Mandrake Holdings Ltd. & Anor v Countrywide Assured Group Plc

A first-instance court must apply binding authority as it stands. It cannot permit an amendment advancing a claim which established authority makes legally unmaintainable merely because a higher appellate court might develop the law. The possibility of a successful appeal may justify consideration of permission to appeal, but the lower court may leave that question to the appellate court. Permission to amend may also be refused independently where unexplained delay would cause serious prejudice, particularly loss of an imminent trial date or disruption to other litigants.

The claimants sought permission to amend their Particulars of Claim to add a £15.5 million claim for loss of the opportunity to expand and realise the value of a pension-advice business. The defendant opposed the amendment on the grounds that the claim was bad in law, had been advanced after substantial unexplained delay, lacked particularity, and would cause the scheduled trial to be lost.

The central issue was whether a first-instance judge could permit an amendment which was contrary to binding authority because the point might properly be reconsidered by the Court of Appeal or the House of Lords.

1. Legal maintainability. The proposed claim was consequential loss said to arise from failure to pay an indemnity. The authorities relied on by the defendant established that an indemnity is a promise to hold the indemnified party harmless against specified loss; breach occurs when the relevant loss or liability is incurred; and the resulting claim is a claim for damages. There is no separate cause of action in damages for late payment of damages. The proposed New Claim was therefore not maintainable on the law as it stood.
2. Duty of a first-instance court. A first-instance judge must apply binding authority. The possibility that the Court of Appeal or House of Lords might develop or change the law does not justify allowing an amendment which has no reasonable prospect under current law. The reasoning in Baird Textiles Holdings Ltd v Marks & Spencer Plc [2001] EWCA Civ 274 applied equally to an application for permission to amend.
3. Permission to appeal. The court distinguished the position on an application for permission to appeal made to the trial judge from an application made to the appellate court. The latter court may be better placed to assess the prospects of changing the law or the other reasons for hearing the appeal. Permission to appeal was therefore refused, leaving the Court of Appeal to determine the matter.
4. Discretionary refusal. Independently, the amendment was refused because the proposed claim had been pursued after wholly unexplained delay, and allowing it would lose the fixed trial date, require substantial further preparation, prejudice the defendant, and affect other litigants awaiting trial. The application was dismissed.

Not stated in the judgment.