Malicious Falsehood
Cases
Roche Ireland Ltd v O’Mahony
[2010] IEHC 491, Laffoy J.Judgment of Miss Justice Laffoy delivered on the 14th day of December, 2010.
1. The parties
1.1 The plaintiff is an Irish company which carries on business as a pharmaceutical company, including manufacturing and sale of pharmaceutical products, at its Irish premises and plant at Clarehill, Clarecastle, County Clare (the Roche premises). It is a company in the Roche Group of companies which carries on business worldwide with headquarters in Basel in Switzerland.
1.2 The first defendant (Mr. O’Mahony), either solely or jointly with his wife, Linda O’Mahony, or through the medium of the second defendant, is the owner of lands comprising 1.31 hectares at Clarecastle, County Clare (the O’Mahony lands) adjacent to the Roche premises. Originally, Mr. O’Mahony was represented by a firm of solicitors and counsel in these proceedings. However in January 2010, Mr. O’Mahony entered an appearance in person and he appeared in person at the hearing. The second defendant is an Irish company, of which, as I understand it, Mr. O’Mahony is the proprietor, using that expression in a non-technical sense. Mr. O’Mahony is the managing director of the second defendant, but he accepted that he could not, in that capacity, represent the second defendant. In the circumstances, the second defendant was not represented at the hearing.
2. The factual background
2.1 While it is not clear in whom the title is vested, on the evidence it appears that Mr. O’Mahony purchased the O’Mahony lands in 2006 as a commercial project. In early 2007 he obtained planning permission from Clare County Council for the development of the O’Mahony lands as light industrial units and offices. What is also clear on the evidence is that Mr. O’Mahony perceived the plaintiff as being a potential purchaser of the development on the O’Mahony lands and he had a number of contacts with the then managing director of the plaintiff, Mr. John Liddy, in late 2006 and in 2007. However, it was at all times made clear by the plaintiff to Mr. O’Mahony that it was not interested in acquiring the O’Mahony lands or being involved in the development proposed by Mr. O’Mahony.
2.2 Around the same time, 2006 and 2007, the plaintiff embarked on a landfill remediation project on the Roche premises. Part of the work involved the capping of what were known as waste deposition cells 1 to 7 on the Roche premises. The plaintiff carries out its manufacturing activity at Clarecastle under an Integrated Pollution Prevention and Control (IPPC) licence issued by the Environmental Protection Agency (EPA), a revised licence having issued on 12th May, 2006. The work of capping the landfill, which involved covering it over with a large filler, subsoil and topsoil, was carried out subject to the approval of the EPA.
2.3 The building agreement for the capping of the landfill project was the subject of a tender process. The successful tenderer was TAL Ltd. (TAL), a Northern Ireland company, which entered into a contract with the plaintiff to do the works, the contract price being in the region of €1.3m. The project was supervised by RPS, a firm of engineering consultants, retained by the plaintiff. The landfill capping project necessitated the bringing on to the Roche premises subsoil and topsoil from outside. The responsibility for sourcing that material was with TAL under its contract with the plaintiff and the consultants were responsible for approving the material.
2.4 Sometime in 2006 Mr. O’Mahony was introduced to Mr. Stephen Murphy of Milltown Engineering Ltd. (Milltown) and discussions ensued between them in relation to a joint development of the O’Mahony lands. Eventually, in 2007, the parties came to an agreement in principle that Milltown would purchase the O’Mahony lands and adjoining lands which Mr. O’Mahony was to acquire. On foot of the agreement in principle and with the consent of Mr. O’Mahony, Milltown went on site in or around September 2007. It stripped the topsoil to base level and removed subsoil to prepare for the installation of services, such as foul sewerage. According to Mr. Murphy, Milltown then put hardcore on the site and rolled it off. Mr. Murphy’s evidence was that this work was carried out with the agreement of Mr. O’Mahony, because September was a suitable time of year to strip the topsoil before the weather deteriorated.
2.5 At the same time as the topsoil was being stripped on the O’Mahony lands, TAL required topsoil in connection with the landfill capping project on the adjacent Roche premises. Mr. Murphy’s evidence was that Milltown’s foreman was approached by TAL. As a result TAL purchased topsoil and subsoil from Milltown at a price of just over €96,000 exclusive of VAT. The material was delivered to TAL. Milltown issued an invoice to TAL on 8th October, 2007.
2.6 Around the same time, a company called Martins Construction Ltd. (Martins) was carrying out landscaping works on the Roche premises under contract from the plaintiff. Milltown sold topsoil and subsoil from the O’Mahony lands to Martins and delivered it to Martins. Milltown issued an invoice in the sum of €7,500 exclusive of VAT to Martins on 8th October, 2007.
2.7 TAL used the topsoil and subsoil from the O’Mahony lands in the landfill capping project. Martins also used topsoil and subsoil from the O’Mahony lands in landscaping works on the Roche premises. For the sake of brevity, I will henceforth refer to the topsoil and subsoil from the O’Mahony lands which was incorporated in the Roche premises as “the material”.
2.8 According to Mr. Murphy, he or Milltown (and it is not clear who the intended contracting party was) pulled out of the deal with Mr. O’Mahony in October 2007, because Mr. O’Mahony had not succeeded in acquiring the adjoining lands which were to be included in the sale. As regards what happened between the parties during the period between entering into the agreement in principle and Milltown pulling out, Mr. O’Mahony’s evidence was consistent with Mr. Murphy’s evidence to the extent that he acknowledged that he got a request from Mr. Murphy in 2007 to come on the site but his account was that the permission was granted to do boundary works and suchlike. His case is that the material was taken off the site by Milltown without his consent and the site was left 1.5 metres below road level, so that it is prone to flooding.
2.9 The solicitors originally on record for Mr. O’Mahony, Tynan Murphy Yelverton, first wrote to the plaintiff in relation to the removal of the material from the O’Mahony lands to the Roche premises on 27th November, 2007. That letter suggests that it is Mr. O’Mahony and his wife, Linda O’Mahony, who own the O’Mahony lands, not Mr. O’Mahony solely nor the second defendant. However, in the context of the resolution of these proceedings, nothing much turns on where the title lies, although I will return to this issue later. Further, that letter suggests (as does the evidence in general) that it was unclear whether it was Mr. Murphy or Milltown which had entered into the agreement in principle with Mr. O’Mahony. Again, nothing much turns on the identity of the intended ultimate purchaser. What is significant is that the letter stated that the clients of Tynan Murphy Yelverton, Mr. O’Mahony and Mrs. O’Mahony, “entered into an agreement with [Mr. Murphy] and/or Milltown and the said parties have not concluded the transaction with our clients”. In the letter, having stated that a substantial amount of topsoil had been removed from the O’Mahony lands and delivered to the Roche premises and having sought clarification of the arrangement under which that was done, Mr. O’Mahony’s solicitors stated that they were satisfied that Mr. Murphy, Milltown, the plaintiff and the intermediary who introduced Mr. O’Mahony to Mr. Murphy were responsible and liable to compensate Mr. O’Mahony and his wife “for their loss, damage, expense and costs”.
2.10 The plaintiff referred the matter to its solicitors. As early as 11th December, 2007 the plaintiff’s solicitors informed Mr. O’Mahony’s solicitors that the plaintiff was not in a position to state the quantity or provenance of any materials used in the project on the plaintiff’s premises and referred them to the independent contractors, TAL. The plaintiff’s solicitors also informed Mr. O’Mahony’s solicitors that Martins had obtained topsoil from the O’Mahony lands and a small quantity of the topsoil had been used on the Roche premises in a separate project and the plaintiff was investigating that matter. It was denied that Mr. O’Mahony had any cause of action against the plaintiff. By letter dated 20th December, 2007, the solicitors for TAL in Northern Ireland confirmed to Mr. O’Mahony’s solicitors that TAL had acquired soil from Milltown and furnished a copy of the purchase order dated 24th September, 2007, the invoice dated 8th October, 2007 and a credit note which Milltown issued to TAL. It was contended that TAL was a purchaser for full value without notice of any question as to the title of the subsoil and it did not consider that it had any liability to Mr. O’Mahony. However, the solicitors for TAL offered to withhold payment to Milltown in order to give Mr. O’Mahony’s solicitors adequate time to see how the matter could be resolved.
2.11 Mr. O’Mahony’s solicitors issued proceedings in the High Court against Milltown in January 2008. However, the proceedings were not prosecuted and, on the basis of the evidence, it appears that they were ultimately struck out for want of prosecution in the Master’s Court in November 2008.
2.12 The Court was told that the sum due by TAL on foot of the invoice it received from Milltown is now held by Milltown’s solicitor, apparently by arrangement with TAL’s solicitors, and that Milltown intends instituting proceedings to procure its release to Milltown.
2.13 Matters took a turn in January 2008 when Mr. O’Mahony commenced e-mailing the head office of the Roche Group in Switzerland. As a result, the plaintiff’s solicitors wrote to Mr. O’Mahony’s solicitors on 24th January, 2008 requesting him to desist from communicating with the plaintiff directly and to withdraw allegations that either the plaintiff or the plaintiff’s solicitors were withholding or concealing information and were threatening or bullying him. Despite many reminders, that letter elicited no response other than that the plaintiff’s solicitors’ correspondence would be communicated to Mr. O’Mahony. The e-mails continued.
