Leslie Francis Bellinger and Another v Mercer Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Hh Judge Pelling QC |
| Judgment Date | 13 January 2014 |
| Neutral Citation | [2014] EWHC 372 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 2MA30311 |
| Date | 13 January 2014 |
[2014] EWHC 372 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
MANCHESTER DISTRICT REGISTRY
Manchester Civil Justice Centre
1 Bridge Street West
Manchester M60 9DJ
His Honour Judge Pelling QC
SITTING AS A JUDGE OF THE HIGH COURT
Case No: 2MA30311
Mr J Evans (instructed by Squire Sanders) appeared on behalf of the Claimant
Ms J Seaman (instructed by Maurice Turnor Gardner LLP) appeared on behalf of the Defendant
Introduction
This is a Case management Conference in which (aside from directions for the further conduct of the proceedings) there are two separate applications before the court. The applications are, firstly, an application by the claimant for permission to amend the Particulars of Claim, which is opposed in part by the defendants on the grounds that the amendments raise new claims outside the relevant limitation period that do not arise out of the same or substantially the same facts of the claim as it is currently pleaded and, secondly, an application by the defendants for an order transferring these proceedings to be heard in the Chancery Division in London. In any event, and as I said, this is a case management conference seeking directions for the future conduct of the claim.
The Application For Permission To Amend
I give permission to amend the Particulars of Claim in so far as that application is not opposed.
As to the remainder of the application, the applicable relevant principles are contained, so far as primary legislation is concerned, in the Limitation Act 1980, sections 2, 5, 14A and 35. It is not necessary that I set out those provisions in full. In summary:
a. A claim founded in contract or tort shall not be brought more than six years after the cause of action has accrued; but
b. Alternatively, in relation to claims founded on the tort of negligence, a claim so formulated can be brought either within six years of the cause of action accruing, or within three years of the claimant having both the right to bring the claim and the knowledge required for bringing the claim, being 'knowledge' as defined in the Limitation Act 1980 (as amended), sections 14A(6) to (10) as long as such a claim is not brought later than 15 years from the date when the cause of action accrued; and
c. The court shall not permit a new claim to be made in the course of any action after the expiry of any limitation period applicable to the claim unless the new claim arises out of the same facts or substantially the same facts as already in issue.
In relation to the alternative limitation period referred to in (b) above, it is now clear it can apply only to tortious claims and not to claims formulated in contract — see Societe Commerciale de Reinsurance v ERAS International Limited [1992] 2 All ER 882).
CPR rule 17.4 is the rule by which effect is given to the principle referred to in (c) above. In summary, and as is common ground, this requires a three-stage test to be applied before permission can be given to amend, so as to raise a new claim after the expiry of the applicable limitation period. The three stages involve answering three questions being:
a. Are the opposed amendments outside the applicable limitation period?
b. If so, do they seek to add or substitute a new cause of action; and
c. If so, does the new cause of action arise out of the same or substantially the same facts as are already in issue in the existing claim.
If the answer to this last mentioned question is no, then the court cannot give permission to amend.
The case law decided in relation to section 35 of the Limitation Act (as amended) and CPR rule 17.4 and its predecessor provisions establishes that where an application to amend is opposed by reference to these provisions, the court can either:
a. determine it as a conventional amendment application, or
b. direct that the limitation issue be determined as a preliminary issue
— see Chandler v Brook North [2013] EWA Civ 1559 per Jackson LJ at [66].
In this case both parties submit and I accept that I ought to proceed on the first of these courses. That case law further establishes that:
c. If the court proceeds on the first of these two bases, then becomes whether the defendant has a reasonably arguable case that the proposed new claim is statute-barred — see Chandler (ante) at [67];
d. In the event that the court refuses permission to amend, the claimant will be entitled to issue new proceedings in which case the defendant can plead the limitation defence. The new claim will be consolidated with the original claim and the limitation issue resolved on its merits — see Chandler (ante) at [68]; and
e. Whether a new cause of action arises out of substantially the same facts as already pleaded is a matter of impression to be obtained by comparing the facts alleged in the unamended Particulars of Claim and the facts sought to be added by way of amendment — see Welsh Development Agency v Redpath, Dorman Long Limited [1994] 1 WLR 1409, Darlington Building Society v O'Rourke, James, Scourfield & McCarthy [1999] PNLR 365 at 372 and Chandler (ante) at [83].
