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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Bruce v TTA Management Ltd & Ors [2018] EWHC 2718 (Ch) (22 October 2018) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2018/2718.html Cite as: [2018] EWHC 2718 (Ch)

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IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Rolls Building, Fetter Lane, London EC4A 1NL
		22/10/2018

Chief Master Marsh:

1. On 20 September 2018 two applications came before me. First in time was an application issued by the defendants on 8 March 2018 by which they sought certain disclosure orders. This was followed by an application issued by the claimant on 14 May 2018 by which he sought permission to re-amend his particulars of claim, specific disclosure and directions for trial. The claimant's application for permission to re-amend the particulars of claim was strongly contested by the defendants and I determined that this aspect of the application should be dealt with first. Having heard submissions from both sides, I reserved judgment.
2. This claim has had a somewhat troubled history. The claim was issued in 2013 and it is regrettable that more than five years later, only limited progress has been made to bring the claim on for trial. The amendments the claimant ("Mr Bruce") wishes to make to the claim are substantial. The defendants contend that, regardless of the merits of the amendments, the court should exercise its discretion to refuse permission to amend on, amongst other grounds, the lateness of the application and the form in which they are made. It is necessary to review the history of the claim in a little detail so as to put the application in its proper context and to consider the issue of lateness.
3. At an early stage in the life of the claim, the defendants made an application to strike out the claim or for summary judgment. On 25 April 2014 I made an order striking out the claim in entirety. That order was subject to an appeal and on 1 April 2015 Mr Justice Norris handed down a judgment indicating that the appeal should be allowed in part. The hearing to deal with matters arising from his judgment eventually came before him on 5 November 2015. The order made on that occasion describes itself as a "consent order" but I think that marking is intended to indicate merely that the terms of the order were agreed between the parties before being placed before the judge for approval. The order did two things. First, it put into effect the determination made the judge and to that extent it could not properly be described as a consent order. Secondly, it appears the parties agreed directions which were approved by the judge. Those directions were ordered by consent.
4. The claim in its original form comprised three causes of action: (1) breach of contract; (2) conspiracy and (3) fraudulent misrepresentations (deceit). Mr Justice Norris summarised Mr Bruce's case giving rise, so it was said, to these causes of action in paragraph 8 of his judgment and it is convenient to adopt that summary.

"The bare bones of Mr Bruce's case were these:—

a) The Claimant was from the foundation of Management in 1994 until April 2007 a shareholder and non-executive director of Management.

b) Mr Carpenter and Mr Clark were shareholders and executive directors of Management.

c) Management provided services to Travel Trust ("TT"), a company limited by guarantee founded in 1993 and whose primary business was to act as a trade association providing a scheme of trust accounts backed by fidelity insurance for travel agents to use as an alternative to the ABTA bond scheme. (Although it did not feature in the pleaded case, Mr Bruce's evidence was that he and another had advanced all the funding to establish TT's operations).

d) TT was at all material times controlled by Mr Carpenter and Mr Clark.

e) TT was intended to operate as a non-profit making institution (which assertion was not specifically denied in the Defence which Management, Mr Carpenter and Mr Clark filed). Precisely what was meant by "non-profit making" was not clear: it might or might not have meant that any surplus earned by TT was to be extracted by way of management charge payable to Management. But it is clear that at the least it meant that any surplus was not distributable amongst the members (which is why it was accumulated and not paid out).

f) Amongst the services that Management provided to TT was fidelity insurance backing TT's scheme, and also promoting and selling additional travel insurance and travel related products for the members of TT.

g) By clause 3.4 of the Management Agreement between Management and TT it was agreed that in return for the services provided by Management under the agreement that Management should be entitled "to the entire revenues from the insurance services provided to members in respect of their customers together with any other products provided to such members in conjunction with [TT]".

h) The members of TT benefitted from some concessionary arrangements with suppliers of travel services under a scheme known as "the Business Partners Scheme" ("BPS") and the suppliers paid to TT commission at a rate of 1% on business transacted by them with members. Mr Bruce said that Management was entitled to the commission: but Mr Carpenter and Mr Clark said that TT was entitled to the commission.

i) By an agreement in writing dated the 12 September 2005 ("the Compromise") various disputes between Mr Bruce on one hand and Mr Carpenter and Mr Clark on the other were resolved by an agreement that Mr Bruce's shares in Management should be purchased by the company itself.

j) The price to be paid by Management for Mr Bruce's shares was to be determined by Ms Angela Hennessey on the terms of engagement which bound her to act as an expert and not as an arbitrator, and to provide her decision in writing but without disclosing reasons.

k) What her letter of engagement required her to do was to value Mr Bruce's shareholding as a rateable proportion of "the total value of the Company as a going concern without any discount for the fact that the holding [was] a minority holding and assuming a willing buyer and a willing seller".

l) By clauses 1.2 and 1.3 of the Compromise, the parties agreed that Ms Hennessey should be supplied with "comprehensive, accurate and current financial information concerning [Management], including the documents set out in [a] letter of 25 January 2005 (paragraph 5(viii))…"

m) Amongst the documents specified in paragraph 5(viii) of that letter were "forecasts for future trading of [Management] over the next two years" and "copies of the Management contracts between [Management] and [TT]… together with any further information or documentation requested by the expert and considered by [her] in [her] absolute discretion as required for the purposes of [her] valuation".

n) By a letter dated 4 January 2006 Ms Hennessey advised the parties that she regarded the issue of whether the commission income on the BPS formed part of the revenues to which Management was entitled as significant to any consideration of the valuation of Management.

