Diamandis v Wills & Anor

In this action, Michael Diamandis ("the Claimant") seeks payment of remuneration for consultancy services he provided to Sir Seton Wills and his son David Wills ("the Defendants") in the period between January 2002 and October 2008.

There are two matters before me. First an appeal from two orders of Master Teverson made, respectively, on 6 December 2012 and 25 January 2013, and on 26 June 2013 ("the First Order" and "the Second Order") in so far as, by those orders, he dismissed applications by the Defendants for summary judgment and/or to strike out the Amended Particulars of Claim in this action. I refer to those Amended Particulars of Claim as "POC 1". Permission to bring this appeal was granted by Arnold J at an oral hearing on 14 February 2014.

Secondly there is an application by the Claimant to re-amend the Amended Particulars of Claim. This application was first made on 4 March 2013. The application initially was placed before Master Teverson. However when granting permission for the appeal, Arnold J directed it be heard at the same time as the present appeal. [The Claimant now seeks permission to amend the Particulars of Claim in the form of the Draft Re-Amended Particulars of Claim provided on 23 July 2014. This is the fifth version of amended Particulars of Claim (and the sixth version overall) advanced by the Claimant and is referred to herein at "POC 5".

As explained below, I will address first the application to re-amend. If and to the extent that this application succeeds, it is accepted that the appeal will fail, save on issues of costs. If and to the extent that the application to re-amend fails, then there is an issue as to whether and to what extent the existing POC 1 can stand.

The claim form was issued on 15 November 2011 and Amended Particulars of Claim, POC 1, served on 24 January 2012. The Claimant claims remuneration for consultancy services he provided to the Defendants in relation to the latter's business and property interests, including, but not limited to, their shareholding interest in Swindon Town Football Company Limited ("the Club"). Those services were provided in the period from 2002 to 3 October 2008 and included financial and business advice, negotiation of transactions and raising of finance. The Defendants accept, broadly, that the Claimant did provide those services (see second witness statement of Mr Bignell 23 April 2012, §§4 and 5). However they deny liability on the basis that they never agreed to remunerate the Claimant by way of fees, but rather by way of giving him shares in the Club and in the Club's parent company, Swindon Town FC Ltd ("STFC"); that since the Claimant was at the material times subject to a director's disqualification order, but nevertheless acted as a de facto director of the trading company of the Club, the agreement for services was a sham to cover up those activities and further that the agreement was, for this reason, illegal. At the relevant times, the Claimant had an office at The Litten, Newbury, Berkshire; the First Defendant owned the Eastridge Estate in Berkshire, and it appears that he had an office at Eastridge Farm.

As matters currently stand, the claim is based upon the terms of a written consultancy agreement ("the Agreement") said by the Claimant to have been executed by himself and the Defendants (defined together as "the Wills Family") on 8 October 2003 to cover the provision of his services from 3 January 2002 until 1 December 2004. The Agreement as signed was subject to manuscript amendments and additions to its original typed draft. After recitals setting out its purpose, the Agreement in its signed form provided, inter alia, as follows (manuscript amendments are indicated in bold):

Commencement

This agreement shall [be deemed to have commenced/commence] on [3rd Jan2002] ("the Commencement Date'')."

Then, importantly, Clause 4 provided as follows:

Clause 5 of the Agreement then provided for the "Period of services" as follows:

As matters currently stand, at §§8 and 10 of POC 1, the Claimant alleges that the Agreement was in fact extended so as to continue beyond 1 December 2004 by an oral agreement made in November 2001 or by the parties' conduct. The Claimant further alleges, or has alleged at different times, that various demands for payment of the fees under the Agreement were made to the Defendants: orally on 29 August 2007, on 22 August 2008 and again in July 2010.

In 2010, the Claimant sought payment of management fees from the Club, and in April 2010 presented a petition for the winding up of the Club based on a debt, which included a substantial sum for management fees, alleging that he had been employed as manager of the Club. The Club's application to restrain the Claimant from proceeding with petition was dismissed by Peter Smith J on 19 July 2010. On 17 January 2011 the Court of Appeal allowed the Club's appeal and the Claimant was restrained from carrying on with the petition. In the course of that appeal, the Club submitted new evidence in the form of witness statements from each of the Defendants, dated November and December 2010 respectively, which included a copy of the Agreement. Those witness statements stated that the Claimant's services were provided under the Agreement, that that was an agreement between the Claimant and the Wills Family (and not the Club) and that he had been paid "management fees due to [the Claimant] pursuant to the Agreement". This was to demonstrate that it was the Defendants and not the Club who were liable to pay for the Claimant's services under Agreement. The Court of Appeal held, relying in part on this evidence, that the Club had grounds for disputing that the fees were its liability, rather than that of either Wills Family or STFC.

The Claimant's claim in POC 1 (as elaborated in a response, dated 20 January 2012, to a Part 18 request ("RFI")) was as follows.

The Claimant provided his services under the Agreement: §7. The term of the Agreement was extended beyond December 2004 either by an oral agreement made at meetings between the Claimant and the First Defendant at "The Litten" in Newbury in November 2001 (§8 and RFI §§9-10) alternatively by conduct after 1 December 2004 (§10). By oral request on 29 August 2007 the Claimant asked the Defendants for payment under the terms of the Agreement. The Defendants agreed to pay a sum and on 30 August 2007 the First Defendant paid to the Claimant the sum of £50,000 as a part payment towards the sums due under the Agreement. That payment was said to affirm the ongoing Agreement: §9. §11 set out, in 24 numbered sub-paragraphs, details of the variety of services provided by the Claimant under the Agreement.

