[2025] EWHC 2760 (Ch)

Although there are two strands to the amendment, due to the effect of CPR rule 14, they both involve the exercise of a discretion and balancing competing considerations. If an application to withdraw an admission is not needed, there is generally no requirement to provide a full and frank explanation about why the need for amendment came about. Nevertheless, some explanation about why the point in issue was not relied upon previously will be relevant to the exercise of discretion. The application to amend to rely upon the release, in the absence of earlier reliance, calls for some explanation to assist the court in reaching a balanced decision. As I have previously noted, the terms in which the application notice is drafted are unsatisfactory because it is not clear what matters are said to have come to light that provide an explanation why the release was not relied on previously. Ms Swan’s third statement does little to provide illumination.

In relation to the release, the court is required to apply the test summarised at paragraph 48.4 above alongside the exercise of a discretion to postpone the effect of the release. In my judgment, the competing considerations result in a strong case for refusing permission to amend on the basis that the effective date of the release from the current claim should be postponed until after this claim’s final resolution. The claim has real merits both on the facts and the law. The release is not an entitlement which is absolute and incapable of being changed. An application may be made under section 212 which, if successful, will trump the release. I also have in mind the context summarised at paragraph 63 above, the lack of explanation for the failure to rely upon the release earlier and the balance of fairness and unfairness. I will make an order that Ms Swan is not able to rely upon the release arising from her resignation as one of the joint liquidators. That order preserves the status quo arising from her defence which she signed with a statement of truth.

The Limitation Clause brings into play different considerations. Ms Swan’s evidence in the application notice and in her statements is very limited and inconsistent.

I note that in giving an explanation in her statement provided during the hearing Ms Swan has chosen to waive privilege to a limited degree. Mr Goodfellow in his oral submissions asked rhetorically ‘what else could she say?’. The answer of course is that neither he nor the court or the claimants know the answer to this question. There are some obvious gaps such as:

I am not satisfied that Ms Swan has provided a full and frank explanation and on that basis her application for permission to withdraw the admissions is refused with the consequence that her application to amend the defence to rely on the Limitation Clause is refused.

If the court were to be required to apply the criteria in CPR rule 14.5, I would reach the same conclusion. The claim on the facts and the law has real prospects of success. At a trial the court will have to consider the events with the benefit of full evidence. Ms Swan may struggle to persuade a court that the liquidators had no responsibility for dealing with tax when it was part of their role to obtain clearance from HMRC. It was inevitable that a liability for tax had to be reviewed. It should have been obvious to Ms Swan that a tax return would have to be filed and the only persons who could approve and file it were the liquidators, unless they appointed Cedar’s accountant to act as their agent for that purpose or sanctioned the director to perform the task. It is notable that there were very long delays by the liquidators in dealing with the return without a proper explanation or excuse and without the liquidators taking steps to enable the director to file the return. Absent that, it appears to me that only the liquidators could regularise the position as part of obtaining tax clearance, a step it was explicitly agreed they would undertake.

The legal basis for the defence based upon the Limitation Clause is weak not just in light of Pagden v Fry. There is force in Moraes’ submissions that Ms Swan does not have the benefit of clause 10 because she was not a party to the contract and as a matter of construction its terms do not apply to her. There is also a strong case to say that the clause was not reasonable.

Since the law has been clarified by Pagden v Fry it is not open to Ms Swan to exclude liability.

These points on the merits taken with the additional criteria under CPR rule 14.5 which I have discussed earlier in this judgment lead to the clear conclusion that permission to amend should be refused.