Morgan Est (Scotland) Ltd v Hanson Concrete Products Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Jacob,Lord Justice Hooper |
| Judgment Date | 17 February 2005 |
| Neutral Citation | [2005] EWCA Civ 134 |
| Docket Number | Case No: A1/2004/1936 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 February 2005 |
[2005] EWCA Civ 134
Lord Justice Jacob
Lord Justice Hooper
Case No: A1/2004/1936
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
His Honour Judge Havery QC
HT-03–391
Royal Courts of Justice
Strand, London, WC2A 2LL
William Norris QC and Benjamin Pilling (instructed by Messrs Vizards Wyeth) for the Appellant
Andrew Bartlett QC and Paul Reed (instructed by Messrs Kennedys) for the Respondent
This is an appeal from a judgment of HHJ Havery given on 22 nd July 2004. It is with his permission.
The Judge permitted an amendment of the proceedings so that two new claimants could be added to the sole original claimant and for consequential amendments. The defendants say he had no power to do that or that if he did he ought to have refused permission on the grounds of discretion.
The facts
In 1998 an engineering contractor, Miller Civil Engineering Ltd. ("company A") built a large tunnel as part of a waste water treatment plant. It involved the use of pipe sections made by the defendants. Some parts of the pipe were damaged during a jacking process. As a result a significant number of pipe sections had to be removed and replaced. This took time and caused additional cost.
The pipe sections were bought from the defendants. It is said that the damage which occurred to them was due to defective manufacture or design and that accordingly the defendants are liable for breach of contract in the sum of about £1/2m. The defendants say that the pipes were perfectly good. In addition, however the defendants say they have a technical defence. This appeal is only about the latter and specifically about whether or not it can be overcome by the joinder of parties.
The points arise in this way. Shortly before the expiry of the limitation period the original sole claimant ("company B", then called Morgan Est (Scotland) Ltd.) issued the proceedings. The claim form, correctly, asserted that company B was formerly called Miller Civil Engineering Services Ltd. But it went on to assert, wrongly, that the original pipe supply contract was between B and the defendants and that it, B, was the company which had the trouble with the defective pipes and that it was it which suffered the consequential loss and damage.
By their defence the defendants took inter alia the point that the original contractor was company A called Miller Civil Engineering Ltd and not B. They said they were never in contractual relationship with B. They added denials that they were in breach of the contract they did have with A and that any claim by A would now be statute barred.
The response was the application the subject of this appeal. It was to add two claimants, namely company A and a company called Morgan Est plc ("company C"). This was accompanied by an explanation of the position. This was as follows:
i) Company A was the original contractor and purchaser of the pipes from the defendants. This was the company which had in fact suffered the damage and which accordingly originally owned the cause of action against the defendants;
ii) By a first assignment, company A's cause of action was assigned to company B, then called Miller Civil Engineering Services Ltd.
iii) Company B then changed its name to Morgan Est (Scotland) Ltd.
iv) Company B then assigned the cause of action to a further company Morgan Est Plc ("company C").
v) Thus in law the position was that the legal title to the cause of action remained in A but the benefit of that cause of action was now vested in C.
So there were two distinct blunders:
a) The particulars of claim asserted, wrongly, that company B was the contracting party and made no mention of any assignment;
b) The solicitors were not aware of the second assignment to company C.
The Rules and Legislation
The application to join companies A and C and make appropriate amendments to the pleadings were made pursuant to CPR rules 17. 4 or 19.5. The relevant rules read as follows:
" 17.4 (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; or
(ii) the Foreign Limitation Periods Act 1984 or;
(iii) any other enactment which allows such an amendment, or under which such an amendment is allowed.
(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 not one which would cause reasonable doubt as to the identity of the party in question."
" 19.5 (1) This rule applies to a change of parties after the end of a period of limitation under –
(a) the Limitation Act 1980;
(b) the Foreign Limitation Periods Act 1984; or
(c) any other enactment which allows such a change, or under which such a change is allowed.
(2) The court may add or substitute a party only if –
(a) the relevant limitation period was current when the proceedings were started; and
(c) 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; or
(c) the original party has died or had a bankruptcy order made against him and his interest or liability has passed to the new party."
Rule 19.5 (note not rule 17.4) implements s.35 of the Limitation Act 1980. This reads as follows:
"35 New claims in pending actions: rules of court
(1) For the purposes of this Act, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced –
a. In the case of a new claim made in or by way of third party proceedings, on the date on which those proceedings were commenced; and
b. In the case of any other new claim, on the same date as the original action.
(2) In this section a new claim means any claim by way of set-off or counterclaim, and any claim involving either –
a. The addition or substitution of a new clause of action; or
b. The addition or substitution of a new party;
and "third party proceedings" means any proceedings brought in the course of any action by any party to the action against a person not previously a party to the action, other than proceedings brought by joining any such person as defendant to any claim already made in the original action by the party bringing the proceedings.
(3) Except as provided by section 33 of this Act or by rules of court, neither the High Court nor any county court shall allow a new claim within subsection (1)(b) above, other than an original set-off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Act which would affect a new action to enforce that claim.
(4) Rules of court may provide for allowing a new claim to which subsection (3) above applies to be made as there mentioned, but only if the conditions specified in subsection (5) below are satisfied, and subject to any further restrictions the rules may impose.
(5) The conditions referred to in subsection (4) above are the following –
a. In the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the original action; and
b. In the case of a claim involving a new party, if the addition or substitution of the new party is necessary for the determination of the original action.
(6) The addition or substitution of a new party shall not be regarded for the purposes of subsection (5)(b) above as necessary for the determination of the original action unless either –
a. The new party is substituted for a party whose name was given in any claim made in the original action in mistake for the new party's name, or
b. Any claim already made in the original action cannot be maintained by or against an existing party unless the new party is joined or substituted as plaintiff or defendant in that action."
It may be noted that Rule 19.5 virtually adopts s.35 – and indeed neither side contended that the slight difference in wording made any difference to the meaning. It may further be noted that no "further restrictions" were imposed by the rules.
Prior to the 1980 Act there was no provision corresponding to its s.35. Limitation was governed by the Limitation Act 1939. The general rule for actions founded on simple contract or tort was that they:
"shall not be brought after the expiration of six years from the date on which the cause of action accrued" (s.2(1)).
Not infrequently the apparent black and white, unforgiving nature of that provision caused injustice. So, for instance, where a defendant was wrongly named in error. In 1965 that injustice was partly alleviated. But of course this could only be done within the constraints of the Limitation Act itself. Order 20 r.5 of the RSC provided:
"An amendment to correct the name of a party may be allowed under paragraph (2) notwithstanding that it is alleged that the effect...
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