2.14 In May 2008, however, a mediation process was put in place to mediate the dispute between Mr. O’Mahony and his wife, on the one hand, and the plaintiff, on the other hand. Unfortunately, the mediation, which was conducted by an independent mediator and the costs of which were defrayed by the plaintiff, was not successful.
2.15 In June 2008 Mr. O’Mahony, through his solicitors, issued two invoices in the name of the second defendant to the plaintiff claiming VAT inclusive sums of €316,536 and €26,136 in respect of material removed from the O’Mahony lands in September/October 2007. In addition, Mr. O’Mahony recommenced his e-mail campaign to the plaintiff and to the headquarters of the Roche Group in Basel and he also commenced e-mailing third parties. Once again, by letter dated 20th June, 2008 to Mr. O’Mahony’s solicitors, the plaintiff’s solicitors requested that Mr. O’Mahony desist from his e-mail campaign. He did not do so.
2.16 In fact, Mr. O’Mahony escalated the campaign against the plaintiff by sending e-mails to third parties alleging serious wrongdoing and criminality on the part of the plaintiff. To take one example, in an e-mail of 28th July, 2008 to the plaintiff’s auditors, KPMG, he asserted that the Directors’ Report and Financial Statements in the plaintiff’s accounts, as audited by KPMG, were unsafe as the plaintiff was the receiver of stolen material and was in breach of the United States compliance code known as the Sarbanes-Oxley Code. It was also stated in the e-mail that Mr. O’Mahony had had a meeting with the Fraud Investigations Office of the Revenue Commissioners on 24th July, 2008 and that the United States Securities and Exchange Commission (SEC) had been made aware of the theft and that he was in correspondence with the SEC “as Roche is increasing its shareholding in specific US firms”.
2.17 By letter dated 31st July, 2008 to Mr. O’Mahony’s solicitors, the plaintiff’s solicitors threatened proceedings against Mr. O’Mahony if he did not communicate withdrawal of the allegations of wrongdoing to the parties to whom he had made them, apologise to the plaintiff for the damage he had caused to the plaintiff’s reputation and standing, and undertake to cease and refrain from making such allegations in the future. The response which eventually came from Mr. O’Mahony’s solicitors was that their instructions were that he would “continue to request full accountability for the material disclosed by your clients, as having come from our client’s site and now lying within your clients’ premises”.
2.18 These proceedings were initiated by plenary summons which issued on 3rd September, 2008. Counsel for the plaintiff informed the Court that the plaintiff was very reluctant to initiate and prosecute the proceedings against Mr. O’Mahony. However, as Mr. O’Mahony had a grievance against the plaintiff and was obsessed with it, the plaintiff had no option but to bring the proceedings. That the plaintiff is a reluctant litigant against the defendants is consistent with the evidence and the manner in which the proceedings were prosecuted. In fact, it was Mr. O’Mahony who served notice of trial on the plaintiff’s solicitors on 18th January, 2010. It is only fair to record that at the hearing Mr. O’Mahony conducted his defence and pursued his counterclaim without rancour.
3. The progress of the proceedings and the case as pleaded
3.1 In the indorsement of claim on the plenary summons, the plaintiff sought various declaratory and injunctive reliefs against Mr. O’Mahony and the second defendant, which I will outline later. The plaintiff also sought damages for various torts, namely, intentional interference with economic relations, slander of title, injurious falsehood, defamation, breach of statutory duty under s. 12 of the Criminal Law Act 1976, and harassment and/or intimidation. At the hearing, counsel for the plaintiff informed the Court that the plaintiff was not seeking an award of damages and was merely seeking declaratory and injunctive relief.
3.2 After these proceedings were initiated, the plaintiff brought an application for interlocutory relief, which was returnable for 10th September, 2008. On that day a consent order was made by the Court (Hanna J.) restraining the defendants pending the trial of the action from communicating to any person written allegations of wrongdoing on the part of the plaintiff and from repeating the allegations the subject matter of the proceedings. In addition, on 10th September, 2008 Mr. O’Mahony, on his own behalf and on behalf of the second defendant, signed a letter addressed “To Whom It Concerns”, in which he stated that he thereby “unconditionally” withdrew “any allegations (whether made directly or indirectly) of wrong doing on the part of [the plaintiff] or any company or person in the Roche group (including without limitation allegations of criminal behaviour or allegations of breaches of regulatory and/or financial reporting obligations)” relating to removal of the material from the O’Mahony lands. The original letter of retraction was furnished by Mr. O’Mahony’s solicitors to the plaintiff’s solicitors with a covering letter dated 12th September, 2008. Notwithstanding the consent order, Mr. O’Mahony continued to make allegations against the plaintiff and the plaintiff’s solicitors were constrained to threaten an attachment and committal application, as a result of a communication to KPMG in November 2008, and again in early 2009, as a result of communications by Mr. O’Mahony with KPMG, the Revenue Fraud Squad and the Office of the Director of Corporate Enforcement. At that stage the plaintiff’s solicitors delivered their statement of claim.
3.3 In the statement of claim the plaintiff pleads that it had no knowledge of the specific provenance of the material and was wholly unaware of any dispute in relation to it and, in the premises, that it was a bona fide purchaser for value of the material which came from the O’Mahony lands, lawfully took possession of it and at all material times has remained lawfully in possession of it. In the statement of claim the wrongdoing pleaded against the defendants is that they falsely and maliciously made and repeated (knowing them to be false) allegations about the plaintiff’s conduct – its alleged involvement in the alleged misappropriation of the defendants’ soil as the alleged receiver of stolen material, alleged breaches on its part of regulatory requirements in relation to environmental standards and financial and corporate governance, and that the behaviour of the plaintiff warranted investigation. It is pleaded that the allegations in question had been communicated to the plaintiff, to senior management in the Roche Group and to third parties, including the Office of the Revenue Commissioners (Fraud Investigations), An Garda Siochána, the EPA, KPMG, Deutsche Bank in London and Frankfurt, the Swiss Stock Exchange, the SEC, the Directors of the New York Stock Exchange and to the biotechnology company, Gentech, which in 2008 was in the process of being acquired by the Roche Group. It is also pleaded that the communications were calculated, inter alia, to damage the business and reputation of the plaintiff and to interfere with and obstruct its economic relations.
3.4 The declarations and injunctions which counsel for the plaintiff indicated at the hearing are the primary reliefs being sought by the plaintiff against the defendants are:
(A) A declaration that the subsoil and topsoil emanating from the O’Mahony lands and presently incorporated in the landfill deposits on the Roche premises is in the lawful possession of the plaintiff;
(B) A declaration that the plaintiff has no liability in law or otherwise howsoever to the defendants arising from or relating to the acquisition by the plaintiff of the topsoil and subsoil emanating from the O’Mahony lands;
(C) An injunction restraining the defendants from communicating to any person any written allegations of wrongdoing on the part of the plaintiff including, without limitation, allegations of criminal behaviour or allegations of breaches of regulatory and/or financial reporting obligations arising from or relating to the acquisition by the plaintiff of topsoil and subsoil emanating from the O’Mahony lands to such persons and/or entities as the Court shall identify; and
(D) An injunction restraining the defendants from repeating the allegations the subject matter of these proceedings.
In the statement of claim the plaintiff also sought orders that the defendants be directed to withdraw the allegations already made. However, counsel for the plaintiff acknowledged the practical difficulty to which enforcing such orders could give rise.
3.5 The defendants, while still represented by solicitor and counsel, delivered a defence and counter claim on 15th July, 2009. Following an application by the plaintiff, by order of the Court (Murphy J.) made on 12th May, 2010 certain paragraphs of the defendants’ counter claim were struck out.
3.6 In the defence, the matters pleaded in the statement of claim are traversed. Specifically, it is denied that the plaintiff had no knowledge of the specific provenance of the material from the O’Mahony lands and it is denied that the plaintiff was a bona fide purchaser for value thereof, lawfully took possession and has remained lawfully in possession thereof. Further, it is denied that the communications complained of in the statement of claim were published or communicated with false or malicious intent.
3.7 In the counterclaim, as it stands, it is pleaded that, in contemplation of the contract for sale of the lands between O’Mahony and Mr. Murphy/Milltown being signed and monies paid over to Mr. O’Mahony, the defendants allowed Mr. Murphy/Milltown to enter the O’Mahony lands and “begin development” in September 2007. However, it is pleaded that the removal of the material from the O’Mahony lands was performed without the defendants’ knowledge or consent and that the plaintiff was at all times aware of the ownership and source thereof. It is contended that the plaintiff knowingly acquired the material knowing that Milltown was not the true owner thereof, and that the plaintiff did not perform due diligence in determining the lawful owner thereof and was reckless in accepting it, not having determined the identity of the lawful owner. It is pleaded that, in the light of the foregoing, the plaintiff has not come to Court with clean hands and should be refused the reliefs claimed. The reliefs claimed in the counterclaim include an order for the return of the soil removed from the O’Mahony lands to the defendants or, in the alternative, monetary compensation to the true value of the soil removed.
