AIG Europe Ltd v McCormick Roofing Ltd & Ors [2020] EWHC 943 (TCC)

“3.1.1 In accordance with the sequence of events set out in article 1.2.3, on Merger Completion, all property, rights and powers of any description) of AEL shall be transferred to AESA as they are on Merger Completion (i.e. on Merger Completion, AEL shall transfer to AESA the entire business of AEL which remains following the UK Transfer, being the European Business including the business of the European Branches). “AESA shall constitute the universal legal successor to AEL (including for each European Branch) and shall continue, after the Merger, to exist under the form of a public limited company (societe anonyme).”

“By way of explanation as to how this error has occurred, I should also clarify that ACE provided a Multinational Master Insurance Policy (“the Policy”) to American International Group Inc and all of American International Group Inc’s subsidiary companies. The Policy responded to the damage to the Property, and this Firm is instructed by both ACE and AIG and as I set out above, before that AIG Building Limited. In drafting the Claim Form, my firm named AIG Europe Ltd instead of AIG Europe SA. It was our mistake in not identifying and transposing the correct entity onto the Claim Form, and we apologise for it.”

“Special provisions about adding or substituting parties after the end of a relevant limitation period “19.5 “(1) This rule applies to a change of parties after the end of a period of limitation under – (a) the Limitation Act 1980; (b) the Foreign Limitation Periods Act 1984; or (c) any other enactment which allows such a change, or under which such a change is allowed. “(2) The court may add or substitute a party only if – (b) the Foreign Limitation Periods Act 1984; or (c) any other enactment which allows such a change, or under which such a change is allowed. (a) the relevant limitation periodwas current when the proceedings were started; and (b) the addition or substitution is necessary. “(3) The addition or substitution of a party is necessary only if the court is satisfied that – (a) the new party is to be substituted for a party who was named in the claim form in mistake for the new party; (b) the claim cannot properly be carried on by or against the original party unless the new party is added or substituted as claimant or defendant; or (c) the original party has died or had a bankruptcy order made against him and his interest or liability has passed to the new party.” (a) the new party is to be substituted for a party who was named in the claim form in mistake for the new party; (b) the claim cannot properly be carried on by or against the original party unless the new party is added or substituted as claimant or defendant; or (c) the original party has died or had a bankruptcy order made against him and his interest or liability has passed to the new party.”

“(3) The court may allow an amendment to correct a mistake as to the name of a party, but only where the mistake was genuine and not one which would cause reasonable doubt as to the identity of the party in question.”

“The claim cannot properly be carried on by or against the original party unless the new party is added or substituted as claimant or defendant.”

“…. on the question of jurisdiction, whether it is open to the court to permit the substitution, it seems to me that this is a case in which the substitution is necessary in terms of section 35(5)(b) as well as of CPR r 19.5(3)(b). The original action, asserting the company’s claim against the former administrators, cannot be determined without the substitution of the liquidator whereas if brought by the liquidator under section 212 it can. Without that substitution it could only, and would be bound to, be determined in favour of the defendants because of the section 20 defence. The claim would be struck out, because of that defence, and it could not be decided on its merits, either way, as the proceedings stand. In terms of the rule, it cannot properly be carried on by the original party, the company, whereas it can be maintained and carried on if the liquidator is substituted. No more than minimal change is necessary to the statement of case: substitution of references to the liquidator as claimant and references to the company in the third rather than the first party, so to speak, together with consequential changes as regards the relief sought. It is the same claim, in every respect, despite the fact that it is asserted by the liquidator on behalf of the company, rather than in the name of the company itself.”

“In the ordinary case of a simple assignment or transmission of a cause of action after proceedings have been commenced, no question of limitation arises.”

“Here the original claim was liable to be struck out, as it has indeed been, because of lack of standing, but I see no good reason to regard the reason for the striking out as being a critical distinction between [Parkinson Engineering] and this [case]. I would also reject the contention that the cause of action is not the same because of the identity of the claimant. Sometimes the identity of the party might be, indeed often it might be, a vital distinction, but here Mr Irwin plainly asserted the company’s cause of action and asserted it on behalf of the company, just as the substituted liquidator did in the Parkinson Engineering case. So the cause of action is identical; it is already pursued for the benefit of the company, but it is doomed to failure because of the lack on Mr Irwin’s part of the necessary locus standi. It seems to me that it is possible and appropriate for the court to exercise its discretion under rule 19.5 to allow the joinder of the company so as to assert the relevant claims.”

