England & Wales High Court Summarises Factors To Consider In Deciding Whether To Allow Re-Amendment Of Particulars Of Claim

The England & Wales High Court recently handed down its decision in Rose and others v Creativityetc and others [2019] EWHC 1043 (Ch), in which it refused an application by the first and second claimants (the "Claimants") to re-amend the Particulars of Claim. The proposed re-amendment sought a declaration that certain mortgages were rescinded as they were entered into as the result of fraud committed by those controlling the first defendant ("Creativityetc"). In exercising its discretion, the Court provided a helpful summary of several factors it must consider, including the timing of the application and the extent of the amendments, to decide whether it should allow the application.

Background

The Claimants held registered titles to properties on trust for Dreadnought Ltd ("Dreadnought"), which had received loans from Creativityetc. The Claimants gave guarantees in respect of the properties and executed mortgages over part of the land in favour of Creativityetc. In July 2017, Creativityetc brought proceedings against Dreadnought for a debt claim and obtained a default judgment. The Claimants subsequently commenced proceedings seeking to redeem the mortgages.

On 30 April 2018, the Particulars of Claim were filed seeking redemption of the mortgages. They made no challenge to the mortgages' validity or enforceability. Those Particulars of Claim were then amended to allege bad faith on the part of Creativityetc in entering a sale contract in relation to the properties. Following a hearing on 3 August 2018, in which the defendants alleged that sums totalling at least £680,000 were secured by the mortgages, the Claimants realised that the "commercial rationale" for limiting the relief to redemption no longer made sense, as that amount was much higher than they had anticipated. As such the Claimants decided to expand the proceedings to seek to have the mortgages set aside on the basis of misrepresentation.

The proposed re-amendment was substantial: the amended Particulars of Claim were approximately 13 pages long, whereas the proposed re-amended Particulars of Claim extended to over 41 pages. The re-amendment also raised noticeably different matters than were contained in the original and amended Particulars of Claim. The effect of the re-amended Particulars of Claim would have been to downgrade the redemption claim to being an alternative to the Claimants' new principal claim that the mortgages should be held to have been rescinded due to...