Then, importantly, §§12 to 14 of POC 1 alleged that "the Defendants have failed to comply with the terms of the Agreement by failing to pay the Claimant for the performance of the Services as agreed", going on to allege that the failure to pay the fees due and owing under the Agreement as extended constituted a breach of the Agreement; and that that breach caused loss and damage to the Claimant. The claim in POC 1 was thus for damages for breach of contract, the breach consisting of the failure to pay the fees due under the Agreement, as extended in time.

At §§15 to 20, the Claimant pleaded that the Defendants had confirmed the validity of the Agreement and that it was the Defendants in their personal capacity who were liable to pay the Claimant under the Agreement, by virtue of their admissions made in their witness statements in the winding up proceedings referred to in paragraph 10 above.

By their Defence and Counterclaim served on 14 February 2012, the Defendants denied liability.

On 23 April 2012, the Defendants applied to strike out all or part of POC 1 alternatively for "reverse" summary judgment on all or part of the Claimant's claim, on three grounds: first, that the claim was based on an illegal contract; secondly, that no right to payment under the Agreement had arisen since no invoices had been submitted (Clause 4.2) and thirdly, that the claims were statute-barred. Substantial witness evidence was filed by both parties between May and July 2012. In a further witness statement dated 2 July 2012, the Claimant stated that at the time of the Agreement the Wills family had a very substantial overdraft with the bank and that the Agreement was never enforced as the Defendants did not have the money. At the time of the Agreement the Wills did not have the income to pay for his services and as such the terms of his work were orally varied in that he would get paid not in line with the terms of the consultancy agreement, but sometime in the future. He referred to evidence dated 24 November 2004 showing that both the Wills farm businesses were "flat broke". Thus the case that the payment terms were varied due to the Defendants' financial situation was made in this witness statement in July 2012, and there was reference to events on or around 24 November 2004, although it was not alleged that this variation was made at a meeting on that date.

The application was heard by Master Teverson on 6 December 2012. He decided to dismiss the application in relation to the first two grounds (illegality and no right to payment). As to the third ground, limitation, Master Teverson adjourned the application and gave more time for the Claimant to plead more clearly the cause of action so that limitation could be determined at the resumed hearing. The formal order ("the First Order") reflecting this decision was made later, on 26 January 2013 (as set out in paragraph 21 below).

In his ex tempore judgment, Master Teverson dismissed the application based on grounds of illegality as it was not suitable for summary determination. He then addressed the second and third grounds (no right to payment and limitation) together. As to Clause 4.2 he recorded that the Claimant's response was to allege that the Agreement had been varied by subsequent agreement between the parties (transcript §8). After pointing to the difficulties in the Claimant's pleading of breach of contract and entitlement to payment, he concluded(§13) that he did not think that it was right to strike out the whole of the claim on this application as matters stood on the basis of Clause 4.2. He commented at the same time that POC 1 might be said to obstruct the just disposal of the proceedings, because they did not clarify when the Claimant claims that his cause of action accrued. The right course was to order the claimant to amend the POC1. POC 1 were inadequate and "must be amended if the claim is allowed to proceed' (§14). When counsel for

On 20 December 2012, the Claimant served a further amended pleading: the first draft Re- Amended Particulars of Claim ("POC 2"). POC 2 is the version which was before Master Teverson on 11 April2013 and made the subject of the Second Order. POC 2 sought to introduce new versions of paragraphs 12 to 14, referring to two distinct demands for payment said to have been made by the Claimant on 22 August 2008 and in July 2010. The Claimant alleged that the claim under the Agreement did not fall due at all until the Claimant made a demand by letter dated 22 August 2008. It also added in an additional paragraph in the prayer for relief to claim "repayment of the debt", in addition to damages.

In his witness statement in support of POC 2 dated 4 January 2013, the Claimant explained the agreement that the Defendants would pay for his work when they had money themselves, saying that by 24 November 200, the Defendants were flat broke. They could not afford to pay him under the terms of the Agreement. "We agreed I would be paid when they had the money to do so and I would continue to help the Wills family". The Claimant expressly stated that he made a demand in August 2008. The Defendant responded by requiring the Claimant to seek permission to amend in this form at the same time at the resumed hearing of the strike out application; that resumed hearing in fact took place on 11 April 2003.

On 26 January 2013, the formal order following the judgment of 6 December and a further ruling on 25 January 2013 (the First Order) was made. It provided that:

On 28 January 2013 the Defendant made a further application seeking an order that the claim form and POC 1 be struck out on wider grounds, including that they were an abuse and embarrassing, that the claim was inherently implausible and that the changes in the various witness statements to the essential elements of claim were such as to render the claim incapable of belief. On 4 March 2013, the Claimant applied to re-amend the particulars of claim in the form of POC2.

On 11 April 2013 Master Teverson heard the balance of the Defendants' original application, its further application of 28 January 2013 and the Claimant's application to re-amend the particulars of claim in the form of POC 2. He reserved judgment.

