the purposes of the application.

4. However Mr Stephen Auld QC for the defendant submitted that if the amendments were allowed in the forms set out in paragraphs 19F or 19G they would still be struck out (or would be liable to be struck out) since each referred to a "detailed programme of activities". In paragraph 22 of my previous judgment I decided that such a programme would form an integral part of the Consortium Agreement but even if it was not to do so such a programme was not a matter of detail but was considered to be essential to the implementation of the project. Thus as it had not been agreed all the essential terms of the proposed Consortium Agreement had not been agreed. In addition I decided that the nature of the project was such that the agreement of such a programme had to be treated as if it were an agreement to agree: neither party was bound to forego its own interests and thus the agreement was unforceable in law on the basis on Walford v Miles [1982] 2 AC 128, especially as set out by Lord Ackner at page 138. Mr Auld also submitted that paragraph 19G produced an agreement to agree which equally fell foul of Walford v Miles.

5. In my judgment there is no real answer to these submissions. It has long been established that an amendment should not be allowed if the pleading as amended would be struck out. To allow such an amendment would have been an abuse of the process of the court. Under the Civil Procedure Rules is the grant of permission would plainly be contrary to the overriding objective set out in Part 1 and would not accord with the purposes of the case management powers. Amongst other things a court must at every stage not just to identify issues as they emerge but it must also consider whther they could be disposed of summarily or otherwise. There is no point in postponing to the trial a decision that can be taken at an earlier stage properly, fairly and cost-effectively. An application to amend may call into question whether a party has a sound basis in law (or in fact) for its case. Here adequate time and notice was allowed for the presentation and hearing of the parties' cases (which were well and carefully prepared) so there is no reason for not reaching a conclusion on them In my judgment even if the claimant were successful in establishing that the letter agreement of January 1997 did not accurately record what had been agreed between himself and M Troullier or was intended by both of them and that it ought to have been written as set out in either paragraph 19F or 19G then such an agreement would be unenforceable for the reasons that I gave in my earlier judgment. Accordingly no useful purpose would be served by permitting the amendments proposed as they could not provide the claimant with the legal foundation for his claim for damages arising from the fact that project did not proceed.

18. Paragraphs 21A and 51-63

6. These paragraphs set out the claimant's new case to recover damages. Paragraph 21A puts forward a term of the agreement that after the end of the initial period "the parties should proceed to develop the project subject to each party, if so required by the other party in good faith, entering into a Consortium Agreement in the defendant's model form embodying both the already agreed terms and other appropriate details or alternatively the outcome of Stage 1." The existing pleading contains the following:

19. 20. It was a term of the joint venture agreement that after the conclusion of the said period the parties would proceed to develop the project; that they would negotiate in good faith the outstanding details of a consortium agreement, the essential details of which had already been agreed; and that after such details had been negotiated, they would enter into a consortium agreement generally in the form of the Defendant's model consortium agreement embodying both the already-agreed essential terms and the negotiated details.

20. 21. Alternatively, if, contrary to the Plaintiff's case, the essential terms of the consortium agreement had not yet been agreed, it was a term of the joint venture agreement that, if and when the essential terms of the consortium agreement had been agreed, the parties would thereafter negotiate in good faith the outstanding details of the consortium agreement; and that after such details had been negotiated, they would enter into a consortium agreement generally in the form of the Defendant's model consortium agreement embodying both the essential terms and the negotiated details.

21. 22. The last-mentioned term (set out in alternative forms in the preceding ~~two~~ three paragraphs) was subject to the right of either party to give a notice of withdrawal under clause 4(viii), at the conclusion of the said stage 1 period of up to 6 months if that party should reach the conclusion that the project was not economically viable.

...

22. 25. There were implied terms inter alia of the joint venture agreement that:-

23. 1. Both parties would exercise and display good faith in the execution of the agreement, including,

24. a. a withdrawal under clause 4(viii) on the ground that the project was not economically viable;

25. b. a withholding of satisfaction from a letter of commitment from AIS.

26. 2. Neither party would unreasonably,

27. a. withdraw under clause 4(viii) on the ground that the project was not economically viable;

28. b. withhold satisfaction from a letter of commitment from AIS.

