THE CURRENT IMPORTANCE OF PLEADINGS 51: TOO LATE TO AMEND A REPLY WHICH WAS INADEQUATELY PARTICULARISED IN ANY EVENT

January 20, 2026 · by · in Amendment, Applications, Statements of Case

There has been a recent flurry in cases about late amendment and also about Replies. Both issues are considered her. The claimant applied to amend its Reply five weeks before trial. The revised Reply attempted to put forward a “counterfactual” in relation to what would have happened if the defendants were found to be in breach of duty.  The judge refused the claimant’s application to amend.

 

“Where an amendment is advanced at such a late stage, it is incumbent on the party proposing it to articulate it as clearly and as comprehensively as possible, so its practical effects can be properly evaluated. I am not satisfied that is possible here.”

KEY PRACTICE POINTS

This is another example of a party being refused permission to amend a pleading in the run up to a trial.  The issue here was not just the lateness of the amendment but the fact that the counter-factual issues it attempted to raise were not sufficiently particularised.  This lack of particularity was something that could have been dealt with earlier in the proceedings, however at this stage it was far too late, and unfair on the defendants, to allow this amendment.

THE CASE

Hipgnosis Music Limited v Merck Mercuriadis & Ors [2026] EWHC 82 (Ch), Mr Justice Adam Johnson.

THE FACTS

The claimant brought proceedings against the defendants alleging that they had wrongfully diverted work away from the company. The claimant applied for permission to serve amended  Replies served by which included pleading a “counterfactual” as to what would have happened if (it was established) that the defendants had breached their duties.

“It is the claims for equitable compensation that we are presently concerned with. It is accepted by HML that in order to make good its claims, there will need to be an assessment of what would have happened in a counterfactual world in which there had been no breach of duty by Mr Mercuriadis. ”

WHAT HAPPENED IN A NUTSHELL

The judge refused the application to amendment. The draft pleading was insufficiently particularised and raised too late.

THE PROPOSED AMENDMENT

“17. HML seeks permission to amend its Replies to Mr Mercuriadis and HSML to allege the following:

“ … if Mr Gergeo had been led to understand that it was necessary or advisable in the interests of Copyrights being able to complete an IPO or otherwise in the interests of HML that SVCL should cease to be registered as the holder of any shares in HML (which is a matter for expert evidence), HML contends that an arrangement could and would have been reached, if Mr Mercuriadis had been acting in accordance with his duties as a director of Copyrights and HML, under which Mr Gergeo obtained a legally enforceable entitlement to receive a share of the economic benefits to be derived from Copyrights’ intended business (e.g. a contractual entitlement to receive an agreed proportion of the fees payable to the investment adviser) and SVCL ceased to be registered as the holder of any shares in HML”. 
18. The pleading then goes on to rely, in support of the case that some form of agreement would have been achievable, on the fact that discussions had in fact been ongoing between Mr Gergeo and Mr Mercuriadis in around April 2017, about a possible sale of “almost all of the shares in HML held by SVCL”. In his submissions, Mr Davies KC for HML emphasised that at the time, in early 2017, Mr Mercuriadis had his own keen interest in some form of transaction moving forward, and said that the same motivation would likewise have existed in any counterfactual scenario and means there are good reasons for thinking some kind of deal would have been struck.

SHOULD THE AMENDMENT TO THE REPLY BE ALLOWED?

 

21. In his submissions for HML, Mr Davies KC argued that the exercise we are engaged in is constructing a hypothetical. Everything is therefore a matter of speculation. This should condition the degree of precision required in pleading terms, and it is not realistic to think that a hypothetical can be put forward with granular precision as to what would have been achieved.

22. I agree with the general sentiment behind this. If the exercise is to construct a counterfactual then obviously one is conducting an assessment not of what has happened in fact but of what is likely to have happened but for the breach complained of. The assessment of loss is hardly ever a precise exercise for this reason and very often involves dealing with inherent limitations in the evidence available

23. All the same I cannot accept the submission that these factors justify the very general nature of the present draft pleading. In my opinion two other matters suggest that something more is required. The first is the nature of the proposed case. The second is the stage the proceedings are at and the practical consequences at this stage of allowing the amendment to proceed.