On 26 June 2013 Master Teverson handed down judgment. After reciting the history, he referred to his first judgment, explaining why he had dismissed the application to strike out in relation to illegality and in relation to failure to invoice. In relation to the latter ground, he said that he had decided then that this was too narrow a ground on which to dismiss the whole claim summarily:§17. As to limitation, he explained that he had required the Claimant to plead more clearly when the cause of action accrued, and referred to the fact that now POC 2 identified a demand in August 2008: §19. He then held that he could not strike out on grounds of limitation alone, as the limitation issue was too closely bound up with factual issues and would have to be determined at trial: §20. In relation to the Defendants' further application to strike out on broader grounds of incoherence of the contract claim, he found it credible that the Claimant expected to be paid at a future date, but he agreed that claim for amounts going back to the date of the Agreement was less credible. He added that he did not think the claim for payment arose from the Agreement, but rather it was based on an expectation that the Claimant would be paid reasonable remuneration: §34. However he thought it not appropriate to grant reverse summary judgment and that the case should go to trial. He concluded by identifying two unsatisfactory features in the pleading in POC 2. First the claim was unquantified. Secondly, he considered that the claim could not properly be formulated as a claim for damages for breach of contract. The only possible claims could be for debt for an agreed sum or a claim in quasi-contract or restitution for reasonable remuneration: §§37 to 40. He made the following order (the Second Order):

In line with paragraph 6 of the Second Order, on 5 July 2013 Claimant served a second version of

On 22 July 2013, the Defendants issued notice of appeal against Master Teverson's two orders. On 6 November 2013, Norris J refused permission to appeal on paper. On 11 February 2014, Defendants renewed their application for permission to appeal orally, contending that Master Teverson should have adjourned the application to strike out, pending an application to amend remedying the defects and not dismissed the strike out application in the absence of a viable amendment. On 14 February 2014 Mr Justice Arnold granted permission to appeal and he directed that the application to re-amend should be heard at the same time as the Defendants' appeal.

The appeal and the application to re-amend were heard initially on 17 and 18 July 2014. As a result of argument on the first day, and at my prompting, on 18 July 2014, the Claimant produced a further version of the draft Re-Amended Particulars of Claim (POC 4), which sought to set out in the particulars of claim how the Claimant said that Clause 4.2 of the Agreement did not apply. As a result of the changes introduced in POC 4 and the substantial volume of new case authority then produced by the parties, the hearing was adjourned, and subsequently re-fixed in the first place for 23 September 2014. On 23 July 2014, after the hearing, the Claimant produced a yet further version of the draft Re-Amended Particulars of Claim (POC 5).

By this time, the Defendants had raised the limitation objection to the re-amendments sought. The Claimant was concerned that his application to re-amend should not be prejudiced by the adjournment, and following application, at a further hearing on 25 July 2014, the Defendants gave undertakings not to rely upon a limitation defence in respect of the restitution claims in so far as causes of action accrued between 25 July 2008 and 23 September 2008 (i.e. six years before the date of the undertaking and the then next hearing).

Although extensive written argument on POC 5 was duly served in September, in fact the hearing on 23 September 2014 did not go ahead and was re-fixed for November 2014. At the outset of that hearing, counsel for the Defendants accepted that, since he was raising limitation as a ground to refuse amendment in respect of the contract claims too, no limitation objection to amendment would be taken in respect of causes of action in contract accruing on or after 25 July 2008.

The Defendants contend that Master Teverson's approach was wrong. Having concluded that the pleading before him was unsatisfactory, he was wrong to dismiss the Defendants' strike out applications, whilst allowing the Claimant a further opportunity to amend his statement of case. The Master ought either to have granted the Defendants' application to strike out or adjourned that application to see if the Claimant could remedy the defects in the then current particulars of claim, by way of re-amendment, and thereafter, upon considering that re-amendment, he would have refused it and struck out the existing Particulars of Claim. They submit that the application now to re-amend in the form of POC 5 should be refused, thereby leaving only the existing POC

The Claimant contends that permission should be granted to re-amend in the terms of POC 5, and in that event the Defendants' appeal should be dismissed. If permission to re-amend is not granted nevertheless POC 1 (without paragraphs 12 to 14) still stands and discloses a viable claim in debt, based on admissions and the fact that Master Teverson was not prepared to strike out on the basis of clause 4.2.

I thus approach the issues as follows. First, should the Claimant be granted permission to re- amend in the form of POC 5? Secondly, and depending on my decision on the first issue, what are the consequences for the Defendants' appeal addressing the applications to strike out and/or summary judgment?

The application to re-amend is now made in respect of POC 5. Paragraphs 1 to 7 remain as in POC 1, save for the inclusion of an express reference to Clause 4.2 of the Agreement. Paragraph 8 is amended by giving more detail of the further agreement made in November (the agreement is now said to have been made in November 2001), and by introducing, crucially, the variation of the Agreement as to the terms of payment and the facts relating to why Clause 4.2 did not operate. Paragraph 8 provides, so far as material (with amendments to POC 1 shown in underlining):

Paragraph 10 is amended slightly to allege that the continuation of the Agreement had arisen as set out in paragraph 8 - thereby changing this plea from amendment by conduct to amendment by the agreement on 24 November 2004 and to that extent is inconsistent with the earlier particularisation of paragraph 8.

