Frontiers Capital I Limited Partnership v Thomas Flohr [2025] EWHC 678 (Ch)

‘At the time, Mr Flohr and his business partner, Mr Roman Brunner, were seeking investment into a new venture to establish a group specialising in online document management, storage and archiving solutions for European businesses. The proposal was for the acquisition and unification of three existing companies: Micro-Image Business Solutions Limited (UK) (“MBS”), Solitas Informatik AG (Switzerland) (“Solitas”) and Solsys Solution Systems GmbH (Austria) (“Solsys”).’

‘My role: As Executive Chairman of StorageOnline, I will be responsible for the profitable growth path as outlined in the business plan. You stated correctly, that one of my strength is also on the sales side with high level corporate decision makers at large enterprises. I am therefore very comfortable to commit, that I will devote a substantial part of my efforts to not only make those executive relationships available to StorageOnline, but also be significantly involved in the sales cycle to ensure, that these relationships turn into accountable revenue.’

‘3. Unbeknown to FCILP, Mr Flohr set up, controlled and kept hidden from FCILP a parallel structure of Comprendium companies in Switzerland and Germany. Those companies acquired European technology companies from Comdisco Global Holding Company Inc (USA), in one instance for a profit of EUR 93m or more at completion. That parallel structure of companies had no right to use the name “Comprendium”, leveraged the existing company structure under Comprendium UK and used its resources and personnel.’

‘72.1. During his tenure as Chairman of Comprendium UK, Mr Flohr caused to be incorporated a series of parallel Comprendium companies, including to the Fund’s present knowledge, Comprendium Investment SA, Comprendium Finance SA, Comprendium Capital SA, Comprendium Investment (Deutschland) GmbH, and Comprendium Leasing (Deutschland) GmbH; 72.2. In particular, Mr Flohr then utilised some of those companies within his Parallel Comprendium Structure to purchase the Swiss and German subsidiaries of his former employer, Comdisco Holdings Global Inc. In particular: 72.2.1. On 10 October 2002, Mr Flohr caused Comprendium Investment SA to purchase the entire share capital of Comdisco (Switzerland) SA, which changed its name to Comprendium Finance SA; 72.2.2. On 29 April 2003, Mr Flohr caused Comprendium Investment (Deutschland) GmbH, a subsidiary of Comprendium Investment SA to acquire the shares in Comdisco Deutschland GmbH, which, by that point, had already changed its name to Comprendium Leasing (Deutschland) GmbH; 72.3. It is the Claimant’s case that by these transactions Mr Flohr made very significant profits for his personal benefit and built up a substantial collateral business empire to the detriment of the Claimant; 72.4. Contrary to his ongoing fiduciary duties and duties of good faith, Mr Flohr never told the Claimant (nor Mr Horlick) that he had used and was continuing to use Comprendium Investment SA and other Comprendium branded companies to acquire, run and manage the former assets and businesses of Comdisco Switzerland and Comdisco Germany; 72.5. Further, after his acquisition of the former businesses and assets of Comdisco Switzerland and Comdisco Germany, Mr Flohr prompted a process of corporate restructuring at Comprendium UK. During that process, Mr Flohr never referred to, nor mentioned, the Comdisco acquisitions. Nor during that process did Mr Flohr reference the parallel Comprendium companies (Comprendium Leasing (Deutschland) GmbH, Comprendium Investment (Deutschland) GmbH, Comprendium Finance SA and Comprendium Capital SA). This is surprising if, as Mr Flohr suggests, there was no concealment of his acquisitions of Comdisco entities and use of parallel Comprendium-named companies to effect and manage those acquisitions. 72.6. Mr Flohr had no right to use the Comprendium name and trademark in his Parallel Comprendium Structure; 72.7. Following the acquisitions, Mr Flohr unilaterally resigned from his position as a Director of Comprendium UK. The Claimant and Mr Horlick took this action to be a simple error at the material time. Mr Horlick was only notified by Mr Rinaldo on 27 November 2003 that Mr Flohr appeared to have removed himself from Comprendium UK’s Board of Directors on 21 May 2003, according to the Annual Return filed on 2 June 2003, even though there was no proper notice filed alongside the Annual Return. Until Mr Rinaldo’s email, it is clear that Mr Horlick was unaware that this had occurred, particularly since, upon becoming aware of this fact, Mr Horlick requested that Mr Flohr be reinstated to the Board, stating “Thomas should only have been replaced as Secretary, not as a Director. Carl should be removed and Thomas reinstated.” Of course, with the benefit of hindsight and, in retrospect, it is clear that Mr Flohr’s action was deliberate and undertaken with a view to avoiding his duties to Comprendium UK. However, Mr Flohr did not disclose the reasons for his actions at the time. 72.8. … 72.9. Further, the assets and manpower of Comprendium UK and its subsidiaries were exploited by Mr Flohr for his benefit or those of the Parallel Comprendium Structure, including by the use of shared offices and staff. 72.10. The above actions frustrated the purpose of Comprendium UK, which was to be the ultimate holding company for the whole of the Comprendium group. 72.11. Once Comprendium UK was in considerable financial difficulty, Mr Flohr exploited its vulnerability by obtaining its registered trademark for the benefit of the Parallel Comprendium Structure. I address this point further below, but the Claimant’s case is that Mr Flohr made various representations at this time to explain why he required the benefit of the trademarks, including by reference to his own business reputation and personal exposure on guarantees. Mr Flohr never disclosed, nor referred to the fact that he required the trademarks as a result of his acquisition and management of former Comdisco businesses under the Comprendium brand. 72.12 . Throughout the life of Comprendium UK, Mr Flohr was obliged to deal fairly and openly with the Fund, disclosing facts or circumstances likely to affect materially the business of Comprendium UK. His continuing failure to do so was an ongoing breach.’