“The principle which I derive from these two decisions of the Court of Appeal is that the court has power to order substitution under section 35(6)(b) and CPR r 19.5(3)(b) if: (1) a claim made in the original action is not sustainable by or against the existing party; and (2) it is the same claim which will be carried on by or against the new party.”

“CPR 19.5(3)(b) is not applicable and reliance on it is misconceived. ” “39.1 It states in terms that substitution can only be given thereunder if adding or substituting is necessary to continue the claim brought by the “original party”

“the new party is to be substituted for a party who was named in the claim form in mistake for the new party”

“29. …. we would make some general observations, using the current descriptions of claimant and defendant to describe the parties to an action. Most of the problems in this area arise out of the difference, sometimes elusive, between an error of identification and an error of nomenclature. An error of identification will occur where a claimant identifies an individual as the person who has caused him an injury, intends to sue that person, describes him in the pleadings by the correct name, but then discovers that he has identified the wrong person as the person who injured him. An error of nomenclature occurs where the claimant identifies the correct person as having caused him the injury, but describes him in the pleadings by the wrong name. “30. A problem arises in distinguishing between the two types of error where the claimant knows the attributes of the person he wishes to sue, for example the manufacturer of an object, but has no personal information of the identity of that person. If on inquiry he is incorrectly informed that a named third party as defendant but describing in the pleading the attributes of the person intended to be sued, is the case one of misnomer of the person intended to be sued or error of identification? A similar problem can arise when attempting to identify the parties to an alleged contractual offer and acceptance: see for example Ingram v Little [1961] 1 QB 31. “31. The rule presupposes that there is a person intending to sue. The mistake envisaged in relation to the name of the claimant is one under which the name used for the claimant is not the name of the person wishing to sue. Such a mistake is likely to be made by an agent of the person intending to sue. Where the claimant is a company the mistake will always be that of an agent, but identifying the person intending to sue may create difficulties. “32. The rule also envisages that there will be a person intended to be sued. The mistake envisaged in relation to the defendant will be one under which the name used for defendant is not the appropriate name to describe the person that the claimant intends to sue. Thus the rule envisages a defendant identified by the claimant but described by a name which is not correct.. “33. In either case the mistake that the rule envisages is one of nomenclature, not of identification. This conclusion receives support from the authorities ….”

“The first is that it involved a mistake in relation to the name of the plaintiff. The second is because it laid down a test that has been applied in a number of subsequent cases.”

“In one sense a plaintiff always intends to sue the person who is liable for the wrong which he has suffered. But the test cannot be as wide as that. Otherwise there could never be any doubt as to the person intended to be sued, and leave to amend would always be given. In Mitchell v Harris Engineering [1967] 2 QB 703 the identity of the person intended to be sued was the plaintiff’s employers. In Evans v Charrington [1983] QB 810 it was the current landlord. In Thistle Hotels v McAlpine (unreported) 6 April 1989 the identity of the person intending to sue was the proprietor of the hotel. In The Joanna Borchard [1988] 2 Lloyd’s Rep 274 it was the cargo-owner or consignee. In all these cases it was possible to identify the intending plaintiff or intended defendant by reference to a description which was more or less specific to the particular case. Thus if, in the case of an intended defendant, the plaintiff gets the right description but the wrong name, there is unlikely to be any doubt as to the identity of the person intended to be sued. But if he gets the wrong description, it will be otherwise.”

“55. CPR r 19.5(3)(a) makes it a precondition of substituting a party on the ground of mistake: “the new party is to be substituted for a party who was named in the claim form in mistake for the new party.”

“If those responsible for the particulars of claim had knowledge of the corporate structure of the Las Vegas Sands Group and of the part played by each company in the group activities and deliberately decided to sue in the name of the second claimant alone, the fact that this decision may have been mistaken will not bring the case within CPR r 19.5. To do this the claimants must establish that those responsible for the particulars of claim were under a mistake as to the group structure or the roles played by the members of the group and, but for that mistake, would have included as claimants the third and fourth claimants. This is the very minimum that they need to achieve if they are to have an arguable case that a mistake of name within the Sardinia Sulcis test occurred.”