Paragraph 11 remains essentially unaltered, although a new paragraph 12 is included to refer to an Appendix where it is said that a particularised list of the services provided by the Claimant and the relevant period is set out. Old paragraphs 12 to 14 of POC 1 are deleted, as required by the Second Order. Then new paragraphs 12A and 13A plead the obligation to pay arising, as follows:

Mr Power asserts, and I accept, that this new paragraph 14A quantifies the claim in contract,

Paragraphs 15 to 20 remain largely unaltered, referring to the admissions made in the course of the winding up proceedings. Paragraph 20 is amended to read as follows:

The claim as now put forward in POC 5 advances three bases of claim:

In relation to the contract claim in particular, two points emerge. First, the variation is alleged to have been made at a meeting held at the First Defendant's offices on 24 November 2004; previously it was alleged to have been made at a meeting at the Claimant's premises in November 2003. The agreed variation is alleged to have been as to the terms of payment; previously it was alleged to have concerned the duration of the Agreement only. Secondly, there appears to be two, alternative, bases upon which payment was to become due: first, when the Defendants could afford to pay ("afford only"); and secondly, when the Claimant made a demand for payment at a time when the Defendants were able to pay ("demand/afford"). Moreover, the Defendants have pointed to three particular difficulties in the contract pleading.

As regards amendment of a statement of case in general, CPR 17.1(2)(b) provides that, once served, a party may amend its statement of case with the permission of the court. Principles governing the exercise by the Court of its discretion under CPR 17.1(2)(b) are set out in The White Book Service 2014 §§17.3.5 to 17.3.7.

First, amendments ought in general to be allowed so that the real dispute between the parties can be adjudicated upon, subject to any prejudice being compensated for in costs and subject to the public interest in the administration of justice.

Secondly, an application to amend will be refused if it is clear that the proposed amendment has no real prospect of success; in this regard the test to be applied is the same as that for summary judgment under CPR 24. Thus, the court may reject an amendment seeking to raise a version of the facts which is inherently implausible, self-contradictory or is not supported by contemporaneous documentation. Equally, an amendment seeking to raise a claim which is unsustainable in law will not be allowed.

Thirdly, late amendments, close to the date of trial, will require particular scrutiny. InBrown v Innovatorone Plc [2011] EWHC 3221 (Comm) Hamblen J(at §14) considered relevant factors in deciding whether to allow a late amendment; these included the history as regards the amendment and the explanation as to why it was being made late; prejudice to either party if the amendment was or was not allowed; and whether the text of the amendment was satisfactory in terms of clarity and particularity. The Defendants submit that this last factor also applies in the present case.

Special provision is made for amendment of a statement of case which raises a limitation issue. This is to be found in the combined effect of s.35 Limitation Act 1980 ("the 1980 Act") and CPR

I do not set out in full the provisions of s.35 of the 1980 Act and CPR 17.4(2). Their effect can be summarised as follows. For the purposes of the 1980 Act any new claim made in the course of existing proceedings which involves the addition or substitution of a new cause of action is treated as a separate action commenced on the same date as the original proceedings: s.35(1) and (2)(a) of the 1980 Act. Where a statement of case is amended to add such a claim (i.e. involving a new cause of action) after an applicable limitation period has expired, the effect is to deprive the defendant of an accrued limitation defence. By the combined effect of s.35(3) to (5)(a) of the

InBallinger, Tomlinson LJ recently reviewed the authorities and, at §15 summarised what he described as "the three-stage test that the claimants need to satisfy before being granted permission to raise a new claim in an existing action". The three stages there identified (together with my additional explanation) are as follows:

A number of further principles emerge from the authorities. First, as regards Stage 1 (arguable limitation defence):

As regards Stage 2 (new cause of action) from the recent analysis of the authorities by Longmore LJ in Berezovsky v Abramovich §§59 to 69, the following principles arise:

As regards Stage 3, ("arising out of the same or substantially the same facts") a number of points emerge, particularly from Ballinger at §§34 to 38:

In relation to the re-amended claim in contract, the Defendant submits:

In relation to there-amended claim in contract, the Claimant submits:

Thus, the issues on the application to re-amend are, in respect of each of the contract claims and the restitution claims, first, whether in each case, permission to re-amend should be refused under the general discretion under CPR 17.1(2)(b) on the basis that the case pleaded has no real prospect of success, and secondly, if and to the extent not, whether the re-amended claims raise limitation issues and thus whether the provisions of CPR 17.4(2) apply and whether permission must or should be refused under those provisions. In the following paragraphs I address each of these issues, in respect of the contract claim, the paragraph 14B restitution claim and the paragraph 14C restitution claim in turn.

At the outset I note that the Claimant has had ample time to plead his case clearly. As the Defendants have pointed out with considerable justification, the Claimant has made numerous attempts to clarify his case, there have been significant changes as between the different drafts put forward and inconsistencies with witness statements. Further Master Teverson put the Claimant on notice that his pleading was not sufficiently clear. So, subject to making some allowances for the imperfections of drafting and taking care not to seek to construe the pleading as if it were a statute, I assess the application to re-amend on the basis of what is now in POC 5. It is this case, and no other.

Master Teverson said on 6 December 2012 that at that point he considered that there was a real prospect of the Claimant being able to circumvent the Clause 4.2 defence by being able to rely upon the way in which the matter in fact operated. In my judgment, this has been the purpose of the amendments now pleaded in paragraphs 8 and 9 of POC 5. The Claimant has purported to plead precisely how it in fact operated and how he can circumvent Clause 4.2.

