Klenk And Ors v The Betesh Partnership Solicitors & Anor

Where an amendment is assumed to introduce a new claim, it remains within the relevant limitation and procedural provisions if it arises from the same or substantially the same facts as the existing claim. Appellate courts should interfere with an experienced first-instance judge’s case-management discretion only where relevant factors were omitted, irrelevant factors were considered, or the decision fell outside the broad ambit of discretion and was irrational. The appellate court should not substitute its own assessment of the weight given to relevant factors.

More than 60 purchasers sued solicitors concerning advice given about a hotel-room investment scheme. During the trial, the judge raised whether the scheme might be an unauthorised collective investment scheme under section 235 of the Financial Services and Markets Act. The claimants sought permission to amend their particulars to allege that the solicitors should have advised them of that possibility.

The Chancery Division permitted the amendment, excluding an allegation concerning a possible criminal offence, and ordered the defendants to pay the costs of the application. Kitchin LJ refused permission to appeal. The defendants renewed their application before Briggs LJ, challenging whether the amendment was a new claim, whether it arose from the same or substantially the same facts, and the exercise of discretion.

1. Application refused. Permission to appeal required a real prospect of success or another compelling reason. Neither was established.
2. For the purposes of section 35 of the Limitation Act and CPR 17.4(ii), the critical issue was whether the proposed claim, if new, arose from the same or substantially the same facts as the original claim. Both claims required detailed examination of the same hotel investment scheme. The proposed additional matters concerning whether Denison was a regulated person and whether individual claimants were high net worth individuals were peripheral to the common factual matrix.
3. The judge below had expressed the factual test at an excessively general level, but had reached the correct conclusion. A full appeal would address whether the conclusion was wrong, rather than whether the judge had selected the correct level of generality. The assessment also involved an element of multifactorial balancing in which the trial judge was particularly well placed to decide the result.
4. The judge had considered the relevant factors governing a very late amendment, including the absence of a good explanation for the delay, the fact that the issue had been raised by the court, the realistic prospect of success of the amendment and the test-case context. The trial date had already been lost by the time the application was determined.
5. The appellate question was whether relevant factors had been omitted, irrelevant factors included, or the conclusion was so outside the bounds of the discretion as to be irrational. Questions of weight were pre-eminently for the first-instance judge, especially in case management. No such error had a real prospect of being established. The allegation that operating the scheme might constitute a criminal offence remained excluded from the amendment.

1. Court of Appeal: Kitchin LJ refused permission to appeal. Briggs LJ refused the renewed application. [2016] EWCA Civ 1203
2. Chancery Division: His Honour Judge Kaye QC permitted amendment of the particulars of claim, excluding an allegation that the scheme’s operation might involve a criminal offence, and ordered the defendants to pay the costs of the application.