GBM Minerals Engineering Consultants Ltd v GB Minerals Holdings Ltd [21.10.15]

Permission granted to both parties by the Technology and Construction Court to amend pleadings seven weeks before trial and trial date vacated.

Implications

Mr Justice Fraser emphasised the almost unique circumstances of this case. He cautioned against his judgment being seen as diluting or attempting to change the principles set out in the relevant authorities.

Applications will still be regarded as very late if permission to amend threatens the trial date. They will not, ordinarily, be allowed as the court will not permit parties to hijack a pre-trial review (PTR) with tactical or late applications. The courts will scrutinise the explanation for the lateness of the application, the prejudice to the amending party if the amendments are not permitted and the prejudice arising from a party’s own conduct.

Fraser J stated “if a party is contemplating amendment that party had better get its house in order and make its amendments promptly. Failure to do so will prejudice the grant of permission.” Therefore, an application to amend statements of case should be made promptly and without delay.

Background

The parties entered into an initial £1.9 million agreement which was amended by 17 Variation Orders (VOs). The VOs were signed and backdated to random dates by Mr Short (owner/director of the Claimant) and Mr Laing (chief executive officer of the Defendant). The VOs purported to increase the contract sum to over £10 million.

The Defendant was granted permission by Mr Justice Coulson to bring contempt proceedings against Mr Short due to a false statement provided in the Claimant’s pleadings in relation to the VOs, but only at or after the final trial.

In late September 2015, the Claimant applied to amend its pleadings by removing any reliance on the VOs. The Defendant also applied to include a counterclaim for “secret payments” of approximately US$2.5 million discovered during disclosure. These were paid by the Defendant to the Claimant and subsequently matched to a Cyprus account controlled by Mr Laing. The applications were heard at the PTR, seven weeks before the trial was due.

Decision

Fraser J set out the following relevant principles, referring to CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd and others [2015]:

  • Amendments that threaten the trial date are categorised as very late, whereas a late amendment is one that could have been advanced earlier.
  • Ordinarily, a court will not entertain amendments that threaten the trial date.
  • If prejudice to a party came about by that party’s own conduct, then it is a much less important element of the balancing exercise.

The Defendant’s amendments were allowed because “a wholly unjust result in the entire proceedings might result if the defendant were to be shut out from arguing these points.” The trial judge would also not be able to consider the secret payments during the trial which would be “verging on an absurd result”.

The Claimant’s proposed amendments were allowed because they did not prejudice the trial date. Also, to deny permission to amend would effectively be to insist the Claimant continue with a case predicated on 17 (prima facie) falsely created VOs.

In a subsequent judgment on costs on 28 October 2015, Fraser J indicated that he felt that both parties had been seeking an opportunistic advantage:

  • There was no good reason for the Defendant to have opposed the Claimant’s proposed amendments. Had the Claimant been refused permission, the Defendant could have achieved summary judgment on its defence to the claim by the back door.
  • Similarly, the Claimant was also seeking an opportunistic advantage in opposing the Defendant’s proposed amendments. The proposed amendments were supported by contemporaneous documents which were relevant were the matter to have gone to trial.

Fraser J cautioned that “seeking opportunistic advantage will not achieve the aim of efficient conduct of litigation.”