MOK Petro Energy FZC v Argo (No 604) Limited & Ors

Permission to amend pleadings shortly before trial may be refused where the amendment introduces a materially new legal case, requires investigation of additional evidence, and could reasonably have been raised earlier. A proposed construction point does not justify introducing related waiver or election arguments where those arguments depend on subjective knowledge and may require evidence concerning legal advice and privilege. The court may also refuse to leave a preliminary construction issue open for later determination where doing so would be disproportionate and inefficient. Contractual wording referring to “normal circumstances” need not be recast merely because the existing case is difficult.

The claimant sought permission to amend its pleaded case in an insurance dispute. Its existing case was that, because the parties had contracted out of section 10 of the Insurance Act 2015, breach of warranty in normal circumstances made the contract void, and that the defendants were estopped from relying on that consequence.

The proposed amendment would construe “void” as “voidable”, rely on election and waiver, and introduce a presumption that legally represented defendants knew of their right to avoid. The application was made shortly before trial. The central issues were whether the amendment was sufficiently justified and whether its lateness and evidential consequences made it unfair or disproportionate.

1. Application refused. The disputed amendments in paragraphs 7.2 and 10.2 of the proposed amended pleading were not permitted.
2. The proposed waiver and election case introduced a substantially different legal field from the existing estoppel case. Estoppel based on objective representations differs materially from election or waiver, which depends on subjective knowledge. The defendants required a proper opportunity to investigate whether they knew of their right to avoid, whether they had been advised about it, and whether the relevant wording had been addressed with their solicitors. The possibility of additional evidence and privilege disputes made the amendment materially burdensome despite the underlying facts being within the defendants’ knowledge.
3. The amendment could reasonably have been raised earlier. The defendants’ skeleton argument did not require or positively advance a case that the circumstances were normal. The agreed list of issues already identified whether the circumstances were normal or not. The proposed amendment therefore appeared to be an afterthought, or at least a further argument that could have been advanced well before trial.
4. It was unnecessary to construe “void” as “voidable” to give coherent meaning to “normal circumstances”. The existing wording had a coherent meaning. The construction point might not, viewed alone, have been objectionable, but it was not sufficient justification for the new waiver and election case.
5. The court noted an additional statutory construction issue under section 17 of the Insurance Act 2015, concerning the clear and unambiguous requirement and whether it applied where the assured sought to rely on the term. It was disproportionate and inefficient to hear that point separately while leaving the wider amendment issue for possible later determination.