3.8 In its reply delivered on 10th November, 2009 the plaintiff joined issue on the matters pleaded in the defence and counterclaim and reiterated that it was a bona fide purchaser for value of the material and lawfully took possession of it and has remained in lawful possession of it.
4. The issues
4.1 The primary issues, in my view, which arise on the pleadings and on the facts are the following:
(a) whether the plaintiff is in lawful possession of the material which emanated from the O’Mahony lands and which was incorporated into the Roche premises in the course of the landfill remediation works and landscaping or, alternatively, whether Mr. O’Mahony as the owner of the O’Mahony lands has a claim against the plaintiff for return to him of the said material or to be compensated to its value; and
(b) whether, in making and repeating the communications that the plaintiff acted wrongfully in acquiring, using and retaining that material, the defendants have been, or if they continue to make or repeat such communications will be, liable under any of the torts invoked in the statement of claim, thus entitling the plaintiff to the ancillary injunctive relief it seeks.
4.2 There is a myriad of peripheral issues arising from other allegations made by Mr. O’Mahony in relation to the plaintiff’s conduct. I propose focusing on what I have identified as the primary issues but, as regards the peripheral issues, I think it is appropriate to record the following findings from the evidence.
5. Findings on peripheral issues
5.1 On the basis of the evidence of Mr. Pat O’Shea, the current Operations Director of the plaintiff, I am satisfied that the plaintiff did not commit any breaches of the Waste Management Acts 1996 to 2008 arising out of the removal of the material from the O’Mahony lands to the plaintiff’s premises. It was confirmed by letter dated 11th March, 2009 from Clare County Council to Mr. O’Shea that that was the view of Clare County Council and that no further action was deemed necessary.
5.2 On the basis of the evidence of Mr. Caoimhín Nolan, Inspector of Environmental Enforcement with the EPA, I am satisfied that the EPA has no issue as to the manner in which the capping of the landfill on the Roche premises was implemented by the plaintiff. It is clear on the evidence that Mr. O’Mahony has been repeatedly informed by the EPA that the issue of the removal of the material from the O’Mahony lands is not a matter for the EPA or the enforcement of the IPPC licence held by the plaintiff and, therefore, the EPA has no intention of launching an investigation as he requested. That position was reiterated in a letter of 1st July, 2010 from the EPA to Mr. O’Mahony.
5.3 As a result of a written complaint to An Garda Siochána made by Mr. O’Mahony on 4th September, 2008 a criminal investigation was carried out and a file was sent to the Director of Public Prosecutions on 2nd February, 2009. However, there is no evidence that the investigation related to alleged criminal activity on the part of the plaintiff and there is no evidence that a criminal prosecution has been initiated against any party.
6. Ownership/lawful possession of the material
6.1 As regards the legal principles which govern the issue of entitlement to possession and ownership of the disputed material, that is to say, the subsoil and topsoil from the O’Mahony lands, unfortunately, the relevant principles are identified to a limited extent only in the pleadings and in the submissions made at the hearing, which is understandable because Mr. O’Mahony was not legally represented. While to the lay person the principles may be difficult to understand, having regard to the history of this matter, and, in particular, the conduct of Mr. O’Mahony, which has clearly arisen from a grievance he harbours against the plaintiff, I will endeavour to summarise them in terms from which he will appreciate their implications.
6.2 To recapitulate, the plaintiff’s case is that as a result of the plaintiff having paid TAL and Martins for the works they carried out on the Roche premises and TAL and Martins, in turn, having purchased the material from Milltown, and either having paid for it or accepted liability for payment, the plaintiff, having no knowledge of the provenance of the material or any dispute in relation to it, was a bona fide purchaser for value of the material, lawfully took possession of it and is lawfully in possession of it. As I have recorded, what the plaintiff seeks is a declaration that it is in lawful possession of the material and that it has no liability to Mr. O’Mahony arising from its acquisition. Mr. O’Mahony has pleaded that the defendants are the owner of the O’Mahony lands, that the material was removed from the O’Mahony lands without the defendants’ knowledge or consent, that the plaintiff was at all times aware of the ownership and source of the material, that the defendants are the true and lawful owners of the material and are entitled to its return or to be compensated for its true value. So, the plaintiff is claiming to be in lawful possession of the material and Mr. O’Mahony is claiming ownership and an entitlement to possession. Although the wrong which the defendants allege against the plaintiff is not spelt out in the pleadings, the defendants’ claim must be based in tort for detinue or conversion of the material by the plaintiff.
6.3 The authorities relied on by the plaintiff in its written submission in support of the proposition that the plaintiff was a bona fide purchaser for value without notice of the material and, therefore, was unaffected by the rights of Mr. O’Mahony as owner of the O’Mahony lands all relate to issues concerning land as such (AIB v. Finnegan [1996] 1 ILRM 401; Gannon v. Young [2009] IEHC 511 and Kingsnorth Finance Trust Co. Ltd. v. Tizard [1986] 1 WLR 783). However, as the reference to detinue and conversion in the preceding paragraph indicates, in my view, the legal principles which are applicable to the situation which has arisen here in relation to the material are the legal principles governing possession and ownership of goods. The crucial factor, in my view, is that the material, the topsoil and the subsoil, had been severed from the O’Mahony lands when the plaintiff’s contractors agreed to acquire it. It follows that the relevant legal principles mainly derive from the Sale of Goods Act 1893, as amended by the Sale of Goods and Supply of Services Act 1980 (the Act of 1893). It is with a considerable degree of diffidence that I propose outlining these principles, which were not explored at the hearing. However, the principles, which I will outline and apply, are well established. In circumstances in which the defendants are not legally represented and Mr. O’Mahony has no legal training, having considered the matter carefully, I have come to the conclusion that it is not in his interest to invite further legal argument in this matter, which would merely give rise to further legal costs in circumstances in which the legal position is quite clear.
6.4 Even at common law the material severed from the land would have been regarded as a chattel or goods rather than as land. In Sligo Corporation v. Gilbride [1929] I.R. 351, in which the plaintiff was seeking injunctions to restrain the defendant from removing a wall and to direct the plaintiff to restore it, in the Supreme Court, Kennedy C.J. stated (at p. 362):
“If the ownership of the wall is actually in the plaintiffs, the action is in substance one for damages for trespass and trover and conversion of the stones in the wall, and the injunction is sought as ancillary to that right of property.”
Fitzgibbon J. was of a similar view stating (at p. 366):
“The real cause of action is one of trespass to the plaintiffs’ wall – assuming it to be theirs – and trover and conversion of the materials with which the wall was built”
Moreover, consistent with the decision of Gavan Duffy P. in Scully v. Corboy [1950] I.R. 141, the material comes within the definition of “goods” in s. 62 of the Act of 1893, which defines that term as including “emblements, industrial growing crops and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale”.
6.5 Although as I have stated at the outset, it is not clear in whom the title to the O’Mahony lands is vested, it is not in dispute that Mr. O’Mahony is either alone or jointly with his wife, who was in Court throughout the hearing, or through the medium of the second defendant, the owner of the O’Mahony lands. During the hearing, Mr. O’Mahony indicated that he had evidence of his title in Court. However, he was not asked to produce it. For present purposes, I am assuming that he has good title to the O’Mahony lands either solely or as aforesaid. As such, before the material was severed from the land, he owned it. When the material was severed by Milltown he remained the owner of it, subject to the rights, if any, of Milltown. A fundamental principle of our law of property, whether land or goods, like so many other fundamental rules, is known by its Latin tag: the rule nemo dat quod non habet. What the rule means is that no one can give a better title to property than his own. However, at common law that rule is subject to exceptions. Moreover, while, in the case of goods as defined in the Act of 1893, the rule was repeated in s. 21 of that Act, it is subject to the exceptions set out in succeeding sections thereof, including s. 25(2). Section 25(2) provides:
“Where a person having bought or agreed to buy goods obtains, with the consent of the seller, possession of the goods or the documents of title to the goods, the delivery or transfer by that person, or by a mercantile agent acting for him, of the goods or documents of title, under any sale, pledge or other disposition thereof, to any person receiving the same in good faith and without notice of any lien or other right of the original seller in respect of the goods, shall have the same effect as if the person making the delivery or transfer were a mercantile agent in possession of the goods or documents of title with the consent of the owner.”
In s. 62(2) of the Act of 1893 it is provided:
“A thing is deemed to be done ‘in good faith’ within the meaning of this Act when it is in fact done honestly, whether it be done negligently or not.”
