Lloyds TSB Bank Plc v Crowborough Properties Ltd & Ors

The jurisdiction to reopen a case or permit amendment after judgment exists, but must be exercised sparingly and only in exceptional circumstances. The court considers the particular circumstances, including finality, legitimate expectations, efficient conduct of litigation, prejudice and whether the trial would have materially differed. An estoppel by convention may arise where parties share, or one party communicates and the other acquiesces in, an assumption of fact or law. Communication, reliance and detriment are required; a concluded agreement is unnecessary. Where the court itself identifies a technical gap between the pleaded case and facts already found, and reopening would not materially alter the trial, amendment may exceptionally be permitted.

The claimant bank had brought a claim for rectification concerning charges over properties securing indebtedness. The court had dismissed the rectification claim after finding that the parties had proceeded on a common assumption that all the properties secured the company’s indebtedness.

After judgment had been delivered, but before the order was entered, the bank sought to reopen the case and amend its pleading to rely on estoppel by convention, alternatively proprietary estoppel. The defendants opposed the application on grounds of finality, lateness and possible prejudice. The issues were whether the court should permit reopening and, if so, whether the facts found established estoppel by convention.

1. The court retained jurisdiction to permit amendment and to allow a new argument after judgment had been delivered but before perfection of the order. That jurisdiction was to be exercised cautiously and sparingly. Reopening contentious matters or permitting a new case would ordinarily require exceptional circumstances, assessed by reference to the particular case: Robinson v Bird [2003] EWCA Civ 1820, Charlesworth v Relay Roads Limited [2000] 1 WLR 230 and Stewart v Engel [2000] 1 WLR 268.

2. The relevant considerations included the legitimate expectations of the opposing party, the efficient conduct of litigation, inconvenience to other litigants, the public interest in finality and whether the trial might have proceeded materially differently. The defendants had already cross-examined witnesses on matters relevant to the common assumption. The judge was not persuaded that the trial would have been significantly different.

3. Exceptional circumstances existed. The proposed amendment was technical and sought to align the pleadings with facts already found by the court. The issue arose from a point raised by the judge in closing submissions, the application was brought at the first practicable opportunity, and the defendants were not materially prejudiced. The bank was therefore permitted to reopen its case and amend its pleading.

4. An estoppel by convention could arise where parties to a transaction acted on an assumed state of facts or law, the assumption being shared by both or made by one and acquiesced in by the other. The assumption had to be communicated; reliance causing detriment and resulting unfairness were sufficient, and a concluded agreement was unnecessary. This principle was summarised in The Indian Endurance (No 2) [1998] AC 878.

5. The negotiations and offers demonstrated a continuing, communicated common assumption that the bank had, and would retain, charges securing the company’s indebtedness over the whole site. The bank relied on that assumption by releasing the individual guarantees for a relatively small payment, thereby inadvertently releasing charges over properties owned by the individuals. That reliance was detrimental. The court declared that the properties were to be treated as charged to secure the relevant judgment debt and accrued interest.