GBM Minerals Engineering Consultants Ltd v GB Minerals Holdings Ltd

In this action, the claimant, GBM Minerals Engineering Consultants Ltd claims a sum slightly in excess of £594,000, said to be due under a contract dated 18 January 2010, pursuant to which the defendant, a Canadian company called GB Minerals Holdings Ltd, engaged it to carry out consultancy services in connection with a project in Guinea-Bissau in West Africa. There is a sizeable counterclaim by the defendant which is currently pleaded in the sum of about £4 million, brought on the basis that the defendant has significantly overpaid the claimant for the work carried out, and seeking damages for negligent performance. There are extensive and wide-ranging allegations not only in respect of the work done and its proper value, but also relating to the binding nature and true construction of various agreements, including settlement agreements, between the parties. That anodyne introduction does not, however, fully summarise the case between these two parties that has led to a situation where at the Pre-Trial Review on 9 October 2015, (the trial date having been fixed for 30 November 2015, some seven weeks later) both sides sought to amend their pleadings in substantial respects, in applications issued very shortly before the Pre-Trial Review. The Defendant’s application was issued on 25 September 2015 and is supported by the Third Witness Statement of Kate Allass, a solicitor at Farrer & Co, the claimant’s solicitors, of the same date. The Claimant’s application was issued on 29 September 2015 and is supported by the witness statement of Christopher Wright, the solicitor acting for the defendant, dated 28 September 2015; it is opposed by the witness statement of William Charrington dated 5 October 2015.

The Technology and Construction Court Guide states at Part 14 what the purpose is of Pre-Trial Reviews, and how these important hearings are not to be hijacked by parties for the hearing of applications that could and should have been issued, and heard, in the normal way, on other occasions. The court will always endeavour to hear applications if time permits, but this will not always be possible at a Pre-Trial Review. However, for reasons that will become obvious, the court in this instance had no option but to hear both bitterly contested applications to amend the pleadings. The background to these applications is very important; indeed, both applications are connected by similar facts. The claimant applied to amend both its Particulars of Claim and its Reply and Defence to Counterclaim. The defendant applied to amend its Defence and Counterclaim. There was also a far more detailed draft proposed amended Defence and Counterclaim produced by the defendant to the claimant’s solicitors the day before the Pre-Trial Review on 8 October 2015, but formal permission for those amendments was not sought before me. The claimant invited me to consider the contents of that document so that I could put the extant application to amend in context. It can therefore safely be said that the pleadings were far from in an ideal state. As my ruling on the applications was going to have a direct impact upon the trial date, I gave a short extempore judgment at the conclusion of the hearing, but stated that I would provide a more detailed ruling in writing giving my reasons.

The claimant’s case is that pursuant to a written contract dated 18 January 2010, it was engaged by the defendant to provide consultancy services in respect of a Full Feasibility Study of the Farim Phosphate Project in Guinea-Bissau, in West Africa. The estimated contract sum was £1,924,023 and claims for interim payments would be made by way of invoices. The services would be performed on a cost reimbursable basis. Clause 4.3.1 of the contract stated that it "can be varied on application by either Party by written agreement of the Parties". Between January 2010 and October 2012, the claimant relied upon the scope of the contract works being significantly altered such that, by reference to Variation Orders 1-17, the contract price was increased to £10,811,352. There are three other Variation Orders (18, 19 and 20) which were produced in 2013. Unlike Variation Orders 1 to 17, these were not signed, and lie at the heart of the claim.

The fact that the original contract had been varied was a central element of the Particulars of Claim, which was served on 3 December 2013. Paragraph 11 of that document stated:

"The Feasibility Study Agreement was varied by written agreement between the parties in respect of additional services to be provided by the Claimant to the Defendant the consequential increase in the costs to the Defendant of the Claimant performing its duties under the feasibility Study Agreement. Agreed 'Variation Orders' included those dated 5 May 2010; 25 March 2011; 15 April 2011; 10 July 2011; 29 September 2011; 11 November 2011; 2 December 2011; 17 January 2012; 12 March 2012; 12 May 2012; 15 May 2012; 26 May 2012; 8 July 2012; 31 July 2012; 15 October 2012; 30 October 2012; and 18 July 2013."

These are the 17 Variation Orders.

