Court of appeal disallows very late amendments in MBO case

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This law report has been contributed by national law firm Berrymans Lace Mawer.

Claire Swain-Mason and others v Mills & reeve (Court of appeal - 20 January 2011)

In deciding whether to grant a late application to amend a pleading, the Court of Appeal held that a balance needs to be struck to ensure justice to all litigants, with a heavy onus on the amending party to show the strength of the new case and why it should be pursued.

The case concerned a negligence action against a firm of solicitors, made by daughters of a businessman who died unexpectedly two weeks after a management buy out of his company. The daughters amended their claim at a late stage to allege the solicitors should have made it clear that their advice did not take account of the tax consequences of the MBO, which amounted to £1.35m.The
judge granted the amendment, while allowing the firm to apply for the amendments to be disallowed if subsequent evidence did not support them.

The Court of Appeal found the judge had been too relaxed in his approach to allow the amendment. The judge should have followed the 1998 case of Worldwide Corporation v GPT, which reflected the principles of the Civil Procedure Rules. It was a question of striking a balance between the parties' interests. The court should be careful before allowing a late amendment, and thus the burden was on the party seeking the amendment to justify it.

If a very late amendment is being made, the party is also obliged to provide a full copy of the amended pleadings, so that its opponent knows the case it has to meet. The court, therefore, permitted the appeal and disallowed the amendments.

Comment
This case highlights the importance of ensuring that pleadings set out your case in detail. This applies to both parties. As a case develops, it is important to ensure your defence remains sufficiently robust to stand up to scrutiny at trial. Any application to amend should be made as soon as possible, supported by evidence and a copy of the draft amended pleading. The case also highlights that if your opponent makes a late amendment to their case, there is a heavy onus on them to persuade the court to allow those amendments.
Stuart Hardy, BLM Manchester

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