“34. The Court of Appeal in the Adelson case concluded, at paras 55-56, that for CPR r 19.5(3)(a) to apply, three requirements must be met: (1) the person who has made the mistake must be the person responsible, directly or through an agent, for the issue of the claim form; (2) it must be shown that, had the mistake not been made, the new party would have been named; and (3) the mistake must be as to the name of the party, applying the Sardinia Sulcis test. “35. There is a footnote which should be added to the Adelson case. In holding that the Sardinia Sulcis test still applies, the Court of Appeal cannot have intended to suggest that it remains necessary to show that the mistake was not misleading or such as to cause any reasonable doubt as to the identity of the person intended to be sued. As already mentioned, and as was noted in the Adelson case at para 44, that was a requirement of the old RSC Ord 20, r 5 but it is not a requirement of CPR r 19.5(3).”

“In his concurring judgment in The Sardinia Sulcis … Stocker LJ said, at p 209: “I agree with Lloyd LJ that the distinction between the identity of a party and the name of that party may present great difficulties. If a solution to the problem is to be stated in terms of general application I do not feel I can improve on the test suggested by Lloyd LJ – can the intending plaintiff or defendant be identified by reference to a description which is specific to the particular case – e g landlord, employer, owners or shipowners? … The nature of the claim will usually provide the answer to this problem.” “I respectfully agree that, if it is necessary to draw this distinction, it may be impossible to improve on the Sardinia Sulcis test, seen as a method for distinguishing in effect between errors of fact and law. The difficulties in drawing the distinction, however, seem to me to be at least three. The first is that the distinction between what counts as an error of fact and one of law can itself be elusive. Second, even where the distinction can in principle be drawn with reasonable clarity, there may be considerable practical and evidential difficulty in identifying the precise nature of the mistake made by the person responsible for preparing the claim form – not least because the mistake may often have arisen as a result of the failure of that person to give the matter any proper thought. The third difficulty is that it is not clear why it should matter which type of mistake was made. There is no obvious rationality in drawing a distinction between mistakes of fact and mistakes of law in this context any more than there is in other contexts, such as the recovery of money paid under a mistake of fact, where a similar distinction has been abolished or questioned in recent years.” “I agree with Lloyd LJ that the distinction between the identity of a party and the name of that party may present great difficulties. If a solution to the problem is to be stated in terms of general application I do not feel I can improve on the test suggested by Lloyd LJ – can the intending plaintiff or defendant be identified by reference to a description which is specific to the particular case – e g landlord, employer, owners or shipowners? … The nature of the claim will usually provide the answer to this problem.” “I respectfully agree that, if it is necessary to draw this distinction, it may be impossible to improve on the Sardinia Sulcis test, seen as a method for distinguishing in effect between errors of fact and law. The difficulties in drawing the distinction, however, seem to me to be at least three. The first is that the distinction between what counts as an error of fact and one of law can itself be elusive. Second, even where the distinction can in principle be drawn with reasonable clarity, there may be considerable practical and evidential difficulty in identifying the precise nature of the mistake made by the person responsible for preparing the claim form – not least because the mistake may often have arisen as a result of the failure of that person to give the matter any proper thought. The third difficulty is that it is not clear why it should matter which type of mistake was made. There is no obvious rationality in drawing a distinction between mistakes of fact and mistakes of law in this context any more than there is in other contexts, such as the recovery of money paid under a mistake of fact, where a similar distinction has been abolished or questioned in recent years.”

“56. On the basis, however, that the distinction between mistakes as to identity and as to name is one which the law still requires to be drawn, I turn to consider the situation with which the present case is concerned, where a claim for damages for alleged professional negligence has been mistakenly brought against an LLP rather than the partnership whose business the LLP took over. Applying the Sardinia Sulcis test as discussed above, it seems to me that the relevant description of the defendant in a case of this kind is that of professional adviser. It is the fact that the defendant has provided professional services and has allegedly done so negligently which potentially give rise to legal liability. “57. In order to decide whether the claimant’s mistake can be regarded as one of name rather than description, it is thus necessary to distinguish between the two following cases. (1) The claimant sues the LLP in the mistaken belief that the LLP provided the services which are said to have been performed negligently, failing to recognise that the services were provided by the former partnership and not the LLP. (2) The claimant knows that that the services were provided by the former partnership but mistakenly believes that the LLP is legally liable for the negligence of the earlier firm. The court has the power to grant relief in case (1) but not in case (2).”

