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

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION TECHNOLOGY AND CONSTRUCTION COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		14 October 2011

 


Mr Justice Akenhead:

1. These proceedings were started initially in December 2009 but effectively in April 2010 in the Queen's Bench Division, the Amended Particulars of Claim being dated 30 April 2010. Omni Laboratories Inc ("Omni"), the Claimant, provides various engineering services to oil and gas producers. The Defendant, Eden Energy Ltd ("Eden"), is a company concerned in energy production and, it appears, had secured land based interests in South Wales where it was thought that there might be commercially viable quantities of extractable gas in the earth at depth, in areas which had coal deposits ("the South Wales Resource"). There seems to be no issue now that Omni was retained by Eden in 2007 to carry out gas content analysis and permeability testing in respect of three wells, and that Omni carried out certain services in connection therewith between about mid-2007 and mid-2008. Whilst about $350,000 is said to have been paid, Omni claims $786,191 in relation to what it asserts is the outstanding sum due pursuant to its contract of engagement. The three wells, which were to be worked on by Omni, were Aberavon No 1, Llangeinor No 1 and Pencoed No 1. Given the Court is dealing with a procedural application, I am not making findings of fact which are binding on the ultimate trial judge.
2. A factor which is likely to be of interest at trial relates to the permeability of the materials at various depths. It seems to be the case that in relative terms the more permeable those materials are the easier it is to extract gas; conversely the less permeable materials are the more difficult it will be to extract gas from and through and the less commercially viable will be the particular site. The testing to be done to identify permeability is done in the drill hole which in this case was to be taken to substantial depths, with the drilling done by others. The experts in this case have agreed in relation to permeability and its testing as follows:

"Equipment: the test section (coal formation) is isolated from the rest of the wellbore using inflatable packers which from pressure seals. The length of the test sections are selected based on drill core inspection and geophysical logging. The straddle length of the packer system (distance between the two packers) is made up accordingly and the entire packer system including downhole gauges and a shut-in tool is assembled. The packer system is then run on rods into the open borehole or on a wireline inside rods down to the test section. In the latter case, the rods will be placed shortly above the selected test section and the packers isolating the test section will be placed below the lower end of the rod string so injected water cannot flow into the annulus but to the isolated section only.

Testing procedure: The packer system is run down to the test section and the packers are inflated using water, nitrogen or compressed air to seal the test section off. In an IFO test, water is pumped into the rod string at the surface and therefore injected into the test section downhole, usually at an approximately constant rate. The injection pressure is monitored at the surface. It should not exceed a predefined limit which is calculated based on the depth of the test section in order to avoid hydraulic fracturing. The injection rate is controlled in order to maintain the injection pressure below the estimated fracturing pressure. After the period of water injection, the well is shut-in for an extended period, usually several times longer than the injection period. The pressure in the packed-off test section is measured throughout the test; both during the injection period and during the shut-in period. Downhole pressure data after shut-in represents the pressure decline and is used to analyze the fall-off period. Further, the static formation pressure can be estimated from the downhole pressure data at the en of the fall-off period.

Permeability measurement: The permeability cannot be measured directly but is analyzed from pressure data and flowrate data. Permeability cannot be calculated if no flow is measured. However, in cases when it is not possible to establish an injection flow rate, this is an indication of very low coal seam permeability. [This last sentence is not agreed to by Eden's expert]"