I now turn to the facts of this case. They are complex and the summary I set out below is not intended to be anything other than a summary sufficient to enable this judgment to be understood.
First City Insurance Brokers Limited were a substantial company carrying on insurance broking as its principal business. Its business was sold in 2010 and thereafter that company was placed in liquidation. The claimants are the former and current trustees of First City's pension scheme that I refer to hereafter as "the Scheme". The Scheme is in deficit. The defendants are the former providers of actuarial and administrative services to the trustees of the Scheme.
One of the functions of the defendants was to prepare reports known as actuarial valuation reports or AVRs, which valued the scheme's assets and liabilities. It was on the basis of these reports that First City made contributions to the Scheme. Broadly, it is alleged that certain of these valuations were carried out negligently and in breach of contract. As a result, the Scheme was underfunded and thus is now in deficit. The Scheme closed for future accruals on 1 October 2001. The Scheme was governed by a deed and rules dated 24 June 1994 which were replaced by a deed and rules dated 13 June 2001. Hereafter where I refer to the rules, I mean the deed and rules applicable for the time being.
As the claim is currently formulated, it relates to three successive AVRs being that for 1996, 1999 and 2001. The rules provided that guaranteed minimum pensions payable under the Scheme would be increased by a fixed percentage each year, whereas it is alleged that the defendants prepared the AVRs on the basis that the increase would be at the lower of the statutory rate or inflation, and limited such increases to the guaranteed minimum pension after 1988. It is alleged that this approach was both negligent and a breach of contract. There are other breaches alleged as well but they are not material to the application before me.
There are three categories of amendment that are sought by the claimant and opposed by the defendant. In summary they are these,
a. An application for permission to amend so as to enable the claimant to bring a claim against the defendants in respect of a report referred to in the draft amended pleadings as the 2002 AVR. The claims that the claimant seeks to bring in relation to the 2002 AVR are
i. A claim in the same terms as that currently pleaded in relation to the 1996, 1999 and 2001 AVRs; and
ii. claims in similar terms to the additional claims that the claimant seeks permission to amend so as to bring in relation to the 1996, 1999 and 2001 AVRs.;
b. An application for permission to amend so as to enable the claimant to bring claims against the defendant in relation to the 1996, 1999 and 2001 AVRs (and the 2002 AVR, if the claimant is permitted to amend so as to add a claim in respect of the 2002 AVR) based on an allegation that the defendants failed to take account of the rules and/or the statutory minimum funding requirement (or MFR) valuation methodology in arriving at
i. A uniform accrual rate assumption, and
ii. The rate of increase to pensions payable in excess of the guaranteed minimum pension.
The MFR is a statutory requirement contained in the Pensions Act 1995. It took effect from 6 April 1997. Although the draft amendment suggests otherwise, it is accepted on behalf of the claimants that the MFR methodology is not a relevant consideration to the 1996 AVR in relation to the uniform accrual rate assumption point. These proposed amendments have been referred to by the parties as, respectively, the category 4 proposed amendments (being those referred to in (a) above), the category 5(1) proposed amendment (being that referred to in (b)(i) above) and the category 5(2) proposed amendment (being that referred to in (b)(ii) above) and I adopt that shorthand description to the extent necessary hereafter.
Against that background I now turn to the questions that arise on this application. The first is whether the amendments add new claims. As to this, it is common ground that they do — see paragraph 12 of the claimant's skeleton.
The next question is whether the defendants have a reasonably arguable case that the proposed new claims are statute-barred. The claim is pleaded both in contract and in tort, as I have explained. The claimant's case on limitation...
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