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	England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Abbey National Plc v John Perry & Co & Ors [2001] EWCA Civ 1630 (24 October 2001) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2001/1630.html Cite as: [2001] EWCA Civ 1630

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
ABBEY NATIONAL MANAGED LIST
(Mr Justice Rimer)

		Royal Courts of Justice Strand London WC2 Wednesday 24th October, 2001

1. LORD JUSTICE ALDOUS: With leave of this court the defendants, who are various firms of solicitors, appeal against the order of Rimer J of 23rd January 2001, which allowed Abbey National Plc, the claimants, to amend their statements of claim and to serve draft replies.
2. Abbey National, like many lenders, have brought a number of claims against solicitors who acted for them in connection with loans made between 1988 and 1991. The vast majority of those claims have now been determined, but some still remain outstanding. There are, I believe, about 35 claims in what can be called the "managed case list". To be in the managed list, a claim must be defended by a solicitor who is being indemnified by the Solicitors' Indemnity Fund and be subject to a limitation defence. The cases that are the subject of this appeal are in that list.
3. The managed list came before Rimer J on 6th June 2000, when he gave directions as to pleadings and disclosure. The list was restored for hearing on 17th January 2001, when he heard argument occupying the best part of three days about pleadings and disclosure. One of those issues concerned Abbey's application to amend their statements of claim. The amendments are not identical in all the cases, but it is sufficient to consider first the action by Abbey National against John Perry & Co.

The John Perry case

4. In the statement of claim as originally served, it was alleged that on or about 11th April 1990 Mr Nasser Al-din Abulebah applied to the Abbey National for an advance of £88,350 to be secured by way of a first mortgage over a leasehold property known as 11 Albany Court, for the purpose of purchasing that property at a price of £93,000. Abbey National required a valuation which was carried out. It indicated that the property was further £83,000. On 1st May 1990 Abbey National offered to advance £78,850 which was accepted by the borrower. In the first week of May 1990 Abbey National instructed John Perry & Co, who were acting for the borrower, to act for them as well. Their instructions were subject to their normal terms, as laid down in documents supplied. Those documents stated that Abbey National were prepared to lend £78,850 to the borrower in accordance with details which included a statement that the purchase price was £93,000. The solicitors were required to confirm the purchase price and having confirmed it were to request the advance cheque in time for completion. On 6th June 1990 John Perry & Co confirmed to Abbey National in writing that the purchase price was £93,000 and requested the advance cheque of £78,850 in time for completion. On 7th June Abbey National, relying upon the solicitors' confirmation, sent the cheque of £78,850 and on 9th June the purchase of the property was completed.
5. In paragraph 10 of the statement of claim it is alleged that John Perry & Co were negligent in that they omitted to report or advise Abbey National that the only sum passing on completion was £77,190, less the agreed costs of some work carried out, reducing it to £77,075. Further, the balance of the purchase price of £93,000 did not pass through the solicitors' account and the solicitors could not confirm of their own knowledge that the true purchase price was more than £77,190.
6. Paragraph 12 of the statement of claim went on to allege that had Abbey National known of the facts and matters to which John Perry & Co had failed to report, they would not have made the advance or any advance for reasons which are set out in the pleadings.
7. The pleading continued in paragraphs 13, 14 and 15 to plead breach of a constructive trust. For convenience those allegations are set out with the amendments considered by the judge shown as deletions or as underlined:

"13. Further or alternatively the Claimant will aver that at all times after the receipt by the Defendant of the said mortgage advance the Defendant held the said mortgage advance for the Claimant with authority only to apply it for the purpose of enabling the borrower to complete the purchase of the property at a price of £93,000 and otherwise to repay the said mortgage advance to the Claiman

14. On or about 9th June 1990 in breach of trust and without authority the Defendant misapplied themortgage advance by applying it for the purpose of enabling the borrower to complete the purchase of the property not at £93,000 but at a price of £77,190 or less without first having notified the Claimant of those matters set out at paragraph 10 above and by which the Defendant knew and must or ought to have known that the true nature of the transaction was being concealed from the Claimant and that if the said facts had been made known by the Defendant to the Claimant prior to completion it would not have authorised the making of the advance.

