HIH Casualty and General Insurance Ltd v JLT Risk Solutions Ltd

Amendments alleging fraud are governed by the ordinary principles applicable to amendments. Permission should generally be granted where the proposed case has a reasonable prospect of succeeding and any prejudice can be compensated by costs. Fraud allegations require particular care because the defendant must know precisely the case to meet.

There is no special rule that a late amendment pleading fraud must be refused. Similar-fact evidence in civil fraud litigation requires a two-stage assessment: whether it is logically probative, and, if so, whether it should be excluded in the court’s discretion. Its admission may be justified where it bears materially on falsity or knowledge and the resulting delay and expense do not create uncompensable prejudice.

HIH sought permission to amend consolidated proceedings against its insurance broker, JLT, to allege fraudulent misrepresentation and fraudulent non-disclosure concerning film-finance insurance and reinsurance arrangements for Hollywood 1, 2 and 3.

JLT opposed the amendments on grounds including delay, prejudice, inadequate particularisation, reliance on similar-fact evidence, and alleged legal bars to the non-disclosure claims. The application required the court to determine the ordinary amendment principles, whether a special rule applied to late fraud allegations, and whether allegations concerning the earlier TNP transaction should be admitted as similar-fact evidence.

1. The court applied the ordinary amendment principle: an amendment should be permitted unless it causes prejudice that cannot fairly be compensated by an appropriate costs order. The proposed case must also be properly formulated and disclose a sufficient case to go to trial, namely a reasonable prospect of success. Fraud allegations require especial particularity.

2. There is no special rule requiring refusal of a late amendment pleading fraud. Atkinson v Fitzwalter rejected the earlier broad dictum in Bentley v Black, and was consistent with the ordinary principles. The additional considerations relied on by JLT were aspects of prejudice, delay, or abuse of process.

3. Similar-fact evidence requires a two-stage assessment. It must first be logically probative of an issue. The court must then decide whether, in its discretion, it should be excluded, with prejudice—including trial complication, delay, and increased costs—as the prime consideration. Such evidence is unlikely to be probative of fraud without some evidence of fraud in the transaction under challenge.

4. Applying those principles, the general permission to amend was granted because HIH had not acted unreasonably and JLT’s prejudice could be compensated in costs. However, parts of the proposed Hollywood 1 and 2 pleadings were refused or required reformulation because they lacked adequate particularisation or raised unsustainable non-disclosure cases. The Hollywood 3 allegations concerning sales estimates, supported by the TNP allegations as similar-fact evidence, were sufficiently probative and admissible in principle.

5. The parties were directed to prepare a draft order reflecting the judgment, with ancillary matters to be considered if not agreed.

The judgment concerned an interlocutory application in consolidated first-instance proceedings. Earlier preliminary issues in related proceedings had been determined by the Court of Appeal, but those decisions were not under appeal in this application.