29. Paragraph 19H of the proposed amendments acknowledges that paragraphs 20 and 21 are retained only to be relied on in the event that the Court of Appeal decides that my earlier decision was wrong. (The defendant submitted, in my judgment correctly, if that decision is right then paragraphs 25(1)(a), 25(2)(a) are objectionable in law and paragraphs 36-42 are irrelevant to the claimant's surviving claim for the debt.) Paragraph 21A is virtually identical in effect to paragraphs 20 and 21 (which it has been conceded must if paragraph 20 were not to stand) but with the addition of the words "if so required by the other party in good faith". (They appear also in paragraph 19G.) Mr Anthony Speaight QC for M Abballe acknowledged that they were derived from Little v Courage (1994) 70 P & CR 469 which I considered in my earlier judgment. In that case it was held that the lease in question might have been so read as a matter of its interpretation in order to avoid the non-fulfilment of conditions precedent. The court emphasised that "these words impose no obligation on Courage". Yet here their introduction is intended to achieve precisely that result, ie to found a claim that the defendant ought to have reached agreement with the claimant which itself would have required agreement on matters which had not already been settled but also other matters and the consideration of the effect of what might otherwise have been settled in the light of "the outcome of Stage 1". In my view this term is no more than another version of paragraphs 20 and 21 and fails for the reasons that I have given previously. Permission to amend will therefore not be given.

7. In paragraphs 51-63 the claimant sets out extensively his new case. It relies on breaches of two provisions: first, the express term for co-operation in clause 1(i): "Both Parties shall co-operate to evaluate the viability of the Project from the date of acceptance by [the claimant] of this letter for a maximum period of six months"; secondly, the term in paragraph 25(1). Paragraph 51 is about a failure "to co-operate and/or to display good faith in [the defendant's] technical proposals as to the type and nature of power station plant and equipment"; paragraph 52 with similar failures in connexion with "the internal work necessary to develop a proper technical proposal"; paragraph 53 with such failures "in respect of the making of arrangements for establishing the commitment of the intended consumers of electricity"; paragraph 54 with such failures "in respect of other aspects of the Action Plan and investigation"; and paragraph 55 with such failures in that "the defendant failed promptly to notify the plaintiff when in about May 1997 it ceased to be positive about continuing the development of the project." Paragraph 56 maintains that

30. "the practical consequences of the matters aforesaid was that the plaintiff was denied the opportunity of finding ways of overcoming the difficulties which members of the defendant's staff perceived or alleged or, if such could not be found, the plaintiff was denied a realistic opportunity of finding an alternative partner for the project. Therefore the breaches ultimately resulted in the plaintiff not being able to participate in a development in the of the El Salto Project and losing the chance to derive a profit from it. He thereby suffered loss and damage to the extent of the loss of that chance."

8. This case therefore raises the question whether there is an implied term of the agreement as set out in paragraph 25(1) which is directed to the implementation of the agreement and which, if it is relied on in addition to the express term, must require something more than the positive co-operation expressly required by clause 1(i). (However Mr Speaight acknowledged that the term in paragraph 25(1) was not absolutely necessary to the case.) Mr Speaight submitted that it supplemented that obligation by an additional characterisation of the nature of co-operation, and that it meant that the parties had to deal fairly with each other during the period of co-operative evaluation. In other words clause 1(i) should be read as it had said "Both shall co-operate in good faith to evaluate...". He submitted that a joint venture such as that between the present parties should be treated as "involving mutual confidence and reciprocal obligations", as held by Stamp J in Page One Records v Britton [1968] 1 WLR at page 165 for the relationship of the parties was essentially similar to that of manager and pop group. Mr Speaight also referred to the observations of Winn LJ in Denmark Productions v Boscobel Productions [1969] 1 QB 699 at pages 729G-730A (another pop group case). He went on to rely on well-known dicta, primarily of Lord Bingham of Cornhill CJ, eg in Interfoto Library Ltd v Stiletto [1969] 1 QB 433 (where he said that English law had not committed itself to recognition of the principle of good faith in the interpretation and performance of contracts as it had "developed piecemeal solutions in response to demonstrated problems of unfairness"); in Timeload v British Telecommunications plc [1995] EMLR 459; and in Philips Electronique Grand Public SA v British Sky Broadcasting Ltd [1995] EMLR 472 (which I mentioned in my previous judgment). I was also referred by both counsel to a number of articles, including Lord Steyn's paper "Contract Law: Fulfilling the Reasonable Expectations of Honest Men" (1997) 133 LQR 433; Heal: Construction Partnering: Good in Faith in Theory and Practice [1999] 15 Const LJ 167; Groves: Doctrine of Good Faith in Four Legal Systems [1999] 15 Const LJ 265; Colledge: Good Faith in Construction Contracts [1999] 15 Const LJ 288; Harrison & Jansen: Good Faith in Construction Law [1999] 15 Const LJ 346. With the exception of Lord Steyn's paper, the articles generally argue for the adoption by English law of the doctrine of good faith in the performance of contractual obligations, even though there is scant authority to support it. Mr Speaight nevertheless submitted that the importation of good faith may now regarded a possible fall-back device which will be used where other possibily approaches such as contract construction, the implication of terms, a requirement of reasonableness and the like, have been exhausted.