Originally, therefore, the contract between the parties was for a sum of approximately £1.9 million, although over the years that the claimant provided services, that figure rose very substantially over time and the total amount of the contract sum relied upon by the claimant (and invoiced by the claimant) is in excess of £10 million. Various new “job numbers” were created for some of the work that was being performed by the claimant, although the details of those job numbers and the subject matter of them is not currently material. The claimant company is based in Twickenham and is the corporate vehicle through which Mr Short conducts his engineering consultancy business. Originally, the large increase in the contract sum (or the total of the fees paid or payable by the defendant, which may amount to the same thing) was justified in the Particulars of Claim by reliance upon by the 17 Variation Orders, or VOs, set out in paragraph 4 of this judgment. These are described (and numbered) VOs 1-17. These 17 Variation Orders were alleged to have been agreed between and signed by Mr Short and Mr Laing (the then-CEO of the Defendant) between May 2010 and October 2012.

Mr Laing, at the time the litigation commenced, was no longer with the defendant company and had his own separate dispute with them. The defendant had no copies of any of these Variation Orders in its corporate records and once proceedings were instituted understandably sought copies of them from McClure Naismith, the solicitors then acting for the Claimant. Copies were eventually provided to the defendant in April 2014. It is at this point that this action departs from what could be called an habitual commercial dispute, and became an action far more unusual. Points were immediately taken by the defendant on the authenticity of these documents, and when these points were pursued in correspondence McClure Naismith refused to provide any further information. This pre-dated the service by the claimant of its reply and defence to counterclaim, which was then served in May 2014 supported by a statement of truth. That pleading relied on the authenticity of the disputed, but signed, Variation Orders, as had the Particulars of Claim. It even indicated that summary judgment would be sought by the claimant in respect of them. However, following standard disclosure in March 2015, it became apparent that the defendant’s suspicions about these documents had been well-founded. Neither the signatures of Mr Short, nor those of Mr Laing, each of which bore a specific date, had been signed on the date indicated on the face of each Variation Order. In fact, the Variation Orders had not even existed on those dates. They had been 'created' long afterwards. This was made clear by the text of certain emails passing between Mr Short and Mr Laing.

The defendant, on 24 March 2015, then issued an application for permission to bring contempt proceedings against Mr Short, arising out of the statements of truth attached to the claimant’s pleadings. This application was supported by an affidavit of Kate Allass and dated 24 March 2015. The application was opposed on the basis of no less than five affidavits: from Mr Short, Mr Christopher Wright (his solicitor for the committal application), Mr Thomas Crittenden, the solicitor at McClure Naismith who had signed the statement of truth, and two other affidavits; these were from David Richards and Anandj Anthony, both of whom purported to give expert evidence as to how normal it is to backdate Variation Orders.

That application was heard by Coulson J on 14 May 2015, and the judgment is at GB Mineral Holdings Ltd v Michael Short [2015] EWHC 1387 (TCC).In summary, after a thorough and careful analysis of the factual material, the explanations (such as they were) from Mr Short and the authorities, the learned Judge gave the defendant permission to bring contempt proceedings against Mr Short in respect of the passages of the Reply that dealt with the Variation Orders. The defendant did not pursue the like allegations in the Particulars of Claim because, although this also had relied on the Variation Orders, Mr Short had said in his affidavit that the Particulars of Claim was served without his express approval (Footnote: ¹). The permission was granted by Coulson J on the express basis that these proceedings were to be heard at or after the trial of the action, at the discretion of the trial judge, and not before. Two points should be borne in mind concerning these committal proceedings. Firstly, the court does not give permission in such situations lightly and, in particular where application for permission is sought before an action is heard, approaches such applications with great care. Secondly, there has not yet been any oral hearing or cross-examination of Mr Short or anyone else in these proceedings. As David Richards J stated in Daltel Europe Ltd and Others v Hassan Ali Makki and Others[2005] EWHC 749 (Ch) the proper time for determining the truth or falsity of the statements is at trial. The views of the court were therefore made on the basis of the written evidence and what the documents showed. However, Coulson J found “there can be no doubt that those statements were false” (Footnote: ²) and he considered “on the material before me that there is a strong prima facie case of dishonesty” (Footnote: ³).

The later creation of the Variations Orders which were the subject of the proceedings before Coulson J therefore show that there were very real difficulties with the claimant’s case as it was then pleaded, and with the reliance on the Variation Orders, given their provenance. That hearing was on 14 May 2015 and the judgment was given on 22 May 2015. The claimant has therefore known since at least that date in late May of this year, if not rather earlier, that its case on the Variation Orders was potentially flawed.

