Middleweek v Collins Stewart Ltd

In a renewed, ex parte application for permission to appeal against an order allowing substantial amendments, the Court of Appeal granted permission where the proposed grounds were arguable and success could materially reduce the cost and length of the trial. The court identified arguable issues concerning whether a purported acceptance of repudiatory breach was effective, and whether a claim for stigma damages was legally and factually sustainable. A claim based on whistleblower stigma was viewed with particular doubt, while the application of the principle recognised in Malik v BCCI remained arguable. Permission was refused on a late allegation that a solicitor had acted without authority because the issue was discrete, evidentially limited, and could fairly be determined at trial.

The claimant, an employee, sued Collins Stewart Ltd alleging dismissal in breach of contract. The defendant contended that dismissal was lawful because the claimant had acted grossly improperly by attempting to blackmail the company over alleged breaches of FSA regulations. The High Court, on 14 June 2004, permitted amendments adding an allegation that the relevant threat had been made by the claimant’s solicitor without authority; further allegations of fundamental contractual breach supporting stigma damages; and a contention that those breaches constituted a repudiatory breach which the claimant accepted by a letter of 7 July 2003 and events on 9 July 2003.

The defendant’s initial application for permission to appeal was refused, and the renewed application came before the Court of Appeal. The central questions were whether the proposed grounds were sufficiently arguable and whether appellate intervention was justified despite the case-management character of an amendment decision.

1. Permission granted in part. Permission to appeal was granted in relation to the constructive dismissal claim and the stigma damages claim. It was refused in relation to the amendment alleging that the solicitor acted without the claimant’s actual or ostensible authority. Costs were reserved.
2. Decisions on amendments are ordinarily matters for the trial judge, particularly where they involve case management. The Court of Appeal may nevertheless grant permission where there is an arguable error of approach or a sufficiently strong issue whose resolution could substantially reduce the preparation, evidence, hearing time and expense of the trial.
3. The 7 July 2003 letter was apparently written without prejudice. It referred to instructions and therefore could be characterised as no more than a provisional indication of an intention to accept repudiation. Even taken with the 9 July meeting, there was at least a good arguable case that the contention of accepted repudiation should not have been pleaded because it was hopeless. Norwest Holst Group Administration Ltd v Harrison was cited for the difficulty arising from the without-prejudice character of the letter.
4. Stigma damages were capable of being claimed in principle in light of Malik v BCCI. The proposed stigma based on employment by a dishonest company that intentionally breached FSA regulations was more strongly arguable than the separate suggestion of stigma as a whistleblower, which the court viewed with considerable doubt. The law was insufficiently developed, and the factual scale and notoriety of the alleged wrongdoing were materially different from the circumstances in Malik. Those issues nevertheless justified an appeal because success could remove extensive allegations of breach and save substantial costs and hearing time.
5. The lack-of-authority amendment raised a potentially decisive issue, since proof that the threat was made without actual or ostensible authority could remove the basis for the employer’s justification for dismissal. But it was discrete, unlikely to require much evidence, and could fairly be resolved at trial; permission was therefore refused on that issue.

• Court of Appeal (Civil Division) [2004] EWCA Civ 1179: on a renewed application, granted permission to appeal concerning the constructive dismissal and stigma damages amendments, refused permission concerning the alleged lack of authority, and reserved costs.
• High Court of Justice, Queen’s Bench Division: Andrew Smith J’s judgment dated 14 June 2004 permitted the three contested amendments. The judgment does not state a citation.
• Permission application before Pill LJ: permission was refused in writing, effectively on the basis that amendment decisions were matters for the trial judge.