Portland Stone Firms Ltd & Ors v Barclays Bank Plc & Ors

A proposed amendment made after expiry of a limitation period cannot be allowed where it adds a new cause of action which does not arise from the same, or substantially the same, facts already in issue. The claimant must show that the defendant has no reasonably arguable limitation defence.

Allegations of fraud require clearly pleaded primary facts capable of supporting an inference of dishonesty. Serious allegations cannot proceed where the documents are consistent with honest conduct and do not provide a real prospect of success. A banker–customer relationship does not, without more, establish contractual duties of good faith or fiduciary duties. A restitutionary claim cannot recover money paid under a valid and subsisting contract.

The claimants operated a Portland stone business. They alleged that their bank, financial advisers and insolvency practitioners had dishonestly pursued an ‘Exit Plan’ to force the business into insolvency, and relied on alleged fraudulent misrepresentations, unlawful means conspiracy, contractual duties, equitable compensation and restitution.

The defendants applied to strike out the claims or obtain summary judgment. The claimants sought permission to make extensive amendments which introduced and reformulated allegations of fraud, deceit, contractual breach and conspiracy. The principal issues were whether the proposed claims were time-barred, whether they arose from substantially the same facts as the original claims, and whether the pleaded facts gave the new claims a real prospect of success.

1. The claims were struck out and permission to amend was refused. The defendants’ applications to strike out or for summary judgment were well founded. The proposed amendments could not cure the absence of a viable subsisting claim.

2. Under Limitation Act 1980, section 35 and CPR rule 17.4, the court applied the three-stage analysis: whether limitation was reasonably arguable; whether a new cause of action was added or substituted; and, if so, whether it arose from the same or substantially the same facts. The defendants had a reasonably arguable case that section 32 did not postpone limitation. The material facts were available to the claimants in 2010 and the later disclosure did not conceal the alleged wrongdoing.

3. The proposed contractual, fraudulent-misrepresentation and conspiracy claims each introduced new causes of action. They required investigation of materially different facts, including alleged representations, falsity, inducement, dishonesty, a different object of conspiracy and an intention to injure shareholders. They did not arise from the same or substantially the same facts as the original claims. The court therefore had no power to allow the amendments.

4. Independently, the proposed contractual claim had no real prospect of success because it identified no recognisable contractual framework for the alleged implied terms. The pleaded banker–customer relationship was an ordinary arm’s-length commercial relationship. It did not establish a fiduciary relationship or support equitable compensation. The restitution claim also failed because the arrangement fee had been paid under a valid and unchallenged contract.

5. The fraud and conspiracy allegations were fanciful. The pleaded documents did not justify an inference that the defendants had agreed dishonestly to implement the alleged plan. The engagement letter openly stated KPMG’s limited services; the documents were consistent with a genuine review and an open-minded assessment of further support; and the bank’s later actions were inconsistent with the alleged plan.

6. The original trustees’ conspiracy claim was additionally deficient because unlawful means conspiracy requires an intention to injure the claimant. Mere foreseeability of loss is insufficient. The court also struck out irrelevant, prolix and embarrassing pleading, including material concerning reports about another bank.

not stated in the judgment.