MBI International & Partners Inc, Re

Permission to amend a pleading, including during a trial, is discretionary and governed by the overriding objective. The court must balance the injustice to the applicant if amendment is refused against the prejudice to the opposing party, other litigants and the administration of justice if it is allowed.

Lateness is relative. The court should consider the nature of the amendment, the explanation for its timing, the strength and clarity of the proposed case, the effect on the trial timetable, wasted work and consequential work. A party seeking a very late amendment ordinarily bears a heavy burden, but that burden may be reduced where the amendment responds to genuinely late disclosure or changed evidence.

The liquidators of MBI International & Partners Inc sought permission to replace their existing pleading with a substantially amended case concerning alleged events in 2017. The application was made on the fifth sitting day of the trial after the first respondent supplied corrections indicating that earlier evidence about the transfer of shares was inaccurate.

The proposed amendments introduced allegations concerning untrue representations, breaches of duty and trust, negligent misstatement and conspiracy. The respondents opposed the application on grounds including lateness, lack of particularity, prejudice and the likely need to adjourn the trial. The central issues were whether the new case had a real prospect of success, whether it was sufficiently pleaded, and how the competing prejudice should be balanced.

1. Applicable principles. The court applied the principles in Swain Mason v Mills & Reeve LLP [2011] 1 WLR 2735, Quah Su-Ling v Goldman Sachs International [2015] EWHC 759, and the other authorities cited. The court must exercise its discretion in accordance with the overriding objective and balance the competing injustice. A very late amendment attracts a heavy burden, particularly where it threatens a fixed trial date, but lateness is a relative concept.
2. The proposed amendments had to satisfy the summary-judgment threshold of showing a real prospect of success. They also had to be pleaded with sufficient clarity and particularity so that the opposing party could understand the case to be met.
3. The application was made during trial, but the liquidators had relied on repeated sworn evidence and only received the material change in that evidence shortly beforehand. In those circumstances, the application was not treated as truly late and the burden was less onerous than it might otherwise have been.
4. Although several allegations were inadequately particularised, including the alleged representations, knowledge, breach of undertaking, negligent misstatement and conspiracy, the court considered that properly pleaded claims along broadly those lines might have a real prospect of success. The proposed claim was not, on the material before the court, necessarily barred by the reflective-loss rule in Prudential Assurance Co Ltd v Newman Industries Ltd [1982] Ch 204.
5. The prejudice to the liquidators from being forced to proceed on a factual case apparently undermined by the respondent’s changed evidence outweighed the prejudice to the respondents. The court therefore allowed further time for the defects to be cured, rather than refusing the amendment outright or adjourning the trial indefinitely.
6. The liquidators were given until 1 pm on the following Monday to submit a revised draft. The amendments would be refused if the identified defects were not cured. The parties were directed to make brief submissions at 2 pm, after which the court intended to proceed with the first respondent’s evidence, subject to any application for an adjournment.