Charles Church Developments Ltd v Stent Foundations Ltd & Anor [2006] EWHC 3158 (TCC)

Case No HT-06-044[2006] EWHC 3158 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
St. Dunstan’s House
Venue 131-137 Fetter LaneDate Monday, 5 th December 2006
London EC4A 1HD
Before
THE HONOURABLE MR JUSTICE JACKSON
B E T W E E N:
Between
CHARLES CHURCH DEVELOPMENTS LIMITEDClaimantSTENT FOUNDATIONS LIMITEDDefendantPETER DANN LIMITEDDefendant
Mr David Friedman QC and Mr Benjamin Pilling (instructed by Nabarro Nathanson) appeared for Claimant.Mr David Sears QC (instructed by Berwin Leighton Paisner LLP) appeared for first defendant.Mr Richard Wilmot-Smith QC (instructed by Fishburns) appeared for second defendant.
Transcribed from a tape recording by Harry Counsell & Co.A subsidiary of Ubiqus Reporting UKOfficial Court ReportersClifford’s Inn, Fetter Lane. London EC4A 1LDTel: 0207 269 0370 Fax: 0207 405 9884
JUDGMENT
[1]This judgment is in five parts, namely Part 1 – Introduction; Part 2 – The Facts; Part 3 – The Present Proceedings; Part 4 – The Law; Part 5 – Decision. Part 1: Introduction[2]This is an application for permission to amend particulars of claim after expiry of the limitation period. The application raises an important point of law. It is common ground that whichever party loses should have permission to appeal to the Court of Appeal.[3]The claimant in these proceedings, and the applicant for permission to amend is Charles Church Developments Limited. I shall refer to this party as “Charles Church”. The first defendant in the action is Stent Foundations Limited, to whom I shall refer as “Stent”. The second defendant in the action is Peter Dann Limited, to whom I shall refer as “Dann”.[4]In relation to Charles Church’s application to amend, Stent consents to some of the proposed amendments but opposes others. Dann consents to all of the amendments which are sought. In so far as the defendants consent to amendments, they do so on the usual terms as to costs. Thus, it can be seen that the contest on the present application lies between Charles Church and Stent.[5]Two other companies feature briefly in the narrative of events. Keltbray Limited, which is a demolition contractor, is referred to as “Keltbray”. Wates Construction Limited, which is a main contractor, is referred to as “Wates”. In the course of this judgment I shall refer to the Limitation Act 1980 as “the 1980 Act”. I shall refer to the Civil Procedure Rules 1998 (as amended) as “CPR”.[6]After these introductory remarks I must now turn to the facts. Part 2: The Facts[7]Charles Church is the freehold owner of the property at 60 Vauxhall Bridge Road in London, which I shall refer to as “the property”. The property lies between 50 Vauxhall Bridge Road on one side and 70 Vauxhall Bridge Road on the other side.[8]Charles Church decided to demolish the existing building on the property and to construct a new building in its place. The new building was intended to comprise residential flats with underground car parking. The method of construction which was originally intended is described as follows in Charles Church’s Particulars of claim:
“6. As originally designed the building was to be constructed so as to be structurally independent of Nos. 50 and 70; the main foundations were to incorporate large diameter bored piles below basement level; and a secant pile wall was to be installed around the perimeter of the underground car park structure. 7. The proposed method of constructions was a “bottom up” form of construction. This involved the installation of the perimeter secant pile wall to enclose the basement area; temporary propping of the tops of the secant pile wall; and excavation to the full depth of the basement. The lowest level concrete slab would then be cast, followed by the intermediate slab and supporting columns. The temporary props would then be replaced by the permanent concrete ground floor transition slab, which would support the superstructure above. This form of construction requires the excavated basement to be kept dry during construction, and requires the concrete basement slab and walls to be able to resist water penetration.”
