Late amendments – A new approach

In CIP Properties (AITP) Limited v Galliford Try Infrastructure Limited Anors (No.3) [2015] EWHC 1345 (TCC) Coulson J reviewed the post-Jackson authorities governing amendments to statements of case. The judgment leaves little doubt that there is a new approach to applications to amend and that courts will be much more willing to consider questions of procedural prejudice when determining whether permission should be granted.

The Traditional Approach

It has been long established that the court has a broad discretion to permit amendments in accordance with overriding objective. The traditional approach is summarised in Cobbold v Greenwich LBC [1999] EWCA Civ 2074 by Peter Gibson LJ as follows:

“[a]mendments 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 management of justice is not significantly harmed”. 

However, following the decision in CIP, it is likely that Cobbold is no longer the correct starting point.

The Retreat from Cobbold

Even prior to the Jackson reforms, there had been a gradual move away from the approach espoused in Cobbold. In Savings and Investment Bank Ltd (in Liquidation) v Fincken [2003] EWCA Civ 1630 Rix LJ noted that:

“the older view that amendments should be allowed as of right if they could be compensated in costs without injustice had made way for a view which paid greater regard to all of the circumstances as summed up in the overriding objective”.

An example of paying regard to all of the circumstances can be seen in Brown and Others v Innovatorone PLC & Others [2011] EWHC 3221(Comm), where Hamblen J emphasised that parties to litigation have a legitimate expectation that trial dates will be met and would not be put back or delayed without good reason. He identified at [6]-[14] the following (non-exhaustive) list of factors relevant to the exercise of the court’s discretion: 

1. The history as regards the amendment and the explanation as to why it is being made late.
2. The prejudice which will be caused to the applicant if the amendment is refused.
3. The prejudice which will be caused to the resisting party if the amendment is allowed.
4. Whether the text of the amendment is satisfactory in terms of clarity and particularity.

In Swain-Mason and Others v Mills and Reeve LLP [2011] EWCA Civ 14 the Court of Appeal stressed if an amendment would put the parties on an unequal footing or make preparations for trial so burdensome as to put the trial date at risk then the amendment may be considered “very late”. When dealing with very late amendments the court should be less ready to grant the application, indeed the lateness of the application itself could provide grounds for refusing it. The prejudice to the amending party in not being able to advance its amended case is a relevant factor but there was a heavy onus on the amending party to justify it “as regards its own position, that of the other parties to the litigation and that of other litigants before the court.”

There was also an increasing emphasis on the conduct of the amending party; in Archlane Ltd v Johnson Controls Ltd [2012] EWHC B12 (TCC),  Edwards-Stuart J refused permission for an amendment ten weeks before trial, in part, because the reason for the amendment was the evidence of the amending party’s sub-contractor and there was no reason why that evidence could not have been obtained earlier (and therefore the application to amend made earlier). Edwards-Stuart J expressly noted that the extent to which the amending party was the author of its own misfortune was a relevant factor because:

“to the extent that the [amending party] will suffer prejudice by the refusal of this amendment, which I accept is a clear possibility, it seems to me clear also that it is very substantially the author of that prejudice. The reality is that nothing has changed since the original incident and it appears that nothing has been discovered now which could not have been discovered three years ago”.

The New Overriding Objective

As part of the Jackson reforms to the CPR, the Overriding Objective was amended to provide that the court must deal with cases “justly and at proportionate cost”. Further additions to the overriding objective found at CPR r.1.1(2) include “saving expense” and “allotting the [the case] an appropriate share of court resources”. Issues of “proportionality” will be vital to most applications to amend late, as can be seen from the Post-Jackson amendment cases below:

In Hague Plant Ltd v Hague & Others [2014] EWCA Civ 1609, the Court of Appeal upheld the first instance decision to refuse the Claimant’s application to re-amend its particulars of claim to include claims for dishonest breach of fiduciary duty and dishonest assistance despite the fact that no trial date had yet been fixed. HHJ Behrens concluded that the application to amend was nonetheless “late” having regard to the time that had passed and the work that had been done (including completion of defences and considerable time and effort on Part 18 exchanges).

Briggs LJ approved that approach. He acknowledged the distinction between a “very late” amendment which will jeopardise a trial date and a “late amendment” where as a consequence existing work will be wasted and substantial further work and expense incurred. The Court made clear that lateness is not an absolute but a relative concept. A short, tightly-focused, properly explained and fully particularised amendment shortly before trial may not be too late whereas a lengthy, ill-defined, unfocused and unexplained amendment proffered several months before trial may be too late (Hague Plant Ltd at [31] to [34]).

In Bourke and another v Favre and another [2015] EWHC 277 (Ch) Nugee J refused to allow amendments months before trial because dealing with the amendments would put “significant pressure” on the defendants whilst there was no corresponding pressure on the claimants who had already prepared their evidence with the amended claim in mind.

In Wani LLP v Royal Bank of Scotland Plc and another [2015] EWHC 1181 (Ch) Henderson J refused permission to amend where the application was being made two months before trial and neither side said that the trial would have to be adjourned if the amendment were allowed. Henderson J considered the factors in Brown and concluded that the amended case could have been advanced earlier and with greater particularity. The lateness and want of particularity would put the defendant under great pressure in preparing for trial and, accordingly, permission to amend was refused.

