NEVER MIND THE… AMENDMENTS…. HERE’S THE SEX PISTOLS: JOHNNY ROTTEN WAS TOO FAR BEHIND THE BEAT…

In  Jones & Anor v Lydon & Ors [2021] EWHC 2322 (Ch) Sir Anthony Mann refused an application for late amendment of the pleadings.  A Note explaining the nature of the case cannot be used as a substitute for a properly pleaded statement of case.

“It is no answer to this to say that the points appeared in the evidence and then were made clear in the note prepared at the beginning of the hearing. The evidence should relate to the pleaded case, not the other way round,”

THE CASE

The parties had been members of the punk band the sex pistols.  There was a written agreement between the band which dealt with the use of the music. The issue in the case was whether that agreement was binding, or whether certain issues meant that the agreement was no longer binding.

THE DEFENCE

The judge considered the pleaded case of the First Defendant Mr Lydon (Johnny Rotten).  The judge found that the case as to pleading estoppel required amendment and the application to amend was made far too late.

1. 1. The original pleading of Mr Lydon was as follows:

“21. Mr Lydon relied upon the said common assumption, rather than merely upon his own independent view of the matter, in connection with the dealings between the parties described at paragraph 16 above, whereby Mr Lydon suffered detriment, or a benefit was thereby conferred upon the Claimants and the Second and Third Defendants, sufficient to make it unjust or unconscionable for any of the latter to assert the alleged legal (or factual) position as against Mr Lydon.”

In addition Mr Lydon pleaded that he proceeded on the basis that it was unnecessary to seek the declaration that Mr Grower had threatened in his email of January 2015.

1. 1. There was no real pleading of what the detriment was. This was in a context in which the pleading seemed to be confined to estoppel by convention, so there was no reference to reliance on representations. A Request for Further Information sought confirmation that Mr Lydon’s case was confined to estoppel by convention, and the response indicated that Mr Lydon relied on “the doctrine of estoppel generally”. It went on to dissect the existing Defence and to extract representations from various events, and I have reflected those above. It referred to reliance by cross-referring to paragraphs 20 and 21 of the Defence. Paragraph 20 reads:

“20. Further, the Claimants and the Second and Third Defendants assumed some element of responsibility for that common assumption, having conveyed to Mr Lydon an understanding that they expected him to rely upon it in relation to the matters set out at paragraph 16 above. In particular, their failure to respond to Mr Grower’s express contention in January 2015 that they were estopped from relying upon the BMA conveyed to Mr Lydon the understanding that the majority rule provisions of the BMA did not apply to proposed licences of the Compositions or Properties.”

That does not seem to me to contain a relevant pleading of reliance or detriment.

1. 1. Unconscionability is pleaded by a cross-reference to paragraphs 21 (above) and 24:

“24. In the premises, it would be unfair or unjust to allow the Claimants to rely upon the terms of the BMA so as to require Mr Lydon to acquiesce in or grant approval for a licensing proposal approved by the majority of the members of the Band against his will.”

That does not really add anything much about matters said to make resiling unconscionable.

1. 1. Deficiencies in pleading detriment were pointed up in the claimants’ skeleton argument. There was a delayed start of the trial caused by a need to self-isolate and that gave an opportunity for a short pre-trial hearing at which the point was raised. I indicated that the first defendant’s case on these issues (and other points) needed to be clear so that there were no surprises part way through the trial, and as a result of that Mr Cunningham produced a note for the beginning of the trial which indicated two sorts of detriment that were relied on. They were, first, Mr Lydon’s not taking any steps to commence the proceedings threatened by Mr Grower in his letter of January 2015, and second, the carrying out of substantial and effective work on licensing opportunities, and maintaining the integrity of the Sex Pistols brand, on the footing that Mr Lydon had a veto which he could exercise to preserve and enhance the brand.

1. 1. The second of those matters had not hitherto been pleaded, and that was pointed out by Mr Cullen. He indicated that it ought to be pleaded and he would not be consenting to that amendment. Furthermore, he indicated that he would be fighting the case on the basis of the then current state of the pleadings, clearly indicating that if Mr Cunningham wished to introduce these matters then he ought to apply to amend. Although I was not invited to rule on the point at the time, in my view Mr Cullen was plainly right about that.