‘37. In or around September 2002, Mr Flohr invited Mr Horlick to attend the Oktoberfest in Munich, Germany. After dinner in a VIP chalet, Mr Flohr took Mr Horlick to one side, informed him that he was considering bidding for the assets of an entity named Comdisco Deutschland and asked Mr Horlick for his assistance. Mr Horlick stated that this would not be possible as both men had just invested in Comprendium UK and Mr Flohr's obligation was to focus 100% of his time on that business. Mr Flohr stated that it would be for the benefit of Comprendium UK and FCILP as: (i) The business to be acquired would need document management services; and (ii) Mr Flohr would ensure that €10-20m of annual business would be placed with Comprendium UK, thus ensuring the profitability of that company. 38. On the basis of these representations, Mr Horlick agreed to assist Mr Flohr and entered into an oral agreement with him including the following terms: (i) By way of his contacts, Mr Horlick would introduce Mr Flohr to banks and investors in the City of London to fund the acquisition of Comdisco Deutschland (“Comdisco Germany Transaction”); (ii) In return for Mr Horlick making the necessary introductions, Mr Flohr would pay to Mr Horlick 20% of the profits earned on the Comdisco Germany Transaction (“20% Profit Agreement”).’

‘42. Paragraph 35(ii) above is repeated. Mr Flohr indirectly acquired Comdisco Deutschland GmbH under the name Comprendium Leasing (Deutschland) GmbH, ABN was the source of funding used and Mr Flohr made a profit of, or in excess of, EUR 93m. In the premises, Comprendium Leasing (Deutschland) GmbH would have been capable, had Mr Flohr so directed it, of satisfying the assurance given to Mr Horlick of €10-20m of annual business being placed with Comprendium UK. 43. In breach of the fiduciary duties owed by Mr Flohr, each of the minimum standards of the duty of good faith owed by Mr Flohr to FCILP, the implied terms and/or Clause 10.1.1 of the 27 March 2002 SSA as pleaded at paragraphs 27 - 31 above, Mr Flohr failed to follow through on his assurance that €10-20m of revenue would accrue to Comprendium UK. Mr Flohr thereby frustrated the continuing viability of Comprendium UK in breach of his fiduciary and contractual obligations.’

