Total Electric Solutions Limited & Anor v Nortek Electrical Circuits Limited

Permission to amend should be refused where the proposed case has no real prospect of success. The court must not conduct a mini-trial or evaluate the weight of conflicting evidence, but may assess whether the pleading is fanciful, unsupported by material establishing at least a prima facie case, or insufficiently coherent or particularised to permit necessary inferences.

An oral or partly oral contract must be pleaded with sufficient detail, including the words or conduct relied upon. A contractual term cannot be implied merely because one party asserts a statutory entitlement. A parent company’s handling of purchase orders for its subsidiary does not, without more, make it a contracting party or engage the Contracts (Rights of Third Parties) Act 1999.

The claim concerns alleged contractual, copyright and design-right rights arising from dealings between Total Electric Solutions Limited, Ardent and Nortek Electrical Circuits Limited concerning electronic products.

Following an earlier judgment, the claimants applied to amend their Particulars of Claim. The proposed amendments sought to introduce an alleged oral or partly oral contract from 2005 to 2010, to characterise the 2010 Agreement as recording rather than replacing that contract, to rely on a 2017 Agreement, and to add Ardent as a contracting party or statutory third-party beneficiary.

The central questions were whether the proposed amendments disclosed a viable and sufficiently pleaded case, whether they were barred by res judicata principles, and whether Ardent’s involvement was enough to establish contractual standing or third-party enforcement rights.

1. Amendment test. The application was governed by the same merits threshold as summary judgment: whether the proposed case had a realistic rather than fanciful prospect of success. The court was not to conduct a mini-trial or evaluate the weight of contested evidence. It could nevertheless refuse permission where the factual basis was fanciful, unsupported by material establishing at least a prima facie case, or pleaded with insufficient facts, coherence or particularity to permit necessary inferences.
2. Res judicata. The earlier determination of the construction issue prevented its re-argument by issue estoppel and Henderson abuse. The earlier striking out of the joint-authorship and particularisation pleading, however, did not prevent a legally sustainable alternative design-right case where that possibility had been expressly preserved.
3. Alleged earlier contract. The proposed oral or partly oral contract was inadequately pleaded. The claimants did not identify the contractual words, the relevant documents or emails, or the specific conduct said to establish agreement. The alleged pricing, design-right and exclusivity terms lacked a sufficient factual basis and coherence. In particular, asserted payment or amortisation of design costs did not establish an implied design-right term, and the statutory first-ownership provision did not make implication necessary.
4. Written agreements and amendment scope. Permission was refused for amendments relying on the alleged continuity of the 2005–2010 contract, the proposed construction of the 2010 Agreement, the alternative design-right case and related breaches. The proposed expansion would generate a wide historical inquiry with no evident relevance to the surviving exclusivity claim. The 2017 Agreement could remain only subject to greater specificity concerning breach and specific performance.
5. Ardent. The proposed amendments adding Ardent were insufficiently particularised because they did not identify the contractual terms varied. The handling of purchase orders by a parent company for its subsidiary did not establish variation or make Ardent the new customer. Nor did it satisfy either statutory route for third-party enforcement. The documentary evidence instead showed Ardent’s rejection of contractual relations with Nortek, making the proposed amendments fanciful.
6. The claimants were directed to prepare revised Particulars of Claim reflecting those decisions, with consequential matters, including the draft order, to be agreed where possible.

First-instance decision on an application for permission to amend following the court’s earlier judgment on strike-out and reverse summary judgment. The judgment records that the earlier decision was [2025] EWHC 725 (Ch), but that decision concerned the same litigation and is not treated as a separate appellate stage here.