The claimant therefore set about amending its pleadings. The point in time when this was actually done is addressed further in this judgment when I deal with “Timing of the applications”; it goes without saying that issuing the application in late September, with a Pre-Trial Review on 9 October 2015 and a trial in November, was far from ideal. However, the amendments are in substance to remove reliance on the Variation Orders, deleting paragraph 11 in its entirety, and also amending the sentence in paragraph 12 of the Particulars of Claim that had stated:

“The Claimant performed engineering consulting services for the Defendant pursuant to the Feasibility Study Agreement as varied by the variation orders”

With

“The Claimant performed engineering consulting services for the Defendant pursuant to the Feasibility Study Agreement as varied by the parties from time to timevariation orders”.

The other amendments – almost all of which are opposed by the defendant, including the one I have reproduced concerning paragraph 12 of the Particulars of Claim – are different iterations of the same plea. Wherever the claimant had relied upon the 17 Variation Orders in either of its pleadings, it removed any reference to those orders and to that reliance. This might be considered sensible, given that the parties knew that the Variation Orders were created in the way explained by Coulson J in his judgment, referring to the emails that had been disclosed in standard disclosure (Footnote: ⁴):

“The emails to which I have referred make plain beyond doubt that, far from these Variation Orders being created over a two year period, as and when the variation instructions were purportedly given, the Variation Orders were all created after the event in November 2012 (with VO017 being created in February 2013). Furthermore, they were created by the contractor seeking additional payment rather than the employer instructing the work; and they were given the impression of contemporaneous authenticity by signatures which had been falsely dated by reference to random dates over the preceding 18 months.”

Although the claimant is seeking permission to appeal from the Court of Appeal in respect of the findings by Coulson J and his grant of permission, the single Lord Justice has refused permission and the existence of those appellate proceedings does not concern me, although I return to the refusal of permission on paper below. The claimant has therefore recognised the potentially damaging aspect of its own case relying upon the Variation Orders, and the serious developments in that case following disclosure and the proceedings before Coulson J, and has proposed these amendments. The defendant opposes the draft amendments that relate to the 17 Variation Orders. Other minor ones are agreed but the majority are not. In addition to the ones in the Particulars of Claim the following in the Reply and Defence to Counterclaim are opposed: paragraphs 3(b), 3(i), 4, 6(a)(vii), 7(k), 9(a), 9(b), 9(c), 17(g)(i) and 17(g)(iv).

The grounds for this opposition by the defendant are set out and amount, essentially, to want of particularity. It is said by the defendant that the new pleading, were these amendments to be permitted, would “obscure” the claimant’s true case, and would make references to the “FSA (Footnote: ⁵) as varied” senseless. Upon receipt of the draft amendment to paragraph 12 of the Particulars of Claim, the defendant’s solicitors wrote a letter dated 30 July 2015 enclosing what could be described as a conventional request for further information. It asked the claimant to address those requests which were numbered 1 to 4(c). Although there was other correspondence, the
Further Information provided (which also addressed other points) was dated 18 September 2015. The contents of that were rather less than helpful, but the statement was included: “Full details of these matters are set out in the Claimant’s witness statements now served”. I should record that witness statements have been served for the claimant both by Mr Short and also by Mr Laing, amongst others. Given that consent from the defendant was not forthcoming, the claimant then applied to the court for permission to amend on 29 September 2015.

Meanwhile, disclosure had thrown up something of yet further interest to the defendant and its solicitors. These matters are explained in the witness statement of Kate Allass of 25 September 2015. I should record that the claimant criticises this statement as being insufficiently precise in terms of exactly what was discovered on precisely which date, or at least the statement is said to be too vague in some respects. Whilst that criticism might have some limited justification, it may be that given how much was going on at the time concerning the application for permission to commit Mr Short, the events of April and May 2015 were such that Ms Allass has given as much detail as she is able. I find it difficult to imagine why precise details might be withheld from the court were such details, in reality, to be readily available. The fullest explanation as possible should be given to explain delay where that has occurred.