9. Mr Auld submitted that the term put forward in paragraph 25(1) failed to satisfy the criteria established by BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1978) 52 AJLR 20 at page 26 per Lord Simon of Glaisdale:

31. "for a term to be implied, the following conditions (which may overlap) must be satisfied: (1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that "it goes without saying"; (4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."

32. He invited me to note that in Philips Electronique Lord Bingham had said that Lord Simon had there distilled much learning on implied terms and had himself then explained why there should be a rigorous test for the implication of terms and that it was "tempting but wrong" for a court to fashion a term which would reflect the merits of the situation as they appeared with the advantage of hindsight. He submitted that the decisions relied on by the claimant did not affect that general approach. The letter agreement had expressly provided for co-operation. It was not necessary to go further. The cases cited by the claimant did establish any principle of law to the contrary, rather, they emphasised the need to determine the question of the implication of any term as at the date of contract. Here there would have been no reason to go beyond the terms agreed. For completeness Mr Auld also referred to Balfour Beatty Civil Engineering Ltd v Docklands Light Railway (1996) 12 Const LJ 259 but in my judgment the observations of Lord Bingham were there made in the context of a concession. (The case was in any event overruled by Beaufort Developments v Gilbert-Ash [1999] 1 AC 266, although not directly on this point). I do not consider that it needs to be considered separately. Mr Auld relied on Regalian Properties plc v London Docklands Development Corporation [1995] 1 WLR 212 and referred also to Blackpool and Fylde Aero Club v Blackpool BC [1990] 1 WLR 1195.

10. In my judgment the term put forward by the claimant in paragraph 25(1) is not to be implied. It is evidently devised to deal with the merits as they are perceived by the claimant. The proposition that "good faith" may be used as a fall-back device tellingly shows why it is wrong but tempting to consider with the advantage of hindsight whether a term should be implied. At the date of this agreement it was not necessary to imply thie term suggested for in my view the contract is effective without it. A joint venture contract of this kind presupposes mutual confidence and trust if its factual matrix is that pleaded by the claimant (which for present purposes I must assume will be established). The parties expressly stipulated in clause 1(i) for co-operation Clause 1(i) will therefore be read and given effect to in that light. (If that factual matrix is not established then the parties may be found to be "at arm's length" so such a term could not be implied as it certainly would not "go without saying" for the reasons given in Walford v Miles.) In addition I consider that Mr Speaight was right to describe the importation of good faith as a fall-back device. It is used in conjunction with the use of one or other of the techniques available to the common law. As such it may be doubted whether it is obviously to be implied as a separate term or even, as here, to qualify an existing term when effect can be given to the parties' presumed intentions by other and well-established means. There are no authorities which in my judgment establish that it is anything more. In my view the true position in English law is that set out by Lord Steyn in his paper at page 439:

33. "But I have no heroic suggestion for the introduction of a general duty of good faith in our contract law. It is not necessary. As long as our courts always respect the reasonable expectations of parties our contract law can satisfactorily be left to develop in accordance with its own pragmatic traditions. And where in specific contexts duties of good faith are imposed on parties our legal system can readily accommodate such a well-tried notion. After all, there is not a world of difference between the objective requirement of good faith and the reasonable expectations of the parties."