3. Eden served its Defence and Counterclaim on 14 May 2010 albeit it served a substantially amended pleading on 10 December 2010. The case was transferred to the Technology and Construction Court in June 2010 and on 29 October 2010 I ordered that there should be a trial on 9 May 2011, notwithstanding an abortive application by Eden that the trial should be much later. On 27 January 2011, upon the receipt of more cogent material from Eden, I vacated the 9 May 2011 trial date and fixed a new trial date for 7 November 2011 with a time estimate of three weeks. On both occasions, Eden through its Counsel argued that it was essential that it be permitted to have further testing done at Llangeinor which would involve drilling close to the site of the first drill hole and testing as it arguably should have been tested by Omni in the first place. I have the clearest recollection that I was told by Counsel that a primary reason for this testing was so that it could be determined if the area around the well was sufficiently permeable as to make it more or less commercially viable. It was indicated unequivocally that the testing was needed amongst other things for quantum purposes. The first application for the fixing of a later trial date was refused because no real evidence was produced by Eden that this testing was essential or as to why it had not been done or at the very least initiated well before October 2010. The second application was allowed because such evidence was finally produced.
4. I will return later to the detail of the Amended Defence and Counterclaim but in essence Eden denies liability to pay any further sum and asserts that Omni failed to exercise appropriate care and skill in carrying out its services in relation to its services at the Llangeinor No 1 Well. By reason, it is said, of the negligence, Eden was "forced…to sell 90% of its stake in the South Wales Resource at a reduced value". It claims damages of between £15.5 million and £27.2 million and the cost of retesting the well.
5. The re-testing at Llangeinor was done in August 2011 and it was done under the supervision of Eden's own expert albeit that Omni's experts were given the opportunity to attend. The technical experts produced experts' agreements on 5 October 2011. The experts are agreed that the results of the well testing in August 2011 identified permeability which they describe as low, very low and extremely low at all tested depths between 334 and 643 metres below ground level.

The Applications

6. With the trial due in a few weeks time, Eden's solicitors served on 21 September 2011 a draft Re-Amended Defence Counterclaim, which amongst other things but primarily sought to add in a claim for deceit and (post-contract) fraudulent misrepresentation. The letter gave Omni's solicitors seven days to consent to the re-amendment, failing which they would make an application to court for leave to amend. Omni's solicitors replied on 23 September 2011 to the effect that, whilst they would consent to certain of the other re-amendments, their client objected to the amendments relating to deceit and fraud on the grounds that the allegations were wholly without merit and that they were made too late. There appears to be little or no effective response from Eden's solicitors to this letter. Omni's solicitors issued an application on 23 September 2011 seeking a direction that Eden should not be given permission to re-amend its pleading in relation to the fraud and deceit allegations. That was supported by a witness statement of Mr Leckie which provided a more detailed explanation as to why objection was being taken to these proposed amendments. A hearing date of 6 October 2011 was fixed for the hearing of this application. For no obvious good reason, it was not until 3 October 2011 that Eden issued its application for permission to make the proposed re-amendment. That was only supported by a witness statement from Mr Flook dated 5 October 2011.
7. I heard the arguments on 6 October 2011 but indicated that I would reserve judgement in particular so that I could consider the oral arguments with care.

The Proposed Re-amendments of the Defence and Counterclaim

8. Paragraph 5 of the proposed pleading now admits that Omni "provided some gas content analysis and permeability testing in respect of all three wells". The remainder of Paragraph 5 for which no further re-amendment is sought sets out some of the commercial and technical criteria in relation to the project, for instance identifying that "a crucial determinant of the commercial viability of a coal seam methane resource, and therefore its value, is the feasibility of extracting the gas at a commercially viable cost" and that the "permeability of the target coal seam is a key determinant of whether or not the coal seam methane may be extracted at a commercially viable cost". It explains that "coal seam permeability testing is conducted to determine the gas flow rates of coal seam methane gas and therefore whether it can be viably extracted on a commercial basis from the coal seam in which it is situated." Paragraph 5.6 asserts:

"As the Claimant well knew or ought to have known, the key purpose of the project and the Services was to ascertain the permeability of the target coal seams so as to ascertain both whether the gas could be extracted at a commercially viable cost so as to enable the Defendant to exploit the South Wales Resource commercially and also therefore the value of the Resource to the Defendant".