o) At a meeting of the board of Management on 20 February 2006 the board (Mr Carpenter and Mr Clark forming the majority) resolved that it would continue to treat the commission income from the BPS as belonging to TT. This left the profit from the BPS operation accumulating in non-profit making TT, and meant that Management's income stream did not include the BPS income even if it constituted revenue from "any other products provided to such members in conjunction with [TT]".

p) In communicating that resolution to Ms Hennessey the solicitors for Management, Mr Carpenter and Mr Clark said:—

"What the resolution does make absolutely clear is that there is no prospect of [Management] receiving the [BPS] income".

q) On 15 March 2006 Ms Hennessey informed the parties that unless proceedings were issued to determine Management's entitled to income from the BPS she would proceed to complete the valuation on the assumption "that [Management] (either as currently owned or as owned by a prospective purchaser) is unlikely to receive any income from this source".

r) The solicitors for Management, Mr Carpenter and Mr Clark said in response that it was "more accurate to say that there is no real possibility at all of the [BPS] income being paid to [Management]".

s) Mr Bruce did issue such proceedings but Mr John Jarvis QC (sitting as Deputy High Court Judge), declined to determine the question on the footing that where parties chose to select valuation by an expert, then recourse to the Courts was virtually non-existent (except where there had been a true breakdown in the machinery or a frustration of the contract).

t) By a letter dated 13 April 2007, Ms Hennessey formally determined the transfer price for Mr Bruce's shares at £1,485,914.00.

u) Immediately after the completion of the sale of Mr Bruce's shares to Management, during the period from the 1 July 2007 to the 12 November 2007 TT paid to Management sufficient money to enable it to declare a profit of £1.96m on a turnover of £740,000 (as compared to the profit during the year ending 30 June 2007 of £791,000 on a turnover of £2.67 million). The solicitors for Management, Mr Carpenter and Mr Clark explained that the exceptional profit figure

"represents revenue from [TT] which we understand was declared by way of dividend, and is therefore consistent with [Mr Bruce's] own contention to the expert valuer".

v) The "declaration of dividend" was achieved because after the purchase of Mr Bruce's shares they were cancelled by Management, and then TT ceased (in October 2007) to be a company limited by guarantee and was re-registered as a company having a share capital. Its one issued share was registered in the name of Management (itself now in the ownership of Mr Carpenter and Mr Clark and others to the exclusion of Mr Bruce). So TT could now avoid distributing the profits to its general members, avoid transferring them to Management under the Management Agreement (if applicable) and could distribute the accumulated profits by way of dividend to Management (and hence to Mr Carpenter and Mr Clark). The end result was that Management did receive the BPS income, and Mr Carpenter and Mr Clark enjoyed it to the exclusion of Mr Bruce.

5. Mr Justice Norris went on, before considering the grounds of appeal, to make the following remarks:

"16. Before considering the grounds of appeal I should clear some of the undergrowth. First, this is a claim about damages. On the facts pleaded there was no real prospect of obtaining a declaration that Ms Hennessey's valuation was a nullity (so that Mr Bruce was bound to return the £1,485,914 Management had paid him and Management was bound to return the shares it had acquired from Mr Bruce in 2007). Equally, there was no real prospect of obtaining an order for specific performance of the Compromise by the undertaking of a fresh valuation by Ms Hennessey.

17. Second, the Chief Master thought the pleading of the claims to be unsatisfactory: and in the main I agree with him.

18. However, their fault was not that they failed to plead facts sufficient to constitute the relevant cause of action i.e. that they were not comprehensive. Their fault was that they were too comprehensive and not sufficiently particular: they left Mr Bruce with too much room to manoeuvre in establishing his case.

6. The breach of contract claim Mr Bruce wished to pursue arose from the Management Agreement. He said that on a proper construction of that agreement, TT was bound to pay the BPS commission and similar payments to TTAM and the failure of TTAM's accounts to reflect these sums meant that there was a failure to supply to the valuer, Ms Hennessey, "comprehensive, accurate and current financial information" within the terms of clause 1.2 of the Compromise Agreement. The problem for Mr Bruce, however, was that Mr Jarvis QC, sitting as a Deputy High Court judge, determined that this issue of construction was not justiciable by the court because the Compromise Agreement had submitted to the valuer all issues that related to valuation of Mr Bruce's shares. Mr Justice Norris concluded:

"36. With some reluctance I agree that once the Court has determined as between these parties that issues of construction were subsumed into the valuation exercise Mr Bruce is not entitled to raise the construction issue for the purposes of running a "breach of contract" claim in connection with that valuation exercise.

37. Counsel for Mr Bruce submitted that this conclusion had the effect of rendering nugatory the obligation Mr Carpenter and Mr Clark undertook to provide complete and accurate information to Ms Hennessey. But that takes to an unwarranted level of generality a particular dispute about what the accounts should have contained. The particular dispute was about the construction of the Management Agreement. The Court held that that lay within the remit of the valuer and was not justiciable by the Court. Mr Bruce did not appeal that result and is stuck with it in this action. The Chief Master made no error of law in his conclusion.

38 I also agree with the Chief Master (again with reluctance) that Mr Bruce stands no real prospect of establishing that the loss he claimed was caused by the breach of contract. Mr Bruce acknowledged in his evidence what his state of knowledge about the valuation was:—

"I did not know for certain whether [Ms Hennessey] had taken into account the BPS monies, or whether she had entirely discounted them or whether she had made some partial allowance for them. I also did not know how (if at all) she had valued the BPS revenue".