However, in disclosure, the defendant’s solicitors discovered within the 56,000 documents that were reviewed an email dated 27 April 2012 from Mr Short to Mr Laing which referred to the “last” payment of US$75,000 being made from Mr Short to an account in respect of “non-Plains Creek expenses”. A spreadsheet was also found, which was called the “Laing Payments Spreadsheet” at the hearing of the applications. Investigations then took place, including asking the claimant for an explanation. The substantive explanation that was provided was that the payments which were being scrutinised were “advance payments” to the claimant, which appeared to be then described as “investments in non-mining activities”. It was said that these investments were not made for the benefit of Mr Laing, but “at all times, including presently, the beneficial interest in these investments remains with Mr Short”. The defendant relies upon this explanation, such as it is, as raising more questions than it answered, and it certainly did not placate the defendant or allay its suspicions. If anything, it led to even greater scrutiny being brought to bear on what is a very curious situation. The Laing Payment Spreadsheet shows payments being made to another account, all after advance payments were made in similar or identical amounts from the defendant to the claimant.

The summary of the situation concerning Mr Short, Mr Laing, payments, and a bank account in Cyprus is, as set out in the witness statement of Ms Allass, as follows:

The defendant therefore drafted 17 sub-paragraphs of paragraph 18 of the Defence and Counterclaim as proposed amendments. These sub-paragraphs were not, in the usual way, served as underlined additions to the existing pleading; I consider that the form in which they were presented to the claimant and the court to be entirely sensible and cost-effective (and also much more readily digestible) as they stand alone and represent an entirely new and different head of counterclaim, although arising inexorably out of the same facts as the claim. If permission is granted, they can be incorporated in the usual way. If the relationship between Mr Short and Mr Laing was not of central importance following disclosure and the matters that led to the application for permission to commit Mr Short for contempt, these amendments, if allowed, would certainly place that relationship at the very heart of the case. What is currently known about these payments set out in the statement of Ms Allass raise, at the very least, serious and important questions that demand an explanation. There may be an entirely innocent explanation and if so that will doubtless emerge, if the defendant is permitted to advance these points. However, amending to include them is opposed by the claimant. The proposed pleading is to the effect that it can be inferred from the coincidence of timing of the receipts and disbursements that the advance payments would enable the claimant to make payments to Mr Laing for his direct or indirect benefit. All of these proposed amendments are opposed by the claimant.

The unsatisfactory state of the proceedings was then, the day prior to the Pre-Trial Review, complicated further by the service upon the claimant’s solicitors under cover of a letter dated 8 October 2015 of a further proposed amended Defence and Counterclaim. This further version constituted abandonment by the defendant of a great number of grounds previously relied upon, and would leave the crux of the case to be the matter of the secret payments. However, the defendant does not seek permission for those amendments now. The claimant submitted that the abandonment of so many grounds by the defendant should be taken into account when considering the strength of the proposed new grounds of counterclaim, but I have difficulty following that as a point in the claimant’s favour that would justify refusing permission to the defendant to amend paragraph 18 in the way indicated. Regardless of whether any other causes of action remain to be relied upon by the defendant, it is not necessary for the defendant to demonstrate it has numerous other causes of action against the claimant. In order to obtain permission for these amendments it is not relevant that other, less explosive arguments are potentially being abandoned by the defendant.

It can therefore be seen that the amendments proposed by each party, and the grounds of each application, throw light on the other party’s application. The claimant’s application is an understandable reaction to what the defendant has uncovered about the 17 Variation Orders, and in large part consists of deletions relating to the way that the case had been put prior to the hearing before Coulson J. I asked Mr Slade QC for the defendant how it could be that mere deletions no longer to rely upon ex post facto created documents (rather than the addition or substitution of new pleas) could sensibly be opposed, as by deleting part of its case any party, in general terms, is simply no longer proceeding with that particular element of its case. He accepted that way of looking at the point, but submitted that unless what remained was cogent, then the deletion(s) ought not to be permitted. Whilst that must be correct, as no court would permit deletions to be made without having proper regard to what remained, it must bring into bright focus what would in fact remain. If what would remain could not constitute a cogent cause of action, or would not make sense, then that would be a justification for not allowing deletions, but this case does not fall into that category.

I therefore have considered each application separately, but taken what is before the court on each application into account too when considering the other. It seems to me that this is the only sensible way that I can consider the discretionary aspect of whether or not to grant permission to either party to amend its case in the way it seeks. Both sets of amendments spring from the situation concerning Mr Short, Mr Laing, the 17 Variation Orders, and the relationship between those two gentlemen.