9. Paragraph 6 of the Amended Defence identified the services to be provided by Omni at each of the three wells which included the design of the permeability test programme, the selection of the "bottom hole assembly"("BHA") including the packers to be used for testing, the supervision of the installation and operation of the BHA, the supervision of the permeability test programme and the recording and analysis of data from the permeability testing as well as reporting of the analysis. Paragraph 7 pleaded a duty of care in tort with a view to ensuring that appropriate packers were selected and properly installed and that any invalid results were properly recorded and reported as such. Contractual terms are also pleaded in comparable terms.
10. Paragraph 9, which is not re-amended, identifies complaints against Omni for failure to exercise reasonable skill and care in relation to the services performed at the Llangeinor Well No 1. These complaints revolve around the use of what are said to be inappropriate packers for use in the testing, inappropriate because it is said that they "could only hold differential pressure of 275 psi [lbs per square inch]" in respect of which "the Claimant knew (or ought to have known), that for any meaningful results to be achieved, the packers had to be able to hold a pressure differential of 1500 psi". It is asserted that Omni should have advised or warned "that the proposed testing should be postponed until suitable alternative packers had been obtained". It is alleged that testing between 1 and 28 February 2008 was conducted "at a differential pressure of only 100 psi" and that Omni should have advised Eden that "the test should not be carried out using the selected packers and/or that any results obtained as a result of any such testing were likely to be invalid and/or worthless or, at best, of only very limited value". It is said that the results of this February 2008 testing "were invalid and/or worthless" and that Omni "should have advised [Eden] to carry out retesting immediately and/or should itself have taken steps to do so". As a result of zero permeability being consequently recorded from this well, it was said to be "impossible to say whether or not there was in fact any permeability" and that the report was "worthless and/or of only very limited value because, as [Omni] well knew or ought to have known, the testing did not establish, and the report therefore did not report, the actual level of permeability."
11. Paragraphs 11, 12 and 13 of the Amended Defence addressed what happened after February 2008 which was that Omni did not conduct any further permeability testing at that well until May or June 2008. It is said that because of the "delay between February 2008 testing and the May/June 2008 testing, part of the well below 340 metres had collapsed, thereby precluding testing the target seams below this level and, in particular, precluded testing in the thicker coal seams below 545 metres that had been intersect and which were known to contain relatively high levels of methane gas." It is said that the May/June 2008 testing was conducted using a pressure differential of up to 1000 psi but it could only be carried out to about 545 m because the well had collapsed.
12. The original Amended Defence pleaded in Paragraphs 15 to 23A the financial consequences of the alleged negligence and breaches of contract. It was explained that Eden "held a 50% interest in the South Wales resource" and was from about early 2008 "negotiating with Centrica Plc for [it] to contribute equity by purchasing up to 90% of [Eden's] share"; but before the February 2008 testing, these negotiations "were being conducted on the basis that [Eden's] share of the South Wales Resource was worth between £20 million and £33 million." Paragraph 19 stated:

"As a result of [Omni's] failure to exercise any reasonable skill and care…during the February 2008 testing and/or incorrect analysis and reporting of the permeability testing at the Llangeinor No. 1 well the Defendant was unable to sell its share in the South Wales Resource to Centrica and/or had to put the negotiations for the same into abeyance. It was (or would have been) impossible to negotiate a proper price for the sale of the [Eden's] share without any valid results for the permeability testing. [Eden] thereby lost the opportunity to effect a sale of 90% of its share of the South Wales Resource at a price between £18 million and £29.7 million"

Paragraph 20 pleaded that the lack of any permeability testing below about 545m from the May/June 2008 testing "meant that the results obtained were inconclusive and therefore worthless in the negotiations with Centrica (and others) for the sale of [Eden's] share of the South Wales Resource."

13. Paragraphs 21 to 23 pleaded:

"21. The failure to obtain any conclusive results even as a result of the re-testing meant that the value of the South Wales Resource remained uncertain and was therefore a less attractive investment for any potential investors such as Centrica. Further, the delay in carrying out the re-testing also delayed any potential sale until the second half of 2008. By September 2008, the economic situation had worsened considerably and the climate for investment had significantly deteriorated with the result that conditions for investment in the South Wales Resource and the sale of part of the [Eden's] share in the South Wales Resource had also deteriorated significantly.

22. By reason of the matters aforesaid, [Eden] lost the chance to sell its interest in the South Wales Resource on the basis that its 50% interest was worth between £20 million and £33 million…and was forced instead to sell 90% of its stake in the South Wales Resource at a reduced value. The final sale price to Centrica for 90% of [Eden's] interest in the South Wales Resource was £2.5 million.

23. The sale of 90% of [Eden's] interest in the South Wales Resource on the basis that it had a value of between £20 million and £33 million would have provided a price between £18 million and £29.7 million. The actual sale price was £2.5 million. Therefore, by reason of [Omni's] negligence and/or breaches of contract, [Eden] has suffered loss and damage of between £27.2 million and £15.5 million."