6.6 The facts relevant to the application of s. 25(2) to the plaintiff, in my view, are the following. Mr. O’Mahony agreed in principle to sell the lands to Milltown and he allowed Milltown into possession of the lands. Milltown severed the material from the lands while in possession and, accordingly, was in possession of the material, although it remained in the ownership of Mr. O’Mahony until the sale to Milltown would be completed. Milltown sold the material to TAL and Martins, who used it in the landfill capping and landscaping works on the Roche premises in fulfilment of their respective contractual obligations to the plaintiff. TAL paid, or acknowledged the obligation to pay, for the material Milltown sold to it. While it is not clear on the evidence what position Martins has adopted in relation to payment to Milltown, I am assuming it has adopted a position similar to that adopted by TAL. The plaintiff paid TAL and Martins for the works in which they used the material, thereby paying for the material. The plaintiff got actual possession of the material.
6.7 Having regard to those facts, two questions arise in the application of s. 25(2), namely:
(a) Did Milltown get possession of the material with the consent of the plaintiff?
(b) Did the plaintiff receive the material, which was incorporated into the Roche premises, in good faith and without notice of any lien or right of Mr. O’Mahony as the owner of the O’Mahony lands from which the material was severed?
6.8 In relation to the first question, I am satisfied on the evidence that Milltown got possession of the material with the consent of Mr. O’Mahony. It is stated in the letter of 27th November, 2007 from Mr. O’Mahony’s then solicitors and it is pleaded on behalf of Mr. O’Mahony in his counterclaim that Mr. Murphy/Milltown was given possession with a view to doing preliminary works in aid of the development of the O’Mahony lands. It was in the course of that work that the material was severed from the O’Mahony lands. Mr. Murphy’s evidence was that Mr. O’Mahony knew that the topsoil was going to the plaintiff and he was not challenged on that in cross-examination by Mr. O’Mahony, although the thrust of Mr. O’Mahony’s evidence was that he did not know that the material was going off the site. On the basis of the totality of the evidence, I think it is probable that Mr. O’Mahony did know that Milltown was disposing of the material. In any event, I am satisfied that Milltown severed and had possession of the material with the consent of Mr. O’Mahony before the sale to TAL and Martins.
6.9 In relation to the second question, in outlining the factual background earlier, I have referred to the contacts between Mr. O’Mahony and Mr. Liddy, the then managing director of the plaintiff in 2006 and 2007. In April 2007, Mr. O’Mahony notified Mr. Liddy on two separate occasions of his intention to sell the O’Mahony lands. Subsequently, a meeting was held on 4th July, 2007 between Mr. Liddy and Mr. O’Mahony and, on the basis of Mr. Liddy’s evidence, I am satisfied that he agreed to the meeting as a courtesy to a neighbour. At the time, while the proposed development on the O’Mahony lands was of some concern to the plaintiff, the concern was not enough to induce the plaintiff to get involved in the O’Mahony lands. Subsequent to that meeting there were two e-mails from Mr. O’Mahony to Mr. Liddy in July 2007, in the second of which, dated 29th July, 2007, Mr. O’Mahony advised Mr. Liddy that he had “three joint venture proposals for the development of the site and four bids for the outright sale of the site” and that, if he did not hear from Mr. Liddy, there would be little point in keeping him advised of further negotiations with third parties. That was the end of the contact between Mr. Liddy and Mr. O’Mahony until the end of November 2007.
6.10 A meeting arranged at short notice was held between Mr. Liddy and Mr. O’Mahony on 3rd December, 2007. At that stage, Mr. Liddy was not aware of the letter of 27th November, 2007 from Mr. O’Mahony’s solicitors, as the plaintiff’s company secretary was out of the office and it had not been brought to his attention. In any event, Mr. Liddy’s evidence was that Mr. O’Mahony told him that Milltown had been allowed on to the O’Mahony lands on condition that a contract would be signed within three weeks but that on 26th November, 2007 the contract had been returned unsigned. Mr. Liddy’s evidence was that he was completely surprised by Mr. O’Mahony’s statement that Milltown had taken the material illegally. Mr. Liddy’s evidence was that Mr. O’Mahony’s suggestion that the plaintiff return the material came as a real shock to him and was completely unexpected. He passed the problem on to the plaintiff’s legal advisers at that stage.
6.11 A director of TAL, Mr. Martin Hamill, also testified. His evidence was that he was aware that Milltown was doing preparatory work on the O’Mahony lands and was stripping the site. When TAL approached Milltown to purchase the material, he was not aware that Milltown was not the true owner of the soil. On the basis of the evidence of Mr. Hamill, I am satisfied that TAL agreed with Milltown in good faith to purchase the material and received it without any notice of any lien or other right of Mr. O’Mahony in respect thereof.
6.12 Similarly, on the basis of the evidence of Mr. Liddy, I am satisfied that the plaintiff dealt with TAL honestly and in good faith and from the perspective of the plaintiff the material was incorporated into the Roche premises without notice of any lien, right or equity of Mr. O’Mahony in respect thereof. Having regard to what had transpired between the plaintiff and Mr. O’Mahony before September 2007, and the circumstances which prevailed in September 2007, although honesty, as opposed to reasonableness, is the test of good faith under the Act of 1893, in my view, it was reasonable for the plaintiff, acting by Mr. Liddy and other employees of the plaintiff, and for TAL to assume that Milltown had authority to sell the material.
6.13 In summary, having found that Milltown got possession of the material with the consent of the plaintiff and that both TAL and the plaintiff received the material in good faith and without notice of lien or other right of Mr. O’Mahony, by operation of s. 25(2) of the Act of 1893 the plaintiff obtained good title to the material which was incorporated in its premises as against Mr. O’Mahony and is entitled to retain possession thereof. The plaintiff has no liability to the defendants in respect of the material.
6.14 While it is clear that Mr. O’Mahony feels aggrieved that the sale to Milltown fell through after Milltown had sold the material to TAL which was used in fulfilling TAL’s contractual commitments to the plaintiff, he must appreciate that, in the circumstances of the events of September 2007 which I have outlined, the law protects the plaintiff, which acted honestly in its dealings with TAL which, in turn, acted honestly in its dealings with Milltown. It was Mr. O’Mahony who allowed Milltown to go into possession of the O’Mahony lands and to do the pre-development works which created the material and thus facilitated the sale of the material by Milltown to TAL. Whatever, if any, redress Mr. O’Mahony has arising out of the failure of Milltown to complete the acquisition of the O’Mahony lands and from the sale by Milltown of the material can only be pursued against Milltown. It is not a matter for the Court in these proceedings.
7. Mr. O’Mahony’s communications alleging wrongdoing on the part of the plaintiff
7.1 The plaintiff has invoked a plethora of torts in alleging wrongdoing against the defendants and in seeking civil law remedies to redress such wrongdoing. As the plaintiff has decided to forgo its claim for damages, it is unnecessary to consider whether the plaintiff has established liability on the part of the defendants for all or any of the torts alleged. Further, in the light of the findings which have been made as to the ownership and entitlement to possession of the material which was severed from the O’Mahony lands and is now incorporated in the Roche premises, in my view, the only issue which requires to be determined is whether, if the defendants were to continue to make or repeat the type of communications complained of by the plaintiff which alleged that the plaintiff acted wrongfully in acquiring, using and retaining the material, they would be liable in tort to the plaintiff, so as to entitle the plaintiff to the ancillary injunctive relief it seeks. In this context, of the torts invoked by the plaintiff, that which would obviously come into play if the defendants were to continue making or repeating such communications is injurious falsehood encompassing slander of title and slander of goods.
7.2 If, notwithstanding the making of the declaration which I intend to make that the material is in the lawful possession of the plaintiff, Mr. O’Mahony or the other defendant were to communicate to third parties the assertion that, in receiving and retaining the material, the plaintiff received and retained stolen goods, in my view, the plaintiff would unquestionably be able to establish the ingredients of the tort of injurious falsehood as outlined in McMahon and Binchy on The Law of Torts, 3rd Ed., at paragraphs 35.26 to 35.30, for the following reasons:
(a) the statement alleging receipt and retention by the plaintiff of stolen goods would be untrue;
(b) such statement would be made maliciously, because there would be no basis on which Mr. O’Mahony or the other defendant could assert some just cause, excuse or proper motivation for making the statement; and
(c) such statement could only be viewed as calculated to cause pecuniary damage to the plaintiff and being published in permanent form in writing or electronically (as, on the basis of the evidence, it is probable would be the case) the plaintiff would, by virtue of s. 20(1) of the Defamation Act 1961, be relieved from the requirement to prove special damage.
7.3 I am satisfied that the defendants’ allegation that the plaintiff has not come to court with clean hands is utterly without foundation. On the other hand, it is a matter of concern that after September 2008, notwithstanding the existence of the order of the Court made with the consent of Mr. O’Mahony, Mr. O’Mahony persisted in communications alleging wrongdoing on the part of the plaintiff. Accordingly, I consider it appropriate to grant the plaintiff injunctive relief in the terms sought by the plaintiff and set out at (C) in paragraph 3.4 above framed to cover communications to the plaintiff and its associated companies, any officer or employee of the plaintiff and its associated companies, and any third party. An injunction in the terms set out at (D) would merely replicate the content of the injunction in the terms set out at (C) in a vague manner and, for that reason, I do not propose to grant it.
