Park v Hadi & Anor

Relief from sanctions may be granted where a breach is neither serious nor significant, causes no prejudice, and the overall circumstances favour permitting the claim to continue. The absence of legal representation does not ordinarily excuse non-compliance, although it may affect the assessment at the margin.

An opposed amendment should be permitted where the proposed claim has a real prospect of success. A proposed change from a contract requiring writing under the Law of Property (Miscellaneous Provisions) Act 1989 to a share sale agreement may be a replacement rather than an oral variation of the original contract. Where pleaded facts disclose a possible contractual, restitutionary, duress or undue influence claim, unresolved factual disputes may make strike out or summary judgment inappropriate.

The claimant owned or controlled companies connected with a public house. The defendants acquired control of the relevant companies and paid sums said to discharge rent arrears. The claimant alleged that the agreed price was £170,000, or alternatively that the defendants acquired the business by duress or undue influence without paying the proper consideration.

The defendants sought strike out, summary judgment, default judgment and conditions requiring payment of earlier costs orders or security for costs. The claimant sought permission to amend his claim. The court also considered alleged non-compliance with an unless order requiring service of documents and financial information.

The central questions were whether relief from sanctions should be granted, whether the amended claim had a real prospect of success, and whether the proceedings should be permitted to continue.

1. Relief from sanctions. The court applied the three-stage test in Denton v TH White Ltd [2014] 1 WLR 3926, considering the seriousness and significance of the breach, the reason for it, and all the circumstances, including efficient and proportionate litigation and compliance with court orders. The delay in serving the amendment documents was short, caused no prejudice, and involved documents substantially prepared within time. Relief was therefore granted and service was treated as effective.
2. The absence of legal representation does not itself justify non-compliance. As explained in Wright v Hassall [2018] AC 12, it may affect the assessment only at the margin. In this case, the claimant’s lack of representation and the difficulties faced by his McKenzie Friend provided mitigation but were not treated as a complete excuse.
3. Amendment. Under CPR 17.1(2), the relevant question was whether the proposed new claim had a real prospect of success. Applying SPR North Ltd v Swiss Post International (UK) Ltd [2019] EWHC 2004 (Ch), the court held that the amended case should proceed. It raised genuine issues about the agreed price, the parties’ communications and conduct, and the circumstances in which control of the companies was transferred.
4. The proposed case was capable of being characterised as a contract for the sale of shares rather than a contract for the disposition of an interest in land. Accordingly, there was a real prospect that section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 did not apply. A change from a contract requiring writing to a different contract not requiring writing could be a replacement, not merely an oral variation, applying the reasoning in Morris v Baron & Co [1918] 1 AC 1.
5. If no binding contract existed, the pleaded restitutionary claim could amount to a claim in unjust enrichment. The distinction between failure of basis and failure of consideration was treated as terminological rather than legally significant, following Haugesund Kommune v Depfa ACS Bank [2010] EWCA Civ 579 at [62]. The allegations of pressure and coercion also provided a real prospect of claims involving duress or undue influence.
6. The factual disputes were unsuitable for determination by strike out or summary judgment. Permission to amend was granted, the defendants’ applications for strike out and summary judgment were dismissed, no default judgment was entered on the counterclaim, and no condition requiring payment of outstanding costs or security for costs was imposed, subject to review after production of further bank statements.