“The criticisms of Sardinia Sulcis in observations in later cases may be explicable on the basis that the solicitor in Sardinia Sulcis was apparently aware of the merger but made a mistaken assumption about its legal effect. Had he not been so aware, then it seems to me that any criticism would be misplaced. Where proceedings are intended to be brought by or against an entity identifiable by description, such as employer, landlord, shipowner or insurer, but the person preparing the proceedings is unaware that the entity has meanwhile been subsumed into another corporate body and ceased to exist in its original form, then that person has in my view misnamed the entity and the case falls within the Sardinia Sulcis test and CPR rule 19.5. It would be entirely artificial to classify such a case as involving no mistake as to the party’s name but only as to its rights. In reality, there has been a mistake of facts – ignorance of the fact of the reorganisation by adjunction – which has led to the wrong entity being named as fitting the identifiable description.”

“For completeness, I would observe even in a case of simple assignment it is not at all obvious why a mistaken selection of a party arising from ignorance of the assignment should not be regarded as a mistake falling within CPR 19.5 ….”

“Miss Linklater drew my attention to various passages in the authorities where the courts had relied on the pleadings to justify the substitution of a party. For my part I have some doubt as to whether reliance on the Particulars of Claim adds anything in the circumstances of this case. It is a document which came into existence after the expiry of the Limitation period and after the mistake had come to light and which was served in draft form during the course of the application for substitution. Plainly by the time the application was heard the defendant was aware of the mistake. However it seems to me that the Court of Appeal in Adelson was contemplating a period before that.”

“35. The Applicant was neither named nor described in the claim form in mistake for the dissolved Claimant. Only the dissolved claimant was named and described in the Claim Form. Further the applicant assignee does not match someone of the description actually used in the Claim Form and never did. In Smith Kline Beecham PLC v Horne Roberts Horne-Roberts v SmithKline Beecham plc [2001] EWCA Civ 2006; [2002] 1 WLR 1662 Lord Justice Keene the President of the Court of the Appeal at Paragraph said: “Stocker L.J. while acknowledging the difficulty in distinguishing between the identity of a party and the name of that party, added at page 209: “If a solution to the problem is to be stated in terms of general application I do not feel I can improve on the test suggested by Lord Justice Lloyd – can the intending plaintiff or defendant be identified by reference to a description which is specific to the particular case e.g. landlord, employer, owners or shipowners?” “a) It is by this test that the distinction between the entities can be starkly drawn: “b) The Claimant was the Employer, also occupier of the Premises, an English limited company. Whilst neither the Applicant nor the Claimant entered into a contract with the Defendants only the Claimant entered into the contract with the Main Contractor. “c) Whereas the Applicant has never been any of those things it is simply on the Applicant’s own case “the Assignee” of part of the Claimant’s interests, a Societe Anonyme that never employed the Main Contractor, the Defendants and never suffered any loss from any alleged tort. “d) The Assignee does not even occupy the building where the fire took place - that is a different AIG company. Even after the attempts to patch the property rights with the 20 December 2019 transactions are taken into account the result is that there is both confusion and separation of identity - were that not the case those steps would not have been necessary. “e) Clearly there is a difference and any lay person (from the point of view of mergers) is likely to be confused by the prospect that the claim is brought by the Post-Brexit EU Passporting business based in Luxembourg and not the person the work was done for or the person who occupied that building.” “Stocker L.J. while acknowledging the difficulty in distinguishing between the identity of a party and the name of that party, added at page 209: “If a solution to the problem is to be stated in terms of general application I do not feel I can improve on the test suggested by Lord Justice Lloyd – can the intending plaintiff or defendant be identified by reference to a description which is specific to the particular case e.g. landlord, employer, owners or shipowners?”

“This is a case where protective proceedings were issued to attempt to access the resources of the insurers of the Defendants. In the meantime this case is likely to drive both Defendants out of business and their directors and staff out of their minds and out of work even if the matter does not end up reaching trial which would be at some innominate far off and costly point in the future. The Defendants ask that the court ends this part of the action now and release the Defendants. It is submitted that justice is served if the court dismisses this application and award costs to the Defendants.”