7.4 Even if, despite the information furnished to him from December 2007 onwards as to the circumstances in which the material was incorporated in the Roche premises and the steps taken by TAL to ensure that the defendants would not be prejudiced by the payment of the price of the material directly to Milltown after Mr. O’Mahony raised the issue of the ownership of the material with the plaintiff and after his solicitor’s letter of 27th November, 2007, Mr. O’Mahony honestly believed that he had a good claim against the plaintiff, once the Court has decided that he does not have a good claim against the plaintiff he must appreciate that he would be acting wrongly by asserting otherwise and that he must desist from doing so. In relation to what I have referred to as the peripheral issues, having regard to the findings which I have made in paragraphs 5.1 and 5.2 above, Mr. O’Mahony must also appreciate that he must desist from alleging breaches by the plaintiff and its agents of waste management and environmental enforcement legislation in connection with the removal of the material from the O’Mahony lands and its incorporation in the Roche premises.
8. Order
8.1 The Court will make the following orders on the plaintiff’s claim:
(1) declarations in the terms set out at (A) and (B) of paragraph 3.4 above; and
(2) an injunction in the terms set out at (C) in paragraph 3.4 restraining communications to the plaintiff and its associated companies and any officer or employee of the plaintiff and its associated companies and any third party.
8.2 There will also be an order dismissing the defendants’ counterclaim.
Cornwall Gardens PTE Ltd v R O Garrard & Co Ltd & Anor
[2001] EWCA Civ 699
Introduction
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- LORD PHILLIPS, MR: The Claimant in this action (“Cornwall Gardens”) is a property development company registered in the British Virgin Islands. It is controlled by a shareholder who is based in Singapore. The action arises out of a development under which Cornwall Gardens purchased, and converted into an hotel, an office block called Western House in Hangar Lane, West London.
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- To the west of Western House stand Gordon House and Wellington House. These properties consist principally of 68 flats, held on 999 year leases. The First Defendant, Garrard & Co, own the freehold reversion of those properties. The second defendant, Christie & Co, is a firm of surveyors and valuers which has acted for Garrard & Co.
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- Garrard & Co contend that Gordon House and Wellington House enjoy a right of way across the land behind Western House which, under the development, has become the car park of the hotel. (I shall, in future, refer to this land as “the car park”). Cornwall Gardens contend that no right of way exists and, in the action, seek a declaration to that effect. This appeal does not relate to that issue which remains to be resolved.
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- This appeal relates to a letter written on 4 March 1998 by Christie & Co, on behalf of Garrard & Co, to the planning authority, Ealing Borough Council (“Ealing”). In that letter Christie & Co asserted that Garrard & Co enjoyed a right of way over the car park which would render it impossible, without the consent of Garrard & Co, to satisfy certain of the conditions of the planning consent that had been given to Cornwall Gardens.
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- Cornwall Gardens claim that this statement was untrue and that it was made maliciously with the intent of extorting from Cornwall Gardens a substantial payment in order to procure Garrard & Co’s consent to the development. Cornwall Gardens claim that by making this false statement the Defendants created problems with Ealing that delayed completion of the development and caused them to introduce an expensive valet parking scheme.
(1)that the claim in respect of malicious falsehood was time barred under Section 4A of the Limitation Act 1980;
(2) that the claim in respect of unlawful interference with rights was also time barred under the principle in Letang v Cooper [1965] 1 QB 232, in that it was founded on the same facts as the claim in respect of malicious falsehood;
(3) that it was not an appropriate case to grant an extension of time pursuant to Section 32A of the 1980 Act; and thus
(4) that judgment should be entered for Christie & Co;
(5) that Cornwall Gardens should have permission to appeal.
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- Garrard & Co then followed the example of Christie & Co and applied for the same relief. Cornwall Gardens at this point filed evidence in support of an application for an extension of time pursuant to Section 32A. They also applied for permission to amend their statement of case to add claims in fraud and conspiracy to injure. The parties agreed that, on the limitation issues, judgment should be entered for Garrard & Co by consent, that Cornwall Gardens should have permission to appeal and that the application for permission to amend should be “adjourned to the Court of Appeal”. On 8 December 2000 Judge Chambers so ordered by consent.
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- Cornwall Gardens now appeal against each of the orders made against them. The issue of whether the claims are time barred is a succinct issue which requires little by way of recital of facts. I must, nonetheless, set these out in a little detail as they bear on the question of whether the judge properly exercised his discretion in refusing to grant an extension of time for commencing proceedings, and on the question of whether Cornwall Gardens should be given permission to amend their claim.
The Facts
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- Cornwall Gardens completed the purchase of Western House on or about 3 March 1995. Edwards Geldard acted as their solicitors in connection with the purchase. Edwards Geldard advised that the Land Registry title of the property recorded a right of way across the car park. This was along the rear boundary of the land. The Registry title did not record in whose favour this right of way existed. Enquiries revealed that residents of Gordon House and Wellington House were driving to and fro across the car park, although not along the route recorded as a right of way on the Registry title. This information did not deter Cornwall Gardens from completing the purchase.
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- It seems that some of the residents of Gordon House and Wellington House became concerned that the development of Western House might prevent or interfere with the access that they were enjoying across the car park and made representations to Ealing about this. Ealing made it a condition of the grant of planning permission that Cornwall Gardens enter into an agreement with them under Section 106 of the Town and Country Planning Act 1990 to grant the residents of Gordon House and Wellington House a right of access across the car park.
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- Edwards Geldard were instructed to negotiate an appropriate agreement. By about the end of September 1996 the terms of this agreement had been agreed with Ealing. Under the agreement Cornwall Gardens covenanted to allow the residents of Gordon House and Wellington House access and egress, both vehicular and pedestrian, across the car park using the route along the rear boundary to Western House. That is the route recorded as a right of way on the Land Registry title.
“6. The car parking spaces shown on the approved plan reference PL/002A received 24.1.96 shall be marked out on the site to the satisfaction of the Local Planning Authority, and these spaces shall thereafter be kept continuously available for car parking and shall not be used for any other purposes without the prior permission in writing of the Local Planning Authority.”
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- Garrard & Co then intervened, contending that they were entitled to insist on the use of the right of way recorded on the Land Registry title and that they were thus in a position to prevent Cornwall Gardens from complying with Condition 6 which would prevent the opening of the hotel. On 26 January 1998 they wrote to Edwards Geldard threatening to seek an injunction restraining Cornwall Gardens from interfering with the right of way.
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- Negotiations then ensued between Edwards Geldard and Garrard & Co which did not resolve the matter. Garrard & Co wrote to Ealing, drawing the dispute to their attention. This led Ealing to write on 2 March 1998 to Land Architects Limited (the architects supervising the hotel development) a letter which included the following warning:
“I refer to the proposed Holiday Inn at Western House. I know you are aware of the difficulties between your clients and the freeholders of Gordon and Wellington Houses over the right of way across the rear of the Holiday Inn site.
If these matters are not resolved in a mutually satisfactory manner beforehand and they open for business on this site, Holiday Inn will immediately be in breach of planning control because condition 6 of the planning permission requires that parking spaces shown on the approved drawing must be made continuously available. Some of these spaces are on the right of way and Holiday Inn may be prevented from using them by third parties.
This would result in a serious shortfall of on-site parking. The local planning authority could not ignore this and would have to consider legal action to enforce the condition. This might well force the hotel to close until the matter was sorted out with obvious effects on revenue.
In addition, unless you can resolve the right of way satisfactorily, it may not be possible for the Council to approve the traffic circulatory details under condition 11, because there is no certainty that your clients will be able to implement them. Until they are approved and laid out, the hotel may not open.”
“….our client does not dispute that the occupiers of the Flats have exercised a right of way through Western House and our clients have no wish to interfere with this. The issue is the extent and nature of what is exercised.
It was apparent at the time of our client’s purchase that vehicular parking took place along the rear boundary of the Property. The area had been laid out and marked for such parking at least from the time that the Property was used as offices.
The current layout for parking and traffic movement is a restatement of that previous position. Therefore, the occupiers of the Flats will continue to have the ability to exercise a right of way as previously enjoyed.
Condition 6 of planning permissions SCA/TPE 00122/8 acknowledges the parking layout. It does not provide for the layout to be further approved by your authority, merely that marking out shall be satisfactory.”
“Thank you for forwarding me a copy of your letter of 3 March 1998 to Ealing Planning and Surveying Service in respect of the above.
The position as you have set out to them is inaccurate in respect of the right of way at the rear of Western House and I am surprised that you have written to the London Borough of Ealing in this vein.
The conveyance dated 1 April 1937 between Ardsley Estates Limited and J D Thackray reserved ‘….unto the Vendors their predecessors and successors in title and assigns owners or occupiers of the adjoining or neighbouring land or any part thereof in common with the Purchaser… the full and free right of way for all purposes over and along that part of the said land hereby conveyed which is coloured blue….’ The conveyance shows the exact line of the right of way and its width. It provides all the detail necessary to identify the ‘….extent and nature of its use….’ and is the ‘….documentary evidence of these matters….’, as you put it in your letter.
