JP Morgan International Finance Limited v Werealize.Com Limited

Applications to amend pleadings or enlarge issues at a very late stage require careful application of the overriding objective. The applicant must show a real prospect of success, a proper explanation for delay, and why justice to the parties and other court users requires the amendment. The court must balance injustice to the applicant if refused against prejudice to the opponent and the efficient conduct of the litigation. A late amendment may be allowed where it concerns an existing core issue and requires no further evidence. It should be refused where the merits threshold is not met or the opponent lacks a proper opportunity to prepare. The same considerations apply when deciding whether to add a new issue to an expedited trial.

Two related commercial proceedings concerned the parties’ rights as shareholders in Viva Wallet Holdings Software Development SA under a shareholders’ agreement containing call-option provisions. The court was addressing an expedited trial shortly before the next option exercise period.

J.P. Morgan sought amendments concerning the use of Viva’s current business plan and, alternatively, earlier financial projections. It also sought to add an issue concerning whether a transfer agreement was required. Werealize sought to add a new construction issue concerning whether the call option could be exercised only once or in each option period. The central questions were whether the proposed amendments and additional issues could fairly and efficiently be determined at the expedited trial.

1. J.P. Morgan’s amendment application. The court applied the principles concerning late amendments stated in Quah Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm). An amendment must have a real prospect of success. The court must exercise its discretion in accordance with the overriding objective, balancing injustice to the applicant against prejudice to the opponent and other court users. For a very late amendment, the applicant bears a heavy burden to show the strength of the new case, why it was delayed, and why justice requires permission.
2. The amendment concerning valuation by reference to Viva’s current approved Business Plan was allowed. Although late, it was a logical extension of an issue already pleaded and listed for trial. No additional evidence was required, and Werealize could fairly respond to the construction issue.
3. The amendment proposing that valuation experts use earlier projections and make adjustments was refused. The court was not satisfied that it had a real prospect of success on the material then available. The language of paragraph 3.7(b)(vi) of Schedule 1 referred to financial projections to be prepared by the company, approved by the Board and Shareholders, and provided to the valuation expert. In any event, the lateness denied Werealize a proper opportunity to prepare its response.
4. The application to add the transfer-agreement issue was refused. The issue had not been formulated sufficiently to enable a fair response, and adding it would burden the time-limited expedited trial.
5. Werealize’s application to add the one-shot construction issue was granted. It was a fundamental issue concerning the call option and its determination was considered necessary to avoid undermining resolution of the principal valuation issue. Supplemental skeleton arguments and additional oral-argument time were directed. Questions concerning rectification and estoppel were reserved.

First-instance ruling on applications made during an expedited trial. No appellate history is stated in the judgment.