Hassan Kadhim Ali v Amar Hussain

Permission to amend pleadings is discretionary. The court must apply the overriding objective and balance injustice to the applicant against prejudice to the opposing party and other litigants. An amendment must be coherent, properly particularised and have a real, rather than fanciful, prospect of success. The court should avoid a mini-trial, but may refuse a case which is inherently implausible, self-contradictory or unsupported by adequate explanation. Proprietary estoppel requires assurances relating to identified property owned, or potentially owned, by the person against whom the estoppel is asserted. A director may also owe duties arising from a separate agency or professional relationship. Equitable compensation for fiduciary breach cannot recover losses attributable merely to incompetence.

The claimant applied for permission to re-re-amend his Particulars of Claim in long-running proceedings concerning the alleged beneficial ownership and management of several properties held through three companies. The proposed amendments included claims concerning company shareholdings and directorships, a beneficiary’s derivative claim, agency and fiduciary duties, proprietary estoppel, equitable compensation and alleged failures to assist refinancing.

The defendants opposed eight groups of amendments, relying on inconsistency, lack of particularity, lack of a real prospect of success, delay, prejudice and costs. The court determined which amendments should be permitted before any case management conference, disclosure order, witness-statement timetable or trial date had been fixed.

1. Permission and case management. Under CPR 17.1(2)(b), the court had to exercise its discretion in accordance with the overriding objective. The relevant balance was between injustice to the claimant if amendments were refused and injustice to the defendants, other litigants and the court system if they were allowed. The absence of a trial timetable favoured amendment, but delay, repeated changes of case and late payment of costs remained relevant.
2. Prospect of success. An amendment introducing a new claim had to carry a real prospect of success. The court should not conduct a mini-trial, but factual averments need not be accepted where they were demonstrably unsupported, inherently implausible or irreconcilable with the pleaded case and verified responses. The proposed 2012 shareholding case contradicted the claimant’s earlier pleaded and verified position, was not pleaded in the alternative and lacked explanation. Permission was refused.
3. Permitted company and agency amendments. Amendments concerning the legal effect of the alleged removal of directors, the alleged unlawful alteration of Companies House records, relief relating to the alleged 2020 agreement, and a limited account claim concerning 172 Brent Crescent were permitted. The proposed agency case based on the 187 Brent Crescent deed, and a new claim alleging duties owed by the first defendant to Autotrade, were refused as inadequately pleaded or meaningless. The court nevertheless confirmed that a director may owe additional contractual or professional duties apart from directorial duties.
4. Derivative claims and estoppel. Joinder of every beneficiary to a beneficiary’s derivative claim was not mandatory under CPR 64.2(a) and CPR 64.4(1). The proposed derivative claim was nevertheless refused because the underlying duties claim was not permitted. Proprietary estoppel amendments were refused because the first defendant had no relevant proprietary interest in the properties. A promissory estoppel claim also lacked an alleged existing legal relationship.
5. Equitable compensation and costs. Losses caused by incompetence, default charges, refinancing costs and receivership were not losses attributable to fiduciary disloyalty or infidelity. Permission to plead equitable compensation was therefore refused. The claimant was ordered to pay the costs caused by the amendments; other costs issues were reserved to a Consequentials Hearing.