Scipion Active Trading Fund v Vallis Group Ltd

Permission to amend is discretionary. The court must balance the injustice to the applicant if permission is refused against the prejudice to the opposing party, other litigants and the administration of justice if it is granted. A late amendment attracts a heavy burden, particularly where it may disrupt a trial, but lateness is relative and its significance depends on the explanation, the nature of the amendment and its practical consequences. Pleadings must give fair notice of the general nature of the case. A new positive and alternative case on causation, even if substantially based on legal propositions, requires amendment where it is not fairly apparent from the existing pleadings.

Scipion brought proceedings against Vallis arising from the admitted physical loss of copper scrap held at a Moroccan facility under a collateral management agreement. Scipion’s pleaded claims depended on loss of security under a pledge. During the proceedings Vallis advanced an amended case that the pledge was invalid under Moroccan law.

At the end of the trial Scipion sought permission to amend its Reply to advance alternative claims based on its possessory rights as bailor and on contractual preclusion arising from the collateral management agreement. The issues were whether permission to amend was required and, if so, whether it should be granted.

1. Permission was required. Although the existing pleadings alleged the collateral management agreement and a bailment, Scipion’s proposed amendments advanced a distinct positive case that it could recover damages independently of loss of security under the pledge. Its existing causation case was expressly based on being left unsecured and losing the benefit of the pledge. The proposed contractual-preclusion argument also required fair notice.
2. The governing principles were those stated in Swain-Mason v Mills & Reeve LLP [2011] EWCA Civ 14, Quah Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm) and related authorities. The court had to apply the overriding objective and balance the applicant’s prejudice against prejudice to the opponent, other litigants and the court. A late amendment imposed a heavy burden, but lateness was a relative concept. The court had to assess the explanation, clarity and strength of the amendment, and the work and disruption it would cause.
3. Applying those principles, the delay was unsatisfactory in part. Scipion had the relevant facts and evidence by late December 2019 and should ordinarily have pleaded the alternative case before trial. Nevertheless, the application was responsive to Vallis’s late amendment, did not cause the trial date to be lost, and raised potentially decisive points with sufficient prospects of success.
4. The prejudice to Vallis and other court users was limited. Any necessary further investigation, pleading or joinder could still be addressed by appropriate directions. The prejudice to Scipion if permission were refused was substantial because the Moroccan-law case might otherwise defeat a claim arising from Vallis’s admitted breach and the physical loss of the goods.
5. Permission to amend was therefore granted. Further directions were to be determined after submissions.