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Case No: QBENI 2000/0064/A2

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION (MR JUSTICE GRAY)

Royal Courts of Justice

Strand, London, WC2 A 2LL

Date: 10th October 2000

Before:

LORD JUSTICE POTTER

LORD JUSTICE MAY

and

LORD JUSTICE TUCKEY

 

SX HOLDINGS LIMITED
Appellant

- and -

(1) SYNCHRONET LIMITED
(2) STEVEN DAVID LAITMAN
Respondents

David Ashton Esquire (instructed by Clarkson Wright Jones, Kent, for the appellant)

Edmund Nourse Esquire (instructed by Rooks Rider, London, for the second respondent)

Judgment: Approved by the court for handing down (subject to editorial corrections)

 

  Potter LJ:
  INTRODUCTION
1.   This is an appeal from the judgment and order of Gray J made on 6th October 1999 and sealed on 14th October 1999, whereby he dismissed an appeal from the order of Master Eyre dated 2nd August 1999 ordering that the claimant's Writ and Statement of Claim be struck out against the second defendant, the action being thereby dismissed against him. Master Eyre's order also refused permission to the claimant to amend his Statement of Claim. The claimant was ordered to pay costs.
2.   The claimant seeks to set aside the judge's order and to be permitted to amend the Statement of Claim in accordance with a draft attached to the Notice of Appeal.
   THE FACTUAL BACKGROUND
3.   The claimant was the owner of a fifty-one per cent shareholding in a company called Creative Overload Limited ("COL"). The business of COL was that of a web development company set up to provide IT support to clients. On 29th May 1998 the claimant entered into a sale and purchase agreement with the first defendant, Synchronet Limited, of which the second defendant was a director and a principal shareholder, whereby the first defendant agreed to buy the claimant's shareholding in COL for £150,000. The agreement was negotiated by the second defendant. The completion date was originally agreed to be 15th June 1998, but by further agreement it was postponed to 26th June 1998. Pending completion the claimant permitted the first defendant to carry on the business of COL. It took over the order book, ran COL's bank account and carried out a variety of other activities which are set out in paragraph 7G of the Statement of Claim. The blank stock transfer forms, together with a number of other documents, were provided by the claimant to the solicitors for the first defendants to be held to the claimant's order pending completion taking place.
4.   The precise sequence of events, as reflected in the correspondence before us was as follows. On 12th May 1998 the claimant wrote to the first defendants solicitors returning a copy of the sale agreement duly signed by a director of the claimants together with documents (including copy entries of the register in relation to the transfers, copies of the share certificates and copies of the stock transfer forms) required under section 6.3 of the Sale Agreement, expressly stipulating that such documents were to be "held to our order pending completion".
5.   On 10th June 1998, the first defendant's solicitors sent a letter to the claimant recording his instructions that all parties now wished to complete as at 10th June, although payment would not be made until 26th June. It asked for confirmation that this was agreed to be so and stated:
  
   "I will hold all the documentation you sent me strictly to your order until you confirm that you have received the completion monies. At that time everything will then be dated 10th June."
   From then on the documentation referred to in that letter continued to be held to the order of the claimant. It was also agreed that there should be "completion" on 15th June but that payment should be delayed until 26th June 1998. In fact the delay extended beyond that date. On 28th July 1998, the solicitors for the first defendants sent a fax to the claimant saying:
  
   "I confirm your telephone conversation today but I inform you that my instructions were to complete the sale and purchase of the fifty-one shares in COL as soon as possible. I also confirm I have asked my client to transfer to me the sum of £150,000 as it is my view that the sale and purchase has not yet been completed. Interest will not be payable on the £150,000. Please confirm your agreement."
   That fax set out the documentation which the sender believed to be required to complete the sale and purchase, including resignations of directors, confirmation that the authority of the bank had been revoked and appropriate completion of relevant board minutes. On 5th August 1998 the claimant wrote to the first defendant's solicitors saying:
  
   "Further to your communication of 31st July and our subsequent telephone conversations .... we return herewith the requested documents duly completed. As agreed these documents are to be held by Rooks Rider [i.e. the first defendant's solicitors] to our order and only released at our instruction pending receipt of £150,000 cleared ...."
6.   As already indicated the purchase price had not been paid on the date it was originally due. That was because the first defendant contended after going into possession that the shares were in fact only worth some £50,000. There was then an agreed reduction in the purchase price payable to £95,000. The claimant's letter dated 4th September 1998 confirmed that reduction and stated:
  