14. Paragraph 25 went on to plead in the alternative that there should be a full or lesser abatement on the full price charged by Omni for its services. The Amended Counterclaim went on to claim losses at the above level.
15. The Amended Reply and Defence to Counterclaim was served in January 2011 and issue was taken on many of the assertions referred to above. Liability was denied; for instance it was said that the packers were suitable for the drill hole size originally to be used at Llangeinor No 1 Well but it was asserted that this was changed by Eden; it is said that Eden knew that the packers actually provided were not designed to hold pressure above 100 psi. Issue is taken on what the value of the South Wales Resource was at any material time. Reliance is placed on an exclusion and limitation of liability clause.
16. A Rejoinder and Reply to the Amended Defence to Counterclaim was served in mid-February 2011. In Paragraph 3, Eden positively pleaded that "the question whether the tests had been validly performed was raised as early as 20 March 2008". In Paragraph 5, Eden comprehensively addresses issues relating to the exclusion or limitation of liability clauses relied upon by Omni.
17. Disclosure was ordered to take place by 10 December 2010 with inspection to follow before Christmas. Certain documents which are important for the purposes of the amendment application were as follows:

(a) An email dated 2 February 2008, a Friday, from Mr Obluda to Mr Mavor:

"Attached should be the down-hole data for the perm test. I'm just sending it for safe keeping in case my computer gets stolen. You can look at it, but they don't want any results until next week. They think the owners will call the hole quits when they see this. It's obvious to me the perm is zero, the injection rate was too low to measure, and the pressure didn't bleed off all night. We'll talk about it Monday, but don't contact Coastal before that."

The reference to "perm" is presumably to permeability. Mr Obluda was a project manager retained by or on behalf of Omni who was involved on the project and who will give evidence as to what did and did not happen in relation to the work at Llangeinor. Amongst other things his first witness statement suggests that he worked under the direction and supervision of Oliver Taylor who was said to be a consultant for Eden who was permanently on site. Mr Mavor was employed or retained by Omni. Coastal was engaged with Eden in some way on the project.

(b) Mark Wood's written notes for 5 February 2008:

"Coastal Langeinor No.1, 0.05 millidarcy, very low. Too low a perm at 60 psi, need 600 psi. Will have to ream hole to larger diameter to do the regular perm at 730 metres. Small diameter perm is not worth the effort. HQ drill stem may stuck [sic]. Coring with NX sixes right now. Hole stability is a problem. Jim recommended perm test in upper zone at 400 metres. Lower zone is questionable. Check on percent of crushed gas.

The right way to mud up, need to use better mud system. Using KCI now which reacts with montmorillonite in the formation causing it is well and cave in. Need NaCl mix with the KCI. Need to keep mud density up. Case and then perforate zones to be perm tested. Second hole for perm testing will use 6.5 inch bit and 4 inch casing."

Mr Wood was a field supervisor who also explains in his witness statement that he and other people working for Omni were under the direction of Mr Taylor. There is another e-mail note from Mr Wood which suggests that there was a "Debrief on the Llangeinor # 1 small diameter coring and perm test" on that day, although whether his written note is a note of that meeting remains unclear. A "millidarcy" is a measure of permeability.

(c) Mr Mavor's e-mail dated 25 March 2008 to Mr Taylor:

"Jim Obluda and I discussed the 100 psi pack at limitations before the tests were conducted. We both agreed that this was at that time the best option possible to get any test data given the hole stability problems. We were concerned that it would not be possible to initiate the tests and should have made this more clear at the time. For the future, we have identified test equipment that can be run through the coring equipment with packers that are rated to pressure differential of 1500 psi. We recommend that this equipment be considered for future well."

18. Witness statements were due for exchange at the end of March 2011 but that was extended to late May 2011. Disclosure of the above documents had occurred between December 2010 and March 2011. Rebuttal witness statements were served on about 13 or 14 September 2011.These included another witness statement from Mr Obluda. He provided in this latest statement further details of the testing which he carried out at the Lllangeinor well site. He explained that water was injected into the coal zone at a pressure of 60 psi and that the flowmeter "had actually measured zero in less than 10 minutes". He explained that he spoke to Mr Mavor to advise him that there was no flow "but as I have personally never experienced zero injection readings before I decided to continue with the test to see if the situation changed." He added that the flow meter reading remained zero throughout the test and consequently did not produce any handwritten notes. He says at Paragraph 14 of this second statement:

"In relation to analysing the Llangeinor testing, I was to e-mail the data to Matt Mavor, so that he could interpret the figures. As explained above, the first overnight injection test at Llangeinor produced no injection, so a standard practice was adopted to have me call Matt Mavor after the first 15 minutes of injection for each test to report the status of injection. In practice, it was clear that a test was not going to be successful if there was a zero result after 15 minutes, because if there was no injection after 15 minutes there would continue to be no injection for the whole test period."