15. By reason of the same the application of the whole of the advance was a breach of trust by the Defendant and the Claimant is entitled to and does so seek the restoration of the trust find of £78,850.00 together with interest thereupon or equitable compensation or damages for breach of trust in the like amount, subject to the Defendant being given credit for such sums as are particularised below which the Claimant has recovered under or in realisation of its security."

8. It is common ground that the primary period of limitation applicable to the relevant cases had expired before the application for permission to amend was made. Thus the court's power to permit the proposed amendment was subject to restrictions contained in section 35 of the Limitation Act 1980 and Part 17.4 of the Civil Procedure Rules. Section 35 of the 1980 Act provides:

"(1) For the purposes of this Act, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced-

...

(b) in the case of any other new claim, on the same date as the original action.

(2) In this section a new claim means ... any claim involving either-

(a) the addition or substitution of a new cause of action;

...

(3) Except as provided by section 33 of this Act or by rules of court, neither the High Court nor any county court shall allow a new claim within subsection (1)(b) above ... to be made in the course of any action after the expiry of any time limit under this Act which would affect a new action to enforce that claim.

...

(4) Rules of court may provide for allowing a new claim to which subsection (3) above applies to be made as there mentioned, but only if the conditions specified in subsection (5) below are satisfied, and subject to any further restrictions the rules may impose.

(5) The conditions referred to in subsection (4) above are the following-

(a) in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the original action ..."

9. The material parts of CPR Part 17.4 provide:

"(1) This rule applies where-

(a) a party applies to amend his statement of case in one of the ways mentioned in this rule; and

(b) a period of limitation has expired under-

(i) the Limitation Act 1980;

...

(2) The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings."

10. Rimer J in his judgment held that the proposed amendments in paragraphs 13 and 14 were such as to plead a new cause of action:

"I regard that new way of putting the case as sufficiently fundamental to involve the raising of a new cause of action. First, the abandonment of the suggestion that any trust was a constructive trust involves the assertion that the trust now sought to be relied upon arose by implication from the relationship between the parties rather than by imposition by the general law. Secondly, whereas I interpret the essence of the current case to be that the defendant's knowledge of the paragraph 10 matters resulted in its having no authority to part with the advance, the new case is one simply to the effect that the defendant only had authority to part with the advance so as to complete a purchase at £93,000.

In these circumstances, I conclude that I ought not to allow the amendment unless I am satisfied that the new case Abbey wishes to make arises out of the same, or substantially the same, facts as those currently pleaded."

11. The judge went on to consider whether the new case pleaded arose out of the same or substantially the same facts as were currently pleaded and concluded that they did. He held that it was for him to decide as a matter of impression whether the facts were substantially the same. He said:

"This being so, I come back to the `matter of impression' exercise. In my view, the essence of the current pleaded case is that the defendant was subject to a trust obligation in which it only had authority to part with the mortgage money in accordance with Abbey's wishes and instructions. They are not defined, but I consider they can be taken. at least in part, to include the assertion that Abbey was only making its offer available to enable a purchase £93,000 to take place. That is, in my view, a properly arguable inference from Abbey's instructions to the defendant, a document which is currently pleaded. The current case is, in effect, that the defendant knew facts suggesting that the purchase price may not have been £93,000, being facts that, if disclosed to Abbey, would have caused it to withdraw its offer and which meant that the defendant had no authority under the trust to part with Abbey's money. The new case is that in fact the purchase price was no more than £77,000 resulting in the same absence of authority. That is a change of case, but I have come to the conclusion that it does arise out of substantially the same facts as the current claim and I propose to allow the amendments intended to raise it."