   "Upon payment of £95,000 ......... the documents held by us to the order of SX will be released and SX will co-operate in executing such other documents as are required to complete the agreement."
   However, again the £95,000 was not paid by the first defendant.
7.   On 20th November 1998, the price still being unpaid, the claimant wrote the first defendant a letter treating the non-payment of the price as a repudiation by the first defendant of its obligations under the sale agreement and accepted that repudiation, claiming substantial damages. By letter of the same date to the first defendant's solicitors, the claimants asked for the return of all the documents previously forwarded to them to be held to their order. That was duly done, as confirmed in a letter from the first defendant's solicitors of 23rd November 1998.
8.   On 22nd December 1998 the claimants commenced proceedings, not for the unpaid price, but for damages for repudiation of the agreement, such damages being pleaded as the amount of £150,000 originally agreed which was said to be the value of the shareholding as of the date of completion (thus ignoring the subsequent agreed reduction to £95,000). On 28th December 1998 judgment was entered in default against the first defendant. However, the first defendant is insolvent and that judgment remains unsatisfied and is worthless.
THE CLAIM AGAINST THE SECOND DEFENDANT
9.   As against the second defendant, the claim in its original form was for damages for fraudulent, alternatively negligent, misrepresentation. The representations relied on were, and have since remained pleaded as, express or implied representations that, on the basis of a financing agreement with 3i, a venture capital company, the first defendant was in a position to pay and/or intended to pay the price on or within a brief time after the completion date. The relevant paragraphs read as follows:
  
"12.   By entering into the Agreement the First Defendant as Purchaser impliedly represented to the Plaintiff as Vendor that it had the present intention of paying for the said shares on the date of completion or, alternatively, on any agreed date of payment.
13.  By signing the Agreement on behalf of the First Defendant on or about 8 June 1998 the Second Defendant himself impliedy represented to the Plaintiff like terms set out in paragraph 12 above.
14.  Further, on 8 June 1998 the Second Defendant sent the following e-mail to one Gary Haycock-West, a director and Plaintiff:
  
  We can sign - already signed our side - but the funds can't be released until the process is completed due to the fact that our agreement with 3i is on an equity basis.
  If you are happy to complete and wait a couple of days for the funds, we can probably do that - I would need to check. Let me know.
15.  By his said e-mail the Second Defendant expressly or impliedly represented:
  
15.1  that there was in existence an agreement between the First Defendant and 3i that is to say, Investors in Industry (who are well-known venture capitalists) whereby 3i was to provide funds for the First Defendant's purchase of the said shares;
15.2  such funds would be released by 3i to the First Defendant as soon as the Sale Agreement had progressed to its conclusion;
15.3  that any further process still to be carried out as a matter of formality would take place within a couple of days;
15.4  that if the Plaintiff agreed to complete forthwith, that is to say, agreed the Completion Date under the Agreement and if thereafter the Plaintiff agreed to wait a couple of days, the First Defendant would pay the said purchase price £150,000
  
15.4.1   within a couple of days of 8 June 1998 or, failing that,
15.4.2  within a very short space of time.
16.   The Second Defendant intended the Plaintiff to rely on the said representations and in reliance thereon and induced thereby the Plaintiff agreed to complete the Agreement on 8 June 1998 and agreed to payment thereunder being deferred ... as is evidenced by the e-mail sent by the said Haycock-West to the Second Defendant on 8 June 1998 in the following terms:
  