But he asserted

"Now that I am in possession of more information it is clear to me that the valuation could not have proceeded on the correct basis".

The question was: having acknowledged the former did he have any real prospect of establishing the latter? The Chief Master held not, since

"... because it was a non-speaking valuation there is simply no way of knowing the extent to which, if at all, the BPS income was taken into account".

If you do not know what was done it is fanciful to say that you will establish on the balance of probabilities that what was done was not correct.

39. I was at one time attracted by the notion that if it could be established that incorrect accounts had been submitted then, even if one did not know what was actually done, one stood a real prospect of establishing on the balance of probabilities that it cannot have been correctly done because the underlying data was false, and one could seek damages for loss of the chance of a more favourable outcome if the true data had been submitted. But on reflection this depends upon being able to establish both that the submitted data was false and what the true data was: and this in turn depends upon the true construction of the Management Agreement, which Mr John Jarvis QC has held is not a justiciable issue."

7. The determination made under CPR Part 24.2 in respect of the contract claim was upheld and that element of the claim remains struck out.
8. Mr Justice Norris considered that the conspiracy claim had not been satisfactorily pleaded, although the defects in pleading it could have been cured by an amendment. However, the appeal was not allowed in respect of it. The judge's closing remarks make it clear that he did not consider the conspiracy claim to be of significance:

"I am of the view that whilst the breach of contract claim and the conspiracy claim (which adds nothing) should remain struck out, the deceit claim may proceed (though Mr Bruce should be in no doubt about the risk in costs in so proceeding for what inevitably will be a relatively modest damages claim)." [my emphasis]

9. The outcome of the appeal is clear both from the judgment and the order. The latter provides:

"The claim

1. The appeal be allowed to the extent that the Claimant is permitted to proceed with the claim in deceit, and to that extent paragraph 1 of the Chief Master's order be varied.

Statements of case

2. The Claimant has permission to amend the Particulars of Claim provided that the Amended Particulars of Claim confine the Claim to a claim in deceit."

10. The remainder of the order made provision for service of draft Amended Particulars of Claim, disclosure and ADR. In the event, the defendants did not take objection the draft provided to them and the Amended Particulars of Claim ("APOC") were served on 1 December 2015. The claimant, therefore, in entitled to pursue a claim in the form envisaged by Mr Justice Norris on the appeal against the order striking out the entire claim. If his application for permission to amend the claim is refused, he has a viable claim that can proceed to a trial in 2019, some 12 years after the events in question.
11. APOC achieved the two objectives that were envisaged in the judgment of Mr Justice Norris. First, the claims in contract and conspiracy were removed. Secondly, the claim in deceit was put forward in a clear and understandable way. At paragraph 25(a) to (d) the claimant pleads four express representations and in paragraph 25(e) he pleads seven implied representations. In paragraph 26 he alleges that the defendants knew the representations were false, or were made without belief in the truth of them. He goes on in paragraph 27 to provide three particulars of falsity upon which the claim in paragraph 26 is based namely:

(1) There was a consistent failure to provide adequate information about the businesses of TTAM and TT to Mr Bruce and Ms Hennessey.

(2) There was a restructuring of TTAM and TT immediately after the purchase of his shares and payment of the BPS income to TTAM which produced a profit in TTAM of £1.96 million. He invites an inference to be drawn that the restructuring was planned before the sale of his shares was completed.

(3) There was a failure to reveal the planned restructuring to the claimant and Ms Hennessey.

12. It could fairly be said in relation to APOC that the representations are insufficiently directed to specific defendants. In each case it is asserted that "the Defendants" made expressly and impliedly the representations. There are some difficulties with this blanket assertion given that the first and fifth defendants are companies and Penningtons did not act for the fourth defendant. However, the point was not taken when APOC was approved.
13. The defendants were right not to object to APOC because it sets out with adequate clarity and in a reasonably brief manner the case Mr Bruce wishes to put forward. I would add that statements of case must be clear and succinct for the entirely obvious reasons that, otherwise, disclosure will be far wider than is required because it is insufficiently focussed on the real issues and the witness statements will deal with extraneous matters and be over-lengthy: thereby the trial is lengthened, the claim is made more difficult to settle and the parties expend far more than is required.
14. Mr Adkins points to three events that post-date the share valuation in 2007:

(1) The claimant's discovery that a dividend of £1.7 million was paid by TTAM shortly after the share sale. The dividend was derived from the BPS income that had been accumulated in TT.

(2) The discovery that the defendants had been in discussion with a private equity investor and heads of agreement had been signed before the sale of his shares.

(3) The fact that representations were made to the private equity investor putting the business in a very positive light, in contrast to the submissions that were made to Ms Hennessey.

15. Returning to the chronology, the remaining steps leading up to the hearing on 20 September 2018 can be set out in summary form:

14 January 2016 – An amended defence and counterclaim was served.

18 February 2016 – The defendants' list of documents was served.

14 April 2016 – The reply and defence to counterclaim was served.

19 May 2016 – Mr Bruce's list of documents was served.

10 June 2016 – An order for directions was made by Norris J.

21 July 2016 –Mr Bruce made an application for specific disclosure.

28 October 2016 – The claimant served the first draft of his re-amended particulars of claim ("RAPOC1").

8 November 2016 – Mr Bruce's disclosure application was heard. The defendants were ordered to make witness statements dealing with the scope of disclosure and to provide further disclosure.