In Paragraphs 15 and 16 he refers to his e-mail of 2 February 2008 (see above) and states that the "fact that there was no injection was communicated to Oliver Taylor verbally on-site".

19. In the context of this, Eden explains the basis upon which it seeks to add a claim in deceit and fraud. The proposed re-amendments are mostly in Paragraph 14A.which proceeds on the basis that "by about 2 February 2008 (at the latest) {Omni] knew and/or had formed the belief that the packers were not fit for the purpose and/or that any further testing with the packers would be pointless and/or would be highly unlikely to produce any meaningful results but nevertheless decided to conceal the same from [Eden]". The Particulars then given set out that Omni knew that "the injection rate of water in the First Test was too low to measure flow" and that Mr Obluda had concluded "straightaway that any reports on permeability would be negative". There are specific references to the e-mail dated 2 February 2008 and there is an assertion that Mr Mavor knew or should have known that "based on the results of those tests other estimates of permeability would have been zero because the injection rate was zero." Paragraph 14A.7 expressly refers to Mr Wood's note of 5 February 2008. There is a complaint that Omni did not inform or report to Eden either that the "First Test had failed to record any permeability", "any estimates of permeability would be zero because the injection rate was zero" or that "the [packers were] unlikely to be able to operate at a sufficient differential pressure for permeability to be recorded". Paragraph 14A.9 states, without condescending to particulars:

"…the Claimant deliberately misrepresented the position to Mr Oliver Taylor (acting for and on the half of [Eden]) by informing him:

14A 9.1 only that 'permeability would probably be low'; and

14A.9.2 that [Omni] (in the person of Jim Obluda) was 'happy' with the way the packers operated'"

20. The draft Re-Amended Defence and Counterclaim continues:

"14B. By deliberately failing to inform [Eden] of the true position (by failing to inform [Eden] of any of the facts and matters pleaded in paragraph 14A.8 above) and/or by deliberately misrepresenting the position to Mr Taylor as alleged in paragraph 14A.9 above, [Omni] intended that [Eden] would not abort the tests and instead allow them to continue.

14C. By failing to reveal the true position to Eden, [Omni] falsely represented to [Eden] and/or falsely induced [Eden] to believe that the packers were fit for purpose and/or that further testing was worth carrying out and/or that meaningful results could be obtained. [Omni] knew (or ought to have known) that if the true position had been revealed to [Eden], [Eden] would have aborted the testing with the Priority Packers.

14D. In reliance upon [Omni's] false representation as aforesaid and/or induced by its mistaken belief as aforesaid, [Eden] allowed the Llangeinor testing to continue through February and March 2008.

14E. If [Omni] had revealed the true position to [Eden], [Eden] would have immediately directed [Omni] to:

14E.1 stop testing with the Priority Packers;

14E.2 obtain packers capable of operating up to as high a pressure ia that recommended by Mr Mavor or Mr Wood;

14E.3 move the testing to Pencoed until the new packers for Llangeinor become [sic] available; and

14E.4 retested at Llangeinor when the new packers arrived.

14F. the deliberate nondisclosure by [Omni] continued from 31 January 2008 until 18 March 2008, by which time the testing at Llangeinor was completed…"

21. The quantum and the causation for the loss and damage said to flow from the deceit or false misrepresentation is identical to that claimed for the negligence and breach of contract. Paragraph 28.2 adds an assertion that by reason of the facts and matters pleaded in Paragraph 14A the Omni terms and conditions have no "application in respect of any services provided in relation to Llangeinor".
22. Thus, it can be concluded that the allegations of deceit relate at most to a 6 to 7 week period in February and March 2008 and the same quantum through the same causation chain is claimed in relation to the alleged deceit as is claimed for the negligence and breach of contract claims.