Ordinarily, and particularly at the stage of the Pre-Trial Review, the court simply will not entertain amendments that threaten the trial date. Such amendments were categorised as “very late” (Footnote: ⁶) in CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd and others [2015] EWHC 2015 1345 (TCC) and that description does not apply solely to the period of time between the seeking of permission to amend and the trial. In that case, amendments proposed eight months ahead of the trial were still “very late” due to the threat they presented to the date of the trial. In that case, Coulson J set out and summarised the more recent approach to amendments following the Jackson Reforms to the Civil Procedure Rules. As he put it (Footnote: ⁷): “I will cut to the chase and summarise the principles which are now applied in The Rolls Building to disputed applications to amend.” I can do no better than rely upon and reproduce his analysis here:

“15.

In my view, the traditional approach outlined by Peter Gibson LJ in Cobbold v Greenwich LBC(1999 unreported), to the effect that "[a]mendments in general ought to be allowed so that the real dispute between the parties can be adjudicated upon provided that any prejudice to the other party or parties caused by the amendment can be compensated for in costs…" is no longer the right starting point. Indeed it is arguable that it never was: in the earlier Court of Appeal decision of Worldwide Corporation Ltd v GPT Ltd and another [1998] WL 1120764, Waller LJ stressed that a payment in costs was not adequate compensation for the other party being 'mucked around' at the last moment. Subsequently, in Savings and Investment Bank Ltd (in liquidation) v Fincken[2003] EWCA Civ. 1630; [2004] 1 WLR 667, Rix LJ noted that Worldwide was authority for the proposition that "the older view that amendments should be allowed as of right if they could be compensated in costs without injustice had made way for a view which paid greater regard to all the circumstances which are now summed up in the overriding objective”.

16.

The subsequent decision of the Court of Appeal in Swain-Mason and Others v Mills and Reeve LLP[2011] EWCA Civ. 14; [2011] 1 WLR 2735 also stressed that, when dealing with very late amendments, the court should be less ready than in former times to grant a late application to amend. Moreover, Lloyd LJ said that, when considering the competing arguments of prejudice, the prejudice to the amending party in not being able to advance its amended case was a relevant factor, but was only one of the factors to be taken into account in reaching a conclusion. It was also stressed that a late amendment cannot be insufficient or deficient. And at paragraph 72 of his judgment, Lloyd LJ said:

"…a heavy onus lies on a party seeking to make a very late amendment to justify it, as regards his own position, that of the other parties to the litigation, and that of other litigants in other cases before the court."

17.

In Andrew Brown and Others v Innovatorone PLC and Others[2011] EWHC 3221 (Comm), Hamblen J said that parties had a legitimate expectation that trial dates would be met and they would not be put back or delayed without good reason. At paragraph 14 of his judgment, the judge set out some of the likely factors that would be involved in striking a fair balance. They were:

"(1)

the history as regards the amendment and the explanation as to why it is being made late;

(2)

the prejudice which will be caused to the applicant if the amendment is refused;

(3)

the prejudice which will be caused to the resisting party if the amendment is allowed;

(4)

whether the text of the amendment is satisfactory in terms of clarity and particularity."

18.

As part of the Jackson reforms to the CPR, the overriding objective, which is the starting-point for any consideration by the court of late amendments, was amended. It now expressly provides that the court must deal with cases "justly and at proportionate cost". Proportionality is vital, not only to this application, but to the vast majority of applications to amend late. For those reasons, I pay particular attention to four more recent cases concerned with amendments, the majority of which post-date this change to the overriding objective. They are:

(a)

Archlane Ltd v Johnson Controls Ltd[2012] EWHC B12 (TCC), in which Edwards-Stuart J said that "to the extent that the First Defendant will suffer prejudice by the refusal of this amendment, which I accept is a clear possibility, it seems to me clear also that it is very substantially the author of that prejudice".

(b)

Hague Plant Ltd v Hague and Others[2014] EWCA Civ. 1609, in which Briggs LJ said:

"32.

In that succinct passage the judge clearly distinguished between the "very late" amendment cases such as Swain-Mason where the risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be heavily loaded against the grant of permission, and "late" amendments in which the consequence of the large scale reformulation of the Particulars of Claim, after the completion of Defences and Part 18 exchanges, will risk undermining work already done on response to the original Particulars of Claim, and causing a duplication of cost and effort. It is evident, for example from paragraph 60 and 61, and elsewhere in the judgment, that it was this aspect of lateness, namely the consequence that, if permitted, the amendments would cause existing work to be wasted and substantial further work and expense incurred, that weighed in the judge's mind.