31 March 2017 – The defendants served a further list of documents.

July to September 2017 – Further disclosure was provided by both sides

26 September 2017 – Mr Bruce's solicitors wrote to say that counsel has been instructed to revise RAPOC1.

26 February 2018 – RAPOC2 was served in draft.

8 March 2018 – The defendants' disclosure application was issued.

16 April 2018 – Mr Bruce obtained third party disclosure from Vantis who had acted for the equity investor in the restructuring.

14 May 2018 – Mr Bruce's application for permission to re-amend the particulars of claim was issued and RAPOC3 was served.

5 September 2018 – A witness statement was made by Mr Patrick Tedstone (the Defendants' solicitor) explaining their objections to RAPOC3.

16. The only gloss that needs to be added to this chronology is:

(1) At the hearing on 8 November 2016, the defendants were criticised for having provided "woefully inadequate" disclosure. As a consequence of the order made on that occasion, substantial additional disclosure was provided. The defendants say that the additional disclosure exercise was completed by March 2017.

(2) Shortly after the hearing in November 2016, the defendants changed solicitors having up to that point instructed Penningtons (later Penningtons Manches LLP) from 2005 onwards.

(3) Mr Bruce criticises the defendants for being slow to provide objections to RAPOC3. He points to the gap of nearly 4 months between issue of the application for permission to amend and service of Mr Tedstone's witness statement.

Fraud, the function of pleadings and amendment

17. It is unnecessary to burden this judgment with extensive citation from authority because the principles that are applicable are well known. CPR 16(1)(a) requires that the particulars of claim must include "a concise statement of the facts on which the claimant relies". Sadly, the requirement for concision is frequently ignored. As Mr Justice Norris observed in relation to original particulars of claim in this case, their fault was not that they lacked detail but that they were too comprehensive and not sufficiently particular, leaving Mr Bruce with too much room for manoeuvre in establishing his case. A case which alleges fraud must contain particulars of the allegation of fraud (16PD8.2(1)) but concision in providing those particulars is also required. Indeed, clarity and concision are of particular importance when serious allegations are made so as to ensure that the defendant is in no doubt about the case that is being made. All too often over-long pleadings lead to obfuscation.
18. In the very recent decision in Portland Stone Firms Ltd and others v Barclays Bank plc [2018] EWHC 2341 (QB) Mr Justice Stuart-Smith provides an extremely helpful summary of the principles relating to pleading fraud and the proper function of pleadings at [25] to [31]. I would draw out of his summary the following points that are directly relevant to this claim:

(1) "… pleadings of fraud should be subjected to close scrutiny and … it is not possible to infer dishonesty from facts that are equally consistent with honesty:" [26]

(2) It is necessary to recognise there is a tension between ensuring that claims are fully and clearly pleaded and not preventing a claimant from introducing a claim which may be shut out by limitation if the claimant is forced to wait until full particulars are available before making a claim. This has led some judges to say that a measure of generosity in favour of the claimant is needed. [27]

(3) Particulars of claim must include a concise statement of the facts on which the claimant relies. He observes by reference to the Queen's Bench Guide:

"A statement of case exceeding 25 pages is regarded as exceptional: experience shows that most cases can be accommodated in well under 25 pages even where the most serious allegations are made. Experience also shows that prolix pleadings normally tend to obfuscate rather than to serve their proper purpose of identifying the material facts and issues that the parties have to address and the court has to decide.

(4) It has always been within the power of the court to strike out either all or part of a pleading on the basis that it is vague, irrelevant, embarrassing or vexatious. This remark was made in the context of an application to strike out a claim but it is of equal application when the court is considering an application for permission to amend a statement of case where the court's approach may involve determining whether the amended claim, or part of it, has a real prospect of success. If it is vulnerable to being struck out, permission to amend will only rarely be granted.

19. Mr Justice Stuart-Smith also summarises at paragraphs [15] to [20] the approach the court should adopt when CPR 17.4 and section 35 Limitation Act 1980 are engaged. Again, I gratefully adopt that summary for the purposes of this judgment.
20. The wider principles that are applicable in relation to an application for permission to amend a statement of case are summarised in the judgment of Coulson J (as he then was) in CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd [2015] EWHC 1345 (TCC) [15] to [19]. This application cannot be characterised as being made 'very late' but there is disagreement between the parties about whether the application is made 'late', in the sense in which that notion is explained by Briggs LJ (as he then was) Hague Plant Ltd v Hague [2014] EWHC Civ 1609 at [32] and [33]. A late application can be one in which there is a large scale reformulation of the particulars of claim after a defence has been served leading to existing work to be wasted and substantial further work and expense to be incurred. Lateness is not an absolute but a relative concept.

"It all depends upon a careful review of the nature of the proposed amendment, the quality of the explanation for its timing, and a fair appreciation of its consequences in terms of work wasted and consequential work to be done."

21. In his summary of the principles at [19] Coulson J suggested that the right approach to amendments is:

"(a) The lateness by which an amendment is produced is a relative concept (Hague Plant). An amendment is late if it could have been advanced earlier, or involves the duplication of cost and effort, or if it requires the resisting party to revisit any of the significant steps in the litigation (such as disclosure or the provision of witness statements and expert's reports) which have been completed by the time of the amendment.

(b) [omitted]

(c) The history of the amendment, together with an explanation for its lateness, is a matter for the amending party and is an important factor in the necessary balancing exercise (Brown; Wani). In essence, there must be a good reason for the delay (Brown).