34. This is not a case in which an express obligation of good faith exists. It might be said that requirement of good faith is no more than interpreting an express term but paragraph 25(1) is not put forward as a means of interpreting clause 1(i) but as a separate obligation. If Lord Steyn does not see the necessity for such a general obligation I do not consider that I should be a hero and permit the claimant to advance a term which is in effect such a general duty expressed within the context of this contract. Indeed in my judgment I am bound to conclude that on the factual basis relied on by the claimant no such term can be implied and so to decide now in accordance with the CPR, even if the result is indirectly to disentitle the claimant from relying on paragraph 25(1). It is not now necessary to require a party formally to apply to strike out a paragraph if the result would be achieved on such an application is attained in consequence of another application properly made on adequate notice. Thus the amendments in so far as they rely on paragraph 25(1) cannot be allowed. If the defendant had applied to strike out that term or if it were hereafter it do so the application would have succeeded or would succeed.

11. Mr Auld submitted that the amendments should not be allowed on other grounds, namely for lack of particularity, especially in relation to certain allegations which under the CPR require details to be pleaded in specific matters, as set out in paragraph 10.2 of the Practice Direction to Rule 16, some of which are to be found in the sub-paragraphs of paragraphs 51-55. He emphasised, in my judgment correctly having regard to Rule 1.2(b), that serious allegations of want of good faith should also be treated as falling within that paragraph even if they were not made expressly as one of the specific matters. Essentially the claimant's case in each of the relevant paragraphs did not explain for example what the defendant ought to have done, what the claimant would then have done and how and why his actions or reactions would have saved the project and thus permitted it to go forward so that he would have made the profit that he claims. In so far as his case may be that he lost the chance of going forward similar considerations apply. In addition Mr Auld submitted that the claimant should identify the people involved so that the defendant could know who was implicated and from whom witness statements might be needed. These objections are especially material since Rule 16.5 of the CPR requires a party in the position of the defendant to state why an allegation in not admitted or is denied. In my view Rule 16.4 interpreted in the light of the overriding objective as required by Rule 1.2(b) and by reference to Rule 16.5 requires a party to explain its case on causation so that there is a clear and intelligible link between the breaches of contract that are alleged and the loss and damage suffered for otherwise not only will the defendant not know the case against it but it will be unable to say specifically what is admitted and what denied and what its positive or alternative case may be. Without that foundation the issues will not be clear and, for example, it will be difficult to produce witness statements which bear on the points that require to be decided by the court. Even prior to the advent of the CPR this approach has been the practice in this court. Certainly in deciding whether or not permission to amend should be given Rule 1.2(a) requires me to examine the proposed pleading to see whether it meets such objectives, for otherwise if permission were given for an incomplete pleading, unnecessary costs may be incurred by both parties in having to revise their cases until those objectives are met. If on the other hand satisfactory answers were readily obtainable it might be sensible to permit the pleading to be served, perhaps conditionally on the missing parts being provided in a short time so that the amended defence as comprehensive and could comply with Rule 16.5.

12. I therefore explored these difficulties with Mr Speaight but he was not able to provide many of the answers that I sought, mainly, it seemed through lack of instructions. M Abballe appeared merely to have indicated the areas of complaint and not to have followed through the consequences (perhaps because the Nouveau Code du Procedure Civil and the French practice does not make such requirements of a party at this stage of a case). Overnight Mr Speaight produced a substantial set of modifications but Mr Auld rightly objected to having to deal with them at short notice, especially given the evolution of the claimant's case. He wished to have an up to date and authoritative pleading, verifiable by a statement of truth. In any event the proposed modifications appeared to fall short of what was required. The explanations are not only vital to the claimant's case but also to the defendant as they will both confront the defendant with what it ought to have done and will also require the defendant to present the case to which the claimant will have to plead and surmount if he is to succeed. In addition a number of allegations were apparently related to the debt claim and could therefore affect how it was to be managed. I therefore decided that it would not be right to permit the claimant to make the amendments in their present form although I did not refuse him permission so as to preclude him from putting forward yet another set of amendments which satisfied the requirements that I set out in argument when I examined in detail many of the apparent deficiencies in the claimant's case. It is not necessary now to attempt to record them.