[9]Charles Church originally proceeded on the basis that it would engage Wates as main contractor. However, in or about May 2000 Charles Church assumed the role of main contractor. Charles Church engaged Stent as piling sub-contractor for the project on terms which were agreed on or about 18th July 2000. Stent commenced work on site on or about 19th July 2000.[10]Dann provided structural engineering services for Charles Church in relation o the project. The precise date when Dann was first engaged by Charles Church is a matter of controversy, but I do not need to venture into that controversy for present purposes.[11]Let me now turn to the history of events on site. The first activity was, of course, the demolition of the existing building. This task was carried out by Keltbray. After demolition works had been carried out, Stent commenced its piling operations for the main foundations. It is alleged that vibration from those piling works caused severe damage to the adjoining building at 50 Vauxhall Bridge Road and also to the party wall between the property and 50 Vauxhall Bridge Road. This incident is referred to as “the first incident”. Charles Church contends that the first incident generated the need for remedial works to 50 Vauxhall Bridge Road, and also caused delay to the project. Charles Church’s claim in respect of the first incident is quantified at £777,458.00.[12]Let me now move on to the construction of the secant pile wall. Stent carried out the design and construction of the secant pile wall, making use of two drawings prepared by Dann, namely drawing no. 5159/PW/02, and drawing no. D5159/50. It is alleged that the construction works for the secant pile wall caused serious damage to the adjoining building at 50 Vauxhall Bridge Road and also to the party wall between the property and number 50. This incident is referred to as “the second incident”. Charles Church regards Dann as responsible for the second incident because of alleged deficiencies in the two drawings previously mentioned. For example, Charles Church asserts that Dann determined a position for the secant pile wall which was too close to the party wall.[13]Charles Church contends that the second incident caused more serious damage than the first incident. Temporary support was required for part of the building at 50 Vauxhall Bridge Road. Thereafter, substantial remedial works had to be carried out to number 50. In addition, the secant pile wall had to be re-designed. Also, the method of construction for the new basement of the property had to be changed from “bottom up” to “top down”. Charles Church contends that all these matters caused it to suffer a loss totalling £2,949,005.00.[14]It is common ground that following the second incident the secant wall had to be re-designed. The revised design comprised two sections of piled retaining wall, which used two types of low vibration piling methods.[15]In Autumn 2002 Wates returned to site and took over as main contractor. Wates began the operation of excavating the basement. As excavation proceeded, a number of water leaks occurred through the re-designed secant wall. This episode is referred to by the parties at “the third incident”.[16]Charles Church maintains that the third incident was caused by Stent’s errors n designing and/or installing the re-designed secant wall. Charles Church maintains that it carried out remedial works to deal with the third incident. Charles Church contends that its total loss attributable to the third incident amounts to £4,292,007.00.[17]Charles Church was minded to recover its various losses against Stent and Dann. Unfortunately, Charles Church left matters until near the end of the limitation period. As a result, Charles Church did not have time to comply with the Pre-action Protocol. In the result, therefore, and without further ado, Charles Church commenced the present proceedings. Part 3: The Present Proceedings[18]By a claim form issued in the Technology and Construction Court on 14th February 2006 Charles Church claimed against Stent and Dann damages for negligence and breach of contract in relation to the three incidents. In its Particulars of claim filed on 2nd June 2006 Charles Church alleged that the first and third incidents were caused by negligence and/or breaches of contract on the part of Stent, and that the second incident was caused by negligence and/or breaches of contract on the part of Dann.[19]On 5th October 2006 both defendants served their defences. Dann in its defence maintained that the second incident was caused by matters for which Stent was responsible. The relevant paragraphs of Dann’s defence read as follows:
“36. Paragraph 55 of the Particulars of Claim refers to Dann’s drawing no. D5159/50 and was produced by Dann on 3rd May 2000 for [Stent’s] tender purposes. It is clearly marked as a “CONSTRUCTION” drawing. It is admitted that this drawing is different from Dann’s earlier drawing but it is denied that such inconsistency is evidence of any want of care on the part of Dann. Further, Dann contends that the Claimant and/or Stent designed and installed the secant pile wall and that the Claimant employed its own surveyor (Jules Baroudi) and set out the secant wall in the position it chose. By its letter to Dann of 28th July 2000, the Claimant issued Dann with revised co-ordinates for the secant wall. Had there been any ambiguity which required resolution or concern on the part of the Claimant or/or Stent as to the precise or proper position of the secant wall, then they or either of them as reasonably careful and competent Developers and Contractors could and should have asked Dann for clarification of its drawings. Neither did so. Paragraph 1.06 of the Piling Specification which is noted at paragraph 34 hereof, expressly requires such action in the event of “inconsistencies or discrepancies” in the drawings supplied… 40. As to paragraph 59 of the Particulars of Claim, Dann avers and asserts that the piles referred to at paragraph 58 of the Particulars of Claim were installed by Stent in a row and are therefore the same distance from the five storey section of No. 50 as those installed previously. Accordingly, the claimant is put to strict proof if its case is that this further pile was in fact constructed closer to the five storey section of No. 50. Furthermore, Dann contends that Stent’s machinery was defective and that its pile logs were and are missing. Dann calls for the production of these (Stent’s piling) logs or a formal explanation as to their whereabouts if they are unavailable. If and to the extent that it is shown that Stent’s piling rig was defective and/or its logs missing, in respect of the latter Dann will also assert that the Claimant should have regularly collected the piling logs from Stent, and maintained them. If this did not happen, Stent should not have continued to install piles when its machine was malfunctioning and/or its logs were not being produced and/or maintained and equally, the Claimant, which as main contractor had a full time present on the site and was obliged to supervise its sub-contractor, should not have allowed it to do so. In doing so, Dann contends that both the claimant and /or Stent caused or contributed to the damage which occurred… 43. The first sentence of paragraph 61 of the Particulars of Claim is admitted, the second is denied and the Claimant is put to strict proof of the actual causes of the disturbance to the footings of the party wall. Dann refers to Stent’s letter to the Claimant of 2nd October 2000, in which it stated: “…nothing untoward was noted during either the boring or concreting phases.”