(d) The particularity and/or clarity of the proposed amendment then has to be considered, because different considerations may well apply to amendments which are not tightly-drawn or focused (Swain Mason; Hague Plant; Wani).

(e) The prejudice to the resisting parties if the amendments are allowed will incorporate, at one end of the spectrum, the simple fact of being 'mucked around' (Worldwide), to the disruption of and additional pressure on their lawyers in the run-up to trial (Bourke), and the duplication of cost and effort (Hague Plant) at the other. If allowing the amendments would necessitate the adjournment of the trial, that may be an overwhelming reason to refuse the amendments (Swain Mason).

(f) Prejudice to the amending party if the amendments are not allowed will, obviously, include its inability to advance its amended case, but that is just one factor to be considered (Swain-Mason). Moreover, if that prejudice has come about by the amending party's own conduct, then it is a much less important element of the balancing exercise (Archlane).

22. All these factors are in play to a greater or lesser degree in this application. The court, in the exercise of its discretion to grant or refuse an application for permission to amend, will have regard to the overriding objective.
23. It is trite that on an application to strike out a statement of case the court will sometimes give the respondent an opportunity to cure defects when the objections to the statement of case become clear. The course of action the court may adopt may involve (a) striking out the statement of case but giving the party an opportunity to replead it, or (b) adjourning the application for consideration to be given to the revised case or (c) the court acting as surgeon to excise and repair the case; or (d) adopting some other approach. Although the position is similar where a party applies for permission to amend and there are concerns about the amended case, it is not exactly the same. If the court is faced, as here, with a very detailed and extensive draft re-amendment, the court may feel constrained to adopt a binary approach, unless there are very minor adjustments that will bring the case into an acceptable form. In such circumstances, it is commonly going to be a matter of either granting or refusing the application if the amending party has had an adequate chance before the hearing to put the statement of case in order. There is no suggestion here that Mr Bruce does not have a claim he can take to trial in the form of the APOC. Unlike on a strike out application, he does not face losing the ability to bring forward any claim. For that reason, the court may be less willing to offer a lifeline to the applicant unless there are good reasons for the weaknesses in the case and there is a real prospect that they may be capable of being cured.

The re-amended particulars of claim (RAPOC3)

24. Mr Adkin who appeared for Mr Bruce was in the fortunate position of not being the draftsman of RAPOC3, although it bears the name of his junior and Mr Patrick Green QC. Mr Adkin candidly, and realistically, accepted that there are matters of form and substance that create difficulty for Mr Bruce's application although Mr Adkin's primary case is that permission should be granted for RAPOC3 in its current form. His secondary position is that if the court has concerns about aspects of it, Mr Bruce should be given an opportunity to improve it.
25. Looked at from a high level, RAPOC3 is a deeply unattractive pleading. It runs to 44 pages which, even allowing for additional space being taken by deleted material, is far too long given the nature of the case that is being put forward. Other concerns about its form include:

(1) The paragraph numbering and layout are confusing.

(2) Paragraph 25, which purports to contain Mr Bruce's case setting out the representations upon which he relies, runs to 10 pages.

(3) Some, but not all, material that was included in APOC that is no longer relied upon has been left out. It is, therefore, not immediately easy to see how the case has changed.

(4) There is a good deal of seemingly pointless 'tinkering' with the case. For example, paragraph 14 of APOC opened with the words:

"From about the year 2000, the Claimant was kept in ignorance of certain financial arrangements …"

In RAPOC the same paragraph reads:

"Within a few years of his investment, from about the year 2000, the claimant …".

These, and other similar changes, suggest that RAPOC has had input from a number of sources.

26. These complaints might not, taken in isolation, lead to permission to amend being refused. The defendants, however, rely on more fundamental objections including that RAPOC seeks to reintroduce three elements of the original claim that were struck out:

(1) The same, or a very similar, conspiracy claim.

(2) The claim for breach of contract, albeit that there is no prayer seeking damages for breach of contract.

(3) The claim for a declaration that the valuation as an expert of Ms Hennessy is a nullity.

27. Objection is also taken to two new claims that take the focus of the claim back in time. In RAPOC3, Mr Bruce alleges that:

(1) The Compromise Agreement, which settled Mr Bruce's claims against TTAM and made provision for Mr Bruce's shares to be valued by Ms Hennessey, was procured by fraud.

(2) Corporate opportunities for TTAM were diverted and/or concealed and that unjustified payments were made by TTAM with the effect of depressing the value of Mr Bruce's shares.

28. In addition, the defendants submit that:

(1) The allegations of deceit, as they are put forward in RAPOC, are now "prolix and incomprehensible".

(2) The re-amendments fall foul of section 35 of the Limitation Act 1980 and CPR 17.4 because the re-amendments add new causes of action after the expiry of the limitation period and the new claims do not arise out the same or substantially the same facts as the existing claims.

(3) The court should, in any event, exercise its discretion to refuse the re-amendments which are 'late'.

29. Before dealing with these issues, and Mr Bruce's response to them, I must mention two other elements of RAPOC3 that are of real concern.

(1) The fourth defendant, Mr Stones, provided along with Mr Bruce initial capital for the TT venture and, like Mr Bruce, was a non-executive director of TTAM. Mr Stones was also a partner in Wiggin & Co which provided legal services to TTAM and TT. APOC explains in entirely unobjectionable terms in paragraph 2 Mr Stones' involvement. RAPOC3 then seeks to add the following sentence:

"The Fourth Defendant specialised as a lawyer in establishing and managing overseas trusts and other entities, including the trusts of Lord Rothermere of Associated Newspapers Limited (as pleaded at paragraph 13A and 29A below)."

