Anonymised Legal Summary: Court of Appeal Reasons

Factual and Procedural Background

This appeal arose from two related, long-running sets of Commercial Court proceedings managed and tried together by Judge Waksman. The Plaintiff commenced proceedings in 2017 against a law firm and an individual partner associated with that firm (collectively referenced below as Company A and Attorney Gerrard) and in 2019 against a public prosecuting body (referenced below as Company B). After a liability trial (Phase 1), the trial judge found in 2022 that Company A and Attorney Gerrard had breached duties by disclosing confidential and privileged material without the Plaintiff's consent, and that Company B had been in serious breach of duties and had induced breaches of contract by engaging with Attorney Gerrard when he was acting without authority.

A further decision in December 2023 (Phase 1A) found that Company B's wrongdoing was an effective cause of certain losses said to arise from an investigation it had opened in April 2013 (the "CI"), which continued for several years and resulted in no criminal charges. The assessment of losses attributable to the CI was directed to be determined in a second phase (Phase 2).

At the pre-Phase 2 stage, the Plaintiff sought to amend its pleaded case on loss (served in August 2024) to reformulate a substantial part of its borrowing-cost claim. The Plaintiff had realised belatedly that much of the increased borrowing costs it had long attributed to itself had in fact been incurred by a number of group subsidiaries. The proposed amendment reframed the claim so that the Plaintiff sought recovery by reference to diminution in the value of its shareholdings in those subsidiaries (a "dollar-for-dollar" approach matching the subsidiary loss to the Plaintiff's percentage shareholding), adjusted only for relevant tax effects.

The proposed amendments were contested on the ground that they were late and that, because the Plaintiff had preserved its own documents but had not placed a litigation hold on certain subsidiaries' documents, the defendants (Company A and Company B) were substantially prejudiced by the probable non-availability of subsidiary documents. The trial judge (Judge Waksman) refused the contested amendments by judgment dated 23 January 2025, and made an order dismissing those applications on 14 February 2025. Permission to appeal was granted. The Court of Appeal allowed the appeal by order dated 23 July 2025 and permitted the disputed amendments; the present document explains the reasons for that decision.

Legal Issues Presented

1. Whether the trial judge applied the correct legal test when refusing the Plaintiff's application to amend its pleaded loss at the outset of the quantum phase, in particular whether the judge required the Plaintiff to prove a near-impossible negative (that none of the subsidiaries' documents that would have been captured by a litigation hold could be relevant or were missing).
2. Whether the trial judge wrongly pre-judged disclosure and the availability of subsidiary documents and, relatedly, whether he misapplied the balancing exercise between prejudice to the Plaintiff and prejudice to the defendants arising from lateness.
3. Whether the trial judge erred in rejecting the Plaintiff's contention that group-level treasury documents were likely to contain the relevant material and so subsidiary-level disclosure might not be necessary.
4. Whether the judge was wrong to refuse amendments in respect of borrowings of specific holding companies whose documents had been preserved (the Plaintiff argued these items should have been permitted because those companies' documents were available).
5. Whether the judge erred in characterising the amendments as "late" in a way that fatally diminished the weight to be given to allowing amendments made at the commencement of the quantum phase where disclosure and expert evidence had not yet been exchanged.

Arguments of the Parties

Plaintiff's Arguments (Appellant)

• The judge applied the wrong legal test by requiring the Plaintiff to show that none of the subsidiaries' documents could be relevant, rather than asking whether a fair trial would be possible if the amendments were permitted (i.e., whether justice required the amendments to be allowed).
• The judge pre-judged disclosure and the likely availability of subsidiary documents and thereby overstated the prejudice to the defendants.
• The Plaintiff contended that group-level treasury and finance records would capture the essential material on borrowing negotiations, so that subsidiary-level documents were unlikely to be necessary for a fair assessment of the borrowing-cost or diminution claims.
• The Plaintiff argued that, for at least two holding companies (whose documents had been preserved), the amendments should have been allowed because relevant documents were available for those entities.
• The amendments were made at the outset of Phase 2; although technically late, they were made before any decisions on disclosure, witness statements or expert reports and so the timing should not have been treated as decisively fatal.

Defendants' Arguments (Respondents: Company A and Company B)

• While accepting the proposed amendments had a real prospect of success on their merits and not taking points as to irrecoverability or cogency, the defendants opposed the amendments on the ground of delay and resultant prejudice.
• Because the Plaintiff had preserved its own documents but had not imposed litigation holds on a number of subsidiaries, relevant subsidiary documents may have been lost or are otherwise unavailable, causing real and substantial prejudice in defending the newly framed claims.
• The defendants relied on the lateness of the amendments, the absence of a satisfactory explanation for delay, and the consequent risk that the defence would be impaired by non-availability of materials that would have been disclosable if a timely litigation hold had been imposed.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Precedent A (authorities considered and summarised by the trial judge)	Summarises principles applicable to applications to amend pleadings where lateness or impact on trial date arise: the overriding objective, balancing prejudice between parties, requirement that an amendment be arguable/coherent/particularised, the relative nature of "lateness", and the heavy burden on parties seeking very late amendments which might disrupt fixtures.	The Court of Appeal accepted these principles as the correct starting point but found that the trial judge misapplied them by elevating speculative risk of prejudice over the Plaintiff's established and substantial prejudice from losing the claim.
Precedent B (an authority on lateness considered in the appeal court)	Explains the concept of lateness as relative, the need for a good explanation for delay, and examples of prejudice caused by late amendments (e.g., duplication of work, disruption, pressure on lawyers, or adjournment of trial).	The appellate court applied this guidance to conclude that, although the amendments were late, they were made at an early stage of Phase 2 before disclosure and reports were exchanged, and so the lateness carried less weight against allowing the amendments.
Precedent C (on appellate review of discretionary case-management decisions)	Sets out the limited grounds for appellate interference in discretionary evaluations: misdirection in law, procedural unfairness, taking into account irrelevant matters, failing to take account of relevant matters, or a decision plainly wrong (i.e., outside generous ambit of reasonable disagreement).	The Court of Appeal identified misdirection in the trial judge's approach to the balancing exercise and concluded that, in this instance, the judge's approach led to a wrong exercise of discretion.
Precedent D (on consequences of document non-preservation/assessment at later stages)	Illustrates that if disclosure later proves inadequate, there are remedies including trial-stage adjustments, adverse inferences, or striking out where a fair trial is impossible; non-imposition of a litigation hold is not an automatic debarring sanction.	The appellate court relied on this approach to justify permitting the amendments, with the possibility of addressing any proven prejudice later (including at trial), rather than refusing the amendments at the early case-management stage.