‘1. There must be no specific express terms in the contract that prevents a duty of good faith being implied into the contract. 2. The contract will be a long-term one, with the mutual intention of the parties being that there will be a long-term relationship. 3. The parties must intend that their respective roles be performed with integrity, and with fidelity to their bargain. 4. The parties will be committed to collaborating with one another in the performance of the contract. 5. The spirits and objectives of their venture may not be capable of being expressed exhaustively in a written contract. 6. They will each repose trust and confidence in one another, but of a different kind to that involved in fiduciary relationships. 7. The contract in question will involve a high degree of communication, co-operation and predictable performance based on mutual trust and confidence, and expectations of loyalty. 8. There may be a degree of significant investment by one party (or both) in the venture. This significant investment may be, in some cases, more accurately described as substantial financial commitment. 9. Exclusivity of the relationship may also be present.’

‘(7) Without in any way attempting to define the circumstances in which fiduciary duties arise (something the courts have avoided doing), it seems to me that what all [the above] citations have in common is the idea that A will be held to owe fiduciary duties to B if B is reliant or dependent on A to exercise rights or powers, or otherwise act, for the benefit of B in circumstances where B can reasonably expect A to put B's interests first. That may be because (as in the case of solicitor and client, or principal and agent) B has himself put his affairs in the hands of A; or it may be because (as in the case of trustee and beneficiary, or receivers, administrators and the like) A has agreed, and/or been appointed, to act for B's benefit. In each case however the nature of the relationship is such that B can expect A in colloquial language to be on his side. That is why the distinguishing obligation of a fiduciary is the obligation of loyalty, the principal being entitled to “the single-minded loyalty of his fiduciary” ….: someone who has agreed to act in the interests of another has to put the interests of that other first. That means he must not make use of his position to benefit himself, or anyone else, without B's informed consent. (9) So far as joint ventures are concerned, fiduciary duties may in particular be found to arise where one party has control of assets which are to be exploited for the joint benefit of both.’

‘The fiduciary relationship, if it is to exist at all, must accommodate itself to the terms of the contract so that it is consistent with, and conforms to, them. The fiduciary relationship cannot be superimposed upon the contract in such a way as to alter the operation which the contract was intended to have according to its true construction.’

‘(1) …, where in the case of any action for which a period of limitation is prescribed by this Act, either— (a) the action is based upon the fraud of the defendant; or (b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant; or (c) the action is for relief from the consequences of a mistake; the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it. References in this subsection to the defendant include references to the defendant's agent and to any person through whom the defendant claims and his agent. (2) For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty.’

‘50. It makes no sense to say that the test for whether the limitation period has begun to run is when the claimant recognises that it has a worthwhile claim, and then to say that it does not have a worthwhile claim when it knows there may have been a cartel, but did not know, for example, the period during which the cartel operated. The formulation for the necessary knowledge is “knowing with sufficient confidence to justify embarking on the preliminaries to the issue of a writ”. One can embark on the preliminaries to the issue of a writ once one knows that there may have been a cartel without knowing chapter and verse about the details. That is what one either finds out when making investigations or will only find out upon disclosure within the eventual proceedings.’

‘53. To summarise, therefore, the position after FII is that the proviso to section 32(1) has to be construed consistently as between mistake and deliberate concealment cases. Time begins to run in a deliberate concealment case when the claimant recognises that it has a worthwhile claim. In a case of this kind, a worthwhile claim arises when a reasonable person could have a reasonable belief that there had been a cartel. The claimant can embark on the preliminaries to the issue of a writ (and therefore the limitation has begun) once it knows that there may have been a cartel and the identity of the participants, without knowing chapter and verse about the details. It would not, however, know that it had a worthwhile claim if a claim pleaded on the basis of the details it knew would be struck out.’

‘131. … It is not an inevitable consequence of the deeming provision that the directors in office at the date of the dissolution would have remained in office during the whole of the period of what the judge called the companies’ enforced period of non-existence if no dissolution had taken place. It is no more than a possible one. In any given case the relevant directors might have died, or become bankrupt, or might have been disqualified from acting as directors. Or, if the companies had remained in existence, HMRC might have presented winding up petitions and appointed liquidators earlier than they did. Nor is it an inevitable consequence of the companies’ deemed existence that the wrongdoing directors would have persisted in their wrongdoing. Again, it is no more than a possible one. In my judgment, therefore, the conclusion that (irrespective of the facts of any particular case) section 1032(1) requires the assumption that the directors in office at the date of dissolution remained in office throughout the period of enforced non-existence is wrong.’