On their face, and as contended by the Defendants, paragraphs 8 and 9 put forward two bases of claim in contract: first the debt fell due when the Defendants can afford to pay ("the afford only" basis"); secondly and alternatively the debt fell due upon demand by the Claimant at a time when the Defendants could afford to pay ("demand/afford" basis). I consider each of these bases in turn

The Claimant submits that the amendments do no more than clarify the facts already advanced. New paragraph 9 merely clarifies what is already pleaded.

The Defendants' overall submission is that, as regards the "afford only" basis, there is no clear pleading as to when in fact the Defendants could afford to pay; that it is plainly inconsistent with other parts of pleading saying that payment was duly only after a demand and inconsistent with what the Claimant said both in written and oral argument. As regards the "demand/afford" basis, it is inconsistent with the pleaded case in paragraph 9 and inconsistent with the Claimant's written argument which refers only to the need for a demand. The pleading is thus not satisfactorily clear: see Innovatorone at §14.

First, as regards the "afford only" basis of claim, in my judgment the Claimant's pleaded case is not sufficiently clear, particularly bearing in mind the time and number of opportunities which the

Further, even if contrary to what was said in oral argument, the "afford" condition was met once and for all by the events in August 2007 pleaded at paragraph 9, there is no sufficiently clearly pleaded case as to when the debt or debts in respect of the work carried out after that date fell due - for example, as and when each particular piece of work was done, or on a monthly basis or on a yearly basis. The Defendants themselves suggest that one option is that the sums fell due on a monthly basis; however paragraph 14A of the Claimant's own pleading is not clear as to the date or dates when the sums claimed fell due.

For these reasons, and after all this time, the contract claim based on "ability to afford" is inconsistent, incoherent and inadequately pleaded. It has no real prospect of success and accordingly I refuse permission to re-amend to introduce such a case.

Secondly, as regards the "demand/afford" basis of claim in contract, I accept that the references in paragraph 9 to payment in August 2007 being payment towards "the sum due under the Agreement" and to the payment affirming "the debt owed" seem to suggest that by that time all other sums were due, and thus is inconsistent with the "demand" condition. However, as regards the first of these references, the relevant sentence has been carried over from POC 1 and has not been adjusted to take account of the proposed re-amendment. I am prepared to accept that this is no more than a drafting oversight. The second reference to "debt owed" is new and difficult to understand; it is due perhaps to a lack of precision in drafting.

However in my judgment, the claim based on demand is sufficiently pleaded, most specifically because a specific demand is pleaded and thus the Claimant's case as when the obligation to pay arose is made clear. The claim based on "demand/afford" is really a claim based on a demand and, whilst there are some inconsistencies, overall I think it is arguable and raises some real prospect of success. Thus, subject to CPR 17.4(2), I am prepared to grant permission to re-amend for this basis of contract claim to be pursued. In light of the matters referred to in paragraph 29 above, no limitation issue arises in relation to claims in contract for payment for services carried out on or after 25 July 2008 and so I will grant permission to amend in respect of those claims under CPR 17.1(2)(b).

I turn to consider CPR 17.4(2) in relation to "demand/afford" basis claims in respect of services rendered before 25 July 2008. In the light of my conclusion in paragraph 60 above, I do not consider this issue in relation to the "afford only" basis. (I note that, on that basis, it is likely that there would have been an arguable limitation defence in respect of sums claimed for services provided before 25 July 2008).

The Defendants submit that they can raise a limitation defence in respect of contract causes of action accruing before 25 July 2008. The Claimant submits that the obligation to pay under the Agreement as varied did not arise until a demand was made in July 2010 and the cause of action

The Defendants accept that they have no arguable limitation defence, if the pleading is to be interpreted such that the July 2010 demand gives rise to the cause of action. However, the Defendants submit, it is far from clear that this is the legal consequence of the pleaded variation. It is at least arguable that the Claimant's pleaded contractual condition of a demand does not mean that time did not begin to run until the making of that demand in July 2010; rather the cause or causes of action accrued as and when the services were supplied. The requirement of a demand is a condition to enforcement, and not a condition to liability: Legal Services Commission v Henthorn [2012] 1 WLR 1173 (CA) at §§30-31, 45-46.

In the Henthorn case, the Legal Services Commission made payments on account for work done under civil legal aid certificates between 1992 and 1998. After assessment of those costs, the Commission sought repayment of the amount by which the payment on account exceeded the final costs as assessed. The Commission claim was made under Regulation 100(8) of the Civil Legal Aid (General) Regulations 1989, which provided:

Proceedings to recover the overpayment were commenced in 2006 and it was argued by the defendant barrister that the claims were statute barred (under s.9 of the 1980 Act). The defendant contended that time began to run from the date that she had completed the work covered by the legal aid certificate. The Commission contended that time began to run not until the date of the

The Court of Appeal held (§33) that time began to run from the date of "assessment" and not from the earlier date of work done, nor from the later date of the Commission's demand. The words "on demand" in the regulation and statutory context were a condition to "enforcement" and not a condition to "liability" (such that time only ran from the date of the demand). Lord Neuberger stated at §30 that the words "on demand" carry with them an obligation on the Commission to make a demand before taking any steps to enforce its right to recover the balance. At §31 he said:

At §§45-56 Lord Neuberger considered a number of authorities not concerned with the Regulations (in addressing in particular the question whether the cause of action accrues on date of relevant work rather than assessment). Whether there is a difference between the date the claim arose and the date from which it is actionable "is a question of construction of the relevant instrument, whether statute, regulations, rules or contract in each case": §45. Further in decided cases where only one party could be the creditor, an important factor supporting the construction

The Claimant submitted in argument that the analysis in Henthorn does not apply to a contractual claim. The claim there was to enforce a statutory obligation, which was more akin, if anything, to a restitutionary claim. However, as appears from the foregoing, Lord Neuberger went out of his way to indicate that his analysis would apply equally to the case of a contractual obligation.