The Arguments

23. Counsel for Eden indicated at the hearing that Eden would not be calling a valuation expert although it had permission to do so. Also, and I confessed to substantial surprise about this, she indicated that it mattered not to her client's case what the results of the re-testing exercise were. Her client's case was essentially, she said, that it was the absence of reliable information about Llangeinor which led to the securing of "only" £2.5m by her client and that the inability to obtain £15.5 million to £27.2 million more was attributable simply to the lack of reliable information. She was unable to explain satisfactorily in those circumstances what the point of the re-testing exercise was, if the results did not matter.
24. Essentially, Counsel for Omni argued that there was no reasonably credible material which supported even a prima facie case on fraud, that the proposed amendments conflicted with Eden's other evidence and also that the amendments were unnecessarily and prejudicially late.
25. Against that, Counsel for Eden sought to explain the delay by saying that it was only the production of Mr Obluda's second witness statement in September 2011 which finally led to the decision to re-amend and that, even if there was culpable delay on the part of Eden in seeking leave to re-amend, there was still time before the trial in early November 2011 for Omni to deal with the deceit allegations. It is said that there is sufficient material to support a case in deceit and that there is no real conflict between the re-amendments and Eden's factual evidence.

Discussion

26. It is clear as a matter of generality that in dealing with cases justly (as required pursuant to the overriding objective) the Court should allow amendments generally so that "the real dispute between the parties can be adjudicated upon" (Cobbold v Greenwich LBC 9 August 1999 Court of Appeal). Lord Justice Peter Gibson said in that case that this was subject to proviso that, if there was prejudice which could not be compensated for in costs or if the public interest in the administration of justice was significantly harmed, to that extent amendments could be refused. It is also the case that an amendment will be refused if it is clear that the proposed amendment has no prospect of success. So far as amendments are concerned, it is legitimate for the Court to consider whether the effect of the amendment will put the parties on an unequal footing, will or may jeopardise the trial date or will place or add an excessive burden to the other party in preparing for trial (see notes to CPR 17.3.7).
27. I will deal first with the question of lateness. In my judgement, there can be no good excuse for the delay in making this application:

(a) The primary information upon which the new claim in deceit is based has at the very least been available to Eden and its advisers since December 2010 or possibly March 2011. The email of 2 February 2008 from Mr Obluda, heavily relied on in the re-amendments on deceit, was disclosed in December 2010 whilst Mr Wood's notes were made available in March 2011.

(b) If there is or was a claim in deceit, it would be and indeed is largely based on those two documents or their contents. It is clear that Mr Taylor, Eden's own consultant, was on site at least on a regular basis, as appears from his witness statement and it is not as if Eden and its legal advisers do not have access to evidence from its own witness as to what was or was not happening or being communicated on the site.

(c) Indeed, even in the Amended Defence and Counterclaim, Eden positively pleaded albeit as an alternative plea that Omni "knew" effectively that the wrong packers were being used. That is pleaded in at least three places in Paragraph 9. If one couples that with the contents of the e-mail of 2 February 2008 and the notes of 5 February 2008, it is a relatively small step to having enough to argue that Omni knew what it is alleged it knew and represented in the various parts of Paragraph 14 A of the proposed Re-amended Defence. Certainly, Eden has for many months had access to its own witnesses and the disclosed documents as to what was said or not said to its own people.

(d) The suggestion that it was only when Eden and its advisers saw Mr Obluda's second witness statement in mid-September 2011 that they realised that they finally had enough to plead the deceit case proposed by them is not at all convincing, in my view. This adds very little to the email and note of 2 and 5 February 2008 respectively.