   "I have just got your msg, yes we would like to go ahead today, with a funds transfer no later than Friday as you previously indicated.
17.   In further reliance on the said representation and induced thereby the Plaintiff on or about 15 June 1998 agreed to vary the Completion Date to 15 June 1998 and to defer the date of payment to 26 June 1998."
10.   The claimant's case pleaded elsewhere, was that the first defendant was not in fact in funds and/or had no intention of paying on the due date or thereafter. It has alleged that the financial position of the first defendant was, or at least should have been, known to the second defendant. At paragraph 20 of the original version of the Statement of Claim it was alleged that, had the claimant known the true position, it would not have entered into the agreement and has thereby suffered loss and damage, particularised in the sum of £150,000 said to have been the value of the shareholding.
THE DECISION OF MASTER EYRE
11.   When the matter came before Master Eyre he dealt with it shortly on the basis that the claim for damages as then pleaded was based on the allegation that the first defendant became the legal and beneficial owner of the shares whereas the body of the pleading asserted that was not so. His reasoning was not set out. He simply stated that he accepted the submissions of the second defendant. These are apparent, not from the judgment of Master Eyre but from the judgment on appeal, namely that the damages recoverable in an action for misrepresentation were the amount necessary to restore the claimant to the financial position he would have been in if the misrepresentation had not been made and not to the position he would have been in had the misrepresentation been true. The submission of Mr Nourse was that, since the agreement was never executed, the shares remained held to the order of the claimant and, the claimant having accepted the first defendant's repudiation, ownership of the shares was never transferred to the first defendant, the claimant remaining in the same position as owner of the shares as it was before the misrepresentations were made. Thus no damages could be recovered upon the claim as then pleaded, nor on the basis of a reformulated amendment tendered to, but disallowed by, the Master, on the grounds that it was made too late and was in any event inconsistent with the pleaded case.
THE DECISION OF GRAY J
12.   The judge upheld the Master's reasoning in striking out the pleading in its original state. He then turned to consider the appeal upon the basis of an amendment to the Statement of Claim which was proffered to him and in respect of which he was asked to grant leave.
13.   By that amendment the claimant pleaded as follows:
  
"17A   Further or alternatively, the plaintiff in further reliance on the said representations and induced thereby permitted the First Defendant and/or the Second Defendant to take full control of the company and its assets on or about 15 June 1998 and further permitted this state of affairs to continue until 20 November 1998 ..."
   Particulars of the defendant's taking control were then sent out to the effect that the second defendant and a Mr Davies (who were directors of the first defendant) acted as de facto directors together with Stewart Dennis the remaining director of COL running the company and managing its affairs, including taking over its proprietary rights, its technology, its order book and its trade with customers, relocating its business to other offices, running its bank accounts, paying the salaries of employees and holding out to third parties that COL formed part of the group to which the first defendant belonged (the Synchronet Group) in an Executive Summary of the group dated 18th June 1998 and presented to Bank Paribas.
14.   At paragraph 20, there was added the allegation that, had the claimant known the true position as to payment at the outset, he would not have permitted the first and/or the second defendants to obtain control of the company, as a result of which it had suffered loss and damage. The loss alleged was that, over the period when the first and/or second defendant was managing the affairs of COL the value of the 51% shareholding diminished from £150,000 to a position where it was worthless. The judge held that this of itself did not cure the position for two reasons. First, the effect of the pleaded representations made on 8th June 1998 was that the first defendant could or would pay the price on about the completion date originally agreed of 15th June 1998 and thereafter 26th June 1998. It was common ground that payment was not made on either of those dates and therefore, as from 26th June 1998, at least, the representations relied on were in effect "spent" the claimant having known as from that date that payment had not been made, he being free as from that date, still being the owner of 51% of the shares, to retake possession of the company. However, he chose not to do so with knowledge that the price was still unpaid.
15.   Second, and the judge described this as a more formidable objection, the case as reformulated in paragraph 20 so as to overcome the difficulty that the claimant remained the owner of the shares throughout, nowhere alleged or explained how it was said that the diminution in the value of the 51% shareholding was attributable to any act or omission on the part of the first or second defendants, or the servants or agents of either of them. Nor did it plead any other particulars or state any case in support of the bare assertion that the value of the shares (which depended on the assets of the company) were worth £150,000 at the date of purchase but nothing at the date of repudiation. The judge observed that when, in the course of the argument, he had asked Mr Ashton how he intended to establish that the diminution in value was caused by some act or omission on the part of the first or second defendants (as opposed to some event or difficulty with which the company would have been confronted in any event if its management had remained in the hands of the plaintiff) Mr Ashton was constrained to reply that he did not know, but that discovery might reveal it. The judge observed:
  
