Ovlas Trading SA v Strand (London) Ltd & Ors

Permission to amend pleadings is a case-management decision involving competing considerations. An appellate court should intervene only in narrow and compelling circumstances, with particular restraint where the decision was made at a pre-trial review. Relevant considerations include the absence of a convincing explanation for delay, prejudice and practical difficulties for the opponent, inadequate particularisation of the revised damages case, and the likelihood of substantial new evidence. The judge must weigh prejudice to the applicant; using the words proportionate or disproportionate is unnecessary. Allegations previously deployed in settled litigation may be relevant to refusing amendment, even where the court leaves open whether their reintroduction amounts to abuse of process.

Ovlas purchased the shares of a company whose subsidiary operated a cash-and-carry business in Angola. It alleged that fraudulent representations had induced the purchase and claimed damages principally on a going-concern valuation. At a pre-trial review, Proudman J refused permission to amend the Particulars of Claim to introduce an alternative liquidation basis and allegations drawn from a settled parallel misappropriation claim. She also ordered disclosure of fiscal returns of the Angolan subsidiary. Ovlas sought permission to appeal both orders. The Court of Appeal considered whether refusal of the amendment was an erroneous or disproportionate exercise of case-management discretion and whether the disclosure appeal should proceed when the issue had become moot.

Applications refused unanimously. The Court of Appeal refused permission to appeal. The disclosure issue was moot apart from costs, and pursuing it would be disproportionate.

1. A decision whether to permit amendment is an exercise of judgment in case management. Appellate intervention is limited, particularly where the decision is made at a pre-trial review. The court applied the approach described in Morris v Bank of America & National Trust Savings Association & others [2002] EWCA Civ 425, which had approved the guidance in Wembley National Stadium Ltd v Wembley (London) Ltd (unreported, 28 November 2000).
2. Proudman J was entitled to give substantial weight to the absence of a convincing explanation for the lateness of the amendment, the difficulties and prejudice it would cause the respondents, the absence of particularisation of the revised damages calculation, and the prospect of substantial additional evidence. She had considered the prejudice to Ovlas. Her conclusion was not invalidated by her failure to use the words proportionate or disproportionate.
3. The proposed amendment reintroduced allegations from a parallel claim settled following a Part 36 offer. That reintroduction was relevant to the exercise of discretion and caused procedural prejudice because the respondents had lost the opportunity to protect themselves against such allegations when settling the parallel claim.
4. The court did not need to decide whether the reintroduction was an abuse of process. Stanley Burnton LJ expressed doubts about that conclusion as a matter of law, since the allegations were relied on only as factual matters relevant to valuation. Sedley LJ did not share those doubts, while Pill LJ also considered it unnecessary to decide the issue. The amendment could properly be refused without resolving it.

• Court of Appeal (Civil Division): On 27 April 2009, refused permission to appeal against both orders.
• High Court of Justice, Chancery Division: Proudman J refused permission to amend the Particulars of Claim and ordered specific disclosure at a pre-trial review on 3 April 2009.