JMW Solicitors LLP & Ors v Injury Lawyers 4U Limited & Ors

This is a first instance judgment refusing an application by the claimants for permission to amend their Particulars of Claim after an earlier reverse summary judgment hearing. The court applied the "realistic prospects" test for amendments (analogous to summary judgment), and concluded the new allegations had no real prospect of success. Key legal principles applied included the Duomatic principle for shareholder assent to board acts, rules of contractual and constitutional construction (limited admissible factual matrix for articles of association), the strict test for implying terms (necessity/commercial coherence), the law on sham transactions, and the scope of an express duty of good faith in a shareholders' agreement. The court held (inter alia) that Article 11.1 of the 2013 Articles permitted the appointments of the two directors, that contemporaneous evidence established the timing of the acquisition and transfers so as to defeat the claim that Amelans had ceased to exist before the transfers, and that the pleaded cases of an implied restriction on transfers, sham, breach of good faith and rectification were either legally unsustainable or pleaded without sufficient evidential basis.

The claimants, following an earlier decision in which the court granted summary judgment to the defendants on several heads but left open challenges to the validity of certain director appointments, applied to amend their Particulars of Claim to plead new grounds attacking: (i) the validity of appointment of two defendants as directors of the first defendant (D1); (ii) the validity of transfer of A shares to one of those defendants; (iii) breach of an express good faith obligation in the 2013 shareholders' agreement (the SHA); and (iv) a rectification claim to preserve a pre-existing contractual slot price differential.

The application was heard in the context of the court's earlier judgment ([2024] EWHC 3103 (Ch)). The defendants resisted and relied on additional evidence, the Duomatic principle, and on the contemporaneous corporate and regulatory documentation.

• Nature of the application: permission to amend Particulars of Claim so as to advance the new allegations and thereby resist the earlier summary judgment.
• Issues framed by the court: whether each proposed amendment disclosed a "realistic" (as opposed to fanciful) prospect of success; the proper construction of Article 11.1 and related defined terms in the 2013 Articles; whether the transfer to Mr Maxey was void because Amelans had ceased to exist or because the term "Amelans" meant only the original partnership; whether an implied restriction should be read into Article 18; whether the appointments were a sham; whether the board breached clause 5.1(a) (good faith); and whether rectification of the SHA could be pleaded after the prior judgment.

Reasoning and conclusions:

• The court applied the "realistic prospects" standard applicable to summary judgment and amendment applications and emphasised judicial restraint against mini-trials. Where propositions raised pure points of law or construction with a limited factual matrix the court felt able to decide them on the papers.
• Appointment validity: the court accepted the Duomatic principle and concluded the holder of the A shares (Mr Twambley) plainly assented to the appointments recorded on 21 July 2023. On construction of Article 11.1 and the definition of "Director" in Article 1.1, the court found no bar to appointing the two directors and rejected the argument that the holder had already exhausted a two-director entitlement. Even if there had been any defect, it had been cured by subsequent confirmation and ratification steps in December 2024.
• Transfer / Amelans questions: contemporaneous minutes, Companies House filings and client communications supported the defendants' account that the transferees became partners prior to completion and that Express completed acquisition on 24 July 2023; the court rejected the suggestion that "Amelans" in the articles could be read narrowly to mean only the original partnership as at 2013.
• Implied term: the court applied the strict necessity/business-coherence test and authorities limiting admissible extrinsic material for articles; it concluded there was no realistic prospect of implying a term barring transfers where Amelans ceased to be an independent firm.
• Sham allegation: pleading and evidential shortcomings meant the serious allegation of sham (imputing dishonest or deceptive intent) had no real prospect of success; the pleaded facts did not justify inferring a sham.
• Change of control / clause 14: the court regarded this as tied to the good faith allegation; absent a viable good faith case there was no realistic prospect of success in reconstituting the board or ordering transfer notices.
• Good faith: the court held the pleaded case was bare and unspecific; given the express power in clause 4.2 to vary service charges, the obligation in clause 5.1(a) was to be read in context (benefit of company and shareholders as a whole and balancing panel members). The defendants' unchallenged commercial evidence explained legitimate reasons for removing the slot price differential; the claim did not show dishonesty or commercially unacceptable conduct.
• Rectification: the court treated the rectification point as already decided in the First Judgment for the purposes of the contract/estoppel claims and, alternatively, rejected the rectification case on its merits as speculative and unsupported by convincing contemporaneous documentation.

Outcome: the amendment application was dismissed and the earlier summary judgment on the validity issues took effect.

The Amendment Application is dismissed. The judge held that each proposed new pleading raised either pure points of law that failed on construction (Article 11.1; definition of "Amelans"), or factual/contentionary allegations (sham; implied term; breach of clause 5.1(a); rectification) that lacked a realistic prospect of success on the evidence and pleadings before the court. The Duomatic principle, contemporaneous minutes and subsequent confirmation/ratification steps supported the defendants' position and meant the defendants were entitled to the summary relief previously ordered.