1. 1. In due course Mr Cunningham produced a draft Re-Amended Defence pleading the points arising out of his note. However, that was not until the end of Day 4 of the trial, at the end of Mr Cullen’s last witness and immediately before Mr Cullen formally closed his case. The document added the following words to paragraph 21 (the existing wording of which is set out above):

“Mr Lydon suffered detriment in particular because:

a. He refrained from taking the declaratory proceedings threatened by Mr Grower in his 16 January 2015 letter; and

b. He and Mr Stevens undertook prolonged substantial and effective work on licensing opportunities, and maintaining the integrity of the Sex Pistols ‘brand’, on the footing that Mr Lydon had a veto exercisable so as to preserve and enhance the Sex Pistols brand.”

(The proposed Re-Amended Defence contained other amendments to which Mr Cullen did not in the end object.)

1. 1. However, despite producing a draft Re-Amended Defence, Mr Cunningham did not then apply for permission to amend. Mr Cullen commented on the lateness of the production of this document, and reserved all his rights in the event of an application being made for permission to amend. It was anticipated that Mr Cullen would consider the document and give his response by the next morning.

1. 1. However, Mr Cullen did not give his response (at least not to the court) when the I sat the next morning, and Mr Cunningham did not make his application at that time. He called Mr Lydon and his evidence was given without the point being dealt with or an application being made. Mr Cunningham explained that he did not want to make his application then because did not want to “hijack” Mr Cullen’s cross-examination. Once that evidence was over the question of the amendments arose again and Mr Cunningham indicated that he would make his application on the occasion of final submissions. Mr Cullen indicated in very general terms the nature of his objections to the paragraph 21(b) amendment, but said that in the circumstances he considered that Mr Cunningham’s proposal was best course for dealing with the application, so that we could get on with the evidence.

1. 1. In those circumstances Mr Cunningham made his application at the very end of his final submissions.

1. 1. In the end the only part of the application that was opposed by Mr Cullen was paragraph 21(b), the allegation that Mr Lydon and Mr Stevens did a lot of work that they would not have done had they appreciated that they did not have a veto. Mr Cunningham sought to support this application by pointing out that it merely (as he would put it) replicated and formalised what had appeared in his note at the start of the trial, and it did no more than reproduce what was said to be already in evidence. He justified his late application by a desire not to disrupt and put pressure on an expedited trial timetable.

1. 1. Mr Cullen opposed that part of the application on the basis that it was late and he was prejudiced in that the allegation that was sought to be pleaded was one that required proper disclosure for it to be tried and tested properly. Disclosure would have established whether the work was really done, its cost, and when it was done (which was important because it was relevant to ascertain whether it was before or after any conduct said to give rise to an estoppel). Without that disclosure proper cross-examination was not possible, and the lateness of the pleading meant that he was deprived of the opportunity to adduce his own evidence on the point. Furthermore, there was insufficient material to show that the amendment had any merit at all. The underpinning allegations were implausible and unparticularised. No good explanation was given for the lateness of the application.

1. 1. The principal factors which the court should take into account on an application to amend are set out in the judgment of Carr J in Quah Su-Ling v Goldman Sachs International [2015] EWHC 759 (Comm) at para 38:

“a) whether to allow an amendment is a matter for the discretion of the court. In exercising that discretion, the overriding objective is of the greatest importance. Applications always involve the court striking a balance between injustice to the applicant if the amendment is refused, and injustice to the opposing party and other litigants in general, if the amendment is permitted;

b) where a very late application to amend is made the correct approach is not that the amendments ought, in general, to be allowed so that the real dispute between the parties can be adjudicated upon. Rather, a heavy burden lies on a party seeking a very late amendment to show the strength of the new case and why justice to him, his opponent and other court users requires him to be able to pursue it. The risk to a trial date may mean that the lateness of the application to amend will of itself cause the balance to be loaded heavily against the grant of permission;

c) a very late amendment is one made when the trial date has been fixed and where permitting the amendments would cause the trial date to be lost. Parties and the court have a legitimate expectation that trial fixtures will be kept;

d) lateness is not an absolute, but a relative concept. It depends on a review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of the consequences in terms of work wasted and consequential work to be done;

e) gone are the days when it was sufficient for the amending party to argue that no prejudice had been suffered, save as to costs. In the modern era it is more readily recognised that the payment of costs may not be adequate compensation;

f) it is incumbent on a party seeking the indulgence of the court to be allowed to raise a late claim to provide a good explanation for the delay;”