It may well be that at a trial, the terms, construction and context of the agreement are such that it is clear that the parties intended the demand condition to be a condition to liability and not just a condition to enforcement. However that is not something that I can decide on this application to amend.

I conclude that, at this stage, the Claimant cannot demonstrate, on the basis of the pleaded material, that it is not at least arguable on the Defendants' part that, the requirement for a demand was only a condition to enforcement and that the cause of action accrued earlier, at the date when the relevant services were provided. Thus, the Defendants have an arguable limitation defence in respect of the contract claim.

Applying Darlington, the Claimant submits that in both POC 1 and in POC 5, the relevant duty was a contractual duty to pay and the breach was the failure to pay. Paragraph 13A introducing the demand for payment in July 2010 does not introduce a new cause of action; it merely clarifies when time began to run.

Applying the approach summarised in Berezovsky, I consider this issue at the "highest level of abstraction" and regardless of the detail of the factual investigation that may arise. In my judgment, on this basis, the "demand/afford" basis of claim does raise a new cause of action. A comparison of POC 1 with POC 5 shows that POC 5 pleads a new duty in respect of payment and a new and different failure to pay. This new cause of action arises out of the oral agreement made in November 2004; the old duty to pay arose under Clause 4 of the Agreement and was a duty to pay on submission of an invoice; the duty to pay now arises from the agreement made in November 2004; and it is a duty to pay upon demand; most importantly the breach of duty is different and took place at a different time- in July 2010 on the Claimant's case. Because of these changes in the facts, there is clearly a change as to when the obligation to pay fell due: in some cases, as much as seven years later.

The Defendants submit that the contract claim does not arise out of the same or substantially the same facts as those in issue in POC 1. The facts now pleaded require quite different evidence to succeed: evidence relating to a meeting on 24 November 2004 and as to the making of an oral demand in July 2010, and evidence relating to the impecuniosity and wealth of the Defendants from time to time. This will require witness evidence as to who said what and potentially the tracking down of different witnesses.

The Claimant submits that the amendments do no more than clarify that the demand for payment was made in 2010 and the circumstances in which the parties made the November variation agreement. The facts are substantially the same. Clause 4.2 was never relied upon and the November agreement has always been pleaded at paragraph 8 and 10. The factual differences in Paragon Finance and in Ballinger were of a different order.

It is the case that, on the basis of POC 5, evidence as to certain different and new events is likely to be needed: the meeting on 24 November 2001: attended by the Claimant and the First Defendant; the making of a demand by the Claimant to the Second Defendant following a meeting between the two men in July 2010 at the offices of Hacker Young and arranged by Andrew Andronikou.

It is equally the case that as matters stand in POC 1 and the Defence, there is already in issue in these proceedings a very extensive range of matters concerning the relationship between the Claimant and the Defendants and over a very extensive period of time, running from 2001 to 2009. The claim in POC 5 covers essentially the same matter as those covered in POC 1; the services provided by the Claimant to the Defendants over time. In particular the alleged difficulties encountered by the farming business carried on at the Defendants' farm and the Claimant's involvement with the Defendants in connection with those difficulties are already referred to in the pleadings.

Set against this context, and applying the purposive approach to s.35(5)(a) and CPR 17.4(2) summarised in Ballinger at §§34 to 38, in my judgment evidence relating to these specific additional matters raised in POC 5 are not "completely outside the ambit of and unrelated to" the facts which the Defendants could reasonably be assumed to have investigated for the purpose of defending the claim as it currently exists. They are within the ambit of and related to the facts already in issue. Furthermore, even if it can be said that those matters are outside or unrelated to existing matters, I have to consider the extent to which the Defendants would be required to embark upon an extra investigation of new facts. This is a matter of degree; and when set against the scope of the matters which are already in issue in the proceedings, in my judgment the extent of this further inquiry is relatively limited.

Finally, there is a further consideration here. The Defendants accept that they have no limitation defence to the contract claim, in so far as it relates to services supplied after 25 July 2008, and in the light of my conclusion in paragraph 62 above, permission to re-amend, under CPR 17.1(2)(b) to introduce that claim is to be granted and that claim will continue in any event. In relation to claims for those services, the very same matters of the November 2004 agreement and the demand in July 2010 will therefore have to be investigated by the Defendants. In this way, allowing the amendment in relation to services provided before 25 July 2008 will not require the Defendants to conduct any investigation of facts which they would not otherwise be required to make. I accept that, as matters currently stand formally, those issues do not yet have to be investigated. However if I were to refuse now permission in respect of pre-25 July 2008 services, but allow it in respect of post-25 July 2008 services, the Claimant could make a fresh application to re-amend in respect of the former services, and by that time the then "existing claim" would cover the facts relating to the November 2004 meeting and the July 2010 demand. The purpose of 17.4 is to protect from having to investigate matters which would other not have to be investigated. In my judgment, that purpose would not be achieved by disallowing the amendment pursuant to CPR 17.4(2).

