Blue Tropic Ltd & Anor v Chkhartishvili

For a late amendment after limitation has expired, the Limitation Act 1980, section 35 and CPR rule 17.4 require the court to ask whether the amendment adds a new cause of action and, if so, whether it arises from the same or substantially the same facts. The comparison focuses on essential facts, not pleading detail. A new allegation that the defendant personally acted dishonestly to misappropriate property is an essential ingredient where it supplies unlawfulness. If it was absent from the original claim, the amendment introduces a new cause of action and does not arise from the same facts merely because the asset transfers and ownership issues overlap. The court then has no jurisdiction to permit the amendment.

Blue Tropic Limited and Coppella Ventures Limited sued Ivane Chkhartishvili under article 992 of the Civil Code of Georgia concerning transfers of assets to companies controlled by him. The original claim alleged that he had procured an attorney to act without authority or in breach of duty. Shortly before trial, the High Court permitted an amendment introducing a direct claim based on Chkhartishvili’s own misappropriation of the assets. The High Court found for the claimants on that amended claim and rejected a limitation defence: [2015] EWHC 3640 (Ch). The appeal concerned whether the amendment introduced a new cause of action and, if so, whether it arose from the same or substantially the same facts as the original claim.

Appeal allowed; action dismissed. Henderson LJ gave the leading judgment, with Arden LJ agreeing.

1. The combined effect of section 35 of the Limitation Act 1980 and CPR rule 17.4 was that, after expiry of the relevant limitation period, the court had jurisdiction to allow the amendment only if the new claim arose from the same or substantially the same facts as a claim already made.
2. A cause of action is identified by the essential facts material to success. Unnecessary allegations and particulars are disregarded, and the comparison is made at the highest appropriate level of abstraction. The court applied the approach described in Cooke v Gill, Letang v Cooper, Paragon Finance Plc v D B Thakerar & Co and Savings and Investment Bank Ltd v Fincken.
3. On the applicable construction of article 992 of the Civil Code of Georgia, a claim required proof of a person, causation, damage, unlawfulness, and intentional or negligent conduct. Article 992 created a freestanding cause of action. It was unnecessary to prove that the intermediary whose acts were procured had himself acted unlawfully.
4. The original claim alleged unlawfulness through the intermediary’s supposed breach of duty. The direct claim required proof that Chkhartishvili himself dishonestly intended to misappropriate the claimants’ assets. That was an essential new allegation, not merely another particular or method of proving an existing cause of action. The fact that the defence alleged lawful ownership did not place that essential ingredient in issue as part of the claimants’ cause of action.
5. Because the dishonest intention had not been in issue before the amendment and was essential to the direct claim, the direct claim did not arise from the same or substantially the same facts. The High Court therefore had no jurisdiction to permit the amendment. Its discretion did not arise, and the action, which had succeeded only on the amended direct claim, had to be dismissed.

• Court of Appeal (Civil Division): allowed the defendant’s appeal on the amendment issue and dismissed the action.
• High Court of Justice, Chancery Division: permitted the late amendment, held that it did not introduce a new claim or, alternatively, arose from substantially the same facts, and entered judgment for the claimants on the direct claim: [2015] EWHC 3640 (Ch).