13. Paragraphs 56 onwards are consequential on the earlier paragraphs. For these reasons permission to amend paragraphs 21A and 51-63 was not granted.

JUDGMENT (No 3)

1. This is a continuation of an application by the claimant to amend the particulars of claim. As may be seen from the reasons for my decision on 6 April the claimant was given the opportunity of reconsidering paragraphs 21A and 51-63 of the amendments which I then considered and for which I did not grant permission to amend. I will deal very shortly with the application so that the parties may know where they stand. It should be apparent that in general I shall be applying the same principles that I considered appropriate in my previous reasons. I will go through the latest draft starting with paragraph 19(a) and , dealing, I hope, very briefly, with the points that have been raised in argument. I am conscious that in doing that I will not be doing full justice to the skeletons presented by Mr Speaight and, in particular, by Mr Onions. But I hope that what I say will be sufficient for the purposes of the parties.

2. First, it is proposed that there should be a new paragraph 19A: "On a true interpretation [of the joint venture agreement] the obligation of co-operation created by the express term set out in paragraph 19 [ie clause 1(i)] involved an obligation on each party genuinely to co-operate with the other, and to do so in good faith." I accept Mr Onions' objections. There will be permission for this paragraph but with the removal of the words "genuinely" and "to do so in good faith" since not only I am not persuaded, and indeed Mr Speaight was disposed to concede that they do not add anything to the claimant's case, but rather more pertinently each phrase read in conjunction with later paragraphs justifiably lead to the defendant's perceiving that the claimant's case is that it did not behave as a commercial organization of its stature ought to have behaved and amount to allegations of lack of honesty or bad faith. Although those allegations are disavowed by the claimant, it is all too easy to read a pleading in that way. In my judgment if the paragraph was permitted as it stood it would open to the claimant to be develop such a case if circumstances permit. It is vital in a case of this kind that if an allegation of turpitude or bad faith is to be made it should be made plainly and not simply by way of saying breach of a term including words of this kind.

3. Paragraph B is a prelude to later allegations of breach for it sets out five heads illustrative of the co-operation called for by the agreement. The intention of this paragraph is that the defendant will be shown not to provided the requisite co-operation in each of the respects. Paragraph B will be permitted as it stands but I accept Mr Onions' submission that that intention is not fulfilled and that the later paragraphs do not or do not clearly relate back to the five heads or carry the story forward from them ad one would have expected. The claimant's case is still not clearly presented in a form that would enable the defendant to comply with its obligations under Rule 16.5 of the CPR or to know precisely upon what matters witness statements or other evidence might be required. Permission will therefore be given on condition that the relevance of each of the sub-paragraphs of paragraph B is shown in paragraphs 51 onwards. Mr Speaight, in argument, sets out their relevance but I need to know, and the defendant needs to know precisely where paragraph B(a) to (e) leads. In particular, B(b) and (c) matters which require some temporal certainty, a point to which I shall return later on, since neither falls naturally fall within the obligation of cooperation as set out in clause 1(i) or paragraph 19A. So it may become important to see why paragraphs B(b) and (c) are included, and where they bite and how it is they form part of the supposed interpretation of the obligation of cooperation. Permission will therefore be conditional on the claimant including in paragraphs 51 onwards cross-references to paragraph B so as to make clear the purpose for which that paragraph is included.

4. I do not consider that the same considerations apply to paragraph 19C as it is concerned with an allegation that the defendant was "to provide for the plaintiff the benefit of its technical expertise in respect of plant and equipment and to propose to the plaintiff the plant and equipment which it genuinely considered to be best suited for the project". The remaining sub-paragraphs set out the reasons for this proposition and the allegation is sufficiently followed up later. Here the word "genuinely" will be permitted because here it simply means reasonably considered, or factually considered, and I do not think it in fact has the same connotation as might be given to it in paragraph 19A.)

