1. LORD JUSTICE SEDLEY: This is a restored application for permission to appeal made by Mr Gibrail, who has been acting in person and whose submissions have been a model of conciseness and helpfulness. Exactly the same is true of Mr Andrew Sander who has appeared on behalf of the solicitors - the claimants, and respondents to this application - and whose approach has made this court's task a great deal easier than it might have been.

2. I directed when I adjourned this application that it should be restored on notice and that the appeal should follow if permission to appeal were to be granted. For reasons which will become apparent, I would grant permission to appeal if only because there are omissions in the judgment below which would have to be repaired even if the answer were ultimately to be the same.

3. On the first hearing before me, which was a "without notice" hearing, I described the nature of the case in this way:

"1 ..... Mr Gibrail ..... is being sued by his former solicitors, the claimants, for a figure approaching £6,000, representing fees incurred in relation to a disastrous business venture.

2 The applicant and a Mr Salt formed a company called Incomechance Limited to buy out the shareholding of a Mr Taylor in a company, Nightingale Signs Limited. The applicant and Mr Salt also agreed personally to underwrite the purchase price. When Incomechance's cash flow failed, the applicant and Mr Salt became liable, and on non-payment of the instalments which were still due were sued to judgment for £71,750 and interest by Mr Taylor. In consequence of the judgment, both men became bankrupt.

3 The claimant solicitors had acted for the applicant and Mr Salt and Incomechance in the share purchase and in the litigation which ensued. The litigation was contested on the ground of fraudulent misrepresentations allegedly made by Mr Taylor, but at trial Judge Appleton found the applicant and Mr Salt to be unreliable witnesses and dismissed their defence. When the claimants issued these proceedings for their fees, the applicant and Mr Salt had Incomechance joined as a defendant in order that all three could counterclaim, but the latter two were dismissed from the action by District Judge Hegarty, who also stayed the proceedings against the applicant, Mr Gibrail, so that he could obtain an assignment of any material causes of action from his trustee in bankruptcy. This Mr Gibrail did. The assignment was not with the papers but he has produced a copy to me today, and it is:

'Of all those rights, entitlements and choses in action relating to or in any way arising out of the matters giving rise to the claims and the counterclaim.'

I will pass over the details of the further directions given, first, by the District Judge, and then by His Honour Judge Kershaw, save to say that they made provision for Mr Gibrail to apply to re-amend his defence and counterclaim. He did so, italicising the passages that he wished to add and scheduling eight heads of loss, most of them on the optimistic side. The judge refused them in their entirety. It is against this refusal that the applicant wishes to appeal."

I should add that the counterclaim, both as served and as amended, was wholly unparticularised as to damage. Moreover, requests properly put in for particulars by the claimants were ignored by Mr Gibrail.

4. The problem, when it first came before me, was that there was no transcript of the judgment of His Honour Judge Kershaw; this we now have. It answers one of the questions that was troubling me, namely whether the judge had gone through the heads of damage which Mr Gibrail now seeks to plead by way of re-amendment. The answer is that he did so, but only in order to summarise them and to say "Whether they are valid in law does not matter for this purpose." The judge took this approach because he took the view that insofar as the damage was already pleaded no permission to amend was needed and that, insofar as it was new, a re-amendment to plead it should be refused because (a) the claims might be statute barred and (b) they might be the company's and not Mr Gibrail's, and so not have been among those re-assigned to him by the trustee in bankruptcy.

5. As to the first of these reasons, the judge first reminded himself of CPR 17.4 (1) and (2). These read:

"(1) This rule applies where -

(a) a party applies to amend his statement of case in one of the ways mentioned in this rule; and

(b) a period of limitation has expired .....

(2) The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings."

The judge then said:

"I direct myself, as a matter of law, that I should not allow an amendment now which may be statute-barred, and thereby deprive the claimant of a limitation defence if it is statute-barred. The right course would be to say: 'no amendment, if you want to pursue it, start a new action, and then the question of limitation, that is time barring, can be taken by the defendant and investigated, as it were, cleanly, without a complication of it being an added claim in an old action.'"

6. As to the second reason, he said:

"The complication of this action is that some of the losses which Mr Gibrail has put firmly down to his losses in this draft re-amended defence and counter-claim may, on examination, turn out to be not his losses at all, but the losses of Income Chance Limited, so that if Income Chance Limited was in a position to pursue its claim and recover any damages to which it is entitled, then Mr Gibrail would be able to benefit to the extent that any right to the shares and claim against Income Chance Limited for loans, that sort of thing, may be his to follow.

