Cluley v Cluley

Permission to amend a served statement of case is discretionary, but the discretion must be exercised according to principle and the overriding objective under the Civil Procedure Rules.

Prejudice to the opposing party is highly significant. It includes losing the opportunity to protect a claim by joining alternative defendants before limitation expires or a company is dissolved. That prejudice may justify refusing an amendment, even where the amendment raises a potentially complete defence. A claimant who reasonably sued on the basis of an admission is not at fault for failing to join other parties merely to guard against its later withdrawal.

John and Susan Cluley appealed against an order of His Honour Judge Kirkham in the High Court, Queen’s Bench Division, dated 27 June 2003. The order permitted RL Dix Heating to amend its Defence and Nu-Heat Limited to amend its Part 20 Defence to raise whether there was any direct contract or collateral warranty between the Cluleys and Dix.

Dix had previously admitted the contractual relationship. By the time amendment was sought, Churchill Builders, the main contractor, had been struck off and relevant limitation periods had expired or were about to expire. The central issue was whether allowing the late amendments caused prejudice that should prevent permission being granted.

Lord Justice Jonathan Parker gave the leading judgment. Sir Martin Nourse and Lord Justice Simon Brown agreed. The appeal was unanimously allowed.

1. The court has a wide discretion under CPR 17.1(2), and may permit withdrawal of an admission under CPR 14.1(5). That discretion must nevertheless be exercised according to principle and the overriding objective. The Court of Appeal must intervene where the lower court’s approach is contrary to principle or its decision is plainly wrong [64]-[65].
2. Prejudice to the opposing party is, on any view, a highly significant factor. The Cluleys had lost the opportunity to join Churchill and possibly the architect before dissolution and the expiry of limitation periods. That was real and obvious prejudice caused by Dix’s failure to raise the contractual issue earlier [66]-[73].
3. The Cluleys had reasonably sued Dix alone because Dix had admitted the direct contractual relationship. They were not required to join other possible defendants as a precaution against a later withdrawal of that admission. In the circumstances, joining additional defendants despite the admission could itself have been an abuse of process with adverse costs consequences [69].
4. The case-management discussions did not give the Cluleys a warning that the admission might be withdrawn. On the contrary, Dix confirmed that the admission stood. The failure to disclose the main contract did not make the prejudice self-created, since the relevant damage had substantially occurred and the pleadings had not put the contract issue in dispute [71]-[74].
5. Lord Justice Simon Brown added that prejudice could not be postponed until the preliminary issue was decided. If the amendment was unnecessary, that was no reason to allow it; if it was effective, the resulting prejudice was established [79]-[82]. The judge’s order was set aside and specified paragraphs were struck out. Costs orders were made in favour of the appellants.

• Court of Appeal (Civil Division) — [2003] EWCA Civ 1595, 31 October 2003: appeal allowed unanimously; the High Court order was set aside and specified paragraphs were struck out.
• High Court of Justice, Queen’s Bench Division — order dated 27 June 2003 by His Honour Judge Kirkham: permission granted to Dix and Nu-Heat to amend their pleadings to raise the contractual relationship issue, with preliminary issues directed.