Therefore even if, which is not admitted, the auger was obliged to pass through grouted sands and gravels resulting from earlier grouting operations under the party wall after the lift shaft was removed, had Stent’s machinery been working properly, difficult or changed conditions wold have been brought to Stent’s attention immediately and it would have had to notify them to Dann, pursuant to its obligations under the Piling Specification. The Claimant is put to strict proof that the proximity of the rig and guide wall to the party wall was the principal or a relevant cause of the damage. Dann repeats paragraph 34 above. 44. At the time of the incident, “flighting” was mentioned to Dann as the cause of the problem which was consistent with the damage which occurred. Dann concurred with that view. Mr. John Ingle produced a report in November 2000 in which he concluded that: “There is evidence to suggest excessive flighting occurred throughout the site and particularly during the installation of the CFA piles adjacent to the party wall. This could have caused over excavation of material beneath footings.” [page 6, 24th November 2000 report] And “Installation of secant piles along the table end of No. 50 was the last piling operation carried out before work ceased as a result of further movement of No. 50. During the period between the 21st September 2000 and the 26th September, 22 No. female piles and 5 No. male piles were installed. Of the male piles, 4 No. were installed on the 26th September, the day that movement of the 5 storey section was first reported to Charles Church Limited. A comparison of boring times between male and female piles indicates that it took 4 times as long to install the male piles. The average overbreak on the male piles in this area was 29% whilst the corresponding figure for female piles was 20%. This would also tend to suggest that flighting and hence weakening of the bearing strata has occurred and hence possible movement of the Structure.” [ibid, page 16] 45. In the premises, Dann submits that mechanical malfunction of the piling rig, which caused “flighting”, together with the loss of computer-generated pile logs which would have informed Stent of the problem at an early stage, is the likely, primary, cause of the damage which occurred.” “There is evidence to suggest excessive flighting occurred throughout the site and particularly during the installation of the CFA piles adjacent to the party wall. This could have caused over excavation of material beneath footings.” [page 6, 24th November 2000 report] And “Installation of secant piles along the table end of No. 50 was the last piling operation carried out before work ceased as a result of further movement of No. 50. During the period between the 21st September 2000 and the 26th September, 22 No. female piles and 5 No. male piles were installed. Of the male piles, 4 No. were installed on the 26th September, the day that movement of the 5 storey section was first reported to Charles Church Limited. A comparison of boring times between male and female piles indicates that it took 4 times as long to install the male piles. The average overbreak on the male piles in this area was 29% whilst the corresponding figure for female piles was 20%. This would also tend to suggest that flighting and hence weakening of the bearing strata has occurred and hence possible movement of the Structure.” [ibid, page 16][20]For present purposes it is not necessary to refer to any other passages in the defences. Suffice it to say, that both defendants firmly denied any liability to Charles Church.[21]On 31st October a Case Management Conference was held before Ramsey J. Directions were given for the future conduct of the action. Paragraph 5 of the order made on 31st October provided that the claimant should file and serve on the first and second defendants any draft amendments to the particulars of claim by 17th November. Paragraph 17 of that order provided that the question of costs up to and including 16th March 2007 was reserved for further consideration in the light of Charles Church’s failure to comply with the Pre-action Protocol.[22]It is clear from the terms of paragraph 5 of the order that Charles Church was considering amending its particulars of claim. On 17th November Charles Church duly served its draft Amended particulars of claim. The draft amendments covered a range of matters. Many of those amendments are uncontroversial and I say no more about them.[23]The most controversial amendment which the claimant seeks to make relates to the second incident. Charles Church proposes to insert after paragraph 62 of the particulars of claim the following paragraph relating to the second incident:
“62A. Further and alternatively, the damage was caused by Stent’s breaches of contract and/or negligence. PARTICULARS (1) Extensive flighting occurred during the installation of the piles prior to the Second Incident. The flight auger system caused local shaft enlargement, resulting in settlement of the sub-soil. (2) The flighting was either the result of a failure by Stent to control the piling rig, particularly the rate of penetration, and/or mechanical malfunction of the piling rig. (3) Further, had Stent maintained proper control of the piling rig and/or had Stent’s piling equipment been functioning correctly, it would have become aware as soon as difficult or changed conditions (such as grouted sands or gravels) occurred, and should have notified Peter Dann in accordance with its obligations under paragraph 8.01 and 8.02 of section 7 of the structural engineering specification. (4) Further and alternatively, Stent should have realised, at the latest when it was setting out and constructing the guide wall, that the co-ordinates of the secant pile walling given on Peter Dann’s drawing D5159/50 were inconsistent with the requirement on Peter Dann’s drawing 5159/PW02 that there be a distance of 1100mm between the face of the party wall below