‘150. The alternative way of putting the case is that there were no directors during the period of the company’s non-existence. But this, too, seems to me to require a positive assumption to be made which the section does not require. The section requires an assumption to be made about the company, not about the absence or presence of directors. In addition, it must be firmly borne in mind that the context in which the question arises is the postponement of the limitation period under section 32 of the Limitation Act 1980. Where the claimant relies on that section, the burden lies on him to prove on the facts that he could not with reasonable diligence have discovered the fraud. That is a question of fact. The claimants failed to discharge that burden. 151. In my judgment, the approach of the court in relation to the making of a direction under section 1032(3) should also inform the approach to the interpretation and consequences of section 1032(1). The three particular points are: first the company’s dissolution must have been the real cause of the company being unable to pursue its claim (County Leasing); second, the company should not be in a better position under section 1032 than it would have been if it had not been dissolved; and third what would have happened if the company had remained in existence is a question of fact (Davy v Pickering). These are all questions to be decided on the evidence, and not on legal assumptions.’

‘109. The essential facts concealed by Mr Flohr may be summarised as being his use of Parallel Comprendium Structure to acquire and, thereafter, manage former Comdisco entities to his considerable personal profit. In this regard, the Claimant alleges that the acquisition of Comdisco Germany was particularly profitable for Mr Flohr (the profit being €93-131 million, see Paragraph 35(ii)(e) of the PoC). This is expressed in the PoC as follows: 109.1. By Paragraph 67 of the PoC, the Claimant refers to the facts and matters set out at Paragraphs 35 and 41 of the PoC (i.e. the breaches of duty and the failure to inform Mr Horlick of the completion of the Comdisco Germany acquisition, whether ABN provided funding and the profit made on acquisition) and alleges that Mr Flohr failed to disclose to the Claimant the fact and true operations of the Parallel Comprendium Structure, the source of the funds used to complete the Comdisco Germany transaction and the profits that he made from the transactions.’ 109.2 . Further, by Paragraph 69 of the PoC, the Claimant avers that each of the breaches of contractual and fiduciary were deliberate and committed in circumstances where they were unlikely to be discovered for some time. As such, each breach of duty is alleged to be a concealment of the facts involved in that breach of duty (pursuant to Section 32(2) of the Act). 110. By reason of his duties to the Fund, Mr Flohr was bound to disclose (at least) the essential facts identified above and the Fund alleges his continuing failures so to do were deliberate concealments. 111. As I have referred to above, by Paragraph 63 of the PoC, the Fund also alleges that Mr Flohr utilised his position to cause the exit of staff and individuals from Comprendium UK and its subsidiaries. The effect of their removal was to delay the exposure of Mr Flohr’s breaches. … 112. Subsequently, the Fund alleges Mr Flohr continued to conceal the facts relevant to its rights of action when enquiries were made of him in May 2010 by Mr Horlick (see Paragraph 64 of the PoC) and in 2013 during a course of correspondence between lawyers for Mr Horlick and Mr Flohr (see Paragraphs 65-66 of the PoC (“the 2013 Correspondence”)). … 114. Further, the Claimant also alleges an additional act of concealment as follows. On or around 30 November 2005 (which was the date Mr Flohr and Mr Horlick had signed an agreement for Umbra and Equity Management to declare all their mutual receivables and payables forgiven) during a meeting at Mr Flohr’s house in Walton Road, Mr Horlick asked Mr Flohr what happened with his potential Comdisco Germany acquisition. Mr Flohr had replied to Mr Horlick stating that the deal never got off the ground as planned, which Mr Horlick took to mean that Mr Flohr did not acquire Comdisco Germany as expected. Given their relationship of trust and confidence, as well as Mr Horlick’s lack of knowledge as to the true purpose of the Parallel Comprendium Structure, Mr Horlick had no reason to probe Mr Flohr further on an issue that was clearly sensitive to him.’