I entertain a very, very grave doubt whether the assignment covers claims by Mr Gibrail against Income Chance in respect of losses by Income Chance, which Income Chance may be in a position to recoup by a claim against Birchall Blackburn. Again, it would be wrong to prejudice the claimant by any order, which might have the effect of promoting Mr Gibrail's claim in this action beyond what has been assigned to him by the Trustee in Bankruptcy."

The judge then said at page 8 E:

"The approach which I adopt to applications to amend and re-amend is that if a claim looks as if it could not succeed, even if the facts alleged are established, it is just a wrong formulation of the wrong claim, then it should not be allowed by way of amendment. The right course is to say 'Put your money where your mouth is, start a newer claim if you think you have got one.'"

The first part of this passage may be right, but I have some difficulty in seeing how the second sentence follows from it.

7. Both grounds of refusal are, to an important degree, speculative. Both contain the word "might". Certainly, any amendment which was made would date back to the issue of the counterclaim, which was within six years from the date of execution of the share sale agreement and the guarantee, namely 27 April 1992. But it does not follow from the fact that a cause of action is now beyond the limitation period that a new pleading of damage flowing from it is time-barred. What matters is whether the damage now asserted amounts to a new claim, and if it does, whether it arises out of substantially the same facts as the pleaded and amended claim. CPR 17.4 places no absolute bar on the re-amendment sought by Mr Gibrail if it seeks simply to amplify the damage caused by the wrong which he has already alleged, and to do so by reference to a history which has also been pleaded.

8. Mr Sander submits that the proposed heads of damage are more radical than this. He relies on the decision in Darlington Building Society v O'Rourke [1999] PNLR 365, 370 for the proposition that a sufficiently new characterisation of the nature and extent of the damage may amount to a new claim. Since Mr Gibrail had previously failed to set out his damage at all, it is arguable - and I say no more - that this is right. But as a matter of impression (and as Mr Sander has reminded us in his skeleton argument, that is what the next question is according to the decision in Welsh Development Agency v Redpath Dorman Long Ltd [1994] 1 WLR 1409, 1418) the damage which is now claimed does all arise, assuming for the present that it arises at all in the sense of being legally recoverable, out of substantially the same facts as were long ago set out in the defence and counterclaim. Put another way and in simpler language, the particulars are exactly what they purport to be, namely a quantification of injury already pleaded in this cause of action. On either view, it seems to me that Judge Kershaw failed to address this question. The consequence is that we in this court must go on our sense of the case and the pleadings, and mine is as described. It follows that the problem of an amendment which would otherwise defeat the limitation period does arise in this case.

9. As to the judge's second ground, we do not know the answer. But again, the judge's concern about the identity of the correct claimant on at least some of the proposed heads of claim is more concretely addressed if one asks whether Mr Gibrail has a sustainable case for advancing those claims in his own name.

10. Mr Sander argues before us today that the retainer pleaded in paragraphs 8 and 9 of the amendment to the defence and counterclaim is distinct from the action brought by Mr Taylor on the guarantee in which the claimants were instructed. That may be, but since paragraph 39 is already pleaded and has not been demurred to by way of a strike-out, Mr Gibrail is entitled (indeed bound, if he is to rely on what was pleaded), to quantify and to particularise the damage. He may turn out to be wrong about it, but that is not the question before us.

11. The real question must be whether his claims of consequential loss are predicated on potential breaches of the retainer, and, assuming for the present that these can be made out, are sustainable. It seems to me that although he looked at the nature of the claims, the judge did not address this question.

12. Mr Sander has been given permission to put in a respondent's notice out of time in order to assert something that we would have had to consider anyway: that for the most part the claims scheduled by Mr Gibrail to his draft amendment are simply not sustainable. The way Mr Sander has put it in his helpful skeleton argument is this:

"6.3 The amended defence and counterclaim essentially made three claims:

(a) Paragraph 17: In 1992 and in breach of duty the solicitors caused or permitted Incomechance to enter into the Share Sale Agreement without proper investigation or advice as to the financial state of Nightingale and upon terms that were prejudicial to Incomechance.

(b) Paragraphs 18 to 21: In 1993 and in breach of duty the solicitors failed to give proper and adequate advice in relation to the pursuit by Incomechance against Mr Taylor for breach of warranty under the Share Sale Agreement.