5. Paragraph 19D states if clause 1(i) does not bear the meaning set out in paragraph 19A "then there was an implied term of the agreement that the parties should perform their obligation of co-operation in good faith. The discharge of that implied term imposed obligations inter alia as set out in sub-paragraphs (a) to (d) under paragraph 19A [sic] and in paragraphs B and 19C". It is fair to record that this paragraph was proposed before M Speaight had seen my reasons in which I said that if the factual matrix to the agreement were that pleaded by the claimant (which for present purposes is assumed) then clause 1(i) will be read and given effect to in that light. Paragraph 19D in introducing a general implied obligation of good faith should such an interpretation fail to be established is, in my view, not sustainable for the reasons which I have covered in my earlier judgments and reasons. I do not consider that it is right that it should be left in as an alternative to the true interpretation of the term "as to cooperation". Accordingly, no permission is given for paragraph 19D.

6. I turn now to paragraph 51. It and succeeding paragraphs refer to breach of "the implied term of good faith pleaded in paragraph 25(1) hereinabove" but that is now limited to "a withholding of satisfaction from a letter of commitment from AIS which is not relevant to these paragraphs. They now require editorial amendment so as to limit them to a reference to "the express term of cooperation pleaded in paragraph 19 herein above", ie to clause 1(i). Permission is given only if the words "and of the implied term of good faith pleaded in paragraph 25(1) hereinabove" and also the words "and all to display good faith" in the third line of paragraph 51 and elsewhere are all deleted. They clearly relate back to either paragraph 25(1) which does not contain any such obligation, or to paragraph 19D, which is not permitted.

7. Other parts of paragraphs 51 onwards to which exception is taken by the defendant give rise to certain points, some of principle, others ones of ordinary case management, eg whether permission should be given if the wording is unclear. Mr Onions asked me to look first at paragraph 55 where it is said that the defendant "failed promptly to notify the plaintiff when in about May 1997 it ceased to be positive about continuing the development of the project". It is clear from the argument advanced by Mr Speaight that the words "in about May 1997" need to be reconsidered since the particulars include matters after date. It is equally clear that the particulars of breach themselves need to be reconsidered. In my judgment Mr Onions is right in saying that the consequences of the breaches in this paragraph need to be reconsidered in the light of the later allegations since the claimant is here advancing a case which on the face of it is difficult to understand, namely that,, amongst other things, he lost the benefit of the opportunity of seeking alternative partners because he did not know the defendant's position. In paragraph 61 the breaches are said to have occurred "early in stage 1" which may or not be "about May 1997". So the words in paragraph 61, "early in stage 1", need also to be reconsidered as well as other parts of that paragraph to which I shall return later. Therefore, at this stage, there will only be permission in relation to paragraph 55 if the wording is clarified by implementation of a condition that in relation to the subparagraphs up to (6) the claimant is to state specifically the period relied on and to separate from the particulars given those which are truly particulars of breach and those which merely evidence breaches.

8. There are a number of other similar points which have been taken on a number of these paragraphs. Although I consider that permission should be refused or made conditional where there is a manifest lack of clarity which will make it difficult the case to be understood and dealt with properly, eg for the purposes of Rule 16.5 and otherwise as I have stated, a pleading which is tolerably clear may be left to be clarified by requests for information. In the ordinary course of case management a balance has to be struck which must reflect the need to be cost-effective but which does not hold up the progress of the action to the detriment of the claimant himself where the defendant would not be materially prejudiced. At the moment I have come to the conclusion that it would not be right for me to attach conditions to the permission so as, for example, to deal with paragraph 57(3) which imports a potential fresh obligation. I think this is a matter which I will leave to the defendant to press, if it need to, by way of a request for further information. In the light of the answer it will be open to the defendant to reapply. It is in the nature of complex pleadings of this kind that words may be chosen which would require reconsideration or explanation and I do not think it right at this stage merely to refuse permission on the grounds that exception could now be taken to them when in an instance of this sort the right course would be to leave it to the defendant to pursue an objection in relation to it in the light of its formal clarification.