‘I have spent a lot of my time on this fucking company Comprendium over the last 24 months and if I'm totally honest I think it has not had enough of your attention since you did your deal with Comdisco. I am trying to come up with a way of saving this business but I need TOTAL COMMITMENT FROM SOMEONE ON YOUR SIDE or FROM YOU if we are going to save this thing. I had long conversations with Bing and Hans yesterday, we agree to find an insolvency practitioner and when I call Hans today at 2pm German time he says “Oh I was busy in a meeting” and “Anyway Thomas thinks this could damage the Comprendium name”. THIS PISSES ME OFF. If we save the Comprendium business the way I am suggesting then the Comprendium name will be a lot less damaged than if a quite large business goes down the pan completely along with 120 people.’

‘63A. On or around 30 November 2005, during a meeting between Mr Flohr and Mr Horlick at Mr Flohr’s house at Walton Place, Knightsbridge, Mr Horlick asked Mr Flohr what happened with the Comdisco Germany transaction. Mr Flohr stated that the deal never got off the ground.’

‘179. In May 2013, three years after the Stern Proceedings, Mr Horlick had a conversation with Mr Stern, in which Mr Stern made various allegations against Mr Flohr, including that Mr Flohr may have made a profit of circa of €300m on the Comdisco Germany Acquisition and used Comprendium companies to do so. Mr Horlick was sceptical as to that allegation, being mindful that Mr Stern had been unsuccessful in pursuing his own claim against Mr Flohr at the Arbitral Proceedings. As a result, Mr Horlick viewed Mr Stern’s allegations with caution. 180. Mr Horlick was, nevertheless, motivated to query the position with Mr Flohr because, at the time, he believed that money was due to him personally, including, at least, the repayment of the €500K Personal Loan. Mr Horlick, therefore, instructed Dr Geza Toth-Feher, a former German lawyer, friend and business partner of Mr Horlick’s, to correspond with the Defendant’s legal representative, Dr Luka Müller-Studer of MME Partners in Switzerland.’

‘5. You will also recall that you made an agreement with Mr. Horlick at the Oktoberfest in 2002 for him to assist you in raising funds for the acquisition of Comdisco Germany. You will recall that you offered him 20% of the profits on the deal. While this agreement was never documented Mr. Horlick (misguidedly as it turns out) proceeded on the basis that you were a man of your word. Mr. Horlick expressed his concerns that you were supposed to be running Comprendium, which Mr. Horlick had financed ultimately in an amount of nearly €8m; to alleviate his concerns you promised that if the transaction was successful, Comdisco Germany could become a customer of Comprendium and you would ensure that at least €10m of business was contracted with Comprendium. … 7. You will be aware that the acquisitions of Comdisco Switzerland and Comdisco Germany were structured using the name, trademarks and intellectual property of the Comprendium Group without the agreement of Mr. Horlick or his funds or the Board of Comprendium. You will also know that you falsely misrepresented to Mr. Horlick the reasons why Mr. Horlick should agree to transfer the names and IP of Comprendium to you for effectively zero consideration when the core business of Comprendium failed, which he blames largely on your responsibility for the lack of any management oversight whatsoever of the business. It is clear that in your personal dealings with Mr. Horlick and in your dealings with Mr. Horlick in his capacity as a Director of Frontiers Capital regarding the Comprendium Group, and your related dealings with [others] regarding Comprendium and Comdisco, you have demonstrated a repeated pattern of deliberately deceptive behaviour which in the case of the allegations surrounding the auction of Comdisco Germany amount, if proven, may very well amount to criminal offences.’

‘…Mr Horlick's claims are of an entirely different nature, namely the provision of many millions of Euros of capital to Mr Flohr and his companies. It is this capital and Mr Horlick's provision of financial advice and assistance that provided Mr Flohr with the platform with which he has been able to enrich himself.’