28. These amendments, if they were going to be made at all, could and should have been made no later than about April 2011 and in any event before the first round of witness statements, exchanged in late May 2011. Although this is a minor point, even when on 23 September 2011 Eden's solicitors were told that the proposed re-amendments in relation to deceit were being opposed, it took them over 10 days to issue an application to amend and they produced their witness statement to support it even later only on the eve of the hearing.
29. A claim in deceit, in effect for fraud and dishonesty, should in general be pleaded at the earliest reasonable opportunity, whether it is by claimant or defendant. Any such claim can have serious ramifications not only for the litigation party against whom the complaint is made but also for the individuals against whom the serious allegations are effectively made. A particularly unfortunate result of an unjustifiably late amendment to add a claim in deceit arises where witness statements have already been exchanged beforehand so that the individuals against whom the deceit is effectively alleged will have prepared their witness statements and will have been proofed to deal with allegations which fall short of deceit. It is essentially unfair for a party, either consciously or because it has not applied its mind to it, to hold back a claim for deceit which it could make earlier in effect to see or to have the opportunity ofseeing what witnesses for the other party may or may not say in their statements. The same point can be made in relation to the party against whom the belated deceit allegation is made in that that party will have committed itself to securing evidence to deal with pleaded allegations, as in this case, simply for want of care. Whilst, of course, the Court does not expect or anticipate that the earlier evidence will be expected by the party in question to be anything other than true, the reality is that the witness statements were, as in this case, procured and tailored to deal only with the substantially less serious case.
30. In my judgement, in these circumstances, I do not consider it just or fair for the amendments relating to deceit and fraud to be allowed to be made when Omni and the witnesses against whom the deceit allegations are made have submitted statements dealing with a substantially lesser case. It is of course impossible for the Court to say how Omni or their witnesses would have addressed the deceit allegations if they had been made before May 2011. All one can say is that there is a strong probability that the witness statements in question would and could have been prepared differently to deal with such allegations.
31. If the deceit allegations were allowed in at this late stage, Omni would have to be allowed sufficient time to consider its position and how it would have to address the issue. Of course, the first port of call would be Mr Obluda and Mr Mavor who are based in the USA, who have already given witness statements and there has been no suggestion that they would not co-operate. However, Omni would be entitled and I can see would want to investigate very carefully these serious allegations, which might conceivably have criminal connotations and which could well reflect, if ever proved, badly and harmfully on Omni, in other ways and with other witnesses. In my judgment, the lateness of Eden's application has created a risk that the trial date could not be kept once these further investigations are instigated. Given the state of the TCC judges' diary, a three week trial date could not be provided until next summer, which delay would be undesirable and harmful to the interests of Omni who had a reasonable expectation that this second trial date, the May 2011 date having been vacated, would be maintained.
32. It is difficult for the Court to form a conclusive view that a deceit claim as formulated has absolutely no realistic prospect of success. However, the deceit allegations really relate to a very narrow "window" in February and possibly March 2008. Eden only plead liability in negligence and deceit in relation to a six or seven weeks "window", it being reasonably clear that either by late February or possibly as late as the third week in March 2008, or possibly well before, Eden was well aware as to what had happened at the Llangeinor well. I doubt very much whether the deceit allegations add anything to or vary much of significance in Eden's Defence. Put another way, if the Defence based on lack of care fails, it is almost inconceivable that any Defence based on deceit would succeed. Similarly, if the Defence and Counterclaim based on lack of care succeeded on liability but failed on causation (which is very much in issue), it would be unlikely, to say the least, that the Defence based on deceit would succeed on causation, primarily because exactly the same causation chain is pleaded both for lack of care as it is for deceit. I will make no comment on the relative strengths or weaknesses in Eden's position in the light of the re-testing results and its decision not to call a valuation expert.
33. Essentially, the deceit allegations add little to Eden's Defence and Counterclaim as pleaded. The main relevance is by way of rejoinder to the Reply's reliance on exclusion or limitation clauses which, it might forcefully be argued, do not exclude or limit liability for deceit or fraud.
34. It is the case that the lateness of the application to re-amend has led primarily to the reluctance of this Court to allow the deceit based re-amendments but Eden is the author of its own misfortune in this regard. The Court has to balance Eden's inability to rely upon the deceit allegations and the unfairness to Omni having to deal with late allegations of deceit which could and should have been made in relative terms a long time ago. In doing that balancing exercise, I have no hesitation in coming down against Eden in this instance.

Decision

35. Eden's application to re-amend a claim in deceit is refused; certain of the other re-amendments are not challenged. Given the delay on the part of Eden in bringing its application and given the impending trial and Pre-Trial Review on 14 October 2011, it was reasonable of Omni to seek to bring matters to a head by pursuing its pre-emptive application in relation to the then merely proposed re-amendments in relation to deceit, which application is allowed to that extent.