Plaintiff investing in company – Company developing site – Plaintiff claiming company had been promised lease of site – Plaintiff issuing writ – Plaintiff applying for leave to amend out of time – Whether new claim arose out of substantially the same facts – Whether reasonable cause of action – Deputy judge allowing application – High Court allowing appeal – Court of Appeal dismissing plaintiff’s appeal
The plaintiff wanted to develop Withdean Stadium, Brighton, which stood on land belonging to the defendants into a centre for tennis and other sporting uses. The Brighton Squash Rackets Club and the Hove Athletics Club used the facilities. The plaintiff entered into negotiations with the defendant council. He claimed that in the course of the negotiations he was advised to form the Rackets Club into a company limited by guarantee, in order to make funds available for the project, through which he would personally control the venture. The plaintiff claimed that a 31-year lease was promised to the company on completion of the development and that, in expectation of the lease, he had obtained a loan, secured on his house, which was invested in the project. It was claimed that in March 1988, when the development was substantially completed, the defendant, in breach of their contract, refused to grant the lease and as a result the Rackets Club was forced into liquidation. The defendants took possession of the premises and operated it successfully. The plaintiff complained to the Mayor of Brighton about the way he had been treated and issued a writ claiming against the defendants damages for fraudulent misrepresentation and deceit. Subsequently the plaintiff sought a restitutionary remedy on the basis of unjust enrichment and applied under RSC Ord 20 r 5 for leave to amend out of time to add a claim for £184,000 laid out personally in expectation of the lease. Leave to amend was granted in the county court, but the High Court allowed the defendants’ appeal against that order and struck out the writ as disclosing no reasonable cause of action. The plaintiff appealed and contended, inter alia, that the court should be prepared to look beyond the endorsement on the writ and consider other evidence bearing upon the dispute between the parties.
Held The appeal was dismissed.
1. Although the plaintiff’s letter had substantially indicated his grievance, reference to the defendant’s knowledge to asses what claim had been made previously was not appropriate because the plaintiff was seeking to add a new cause of action which was plainly different from that contemplated in the original writ. Therefore the new claim did not arise out of substantially the same facts as were already in issue and leave to amend had been correctly refused: see Sterman v EW & WJ Moore (a firm) [1970] 1 QB 596, distinguished.
2. Although the defendant had been enriched at the expense of the Rackets Club, the claim would have been hard to make out since there was no sufficient nexus between the plaintiff and the defendants, the club was a separate legal entity which was not entitled to ask that the corporate veil be lifted, and there was no distinction between the plaintiff and any other creditors of the club. However it was not an appropriate case in which the jurisdiction to strike out should have been exercised.
David Foskett QC and David Hodge (instructed by George H Coles & Co, of Hove) appeared for the appellant; David Matthias and William Bojczuk (instructed by the solicitor to Brighton Borough Council) appeared for the respondents.