Court's Reasoning and Analysis

The Court of Appeal (Judge Phillips, with Judges Nugee and Baker concurring) reviewed the trial judge's decision and concluded that, although the governing principles for amendments and lateness were correctly identified, the trial judge erred in applying them to the facts.

The trial judge had taken the following approach: once he found the proposed amendments were late and that no good reason had been shown for the delay, he treated it as incumbent upon the Plaintiff to demonstrate that no documents within subsidiaries' control that would have been subject to a litigation hold could be relevant or had gone missing. Because the Plaintiff could not satisfy that test, the trial judge concluded the risk of non-availability of documents amounted to serious prejudice to the defendants, outweighing the Plaintiff's prejudice if the amendments were refused.

The appellate court found several errors in that approach:

• The judge effectively required the Plaintiff to prove a near-impossible negative (that no disclosable subsidiary documents either existed or had been lost), rather than conducting the appropriate staged balancing exercise focused on whether a fair trial would be possible if the amendments were permitted.
• The trial judge pre-judged disclosure disputes and the availability of documents instead of allowing the amendment and permitting the usual disclosure and follow-up processes to determine what documents, if any, were disclosable or unavailable.
• The judge gave excessive weight to the mere absence of a litigation hold as constituting serious prejudice in itself. The appellate court emphasised that failure to impose a litigation hold does not automatically lead to a debarring sanction; prejudice must be shown in substance (i.e., that disclosable documents have been lost and that their loss causes material prejudice to the defence).
• The proper approach at the early stage of the quantum phase should have been to assess: (i) whether the documents in question would have been disclosable if the amendments were permitted; (ii) whether any such disclosable documents had in fact been lost in the intervening period; (iii) whether loss of any such documents would cause prejudice to the defendants; and (iv) whether any such prejudice outweighed the prejudice to the Plaintiff of losing a substantial part of its claim. The appellate court found that the trial judge did not address these questions in the necessary detail.
• Because the amendments were made at the start of Phase 2 (before disclosure, witness statements and expert reports), the lateness—while real—was less decisive; permitting the amendments would have allowed the disclosure and expert processes to test availability and relevance of subsidiary materials, with remedies available later if serious prejudice were demonstrated.

The appellate court therefore concluded that the trial judge placed undue emphasis on speculative and unquantified risk of prejudice to the defendants and insufficient weight on the certain and substantial prejudice the Plaintiff would suffer if stripped of the late-but-arguably-coherent reformulation of its borrowing-cost claim.

The court further observed that the trial judge had not properly considered that some subsidiaries' documents were preserved (notably the two holding companies) and that any necessary assessment of comparative relevance could and should have occurred after permitting the amendments, using the normal disclosure and expert processes. The court noted that, if after disclosure a fair trial proved impossible, there remained established remedies (including potential striking out, adverse inferences, or other adjustments) to address substantive unfairness.

Holding and Implications

Holding: The Court of Appeal allowed the appeal and permitted the disputed amendments to the Plaintiff's pleaded losses (the order allowing the appeal was made on 23 July 2025 and judgments with reasons followed). These are the reasons for joining in that decision.

Implications:

• Direct effect on the parties: The Plaintiff is permitted to pursue the re-formulated loss claims at Phase 2 (including the "dollar-for-dollar" diminution-in-value measure in respect of subsidiary-incurred borrowing costs). The defendants remain entitled to pursue all available defences, including conducting disclosure and using expert evidence to test the relevance and availability of subsidiary documents.
• Practical process going forward: The Court of Appeal's reasoning emphasises that, at an early stage of a split trial's quantum phase, it is generally preferable to allow arguable amendments and to address any prejudice through disclosure, expert examination, trial management and, if necessary, remedies at a later stage rather than to refuse amendments on speculative risk of missing documents alone.
• No new general legal principle was created by this decision beyond applying existing principles concerning amendments, lateness and appellate review; the Court addressed the particular exercise of discretion in the factual matrix of this case and remitted the issues to proceed through the Phase 2 process.

Authorities and Rules Referenced (Anonymised)

The judgment relied upon established authorities and practice directions concerning amendments, lateness and the appellate review of discretionary case-management decisions. The court emphasised the overriding objective, the need to balance prejudice to parties, the relative concept of lateness, and the limited circumstances in which an appellate court will interfere with a judge's exercise of discretion.

Administrative Notes

The appellate decision was given by Judge Phillips, with concurrences from Judge Nugee and Judge Baker. Permission to appeal had earlier been granted by Judge Males. The trial judge at first instance was Judge Waksman.

Note: This summary is strictly based on the provided opinion. All personally identifiable information and entity names have been anonymised consistently. No information has been invented or inferred beyond what appears in the opinion.