ground level, and the centre line of the secant pile wall, and should, incompliance with paragraph 1.06 of section 7 of the structural engineering specification, have drawn this to Peter Dann’s attention, and sought clarification.” (1) Extensive flighting occurred during the installation of the piles prior to the Second Incident. The flight auger system caused local shaft enlargement, resulting in settlement of the sub-soil. (2) The flighting was either the result of a failure by Stent to control the piling rig, particularly the rate of penetration, and/or mechanical malfunction of the piling rig. (3) Further, had Stent maintained proper control of the piling rig and/or had Stent’s piling equipment been functioning correctly, it would have become aware as soon as difficult or changed conditions (such as grouted sands or gravels) occurred, and should have notified Peter Dann in accordance with its obligations under paragraph 8.01 and 8.02 of section 7 of the structural engineering specification. (4) Further and alternatively, Stent should have realised, at the latest when it was setting out and constructing the guide wall, that the co-ordinates of the secant pile walling given on Peter Dann’s drawing D5159/50 were inconsistent with the requirement on Peter Dann’s drawing 5159/PW02 that there be a distance of 1100mm between the face of the party wall below ground level, and the centre line of the secant pile wall, and should, incompliance with paragraph 1.06 of section 7 of the structural engineering specification, have drawn this to Peter Dann’s attention, and sought clarification.”
[24]By this paragraph Charles Church seek to set up a new claim against Stent in respect of the second incident. Charles Church seeks to adopt as against Stent the matters which Dann has pleaded in paragraphs 36, 40 and 43 to 45 of its defence.[25]The draft Amended particulars of claim was duly considered by both defendants. Dann consented to all the proposed amendments on the usual terms as to costs. Stent consented to all of the proposed amendments except for those which asserted that Stent was liable for the second incident. Accordingly, Stent objected to paragraph 62A of the Amended particulars of claim, together with certain consequential amendments in paragraphs 1(2), 64, 65A, 74C and in paragraph 2 of the prayer. The grounds upon which Stent objected to those amendments were twofold. First, that the amendments raised a new cause of action after expiry of the limitation period; secondly, that the court in the exercise of its discretion ought to refuse those amendments in any event.[26]A hearing was held yesterday in order to deal with Charles Church’s application to amend and also with Stent’s application for the trial of a preliminary issue. At the end of yesterday’s hearing I rejected Stent’s application for the trial of a preliminary issue. I said that I would give judgment today in relation to Charles Church’s application to amend. This I now do. Part 4: The Law[27]Section 35 of the 1980 Act provides:
“(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 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.” (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. (a) the addition or substitution of a new cause of action; or (b) the addition or substitution of a new party… (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.”
[28]CPR rule 17.4 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… (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.” (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… 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.”
[29]In Lloyds Bank PLC v Rogers (Court of Appeal Transcript 20th December 1996) Hobhouse LJ, with whom Simon Brown LJ and Peter Gibson and LJ agreed, said this about the policy underlying section 35 of the 1980 Act: “Section 35 contemplates that the introduced cause of action will be time barred. The policy of the section is that, if factual issues are in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts. There is no indication in the drafting of the Act that there should be a further limitation on section 35. If there is any relevant prejudice to the party opposing the amendment it can and should be had regard to on the exercise of the Court’s discretion whether or not to allow the amendment”.[30]In Goode v Martin [2001] EWCA Civ 1899; [2002] 1 All ER 620 the Court of Appeal had occasion to consider the purpose and effect of section 35 in greater detail. In Goode the claimant was a passenger on board the defendant’s yacht. An accident occurred in which the claimant suffered a grievous head injury. The claimant had no recollection of the accident. Accordingly, her particulars of claim was based upon information supplied by a fellow passenger. The defendant in his defence alleged a completely different version of events leading up to the accident. The claimant then sought to amend her particulars of Claim in order to allege negligence on the basis of the facts pleaded by the defendant. By then the limitation period had expired. Both the Admiralty Registrar and the Admiralty Judge refused permission to amend. The Court of Appeal allowed the claimant’s appeal and permitted the proposed amendments.[31]The leading judgment in the Court of Appeal was delivered by Brooke LJ, with whom Latham LJ and Kay LJ agreed. Brooke LJ reviewed the legislative history of section 35 of the 1980 Act and CPR rule 17.4. At paragraphs 29 to 35 of his judgment Brooke LJ said this:
