OEM Plc v Schneider & Ors

Permission to amend pleadings should generally be granted where the proposed case is sufficiently clear, unless amendment would cause prejudice or unfairness. In a claim for restitution of stolen money, receipt into a joint bank account may establish a prima facie case. Questions about agency, mere passage of funds, change of position, beneficial ownership, acquiescence and the justice of restitution are ordinarily matters for defence and trial. Restitution depends on the facts and degree of each case; knowledge of the wrongdoing is not necessarily required. At the amendment stage, the court should not conduct a provisional assessment of the relative merits. It should intervene under Civil Procedure Rules 1998 Part 24 only where the claim has no real prospect of success.

OEM Plc alleged that its former director and employee, Brian Schneider, had fraudulently removed more than £5 million from the company. Some of the money was paid into joint bank accounts held by Schneider and his wife, Teresa Anne Schneider, and further sums were paid to Andrea Schoefeler-Lubbock. OEM sought permission to amend its particulars of claim to pursue restitutionary and tracing claims against the defendants.

The defendants objected that the pleaded claims were legally unsustainable or insufficiently particularised, relying in particular on the possibility that Schneider had used the accounts merely as conduits and that the recipients had not benefited. The central issue was whether those matters prevented amendment or were matters to be pleaded and determined at trial.

1. Applications concerning further information. The applications by the Second and Third Defendants were adjourned. Each defendant was ordered to identify specifically which requests remained inadequately answered, and OEM was ordered to respond.
2. Amendment principles. Applying CPR 17, permission to amend should generally be granted unless the amendment causes prejudice or unfairness. OEM’s proposed case was sufficiently clear for the defendants to understand and plead to it.
3. Restitution claim. The prima facie case consisted of three propositions: the money belonged to OEM, it had been stolen, and it had come into the recipient’s possession through the joint account. Receipt into a joint account was not merely theoretical or notional. The principles concerning joint accounts stated in In re Bishop [1965] 1 Ch 450 supported that conclusion.
4. The entitlement to restitution, and its extent, depended on the facts and degree of the individual case. The recipient could raise matters including agency, mere siphoning of money through the account, change of position, lack of beneficial ownership, or authorised acquiescence. The reasoning in Transvaal & Delagoa Bay Investment Co Ltd v Atkinson and Wife [1944] 1 All ER 579 was confined to its facts, where the wife acted as an agent and conduit. It did not establish a general rule requiring the claimant to identify the individual use of every payment before pleading restitution. The approach was consistent with Lipkin Gorman v Karpnale [1991] 2 AC 548.
5. It was inappropriate at the amendment stage to assess the relative strengths of unpleaded factual allegations. Under Civil Procedure Rules 1998 Part 24, intervention is justified where a case has no real prospect of success. A case with real prospects should proceed to trial, as explained in Wenlock v Maloney [1965] 2 All ER 871 (C.A.).
6. OEM’s application for permission to amend was granted. The claim against the Third Defendant was stayed for 28 days to allow possible mediation.

First-instance decision. No prior appellate decision is stated in the judgment.