   "In my judgment Mr Nourse is right when he contends that in a case such as the present it is for the claimant to plead at least in outline how it is that the loss is said to have been caused by some act or omission on the part of the first or second defendants. I consider that this submission has all the greater force given that this is a case which is based on alleged fraud on the part of the second defendant."
   The proffered amendment was therefore rejected and the claimant's appeal dismissed.
THE ISSUES ON APPEAL
16.   The issues argued before the judge have been re-canvassed upon this appeal. I have been persuaded by Mr Ashton for the claimant that, bearing in mind that the application was made on the grounds that the claimant failed to disclose any cause of action, the judge was in error to hold that the effect of the representation (s) was necessarily "spent" by the passing of the date specifically agreed for payment i.e. 26th June 1998. The representation as pleaded in paragraph 12 of the amended Statement of Claim asserted a (false) representation that the purchaser had "the present intention of paying for the said shares on the date of completion or, alternatively on any agreed date of payment" (see paragraph 9 above). Thus, assuming that (as also pleaded) the claimant relied on that representation up to 26th June, there was no reason to suppose or hold that he did not continue to do so for a period thereafter and/or up to the date of rescission on the basis that the original intention to pay for the shares on completion was genuine and well founded and that the excuses for non-payment advanced by the first defendant in correspondence were advanced bone fide and on a properly founded factual basis. While it might well prove to be the case at trial that after 26th June the claimants' further actions were based upon commercial considerations other than reliance upon the defendants' original representation(s), it was not right so to assume at the stage of an application to strike out.
17.   Further, the allegation being one of fraud, the measure of damages recoverable is one based on causation and not upon foreseeability: see Doyle v Olby (Ironmongers) [1969] 2 QB 158 per Lord Denning MR at 167B-C. In this case Mr Ashton has argued that the judge wrongly accepted the simplistic argument of Mr Nourse that, having let the defendants in to run COL (which he does not dispute happened prior to 26th June), it was open to the claimant after that date to retake possession of the company (being still the owner of its shares), any damage subsequently sustained to the value of those shares being the result of the claimant's failure to do so and thus being irrecoverable. Mr Ashton has submitted that, once the claimant let the defendants into possession, the nature of the handover was such (see paragraph 12 above) that the claimants were "locked in" to the sale and were effectively commercially obliged simply to press for completion, unless or until it became quite clear that no payment would be made in November 1998.
18.   That being so, Mr Ashton relies by analogy on the observations of Lord Browne-Wilkinson in Smith New Court v Scrimgeour Vickers [1997] AC 254 at 267. In that case a claimant was fraudulently induced to purchase shares which had already severely diminished in value by reason of another unconnected fraud unknown to the parties. At trial the defendant asserted that the normal measure of damage in such cases was the full price paid by the claimant, less credit for any benefit received as a result of the transaction, which benefit was the market value of the property acquired as at the date of such acquisition. It was held however that it was not appropriate to apply the general rule in cases where either the misrepresentation has continued to operate after the date of the acquisition of the asset so as to induce the claimant to retain that asset, or where the circumstances of the case are such that claimant is, by reason of the fraud, locked into the property. A claimant is "locked in" if he cannot realise an asset despite his efforts or if the asset is not readily marketable: see p.265D-F.
19.   In my view, it is arguable on the facts as pleaded that this was a case where the claimant became locked into a transaction where control of the company had been handed over on the basis of the original representation, in circumstances where it was reasonable for the claimant to continue to press for completion rather than to seek to take back control of the company. Accordingly I would hold that the judge was wrong to hold that the cause of action would necessarily be defeated on the basis that the representation was "spent" by 26th July.
20.   That said, however, I consider that the judge was correct to hold that the case on damage was insufficiently pleaded. Mr Ashton's position before us was to repeat his frank admission made to the judge that, prior to discovery he was unable to identify any act or omission of the defendants which had reduced the value of the shares in his hands, but he submitted that he was entitled to seek discovery to this end, prior to which it was enough for him simply to assert that the market value of the shares at the date of the sale was £150,000 (the price originally agreed) but that, by November 1988 i.e. some six months later they were valueless, the burden resting upon the defendants to show that they did nothing to reduce the value of the shares in the interim. He relied also upon the principle that, if there is a real possibility of evidence becoming available to a claimant by disclosure of documents or by cross-examination which are likely to support the claimant's case, it is wrong to strike out the claim summarily: see Three Rivers District Council v Bank of England (No.3) [2000] 2 WLR 15, per Hurst and Robert Walker LJJ at 85E-86C and per Auld LJ at 180F.
