Sierra Leone v Davenport & Ors

Permission to amend a pleading at a late stage requires a careful assessment of justice to the parties and to other litigants. The applicant bears a heavy burden, particularly where the amendment abandons a long-standing case, causes delay, or introduces points that were available earlier. Serious arguability is important but not decisive.

A company’s ownership and control by an individual do not by themselves make the individual liable on the company’s contract. Agency or nominee status may be inferred where pleaded facts are capable of supporting that inference. A freezing order must remain justified by the claim and the evidence at the time of continuation. Separate injunctive relief may be granted to preserve property where there is a seriously arguable restitutionary claim and a real risk of disposal.

The Government of Sierra Leone brought proceedings concerning the assignment of its leasehold interest in 33 Portland Place and related contractual obligations. Its original fraud and conspiracy claim was abandoned after expert evidence indicated that the leasehold interest had had a negative value at the relevant time.

The Claimant sought permission to amend its claim to allege uncertainty, non-compliance with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989, and wider breaches of contract. It also sought to maintain claims against Edward Davenport personally by alleging that the contracting company was his agent, nominee or façade. The Defendants opposed the amendments, sought discharge of a worldwide freezing order against Mr Davenport, and resisted an injunction concerning Portland Place.

1. Amendment. The court granted permission to amend. The Claimant had a heavy burden because the application was made shortly before trial, after substantial delay, and after abandonment of a serious fraud claim. Those factors weighed against amendment. However, the proposed uncertainty and statutory claims were seriously arguable, the expanded contractual case was supported partly by recently obtained inspection evidence, and no significant specific prejudice incapable of compensation had been established. It would be unjust to prevent the parties from determining the legal consequences of the Agreement if it proved void or unenforceable.
2. Agency and corporate personality. Sole ownership and control of a company are insufficient to establish that it acted as its shareholder’s agent or nominee. The relevant question is whether the pleaded facts, if proved, could justify an inference of agency on the balance of probabilities. Mr Davenport’s answers and affidavits, together with evidence of Capricorn’s lack of independent activity and treatment of the property, were sufficient to make that case arguable. The alternative façade allegation was allowed to remain, although its legal basis was uncertain.
3. Section 2 issue. The court accepted that the identity of an undisclosed principal is not an express term for the purposes of section 2(1) of the Law of Property (Miscellaneous Provisions) Act 1989. It declined to decide the separate section 2(3) signature issue on an amendment application because the question was difficult, important and inadequately argued.
4. Freezing order. The order against Mr Davenport was discharged. There remained a significant risk of asset secretion and an arguable route to substantial damages, but the personal claim was uncertain, substantial damages were contingent on failure of the primary and secondary remedies, and the order had operated for two and a half years largely on the abandoned fraud case.
5. Injunction. An injunction was granted against Capricorn restraining dealings with its interest in Portland Place pending trial, subject to liberty to apply. A registered caution or unilateral notice did not provide an adequate substitute because it merely postponed the substantive application.

Not an appeal. The judgment determined interlocutory applications in the High Court proceedings.