The Civil Procedure Rules have not retained the notion of a pleading being 'scandalous'. However, on any view the reference to Mr Stones' former client is undoubtedly irrelevant, embarrassing and vexatious. It is entirely gratuitous and obviously designed to be oppressive. Mr Adkin rightly did not seek to defend it.

(2) As I have indicated, Penningtons acted for the defendants throughout the material period and a firm of accountants, White Hart Associates ("WHA"), had an involvement with TTAM and TT both professionally and as a joint venture. RAPOC3 does not seek to join the 'professionals' to the claim but a number of allegations are made about them, including at paragraph 24 that the defendants conspired together "(and/or with others, such as their solicitors and/or accountants) to injure the Claimant…" and at paragraph 25(11)dD (sic) that Penningtons and WHA were a party to the failure to disclose material to Ms Hennessy. Again, and rightly, Mr Adkin does not seek to defend the inclusion of allegations that are intended to have a collateral effect.

The effects of the orders dated 25 April 2014 and 5 November 2015

30. The order dated 25 April 2014 struck out the claim in its entirety or, in the alternative, granted judgment for the defendants on the claim. That order was only partially reversed on the appeal. It is plain in my judgment that the appeal was only allowed in respect of the claim in deceit. The claims in conspiracy and contract were struck out at first instance and were not reinstated by the appe
31. Mr Adkin submitted that Mr Justice Norris accepted that with minimal amendment the conspiracy claim could be pursued and did not preclude the possibility of it being included in the APOC. He also submitted that as currently pleaded the claim serves a purpose because it may be possible for Mr Bruce to establish liability against all the defendants in conspiracy but not in deceit, because the latter claim depends upon establishing that the representations were made by, or on behalf of, each defendant. By contrast, and over-simplifying, if Mr Bruce can establish that each defendant was a party to the combination, liability will follow. It is, however, plain both from the judgment, where the judge remarked that the conspiracy claim adds nothing, and from the order, that the entire claim was to remain struck out other than the claim in deceit. It is quite impossible to discern any encouragement in the appeal to the reinstatement of the conspiracy claim.

The conspiracy claim

32. The conspiracy claim appears to be set out in paragraph 24 of RAPOC. This paragraph, with new paragraph 24A which deals with a general allegation of "deceitful concealment", immediately precede the section of the pleading headed "Deceit". Apart from the section of the pleading headed "Loss and damage", there is no further reference to the conspiracy beyond that which is contained in paragraph 24. There is, however, a claim for loss and damage, which is not differentiated from the claim for loss arising from the deceit. Ignoring words that were deleted in APOC, the conspiracy claim is now put in the following way:

"24. The determination by Ms Hennessey of the transfer price was compromised by the deceit by and/or on behalf of the First, Second, Third and/or Fifth Defendants (or some combination(s) of them) and in respect of which the Defendants conspired together (and/or with others, such as their solicitors and/or accountants) to injure the Claimant by unlawful means and/or acted (whether by themselves, and/or with and/or through others, such as their professional advisers) sufficiently in pursuit of a common design to be liable to the Claimant in the tort of deceit, whether as primary tortfeasors or as accessories."

33. I have marked in italics the claim in conspiracy in its original manifestation. The changes, leaving aside those relating to the professional advisers, are limited to (a) substituting "the deceit" for "the fraudulent misrepresentations", (b) adding "and/or with others" and (c) "to injure the Claimant".
34. The Defendants submit that it should be struck out for, amongst other reasons, that:

(1) That part of the claim was struck out and the order dated 5 November 2015 resolving the appeal expressly states that the claim may only be pursued in deceit. The attempt to reinstate it in RAPOC3 is said to be an abuse of the court's process and a breach of the order. Mr Anderson, who appeared for the defendants, accepted that it might not be an abuse if there had been a change of circumstances that warranted the conspiracy claim being revived.

(2) The current claim is in any event defective. As it is now pleaded it does not:

(i) Set out the primary facts upon which the conspiracy is based;

(ii) Explain the role of each conspirator;

(iii) Specify the unlawful means that are relied

upon. It is not clear, for example whether the alleged breach of the compromise agreement is relied on. And if the claim in deceit is relied on the claim does not say whether separate and additional loss is claimed.

Breach of contract

35. Paragraph 20 of RAPOC sets out paragraphs 1.2 and 1.3 of the Compromise Agreement and paragraph 20A sets out a section of the letter sent to the valuer by Mr Bruce's solicitors that specified the financial information relating to TTAM that was to be provided to her in compliance with its terms. If that is intended merely to provide part of the narrative that is essential to understand the claim, it is not objectionable, although paragraph 20A adds unnecessarily to the length of the pleading. However, in the midst of the very lengthy paragraph 25, immediately before the section that says it provides particulars of the representations that are relied on, Mr Bruce's case is put in the following way:

"(11) Furthermore, in failing properly to account within TTAM for the BPS commission and other income to which TTAM was entitled from approximately 2000 to the completion of the sale and in suppressing entitlement to that income, the Defendants and each of them were in breach of Clause 1.2 of the Compromise Agreement in that Ms Hennessy was not "supplied with comprehensive, accurate and current financial information regarding the Company …" and the said failures amounted to knowingly and recklessly making false representations as to financial information regarding the Company constituting deceit." [my emphasis]

