Playboy Club London Ltd v Banca Nazionale Del Lavora SPA

On an opposed application to amend a statement of case, the court applies the summary-judgment test: whether the proposed claim has a real prospect of success. The court may conduct sufficient analysis to identify a claim with no such prospect, but must avoid a mini-trial. If a reasonable judge could uphold the claim, factual and legal issues should ordinarily be left for trial. This applies even where the proposed claim raises a novel point of principle. In a deceit claim, recovery depends on loss flowing directly from the fraud and on the claimant’s reasonable conduct. Whether costs incurred in earlier unsuccessful proceedings between the same parties can be recovered as damages may involve mixed questions of fact and law. The absence of direct precedent does not, at the amendment stage, establish that such a claim is legally irrecoverable.

The claimant operated a casino and had previously sued the defendant bank in negligence concerning a credit reference. The negligence action ultimately failed in the Supreme Court on the duty-of-care issue, and the claimant was ordered to pay costs.

The claimant then brought a separate deceit action after evidence emerged during the earlier trial. The deceit action survived an abuse-of-process challenge in the Court of Appeal. The claimant sought permission to add the costs of the negligence proceedings as a further head of loss. The central questions were whether that proposed claim had a real prospect of success and whether recovery of those costs was barred as a matter of principle.

1. Amendment test. The application was governed by the same test as summary judgment. The question was whether the proposed claim had a real prospect of success, as opposed to a fanciful prospect. The court could undertake some analysis of fact and law, but should not conduct a mini-trial. If the claim might reasonably be upheld by a judge, the issue should ordinarily be left for trial.
2. Deceit damages. The governing principles were drawn from Smith New Court Securities Ltd v Citibank N.A. [1997] AC 254, including the requirement that recoverable loss flow directly from the fraud. The claimant’s conduct and the reasonableness of the steps taken were relevant to causation, remoteness and mitigation. The court also considered the common-sense approach to causation discussed in Galoo Ltd v Bright Grahame Murray [1994] 1 WLR 1360 and Barings plc v Coopers & Lybrand [2002] EWHC 461.
3. Costs as damages. The proposed claim was unprecedented in combining costs of an earlier action, the same parties, and an unsuccessful earlier claim carrying an adverse costs order. Authorities including Dadourian Group International v Simms [2009] 1 Lloyd’s Rep 601 and Berry v British Transport Commission [1962] QB 306 did not establish that the claim was either sustainable or unsustainable as a matter of principle. The issues were materially fact-sensitive, including whether pursuing the negligence action was reasonable and whether its costs flowed directly from the alleged deceit.
4. Permission to amend was therefore granted. The proposed costs claim was left for determination at trial.

• Original Action: The claimant succeeded at trial in its negligence claim, but the judgment was overturned by the Court of Appeal in 2016 and the Supreme Court reached the same conclusion in 2018.
• Court of Appeal: In the New Action, the court reversed the decision striking out the deceit claim as an abuse of process and reinstated the action: [2018] EWCA Civ 2025.
• Supreme Court: Permission to appeal the reinstatement decision was refused on 11 February 2019.