Milton Keynes v Viridor (Community Recycling MK) Ltd

Joinder of a new defendant requires a dispute or connected issue falling within CPR 19.2(2), and a claimant cannot be compelled to litigate against a party with whom it has no dispute. A shareholding in a contracting company does not transfer ownership of the company’s contractual rights and cannot, without more, support a bona fide purchaser defence to rectification. A wider third-party protection may exist in equity, but its scope is narrow and does not ordinarily protect a parent company whose interests mirror those of the contracting party. Late amendments require a good explanation and must be assessed for clarity, prejudice, duplication of costs and disruption to the trial. Delay may be considered in any claim for an equitable remedy even if laches is not pleaded.

The Council sought rectification of a long-term waste disposal and recycling contract with Viridor (Community Recycling MK) Ltd. The Defendant applied at a pre-trial review to amend its Defence and to join Viridor Waste Management Ltd as a second defendant.

The proposed amendments relied principally on a bona fide purchaser for value without notice defence, a wider equitable protection for third parties, and laches. Other amendments concerned the operation of the contract in practice, mutual mistake and alleged acquiescence. The central issues were whether the proposed joinder and defences were legally available and whether the amendments were sufficiently timely and proportionate to permit shortly before trial.

The application was allowed in part and refused in part.

1. Joinder. The court held that CPR 19.2(2) did not permit the Defendant to join Viridor Waste Management Ltd against the Council’s wishes. There was no dispute between the Council and the proposed defendant, and no pleaded issue between the proposed defendant and the existing Defendant. A claimant is entitled to choose the parties against whom it brings proceedings and cannot be forced to litigate against another party.
2. Proposed purchaser defence. The bona fide purchaser for value without notice defence was inapplicable. It protects an interest acquired in the context of the sale of land or a legal interest in property. The acquisition of shares in the Defendant did not transfer title to the Defendant’s contractual rights. The Defendant remained the legal owner of those rights. The proposed defendant was therefore not a third-party purchaser of an interest conferred by the contract.
3. The court accepted the general synopsis of rectification in Riaz Ahmad v Secret Garden (Cheshire) Limited [2013] EWCA Civ 1005, but held that the authorities and textbooks identified only a narrow extension beyond a bona fide purchaser of legal title. The proposed defendant’s interests were not distinct from the Defendant’s interests. The wider third-party exception therefore did not arise. In any event, the proposed defence was hopeless.
4. Late amendments. Applying the principles in CIP Properties (AIPT) Limited v Galliford Try Infrastructure Limited [2015] EWHC 1345 (TCC), lateness was assessed by reference to whether the amendment could have been made earlier, required duplication or revisiting completed steps, threatened the trial date, had a satisfactory explanation, was clear and focused, and caused prejudice. The VWML amendments were very late, unexplained and would require further disclosure, pleadings and witness evidence, making the January trial impossible. They were refused.
5. Laches and other amendments. The laches amendment was arguable and could be addressed before trial. Delay is a matter the court must consider in a claim for an equitable remedy, whether or not expressly pleaded. Amendments concerning the contract’s operation in practice, mutual mistake and acquiescence were relevant, narrowly confined and capable of being dealt with without material disruption. They were allowed.