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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 >> Mandrake Holdings Ltd & Anor v Countrywide Assured Group Ltd [2005] EWCA Civ 638 (12 May 2005) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2005/638.html Cite as: [2005] EWCA Civ 638

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IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
(MR JUSTICE LIGHTMAN)

		Royal Courts of Justice Strand London, WC2
		12th May 2005

1. LORD JUSTICE MANCE: This is a renewed application for permission to appeal in respect of a refusal on 8th March 2005 by Lightman J to allow an amendment to the claimant's points of claim. The claim, in brief summary, relates to an indemnity in respect of certain liabilities that might be incurred to make compensation payments to investors as a result of the well-known pensions review which was initiated by the Securities and Investment Board on 25th October 1994 and went through a number of subsequent stages.
2. The central issue on which any liability under the indemnity depends is whether the indemnity extends to what have been described as Phase 2 cases, that is payments made in respect of the second phase of the pensions review, which was promoted on 14th August 1998 by the successor to the Securities and Investment Board, that is the Financial Services Authority. That issue came to a head at the end of 2001 and the beginning of 2002 and led then, as a result of letters from the defendant's solicitors denying liability, to the issue of the present proceedings in June 2003.
3. The proceedings as issued claim simply a declaration that the defendant's liability under the relevant deed extended to Phase 2 claims; alternatively, rectification of the deed so as to extend the defendant's liability to such claims; an account and enquiry; the payment of sums found due on the taking of such account and the making of such enquiries; and damages for breach of contract.
4. However, after the matter had proceeded for some 18 months, the present proposed amendment was announced on 1st December 2004. By that stage, there had been an application for the central issue of construction to be dealt with as a preliminary issue, and that, I understand, was not ordered. There had been in November directions agreed, which gave a trial date of July 2005, but there had been no discovery or inspection. There had been service of a defence and reply and a Scott schedule, but there was still work to be done before the trial.
5. The proposed amendment was announced, and that led to a refusal of consent by the defendant's solicitors and an application therefore to the court, and that was the application that came eventually before Lightman J.
6. The main part of his judgment is concerned with the question whether the proposed amendment raises any cause of action in law. The proposed amendment is a claim that, by reason of the defendant's failure to meet their obligations under the indemnification provision in the deed, the claimants lost the opportunity to expand the business of the company, Mandrake, to which the indemnity related, and have as a result been deprived of a very substantial increase in that company's value.
7. Particulars have been given in the way of further information, which satisfied Lightman J as to their detail, and include allegations that this was a company which was in a turn-around situation to the knowledge of the defendants, so that the receipt, as and when due, of any indemnity would be of importance to the development of its business and to the success of the claimants, who had taken it over, in turning it round.
8. Lightman J concluded, and I think that it was effectively agreed before him, that he was bound by authority in this court, particularly Sprung v Royal Insurance [1999] 1 Lloyd's Rep IR 111, that a claim for damages arising from a failure to meet an indemnity is not recoverable in law, since a failure to meet and indemnity will be classified as a failure to pay damages. Sprung is, it may be said and as the judge acknowledged, a somewhat controversial decision, based itself on a somewhat technical rule of insurance law, that payments under indemnity contracts sound in damages, and it is recognised that it involves a point which could well be regarded as one which the House of Lords should at some appropriate opportunity have the opportunity of reconsidering.
9. Lightman J came to the conclusion that that was not a sufficient basis for him to give leave to amend and that he ought to, on that ground alone, dismiss the application to amend and leave it to the Court of Appeal to decide whether the prospects of success in the Court of Appeal and the House of Lords were sufficient, or whether there were other sufficient reasons to give permission to appeal to the Court of Appeal.
10. It might be said, in the light of the authority which he thought relevant, Baird Textiles Holdings Ltd v Marks and Spencer Plc [2001] EWCA Civ 274, and because Sprung is itself a Court of Appeal authority, that the Court of Appeal would, if he was right on this point, find itself in the same position as him and have to leave it to the House of Lords to decide whether leave to amend should be given.
11. Baird was not a case of leave to amend, it was a final decision as to whether or not a claim could stand. Be that as it may, the alternative reason which Lightman J gave was essentially a managerial reason of a nature with which I recognise that this court would be reluctant to interfere. It was this:

"It is common ground that if the proposed amendment is made pursuant to permission granted by the Court of Appeal, the trial date will be lost. The timetable for trial is already tight and there is no prospect that the parties can prepare to trial on the New Claim in time or that the present time estimate can be kept to. This is so even if I were to adopt the claimants' suggestion that I limit the issues at trial to foreseeability (and exclude the issue of causation) of damage, a course which is in my judgment very unattractive and should not be foisted on Countrywide."

12. He then went on to say:

"The loss of this trial date [that is the July date] is a serious prejudice to Countrywide [the defendants]. There is also prejudice to other litigants awaiting trials of their actions. In my judgment this fact combined with the totally unexplained delay in making the claim between January 2002 and December 2004 ... make it only just that, independently of the ground that the proposed amendment is bad in law, this application should be refused."

13. He concluded:

"My decision on this ground makes it unnecessary for the Court of Appeal to consider the question whether the New Claim is bad in law."

14. Notwithstanding the force in that, I have come to the conclusion that there is a sufficient prospect of success on this application to justify it being heard inter partes with any appeal to follow and be determined at the same time, and that is the order which I would propose.
15. I say that for three reasons. Firstly, it seems to me arguable that the judge should not have left it to the Court of Appeal to grant permission. As I have indicated, it seems to me that there may, contrary to what the judge said in paragraph 16 of his judgment, be a distinction between an application to strike out the whole action and an application for permission to amend. Accordingly, it does not seem to me inevitable that the trial date would have been lost if the matter had been considered and an amendment had been granted by Lightman J.
16. Secondly, and more substantially, it seems to me that the judge may have mis-stated, and on what we have been told by Mr Lowe did mis-state, the claimant's suggestion, when he recorded it as being that he limit the issues at trial to foreseeability and exclude the issue of causation. Mr Lowe has told us that the issue of law, namely whether there can ever be a claim for loss based on failure to pay an indemnity, was the issue which he proposed for preliminary determination, with all factual issues -- including issues as to foreseeability, causation and loss -- being stood over.
17. It does not seem to me that that would have necessarily involved any adjournment of the trial date, and if there had been that order, then this issue, which everyone recognises is one for the highest courts, would have been determined as a preliminary issue, and its factual aspects, which are largely different from the other factual issues in this litigation, would have been stood over. I am not sure whether the judge has, in his reasons, addressed that possibility accurately.
18. Thirdly, I am not entirely convinced by the proposition that the loss of the trial date was in itself a very serious prejudice to the defendants such as to justify the refusal of an otherwise good claim in the circumstances of this case. That is despite the still wholly unexplained lateness of the proposed amendment, which Mr Lowe has frankly said that he cannot satisfactorily explain. However, I recognise that if that point was the only point, there would be a difficult task in the way of Mr Lowe.
19. It seems to me, however, looking at the matter overall, that there is just sufficient to justify a different course from that which my Lord proposed as the single judge, and that is the order I would make, therefore: that the matter be adjourned for further hearing inter partes with the substantive appeal to take place at the same time if permission is given. It may also be that the Court of Appeal can deal with the questions relating to the maintaining of the trial date, as Mr Lowe has indicated.
20. For that reason, I would order that the matter be expedited and come on in the remaining two weeks of this term, so that consideration can be given as to whether it is possible after all to keep the July date if the amendment is granted.
21. LORD JUSTICE JACOB: I agree.

Order: The matter is adjourned, to be brought on for an expedited hearing before the end of term, with the substantive appeal to follow if permission is granted.