“29. In 1965 Ord 20, r.5 of the Rules of the Supreme Court 1965 was introduced with the effect of changing this practice in certain ways. So far as is material, it 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 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.’ 30. The power of the Rules Committee to introduce these new rules without the assistance of primary legislation soon came under fire, but it was upheld in Rodriquez v Parker [1966] 2 All ER 349, [1967] 1 QB 116 and Mitchell v Harris Engineering Co. Limited [1967] 2 All ER 682, [1967] 2 QB 703 for reasons which is not now necessary to describe. 31. The Law Reform Committee considered these rules in its Twenty-First Report: Final Report on Limitation of Actions (Cmnd 6923), published in 1977. After explaining the terms of RSC Ord 20, r 5 it said (at p 67 (paragraph 5.12)); ‘The Senior Master, who has suggested to us that the discretion of the court to allow an amendment of pleadings should be stated much more widely than it now is, has helpfully drawn our attention to the terminology used in Ruler 15(c) of the American Federal Rules of Procedure, under which a new cause of action may be added by amendment if “it arises out of the conduct, transaction or occurrence of events set forth or attempted to be set forth in the original proceedings”
. We have considered whether some such words as these might be preferable to those used in the existing R.S.C; but we doubt whether they add anything to the rule we have quoted above. The object of any such rule must, as we see it, be twofold. First, it ought to permit a plaintiff to amend his pleadings so as to make good the error of failing to tell the complete legal story at the outset. Secondly, it ought to be drawn sufficiently narrowly so as to prevent the plaintiff from instituting, under the guise of an amendment to an existing claim and after the limitation period has run, proceedings which are wholly distinct from those covered by the writ as originally framed. On the whole, we think that the existing rule achieves this object and goes as far in giving the court a discretion as a substantive law does, or should, permit. The American formula is probably consistent with our own substantive law, but we doubt whether its adoption would make any practical difference; nor do we think that it is intrinsically superior to the existing words of the R.S.C.’ 32. It follows that the committee decided to make no change to the existing rules to cover a case like the present, where the claimant wishes to add a new cause of action which arises out of the occurrence of events set forth in the proceedings as they stood before the proposed amendments. It does not appear to have considered the kind of situation with which we are at present concerned. 33. The pre-consolidation Limitation Amendment Act 1980 was the vehicle by which many of the committee’s recommendations were passed into law. I have already set out the new statutory scheme it introduced by way of substitution of s 28 of the 1939 Act. Changes were subsequently made to the wording of RSC Ord 20 r 5(4), but r 5(5) remained unaltered. When the CPR were introduced in 1999, CPR 17.4(2) was in substantially the same terms as RSC Ord 20, r 5(5), with the substation of the word ‘claim’ for the expression ‘cause of action’. 34. I return now to s 35 of the 1980 Act (for its terms, see [27], above) in order to make two points. The first is that the language chosen by Parliament in s 35(5)(a) is apt to embrace the concept contained in r 15(c) of the American Federal Rules of Procedure and the situation that has arisen in the present case. The claimant’s new cause of action does indeed arise out of the same facts as are already in issue on her claim. The second is that neither the former Rules Committee nor the Civil Procedure Rules Committee have ever evinced any intention or desire to use their power under s 35(4) to add any additional restrictions to the rules permitting post-limitation amendments. So far as the first of these is concerned, it has received judicial support from Hobhouse LJ, with whom Peter Gibson and Simon Brown LJJ both agreed, in Lloyds Bank plc v Rogers [1966] CA Transcript 1904, [1977] TLR 154 when he said of the s 35: ‘The policy of the section was that, if factual issues were in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts’. 35. We now possess more tools for enabling us to do justice than were available before April 1999. Since then, the CPR and the provisions of the Human Rights Act 1998 have come into force. By the former we must seek to give effect to the overriding objective of dealing with cases justly when we interpret any rule (see CPR 1.2(b)). By the latter we must read and give effect to subordinate legislation so far as it is possible to do so, in a way which is compatible with the convention rights set out in Sch 1 to the Act (see s 3(1) of the 1988 Act).” ‘(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 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.’ ‘The Senior Master, who has suggested to us that the discretion of the court to allow an amendment of pleadings should be stated much more widely than it now is, has helpfully drawn our attention to the terminology used in Ruler 15(c) of the American Federal Rules of Procedure, under which a new cause of action may be added by amendment if “it arises out of the conduct, transaction or occurrence of events set forth or attempted to be set forth in the original proceedings”. We have considered whether some such words as these might be preferable to those used in the existing R.S.C; but we doubt whether they add anything to the rule we have quoted above. The object of any such rule must, as we see it, be twofold. First, it ought to permit a plaintiff to amend his pleadings so as to make good the error of failing to tell the complete legal story at the outset. Secondly, it ought to be drawn sufficiently narrowly so as to prevent the plaintiff from instituting, under the guise of an amendment to an existing claim and after the limitation period has run, proceedings which are wholly distinct from those covered by the writ as originally framed. On the whole, we think that the existing rule achieves this object and goes as far in giving the court a discretion as a substantive law does, or should, permit. The American formula is probably consistent with our own substantive law, but we doubt whether its adoption would make any practical difference; nor do we think that it is intrinsically superior to the existing words of the R.S.C.’ ‘The policy of the section was that, if factual issues were in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts’.[32]Brooke LJ next discussed the rival submissions of counsel. He then came to the kernel of his judgment, which was as follows: “44. I do not consider that the rule, as interpreted by the master and the judge, has any legitimate aim when applied to the facts of the present case. Whether Mr. Martin put forward his version of events (which the claimant now wishes to adopt) before or after the expiry of the primary limitation period ought to make no difference to her ability to adopt it as part of her case and say that if that was indeed what had happened, he had nevertheless been negligent. If she delayed unreasonably in putting forward her amended pleading, the master could have blocked it on those grounds, but he made it clear that he would not have exercised his discretion against her if the rule had permitted him to allow the amendment. Even if the rule had any legitimate aim in the circumstances of this case, the means used by the rule-maker (if we have to interpret the rule in the way favoured by the court below) would not be reasonably proportionate to that aim.45. The House of Lords has been showing us, most recently in R v A [2001] UKHL 24 at [44], [2001] 3 All ER 1 at [44], [2001] 2 WLR 1586, how we should approach the interpretative task imposed upon us by s 3(1) of the 1998 Act. It is not necessary to read into this judgment the whole of the relevant passage in Lord Steyn’s speech. It is sufficient only to quote two sentences: ‘In accordance with the will of Parliament as reflected in s 3 it will sometimes be necessary to adopt an interpretation which linguistically may appear strained. The techniques to be used will not only involve the reading down of express language in a statute but also the implication of provisions’.46. Mr. Ralls contended that we should interpret CPR 17.4(2) as if it contained the conditional words ‘are already in issue on’. It would therefore read, so far as is material: ‘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.’ This would bring the sense of the rule in line with the language of the 1980 Act, which is the source of the authority to make the rules contained in CPR 17.4.47. In my judgment it is possible, using the techniques identified by Lord Steyn in R v A, to interpret the rule in the manner for which Mr. Ralls contends. In this way there would be no question of a violation of the claimant’s art 6(1) rights, and the court would be able to deal with the case justly, as we are adjured to do by the CPR. I would therefore permit the amendment and allow the appeal.” ‘In accordance with the will of Parliament as reflected in s 3 it will sometimes be necessary to adopt an interpretation which linguistically may appear strained. The techniques to be used will not only involve the reading down of express language in a statute but also the implication of provisions’. ‘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.’ This would bring the sense of the rule in line with the language of the 1980 Act, which is the source of the authority to make the rules contained in CPR 17.4.[33]Thus, it can be seen that in Goode v Martin the Court of Appeal reached its decision on the basis of an expanded version of CPR r 17.4(2). I shall refer to the expanded version of the rule as set out in paragraph 46 of Brooke LJ’s judgment as “the expanded rule”.[34]In the course of the hearing yesterday I discussed with counsel whether the expanded rule should always be adopted, or whether that expanded rule only applied in cases with a Human Rights Act dimension. Both Mr. David Friedman QC, for Charles Church, and Mr. David Sears QC, for Stent, inclined to the view that the expanded rule must generally be used in substitution for the original version of r 17.4(2) as promulgated by the Rule Committee. In particular, for the purposes of the present case both counsel agreed that this court should proceed upon the basis of the expanded rule, rather than the original version of r 17.4(2). Accordingly, I shall adopt that course.[35]There is one case decided since Goode v Martin upon which both counsel place reliance. That is Hemmingway v Smith Roddam [2003] EWCA Civ 1342. It is not necessary to analysis the facts of Hemmingway. It is sufficient if I read out the central part of the judgment of Waller LJ, with whom Clarke LJ agreed. Waller LJ said this:
“10. There is a slight different in language between CPR 17.4 and section 35(5). CPR 17.4 and section 35 have been construed in the light of the Human Rights Act in a case called Goode v Martin [2002] All ER 620. That case concerned a case in which a claimant alleged negligence in relation to an accident suffered on a yacht. She had no memory of the accident and alleged one way in which the accident had occurred. The defendant pleaded a detailed defence saying it occurred in another way. Outside the limitation period she sought leave to amend her pleading to say that, even if it happened in the way the defendant alleged, the defendant was negligent. The argument on behalf of the defendant resisting the amendment was that, if one followed the language in CPR 17.4 which related to “facts or substantially the same facts as a claim in respect of which the party applying for permission was already claiming a remedy in the proceedings”, then permission to amend should not be given. The Court of Appeal accepted the submission of counsel for the claimant in that case saying that the CPR should be interpreted so as to contain additional words which would allow the claimant to b ring her claim outside the limitation period. It held that CPR 17.4(2) should be read, so far as material, in the following way: “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 the claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.”
