In Invest Bank v El-Husseini, the Bank has sued eight defendants under section 423 of the Insolvency Act 1986. The claim, which was issued in July 2021, is listed for a 4-week trial in July 2024.
On 25 April 2024, the Bank issued an amendment application seeking to make around 143 substantive amendments to its pleaded case. The proposed amendments included a new allegation of bad faith, a new claim for upto US$15m against D6 and a new factual basis for its existing section 423 claims.
D2 and D6 consented to some of the amendments but otherwise opposed the application root and branch. They contended that: (1) all the amendments were very late, alternatively late; (2) most of them were barred by section 35 of the Limitation Act; (3) some were embarrassing in the technical sense; and (4) others had no real prospect of success.
Following an expedited 2-day hearing on 16-17 May 2024, Mr Justice Bryan refused the Bank’s application, essentially for the reasons given by D2 and D6.
The judgment discusses a number of important points of law about amendments and limitation which are of wider interest. These include the following:
- If the defendant has an arguable limitation defence to a new cause of action that is sought to be pleaded by amendment, leave to amend cannot be given unless the test in section 35(3) of the Limitation Act and CPR 17.4(2) is satisfied: [56]-[58].
- Seeking a new remedy on the same factual basis does not constitute a new cause of action and is not caught by section 35 but seeking the same remedy on a new factual basis does constitute a new cause of action and is caught: [109].
- The phrase ‘same facts’ in CPR 17.4(2) means just that. The phrase ‘substantially the same facts’ is a narrow extension of this basic test and does not extend beyond ‘minor differences’: [60]-[61].
- The limitation period for section 423 claims is either 6 years or 12 years depending on whether the essential nature of the claim is for the payment of a sum of money or non-monetary relief: [69].
- In the light of the recent Supreme Court decision in Potter v Canada Square [2023] 3 WLR 963, section 32(2) applies only if the defendant subjectively knew that his conduct constituted an actionable wrong. There is therefore no rule that section 32(2) is engaged in every case in which a section 423 claim succeeds: [117]-[118].
- An application to make substantive amendments in the immediate lead up to a trial is, ‘at the very least’, a late amendment and, if it threatens the trial date, a very late amendment: [47].
- There is a ‘particular onus’ on a party seeking to make a very late amendment to ensure that it satisfies to the full the requirements of a proper pleading: [50].
- Although it was said in Phones4U v EE [2021] EWHC 2816 that an amendment pleading further factual material in support of an existing plea does not need to meet even the real prospect of success test, ‘it would be contrary to the overriding objective to allow amendments which have no real prospect of success’: [44].
In relation to (1)-(2) above (limitation), the Bank contended that it was open to the court to defer the limitation issue to trial by granting leave to amend conditionally in a manner that deferred all limitation points (including the application of relation back under section 35) to the trial. D2/D6 submitted that the Court has no jurisdiction to do this. Mr Justice Bryan held that ‘there is much force in the submissions of D2/D6 which are based on the statutory language and the rules of court’ but that he was ‘not convinced that the Court can never depart from the statutory language in its approach to an amendment’: [82] (emphasis in original). It was not necessary for this issue to be determined because the Judge held that it was not appropriate to defer the limitation issue to trial even if there was jurisdiction to do so.
The Bank was ordered to pay the defendants’ costs and its application for permission to appeal was refused.
Niranjan Venkatesan and Constantine Fraser acted for the successful defendants, instructed by Debenhams Ottaway LLP.
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