For these reasons I conclude that the factual matters raised by the contract claim in paragraph of POC 5 arise out of the same or substantially the same facts as those already in issue in the proceedings, and I have power to grant permission to re-amend POC 5 in those respects. In my judgment, it is appropriate to exercise my discretion to allow those amendments to be made, so as to allow all matters in issue to be adjudicated upon.

The claim in restitution in paragraph 14B is advanced on the basis that at the time that the services were supplied there was in place a valid, binding and subsisting contract between the parties, whether in the form of the Agreement or as varied. The Defendants submit, and I accept, that the legal basis for the claim for unjust enrichment in the present case is free acceptance of services

The Defendants submit that this claim has no real prospect of success. First they submit it is bound to fail in law. There can be no claim for restitution where a subsisting contract between the parties allocates the risk between them, relying in particular upon the case of Re Richmond Gate Property Co Ltd [1965] 1 WLR 335. Secondly, they submit that there is no properly pleaded claim in restitution. In particular the Claimant has failed to plead either a statement of the objective market value of the enrichment or the relevant "unjust" element. This second point is made also in respect of the claim in paragraph 14C and I address it in that context, at paragraphs

As regards the first submission, the relevant principle is that where there is a contract between the parties relating to the benefit transferred, no claim in unjust enrichment will generally lie whilst the contract is subsisting: Goff and Jones, supra, §3-13. This general principle is justified on the basis that the law should give effect to the parties' own allocation of risk and valuations, as expressed in the contract and should not permit the law of unjust enrichment to be used to overturn those allocations or valuation: Goff and Jones, §3-16 citing Re Richmond Gate, where Plowman J stated: "since there was an express contract with the company in regard to the payment of remuneration it seems to me that any question of quantum meruit is automatically excluded''. Goff and Jones accepts that the same principle applies today. Goff and Jones continues (at §3-29):

In my judgment, this principle applies to the claim made in paragraph 14B. First, neither of the two principal exceptions applies to the present case. Secondly, I do not accept the Claimant's argument that Re Richmond Gate can be distinguished, because in the present case the requirement to invoice in Clause 4.2 was not an allocation of risk. The express terms of the Agreement (assuming it was not varied as now alleged) provided that unless the Claimant invoiced, he would not be paid. The Claimant ran the risk of not complying with the agreed terms of the contract; in this case the risk of not invoicing.

For these reasons, I consider that the claim in paragraph 14B is unsustainable in law, and has no real prospect of success and accordingly I refuse to grant permission to re-amend in this respect under CPR 17.1(2)(b). In the light of this conclusion, I do not go on to consider either the issues of the adequacy of pleading or the issue of limitation and CPR 17.4(2) in relation to paragraph

The claim in restitution in paragraph 14C is advanced on the alternative basis that the Defendants establish, as pleaded in the defence, that the Agreement between the parties was illegal or void, for one of the reasons pleaded in the defence (set out in paragraph 15 above) and is thus unenforceable.

The Defendants submit that this claim has no real prospect of success. First they submit it is bound to fail in law. They submit that there can be no claim in restitution when it is premised on the Claimant's own unlawful behaviour. Itcannot be unjust that in the circumstances outlined in the defence for the Claimant to go unrewarded for his services. Secondly, they submit that there is no properly pleaded claim in restitution. In particular the Claimant has failed to plead either a statement of the objective market value of the enrichment or the unjust element.

As regards the first submission, the relevant legal principles can be summarised as follows. First, if the contract is illegal, a defendant who receives benefits under an illegal contract can rely on the illegality of the contract a defence to a claim in unjust enrichment, provided that the parties were in pari delicto - equally to blame for engaging in the transaction. There are certain exceptions to the principle: Goff and Jones, supra §35-01 to 35-08 and Chitty, supra §§29-082 and 29-083. Secondly, if the contract is merely void or unenforceable, there is a restitution claim unless the claim would undermine the policy of the statute or rule rendering the contract unenforceable. A person who renders services under a contract which is unenforceable will be entitled to a quantum meruit if the other party has failed to carry out his part, provided that the restitutionary claim does not undermine the policy of the statute (or common law rule) rendering the contract unenforceable: Chitty, supra, §§29-081 and 29-085.

In the present case, the application of these principles and their exceptions will depend upon the precise factual and legal basis upon which the Agreement is found to be either illegal or void and/or unenforceable. For example, in relation to illegality, the relative blame of the parties will fall for consideration. In relation to the various grounds of invalidity, the Defendants may seek to advance arguments as to why the policy of the rule should exclude a restitutionary claim. It may be that the Claimant's claim here will ultimately encounter substantial difficulties, particularly in the event that the Defendants' case on illegality (pleaded at §§39 to 45) is established. However, at this stage, it is not possible to say that which of these defences will succeed, and on what basis, and thus that the Claimant has no real prospect of success in relation to the claim in paragraph

As regards the Defendants' contention that this restitutionary claim is not adequately pleaded, they submit that the Claimant has failed to plead two of the key ingredients for a restitutionary claim, namely a statement of the objective market value of the enrichment or benefit and the facts to establish that the enrichment was unjust, relying inter alia on Benedetti v Sawiris per Lord Clarke at §34 and Cobbe v Yeoman's Row Management [2008] UKHL 55 per Lord Scott at §§40-44.