33.

I consider that the judge was entitled to approach the relevance of lateness in this way. Lateness is not an absolute but a relative concept. As Mr. Randall put it, a tightly focussed, properly explained and fully particularised short amendment in August may not be too late, whereas a lengthy, ill-defined, unfocussed and unexplained amendment proffered in the previous March may be too late. It all depends upon a careful review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of its consequences in terms of work wasted and consequential work to be done."

The court upheld the decision of the first instance judge, HHJ Behrens, to refuse the amendments.

(c)

Bourke and another v Favre and another[2015] EWHC 277 (Ch) in which Nugee J refused the amendments some months before trial because of the 'significant pressure' that having to deal with the new claim would put on the defendants, whilst there was no corresponding pressure on the claimants because they had already prepared their evidence with this new claim in mind. In that case, a second action was considered inevitable, and Nugee J indicated that such fresh proceedings would not be caught by the rule in Henderson v Henderson.

(d)

Wani LLP v Royal Bank of Scotland PLC and another [2015] EWHC 1181 (Ch) in which Henderson J refused amendments which neither side said necessitated the adjournment of the trial if they were allowed. He rejected the suggestion that it made a difference that the application was being made two months before the trial, citing the passage in Hague Plant referred to above. He also applied the approach in Brown, although he dealt with the four points in a slightly different sequence. As to lateness, he found that the amendments could have been made much earlier than they were, and they lacked proper clarity and particularity.

19.

In summary, therefore, I consider that the right approach to amendments is as follows:

(a)

The lateness by which an amendment is produced is a relative concept (Hague Plant). An amendment is late if it could have been advanced earlier, or involves the duplication of cost and effort, or if it requires the resisting party to revisit any of the significant steps in the litigation (such as disclosure or the provision of witness statements and expert's reports) which have been completed by the time of the amendment.

(b)

An amendment can be regarded as 'very late' if permission to amend threatens the trial date (Swain-Mason), even if the application is made some months before the trial is due to start. Parties have a legitimate expectation that trial dates will be met and not adjourned without good reason (Brown).

(c)

The history of the amendment, together with an explanation for its lateness, is a matter for the amending party and is an important factor in the necessary balancing exercise (Brown; Wani). In essence, there must be a good reason for the delay (Brown).

(d)

The particularity and/or clarity of the proposed amendment then has to be considered, because different considerations may well apply to amendments which are not tightly-drawn or focused (Swain-Mason; Hague Plant; Wani).

(e)

The prejudice to the resisting parties if the amendments are allowed will incorporate, at one end of the spectrum, the simple fact of being 'mucked around' (Worldwide), to the disruption of and additional pressure on their lawyers in the run-up to trial (Bourke), and the duplication of cost and effort (Hague Plant) at the other. If allowing the amendments would necessitate the adjournment of the trial, that may be an overwhelming reason to refuse the amendments (Swain-Mason).

(f)

Prejudice to the amending party if the amendments are not allowed will, obviously, include its inability to advance its amended case, but that is just one factor to be considered (Swain-Mason). Moreover, if that prejudice has come about by the amending party's own conduct, then it is a much less important element of the balancing exercise (Archlane).”

In this case the amendments proposed by the defendant are indeed “very late” as categorised above. They are very close to the trial date in terms of available time before the trial starts; merely seven full working weeks. They are also very late in terms of the effect they will have upon trial preparation. The stage of the proceedings at which they are made needs to be considered with care. I consider that the defendant’s proposed amendments are sufficiently tightly drawn and focussed, or at least as tightly focussed as they can be given the nature of them is a secret arrangement between Mr Short and Mr Laing. The claimant’s proposed amendments may not be – the use of the phrase “from time to time” demonstrates a desire to retain flexibility that may not be appropriate so close to the trial, but the time available prior to trial to cure that depends upon what happens upon the defendant’s application in any event. Reference is also made to the witness evidence that has already been served. Any prejudice has to be analysed and the cause for it considered. There is potentially severe prejudice to each party in any event which I will consider further below.

