PARTIES SHOULD BE AWARE OF CONGESTION FACING LITIGANTS IN THE COURTS

The judgment  of HHJ Pelling KC in ABT Auto Investments Ltd v Aapico Investment Pte Ltd & Ors [2022] EWHC 1791 (Comm) has recently become available on BAILII.   The judge refused an application to amend that was heard one month before the proposed trial date.  The judge considered an argument that the application itself was made in April of that year and the defendant should have prepared for the possibility of the amendments being granted.  He observed that the claimants should have known that there would have been a delay between the date of issue of the application and the hearing and make the application much earlier.

“The congestion facing litigants in the Commercial Court is well-known and was well-known in April 2022. The problem in this case is in reality that caused by the failure of the claimant to grapple with the issues that arise much earlier than April 2022 and much closer to the date when the last amendment to the particulars of claim was carried out”

THE CASE

The action was listed for trial in July 2022 – with a time estimate of 6 – 8 days. In April 2022 the claimant made an application to amend their pleadings. This was heard on 13th June 2022.

THE JUDGMENT ON AMENDMENT

The judge refused permission to amend.  It was made too late and it was likely that the trial date would be lost once the parties started on the process of amendment.

1. 1. I return to the impact of permitting the amendment on the trial and the preparation for it. There will have to be a round of consequentially amended pleadings if the proposed amended Particulars of Claim is permitted. Disclosure is not something that can be avoided at the option of the claimant for the reasons I have given. That will require the preparation of additional issues for disclosure then the following steps necessary in order to enable the additionally disclosable documents to be produced. It is clear that some additional evidence of fact will be required which will go to at least issues (i), (iii) and (iv) identified by the defendants’ solicitor on 31 March letter. It will then be necessary to consider expert evidence. I have assumed for present purposes that the synergy issue can properly be excluded, for reasons already given. However, as matters currently stand, the defendants’ expert has not considered (1) whether the investment basis of valuation could properly apply in the circumstances of this case, which in turn depends on factual issue (i) in the 31 March letter and the evidence and disclosure relevant to that issue; (2) whether there is any negative aspect to synergies that ought to be considered when arriving at an investment valuation; (3) there is no evidence whatsoever of what expenses will be incurred if the shares are held in a way which engages the investment basis of valuation as opposed to those that would be avoided if the market value approach was adopted; and (4) no consideration has yet been given at all to the expenses issue.

1. 1. As I have said, the trial is due to start on 12 July. That leaves four weeks. In that time if permission is granted it will be necessary to timetable

(a) the service of a further amended defence;

(b) the service of a further amended reply;

(c) additional disclosure;

(d) the production of additional witness statements; and

(e) the exchange of a further round of expert evidence

all in the context of intense preparations for what on any view is a substantial commercial trial and without taking any account whatsoever of the particularisation issues to which I have already referred in some detail.

1. 1. It was submitted by Mr Downes that I should proceed on the basis that this application was issued on 14 April 2022 and that the defendants could and should have been doing much more to prepare on the basis that the application would succeed when eventually it was listed and heard. I accept that if the application had been determined shortly after it was issued, then it may have been possible to accommodate the additional work necessary without endangering the trial. However, it was not. The congestion facing litigants in the Commercial Court is well-known and was well-known in April 2022. The problem in this case is in reality that caused by the failure of the claimant to grapple with the issues that arise much earlier than April 2022 and much closer to the date when the last amendment to the particulars of claim was carried out. As I have said, there is no explanation as to why matters were not dealt with then, particularly given the reference to expert evidence in the amendments that Moulder J approved.

1. 1. As things stand, I consider it will only be with extreme difficulty that what has to be done could be accommodated within the time that remains. I consider that there is a very real risk that if the amendments are permitted there will be an application to vacate the trial date as it becomes apparent that the work involved simply cannot be accommodated in the time between now and trial. That is sufficient to justify a conclusion that the trial date is in danger and that, therefore, this is in reality a proposed very late amendment. I consider that the draft pleading is not fully particularised in at least the ways I have indicated and that will add to the difficulties and, more particularly, will delay the date by which the timetable that I attempted to summarise a few moments ago could commence and overall I consider that if permission were to be granted the trial date would be at significant risk, but in any event it would disrupt the defendants’ preparation for trial and increase substantially the pressure on the defendants’ legal team as they prepare for what is, on any view, a very substantial and technical commercial action and would incidentally substantially increase costs as well. As to this last point, it is unclear whether and, if so, to what extent further security has been provided or would be sought in order to address that issue. It was suggested that work could have been done in anticipation of permission being given, but as it seems to me that would be to incur costs which would or may not be recoverable in the circumstances. If additional security was required and not agreed that would create further delay and disruption.

1. 1. In the result, I consider that the proposed amendments threaten the trial date and that factor, together with the absence of any adequate explanation for the delay that has occurred after permission to amend was given by Moulder J and the lack of particularity of the proposed amendments in relation to the critical factual issues as to whether or not the investment basis of valuation has been engaged and as to the impact of expenses incurred in holding the shares rather than selling them all weigh against the application being granted.

1. On the other side of the scale I accept that the claimant will be prejudiced if permission is not given, but, in my judgment, that prejudice is to be treated as outweighed by the other factors to which I have referred and on that basis and for those reasons I refuse permission to amend.