Kaplan & Ors v Super PCS LLP & Ors

An amendment adding a new, time-barred cause of action is permissible under CPR r 17.4 only where it arises from the same or substantially the same facts as an existing claim. The enquiry concerns the facts the defendant would need to investigate, not merely the issues likely to be disputed at trial. A common document or factual theme is insufficient where the new claim requires investigation of materially different matters.

A defective deceit pleading may be refused where it is prolix, internally inconsistent and fails clearly to identify the representations attributed to each defendant. Delay alone does not ordinarily justify striking out a potentially valid claim for abuse of process. Striking out the claim itself is a last resort where a less drastic case-management response is available.

The claimants, investors in a film investment scheme, alleged that the defendants fraudulently induced them to invest by written and oral misrepresentations. They sought permission to amend their Particulars of Claim to add claims under the Financial Services and Markets Act 2000 and to expand the deceit allegations.

The FSMA amendment was opposed as statute-barred and outside CPR r 17.4. The defendants also sought strike-out of the existing pleading and, in some cases, the claim itself for failure to disclose reasonable grounds, abuse of process or obstruction of the just disposal of proceedings. The central issues were whether the proposed FSMA claim arose from the same or substantially the same facts as the deceit claim, and whether the pleading defects and delay justified striking out the claim altogether.

1. The application to add the FSMA claim was refused. The relevant cause of action arose between October 2008 and January 2009 and was statute-barred when the amendment was proposed. Under section 35 of the Limitation Act 1980 and CPR r 17.4, the new claim had to arise from the same or substantially the same facts as the existing deceit claim.

2. Following the approach in Mercer v Ballinger [2014] EWCA Civ 996, the question was whether the defendants would have to investigate facts outside the reasonable scope of the existing deceit claim. It was not enough that the Business Proposal might be relevant to both claims. The FSMA claim raised additional issues, including pooling of contributions and whether the activities constituted establishing or operating a collective investment scheme or advising on the merits of an investment under articles 51ZE and 53 of the Regulated Activities Order.

3. The earlier decision concerning a similar scheme, R (oao Chancery (UK) LLP) v Financial Services Ombudsman and Sir Ian Robinson [2015] EWHC 407 (Admin), did not establish that the tax-avoidance requirement for investor participation was the same as day-to-day control for FSMA purposes. Nor did Asset Land Investment PLC v FCA [2016] UKSC 17 confine the factual enquiry to the wording of the scheme documents.

4. Permission to amend the deceit claim was also refused. The proposed pleading was unnecessarily prolix and embarrassing. Its repeated cross-references were inaccurate or inconsistent, and it failed to state clearly what each defendant was alleged to have said to each claimant. Serious allegations of deceit required a clear and precise pleading capable of being fairly answered.

5. The Particulars of Claim were struck out under CPR 3.4(2)(b), but the claim itself was not struck out. Although there had been substantial delay and repeated changes to the case, there was no abusive or ulterior purpose and there might be a viable claim. Applying Icebird Ltd v Winegardner [2009] UKPC 24 and Wearn v HNH International Holdings Limited [2014] EWHC 3542 (Ch), delay alone was insufficient. The claimants were required to replead from scratch promptly and to limit the allegations to matters with a reasonable prospect of being established at trial.