(c) Paragraphs 22 to 24: Between 1995 and 1997 the solicitors in breach of duty failed to properly conduct the defence and counterclaim of Mr Gibrail and Mr Salt in their capacity as guarantors under the Guarantee in the Taylor Proceedings.

6.4 It appears from the `Claim for Loss and Damage' that Mr Gibrail is now seeking to pursue claims against the solicitors on the basis [of] loss suffered by him as (a) a financial investor in Nightingale via Incomechance and (b) as an employee of Nightingale and (c) as a shareholder in Incomechance and (d) as a bankrupt. In addition, Mr Gibrail is seeking to claim general damages for 'anxiety and distress'."

13. Even upon this analytical approach, the claimants through Mr Sander are prepared to accept that two of the heads now advanced are viable, assuming that their other objections have so far failed as, in my judgment, they do: the claim under head A) - the £64,000 which is said to have been thrown away by Mr Gibrail personally on the purchase through Incomechance of Nightingale's shares, provided that Mr Gibrail can also show that the solicitors knew about it at the time - and the claim under head C) so far, and only so far, as that head includes the legal expenses incurred by Mr Gibrail in contesting the Taylor proceedings and then subject to asking what the use was to which those legal expenses were put.

14. For the rest, Mr Sander submits that the losses and expenses sought to be claimed were irrecoverable both as a matter of causation and remoteness. With the exceptions to which I will come in a moment, that submission seems to me to be well founded. As a matter, it is true, of policy rather than logic, the law is not prepared to let causation run on indefinitely into everything which would not have happened but for the alleged wrongdoing. If the respondents are responsible to the appellant for mishandling his case, it can at most render them liable for the kinds of loss set out under the following heads (I am referring to the schedule of loss appended by Mr Gibrail to paragraph 27 of his draft re-amended counterclaim): paragraph A) the purchase of shares at £64,000, for reasons I have indicated, and also, although it is badly particularised, the loan which Mr Gibrail asserts that he made to Nightingale in order to keep it afloat with, he asserts, the solicitors' knowledge; secondly, although it will have to be winnowed with great care for its causative elements, head C) "Legal Expenses Paid" which are, in effect, elements of the claimant's bill already satisfied by Mr Gibrail; and, thirdly, G) the "Wasted Costs" which Mr Gibrail asserts, and he has some documentary support for it, resulted in some £6,000 being paid by him in consequence of the unsatisfactory conduct of this case by the claimants. This is not admitted, but it is arguable.

15. The other heads of damage which it sought to claim, it seems to me, all fall foul of the principle that no court will speculate about what a completed take-over might have brought in its wake or about what might not have happened but for the ill-starred venture. The fact that failure could as easily follow as success is enough to explain why the other heads of damage sought by Mr Gibrail cannot be pursued. These general heads are: C) loss of profit, D) profit and losses, E) insurance/pensions, F) unpaid creditors and H) damages.

16. I say only one word about the last matter. Mr Gibrail wants damages at large for the stress and suffering, the loss of enjoyment of life, the indignity of bankruptcy and the publicity attending it; all of which, I have no doubt, are real for him but which are not in the ordinary way within the ambit of contractual relationships that a client enters into with a solicitor. There may be circumstances in which because of the terms of the contract damage of this kind is treated as within the contemplation of the parties, but there is nothing in the present case to bring it into that class. Nevertheless substantial amounts are capable, in the form I have indicated, of being pleaded and ought to be allowed to be pleaded by way of amendment to the defence and counterclaim.

17. I would therefore do the following. I would grant permission to appeal, and upon entertaining the appeal I would allow it. I would set aside the judgment refusing permission to re-amend the defence and counterclaim, and I would grant permission to amend them as asked save that in the particulars of damage referred to in paragraph 27 scheduled to the draft only the following elements may be pleaded by way of amendment: under A), the first element, the purchase of shares with interest, and the fourth element, loan to Nightingale with interest; head C) legal expenses in its present entirety although without any suggestion that the entirety will be recoverable; and head G) "Wasted Costs". On that footing, I would allow this appeal.

18. LORD JUSTICE MUMMERY: I agree. I have nothing to add. The order is as indicated by Lord Justice Sedley. Permission to appeal is granted and the appeal allowed to the extent which he has indicated, with the result that the judgment of Judge Kershaw is set aside. We grant permission to re-amend on the limited basis Lord Justice Sedley has spelt out in his judgment.

Order: Application granted with the appeal allowed. Permission to re-amend the defence and counterclaim granted