12. John Perry & Co appeal against the allowance of the amendments. They support the judge's conclusion that the amended pleading raises a new cause of action, but submitted that it did not arise out of substantially the same facts. Abbey National in their Respondent's Notice contend that their amended pleading did not raise a new cause of action; but if it did, they support the conclusion and reasoning of the judge. It is convenient to deal with the Respondent's Notice first.
13. Before dealing with the detailed submissions of the parties, I must consider a submission made by Mr Pooles QC who appeared for the solicitors. He submitted that the amendments should not be allowed in the court's discretion. He submitted that paragraph 13 of the statement of claim before amendment was demurrable, as the instructions given by Abbey National could not form a condition of the trust. The amended pleading was also demurrable for the same reason and therefore the amendment should not be allowed. To support that submission he relied on Target Holdings Ltd v Redferns [1996] AC 421 and Bristol and West Building Society v Mothew [1998] Ch 1.
14. In Target the House of Lords had to consider what was the measure of compensation payable when the underlying commercial transaction had been completed. At page 435 Lord Browne-Wilkinson said:

"Even if the equitable rules developed in relation to traditional trusts were directly applicable to such a case as this, as I have sought to show a beneficiary becoming absolutely entitled to a trust fund has no automatic right to have the fund reconstituted in all circumstances. Thus, even applying the strict rules so developed in relation to traditional trusts, it seems to me very doubtful whether Target is now entitled to have the trust fund reconstituted. But in my judgment it is in any event wrong to lift wholesale the detailed rules developed in the context of judicial trusts and then seek to apply them to trusts of quite a different kind. ..."

15. Lord Browne-Wilkinson went on, at page 436:

"This case is concerned with a trust which has at all times been a bare trust. Bare trusts arise in a number of different contexts: e.g. by the ultimate vesting of the property under a traditional trust, nominee shareholdings and, as in the present case, as but one incident of a wider commercial transaction involving agency. In the case of moneys paid to a solicitor by a client as part of a conveyancing transaction, the purpose of that transaction is to achieve the commercial objective of the client, be it the acquisition of property or the lending of money on security. The depositing of money with the solicitor is but one aspect of the arrangements between the parties, such arrangements being for the most part contractual. Thus, the circumstances under which the solicitor can part with money from client account are regulated by the instructions given by the client: they are not part of the trusts on which the property is held."

16. In Mothew the claimant, the lender, sought to recover the whole of its loss on the transaction from the solicitor who acted both for it and the purchaser. Millett LJ, who gave the leading judgment, dealt at page 24 with what he called "a more sophisticated argument". He said:

"The defendant's instructions, it pointed out, expressly required him to report the arrangements in question `to the society prior to completion.' This, it was submitted, made it a condition of the defendant's authority to complete that he had complied with his obligation. Whether he knew it or not, he had no authority to complete. It was not necessary for the society to revoke its authority or withdraw from the transaction. I do not accept this. The society's standing instructions did not clearly make the defendant's authority to complete conditional on having complied with his instructions. Whether they did so or not is, of course, a question of construction, and it is possible that the society could adopt instructions which would have this effect. But it would in my judgment require very clear wording to produce so inconvenient and impractical a result. No solicitor could safely accept such instructions, for he could never be certain that he was entitled to complete.

In my judgment the defendant's authority to apply the mortgage money in the completion of the purchase was not conditional on his having first complied with his contractual obligations to the society, was not vitiated by the misrepresentations for which he was responsible but of which he was unaware, had not been revoked, and was effective to prevent his payment being a breach of trust. Given his state of knowledge (and, more importantly, that his authority had not been revoked) he had no choice but to complete."

17. As Millett LJ pointed out in that case, the solicitor's authority to apply the money to complete the transaction was not conditional on his having first complied with his instructions. However, he contemplated that in a case where there was "very clear wording" such a result, which he referred to as inconvenient and impractical, could occur.
18. Paragraph 13 of the statement of claim alleged that John Perry & Co was a constructive trustee of the mortgage advance to hold the sum until such time as it was to be applied in accordance with Abbey National's "wishes and instructions", failing which the money had to be returned. If that allegation had remained unamended, the court would have had to decide whether there were sufficiently clear instructions to produce what Millett LJ referred to as an inconvenient and impractical result, namely that compliance with the instructions was a condition of the authority or whether the actual instructions were akin to that in Mothew. That issue may well have been canvassed before the judge, but he did not deal with that submission and it did not form part of the notice of appeal.
19. The amendments to paragraph 13 allege that John Perry & Co held the mortgage advance from Abbey National upon trust with authority "only" to apply it for the purpose of completing the purchase at a price of £93,000. That allegation seeks to rely upon instructions given by Abbey National, and it seems to me to have the same difficulty, if there is a difficulty, as the original pleading. It sets out in more detail the particular instructions which John Perry & Co are alleged to have failed to comply with. Thus the court will have to decide whether the John Perry & Co's authority to complete the transaction was subject to the pleaded limitations. When doing so, the court will have in mind the observations of Millett LJ in Mothew. The pleading before amendment alleged a trust subject to a condition on completion. It was not demurrable as it stood. That remains the position after amendment.
20. Mr Michael Driscoll QC, who appeared for Abbey National, drew our attention to the decision of this court in Abbey National v Frost [1999] 1 WLR 1080. The issue in that case concerned substituted service, but the pleading in that case was similar to that in the present case. Nourse LJ, who gave the leading judgment, said at page 1082:

"There is a further claim to the effect that the defendant received the £160,000 from the plaintiff on a constructive (more accurately an implied) trust to apply it in accordance with the plaintiff's instructions and subject thereto to hold it in trust for the plaintiff."

21. That statement of the position coincided with the statement of law in Bristol and West v Mothew. It was therefore wrong, as I believe Abbey National now accept, for the statement of claim to call the trust a constructive trust. However, Abbey National submit that in this particular case that is a matter of form, not of substance. The facts which were pleaded in the statement of claim were sufficient to set out the nature of the trust, namely that the money was to be held for the benefit of Abbey National until such time as the sum was to be applied in accordance with Abbey National's wishes and instructions. Failing that, John Perry & Co were under an obligation to return the sum.
22. Abbey National submitted that the judge should have adopted the view set out by Lord Denning MR in In Re Vandervell's Trusts (No 2) [1974] Ch 269, at 321:

"Mr Balcombe for the executors stressed that the points taken by Mr Mills were not covered by the pleadings. He said time and again: `This way of putting the case was not pleaded.' `No such trust was pleaded.' And so forth. The more he argued, the more technical he became. I began to think we were back in the bad old days before the Common Law Procedure Acts 1852 and 1854, when pleading had to state the legal result; and a case could be lost by the omission of a single averment: see Bullen and Leake's Precedents of Pleadings, 3rd ed. (1868), p. 147. All that has been long swept away. It is sufficient for the pleader to state the material facts. He need not state the legal result. If, for convenience, he does so, he is not bound by, or limited to, what he has stated. He can present, in argument, any legal consequence of which the facts permit. The pleadings in this case contained all the material facts. It does appear that Mr Mills put the case before us differently than the way in which it was put before the judge: but this did not entail any difference in the facts, only a difference in stating the legal consequences. So it was quite open to him."

23. In essence, it is Abbey National's case that what was pleaded was a breach of trust, wrongly called a constructive trust. The material facts were that the advance money was held by John Perry & Co to the benefit of Abbey National, with authority only to apply it in accordance with Abbey National's wishes and instructions. Those instructions were to apply the money in a genuine purchase of the property for £93,000. Contrary to those instructions it was applied in breach of trust because it was released for the benefit of the borrower to complete a transaction which was different to the authorised transaction. The true transaction was concealed from Abbey National, but John Perry & Co must have known or knew of it.
24. Abbey National submit that the claim made in the amended claim is the same cause of action. The amendments in paragraph 13 involved deletion of the word "constructive" so that the allegation made is simply one of breach of trust. The other amendments amplify the cause of action that was pleaded by setting out what were the "wishes and instructions" relied on, namely that John Perry & Co would only apply the advance to enable the borrower to complete the purchase of the property at a price of £93,000.
25. Abbey National made a similar submission in relation to paragraph 14. As originally pleaded it was said that John Perry & Co misapplied the money without first notifying Abbey National of certain matters when John Perry & Co knew or must have known or ought to have known that the nature of the transaction was being concealed from Abbey National. The amendments amplify what was the true transaction, which was being concealed by alleging that the advance was misapplied for the purpose of a purchase at £77,000, not £93,000.
26. Mr Pooles, on behalf of John Perry & Co, submitted that the effect of the proposed amendments was:

(a) to withdraw the allegation the defendant was and remains a constructive trustee;

(b) to add an allegation that the defendant held the mortgage advance upon an implied trust (although these words were not actually used in the amended paragraph 13);

(c) to add an allegation that the defendant's authority to release the mortgage advance was subject to a condition that the purchase price being paid by the borrower for the property was £93,000;

(d) to add an allegation that the purchase price being paid by the borrower was not £93,000 but £77,190 or less; and

(e) to add an allegation that the defendant did not have authority to release the mortgage advance.