1. 1. This application fails under almost every head. It is undoubtedly “late”. It might be unfair to treat it as one made right at the end of the defendant’s closing speech (which chronologically it was) because Mr Cunningham might well have been prepared to make it on Day 5 when Mr Cullen indicated that he agreed that the better course, in the circumstances, would be to leave it until final submissions. However, even if it is treated as having been made at that point it is very late. It was after the claimants had closed their case and after Mr Lydon had given his evidence. In chronological terms it could not have been made much later. In procedural terms it was also late because (subject to the one point that I make below as to the overall merits of the would-be case) if I had acceded to it at that point it would have derailed the trial because I agree that it would have appeared that the proper disposition of the point required disclosure (and, in that connection, some particularisation) and an opportunity for the claimants’ witnesses to give evidence on the point. That could have meant recalling them, or some of them. Mr Lydon would have had to have been recalled so that he could be cross-examined on the disclosure material, and I consider it likely that he and Mr Stevens would have needed to give some further evidence about the particular transactions to which the disclosure related. The trial would have been thoroughly derailed if it had to accommodate all that. Since this was an expedited trial in which an urgent answer was required, and therefore with no scope for its being derailed and put back on the rails within an acceptable timeframe, it would have been right to disallow the amendment on this ground alone.

1. 1. It is no answer to this to say that the points appeared in the evidence and then were made clear in the note prepared at the beginning of the hearing. The evidence should relate to the pleaded case, not the other way round, and detriment is an absolutely central element in any estoppel case. What Mr Cunningham now seeks to introduce is that key element at a late stage. Mr Cullen was entitled to have the matter pleaded properly at the appropriate time. Nor is the problem fixed by the note. In this respect the note was not clarifying some existing matter that required clarification. It was referring to something that needed pleading and which had not been hitherto pleaded, as Mr Cullen pointed out. He made it clear that his intention was to meet the pleaded case (save insofar as he then did not object to elements of the note and the new pleading), and he was entitled to take that attitude. Furthermore, the evidence, to which I refer below, was devoid of any particularisation, and the point required that there be some. I am afraid that what the note did was to point up an important matter which was absent from the pleading, and it did nothing to fix that difficulty.

1. 1. Nor was any good (or indeed any) explanation advanced for the lateness of the application. There are two aspects of lateness. The first is the lateness of the application in the context of the action as a whole. It is of course understandable that further and better ideas occur to parties’ legal representatives during the overall course of an action. That lies behind a large proportion of applications for permission to amend. That might or might not have been the case here; it was not given as a reason. In this context I make due allowances for the fact that steps in the action were condensed in order to get this matter to trial by July when it had been started only in the previous March. In that context it would be right to be more sympathetic to accommodating further thoughts (if that is what happened here) occurring closer to the trial than would otherwise have been the case. But still, no explanation was given. The second aspect of lateness is the late production of the draft Re-Amended Defence in the context of the trial. That an amendment would be required ought to have become apparent when the note was prepared, and one would have expected an application for permission to amend along with the note. However, it was not made then, and the draft pleading was not produced for another 3 days. No satisfactory explanation has been given for that. Mr Cunningham has demonstrated a concern not to disrupt the trial, which is commendable, but that does not explain why it took 3 days to produce a draft pleading.

1. 1. The disclosure and evidential difficulties which this late amendment presented, and the lack of explanations, are sufficient by themselves to justify the dismissal of the amendment application in relation the paragraph 21(b) amendments. Mr Cullen also submitted that Mr Lydon had not produced a sufficiently strong evidential case on the merits of the amendment to justify it (see the reference to the strength of the new case in paragraph (b) of Carr J’s judgment above). There is a lot to be said for this point now that I have heard all the evidence and (as will appear below) reached a conclusion on what it reveals, but I am not sure that the same conclusions would have arisen out of the more limited consideration which would have been given at the application stage. I prefer to base my decision on the lateness point which I have just dealt with.

1. I therefore would not allow the amendment to introduce paragraph 21(b). Having said that, I nonetheless consider the merits of the detriment/reliance/unconscionability case its merits on the basis of the material that I had before me at trial and consider that it fails as a point on the merits anyway.