Civil proceedings – Amendment to defence – Transfer of property with declaration of trust – Appellant bringing claim for sale of property – Respondent seeking permission to amend defence at late stage in response to indications from trial judge – Permission given for amendment to advance case of undue influence – Permission refused for adjournment to allow appellant to obtain evidence on undue influence point – Trust deed set aside – Whether judge erring in approach to amendment and evidence – Appeal allowed
In 1996, the respondent’s father transferred a property to him by deed of gift. In reality, the transfer to the respondent was not a gift but was a transfer for value. At the same time, the respondent and his father executed a trust deed to the effect that the respondent held the property on trust for himself and his son, the appellant, in equal shares.
In 2009, the appellant brought proceedings seeking an order for the sale of the property. The respondent initially asserted that his signature on the trust deed was a forgery. The judge found that the respondent had signed the deed but, during the course of the parties’ closing submissions, he expressed concern as to whether the respondent had understood the transaction into which he had entered. He permitted a consequent amendment to the respondent’s defence to allege that his signature had been obtained by the undue influence of his father. He acknowledged that the amendment was very late but considered that justice had to be done and that the consequences could be dealt with in costs. However, he refused the appellant’s application for an adjournment to obtain further evidence on the undue influence issue, including evidence as to the value of the property in 1996. The judge found that the amended defence was made out and set aside the trust deed accordingly.
On appeal, the appellant sought to challenge the judge’s decisions to permit the amendment to the defence and refuse the admission of further evidence. The appellant contended that the amendment was inconsistent with the existing defence and with the evidence that the respondent had given at the trial, and that there was no evidence as to why the new case had not been put forward previously.
Held: The appeal was allowed.
(1) A court should be less ready to permit an amendment where it was sought to be introduced at a very late stage. The party seeking to amend in those circumstances had to discharge a very heavy onus of justifying the amendment and should support its case on that matter with evidence as to why the application was made at such a late stage: Swain-Mason v Mills & Reeve (a firm) [2011] EWCA Civ 14; [2011] 1 WLR 2735 applied.
The amendment in the instant case had been provoked by the judge’s observations. Although a judge could give indications to a party about how to conduct his case without seeming to be partisan, the judge had to leave it entirely to the parties as to whether they wished to follow up on the indication. The judge had been entitled to ask whether the respondent proposed to run any new case following the hearing of the evidence. However, he would have been going beyond his function if he had suggested in any way that the respondent ought to run any particular case.
Having given what he thought was a helpful indication, the judge was then faced with having to reach an impartial decision on a consequent application to amend the pleadings to introduce the point he had suggested. When such a thing happened, the judge had to bear in mind that the point he had thought of was not necessarily a good point, especially if it had not occurred to the parties themselves. He had to be satisfied that it was in the interests of both parties to accede to the amendment and that it was proper in the exercise of his discretion to permit that amendment.
The amendment should not have been permitted in the instant case. The question of fairness had to be considered in the case of a late amendment and it was necessary to strike a balance between the parties. Any amendment would result in the appellant having to take steps to meet the new case. The case could not be resolved at the trial, which had taken place and which had occupied many days, placing substantial strain on the parties and giving rise to substantial costs. The relevance of those factors was not confined to whether further evidence should be admitted but extended also to the question of whether permission to amend should be given at all. Further, the amendment was very late and without satisfactory explanation. Although refusing the amendment would mean that the case of undue influence would not be heard, the respondent had not intended to run that defence in the first place and had sought permission to advance it as a tactical decision made in the light of the judge’s indications. Moreover, there was no evidence that the respondent’s father had instructed him to execute this trust deed or that undue influence had been exerted in that regard.
(2) Even assuming that the judge’s exercise of discretion to permit the amendment had been unimpeachable, he had erred in not giving an opportunity to the claimant to test the evidence on undue influence. The respondent was advancing a new case and the appellant was also entitled to formulate a case as to whether, despite what might appear on the face of things, the transaction was not disadvantageous and was capable of a perfectly proper explanation. Evidence as to the value of the property in 1996 was relevant to that issue. The judge had erred in making a finding on it without giving an opportunity to the appellant to consider his case and put forward any fresh evidence on the point.
Nigel Woodhouse (instructed by Simon & Co) appeared for the appellant; Lloyd Sefton-Smith (instructed by Beverley Morris & Co) appeared for the respondent.
Sally Dobson, barrister
