ICG Manager Limited & Ors v Colliers International Valuation UK LLP

On an application to re-amend a pleading, the court should permit an amendment where it has a real, rather than fanciful, prospect of success and the balance of injustice favours permission. A proposed inference in a negligence case need not satisfy the stricter test applicable to allegations of fraud or wilful default. Where relevant facts are within the defendant’s knowledge, the claimant need not plead details which it cannot reasonably know. Amendments may be refused where they are irrelevant, duplicative, ambiguous or lack a proper legal basis. Delay is assessed in the context of the overriding objective, and curable prejudice will not necessarily outweigh the injustice of preventing a reasonably arguable case.

The claimants alleged that the defendant negligently overvalued property securing a loan. They sought permission to re-amend their Particulars of Claim after disclosure revealed an earlier draft valuation, a subsequent conversation with the borrower’s agent, and a revised valuation which avoided an apparent loan-to-value breach.

The defendant objected that the proposed amendments were late, insufficiently particularised, unsupported by evidence, or an attempt to introduce a fiduciary-duty or impermissible valuation case. The application required the court to determine which amendments had a real prospect of success and whether the balance of injustice justified permission.

The application was allowed in part.

1. Applicable principles. The claimants had to show that the amendments had a real, not fanciful, prospect of success. If amendments were properly classified as late, the burden was higher, applying the approach in Quah Su-Ling v Goldman Sachs [2015] EWHC 759 at [38]. The court had to weigh the injustice of refusing permission against the injustice of allowing the amendments in the context of the overriding objective.
2. Inference and particulars. The stricter rule for allegations of fraud or wilful default, requiring an inferred wrongdoing to be more likely than innocence or mere negligence, did not directly govern an inference relied upon as the basis of a negligence allegation. In the circumstances, the court could properly infer that the valuer’s change of mind resulted from the discussion with the borrower’s agent if he gave no evidence and there was no documentary explanation. The claimants were not required to particularise a conversation which was within the defendant’s knowledge.
3. Amendments allowed or refused. The court allowed amendments alleging an unreasonable reduction in yield without good reason, failure to obtain risk-management approval, and influence by the borrower’s representations, subject to limiting the latter amendment to the valuation. The amendment concerning the valuer’s negative view of the property was suitable for cross-examination but not pleading. The proposed allegation that the valuation had the unplanned effect of avoiding the loan-to-value breach was duplicative or had no proper place in the pleading of breach. The related causation amendments were permitted as a shorthand way of alleging loss caused by failure to identify the breach, not as a new allegation that the defendant was negligent for producing a valuation which avoided the loan-to-value threshold.
4. Discretion and orders. The amendments were not very late, would not jeopardise the trial date, and any prejudice could be addressed by a supplementary witness statement and costs. The application was therefore allowed to the extent set out in the order. The claimants were ordered to pay the costs of and occasioned by the amendments, including the undisputed amendments, consequential re-amendment of the Defence and preparation of the further witness statement.

Not stated in the judgment.