Patel v National Westminster Bank Plc

When a party seeks to amend pleadings to introduce a fresh claim or new basis of claim, the court may assess whether the proposed case has a real prospect of success. An amendment may be refused where the necessary hypothetical events are unsupported by evidence and the case is speculative. In a lost-cheque claim, it is insufficient that the cheque might have been honoured; there must be a real chance capable of assessment. The court reaches the loss-of-chance valuation only after that threshold is met. Where the proposed case has no real prospect, it is unnecessary to decide whether permission should also be refused because the amendment is late or otherwise objectionable.

The appellant paid a cheque drawn on a Kenyan bank into his account with NatWest. The cheque was lost before presentation. He sued NatWest for breach of its duty as his customer, originally alleging that the cheque would have been dishonoured and that he had lost the opportunity to pursue the drawer.

At trial, Mr Patel sought to amend his claim on newly obtained bank evidence to allege that the cheque would instead have been honoured because the drawee bank or the drawer would have provided funds. His Honour Judge Seymour Q.C. refused permission, holding both limbs unsustainable and stating that he would also refuse them in the exercise of his discretion. Mr Patel conceded that his pleaded case could not succeed, and judgment was entered for NatWest. The central issue was whether the proposed amended case had any real prospect of success.

Disposition. The appeal was dismissed. Moore-Bick LJ gave the leading judgment, and McFarlane LJ agreed with and adopted his analysis. Vos LJ agreed with the outcome but differed on the reasoning concerning the second proposed limb.

1. Under Part 24 of the Civil Procedure Rules, when an amendment introduces a fresh claim or a new basis of claim, the court may consider whether it has any real prospect of success. A case with no such prospect should not be introduced, since allowing it to proceed would waste time, money and judicial resources.
2. The evidence concerning the account did not support an inference that the drawee bank would have advanced the funds needed to honour the cheque. Tolerating an existing overdraft did not establish a running overdraft facility, and the proposed payment was large in that context. The first limb was therefore unsustainable.
3. The second limb was also unsustainable. There was no evidence that the drawer had funds elsewhere or would have provided them. Although issuing a cheque ordinarily supports an inference of an intention to honour it, that inference could not substitute for evidence in the unusual circumstances shown. The assertion that the cheque would have been honoured was speculative.
4. In a hypothetical loss-of-chance claim, the court may assess the chance of payment when calculating damages only if the claim first shows a real chance capable of assessment. A possibility that was too small to be assessed did not satisfy the threshold. The majority therefore did not need to decide whether the amendment should also be refused because it was made at a very late stage.
5. Vos LJ’s separate concurring reasoning was that the evidence gave the second limb some prospect of success and that the judge had effectively conducted a mini-trial. Applying the discretionary principles in Swain-Mason v. Mills & Reeve LLP [2011] 1 WLR 2735, including the weakness of the case, delay, the availability of evidence and the need to do justice to both parties, he would nevertheless have refused the amendment. He also referred to Denton v. TH White [2014] EWCA Civ 906 concerning the stricter approach to relief from sanctions.

• Court of Appeal (Civil Division) — The appeal against refusal of permission to amend was dismissed. Moore-Bick LJ and McFarlane LJ held that the proposed amended limbs were unsustainable. Vos LJ would also have dismissed the appeal on discretionary grounds. Judgment: [2015] EWCA Civ 332.
• High Court of Justice, Queen’s Bench Division — His Honour Judge Seymour Q.C. refused permission to re-amend at trial, holding the proposals unsustainable and indicating that he would also refuse them in the exercise of his discretion. After Mr Patel conceded that the pleaded case could not succeed, judgment was entered for NatWest.