Mr Bala Chandra and Another v Brooke North (A Firm)and Another

Hearing date: Thursday 24th October 2013

Approved Judgment

This judgment is in eight parts, namely:

Part 1. Introduction,

Part 2. The facts,

Part 3. The present proceedings,

Part 4. The appeal to the Court of Appeal,

Part 5. Was the judge right to refuse to set aside the claimants' amendments in reliance upon section 14 A of the Limitation Act 1980?

Part 6. Could the amendments be justified on the basis that they fell within the scope of the original claim forms?

Part 7. The remaining issues

Part 8. Conclusion.

This is an appeal against a decision allowing amendments to be made to the particulars of claim in two solicitors' negligence actions. The central issue in this appeal is whether those amendments raised new causes of action after expiry of the limitation period.

The resolution of this appeal will involve a review of Court of Appeal decisions under the former Rules of the Supreme Court ("RSC") and consideration of whether the principles stated in those decisions remain valid under the Civil Procedure Rules ("CPR").

The claimant in the first action is BPC Hotels Ltd ("BPC"). The claimants in the second action are Mr Bala Perampalam Chandra and his wife, Mrs Maria Perpetua Chandra. Mr and Mrs Chandra ("the Chandras") own and control BPC.

The defendants in both actions are Brooke North ("BN") and Brooke North LLP ("BNLLP"). BN is a firm of solicitors which acted for BPC and the Chandras during the period 2001 to 2003. BNLLP is a successor firm, which subsequently took over the business of BNLLP. Mr Stephen Lopeman was the partner of BN who was principally involved in the matters in issue.

In this judgment I shall refer to Royal Bank of Scotland Plc as "RBS" or "the bank". I shall refer to the building contractors Costain Ltd as "Costain". I shall use the familiar abbreviation "SPV" for special purpose vehicle.

I shall refer to the Limitation Act 1980 as "the 1980 Act". Section 14 A of the 1980 Act provides:

"Special time limit for negligence actions where facts relevant to cause of action are not known at date of accrual.

(1) This section applies to any action for damages for negligence, other than one to which section 11 of this Act applies, where the starting date for reckoning the period of limitation under subsection (4)(b) below falls after the date on which the cause of action accrued.

(2) Section 2 of this Act shall not apply to an action to which this section applies.

(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) below.

(4) That period is either —

(a) six years from the date on which the cause of action accrued; or

(b) three years from the starting date as defined by subsection (5) below, if that period expires later than the period mentioned in paragraph (a) above.

(5) For the purposes of this section, the starting date for reckoning the period of limitation under subsection (4)(b) above is the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action.

(6) In subsection (5) above "the knowledge required for bringing an action for damages in respect of the relevant damage" means knowledge both—

(a) of the material facts about the damage in respect of which damages are claimed; and

(b) of the other facts relevant to the current action mentioned in subsection (8) below.

(7) For the purposes of subsection (6)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment.

(8) The other facts referred to in subsection (6)(b) above are—

(a) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and

(b) the identity of the defendant; and

(c) if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant.

(9) Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (5) above.

(10) For the purposes of this section a person's knowledge includes knowledge which he might reasonably have been expected to acquire —

(a) from facts observable or ascertainable by him; or

(b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek;

but a person shall not be taken by virtue of this subsection to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice."

Section 35 of the 1980 Act provides:

"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 cause of action; or

(b) the addition or substitution of a new party;

…

(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."

I shall refer to the deeming process prescribed by section 35 (1) as "relation back".

Until 25 ^th April 1999 the rules of court referred to in section 35 (4) of the 1980 Act were contained in RSC Order 20 rule 5. This provided:

"(2) Where an application to the Court for leave to make the amendment mentioned in paragraph (3), ( 4) or (5) is made after any relevant period of limitation current at the date of issue of the writ has expired, the Court may nevertheless grant such leave in the circumstances mentioned in that paragraph if it thinks it just to do so.

…

(5) An amendment may be allowed under paragraph (2) notwithstanding that the effect of the amendment will be to add or substitute a new cause of action if the new cause of action arises out of the same facts or substantially the same facts as a cause of action in respect of which relief has already been claimed in the action by the party applying for leave to make the amendment."

Since 26 ^th April 1999 the rules of court referred to in section 35 (4) of the 1980 Act have been contained in CPR rule 17.4. This provides:

"Amendments to statements of case after the end of a relevant limitation period

(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 1980¹;

…

(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."

I shall use the phrase "arises out of similar facts" as shorthand for "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".

CPR rule 23.10 provides:

"Application to set aside or vary order made without notice

(1) A person who was not served with a copy of the...