36. The original claim made the bare assertion that the valuation was compromised by the Defendants' breach of contract. It sought a declaration that the valuation was a nullity because it was not compliant with the Compromise Agreement and an order for specific performance. The claim in contract was struck out and that decision was upheld on appeal. Mr Justice Norris concluded that any issue concerning the scope of the obligations in the Compromise Agreement was not justiciable (as had been held earlier by Mr John Jarvis QC sitting as a Deputy High Court judge) and that Mr Bruce had no prospect of establishing that he had suffered loss from the breach.
37. Unlike the conspiracy claim, RAPOC3 does not include a claim for damages for breach of contract and Mr Adkin submitted that, despite what is said in paragraph 25(11), no claim for breach of contract is made. However, there is a claim for relief that indirectly relates to the Compromise Agreement. Mr Bruce seeks a declaration the valuation is vitiated by the fraud of the defendants. Mr Adkin accepted that this prayer for relief served no purpose and should not remain in the pleading because, amongst other reasons, setting aside the valuation would inevitably result in Mr Bruce returning the shares he sold. However, there is now no possibility of doing so in light of the reorganisation of the company structure and the sale of the defendants' interests. I was told that the shares have changed hands on two occasions.

The claim in deceit

38. The claim in deceit in APOC was set out in just over three pages. In RAPOC3 it is pleaded over 20 pages and that is before regard is had to the claimant's case about the diversion and concealment of corporate opportunities and unjustified payments in new paragraph 29A which itself runs to five pages.
39. This aspect of the statement of case was the subject of trenchant criticism by Mr Anderson. Without setting out his submissions in full he says:

(1) The claim is repetitive. For example, paragraph 25(4) repeats paragraphs 25(b) and (c).

(2) Paragraph 25(10) contains an allegation that the defendants concealed from the claimant that the BPS income was not paid to TTAM. But that allegation trespasses into territory that Ms Hennessey was required to resolve and has resolved for the purposes of her share valuation.

(3) Paragraphs (a) to (f) under the heading Particulars of Representations can be criticised because:

(a) They begin at (a) with an allegation which does not particularise a representation and refers to non-disclosure of revenues from TTA and TTAM without specifying what those revenues were;

(b) Paragraph 25(a)(A) pleads a misrepresentation the issue that Mr Justice Norris held was not justiciable in this claim.

(c) Paragraph 25(a)(C) alleges that the existence of the private equity plan falsified the negative picture the defendants painted of TTAM's prospects. The allegation is developed in an unfocussed way over two pages with substantial quotations from one document without saying why it is said the statements are false. Paragraph 26A might be a generalised start to providing details of falsity of paragraph 25(a)(C) but paragraph 26(B) then starts on the topic of concealment.

(4) The case set out in paragraphs 26F to 26 L is obscure.

The Compromise Agreement was procured by fraud

40. There is a new allegation in paragraph 24A which appears to direct fire towards the Compromise Agreement. Like much of the pleading, the purpose of the words used is not always obvious.

"24A Pending further disclosure, the Claimant infers that matters were deceitfully concealed from him which would have led him to decline to (i) sell his shares or (ii) enter into the Compromise Agreement and he was thereby induced to enter into the Compromise Agreement by fraudulent misrepresentations. The Claimant will provide further voluntary particulars of this following further disclosure."

41. This allegation may be linked to paragraph 25(11) and possibly to paragraph 29 where the re-amendment refers back to the materiality of representations and/or concealment to Mr Bruce's willingness to sell his shares. There is no claim to rescind the Compromise Agreement and it is the claimant's case that there is no claim for breach of it.

Travel Trust Profits, HMRC & Business Taper Relief

42. Paragraphs 26F to paragraph 29 follow from this heading over six pages although it appears that only the matters set out in paragraphs 26F to 26J relate to the heading. In any event, it is not made clear how exactly those paragraphs relate to the case Mr Bruce wishes to put forward. They appear to be an attempt to provide examples of the assertion set out in paragraph 26K that the defendants were willing "… to say (or consider saying) anything that was in their financial interests without any or any due regard to its truth …".

Diversion of corporate opportunities

43. This topic is dealt with in paragraph 29A. 22 assertions are made concerning the diversion of corporate opportunities and the failure to disclose information to the claimant and Ms Hennessey. However, as the defendants submit, it is unclear from the pleaded case what rights were infringed. In numerous instances it could be that the wrong was done to TTAM. And there is much in part of the re-amended claim that repeats the complaint made in his submissions to Ms Hennessey. It was after all the claimant's complaint about the diversion of opportunities and inflated costs that led to the Compromise Agreement and thence to the share valuation.