‘Mr Daniel Quarcoopome, an old friend and “fixer” of Mr Flohr's, has provided extensive background regarding Mr Horlick's claims. It is interesting that, according to Mr. Quarcoopome, at the time that Mr Flohr asked for the loan from Mr Horlick he was basically out of cash and was being sued by Comdisco Inc, his former employer. It is Mr Horlick's loan, and his company's investments in Comprendium, that provided Mr Flohr the breathing space to continue his business activities at all and to settle his dispute with Comdisco.’

‘Mr Horlick had wanted to go for an immediate winding up of the business not knowing that in fact the Comprendium business was now closely intertwined with the business of Comdisco Switzerland and Comdisco Deutschland. In effect Mr Flohr completely breached his fiduciary duties towards Comprendium and its lead investor, Mr Horlick, fraudulently misrepresented the state of affairs of the Comprendium group of companies and failed to fulfil his promise to fund the ongoing Comprendium business despite being in a position to do so. These actions and misrepresentations by Mr Flohr led to a total loss of investment in the amount of €7.5m.’

‘…it is clear to Mr. Horlick that your client has demonstrated a repeated pattern of deliberately deceptive behaviour which would weigh heavily with a court. This is before consideration of the other very serious allegations which have been made by Mr Horlick's witnesses against Mr Flohr with respective [sic] to the acquisition of Comdisco Deutschland in particular.’

‘15. i) The court must consider whether the claimant has a “realistic” as opposed to a “fanciful” prospect of success: Swain v Hillman [2001] 2 All ER 91; ii) A “realistic” claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8]; iii) In reaching its conclusion the court must not conduct a “mini-trial”: Swain v Hillman; iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10]; v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550; vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63; vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.’

‘189. This information established that Mr Flohr had made a considerable profit from the Comdisco Germany transaction and had always been in a position to place considerable business with Comprendium UK but, in breach of his duties to Comprendium UK and the Fund, had not done so. Prior to this point, Mr Horlick had neither tangible knowledge of the profit made (beyond rumour), nor proof that any profit had been made at all. Indeed, Mr Flohr had falsely claimed there had been no profit, thereby taking further and positive steps to conceal that fact.’

‘3A. The case for FCILP is that Mr Flohr’s real intention in instigating and participating in the joint venture of Comprendium UK was to support the advancement of his personal interests by facilitating his acquisitions of former European subsidiaries of Comdisco Inc. In securing investments from FCILP, Mr Flohr fraudulently misrepresented his intention, and hid from FCILP his true purpose.’

‘(i) Mr Flohr’s intention in initiating the joint venture of Comprendium UK was none other than to found, launch and grow the leading enterprise software, document management and storage solutions company in Europe; and (ii) Mr Flohr’s intention in acting as Chairman of Comprendium UK and in participating in its business was none other than to execute the purported vision he had set out orally and in the Business Plan, and to promote the interests of the Company and its shareholders.’

‘36. Section 35 of the Limitation Act 1980 provides, at sub-section (1), that “any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced …on the same date as the original action.” Sub-section (3) provides that a new claim will not be allowed after the expiry of any time limit, save as provided for in sub-section (4) and (5). Sub-section (5) permits the addition 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.” 37. These provisions are given effect by CPR 17.4, which provides: “(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; (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.” 38. It is conventional to say that four questions need to be answered when considering r.17.4 (see Ballinger v Mercer Limited [2014] EWCA Civ 996; [2014] 1 WLR 3597 and Hyde v Nygate [2019] EWHC 1516 (Ch)). They are: i) Is it reasonably arguable that the opposed amendments are outside the applicable limitation period? ii) Did the proposed amendments seek to add or substitute a new cause of action? iii) 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? iv) Should the Court exercise its discretion to allow the amendment?’

‘Among the new causes of action which the plaintiffs seek leave to introduce are (i) fraudulent breach of trust, and (ii) intentional breach of fiduciary duty. They submit that no period of limitation applies to either cause of action. I shall deal with the two claims separately. Before doing so, however, I should express my opinion that the solution to the problem lies in the fact that the new claims are based on the same factual allegations as the common law claims for fraud and conspiracy to defraud. The equitable jurisdiction which the plaintiffs invoke is thus the concurrent jurisdiction. The new claims are not different causes of action (which is historically a common law concept) but merely the equitable counterparts of the claims at common law.’

