Harrington and Charles Trading Company Limited & Ors v Jatin Rajnikant Mehta & Ors

Amendments to pleadings are governed by the ordinary overriding-objective discretion unless the alleged illegality is manifest or obvious. That expression requires illegality which is clear and incontrovertible, not an allegation dependent on disputed facts, disputed law or inference. Evidence emerging at trial does not itself require the court to take an unpleaded illegality point where the claimant has not had a fair opportunity to answer it.

Very late amendments require a heavy justification. The court must balance the merits, explanation for delay, prejudice, pleading clarity and disruption to the trial. Serious new allegations requiring further evidence and threatening the trial timetable will ordinarily be refused.

The judgment concerned two applications made during a complex fraud trial. The claimant companies sought permission to amend their pleading to reflect abandoned causes of action and clarify the factual basis of a remaining dishonest-assistance and knowing-receipt case. The active defendants sought permission to amend their defence and counterclaim to introduce allegations of illegality, corrupt inducement under Insolvency Act 1986, unlawful means conspiracy, conflicts of interest and breach of duty by the joint liquidators.

The central questions were whether the proposed amendments had a real prospect of success, whether any illegality was manifest or obvious, and how lateness, prejudice, clarity and trial disruption should affect the exercise of discretion.

1. Claimants’ amendments. The proposed amendments were permitted, save that the final two sentences of paragraph 138 and the claim for an account in paragraph 164.1 were to be removed. Paragraphs 132–135 and specified wording in paragraphs 139.1 and 139.2 were not struck out. The court held that the opening concessions were not objectively unequivocal. The letter of 28 April 2026 and subsequent procedural steps had clarified that factual constructive-trust arguments remained relevant to the knowing-receipt claim. The defendants had not shown prejudice or lost opportunity for cross-examination.
2. Applicable amendment principles. Under CPR 17.3, an amendment lacking a real prospect of success is refused. The court balances injustice to the applicant against injustice to the opponent and other court users. Lateness is relative, but a very late amendment attracting further evidence and threatening the trial date bears a heavy burden of justification.
3. Manifest illegality. Following Otkritie International Investment Limited v Urumov [2013] EWCA Civ 1196, the court must take manifest or obvious illegality into account of its own motion. This means clear and incontrovertible illegality, not a case susceptible to serious factual or legal dispute or dependent on inference. A complete presentation of the claimant’s case is ordinarily required where illegality is not pleaded.
4. Section 164 allegation. The proposed corrupt-inducement allegation under section 164 of the Insolvency Act 1986 was neither manifest nor obvious. The meaning of the statutory mental element was disputed, the pleading was unclear, the documents were not facially illegal and the claimants had not had a fair opportunity to answer the allegation. The allegation was weak or had no real prospect of success, was very late, inadequately pleaded and would require further evidence and disrupt the trial. Permission was refused.
5. Conspiracy and conflict allegations. The proposed conspiracy allegation depended on the refused corrupt-inducement allegation and was also refused. The conflict allegations introduced a new and serious case of breach of duty, rather than merely particularising the existing illegality defence. They had long been available to the defendants, would require further evidence and would derail the trial. Permission was refused.
6. Responsive limitation amendment. The proposed amendment concerning relief under sections 423 and 425 of the Insolvency Act 1986 was permitted. It responded to the claimant’s reliance on THG Plc v Zedra Trust Company (Jersey) Ltd [2026] UKSC 6, raised a pure point of law and caused no evidential prejudice. The parties were directed to provide final amended pleadings.

First-instance interlocutory judgment determining competing applications to amend pleadings during an ongoing trial. No prior appellate decision is stated in the judgment.