Conclusions

44. The court must exercise a broad discretion whether or not to permit an amendment. As always, the court will have regard to the provisions of the overriding objective. A claimant will generally be permitted to bring forward an amended case provided that it is not amenable to a strike out or shows no real prospect of success and is not late. However, a claimant does not have an entirely free hand to overload a claim with allegations with no attempt to focus on the essential elements of the case he wishes to take forward. A claim, whether in its original or amended form, must be readily comprehensible and capable of proceeding to trial at a cost which is proportionate to the value of the claim.
45. Mr Bruce's attempt to reinstate the conspiracy claim is completely misconceived. It is beyond doubt that it was struck out and that no encouragement was given on the appeal to it being reinstated. The remark by the judge that it adds nothing does not need elaboration. And the order made on the appeal is entirely unequivocal. It is also telling that Mr Bruce did not consider at the stage of producing APOC that a conspiracy claim was needed.
46. Mr Adkin submitted that there may be doubts about whether the representations made by Penningtons were made on behalf of the defendants (despite the way it is pleaded) and a conspiracy claim will fix joint tortfeasors who were part of the combination with liability. However, the judgment on the appeal and the subsequent order provide hurdles Mr Bruce cannot climb over. The possible benefit Mr Adkin identifies falls a long way short of justifying the resurrection of the conspiracy claim.
47. Nothing that has happened since the appeal was heard justifies the exceptional step of permitting a claim that has been struck out being reinstated. It is unnecessary to consider whether it is an abuse of the court's process to include it in RAPOC3 because it cannot be pursued without obtaining permission for the amendment.
48. The pleaded case concerning the breach of contract claim is unclear. It is right that no relief is sought by way of damages for breach of contract but the assertion of breach is undoubtedly part of RAPOC3. This illustrates all too clearly the unsatisfactory nature of the pleading. A similar observation can be made about the assertion that the compromise agreement was procured by fraud. It demonstrates a lack of clarity about where Mr Bruce's claim lies. As I have indicated, the same cannot be said of APOC.
49. I need say relatively little about the claim in deceit. RAPOC3 fails to meet all the requirements for a statement of case. There is a theoretical tension between on the one hand the need for adequate particulars of fraud being provided and on the other hand a claim being concisely pleaded. But it is a tension that is readily resolvable as many other claims demonstrate. RAPOC3 reveals (a) the hand of several authors (b) the absence of an editor in chief and (c) Mr Bruce's wish to hold a 'state trial' at which every conceivable element of wrongdoing of the defendants he can dredge up is tried.
50. Leaving aside my concern about the RAPOC3's style and content, there are broader issues that affect the exercise of the court's discretion. They include:

(1) The age of the claim. It was issued well over 5 years ago and will not be tried until 2019 or possibly 2020. It relates to events that took place in 2006 and 2007.

(2) The defendants had to consider RAPOC1 and RAPOC2 in draft before RAPOC3 emerged. The claimant criticises the defendants for being slow to respond to the application for permission to amend and there is some force in that criticism. However, Mr Adkin's submission that had the criticisms now made been made earlier the draft pleading would have been adjusted rings hollow. It seems to me it is very unlikely that RAPOC3 would have been materially improved.

(3) The amendment is properly characterised as being 'late' because if it is allowed it will require both sides to revisit steps already taken. In particular, the defendants would have imposed on them a very substantial additional burden in relation to disclosure given the breadth and lack of focus of the allegations. The impression given by RAPOC3 is that it is intended to be a platform for further wide-ranging disclosure with a view to adding to a claim that is already diffuse.

(4) Some regard must be had to the explanation for lateness. It is said the claimant only found out about some of the matters he wishes to plead from the defendants' disclosure in 2017 and third-party disclosure obtained in May 2018. There is some truth in this but the essence of the case the claimant wishes to make is already in APOC. Some of the detail of his complaints about the diversion of business opportunities comes from disclosure, but the manner in which the information has been deployed is wanting.

(5) APOC advances a claim with a value of approximately £640,000. RAPOC2 put a value of £10 million on the claim. This is a surprising figure. It would mean TTAM had a value in excess of £60 million. RAPOC3 provides no particulars of loss but says a report from a forensic accountant will be provided. In the absence of any clear case on value I am inclined to the view, like Mr Justice Norris, that the claim has a relatively modest value. Were RAPOC3 be permitted to proceed the costs of pursuing the claim to trial would far exceed its value.

51. I consider that ultimately there is one issue for the court to consider, namely should the claimant be given an opportunity to try to improve RAPOC3 in light of the criticism it has faced both from the court and the defendants? It is trite that on an application to strike out a claim, the court will sometimes give the party an opportunity to make adjustments. Mr Adkin's alternative submission is that a similar approach should be adopted here. I bear in mind however that:

(1) The court has not been provided with a draft despite the defects in RAPOC3 being obvious.

(2) The claimant has already produced two earlier iterations of re-amended pleading.

(3) Although in the course of his submissions Mr Adkin indicated some minor adjustments that could be made it is wholly unclear to what extent the claimant is willing to revise RAPOC3.

(4) A further stage is likely to lead to substantial additional cost.

(5) There is already, unlike on the analogous strike out application, a satisfactory statement of case that is capable of going forward to trial.

52. It should not be thought that I am unsympathetic to the claimant. The case he makes in APOC raises serious issues for the Defendants. It might have been possible for APOC to have been bolstered by additional claims in deceit. However, the substance of the claim Mr Bruce wishes to bring is already contained in APOC. On an application for permission to amend, the court may sometimes require some re-drafting as a condition of giving permission to amend. But where the amending party is represented by leading and junior counsel and experienced solicitors, it is not the role of the court to edit a poor quality, prolix and diffuse statement of case. It is one thing to suggest minor changes. With RAPOC3 it is impossible to know where to start.
53. I am satisfied that the court should exercise its discretion against granting permission to re-amend and decline to give the claimant an opportunity to produce a revised statement of case. The claim should now move forward to a trial as it is currently pleaded.
54. I have not addressed the obvious difficulties the claimant faces in relation to limitation despite having received submissions from both sides on the subject. In light of the conclusions I have reached, it is unnecessary to do so but I observe that the claimant would face real difficulties in satisfying the test in CPR 17.4(2).
55. The application for permission to amend will be dismissed. On the handing down of this judgment or at a later date fixed to the convenience of the court and the parties I will hear the balance of the claimant's application and the defendants' application.