24. As to the nature of the proposed case, I have two inter-related concerns. One is about whether the proposed pleading is properly particularised. The other is about whether the case advanced has a real prospect of success. By real prospect of success I mean a real prospect based on an assessment of the pleading on its own terms (see the White Book 2025 Edn. at note 17.3.6). It seems to me that latter question is obviously related to the first because if a pleading is not properly particularised, it is less likely to be viable and to have a real prosect of success. That is especially so if the point of the pleading is to address a problem of sensitivity and complexity facing the party putting it forward.

25. In the present case, the difficulty facing HML is this. In order to make good its case it will need to allege and then prove that Mr Mercuriadis, in the counterfactual, would have entered into an arrangement which achieved the various objectives identified by Mr Christie. It seems to me clear that that would not at all have been a straightforward matter in the circumstances.

PROBLEMS CAUSED BY THE LACK OF PARTICULARISATION IN THE PROPOSED AMENDED REPLY

“31. his is in part a matter of basic fairness. In his submissions Mr Davies KC expressly accepted that his case was put at the most basic level, and that there will of course be many other structures available beyond the idea of a bare contract, which might legitimately be explored at trial and in particular during cross-examination of the witnesses. I think he is right about that. The outline description in the draft pleading gives a great deal of room for manoeuvre. But that only serves to illustrate the point that the Defendants do not presently know what they are dealing with and will find it difficult to prepare themselves to respond. It is well settled that a core purpose of the pleading exercise in litigation is to enable the parties to know the case they have to meet (see, for example, Habibsons Bank Limited v. Standard Chartered Bank (HK) Ltd [2011] QB 943, per Moore-Bick LJ at [12]). In my opinion, the proposed amendment, given its obvious limitations, fails that basic test. To take a specific example canvassed in oral submissions, it is quite difficult to see what instructions could usefully be given to the Defendants’ financial market experts at the moment, to opine on the case advanced in the draft pleading. They might agree with the concept that, if a structure could be found which completely insulated any listing from contamination arising from the association with SVCL and Mr Gergeo, then an IPO would be viable. But they would be justified in saying that they would need to see more precisely what was proposed in order to deal with the point in a considered way. I do not think that concern is addressed by looking beyond the pleading itself at what Mr Christie says in his Report, because that too is expressed generally and is rather more a statement of what would need to be achieved than of how one would actually go about achieving it.”

THE EXTRA WORK THAT WOULD BE NEEDED AT THIS LATE STAGE WAS SIGNIFICANT

“36. On this point, I tend to agree with Mr Davies KC that the points made by the Defendants were perhaps somewhat exaggerated. That does not change my view, however. In my opinion, the problem is really in identifying clearly what additional work would in fact be needed, given the very general nature of the pleading, and Mr Davies’ concession that in practice there might be any number of ways of addressing the practical concerns identified by Mr Christie. Had the point been raised much earlier, there might then have been time to consider the different permutations through correspondence and/or formal Requests for Information; but now there is no time left for such experimentation before the start of the trial, and indeed it would be unfair to require the Defendants to spend time and resources engaged in it, when they are already deeply embedded in their existing trial preparations. I can put the matter another way. Where an amendment is advanced at such a late stage, it is incumbent on the party proposing it to articulate it as clearly and as comprehensively as possible, so its practical effects can be properly evaluated. I am not satisfied that is possible here.”

REFUSING TO ALLOW THE AMENDMENT  STOPS THE CLAIMANT FROM RUNNING THIS CASE ON DAMAGES – BUT THAT IS NOT DETERMINATIVE

 

40. I should note finally that Mr Davies KC emphasised that the refusal of his amendment application would be a terminal matter in terms of the ability to advance this aspect of the case in a positive way. I make due allowance for that in the exercise of my discretion, but all the same do not consider that it tips the balance in favour of allowing the amendment. The overriding objective is to deal with cases justly and at proportionate cost. If (as I consider) the proposed amendment is not viable and has no real prospect of success, there is no injustice in grasping the nettle now and accepting the consequences described by Mr Davies. That is sensible and appropriate case management in a matter which is already crowded with issues. To do the opposite and to give HML the benefit of the doubt would, I fear, only be to store up trouble for the future and to risk wasting considerable time and costs.

 

Tags: , , ,