Lockheed Martin Corporation v Willis Group Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Rix,Lord Justice Wilson,Lord Justice Waller |
| Judgment Date | 30 July 2010 |
| Neutral Citation | [2010] EWCA Civ 927 |
| Docket Number | Case No: A3/2009/1370 |
| Court | Court of Appeal (Civil Division) |
| Date | 30 July 2010 |
[2010] EWCA Civ 927
IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEENS BENCH DIVISION COMMERCIAL COURT
Honourable Mr Justice Beatson
Before: Lord Justice Waller
Lord Justice Rix
and
Lord Justice Wilson
Case No: A3/2009/1370
2009 FOLIO 430
Mr Jeffrey Gruder QC & Mr Simon Stafford-Michael (instructed by Scanlan & Co Solicitors) for the Appellant
Mr Charles Dougherty (instructed by Ince & Co Solicitors) for the Respondent
Hearing date: Monday 1 st March 2010
Lord Justice Rix:
The issue in this application for permission to appeal is concerned with the substitution of a party under CPR 19.5 on the ground of mistake.
The claimant, Lockheed Martin Corporation (“Lockheed”) commenced its proceedings, towards the end of a six year limitation period, on 28 August 2008. Its claim arose out of a global settlement agreement reached with the London Market Insurance Companies (“LMIC”) on 29 August 2002. This agreement was called the Settlement and Release Agreement or “SAR”. The total sum agreed in settlement was US $124 million. However, Lockheed has received only some $103 million out of this settlement. This is partly due to insolvency on the part of some of the underwriters. However, $8.124 million of the unpaid balance is said to be due to the fact that the corresponding policies together with the names of the company underwriters in question had been lost over time, and could not be identified at the time of the settlement. The policies in question go back to a period before 1993, indeed it would seem that they date from 1946 to 1990. The SAR allowed 90 days for payment. It is therefore accepted for present purposes that limitation expired on 26 November 2008. Plainly, the issue of a claim form on 28 August 2008, one day short of six years after the date of the SAR itself, was done to protect the claim against the expiry of the limitation period.
The claim as originally made on issue of the claim form was brought against Willis Group Holdings Limited (“Holdings”). The logic of the claim, as generally endorsed on the claim form, lay in professional negligence against insurance brokers for having failed to maintain proper records of those subscribing to the missing policies. The policy records, including the placement slips, have apparently been lost or mislaid. The claim form said:
“The claim is for professional negligence arising from the Defendants’ broking of insurance policies on behalf of the Claimant and its predecessors in interest prior to 1993. The Defendants owed duties of care to the Claimant including a duty to maintain evidence of the terms, conditions and subscribing market to the policies of insurance to enable the handling of claims made by the Claimant under the said policies, and the collection of such sums from the subscribing market as may be payable by reason of a settlement of any claims.”
At the time of issue Lockheed was unable to particularise loss further than saying it was the difference between the unpaid total of $21 million and the amount which was due from the insolvent companies. Moreover, it was unable to distinguish between the liabilities of two separate broking groups which it named as defendants. The Willis group was one, and the other was the Marsh group. Thus the second defendant named in the claim form was Marsh Limited. We are not here concerned with the position of Marsh Limited.
Lockheed had four months to serve its claim form. In the period after its issue Lockheed continued to try to obtain from agents for the LMIC access to relevant documents which would enable Lockheed to particularise its claim. Lockheed's evidence before the court is to the effect that it was in mid August 2008 that it instructed its London solicitors, Scanlan & Co, to evaluate its claim. Two broking houses were then identified as being responsible for the placement of the relevant insurance policies, namely, as stated above, the Willis and Marsh groups. While investigations were pending the claim form was issued to protect Lockheed's position. By mid October 2008 Scanlan & Co had established contact with Navigant Consulting, the agent of London Market Services Limited, with whose help Lockheed hoped to be able to identify the relevant policies. This necessitated recalling from storage allocation materials brought into existence at the time of the SAR from which it was hoped that the unknown policies could be identified. However, that did not prove possible, as necessary authorities for disclosure were not forthcoming. This led to difficulties in production of Lockheed's particulars of claim. Apart from this account, no explanation has been forthcoming about the circumstances in which it was only in mid-August 2008 that Lockheed gave its instructions to Scanlan & Co to investigate the claim.