‘Whether one cause of action arises out of the same or substantially the same facts as another was held by this court in Welsh Development Agency v Redpath Dorman Long Ltd [1994] 4 All ER 10 to be essentially a matter of impression. In borderline cases this may be so. In others it must be a question of analysis. In the Thakerar case Chadwick J observed that it would be “contrary to common sense” to hold that a claim based on allegations of negligence and incompetence on the part of a solicitor involved substantially the same facts as a claim based on allegations of fraud and dishonesty. I respectfully agree. In all our jurisprudence there is no sharper dividing line than that which separates cases of fraud and dishonesty from cases of negligence and incompetence.’

‘Where it is sought to add allegations of wrongdoing which is intentional, the position is in my judgment different. The change cannot be categorised as a technicality. I accept the submission made on behalf of the plaintiffs that the critical question is the extent to which the facts on which the new cause of action is based depart from those already pleaded (and not the seriousness of the new allegation). However, to allege that an injury is caused intentionally is to add a new allegation of fact which gives the allegations of fact as a whole a substantially different character. In Letang v Cooper [1964] 2 All ER 929, this court recognised the division in actions for personal injuries “according as the defendant did the injury intentionally or unintentionally” (Lord Denning MR (with whom Danckwerts LJ agreed) [1964] 2 All ER 929 at 932). Moreover as Bowen LJ stated in Edgington v Fitzmaurice (1885) 29 Ch D 459 at 483, “the state of a man's mind is as much a fact as the state of his digestion … it is as much a fact as anything else”. The addition of allegations of intentional wrongdoing take these cases beyond the power conferred by s 35(4) because the claims do not arise “out of the same facts or substantially the same facts”. Upon the section as enacted, the reasoning is in a sense self-justifying because it is the allegation of intentional wrongdoing which makes the cause of action new for the purposes of s 35(5)(a) and it is the allegation of intentional wrongdoing which also prevents the claim arising out of the same or substantially the same facts for the purposes of the section. Upon analysis, however, reinforced by the common sense referred to by Chadwick J, the power in s 35(4) cannot be exercised in the plaintiffs’ favour in these cases.’

‘Where there are found in completed buildings serious defects of the type here under review, the facts relating to design, execution and superintendence are inextricably entangled until such time as the court succeeds in elucidating the position through evidence. The design has inevitably to be closely examined even if the only claim relates to superintendence – and all the more so if the designs are, as is alleged, experimental or such as need amplification as the construction progresses. The architect is under a continuing duty to check that his design will work in practice and to correct any errors that may emerge. It savours of the ridiculous for the architect to be able to say – as was here suggested – “True my design was faulty, but of course I saw to it that the contractors followed it faithfully” – and be enabled on that ground to succeed in the action.’

‘71. An apparent gloss on the requirement for a new claim to be issued where there is an arguable limitation defence has emerged in recent years. Mr Sherborne submits that the Court can, instead of requiring a new claim to be issued in which the defendant can raise its limitation defence, give permission to amend but specify that the relevant date of the new claim for limitation purposes is not the date of issue of the claim form but a later date (the authorities seem to favour the date of the application for permission to amend under rule 17.4, but it could be the date of the amendment itself if no such application was made). That approach is known as the Mastercard approach, following a decision of Field J in WM Morrison Supermarkets plc v Mastercard Inc[2013] EWHC 3271 (Comm) (“Mastercard”).’