We have made the Ealing’s Planning and Surveying Service and Legal Departments aware of the 1937 Conveyance and should you also require a copy please let me know.
We have therefore informed Ealing that the issue is not ‘….the extent and nature of what is exercised’ and that my client is prepared to serve an injunction to preserve their legal right of way.
Furthermore this issue is not just a matter of the right of way enjoyed by our client. The assessment of reasonable consideration for the proposal put to your clients has also taken into consideration other issues which are of equal importance. These include …. the legal inability of your clients to establish the traffic circulation system required by the planning conditions. I note that you have not addressed any of these issues.
For my part I am happy to discuss quantum with your hotel valuation advisors but my client requires a response today to my letter to you dated 23 February 1998.
Finally whilst writing I have just been informed that the contractors have marked out the car parking spaces on the right of way and my client is giving them a limited opportunity to remove the markings.
If these are not removed and a meaning[ful] dialogue does not commence today my clients will take the necessary legal steps, with all the unnecessary [sic] ramifications that this implies, to fully protect their position.”
“I very much appreciate Ealing Borough Council making it clear to Land Architects that the problems associated with conditions 6 & 11 required the agreement of our client who are the freeholders of Frobisher House, Gordon House, Nelson House and Wellington House, situated immediately to the west of Western House, because, inter alia, their rights over the land proposed to be used to [sic] car parking would be infringed.
Mr Davies of Edwards Geldard has now written to you contending that such rights do not exist. Our client will today furnish Mr Davies with the necessary documentation regarding the rights of way at the rear of Western House. I have also asked our client to send a copy of [sic] Ms Harris for information. While I would agree that it is not for Ealing to be drawn into a legal dispute between our client and Cornwall Gardens PTE Ltd, regarding the rights, it is important for you to be aware that unless the issues between the parties are resolved this week our client intends to seek an injunction to protect his position, which will prevent the implementation of conditions 6 & 11.
However, time is now short as I understand that Holiday Inn intend to open the hotel on the 11th March, despite the fact that the issues relating to these conditions remain unresolved. In this situation, our client are (sic) now looking to Ealing to use its powers under the Planning and Compensation Act 1991 to deal with anticipated breaches of control, by applying to the High Court for an injunction to secure such restraint. The aim of this action should be to prevent the hotel opening until matters are resolved to everyone’s satisfaction.”
Cornwall Gardens pleaded Case
The claim for malicious falsehood
“that the conveyance dated 1st April 1937 between Ardsley Estates Limited and J D Thackray granted a right of way over the area coloured blue in favour of the freehold proprietors of Gordon House and Wellington House
that the effect of the conveyance dated 1st April 1937 was to create a legal easement over the area coloured blue in favour of the freehold proprietor of Gordon House and Wellington House notwithstanding the freehold titles to those properties and Western House at HM Land Registry does not disclose any such right to interest.”
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- Cornwall Gardens have now withdrawn the allegation that this letter was sent to Ealing. The Statement of Case contained a Statement of Truth signed on behalf of Cornwall Gardens by their solicitors. No explanation has been given to us as to why it contained this untrue allegation. Indeed, we were not even informed of this until counsel for the second respondent addressed us.
“that [Garrard & Co] were the legal proprietor of Frobisher House and Nelson House
that [Garrard & Co] as the legal proprietor of the freehold reversions of Gordon House and Wellington House had legal rights over the area coloured blue at the rear of Western House which would be infringed if the area was used for car parking
that consequently the implementation of planning conditions 6 & 11 required the agreement of [Garrard & Co]
that [Garrard & Co] was entitled at law to injunctive relief to prevent the implementation of planning conditions 6 & 11.”
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- Cornwall Gardens have now withdrawn the allegation that the statements made as to their ownership of Frobisher House and Nelson House were untrue. Again, no explanation has been given to us as to why these untrue statements were included in the Statement of Case. The allegations made were serious allegations of fraudulent behaviour and it is a matter of concern to this court that they were made when it is now accepted that they are without foundation.
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- Cornwall Gardens claim that the statements in the second letter of 4 March were made maliciously, as (I quote from the Statement of Case) “without just cause or excuse”. They allege that the motive for making those statements was not to protect the rights of the residents of Gordon House and Wellington House, but, in effect, to extort a substantial payment from Cornwall Gardens for the release of the alleged rights.
The claim for wrongful interference with rights
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- This claim was also based on the two letters of 4 March 1998 and, thus, is now founded solely on the second letter which was sent to Ealing. Cornwall Gardens plead that the respondents knew that the consequence of the allegedly false statements made in that letter would be that Ealing would refuse detailed planning consent required for the opening of the hotel. It is alleged that this consequence in fact followed, with the result that:
(i)Cornwall Gardens had to introduce a valet parking scheme and obtain planning permission approving this;
(ii)pending the approval of the valet parking scheme Cornwall Gardens were unable to satisfy their contractual obligation to hand over the hotel to Holiday Inns;
(iii) the opening of the hotel was delayed until 31 August 1998;
(iv)the expense of operating the valet parking scheme has continued to this day.
Subsequent Events
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- It seems that Cornwall Gardens decided that the events that I have described were attributable to the fault of their solicitors. They failed to pay Edwards Geldard’s account. On 15 January 1999 Edwards Geldard commenced proceedings claiming their outstanding fees. In February 1999 Cornwall Gardens instructed Simon & Simon to act for them. Mr Paul Simon of that firm has provided a witness statement, dated 20 November 2000, in which he provides some details of the information he received. I shall revert to this statement in due course. At present it is sufficient to note that on 2 June 1999 Cornwall Gardens filed a Statement of Case containing a Part 20 claim (a cross-claim) against Edwards Geldard. That claim alleged breaches of duty, which I can summarise as follows:
(1)Failing to give adequate advice on title in relation to the question of whether or not there was a right of way.
(2) Failing to advise on the implications of the right of way in the context of the proposed development.
(3) Negotiating the Section 106 Agreement on terms that were incompatible with Clause 6 of the planning permission.
“The time limit under section 2 of this Act shall not apply to an action for-
(a) libel or slander, or
(b) slander of title, slander of goods or other malicious falsehood,
but no such action shall be brought after the expiration of one year from the date on which the cause of action accrued.”
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- This action was started on 19 January 2000. The cause of action accrued on 4 March 1998, so the action was started some 10 months out of time. Cornwall Gardens accept that, unless the Court grants an extension of time, their claim for malicious falsehood is time barred. They contend, however, that they have an independent cause of action, namely, unlawful interference with their rights, which is subject to the six-year time limit on bringing actions in tort.
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- The respondents contend that the claim pleaded under the head “wrongful interference with rights” is the same claim that Cornwall Gardens advance under the head “malicious falsehood”. They contend that it falls within the description “slander of title, slander of goods or other malicious falsehood” in Section 4A of the Limitation Act. Consequently, it is time barred.
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- The respondents put at the forefront of their case the analysis of the nature of a cause of action of Diplock LJ in Letang v Cooper. That case also involved limitation. The Plaintiff had been sunbathing in a car park when the defendant drove over her an injured her. The Law Reform (Limitations of Actions) Act 1954 provided by Section 2 that:
“….in the case of actions for damages for negligence, nuisance or breach of duty (whether the duty exists by virtue of a contract or of provision made by or under a statute or independently of any contract or any such provision) where the damages claimed by the plaintiff for the negligence, nuisance or breach of duty consist of or include damages in respect of personal injuries to any person, this subsection shall have effect as if for the reference to six years there were substituted a reference to three years.”
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- So the section provided, in the circumstances specified, a three-year limitation period. The action in Letang v Cooper was commenced outside that period, but the plaintiff contended that she could bring a claim in trespass to the person which fell outside the section and was consequently not subject to the three-year limit. The Court of Appeal rejected that contention. Diplock LJ said at page 242:
“A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person. Historically, the means by which the remedy was obtained varied with the nature of the factual situation and causes of action were divided into categories according to the ‘form of action’ by which the remedy was obtained in the particular kind of factual situation which constituted the cause of action. But that is legal history, not current law. If A, by failing to exercise reasonable care, inflicts direct personal injury upon B, those facts constitute a cause of action on the part of B against A for damages in respect of such personal injuries. The remedy for this cause of action could, before 1973, have been obtained by alternative forms of action, namely, originally either trespass vi et armis or trespass on the case, later either trespass to the person or negligence: (see Bullen & Leake, Precedents of Pleading, 3rd ed (1868)). Certain procedural consequences, the importance of which diminished considerably after the Common Law Procedure Act, 1852, flowed from the plaintiff’s pleader’s choice of the form of action used. The Judicature Act, 1873, abolished forms of action. It did not affect causes of action; so it was convenient for lawyers and legislators to continue use, to describe the various categories of factual situations which entitled one person to obtain from the court a remedy against another, the names of the various ‘forms of action’ by which formerly the remedy appropriate to the particular category of factual situation was obtained. But it is essential to realise that when, since 1873, the name of a form of action is used to identify a cause of action, it is used as a convenient and succinct description of a particular category of factual situation which entitles one person to obtain from the court a remedy against another person. To forget this will indeed encourage the old forms of action to rule us from their graves.”
