Arroyo & Ors v Equion Energia Ltd

Whether permission is needed to advance a new head of loss depends on the substance of the case, not the label attached to it. Pleadings must identify the real issues with sufficient particularity to enable the opposing party and the court to understand the case to be met. General damages for loss of amenity may supplement a conventional award for damage to land where the conventional assessment causes under-compensation. They are not, however, an alternative measure for physical damage to land where diminution in value or reinstatement costs should have been claimed but were not advanced in time. Negotiation damages likewise cannot ordinarily replace a disallowed conventional claim. A late amendment will be refused where its formulation is unclear and permitting it would cause irremediable procedural prejudice.

The claimants, Colombian landowners, brought proceedings concerning damage allegedly caused by construction and operation of the OCENSA pipeline. Colombian substantive law governed recoverable heads of damage, while English procedural law governed assessment and quantification. The Senior Master had previously refused permission to advance a claim for reinstatement costs because it was introduced too late and would cause irremediable prejudice.

The claimants subsequently served a statement and Further and Better Particulars seeking general damages for damage to their land. They argued that these materials merely elucidated an existing claim. The defendant sought permission-related relief, including refusal of permission, strike-out or summary judgment. The central issues were whether the proposed claim constituted a new amendment, whether the proposed measures of loss were legally admissible, and whether permission should be granted.

1. Permission required. The proposed claim was materially different from the case previously advanced. Earlier documents identified damage to land and consequential loss of productivity, but did not articulate a claim for compensation for physical damage to the land itself on the basis of diminution in value, reinstatement costs or general damages. The use of the expression “general damages” did not alter that conclusion.
2. Pleading principle. Statements of case must enable the court and the parties to identify and define the real issues in dispute. The relevant question is whether the existing pleadings gave sufficient particularity to enable the opposing party to understand and prepare for the case it had to meet. The proposed claim therefore required permission.
3. Admissibility. General damages for loss of amenity may be awarded as a top-up where the principled assessment of conventional damage to land produces under-compensation. The authorities did not establish a general damages award in substitution for a conventional claim which should have been advanced by reference to diminution in value or reinstatement costs. English law did not recognise the proposed “at large” measure in those circumstances.
4. Negotiation damages. The Wrotham Park line of authority provides a flexible response where identifiable financial loss cannot adequately measure the claimant’s due. It did not justify using negotiation damages as a substitute for the disallowed reinstatement claim in this case.
5. Discretion. Permission would also have been refused because the Further and Better Particulars lacked clarity, failed to distinguish the proposed claim from existing moral-damage and loss-of-amenity claims, and would require substantial new evidence concerning diminution in value, replacement land and reinstatement. The resulting prejudice could not fairly be remedied within the existing timetable. Permission was refused. The claimants were directed within 28 days to identify which pleaded facts supported the existing moral-damage and loss-of-amenity claims.