In that way the facts pleaded in the defence became a part of the facts in issue which enabled the court in that case to grant leave to amend. Reliance was also placed on the dictum of Hobhouse LJ in Lloyds Bank v Rogers (unreported) when, in relation to section 35, he said:
“The policy of the section was that, if factual issues are in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts.” 11. The test to be applied is thus, whether, even if a new claim is made, the new claim arises out of “the same facts already in issue”
. The question is whether the factual issues under the old pleading were going to be litigated between the parties; if they were, then the court should take the view that section 35 had it in mind that the parties should be able to rely on a cause of action which substantially arises from those facts.” “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 the claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.” In that way the facts pleaded in the defence became a part of the facts in issue which enabled the court in that case to grant leave to amend. Reliance was also placed on the dictum of Hobhouse LJ in Lloyds Bank v Rogers (unreported) when, in relation to section 35, he said:
“The policy of the section was that, if factual issues are in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts.”
[36]Let me now turn to the point of law which has been debated in the present case. Suppose that there are two defendants to an action. Let the claimant be called ‘C’ and the two defendants be called ‘D1’ and ‘D2’. If one of the defendants pleads facts by way of defence to C’s claim, can C adopt those facts as the basis of a new claim against the other defendant after expiry of the limitation period? Mr. Friedman contends that the answer to this question is yes. Mr. Sears contends that the answer to this question is no.[37]Mr. Friedman, in support of his case, relies upon the wording of the expanded rule. He submits that any fact which D1 or D2 may plead becomes an issue in the proceedings, unless those facts are admitted by C. Mr. Friedman submits that this approach is in line with the policy and intent of section 35 of the 1980 Act, as explained by Hobhouse LJ in Rogers, Brooke LJ in Goode, and Waller LJ in Hemmingway.[38]Mr. Sears, for the defendant, submits that this court should interpret and apply the expanded rule more narrowly. He submits that there are three policy reasons underlying the 1980 Act. These are:(i) the need to avoid unfairness to defendants;(ii) the increasing difficult of proving or disproving facts after a lapse of time; and(iii) the need to encourage the claimant to get on with his claim. Mr. Sears submits that section 35 of the 1980 Act is intended to protect defendants against new claims after expiry of the limitation period. Accordingly, section 35 of the 1980 Act, CPR r 17.4 and the expanded rule should all be interpreted in a manner which is consistent with the policy underlying the 1980 Act.[39]This point of law is not an easy one and I have gained considerable assistance from debating it with both counsel. When pressed in argument, Mr. Sears submitted that the words “against that defendant” should be read into r 17.4(2) before the words “in the proceedings”. Mr. Sears submitted that these words should be read into the rule in its original form and also into the expanded version of the rule. Mr. Friedman in his reply contended that such a submission by Mr. Sears undermines Stent’s case. Mr. Friedman pointed out that his interpretation of both the rule and the expanded rule required no words to be read into the text. Accordingly, that interpretation should be preferred.[40]I have weighed up all of counsels’ submissions on the question of law, including, but not limited to, those mentioned above. I come to the conclusion that Mr. Friedman’s interpretation of the expanded rule is correct. I reach this conclusion for five reasons:(i) Mr. Friedman’s interpretation follows naturally from the words of the expanded rule, as formulated by the Court of Appeal. It is not open to me as a first instance judge to put a gloss on the Court of Appeal’s formulation, or to insert words which will narrow its effect.(ii) Section 35(5)(a) of the 1980 provides an exception to the limitation principle. The rationale of this exception is that once particular facts have been put in issue in litigation, and therefore fall to be investigated, the claimant should be entitled to claim any appropriate remedy upon the basis of those facts. This policy justification is equally valid irrespective of whether those facts have been put in issue by D1 or by D2 or by both defendants.(iii) The three policy considerations identified by Mr. Sears apply with much less force to new claims based upon facts which the court is bound to investigate in any event.(iv) Mr. Friedman’s interpretation of the expanded rule seems to me to be in line with the reasoning and the general approach of the Court of Appeal in Lloyds Bank v Rogers, Goode v Martin and Hemmingway v Smith Roddam.(v) Section 35(5) of the 1980, CPR r 17.4(2) and the expanded rule merely give the court a discretionary power to allow the pleading of new claims after expiry of the limitation period, if the threshold condition is met. Whether the court will in fact allow such amendments after expiry of the limitation period must depend upon the circumstances of each case. The court can and will protect a defendant against injustice by refusing permission to amend.