Findlay v Cantor Index Ltd & Ors

Permission to amend a pleading should be refused summarily where the proposed case has no real prospect of success. The [2007] EWHC 643 (QB) test under Part 24 may be applied to amendment applications, but the court must avoid conducting a mini-trial where factual issues require investigation. A proposed head of contractual loss must also be tested against remoteness principles. Loss falls outside recoverable damages where, at the time of contracting, it was not sufficiently likely to result from breach to be within the defendant’s reasonable contemplation. An amendment may proceed where it raises an arguable factual issue requiring evidence, even though contractual construction, remoteness or quantum may ultimately defeat the claim.

The claimant, a managing director employed by the first defendant, brought claims arising from his alleged constructive dismissal. He also claimed that the dismissal affected prospective benefits under an incentive agreement with the second and third defendants, including benefits linked to a listing or trade sale. The defendants sought partial summary judgment under CPR 24.2 and opposed further amendments to the pleadings.

The court considered whether proposed heads of loss and implied contractual terms had a real prospect of success, whether they should be investigated at trial, and whether the proposed claims were legally incapable of succeeding.

1. Summary judgment and amendment. The test governing permission to amend was that embodied in Part 24: an amendment should be refused where the proposed pleading had no real prospect of success. The court had to remain cautious at an interlocutory stage and avoid deciding factual issues prematurely or conducting a mini-trial.
2. Partnership-related loss. The proposed claim for loss of partnership benefits was permitted. The pleaded facts arguably showed a consequential loss caused by termination of employment. Its interaction with the contractual settlement payment, and any issue of remoteness, required determination at trial.
3. Loss under the incentive agreement. The proposed claim that constructive dismissal delayed a listing or trade sale, or caused the loss of a chance that such an event would occur before the end of 2006, was refused. The carefully drafted employment and incentive agreements did not support the alleged entitlement. Applying the principles in Hadley v Baxendale (1854) 9 Exch 341, as explained by The Heron II (1969) 1 AC 350 at 385, the alleged loss was outside the reasonable contemplation of the parties when the agreements were made.
4. Implied terms. The proposed implied term requiring the defendants not to delay or prevent a listing or trade sale had no real prospect of success. It did not fill a contractual lacuna but sought to create an additional entitlement inconsistent with the express agreements and their entire-agreement provisions. The related pleading and consequential amendments were therefore refused or required to be deleted.
5. The parties were directed to produce a viable pleading and order. The court expressed concern about the scale of costs.

First-instance decision. The judgment does not state any prior appellate decision.