“The factual situation upon which the plaintiff’s action was founded is set out in the statement of claim. It was that the defendant, by failing to exercise reasonable care, of which failure particulars were given, drove his motor car over the plaintiff’s legs and so inflicted upon her direct personal injuries in respect of which the plaintiff claimed damages. That factual situation was the plaintiff’s cause of action. It was the cause of action for which the plaintiff claimed damages in respect of the personal injuries which she sustained. That cause of action or factual situation falls within the description of the tort of negligence and an action founded on it, that is, brought to obtain the remedy to which the existence of that factual situation entitles the plaintiff, falls within the description of an action for negligence. The description ‘negligence’ was in fact used by the plaintiff’s pleader; but this cannot be decisive for we are concerned not with the description applied by the pleader to the factual situation and the action founded on it, but with the description applied to it by Parliament in the enactment to be construed. It is true that that factual situation also falls within the description of the tort of trespass to the person. But that, as I have endeavoured to show, does not mean that there are two causes of action. It merely means that there are two apt descriptions of the same cause of action. It does not cease to be the tort of negligence because it can also be called by another name. An action founded upon it is nonetheless an action for negligence because it can also be called an action for trespass to the person.”
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- Not all of Diplock LJ’s judgment in Letang v Cooper has survived unscathed (see Stubbings v Webb [1993] AC 498 at 507). The passages that I have read have, however, become a classic and oft-cited piece of English jurisprudence. Mr Duncan Macleod, for Christie & Co (whose submissions were adopted by Mr Simon John, for Garrard & Co), has submitted that they are directly in point. His submission is that “malicious falsehood” and “wrongful interference with rights” are two apt descriptions of the facts of this case which constitute a single cause of action that falls fairly and squarely within Section 4A of the 1980 Act as “other malicious falsehood”.
(1)Wrongful interference with rights is an innominate and developing tort.
(2)The elements of that tort are not the same as those of the tort of malicious falsehood.
(3)To establish a cause of action for wrongful interference with rights, a Claimant must prove:
(i)an intentional unlawful act;
(ii)done by the Defendant with the intention of harming the Claimant; and
(iv)in fact causing damage to the Claimant.
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- Mr Blackmore submitted that, although in the present case the intentional unlawful act was a malicious falsehood, it could just as well have been some other unlawful act which was not itself actionable at the suit of the Claimant. he further submitted that, while there was no requirement to prove damage in order to establish a cause of action in malicious falsehood, damage was an essential element of the cause of action of wrongful interference with rights.
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- In support of his submissions as to the nature of the cause of action of wrongful interference with rights, Mr Blackmore referred us to a number of cases dealing with tortious conspiracy. He argued that the elements of the two torts were very similarly, if not the same, referring us to Lonrho v Fayed [1992] 1 AC 448 and, in particular, to the observations of Lord Bridge at page 469.
“The history of Lonrho v Fayed and the points in issue in that case could be said to give further support to the argument that unlawful means has the same meaning in the unlawful conspiracy context as in the interfering with business by unlawful means context and further support for the view that in either of those contexts the unlawful means do not have to be actionable at the suit of the plaintiff.”
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- I accept that there is a developing area of tortious liability that falls within the generic description of “wrongful interference with rights”. I accept that this description can embrace facts which would not form the basis of a claim falling within the long established cause of action of malicious falsehood. Equally, however, it seems to me that “wrongful interference with rights” is a description which can aptly apply to facts which constitute the tort more conventionally described as “malicious falsehood”.
“Nomenclature. This tort attracts different names. In part this is due to the possible range of falsehoods concerned. It originated from ‘slander of title’, false allegations calculated to hamper the disposal of land. However, it developed, by analogy, to encompass ‘slander of goods’ and eventually disparagements as to quality as well as title were included. In Ratcliffe v Evans [1892] 2 QB 524, the Court of Appeal decided that the tort could apply to falsehoods calculated to cause and causing actual damage to a business. Thus, this tort can be labelled:
*injurious falsehood;
*trade libel;
*slander of title;
*slander of goods;
*disparagement of goods; or
*malicious falsehood.
The Defamation Act 1952 describes this wrong by the formula ‘action for slander of title, slander of goods or other malicious falsehood’.”
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- Mr Macleod submitted that one could add to Clark & Lindsell’s list “wrongful interference with rights”. While that description is too broad to identify the specific elements that comprise the tort of malicious falsehood it is, as I have indicated, a description which accommodates the elements of malicious falsehood.
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- Parliament has chosen, by Section 4A of the 1980 Act, to impose a 12 months’ time limit on claims based on facts which fall within the description “libel, slander or other malicious falsehood”. If the facts alleged by Cornwall Gardens as giving rise to their claim for relief under the head of “wrongful interference with rights” are facts which fall within the description “other malicious falsehood”, they are subject to that limit, even though Mr Blackmore in his pleading has chosen to give them a different label and even though that label is an appropriate alternative description.
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- Mr Blackmore argues that the facts pleaded under the head “wrongful interference with rights” are not the same as the facts which give rise to the claim for malicious falsehood in that the former include, as they must, allegations of damage. There is, indeed, no other distinction between the facts pleaded in support of the claim for malicious falsehood and those pleaded in support of the claim for wrongful interference with rights. Does the additional element of special damage mean that there is a second cause of action distinct from and not aptly described as malicious falsehood?
“In an action for words not actionable per se, but constituting an untrue statement maliciously published about the plaintiff’s business, which statement is intended or reasonably likely to produce, and in the ordinary course of things does produce, a general loss of business as distinct from the loss of particular known customers, evidence of such general loss of business is admissible, and sufficient to support the action.”
“2. In an action for slander in respect of words calculated to disparage the plaintiff in any office, profession, calling, trade or business held or carried on by him at the time of the publication, it shall not be necessary to allege or prove special damage, whether or not the words are spoken of the plaintiff in the way of his office, profession, calling, trade or business.
3. (1) In an action for slander of title, slander of goods or other malicious falsehood, it shall not be necessary to allege or prove special damage-
(a)if the words upon which the action is founded are calculated to cause pecuniary damage to the plaintiff and are published in writing or other permanent form; or
(b)if the said words are calculated to cause pecuniary damage to the plaintiff in respect of any office, profession, calling, trade or business held or carried on by him at the time of the publication.”
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- In consequence of these provisions there is no need to allege or prove special damage to establish a cause of action for the specified categories of malicious falsehood. The cause of action is complete once the malicious falsehood has been published. It does not follow, however, that where special damage is occasioned, the tort ceases to constitute the cause of action described as malicious falsehood. One has only to state the proposition to appreciate that it is absurd.
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- For these reasons I am in no doubt that the facts pleaded under the head “wrongful interference with rights” are facts which properly fall within the description of “other malicious falsehood” in Section 4A, and that the claim in this action is subject to the 12 months’ time limit imposed by the section. Judge Chambers was correct in so deciding.
Discretion to extend time
“Discretionary exclusion of time limit for actions for defamation or malicious falsehood
(1)If it appears to the court that it would be equitable to allow an action to proceed having regard to the degree to which-
(a)the operation of section 4A of this Act prejudices the plaintiff or any person whom he represents, and
(b)any decision of the court under this subsection would prejudice the defendant or any person whom he represents,
the court may direct that that section shall not apply to the action or shall not apply to any specified cause of action to which the action relates.
(2)In acting under this section the court shall have regard to all the circumstances of the case and in particular to-
(a)the length of, and the reasons for, the delay on the part of the plaintiff;
(b)where the reason or one of the reasons for the delay was that all or any of the facts relevant to the cause of action did not become known to the plaintiff until after the end of the period mentioned in section 4A-
(i)the date on which any such facts did become known to him, and
(ii) the extent to which he acted promptly and reasonably once he knew whether or not the facts in question might be capable of giving rise to an action; and
(c)the extent to which, having regard to the delay, relevant evidence is likely-
(i)to be unavailable, or
(ii) to be less cogent that if the action had been brought within the period mentioned in section 4A.”
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- On the hearing of Christie & Co’s application, Judge Chambers considered an application for an extension of time under this section and rejected it. He remarked on the fact that he had no evidence from either party bearing on the exercise of his discretion and decided to proceed upon the basis that Cornwall Gardens’ pleaded reply to Christie & Co’s reliance on Section 4A constituted evidence.
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- Cornwall Gardens filed evidence in support of their invocation of Section 32A in answer to Garrard & Co’s application, and Garrard & Co have filed evidence in response. This evidence was not considered by Judge Chambers. He made a consent order in favour of Garrard & Co, leaving it to this Court to consider the evidence filed. Should we approach Cornwall Gardens’ appeal on the basis that Judge Chambers has exercised his discretion against extending time in respect of both their claims, or should we exercise our own unfettered discretion in relation to the claim against Garrard & Co? These questions only arise should we be minded, having considered the evidence, to reach a different decision from that reached by Judge Chambers in relation to the claim against Christie & Co. I propose to proceed pragmatically by considering that question first.