9. I now come to the later paragraphs, such as paragraph 61, in which the claimant suggests that if he had know that the defendant "[was not] serious about its involvement in the project, the plaintiff would then have been free to seek an alternative partner either upon consensual termination of the joint venture agreement [or] the plaintiff's acceptance of the defendant's repudiation". Paragraph 62 continues in the same vein. Whatever difficulties there may be about "consensual termination" the claimant's introduction for he first time of an allegation of his "acceptance of the defendant's repudiation" cannot, in my view, simply be left to a request for further information. Even allowing for the fact that draft has not been proof-read I find this an odd allegation in the light of all the other facts pleaded and the manner in which other breaches have been presented (eg as serious but not repudiatory.) At this stage the claimant must clarify his position before the case proceeds further because the allegation will hark back over many potential aspects of the history of the relationship between the claimant and the defendant. At what moment is it said that the defendant's conduct constituted a repudiation which, if it had been known to the claimant "early in stage 1", the claimant would then have been in a position to exercise a right to accept. Would that really have meant that it was going to be free to seek an alternative partner bearing in mind the provisions of clause 4.10 of the contract which, on the face of it, requires the parties to resolve a dispute of that kind first by consultation with senior management?

10. It is not at all clear to me where this statement leads. Before the defendant is required to defend its case it is entitled to know exactly what the claimant is saying. Accordingly, in relation to paragraph 61, the claimant is to state what is meant by "early in stage 1"; to include the words "was not" before "serious"; and to state which breaches by the defendant constitute either individually or collectively the repudiation alleged, when that repudiation occurred; and when and how it has ever been accepted by the claimant.

11. I move to loss or damage. Two main points have been advanced by Mr Onions First, a very formidable point, that there can be no recovery as a matter of law since the claimant is faced with two problems. First, that there was no legal obligation to proceed and, accordingly, on the authorities (see, eg Lavarack v Woods [1967] 1 QB 278), any assessment of damages would have to be on that basis which would mean that there could be no claim for loss of profit. Secondly, even if that is wrong, the assessment of damages as a matter of law has to take place on the assumption that the defendant takes the course least unfavourable to it which would be, it is said, not to go ahead Accordingly, there would be no loss of profit on the assumption it was entitled to take that course.

12. Mr Speaight has countered by saying that the first propositions are not right as a matter of law for if correct they would conflict with the basic approach to the assessment of damages for reach of contract. As I indicated in argument, both sets of the submissions are difficult to resolve, and I have tested it on the basis used for all these applications for permission: can I really say that permission can be refused on the basis that the allegation is bound to fail and has no realistic prospect? If, to adopt a rudimentary test, I could not at this moment say that either argument is correct and that I would wish to reserve judgment on either, then by that test I could not say that it is bound to fail and has no realistic prospects of success. On the other hand if the defendant's case is correct, it would radically affect the claimant's case. Under the Rule 1.4 issues have plainly been identified. For these reasons I suggested that the points raised by the defendant it should be the subject of a preliminary issue but accordingly, there will be permission to allow the amendments in the form in which they are at the moment but without prejudice clearly to the defendant's position to seek a preliminary issue and to have that determined, the terms of which will have to be agreed or determined at a later stage. But I do not attach that as a condition to the amendment as that will be the subject of further directions.

13. In my view, a similar approach may also be required for the second main objection which is that it relates to the claim for the possibility of the loss of an alternative partner. In my view, this is also potentially susceptible to a determination of the preliminary issue as to whether or not, for example, that falls within a head of damage which is not too remote. I indicated in argument that there may be reasons why it is not too remote but that is also a matter which I think may be looked at again. Certainly, at the moment on the pleadings, I would give permission because until it is clear what time table is referred to in paragraph 55 and 61, it would be wrong to refuse these amendments. So here again, the permission granted is without prejudice to the defendant reapplying for an appropriate order once it is quite clear what timetable is relied on by the claimant in paragraphs 55 and 61, both of which are central to this part of the claimant's case to which the defendant takes exception.

14. Therefore, subject to all these reservations and conditions, permission is otherwise granted in the form sought.