27. A sufficient test as to what constitutes a new cause of action was set out by Sir Ian Glidewell in Darlington Building Society, Abbey National Plc v O'Rourke James Scourfield & McCarthy [1999] LR PN 33, at 36:

"There are two classic definitions of what constitutes a cause of action. The earlier is derived from the judgment of Brett J in Cooke v Gill (1873) LR 8 CP 107 at 116:

Cause of action has been held from the earliest times to mean every fact which is material to be proved to entitle a plaintiff to succeed - every fact which the defendant would have a right to traverse.

The second comes from the judgment of Diplock LJ in Letang v Cooper [1965] 1 QB 232 at pages 242-243:

A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person ... it is used as a convenient and succinct description of a particular category of factual situation which entitles one person to obtain from the court a remedy against another person.

Where as in this case the claim is based on a breach of duty, whether arising from contract or in tort, the question whether an amendment pleads a new cause of action requires comparison of the unamended pleading with the amendment proposed in order to determine:

(a) whether a different duty is pleaded;

(b) whether the breaches pleaded differ substantially; and where appropriate

(c) the nature and extent of the damage of which complaint is made."

28. In my view the amended statement of claim does not plead a new cause of action. The labelling of the trust as a constructive trust was wrong, but did that not mislead Nourse LJ in the Frost case. Whether the trust is referred to as a constructive or implied trust is not a matter of substance.
29. If the pleading is considered in its original form, with the word "constructive" struck out, it alleges that John Perry & Co were after receipt of the mortgage advance of £78,850, trustees of that sum, to hold it to the benefit of Abbey National until such time as the sum was to be applied in accordance with the claimant's wishes and instructions; failing which John Perry & Co came under immediate obligation to return it (see paragraph 13). No doubt particulars of what those instructions were could have been sought. If so, it seems that they would have contained the allegation now sought to be pleaded in paragraph 13 that the advance monies would only be applied for the purpose of enabling the borrower to complete the purchase of the property at a price of £93,000, as pleaded in paragraph 2 of the statement of claim. The facts relied on are essentially the same as those envisaged in paragraphs 9 and 10 of the statement of claim. The mortgage advance was made upon terms that it would be applied in accordance with the instructions of Abbey National, as now pleaded, to fund a purchase of the property at a price of £93,000.
30. In paragraph 14 of the statement of claim as originally pleaded, it is alleged that on 9th June 1990, in breach of constructive trust (the Trust) the defendant misapplied the advance of £78,850 by releasing it to the benefit of the borrower, when John Perry & Co knew, or must have known, or ought to have known, that the true nature of the transaction was being concealed from Abbey National. If the true nature of the arrangement had been known to Abbey National prior to completion, it would not have authorised the advance. Again, particulars could have been obtained as to what was alleged to be the true nature of the transaction. If so, the matters sought to be added in paragraph 14 would have been pleaded, namely that the money was applied to complete the purchase not at £93,000, but a price of £77,190 or less, as pleaded in paragraph 10 of the statement of claim.
31. The judge appears to have accepted the submission that because a new fact was pleaded in paragraphs 13 and 14 that resulted in a new cause of action being pleaded. I accept that further allegations are made in paragraphs 13 and 14 by the proposed amendments, but they appear to me to be amplifications of the pleaded cause of action.
32. In view of that conclusion, it is not strictly necessary to decide whether an assumed new cause of action arose out of the same facts or substantially the same facts. If it were, then I would have come to the same conclusion as the judge. Whether a new cause of action arises out of substantially the same facts must be a matter of impression (see Darlington). The new allegations are, as I have said, amplifications of the allegations pleaded and the facts contained in those allegations can be derived from the pleading before amendment.
33. Before leaving the John Perry & Co case I should mention that Lord Justice Chadwick asked Mr Driscoll whether paragraph 14 contained two allegations. First, an allegation that John Perry & Co misapplied the advance for the purpose of completing a sale at a price of £77,190 and, second, an allegation that John Perry & Co acted in breach of trust by misapplying the advance when they knew and must or ought to have known that the true nature of the transaction was being concealed from Abbey National. After some hesitation Mr Driscoll accepted that paragraph 14 contained a single allegation and despite the use of the words "by which the defendant knew and must or ought to have known", no allegation of fraud was made.
34. I come next to the appeal against the judge's decision to allow Abbey National to serve their draft reply. It pleads section 32 of the Limitation Act 1980 and includes allegations of intentional breaches of duty by John Perry & Co. Before the judge Mr Pooles opposed permission being given to Abbey National to serve that reply. The judge said, at page 17 of his judgment:

"Mr Pooles opposes any permission being given to Abbey to serve such a reply, but I see no reason why Abbey should not be allowed to do so. There is no suggestion here that there is any limitation defence to Abbey's claim to plead the facts it wants to. Nor, contrary to Mr Pooles' submission, does it appear to me that the case Abbey wants to plead in support of its section 32 argument involves any departure from, or inconsistency with, the factual basis of its substantive claim against the defendant. The latter case is one based on negligence and breach of trust. Its nature is not changed by the facts alleged in support of the section 32 plea. I will permit Abbey to serve a reply containing the proposed allegations."

35. Before us it was accepted that, as the law stood, the judge was correct provided that the pleading did not allege that John Perry & Co knew, when they did what they did, that they were thereby committing a breach of duty. Mr Driscoll accepted that that was the correct interpretation of the pleading. He said that Abbey National were not alleging that John Perry & Co knew that they were committing a breach of duty when they carried out the alleged acts. That being so, no point arises on the judge's acceptance of the draft reply.
36. It was not suggested on behalf of the solicitors that any different conclusion should be reached in relation to the pleadings in the other actions. In my view, having considered those pleadings, that was correct. Therefore the conclusion reached by the judge in respect of those actions will not be disturbed.
37. For the reasons which I have given, I believe this appeal should be dismissed.
38. LORD JUSTICE CHADWICK: I agree.
39. The principal question raised by these appeals is whether the amendments proposed seek to raise a new cause of action. To my mind, that question is most readily answered by examining, first, the amendments to paragraphs 13 and 14 of the statements of claim in the proceedings brought by Abbey National against Eric Robinson & Co and the corresponding paragraphs in the proceedings brought against Hebblethwaite & Bakhsh.
40. As originally pleaded in the Robinson case, paragraph 13 alleged that, at all times after receipt of the mortgage advance, the solicitor was "a constructive trustee for the claimant in respect of the sum advanced, to hold the same for the benefit of the claimant until such time as the sum was applied in accordance with the claimant's wishes and instructions; failing which the solicitor came under an immediate obligation to return the same". Save that the epithet "constructive", where it appears in front of the word "trust", has been removed, the plea in that sentence is unaltered by the proposed amendment.
41. Whether or not a solicitor who has received client's funds in anticipation of those funds being applied in completing a transaction in relation to which the solicitor has been retained is properly to be described as holding those funds upon a constructive trust, rather than upon an implied trust - or, more simply, upon a trust - seems to me to be a matter of semantics. In the light of the facts alleged in the first sentence of paragraph 13, it is impossible to say that an amendment which has the effect that the solicitor is described simply as a "trustee", rather than as a "constructive trustee", introduces any new cause of action.
42. The proposed amendment seeks to add a second sentence to paragraph 13. The new sentence in the Robinson case is in these terms:

"The Defendant held the said mortgage advance upon trust with authority only to apply the said mortgage advance for the purpose of enabling the borrower to complete a purchase of the property at a price of £52,500 and otherwise to repay the whole of the said advance to the Claimant."

