The High Court has refused a late application by the Cunningham Group to add a new secret-profit claim to its case against First Active plc and Bernard Duffy, while permitting solicitor Michael Lynn to give evidence by video link. The rulings were made by Mr Justice Clarke in related proceedings that had been at trial for almost three months.
The proposed amendment concerned a revised agreement for the sale of commercial units at Bailey Point. The agreement provided for First Active to receive additional sums if specified sale-price thresholds were exceeded. The Cunningham Group argued that the arrangement could amount to a secret profit. First Active and Duffy accepted that an uplift would breach duty if it were not credited to the Cunningham Group as mortgagor; the dispute was whether First Active was to receive it as vendor and mortgagee in possession.
Clarke said the documents did not support an inference that the uplift was intended to be a secret profit. He also found no basis in the circumstances in which the Cunningham Group learned of the revised terms to draw an adverse inference against either defendant. On the evidence then available, he concluded the proposed claim had no chance of success. He refused the amendment, saying a new claim requiring further discovery and witness evidence was inappropriate at that stage of the trial. He left open whether the court had jurisdiction to allow a cause of action arising after proceedings began, expressing only a tentative view that the relevant rule was one of practice.
The judge also rejected the Group’s discovery applications against First Active and Duffy, including requests to strike out parts of their defences. He found no basis to infer that First Active had breached its discovery obligations. The negotiations leading to revised lending and sale arrangements were protected by without-prejudice privilege; the concluded agreements and documents evidencing them were not privileged. The court ordered that copies of an internal Royal Bank of Scotland memorandum be returned to First Active, finding the memorandum itself privileged. No further discovery was ordered. Clarke said an omission in Duffy’s discovery had been remedied and did not justify a further order.
On evidence, the judge refused permission to file a new, more detailed statement from witness Kieran O’Brien. He said material that merely elaborated on O’Brien’s existing statement could still be given in evidence, but the application did not justify adding new areas after the Group’s earlier delays and an “unless” order.
Lynn, a former solicitor to the Cunningham Group, had an outstanding attachment order for contempt after failing to attend a High Court examination. Clarke nevertheless allowed his evidence to be taken by live video link. He considered Lynn a witness rather than a party, and said excluding potentially material evidence could cause disproportionate injustice to the Group. The court was to hear further submissions on the arrangements for taking that evidence.