21.   I recognise and accept that principle. However, it seems to me that, as the matter stood before the judge, no case was advanced as to a real possibility of such evidence emerging, in the sense of any factual basis or other identified probable reason as to why the value of the company's assets had deteriorated as between June and November. In this connection the first point to note is that, while there is no reference to the matter whatever in the Statement of Claim, the parties, had, for reasons which are obscure, agreed that there should be a reduction in the sum available for the shares from £150,000 to £95,000 between purchase and rescission (see paragraphs 6 and 8 above). Thus, even on the basis that the price agreed to be paid by the plaintiffs should be taken as prima facie evidence of the market value of the shares at the time of the agreed sale, a considerable question mark hangs over the pleaded figure of £150,000.
22.   The second point to be made is that, at the outset of this appeal, the claimants indicated that they now pursue the claim against the second defendant solely on the basis of damages for deceit, the outcome of which will depend entirely upon the question of value and whether or not, at the time the plaintiff resumed control of the company, the shares were in fact worth any less (in terms of the assets of COL and its market opportunities) or whether, for instance, any reduction in value was simply due to a general loss of confidence in the market for dot-com companies engaged in the kind of activity which formed the business or prospective business of COL. With no particulars or case advanced in this respect, and no allegation or inference of dereliction or incompetence pleaded on the part of the defendants in the course of administering the company, the claim is in substance no more or less than one for damages for loss of bargain, appropriate to a claim in contract but not in tort. The position remains that without the pleading of such particulars, or at least an outline of the claimant's case on damage, there is nothing to demonstrate that any amount is necessary to restore the claimant to the position it would have been in if the misrepresentation had not been made, or that any expenditure has been incurred or disadvantage suffered by the claimant as a result of the claimant's handing over control of the company to the defendants between June and November. In those circumstances, I consider that the judge was entitled to take the view that he did, namely that the recast amendment placed before him was still inadequate.
23.   Finally, I turn to a point which has been raised on this appeal for the first time and is relied on by Mr Nourse following the decision of this court in Standard Chartered Bank v Pakistan National Shipping Corporation [2000] 1 Lloyds LR 218. In that case the plaintiffs ("SCB") claimed against the defendants ("PNSC") damages for deceit and/or negligent misrepresentation arising out of the tendering of falsely dated bills of lading to SCB on which SCB relied in paying a company called Oakprime monies due under a letter of credit. SCB also sued Oakprime and its director and principal shareholder, Mr Mehra, who at all times acted on Oakprime's behalf, inter alia for damages for deceit, he having persuaded PNSC to authorise signature of the false bill of lading when both knew it to be false, Mr Mehra acting for his own and Oakprime's financial benefit and PNSC knowingly becoming party to the fraudulent scheme to present the bills for its own financial reasons. The case pleaded against Mr Mehra was (as it is against the second defendants in this case) that by making or causing to be made the false representations relied on, he was guilty of deceit.
24.   In his judgment, at paras 62 and 63 on p.230, Aldous LJ (with whom Evans LJ agreed) held that, bearing in mind the need to preserve the pre-eminence accorded to the separate legal personality of a company under company law and the need to apply the principles of tortious liability strictly in accordance with that rule, the case for the personal liability in deceit of Mr Mehra was not made out, in circumstances where the representations relied on were all made in documents tendered in the name and/or on behalf of the company and were so treated by SCB. He held that, in order to establish the personal liability of a company director in such circumstances one of two additional elements had to be pleaded and established. First, an assumption of personal liability, as to which Aldous LJ found none had been pleaded or demonstrated (see paras 10 and 19 at pp.233 and 235); or second, a situation in which the director procures and induces another (the company) to commit the tort (see paras 20-22 at.p.235) which basis of liability had not been pleaded (see para 23 at p.235-6). As to the first point, the court placed heavy reliance upon the exposition by Lord Steyn of the position in relation to liability in negligence in Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830 at 834-835. Aldous LJ stated (para 18 at p.235)
  