43. In the context in which it appears, that sentence does no more than provide particulars of "the claimant's wishes and instructions", to which reference has already been made in the first sentence of paragraph 13. I find it impossible to say that the second sentence introduces a new cause of action. To my mind, its purpose and effect is to restrict, by particulars previously lacking, the factual basis of the cause of action already pleaded.
44. The proposed amendment to paragraph 14 of the statement of claim in the Robinson case follows the same pattern. The phrase "the said constructive trust" is replaced by "the said trust". The allegation is that, in breach of that trust, the solicitor misapplied the sum received in respect of the advance by releasing it to the benefit of the borrower, without first having notified the claimant of the matters set out in paragraph 10 of the statement of claim; which, if the claimant had known, would (it is said) have led the claimant to refuse to authorise the solicitor to apply the advance to the proposed transaction. That amendment does no more than reflect the change already made in the way in which the trust is described in paragraph 13. It introduces no new cause of action.
45. There is a further proposed amendment to paragraph 14, by the additional of a second sentence in these terms:

"The said sum was misapplied in that it was used in the purchase of the property not at a price of £52,500 but at a price of only £49,000."

46. Again, as it seems to me, that sentence, when read in conjunction with paragraph 10 of the statement of claim, does no more than provide further particulars of the breach of trust already alleged. I find it impossible to say that that second sentence in paragraph 14 introduces a new cause of action.
47. The judge held that the amendments did introduce a new cause of action; but that that new cause of action arose out of the same, or substantially the same, facts as those already pleaded. For the reasons that I have sought to explain, it is my view that on a true analysis it can be seen that the amendments to the statement of claim in the Robinson case and in the Hebblethwaite & Bakhsh cases do not introduce a new cause of action. That contention is advanced in the Respondent's Notice. I am satisfied that that contention is correct; and I would dismiss the appeals on that ground.
48. The proposed amendments to paragraphs 13 and 14 in the proceedings brought against John Perry & Co are made in a form which does not lend itself so readily to the textual analysis which points to the answer in the Robinson and the Hebblethwaite cases. But in substance - and subject to one point which I shall mention - it is not suggested that the case in breach of trust sought to be made in the Perry case differs from that sought to be made in the Robinson case. Although the language of the proposed amendment to the relevant paragraphs in the Perry case is different, the effect of the amendment is said, by counsel for Abbey National, to be the same; and it has not been contended on behalf of the defendant solicitors that there is any difference in substance. On that basis, and for the reasons given by my Lord, Lord Justice Aldous, I would dismiss the appeals in the Perry case also.
49. The one point of apparent difference to which I should refer is that the allegation in paragraph 14 of the Perry case (both as originally pleaded and as it remains after amendment) is that the solicitor "knew and must or ought to have known" that the true nature of the transaction was being concealed from the claimant. Mr Driscoll QC, who appeared for Abbey National, accepted that that was not a plea of dishonesty; but only a plea of negligence.
50. But in the Robinson case and in the Hebblethwaite cases, the comparable allegation is that the solicitor "knew and must have known" that the true nature of the transaction was being concealed from his client. To my mind, at least in the context of a claim of this nature, an allegation that a solicitor "knew and must have known" that the true nature of the transaction was being concealed from the lender, who was his client, is an allegation of dishonesty.
51. Mr Pooles QC, who appears for the solicitors, does not accept that that is the effect of the plea in paragraph 14 of the Robinson case and the Hebblethwaite cases. Mr Driscoll, as I understand it, contends that the allegation in paragraph 14 in those cases is intended to be an allegation of dishonesty. The point is not before us for decision. It is not a point which is raised by the amendments. But it seems to me to be a point which needs to be cleared up before these matters come to trial. It is likely to cause considerable difficulty, both for the solicitors and for the judge, if these cases come to trial without it being clearly known and understood whether allegations of dishonesty are made against them. As I say, that is not the point in front of us; but it is a point which, to my mind, needs to be addressed by the parties.
52. The other point that is not in front of us is whether the allegations in paragraphs 13 and 14 can be sustained at all, having regard to the standard form documentation on which these solicitors acted. Lord Justice Aldous has referred to the observations of Lord Browne-Wilkinson in Target Holdings v Redferns; and of Millett LJ in Bristol and West Building Society v Mothew. I say nothing more about that; save that I wholly agree with the observations that he has made.
53. I agree, also, that the Abbey National should have leave to serve its reply.
54. SIR MURRAY STUART-SMITH: I agree that this appeal should be dismissed for the reasons given by my Lords.
ORDER: Appeal dismissed with costs, summarily assessed in the sum of £15,000 plus VAT. (Order not part of approved judgment)