I will deal with the timing of the defendant’s application first. It is the nature of secret payments that they are, by definition, secret. Their details are wholly obscured from view. It is difficult to see the force in any complaint by the claimant that the defendant should or could have discovered the basis for the payments to the bank account in Cyprus earlier than this year when the discovery in fact occurred by analysing the 56,000 documents in disclosure. It was only by considering the disclosure provided in considerable detail that the two relevant documents emerged. These are the email to which I have already referred, and the Laing Payment Spreadsheet setting out the total of the millions of pounds in potentially secret payments. It is fair to say, in a case of this type of subject matter, that the spreadsheet alone would not necessarily jump out at every reader as being suspicious. I consider no criticism can be laid at the defendant’s door for failing to discover, prior to a reasonable time after disclosure, that this material was available and important. Ms Allass states that the spreadsheet became available “between March and June 2015”. That is very vague. In the absence of any further elucidation, I have concluded that the spreadsheet must have been available in March 2015.

If that was the end of the story, the application made by the defendant in September 2015 would have occurred too late after that date to justify allowing the amendments. Although some caution is to be expected in drafting and advancing such amendments, I reject as being permissible one of the reasons for this delay advanced by Ms Allass, namely that in paragraph 9.8 of her statement that the defendant did not wish to prejudice settling the case. Such a reason could only rarely (if ever) in my view justify dilatoriness. 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. Concerns that by doing this it might prejudice settlement could, possibly and putting it at its highest, potentially only justify a delay of a week or so at the very most, and even then only if a mediation were pending or something of that nature. A general concern of the kind explained by Ms Allass does not begin to excuse delay.

However, in this case an important development to which I have paid some attention is the “explanation” in the letter from the claimant’s solicitors of 17 August 2015 in which various points were made which were said to be relevant to the payments and the email regarding the US$75,000. The covering email referred to “expenses”. The explanation in August referred to investments and also the beneficial interest in those “investments” remaining with the claimant. The contents of that letter would have suggested to the defendant’s solicitors that something was (or may be) rotten in the state of Denmark and that it was going to be necessary for amendments to be drafted and proposed. The defendant proceeded promptly after that and the draft amendment was provided a few weeks later.

The grounds relied upon by the claimant in opposition are varied, and in my view weak. Mr Dennys QC for the claimant did his valiant best to persuade me to shut these proposed amendments out, but I do not find the grounds of his opposition persuasive. The fact that the defendant might also have a cause of action against Mr Laing is not material. The fact that the law would permit the defendant to choose which contracts with the claimant to rescind and which to affirm is not material either – that is a function of the legal consequences of secret payments, if that is what these are. Some of his grounds went perilously close to, if not being the same as, the points argued before Coulson J on behalf of Mr Short in the application for permission to commit; they were roundly dismissed then, and I take a similar view of them now. I take comfort that Coulson J was correct in his approach by the fact that Mr Short’s application for permission to appeal was dismissed on paper by Jackson LJ who had this to say about one of the grounds of appeal:

“The applicant [i.e. the claimant] invites the Court of Appeal to consider when ‘run of the mill deliberate false statements in pleadings’ merit committal proceedings; skeleton argument para. 32(1). I do not accept that deliberate false statements in pleadings verified by a statement of truth are ever ‘run of the mill’. The sooner that this notion is dispelled, the better.”

It was said by the claimant, in an attempt to dilute the effect of the permission to commit Mr Short, that there were only three parts of the Reply to which this related and (effectively) these parts were not that important. That is rather to miss the point, and the claimant seemed to continue this approach concerning the secret payments to the bank account in Cyprus controlled by Mr Laing.

I consider the subject matter of the amendments to be most material. These are serious allegations of reprehensible and dishonest conduct. There would not only be extraordinary prejudice to the defendant were they not to be allowed, but it could mean that a wholly unjust result in the entire proceedings might result if the defendant were to be shut out from arguing these points. If Mr Short and Mr Laing had been behaving in the way explained in the draft amendments, but if the trial judge were not able to consider them, he or she would be wholly and artificially restricted to considering only part of the case in the sense that the increase in contract value is said by the claimant (on the current state of the pleadings) to have been increased by agreement between the parties, and that must be between Mr Short and Mr Laing. The arguments on prejudice are all in the defendant’s favour and in favour of allowing the proposed amendments to the Defence and Counterclaim.