The Claimant, in response, contends that what is required to be pleaded are the facts, which if established, constitute a recognised claim in law in restitution. It is not necessary to refer to the particular legal category of restitution that it falls under. In my judgment, this is correct: Uren v First National [2005] EWHC 2529 (Ch) at §18. As regards the "unjust" factor, what has to be pleaded is the fact which makes the enrichment unjust. Here that fact is that the Claimant has done the work and conferred the benefit upon the Defendants but has not been paid. The Claimant further submits that, whilst the value of the enrichment is to be measured by reference to its objective market value, there is no authority requiring the objective market value to be pleaded expressly as such. The value of the enrichment is pleaded in any event by the figures given in paragraphs 14B and 14C, being a figure for the value of the services based on the £80,000 per

In Benedetti v Sawiris, supra Lord Clarke (at§10) stated that in a restitutionary claim for quantum meruit for services where there no contract, four questions arise: Has the Defendant been enriched? Was the enrichment at the claimant's expense? Was the enrichment unjust? Are there any defences available to the defendant? As regards the third factor, he indicated (§11) that, in that case failure to pay for the claimant's services was sufficient to render the enrichment unjust. He then went on (§§12-34) to consider the further question of what is the value of the unjust enrichment. On this issue, the starting point for identifying whether a benefit has been conferred on a defendant and for valuing that benefit is the market price for the services. That is the objective market value, or market prices, of the services performed by the claimant. An objective test is applied to the issue of market value. The test is "the price which a reasonable person in the defendant's position would have had to pay for the services" albeit taking account of the defendant's own particular situation (§17).

Lord Clarke then went on to consider the points there in issue, referred to as "subjective devaluation" and "subjective revaluation". He held that the defendant is entitled to adduce evidence in order subjectively to devalue the benefit, thereby proving either that he in fact received no benefit at all or that he valued the benefit at less than the market price; however, save in exceptional circumstances, the principle of subjective revaluation (where the defendant has valued the services at higher than market price) should not be recognised either for the purpose of identifying a benefit, or for valuing a benefit received.

As regards evidence relevant to ascertaining market value, Lord Reed (at §139), citing Cobbe at §44, suggested that an amount in fact offered by the defendant may be evidence of objective market value of the particular services at the time they were provided. I do not however accept the Claimant's further submission that objective market value does not apply at all where there is a meeting of minds as to how the parties value the benefit. Such a proposition is contrary to the general approach set out in Benedetti and, particularly, to the rejection of the subjective revaluation approach.

I conclude as follows. First, the Claimant has sufficiently pleaded the relevant "unjust" factor; the Claimant has pleaded that the Defendants have not paid for the services rendered. Secondly, I accept that, in order to succeed the Claimant's restitutionary claim in paragraph 14C has to be a claim for the objective market value of the services he provided to the Defendants. There is no express reference in the pleading to this term, nor are any facts pleaded referring to market value. All that is pleaded is the rate of reward provided for in the Agreement, and a claim for restitution calculated on the basis of that rate. The pleading as to value of enrichment is certainly not detailed. However in my judgment it is sufficient to raise a claim with a real prospect of success. I accept that there is no need to refer, in terms, to "objective market value". Moreover, it is at least arguable that what the parties agreed or what the defendant offered may be relied upon as evidence of the objective market value of the services.

Thus, subject to CPR 17.4(2), I am prepared to grant permission to re-amend for the claim in paragraph 14C to be pursued. In light of the undertaking referred to in paragraph 28 above, no limitation issue arises in relation to claims in restitution in respect of services carried out on or after 25 July 2008 and so I will grant permission to amend in respect of those claims under CPR

I turn to consider CPR 17.4(2) in relation to the restitution claim in paragraph 14C in respect of services rendered before 25 July 2008.

It follows that permission will be granted to re-amend the Particulars of Claim in respect of some, but not all of there-amendments in POC 5. To that end, the Claimant will be required to submit a revised version of POC 5 to reflect this judgment, for approval by the Court.

The parties' submissions in relation to the Defendants' appeal were largely predicated on the assumption that permission to re-amend would be granted or refused for POC 5 in its entirety. That is not the position now however and accordingly, if necessary, I will hear short further argument as to the appropriate disposal to be made in respect of the appeal, as well as argument in relation to the costs of the application to amend.

In any event, however, I do not accept the Claimant's argument that absent the amendments introduced by POC 5, there exists a viable claim on the basis of POC 1 (with old paragraphs 12 to 14 deleted). Shorn of those paragraphs, POC 1 does not allege when the duty to pay remuneration fell due and when it was breached and there is no cause of action based simply on the admissions alleged in paragraphs 15 to 20. Further Master Teverson did not conclude that the Claimant's claim could overcome Clause 4.2 in any event; rather he indicated that it might be able to do so because of the way the Agreement was operated, and the whole purpose of the re- amendments now put forward has been to seek to plead how it operated. The Claimant's case now can only be the case set out in POC 5, as now to be modified in the light of this judgment.

Unless these matters can be agreed, I propose dealing with these and other consequential matters, including the making of further case management directions following the amendment to the particulars of claim, either by way of further written submission alone or, if necessary, at a further hearing to be fixed as soon as convenient.