Against the background of these continuing difficulties for Lockheed in particularising its claim, and with the four months for service of the claim form running out, Lockheed served its claim form on Holdings on 19 December 2008. It did so at the Willis Building at 51 Lime Street. The claim form came that day into the hands of Ms Marie Bolton-Jones, an in-house solicitor employed by Willis Limited (“Limited”) who also works for Willis Group Limited (“Group”). The legal department in which she works provides legal advice to all Willis companies except those in the USA or Bermuda. I will give further details about Group and Limited, but in essence Group is the principal holding company in the UK, and Limited is the principal broking company within the UK operation. In her evidence, Ms Bolton-Jones explains that Holdings is the ultimate holding company for the Willis group, and that it is a Bermudan company quoted on the New York stock exchange. It is not an English company. It cannot be served in England other than by consent, and to serve it with English proceedings in Bermuda requires the leave of the English court. Moreover, it only came into existence in 2001, well after the underlying events in question.
Ms Bolton-Jones spoke to Michael Scanlan of Scanlan & Co on the telephone on the same day, 19 December 2008. She explained the position about Holdings, and said that she was not authorised to accept service of the claim form on behalf of Holdings.
On 22 December Lockheed applied to amend the claim form and obtained the order of Master Fontaine permitting it to do so. The amended claim form deleted reference to Holdings and instead named Group and Limited. The application was made under CPR 19.5(3)(a) (see below), without notice.
On 24 December, the amended claim form was re-served on the substituted companies, Group and Limited, at the Willis Building and came again into the hands of Ms Bolton-Jones.
On 31 December 2008, Group and Limited applied to set aside the order of Master Fontaine. By his judgment and order dated 9 June 2009, Mr Justice Beatson granted that application, set aside Master Fontaine's order, and dismissed the claim. This is the renewed application for permission to appeal from that disposal.
When the claim form was served, or purportedly served, on Holdings on 19 December 2008, the complaint came out of the blue so far as the Willis group as a whole was concerned. There had been no previous correspondence with any Willis group company. It also follows from the dates set out above that at the time of service any other claim arising out of the SAR had already been time barred.
The rules
It is convenient at this point to set out three rules. The first, CPR 19.5 is the one which governs the present dispute. The second, CPR 17.4, is a rule which covers a closely related subject-matter. It will be necessary to bear in mind the relationship between these two rules, and their differences in language. The third was the former rule from the era of the Rules of the Supreme Court, RSC Ord 20, 5. Recent authority has said that the present rules have to be understood in the light of the former rule and the jurisprudence decided under it: see para 30 below.
CPR 19.5 provides as follows:
“(1) This rule applies to a change of parties after the end of a period of limitation under —
(a) the Limitation Act 1980…
(2) The court may add or substitute a party only if –
(a) the relevant limitation period was current when the proceedings were started; and
(b) the addition or substitution is necessary.
(3) The addition or substitution of a party is necessary only if the court is satisfied that –
(a) the new party is to be substituted for a party who was named in the claim form in mistake for the new party;
(b) the claim cannot properly be carried on by or against the original party unless the new party is added or substituted as claimant or defendant…
(Rule 17.4 deals with other changes after the end of a relevant limitation period).”
CPR 17.4 provides as follows:
“(1) This rule applies where
(a) a party applies to amend his statement of case in one of the ways mentioned in this rule; and
(b) a period of limitation has expired under –
(i) the Limitation Act 1980…
(2) The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.
(3) The court may allow an amendment to correct a mistake as to the name of a party, but only where the mistake was genuine and...
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