Diamandis v Wills & Anor

A proposed amendment must have a real prospect of success. Where an amendment made after expiry of an arguable limitation period introduces a new cause of action, it may be allowed only if the new claim arises from the same or substantially the same facts already in issue.

A demand ordinarily concerns enforcement rather than liability, unless the agreement shows that payment on demand is essential to the parties’ arrangement. A subsisting contract generally excludes an unjust enrichment claim concerning the same services. If the contract is void or unenforceable, restitution may remain available, subject to illegality and the policy underlying the rule of invalidity. Restitutionary remuneration is measured by the objective market value of the services.

The claimant sought remuneration for consultancy services supplied to the defendants between 2002 and 2008. His existing pleading relied on a written consultancy agreement, but he had never submitted the invoices which its payment mechanism required.

After several earlier versions of the particulars of claim, he sought permission to plead: a contractual variation making payment dependent on the defendants’ ability to pay or on demand when they could pay; restitution while the contract remained valid; and restitution if the contract was illegal, void or unenforceable. The defendants appealed against orders of Master Teverson refusing to strike out the claim or grant summary judgment.

The central questions were whether the proposed claims had a real prospect of success and, where an arguable limitation defence arose, whether they introduced new causes of action arising from the same or substantially the same facts already in issue.

1. Permission to amend was granted in part. The contractual case that payment became due on demand, when the defendants could afford to pay, was sufficiently clear and had a real prospect of success. The alternative case that payment became due merely when the defendants could afford it was incoherent and incomplete because it did not identify when that condition was satisfied. Permission for that alternative was refused under rule 17.1(2)(b) of the Civil Procedure Rules 1998.

2. The defendants had an arguable limitation defence to the demand-based contractual claim for earlier services. Unless payment on demand was essential to the arrangement, a demand could be a condition of enforcement rather than liability. The amended claim nevertheless introduced a new cause of action because it alleged a new payment duty, arising from the later oral variation, and a different breach occurring on demand.

3. The demand-based contractual claim arose from the same or substantially the same facts already in issue. The further investigation concerning the alleged variation and demand was limited in the context of the parties’ existing dispute and would in any event be required for the later, unbarred claims. Permission was therefore granted under rule 17.4(2) for services before 25 July 2008 and under rule 17.1(2)(b) for later services.

4. The restitution claim advanced while the contract remained valid was legally unsustainable. A subsisting contract governing the services and allocating the risk of non-payment generally excludes unjust enrichment. Neither recognised exception relied upon—services beyond the contract or services supplied in anticipation of a contract which never resulted—applied.

5. The alternative restitution claim, applicable if the agreement were illegal, void or unenforceable, had a real prospect of success. Its availability would depend on the basis of invalidity, the parties’ relative blame and whether restitution would undermine the policy of the relevant rule. Non-payment sufficiently pleaded the unjust factor, while the agreed remuneration could arguably evidence objective market value.

6. That restitution claim was arguably governed by the six-year period in section 5 of the Limitation Act 1980 and ordinarily accrued when the benefit was received. It introduced a new cause of action. For services before 25 July 2008, investigation of objective market value over more than six years fell outside the facts previously in issue, so the court lacked power to permit the amendment. Permission was granted only for services supplied on or after that date.

7. The claimant was directed to submit revised particulars. Final disposal of the defendants’ appeal and consequential matters was reserved for agreement, written submissions or a further hearing.

• High Court (Chancery Division): granted permission for some proposed amendments, refused others, and reserved the consequential disposal of the defendants’ appeal.
• Master Teverson: refused the defendants’ applications for strike-out or summary judgment on illegality and absence of a right to payment; later struck out the pleaded damages claim, refused most of an earlier amendment and left limitation and broader strike-out grounds unresolved.