Kieran Hebden v Domino Recording Company Limited

Permission to amend a statement of case should be granted where the proposed amendment has a real, rather than merely fanciful, prospect of success and its determination is consistent with the overriding objective. The court may decide a legal or construction issue summarily where it has the necessary evidence and the issue is sufficiently clear, but should avoid conducting a mini-trial, particularly where the law or factual context is unsettled.

An amendment may properly be refused where the proposed claim faces substantial legal and practical obstacles, has little utility, and would impose disproportionate cost and pressure on court resources. A proposed claim dependent on a refused amendment will ordinarily also be refused.

The claimant, a recording artist, sought permission to amend his contractual claim against his former record label. The proposed amendments concerned alleged continuing obligations to exploit sound recordings, an implied duty of good faith, the consequences of alleged repudiatory breach, reversion of copyright, and alternative claims in restraint of trade and copyright infringement.

The defendant opposed the amendments and applied for strike out or summary judgment. The latter application was not heard because the amendment issue occupied the available hearing time. The central issue was whether the proposed pleadings had sufficient prospects of success, and whether permitting them would further the overriding objective.

1. Amendment test. Under Civil Procedure Rules 1998, rule 17.3, the discretion to permit amendment must be exercised in accordance with the overriding objective. An amendment should be refused if it is clear that it has no real prospect of success. The relevant threshold is the same as for summary judgment: the case must be better than merely arguable. The court may reject a legally defective or inherently implausible pleading, but must not conduct a mini-trial.
2. The proposed amendments alleging an express or implied continuing obligation to exploit the Masters, and an implied obligation to act in good faith, were not fanciful. The construction of the release obligations and the meaning of genuine commercial release required fuller evidence, including evidence about the music industry and digital distribution. Nichols, Schroeder and John v James did not make the proposed case legally impossible, because the agreements and factual circumstances materially differed. Permission was therefore granted for these amendments.
3. The related amendments concerning alleged breach, renunciation, termination, reversion of copyright, and alternative reliance on contractual remedies were also permitted. Although the reversion arguments appeared difficult and novel, they were not clearly unsustainable at the amendment stage. The overriding objective favoured allowing the issues to be determined at trial.
4. Permission to plead restraint of trade was refused. The authorities indicated substantial difficulty in establishing both the substantive claim and a useful remedy. A finding of restraint of trade ordinarily rendered the agreement unenforceable so far as unperformed, rather than producing the pleaded reversion of copyright. The proposed claim was also a tertiary alternative likely to require disproportionate evidence, cost and court time.
5. The proposed copyright infringement claim depended on the restraint of trade case and was consequently refused. The application for summary judgment was not determined.