Palmali Shipping SA v Litasco SA

Permission to amend a statement of case, particularly at a late stage, requires the applicant to establish the overall justice of the amendment, having regard to the history, reasons for delay and prejudice. A claim is not automatically forfeited because its quantum was dishonestly exaggerated. Strike-out for serious litigation misconduct is reserved for truly exceptional cases where the conduct is so serious that allowing the claim to continue would affront the court, even if a fair trial remains possible. Cross-examination on witness statements for an interim procedural application is exceptional and must be proportionate. Where proposed amendments are reasonably arguable, their permission should not ordinarily be refused merely because an opponent’s dishonesty case has not been disproved.

The claimant sought permission further to amend its Particulars of Claim in a claim for damages under an alleged long-term contract of affreightment. The application followed an earlier judgment, [2020] EWHC 2581 (Comm), which held that the claimant’s original $1.9 billion damages calculation was not seriously arguable because it failed to account for saved sub-contracting costs and included losses allegedly suffered by related companies.

The defendant alleged that the original claim had been advanced dishonestly and sought either a cross-examination hearing, refusal of permission to amend, or strike-out. The central issues were whether the claimant’s conduct justified forfeiture of its residual claim and whether the proposed amendments had a realistic prospect of success.

1. Permission to amend. Permission was granted for the claimant to amend its Particulars of Claim in the draft produced to the court, incorporating Annex 3. The parties were directed to address consequential matters and list a case management conference promptly.
2. Late amendment. A party seeking a late amendment bears a particular burden. The court must assess the overall justice of allowing it, including the history of the amendment, the explanation for its timing and the prejudice to each party: paras [6]-[8].
3. Strike-out for misconduct. Under CPR r 3.4 and the jurisdiction illustrated by Arrow Nominees Inc v Blackledge and Summers v Fairclough Homes Ltd, the court may strike out a claim, or part of it, for sufficiently serious misconduct. The remedy remains a last resort. It is appropriate only in truly exceptional circumstances where the conduct is so serious that allowing the litigant to continue would affront the court, notwithstanding that a fair trial remains possible: paras [10]-[22], [46].
4. The original damages claim was not shown even arguably to have been dishonest. The claimant’s treatment of related companies as part of a single economic group reflected a misconception of English law rather than deliberate fraud. Disclosure deficiencies had not breached an order and had in any event been substantially addressed. The available procedures and adverse-inference jurisdiction were sufficient to preserve a fair trial: paras [29]-[46].
5. Cross-examination. A three-day hearing to cross-examine witnesses on the circumstances in which the original claim was advanced would have been disproportionate. Such cross-examination is exceptional, particularly where the issue concerns the manner in which the case was pleaded rather than its merits and the application is procedural: paras [47]-[50].
6. The proposed amendments were reasonably arguable. The court declined to resolve finally, at the amendment stage, the interaction between damages for breach of the minimum cargo obligation and the exclusivity obligation. Construction of the contract and any minimum-performance issue were better determined at trial: paras [53]-[57].

The judgment records an earlier decision of the same court at [2020] EWHC 2581 (Comm) concerning reverse summary judgment and permission to re-amend. The present application was granted.