(1) Blue Tropic Ltd (2) Coppella Ventures Ltd v Ivane Chkhartishvili (2016)
An amendment to a claim brought under the Civil Code (Georgia) art.992 introduced a new allegation of unlawful conduct through personal dishonesty. The unlawfulness originally pleaded did not involve personal dishonesty, so, for the purposes of the Limitation Act 1980 s.35, the amendment constituted a new cause of action that did not arise from the same or substantially similar facts as those already in issue.
A Georgian businessman appealed against a decision that he was liable to pay damages to the respondent companies for breach of the Civil Code (Georgia) art.992.
The companies, which were controlled by the businessman, were non-trading companies whose shares were held on trust for a single beneficiary. The businessman instructed a lawyer to transfer their assets to other holding companies for his own benefit. The companies claimed that that was an "unlawful, intentional or negligent action" within the meaning of art.992 of the Code, that it had caused them harm, and that they were therefore entitled to damages. The judge found in their favour after giving them permission to amend their claim shortly before the trial. But for that amendment, the claim would have failed. In common with the original claim, the amended claim alleged that businessman had caused the lawyer to act unlawfully. However, it also introduced an alternative: that the businessman had himself acted unlawfully by procuring the transfer of the assets (the direct claim). It was common ground that the amendment had been made after the expiry of the limitation period under Georgian law. Under the Limitation Act 1980 s.35 and CPR r.17.4, the court had no jurisdiction to allow an amendment if it introduced a new cause of action, unless that new cause of action arose out of the same, or substantially the same, facts as those already in issue. In allowing the amendment, the judge concluded that it neither introduced a new cause of action nor involved different facts from those already in issue.
The issues were whether (1) the direct claim introduced a new cause of action; (2) if it did, whether that cause of action arose from the same, or substantially the same, facts as those in issue in the original claim.
(1) The direct claim introduced a new cause of action. A "cause of action" comprised every fact that was material to be proved in order to succeed, Cooke v Gill (1872-73) L.R. 8 C.P. 107 applied and Paragon Finance Plc v DB Thakerar & Co  1 All E.R. 400 followed. In determining whether an amendment introduced a new cause of action for the purposes of s.35 of the Act, the court had to examine the pre and post-amendment pleading of the essential facts that had to be proved, Savings & Investment Bank Ltd (In Liquidation) v Fincken (Statement of Claim)  EWCA Civ 1639 followed (see paras 45-48 of judgment). A claim under art.992 of the Code required five cumulative requirements: a person; causation; damage; unlawfulness; and intention or negligence. In their original pleading, the claimants sought to establish unlawfulness by showing that the lawyer's acts were unlawful and that the businessman had therefore acted unlawfully by procuring them. However, that was doomed to failure under Georgian law, there being no tort of inducing a person to breach his duty (paras 49-53). Although the direct claim removed any allegation that the lawyer had acted unlawfully, it did not explain how the businessman was alleged to have acted unlawfully in procuring the transfers. The significance of that point only fully emerged during the trial, and the judge resolved it by finding that the businessman's intention to take the assets for his own benefit satisfied the requirement of unlawfulness. However, the lack of clarity in the amended pleading concealed the significance of the amendment. Although the requirement of unlawfulness remained unchanged, the way in which the claimants had to establish it had changed radically: personal dishonesty on the part of the businessman was an essential ingredient of the direct claim but not of the original. The companies argued that the direct claim merely clarified and simplified their existing case, and that all that had changed was the way in which they sought to establish unlawfulness. However, that argument failed to recognise the fundamental difference between the unlawfulness originally pleaded and the personal dishonesty which had to be established under the direct claim. That difference could not be ignored. As a matter of English law, an amendment which introduced a new allegation of intentional wrongdoing constituted the introduction of a new cause of action, Paragon followed (paras 54-61)
(2) The new cause of action did not arise from the same, or substantially the same, facts as those in issue in the claim as originally pleaded. Had the amendment properly pleaded the necessary ingredients of the alleged dishonesty together with full particulars of the facts relied upon, the radical difference between the original and amended pleadings would have been more readily apparent. The judge's conclusion that the direct claim did not involve any different facts followed from his view that it did not introduce a new cause of action. Once it was recognised that it did introduce a new cause of action, the judge's conclusion could not stand, Paragon followed. He had no jurisdiction to allow the amendment, and the companies' action had to be dismissed (paras 68-73).