Secretary of State for Justice v LSM Professional Ltd & Anor

Late amendments which introduce a fundamentally different factual case will ordinarily be refused where they jeopardise a fixed trial date, cause substantial prejudice, or require extensive new factual and expert evidence. The court must balance the need to resolve the real issues against fairness to all parties and the efficient conclusion of serious, longstanding litigation. Prejudice caused by delay may be incapable of adequate compensation through costs. Expert evidence must remain within the issues pleaded and the permission previously granted; unpleaded issues and unauthorised expert disciplines cannot be introduced indirectly through an existing report.

The court conducted a pre-trial review in three related actions concerning allegations including conspiracy, fraud and bribery. The Secretary of State sought permission to amend the particulars of claim and reply, withdraw an admission concerning an “Other Side Pays Costs” policy, and introduce further factual and expert evidence. The proposed amendments advanced a new hypothetical case about what the Secretary of State might have done in 2003, and the proposed evidence addressed that case and other unpleaded matters.

The trials were listed to begin within a fixed window shortly afterwards. The central issues were whether the late amendments and additional evidence should be permitted, and whether parts of an expert report fell within the scope of the existing pleadings and directions.

1. The applications to amend were refused. The proposed amendments advanced a wholly new factual case about what the Secretary of State would or could have done in 2003, rather than merely clarifying the real issues on the existing factual matrix. The case could have been pleaded earlier and was apparently prompted by a recent expert report.
2. Although amendments should generally be permitted where they enable the court to determine the real issues, lateness is a powerful consideration. Where an amendment would jeopardise a fixed trial date, materially increase costs, and require the opposing parties to prepare fresh factual and expert evidence, the resulting prejudice may be unfair and incapable of adequate compensation by a costs order.
3. The consideration was especially important because the allegations were serious and concerned events many years earlier. The proceedings should be brought to trial at the earliest opportunity consistent with fairness. The proposed alternative lease scenario was also unsupported on the evidence, including evidence that Standard Life would not have entered into it.
4. The application to admit further expert evidence was allowed only to the limited extent that material addressed the pleaded issue of rental valuation by reference to market rent in 2002–2003. Parts 7 to 9 of Mr Hull’s report were otherwise excluded because they introduced unpleaded criticisms, an alternative unpleaded case, and matters outside the permission previously granted. Evidence from Dr Morrison on quantity surveying and hypothetical refurbishment costs had not been authorised and could not be introduced indirectly through an appendix.
5. The Secretary of State was required to serve an amended report omitting the excluded material and consequential cross-references. The court also indicated that any account-of-profits claim would need to be reformulated by reference to net profit and loss attributable to the alleged wrongdoing.