Scott & Ors v Singh

Permission to make a late amendment requires a clear and properly particularised pleading. A genuinely new claim must have a real, rather than fanciful, prospect of success. If it would cause the loss of a trial date, the applicant bears a heavy burden to show that justice nevertheless requires permission.

A seller’s acceptance of warranties proposed by a buyer during negotiations does not, without more, amount to a pre-contractual representation. A party’s ordinary knowledge as controller of a business being sold does not itself establish the special relationship required for liability in negligent misstatement. Written consent to selected parts of a draft pleading is not consent to amend a statement of case unless an identifiable amended document has been agreed.

The claim arose from the sale of the defendant’s controlling shareholding in a road-haulage company to the first and second claimants. They alleged misrepresentation, breach of warranty and fraudulent conduct in connection with the share purchase agreements. The defendant denied liability and counterclaimed for sums said to be due under the agreements.

The claimants applied for permission to amend their particulars of claim. The proposed amendments added detailed schedules and new allegations, including negligent misstatement, financial representations, director-duty claims assigned from the company, and matters concerning insurance, customers and regulatory compliance. The defendant separately sought strike-out or summary judgment, but that application was adjourned pending the amendment decision.

The central issue was which proposed amendments should be permitted consistently with the requirements for pleading, the merits of new claims, and preservation of the listed trial date.

1. The amendment application was granted in part. Permission was refused for the proposed negligent-misstatement claim, the new financial-representations claim, and allegations that the defendant had made representations merely by failing to challenge warranty terms in draft share purchase agreements. The latter contention was novel and commercially unreal: accepting a contractual warranty does not itself create an earlier representation to the party proposing it.

2. A proposed amendment must be comprehensible, adequately particularised and compliant with pleading requirements. A new claim must have a real prospect of success. Where an amendment merely amplifies an existing claim, that merits threshold does not arise because the existing claim remains in issue.

3. Where a new amendment would vacate a fixed trial date, the applicant must show that justice requires permission despite that consequence. The new financial allegations would materially expand disclosure, witness and expert-accounting work, causing loss of the February 2021 trial date. They were arguable but not sufficiently strong, and there was no good explanation for their late introduction.

4. The fraud allegations were adequately pleaded. A statement of present belief may be a false statement of fact if the maker did not hold that belief. It was unnecessary to plead that a reasonable person with the maker’s knowledge could not honestly have held it where the pleaded case was that the maker knew the representation was false or was reckless as to its truth.

5. The alleged negligent-misstatement claim had no real prospect of success. The defendant’s information and knowledge arose only from his control of the businesses being sold. That did not establish the special relationship or assumed responsibility necessary to create a duty of care.

6. The court construed CPR r 17.1(2) as requiring consent to an identifiable amended statement of case. The defendant’s indication of consent to selected elements of a wider draft did not remove the court’s jurisdiction to decide the application.

7. Permission was granted for amendments which principally particularised existing legality, Maritime and Fowler Welch allegations, subject to proper particulars of any alleged oral statements. Permission was also granted for the insurance-warranty allegation, the limited Global-profit allegation, and the assigned claim based on alleged breach of duties under the Companies Act 2006. Taken together, the permitted amendments would not jeopardise the trial date.

This was a first-instance decision. At a case management conference, directions had been given towards a February 2021 trial. No appellate history was stated.