Amendments After the Expiry of Limitation: Libyan Investment Authority v King

This week the Court of Appeal handed down Judgment in the case of Libyan Investment Authority & Ors v King & Ors [2020] EWCA Civ 1690, in which it considered the wording of CPR r.17.4(2) and section 35(5)(a) of the Limitation Act 1980. The appeal was heard by Floyd, Arnold and Nugee LJJ on 26^th November 2020.

The appeal was concerned with whether the Court has the power to permit the Claimants (Respondents to the appeal) to amend their Particulars of Claim, so as to introduce new claims after the expiry of the limitation period. The facts of this case raised a novel point: in circumstances where the Court has struck out the entirety of the Claimants’ currently pleaded case, can the Court nevertheless permit new claims to be brought?

Appellants’ Ground 7

The Defendants’ (Appellants to the appeal) permission to appeal was granted by Richards LJ but limited to Ground 7 only. This ground was concerned with the wording of section 35(5)(a) LA 1980 and CPR r.17.4(2).

Section 35(5)(a) provides that rules of the court may allow 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”. A similar provision is contained at CPR r.17.4(2), although it does not contain the wording “as are already in issue”.

The Defendants argued that HHJ Barker erred in concluding that he had the power to grant permission to re-amend the Re-Amended Particulars of Claim under CPR r.17.4(2), because the Re-Amended Particulars of Claim had been struck out by an Order of October 2018. It follows that because there was no claim “in issue”, new claims could not be said to arise out of the same or substantially the same facts as such a claim.

The Court of Appeal held that the Claimants could not re-re-amend their Particulars of Claim under CPR r.17.4(2) to add new claims after the expiry of the limitation period. As the Re-Amended Particulars of Claim had been struck out, they were no longer “in issue”.

The Court directed itself as to the words “as are already in issue” (section 35(5)(a) LA 1980) by reference to Goode v Martin [2001] EWCA Civ 1899. This authority provided that CPR r.17.4(2) should be interpreted as if it read:

“The court may allow an amendment whose effect will be to add […] a new claim, but only if the new claim arises out of the same facts or substantially the same facts as are already in issue on a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings” (emphasis in original; per Brooke LJ at §46).

The Court did not accept the Respondents’ argument that CPR r.17.4(2) could be satisfied where the relevant facts had been in issue at one time or another. Nugee LJ explained: “facts ‘are in issue on a claim’ only if there is an extant claim which has not been resolved” [§46].

The Court unanimously agreed that Ground 7 of the Appellants’ notice should be upheld.

Respondents’ Ground 4

Ground 4 of the Respondents’ notice (the Claimants in the substantive case) was that HHJ Barker was entitled to compare the proposed facts of the Re-Re-Amended Particulars of Claim to the Re-Amended Particulars of Claim, by reference to the Claim Form; which had not been struck out and could be amended.

It appeared common ground in oral submissions that seeking to amend the Particulars of Claim before amending the Claim Form was somewhat putting the cart before the horse. Nugee LJ pointed out that the Claimants should have first asked for permission to re-amend the Claim Form, and then, if permission were granted, to serve the Re-Re-Amended Particulars of Claim [§58]. The effect being, if the new claims had been permitted to be added to the Claim Form, then there would have been little difficulty in the Court giving the Claimants permission to particularise those amendments.

However, in giving permission for the amendments to the Claim Form, HHJ Barker would still have needed to undergo a comparative exercise to satisfy CPR r.17.4(2). He would therefore have needed to decide whether the new claims arose out of the same or substantially the same facts as were in issue on the claims made in the Claim Form. Nugee LJ held that HHJ Barker’s inevitable conclusion would have been “no”; they did not arise out of the same or substantially the same facts [§70].

Both Floyd LJ and Arnold LJ were in agreement and Ground 4 of the Respondents’ notice was dismissed.

Respondents’ Ground 5

Ground 5 of the Respondents’ notice was that the Court of Appeal can and should exercise either: the power to vary the October 2018 Order under CPR r.3.1(7); or, the power to correct accidental slips or omissions under CPR r.40.12, so as to give effect to HHJ Barker’s intention. The variation sought effectively removed reference to the Re-Amended Particulars of Claim having been struck out.

Arnold LJ and Floyd LJ were in agreement that the October 2018 Order could be varied so as to give effect to HHJ Barker’s intentions. Arnold LJ pointed out that whilst HHJ Barker reached a conclusion that the case against King Sturge must be dismissed, he reached no such conclusion against the Second and Seventh Defendants. Whilst HHJ Barker noted that the claims then being advanced against the Second and Seventh Defendants had no real prospects of success, he considered it might be possible for the Claimants to refine and reformulate their case in a manner which would have a real prospect of success. Arnold LJ considered that “[HHJ Barker] did not intend to make an order which would prevent the Claimants from doing that” [§103].

In agreement, Floyd LJ said the exercise HHJ Barker had in mind was a refinement and re-working of the existing pleading, and the Order which was then formulated frustrated that intention [§131].

The Court noted that orders can be corrected pursuant to CPR r.40.12 to give effect to a judge’s intention where the words otherwise fail to do so, and also to prevent the order from having an unintended consequence. The Court agreed that CPR r.3.1(7) provided an alternative basis for varying the Order which HHJ Barker made, because the October 2018 Order as it was did not permit “the very amendment exercise which [HHJ Barker] had in mind” [§145].

It was therefore held that the Court had the power the correct the failure of the 2018 Order to give effect to HHJ Barker’s intention and should do so. Accordingly, the appeal was dismissed.

Nugee LJ – Dissenting

Nugee LJ described Ground 5 of the Respondents’ notice as “a bold but impossible attempt by the Claimants to rewrite history and extricate themselves from a difficulty of their own making” [§73].

In contrast to Floyd LJ and Arnold LJ’s interpretation of the October 2018 Order, Nugee LJ considered that HHJ Barker did intend to strike out the entirety of the Re-Amended Particulars of Claim, holding that all the claims (including those against the Second and Seventh Defendants) had no real prospects of success. Nugee LJ therefore concluded that the Court had no business in varying the Order, which “did what [HHJ Barker] intended it to do” [§73].

Commentary

Whilst the present case had a complicated procedural history and the facts raised what Nugee LJ termed a “novel point”, he also noted that the issue of amendments after the expiry of limitation “crops up” frequently in litigation.

Although the coram of the Court of Appeal reached differing conclusions on the case-specific point at Ground 5, the hard-edged point in the Appellants’ Ground 7 prevailed. That being, if a claimant wishes to add a new claim after the limitation period has expired on the basis that it arises out of the same facts as his existing claim, he has to do that before, not after, his existing claim has been disposed of.

This reflects the view that limitation has long been recognised as serving a public purpose, with section 35(5)(a) LA 1980 being referred to as a “bright-line” rule, ensuring that “everyone knows where they stand” [§52].  

Sorcha Dervin is a Pupil at Farrar’s Building.

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