I have decided that the defendant’s proposed amendments to paragraph 18 of the defence and counterclaim ought to be permitted. There is another, unusual, reason to justify permitting these amendments. The permission to commit was granted on the express basis that these proceedings were to be heard at or after the trial of the action, at the discretion of the trial judge. The scope of that enquiry would encompass the circumstances in which Mr Short and Mr Laing came between them, in November 2012, to create all the Variations Orders save one (with VO 17 being created in February 2013) yet to date them far earlier, so that on their face they would appear to be much earlier documents. The potential existence of payments made from the defendant to the claimant, and then onwards from the claimant to the bank account in Cyprus, is inextricably woven into that scenario. It could place the trial judge in a virtually impossible position if, by my refusing permission for these amendments, he or she could not consider those payments; or could consider them in the committal proceedings, but not in the substantive action. That would be verging on an absurd result.

Accordingly, in these very rare circumstances, I consider the appropriate exercise of the discretion that I have is to permit the defendant to amend paragraph 18 of its Defence and Counterclaim in the way proposed. The only real issue then becomes whether the trial date can be kept.

As Mr Dennys QC fully explained, the steps required to be taken by the claimant if these amendments were to be allowed would potentially include taking advice on Canadian law, because the defendant is a Canadian company, and also obtaining further evidence from Mr Short and Mr Laing (if the latter is prepared still to assist). The claimant has already changed solicitors once, and the number of lawyers in its current firm available to deal with the forthcoming trial is limited. It is a firm of modest size and this is not a major City firm that could simply throw a team of 20 at the task, even if that could be justified. Although Mr Slade QC urged me to conclude that the defendant’s amendments could be allowed and the trial date kept, I do not believe that submission to be realistic, given the very serious nature of the allegations. I also consider it would give the defendant an unfair advantage in the litigation. The defendant has taken some time this year in formulating its amendments and its approach to this material. Ms Allass frankly accepts there has been delay. Although I have found that the delay is not such that should lead to my refusing permission for the amendments, the delay cannot be wholly ignored. Seven weeks is simply not sufficient time for the claimant to prepare properly for trial, with the other tasks that must be accomplished, and deal with the new case on the secret payments as well. Also, given the seriousness of the allegations, neither the claimant nor Mr Short ought to be put under excessive or unfair pressure by having insufficient time to deal with these points. This is what would occur if the existing trial date were kept. It is therefore inevitable in my view that the existing trial date cannot be kept and will have to be moved.

Turning to the amendments sought by the claimant, I consider that these ought to be allowed. Here, to deny the claimant permission to withdraw its reliance on the 17 Variation Orders would be for the court effectively to insist that the claimant continue with a case predicated on 17 documents that were, prima facie, created falsely and upon which the claimant no longer wishes to rely. That does not seem to me either to be sensible or appropriate. It may be that the particularisation of the agreements in the draft proposed amendments that led to the contract being varied could be more comprehensive, but Mr Slade QC agreed that had the pleading been served in its new proposed form at the beginning, any lack of particularity would simply be cured by the provision of Further Information. I do not consider the lack of particularisation to be of the kind that would be fatal to permission to amend being given. I will however also order that the claimant respond to requests 1-4(c) of the defendant’s Request for Further Information dated 30 July 2015. I would have granted permission for these amendments by the claimant regardless of my decision on the defendant’s application to amend. They would not have prejudiced the trial date. However, they should have been produced earlier. They are entirely unsuitable (in isolation) for permission only to be sought at the late stage of the Pre-Trial Review.

There is a further application listed for 6 November 2015 – this being an application for security for costs. That would, absent the vacating of the trial date which is the inevitable result of the amendments, be only three weeks before trial. When one considers the amount of hostility between the parties and the procedural activity in recent months (I obviously entirely exclude from these comments the application for permission to commit for contempt, which was entirely justified) this action is showing many signs of what might be described as unwelcome old-fashioned litigation of attrition from a bygone age. Despite the nature of the differences between the parties, they are still expected by the court to co-operate to an extent, and litigate their differences in a constructive and cost-effective way, and that should be (and needs to remain) at the forefront of their minds.

It is therefore necessary, in all the circumstances, for the current trial date to be vacated. Nothing in this judgment should be seen as diluting, or attempting to change the principles in respect of amendments set out in the authorities above, and the reception that any application to make very late amendments will face. This case should not be taken either as encouraging, or permitting, either late amendments, attempts to derail trial dates, or applications to adjourn trials. It is a very unusual case and has almost unique features. Trial dates set down in the Technology and Construction Court will very rarely be vacated, and only then on the most compelling grounds.