[41]Let me now draw the threads together. For the reasons set out above, I interpret section 35(5)(a) of the 1980 Act and the expanded version of CPR r 17.4(2) as giving the court a discretionary power, after expiry of the limitation period, to allow a claimant to plead a new cause of action based upon substantially the same facts as have been put in issue by the defence of any defendant. Part 5: Decision[42]The amendments which Charles Church seeks to make against Stent raise a new cause of action after expiry of the limitation period. Nevertheless, those amendments arise out of substantially the same facts as are already in issue in the proceedings. This is because Dann has pleaded those facts in its defence and Charles Church joins issue with Dann on its defence.[43]It follows from section 35(5) of the 1980 Act, and from the expanded version of CPR r 17.4(2), that this court has a discretion to allow the amendments which are sought.[44]The following considerations point in favour of allowing the amendment:(i) The matters pleaded in paragraphs 36, 40 and 43 to 45 of Dann’s defence will be investigated at trial in any event. If such investigation leads to the conclusion that Charles Church has a remedy against Stent in respect of the second incident, it would seem unjust to deny Charles Church that remedy.(ii) Dann intends to issue a Part 20 claim against Stent claiming a contribution pursuant to the Civil Liability (Contribution) Act 1978. That claim will include the allegations pleaded in paragraph 62A of Charles Church’s draft Amended particulars of claim. (See the letter from Dann’s solicitors to the solicitors for both other parties dated 1st December 2006.) It therefore follows that at trial Stent will, in any event, have to deal with the very allegations which are set out in paragraph 62A of the draft Amended particulars of claim. In those circumstances, it would seem appropriate to allow Charles Church to plead those allegations against Stent.(iii) There is no evidence that Stent cannot prepare to meet those allegations at the trial fixed for November 2007. There is no evidence that Stent has suffered significant prejudice as a result of the lateness of the amendment.(iv) The second and third incidents are interconnected. The third incident has always been pleaded against Stent, and now (by unopposed amendment) it is also pleaded against Dann. Even absent the amendments, the facts of the second incident would have to be investigated at trial, not only in relation to the claim against Dann but also as part of the factual background to the claim against Stent in relation to the third incident.(v) If the proposed amendments are allowed, they will not increase the scope of disclosure or require the instruction of additional experts or materially add to the length of the trial.[45]The following considerations point towards refusing the amendment:(i) Charles Church delayed investigating and preparing its claim with the result that it began proceedings shortly before the end of the limitation period and without first complying with the Pre-action Protocol.(ii) Paragraph 6 of the Protocol permits commencement of proceedings without prior compliance with the Protocol, where there is a risk that a claim will become statute-barred. Nevertheless, reliance on paragraph 6 of the Protocol in circumstances where a claimant has delayed until the end of the limitation period is unattractive. As Mr. Sears has submitted, such explanation as Charles Church has offered for delaying until the end of the limitation period is unsatisfactory.(iii) It is always inconvenient and disruptive for a claimant’s case to be pleaded in two stages, rather than fully set out in the particulars of claim at the outset of litigation.[46]I have considered all of the matters urged upon me by both counsel, including those specifically mentioned above. I have come to the conclusion that both defendants can be compensated in costs for Charles Church’s failure to comply with the Pre-action Protocol. Indeed, paragraph 17 of Ramsey J’s order dated 31st October 2006 is designed to achieve that objective. Furthermore, the costs order which I shall make at the end of this hearing will also be designed to achieve that objective. It my view, it would be unduly punitive to refuse permission to amend by reason of Charles Church’s non-compliance with the Protocol.[47]When I stand back from the detail and look at all the circumstances of this case, it seems to me that the balance comes down firmly in favour of granting permission to amend. The interests of justice require that Charles Church’s claim against Stent in respect of the second incident be dealt with at the trial next November. Stent has not suffered any significant prejudice by reason of the fact that this claim has been pleaded now, rather than in the original particulars of claim served in June of this year.[48]Both Charles Church and Stent have previously intimated an application for permission to appeal in the event that they should lose. Both parties have indicated their agreement that whoever loses should have such permission. I agree with that approach. The point of law raised on the present application is an important one and it is far from straightforward.[49]For the above reasons, this court permits Charles Church to make all of the proposed amendments, including those which are opposed. This court also gives Stent permission to appeal to the Court of Appeal pursuant to CPR r 52.3 on the grounds that the appeal has a real prospect of success.[50]If Stent pursues its appeal against this order, it will be entirely a matter for the Court of Appeal whether or not to expedite the appeal. May I, however, respectfully indicate that if the Court of Appeal should see fit to make an order for expedition, it may still be possible to maintain the procedural timetable for this action set by Ramsey J at the first Case Management Conference.[51]Finally, may I thank all counsel for their admirable and clear submissions made yesterday in support of their respective cases. I have found both their skeleton arguments and their oral submissions to be of considerable assistance. (End of Judgment)

Cited in 3 later judgments