   "... Lord Steyn had in mind that the cause of action relied on was negligence. However the principles stated are applicable to other torts, in particular to deceit. There must be an assumption of responsibility such as to create a special relationship by the plaintiff with the director or employee himself. Whether that exists is to be judged objectively with the primary focus on things said and done by the director or employee. It is necessary to enquire whether the director conveyed directly or indirectly to the plaintiff that he assumed a personal responsibility towards the plaintiff."
25.   Mr Ashton has argued with force that, in cases of fraud and deceit, it is by no means easy to see as a matter of policy or logic why the hegemony to be accorded to the principle of company law concerning the separate personality of companies should lead to a 'let out' of this kind for an individual who knowingly defrauds another in the name of a company in which he is interested, for his own financial benefit. Whereas liability for negligence is a liability imposed in respect of inadvertent damage caused to one's 'neighbour' and/or upon the postulate that the defendant has assumed a personal responsibility towards an injured claimant, liability in deceit is imposed on the basis of harm deliberately (or recklessly) caused by a representor to a 'targeted' representee. In this connection I observe that, in another context, Lord Steyn has made clear the strength of the rationale, in terms of deterrence and morality, which underlies the imposition of wider personal liability upon a defendant who is an intentional wrongdoer than that which is imposed upon one less blameworthy in the sliding scale of civil damages: see the Smith New Court case at p.279. Thus there is much to be said for the view that there are strong countervailing reasons of policy why personal liability should not be avoided simply on the basis that the representation was purportedly made, and understood to be made, in the representor's capacity as a company director, particularly when he is the controlling shareholder and moving spirit in relation to that company, use of whose name is adopted as part and parcel of his own fraudulent scheme.
26.   However, Mr Ashton realistically acknowledged that the decision in the Standard Chartered Bank case is a decision of this court and he therefore sought permission in the course of the appeal to amend, in order to plead that the second defendant is liable as a joint tortfeasor for any tort of deceit committed by the first defendant company on the basis that the second defendant procured and induced it (or its solicitors) to make the false representations relied on. That was a course which the claimant sought to take on the appeal in the Standard Chartered Bank case. However, on the basis that the court was there concerned with an appeal following trial, permission to amend was refused as having been applied for too late in a case involving an allegation of fraud (see para 24 at p.236). No such objection is available to the second defendant at this early stage of the proceedings and, in the light of the Standard Chartered Bank decision, such proposed amendment seems to me both necessary and desirable provided that it is otherwise appropriate to permit the case to proceed bearing in mind the overriding objective of the Civil Procedure Rules.
OVERRIDING OBJECTIVE OF THE CPR
27.   For the reasons set out above, the claimant needs permission to amend its statement of case, if it is to pursue what now appears to be its only arguably viable case in law. The question is whether the court should give permission to amend in a situation where the necessary amendments have yet to be formulated in draft and, where such draft will be the fifth attempt on the part of the claimant to plead a case which is not, for one reason or another, liable to be struck out. Further, although I have concluded that the claimant does have an arguably viable case in law, it involves considerable legal and factual difficulties and, if the case is tried to a conclusion, it may well fail.
28.   The court has power to give permission to amend a statement under Rule 17.1 of the CPR. Rule 3 gives the court wide case management powers. The list of powers in Rule 3.1(2) is, by Rule 3.1(1), in addition to any powers given to the court by any other rule or practice direction. By Rule 3.1(3), when the court makes an order, it may make it subject to conditions, including a condition to pay a sum of money into court; and the court may specify the consequences of failure to comply with such order or condition. The overriding objective of the CPR is to enable the court to deal with cases justly.
29.   I have considered whether in this case justice to the second defendant requires that the court should refuse the claimant permission to amend on the basis that it has had ample opportunity to formulate a viable claim already and that, in failing up to now to do so, it has put the second defendant to considerable expense and occupied substantial court time which could have been devoted to other more deserving cases. Such a step would prevent the claimant from continuing the claim, unless it brought a new action when it would in any event be vulnerable to yet further application by the second defendant to strike that action out as an abuse. On the other hand, it is relevant that, for all its difficulties, the claim as it proposed to be formulated is a claim for procuring a deceit which, if it is a good claim, is a serious matter. It is also relevant that the factual substance of the alleged deceit is already pleaded and that some of the amendments would merely be deleting parts of the statement of case which are not now pursued. On reflection, I consider that the just course for this court to adopt is to allow the amendment, subject to the court being satisfied as to its detailed formulation, but to impose conditions for the protection of the second defendant. The conditions I would propose are that the claimant should pay to the second defendant within a short period a sum (to be determined by this court once we have made an appropriate order as to costs of this appeal) on account of the costs orders in favour of the defendants before the master and the judge and (if made) in this court; and that the claimant should in addition pay into court within a short period the sum of £15,000 to abide the future outcome of the proceedings.
30.   We will hear submissions as to the appropriate costs order of this appeal and as to the appropriate period within which the payments are to be made. If the claimant fails to comply with these conditions or either of them, the action will automatically be struck out, the claimant paying the second defendant's costs to be assessed if not agreed.
Lord Justice Tuckey: I agree
Lord Justice May: I also agree