‘77. In Libyan Investment Authority v King [2021] EWCA Civ 1600 at [22] (“Libyan”), Nugee LJ commented that in a case he had heard as a puisne judge he persuaded the parties to agree to permission to amend being granted on the basis that the question of whether the amended material fell within rule 17.4(2) would be decided at trial. The indication in his judgment is that there was particular complexity about whether the new claims arose out of substantially the same facts as existing claims, which the trial judge would be better placed to decide, following which the matter of relation back or not would be determined accordingly. 78. In all these cases except Libyan, the parties were agreed about how the valid part of the claim could be pleaded by way of amendment. In Libyan on the other hand, the parties were persuaded to agree, in effect, to defer to trial the determination of the application under rule 17.4 for permission to amend. 79. The question of whether the Court had power to impose a Libyan-style solution against the will of one of the parties was considered in Advanced Control Systems, Inc v Efacec Engenharia e Sistemas S.A. [2021] EWHC 914 (TCC) (“ACS”). In ACS, it was common ground that some of the amendments pleaded might be statute-barred but others were valid, but there was no concession by the claimant that any claims were statute-barred. There was therefore a limitation issue about all the claims sought to be pleaded. The claimant proposed to side-step the immediate issue about whether permission to amend could be granted by having the order state: “The amendments permitted by paragraph 1 above are to take effect from 1 March 2021” (the date of the application to amend). 80. That was therefore a case where there was a live dispute about barred claims, but the claimant was willing to have the court make an order that negated what would otherwise have been the effect of allowing a new claim to be made by amendment. It would have the effect of deferring to trial the question of which claims were statute-barred. 81. The defendant contended that the court had no power to take that approach. Mr Ter Haar QC, sitting as a Deputy High Court Judge, held that if the parties could agree to such a course (as he considered that previous decisions confirmed) the court must be able to impose it, since the parties could not agree to do something that s.35 Limitation Act 1980 did not allow. He accordingly gave permission to amend on the basis suggested. The effect of that was to leave to trial the question of which new causes of action were statute-barred. The decision therefore went further than the Mastercard or Deutsche Bahn cases because it allowed potentially statute-barred claims to proceed by way of amendment, with the limitation defence being determined later, but protecting the defendant from the new claims automatically relating back to the date of the claim form. …. 83. … However, where there is an issue about whether the running of the primary limitation period is deferred by s.32, a Mastercard approach of excluding claims arising more than 6 years before the date of the application to amend will not be effective. The only order that would work, in such a case, is the equivalent of the order made in ACS, specifying that any “new claims” later identified as not falling within s.35 are deemed to be brought on the date of the application to amend (or a suitable later date).’

‘87. Where an ACS order is made, the purpose underlying s.35 can be achieved, in that the defendant is not deprived of its ability to rely on limitation as fully as if a new claim form had been issued, but the determination of that issue is deferred. S.35 itself is concerned only with preserving the ability of a defendant to rely on a limitation defence; it is not concerned with protecting the parties from having to investigate the facts relating to the new claim, as they may have to do to some extent if a new claim form is issued instead. On the other hand, the issue of a new claim would provide the defendant with the opportunity to seek to strike it out summarily on limitation grounds, or have a trial of a preliminary issue, without the need to prepare for a full trial on the merits. Early determination of a limitation issue is usually desirable because, if the defence succeeds, it saves the parties from the costs of investigating the merits of a stale claim. 88. It therefore seems to me that the court ought to have power to permit an amendment in ACS form where (but only where) that is just and convenient, even if a relevant party does not consent, because it gives effect to the purpose of s.35 and may be more convenient than requiring a new claim to be issued. Mr Hudson did not argue that the Court could not do it, only that it should not do so on the facts of this case. It is, in my view, nevertheless a power that should be exercised with caution, given its potential to subvert the purpose underlying the Limitation Act. 89. The discretion to permit an amendment in ACS form must be exercised with regard to any prejudice likely to be caused to the defendant, the extent to which in a particular case the purposes of the Limitation Act would be undermined by it, and the consequences for the future management of the trial, both as regards the existing claims and the new claims. If the defendant might be prejudiced by such a course, as compared with its position if a new claim has to be issued, or if it will encumber or possibly delay the trial or add to the burdens of case management, it is unlikely to be appropriate to make such an order. Whether it is appropriate to make an ACS order is likely to depend on the stage that the unamended proceedings have reached, when the trial is due, the nature of the issues for trial as matters stand, the impact of the new limitation issues on the trial, including what further disclosure or evidence might be required, and whether the respondent has a strong case for summary (or prior) determination of the limitation issue. 90. If, having considered those matters, it is more convenient to deal with a limitation issue within the existing proceedings, the court can make an ACS-type order, even if one party unreasonably objects.’