The Application in CIP v Galliford

The pre-action protocol process had begun in 2011. Proceedings were eventually issued in October 2013 and, following various interlocutory matters, a trial timetable was set in a CMC on 3 October 2014 leading to a trial in January 2016. By the time of the CMC the Claimant had incurred a very high level of costs and estimated its costs to trial to be £9 million. The Court made a costs management order which reduced the Claimant’s cost budget by more than of £4 million (see [2015] EWHC 481 (TCC)).

By applications in late April 2015, the Claimant sought to amend its claim to include three categories of amendments. There was no objection to category 1 amendments (in relation to remedial works) and category 2 amendments (in relation to further details of breach relating to matters already pleaded). A revised timetable was required to accommodate the additional work involved in dealing with those amendments but the Court found that the trial date could, only just, be maintained.

The Defendant and Additional Parties objected to the third category of amendments which included two new claims in respect of car park ventilation system and roof defects. In particular, the defendant parties argued that:

(i) there was no good reason given for the lateness of the amendments. In particular:

1. The allegations in relation to the car park ventilation system had been included in the letter of claim, omitted from the particulars of claim and that the Claimant’s “Route Map” (an explanatory document served with the Particulars) stated that where items were not included in the Schedule to the particulars of claim they had been investigated and were no longer claimed.

2. On the Claimant’s own case it knew it had made an error in omitting the category 3 claims by November 2014 but made no application to amend for six months thereafter.

(ii) If the category 3 amendments were allowed, the trial date would be lost.

(iii) The proposed amendments were insufficiently clear.

(iv) The defendant and additional parties would be further prejudiced by:

1. Significant pressure time pressure to respond to the amendments where the Claimant had taken for itself the luxury of six months to prepare its amendments.

2. Wasted time and expense in having to respond to the amendments after the close of pleadings and the parties having completed disclosure.

3. Disproportionate time and costs being expended on the claim.

Coulson J agreed with the Defendants that the application was very late (on the basis that the trial date would inevitably be lost) and the lateness of the application had not been properly explained or justified. He concluded that the principal prejudice suffered by the Defendant and the Additional Parties if the category 3 amendments were allowed was that the trial would inevitably have to be adjourned with all of the disruption and increased costs consequences associated and that, in view of the costs already incurred, that was not a feasible option.

Coulson J accepted that the principal prejudice to the Claimant if the amendments were refused would be that it could not pursue the claims in these proceedings. Whilst that is a factor that the court would take into account, it will have little weight if the amending party could or should have advanced the amended case earlier.

The New Approach

Having considered all of the relevant authorities, in EIC v Galliford Coulson J summarised the proper approach to amendments post –Jackson as follows:

1. The lateness of an amendment is a relative concept. An amendment is ‘late’ if it could have been advanced earlier or involves the duplication of cost and effort, or if it requires the resisting party to revisit any of the significant steps in the litigation (such as disclosure or the provision of witness statements and experts reports) which have been completed by the time of the amendment.
2. An amendment can be regarded as very late if permission to amend threatens the trial date, even if the application is made some moths before the trial is due to start. Parties have a legitimate expectation that the trial dates will be met and not adjourned without good reason.
3. The history of the amendment, together with an explanation for its lateness is a matter for the amending party and is an important factor in the balancing exercise. In essence there must be a good reason for the delay.
4. The particularity and/or clarity of the proposed amendment then has to be considered, because different considerations may well apply to amendments which are not tightly drawn or focused.
5. The prejudice to the resisting parties will if the amendments are allowed incorporate at one end of the spectrum, the simple fact of being ‘mucked around’, to the disruption and additional pressure on their lawyers in the run-up to trial, and the duplication of cost and effort at the other. If allowing the amendments would necessitate the adjournment of the trial, that may be an overwhelming reason to refuse the amendments.
6. Prejudice to the amending party if the amendments are not allowed will, obviously, include its inability to advance its amended case, but that is just one factor to be considered. Moreover if that prejudice has come about by the amending party’s own conduct then it is much less important in the balancing exercise.

It is clear from Coulson J’s judgment that the approach in Cobbold v Greenwich is no longer correct and that the burden on the amending party to justify the timing of the amendment applies in all cases of late amendment not just in cases of “very late” amendments which jeopardise the trial date as in Swain-Mason. The starting point is no longer that amendments should be allowed provided that any prejudice to the other parties can be compensated for in costs; the new starting point is whether there is any good reason for the lateness of the amendment.

An amendment may be considered a late amendment even if it does not affect the trial date. The issue is whether  the amendment could have been made earlier or if the amendment causes duplication of costs or effort. Conceivably, an amendment could be considered late even where it could not have been advanced earlier, if it requires the responding parties to revisit significant steps already taken in the litigation. That is part of the prejudice suffered by the responding party. For all practical purposes, any amendment after the closing of pleadings may be considered a “late” amendment. It will then be for the amending party to show good reason for the lateness.

Whilst the prejudice to the amending party in not being able to pursue its amended case remains a factor which the court will consider, it will have little weight if the amending party has been the cause of that prejudice because it did not advance its true case at the earliest opportunity.

“Very late” amendments will only be permitted in the rarest of circumstances. The ambit of the very late amendment is wider than previously thought. As in EIC v Galliford, an amendment proposed eight months before trial can still be considered a “very late” amendment where on analysis of the facts of the particular litigation, the amendment would jeopardise the trial date.

Hardwicke’s Michael Wheater appeared in both Archlane v Johnson Controls (for the successful Defendant) and in CIP v Galliford for the Third Party.