“Section 32A contains a non-exhaustive list of the matters to which the Court should have regard in considering how to exercise its discretion. Section 32A(2)(a) reads as follows:
‘In acting under this section the courts [sic] should have regard to all the circumstances of the case and in particular to the length of and reasons for the delay on the part of the plaintiff.’
It seems to me that this requirement is no more than confirmatory of the fact that where a party to proceedings has put itself in a position by its own conduct that it requires the discretion of the Court to be exercised in its favour to be allowed to continue in those proceedings it must proffer an explanation to the Court as to how the state of affairs has arisen. This may happen in default proceedings where a party seeks to be allowed to defend after judgment has been entered against him. It may happen where a party has failed to comply with an order and wishes to be relieved from the consequences of failure to comply with that order. It seems to me that the principle is similarly applicable to a situation such as this. The Court is being asked to apply its discretion in favour of a party who would otherwise suffer the consequences of being statute barred. I have before me no good reason as to why there was delay on the part of Cornwall Gardens in starting these proceedings.
Mr Blackmore has done his best in his outline argument and has referred to other matters such as the fact that there was other litigation afoot, and also there was a need to clarify the situation as far as parking and planning permission were concerned. But of itself and without explanation there is no reason why, in parallel with such matters, there should not have been a preparation of this case so that it could have been brought in time.
Another factor that weighs with me is the very short period provided by section 4A as a limitation period in respect of malicious falsehood. I do not think it relevant to look at any history behind the introduction of section 4A. I think it quite sufficient to look at section 4A alone in the context of the other periods of limitation which are provided under the Act. One year is to be contrasted with three years in respect of personal injuries and six years in respect of matters such as breach of contract. It is therefore clear that, looking at the Act alone, the expectation is that proceedings of this nature will be brought promptly. It therefore seems to me that when considering the length of delay one should look at the delay in relation to the length of the limitation period. Ten months might, in appropriate circumstances, not seem terribly much in relation to a three-year limitation period, but in relation to a 12-month limitation period it is a lengthy delay.
In those circumstances it seems to me entirely in accordance with the spirit and the underlying principle of the Act that I should require very good reason to permit an action to proceed where there has been a delay of this nature. There is no such reason. In the circumstances it seems to me that it would be wholly inappropriate to exercise my discretion in favour of Cornwall Gardens. It is correct that prejudice is a relevant factor but it is only a factor amongst others. So far as those other factors are concerned, they quite simply have not been addressed. I do not have the material before me upon which I could properly exercise my discretion in favour of Cornwall Gardens, the burden being upon Cornwall Gardens to make good its application for the exercise of that discretion. It follows that that application must fail.”
“I cannot think that, without being told more about the circumstances of the dislocation, any change in solicitors is to be regarded as a relevant component in my considerations. It could have been a relevant component had I been told of the degree of dislocation, but I know nothing about the change. For all I know it might have been a very smooth change.”
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- I turn to the evidence that has been filed on behalf of Cornwall Gardens in an attempt to explain the delay in issuing proceedings. This takes the form of the witness statement made on 20 November 2000 by Mr Paul Simon, to which I have referred. He states that he has reviewed the files and goes on to put in evidence material, of which some was plainly privileged. In essence this amounts to the following:
(i)between March and August 1988 Cornwall Gardens’ solicitors, Edwards Geldard, were busy considering whether Garrard & Co’s claim to a right of way was sound in law and attempting to negotiate a settlement with them.
(ii) Edwards Geldard did not advise Cornwall Gardens that they had a claim against Garrard & Co and/or Christie & Co for malicious falsehood.
(iii) Simon & Simon were instructed in February 1999 and did not obtain complete files from Edwards Geldard until December 1999, which included the letters of 4 March. Only then were Cornwall Gardens advised to commence proceedings for malicious falsehood and wrongful interference with rights.
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- It does not seems to me that this evidence significantly advances Cornwall Gardens’ case. The evidence before us now clearly shows that both Cornwall Gardens and their solicitors were aware from the outset that Garrard & Co, through Christie & Co, were asserting to Ealing that, as owners of the freehold of Gordon House and Wellington House, they enjoyed the right of way recorded over the car park and urging Ealing not to permit user inconsistent with that right of way. The explanation for the failure to commence proceedings amounts to no more than the fact that Edwards Geldard did not consider that there was a claim that should be advanced. Assuming (and I emphasise that this is no more than an assumption) that they were wrong about this, I do not consider that Cornwall Gardens can properly pray in aid the shortcoming of their own solicitors; indeed Mr Blackmore has not sought to argue to the contrary.
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- To establish their case of malicious falsehood, Cornwall Gardens must prove not merely that Gordon House and Wellington House were not the dominant tenants that owned the right of way over the car park, but that Garrard & Co and Christie & Co knew that their claim to the contrary could not be sustained or were, at least, recklessly indifferent to whether it could or not. The considerable body of evidence that is now before the Court lends no weight to that assertion.
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- When Garrard & Co acquired Gordon House and Wellington House, the tenants of those properties appeared to be exercising a right of way over the car park. A right of way over the car park, although not along the same route, was shown on the registered title of Western House. Cornwall Gardens had negotiated a Section 106 Agreement with Ealing under which they covenanted to allow the tenants of Gordon House and Wellington House to traverse the car park along the route of the right of way in vehicles and on foot. Garrard & Co have produced a conveyance dated 1 April 1937 which, so it seems to me, raises at least an arguable case that the benefit of the right of way was transferred to their predecessors in title as owners of the land adjacent to Western House.
The application to amend
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- The application to amend Cornwall Gardens’ statement of case was, by consent, adjourned to this court as, so we were informed, there was insufficient time for it to be considered on the occasion when the application was listed for hearing below. The overriding objective of the new rules is intended to give more flexibility to procedure and the course adopted might be thought to accord with that objection. It is not, however, in general desirable that matters should be reserved for consideration by this court on which there has been no ruling by the court below.
“the statements were fraudulent in that they were made recklessly not caring whether the statements were true or false. The particulars set out in paras 17.1 to 17.8 (inclusive) above are repeated.”
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- Mr Blackmore insisted that the object of this and the second amendment was not to evade the effect of Section 4A of the 1980 Act, although it might incidentally achieve that result. He also submitted that the allegation added to the statement of case an element not implicit in the plea made under the head of malicious falsehood.
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- I do not consider that the proposed amendment adds anything to that plea, save perhaps to make it plain that the nature of the malicious falsehood alleged is reckless indifference to truth rather than deliberate untruth. Certainly, the addition does not produce the result that the facts pleaded under the head “wrongful interference with rights” differ from those properly described as “malicious falsehood”. I would not allow this application to amend.
“Accordingly, before settling any document containing any allegation of fraud (or allegation of a similar nature) you should satisfy yourself not only that you have clear instructions to make the allegation but that the ‘material’ upon which it is based amounts to evidence in a form which can be put before the Court. In particular, where the material relied on includes the evidence of any witness you should insist on being provided with a signed statement from the witness which is capable of being served.
Further, if it becomes clear at any later stage of the proceedings that evidence on which you relied has not been or is not going to be put before the Court (for example because a witness has retracted a statement that he gave), you should on no account maintain the allegation and should ensure that the other side is informed at once that the allegation is not being pursued.”
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- I would endorse that guidance and emphasise that it applies to an allegation of malicious falsehood. The merits of that plea have not and will not be determined in this case, but I have indicated my reservations as to whether there exists material which justifies the making of this serious allegation.
“33B.1 Paragraphs 3 to 33 above are repeated.
33B.2In the first part of 1998 ROGL and Christie agreed to procure Ealing not to grant planning consent to CGPL by falsely claiming that ROGL had a right to a legal easement over the area coloured blue.
33B.3The purpose of the agreement was to prevent CGPL fulfilling its obligations to Holiday Inn under the Management Contract unless CGPL paid ROGL for the release of the alleges rights which ROGL claimed over the area coloured blue.”
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- If this application were allowed, it would open the door to an argument that the alleged conspiracy differed from the cause of action in malicious falsehood and was not subject to the 12 months’ time bar. Such an argument could be founded on the decision of this court in Kuwait Oil Tanker Co SAK v Bader [2000] 2 All ER 271. In that case the Court held that, where an unlawful means conspiracy involves conspiracy to commit a tort, the conspiracy does not merge in the tort and the Claimant is not precluded from alleging both the conspiracy and the tort (see in particular the judgment of Nourse LJ at page 317).
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- Mr Blackmore did not base his application to amend on an argument that the amendment would add a claim that was not time barred, and I do not purport to decide whether or not it would do so. The fact that it might do so does, however, render apposite the comment made in Kuwait Oil by Nourse LJ at page 316 that “a party must not obtain an illegitimate advantage by alleging a conspiracy”.
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- In the present case the addition of a plea of conspiracy would add nothing of significance to the facts already pleaded. It would be contrary to the spirit of Section 4A of the 1980 Act if, in this case, such a plea resulted in the evasion of the 12 months’ limitation period. If the proposed amendment produced that result, it would be an illegitimate advantage. For that reason, I would not allow the amendment.