Background
SCRP Fund I Finance financed a management buyout in which NAC Group Holdings acquired five companies from Paul and Wendy Robson under a September 2022 share purchase agreement. NAC Holdings assigned its rights under the agreement to SCRP, which sued the sellers for alleged breaches of warranty after NAC Holdings entered administration.
The defendants pleaded an equitable set-off based on alleged breaches of earn-out protections, including changes to bid-writing resources and a partnership with Sunderland College. After receiving further particulars of that defence, SCRP conducted broader document searches and sought to amend its claim to allege fraudulent misrepresentations and improper incentive payments, or bribes, involving third parties. A later draft also advanced new financial-warranty allegations based on asserted EBITDA overstatement and overvaluation. The proposed amendments arrived shortly before an October 2026 trial and would have required the trial to be vacated.
The Court’s Holding
Her Honour Judge Kelly granted SCRP an extension of time so that its third and substantially revised draft pleading could be considered. The 18-day delay was serious and significant, and counsel’s holiday and the late discovery of material did not provide a good reason for it. Nevertheless, refusing to consider that version would have caused SCRP greater prejudice, while the defendants had some opportunity to respond.
The court then dismissed the application for permission to amend. For purposes of the application, the judge assumed that the proposed fraud theory had a realistic prospect of legal success if the alleged facts could be established, but found that the evidence did not disclose a strong fraud case. The payments in question had possible legitimate business explanations, there was no evidence that they were excessive, contemporaneous material undermined parts of SCRP’s evidential case, and further difficulties concerned reliance, intent, and the buyer management team’s knowledge. In any event, the amendments were very late, lacked an adequate explanation, arose from documents largely already held by SCRP, and would have caused the fixed trial date to be lost.
The proposed overvaluation amendments also lacked a realistic prospect of success. The SPA required notice within 24 months specifying in reasonable detail the circumstances giving rise to the claim, the resulting breach, and the amount claimed. SCRP’s April 2024 letter identified other accounting inaccuracies but did not identify the additional inaccuracies or losses underlying the proposed amendments, so its general language did not satisfy the contractual notice provision.
Key Takeaways
- A party seeking a very late amendment that would derail a fixed trial bears a heavy burden to justify both the delay and the strength of the proposed case.
- Evidence capable of raising questions about suspicious payments does not necessarily establish a strong fraud case when legitimate explanations remain and essential matters such as excessiveness, intent, and reliance lack evidential support.
- A contractual warranty-claim notice requiring reasonable detail is not satisfied by broad references to accounting warranties when the particular inaccuracies and resulting losses later relied upon are omitted.
Why It Matters
The decision illustrates the strict approach to major pleading changes made close to trial. Even an arguable new fraud theory may be refused where the applicant lacks a strong evidential case, cannot adequately explain why documents already within its control were not investigated sooner, and would force the loss of the trial fixture.
It also underscores the need to follow negotiated claim-notification clauses precisely. A timely notice identifying some warranty breaches will not necessarily preserve different accounting allegations that are discovered later but were not described with the contractually required detail.