“30. In Adelson Lord Phillips CJ stated, at [57], that: “In SmithKline Horne-Roberts v SmithKline Beecham[2001] EWCA Civ 2006 … Keene LJ accepted that the SardiniaSulcis test could be satisfied where the correct defendant was unaware of the claim until the limitation period had expired. We agree with Keene LJ's comment that, in such a case, the Court will be likely to exercise its discretion against giving permission to make the amendment” “In SmithKline Horne-Roberts v SmithKline Beecham[2001] EWCA Civ 2006 … Keene LJ accepted that the SardiniaSulcis test could be satisfied where the correct defendant was unaware of the claim until the limitation period had expired. We agree with Keene LJ's comment that, in such a case, the Court will be likely to exercise its discretion against giving permission to make the amendment” “31. The comment above was given in the context of substituting a defendant after expiry of the limitation period. But it applies equally to substitution of a claimant. “32. GE Money Home Lending was a professional negligence action by a lender against a valuation surveyor. “32.1 Like the present case, the claim had been issued in the name of the wrong group company; the claim was issued in the name of “Money Home Lending” when it should have been issued in the name of “Money Mortgages”

“… the pre-action correspondence would not have assisted the Defendant to identify Money Mortgages as the lender. As already noted both of the pre-action letters described Money Home Lending as the lender. “The first time that the Defendant would have been aware of the mistake and the true identity of the Claimant would have been when it received the application and the letter from Optima Legal dated 14th January 2010. “… “In my judgment the Defendant did not know the true identity of the person intending to sue at any relevant time. Equally (to adapt paragraph 57(ii) of the judgment) it is not a case where the Defendant, or his agent, was aware of the proceedings and of the mistake so that no injustice was caused by the amendment. “If, however, I am wrong about this it is plain that the Defendant did not know the identity of the correct Claimant until well after the Limitation period had expired. In those circumstances it seems to me that it is covered by Keene LJ's comment approved by the Court in Adelson that the Court would be likely to exercise its discretion against giving permission to make the amendment. There are no special factors here leading to a different course.” “… the pre-action correspondence would not have assisted the Defendant to identify Money Mortgages as the lender. As already noted both of the pre-action letters described Money Home Lending as the lender. “The first time that the Defendant would have been aware of the mistake and the true identity of the Claimant would have been when it received the application and the letter from Optima Legal dated 14th January 2010. “… “In my judgment the Defendant did not know the true identity of the person intending to sue at any relevant time. Equally (to adapt paragraph 57(ii) of the judgment) it is not a case where the Defendant, or his agent, was aware of the proceedings and of the mistake so that no injustice was caused by the amendment. “If, however, I am wrong about this it is plain that the Defendant did not know the identity of the correct Claimant until well after the Limitation period had expired. In those circumstances it seems to me that it is covered by Keene LJ's comment approved by the Court in Adelson that the Court would be likely to exercise its discretion against giving permission to make the amendment. There are no special factors here leading to a different course.” “33. HHJ Behrens’ comments are on all fours with the present case: “33.1 There was nothing in the pre action correspondence which could have assisted the Defendants to identify that the true claimant was AIG Europe SA and not AIG Europe Limited. In fact, the only pre-action correspondence seems to have been the Letter of Claim dated 17 June 2019, which was sent in the name of AIG Europe Limited Mr Davison’s witness statement sets this out and appends the correspondence (p217, pp219 – 228). There is no suggestion in the witness statements of Mr Ram or Ms Poonia that there was any earlier correspondence. . “33.2 The first time that the Defendants would have been aware of the mistake would have been when they received the letter from the Claimant’s solicitors dated 20 December 2019 (receipt of which the Defendants in fact deny) which served both the proceedings and the application for substitution. “33.3 The Defendants would not and could not have known the true identity of the person intending to sue at any relevant stage. In particular, the Defendants will obviously have had no reason to be acquainted with the various re-organisations of the Claimant’s group companies. See the witness statement of Mr McCormick at paragraph 19 (p360). “33.4 In any event, it is plain that the Defendants did not know the identity of the correct Claimant until well after the Limitation Period had expired; it expired on 31 August 2019 whereas the Defendants would have been unaware of the identity of the correct claimant until receipt of the application under cover of a letter dated 20 December 2019. This case is therefore covered by Keene LJ's dictum (approved in Adelson) that the Court would be likely to exercise its discretion against giving permission.”

“55. It is submitted that that discretion should be exercised in AIGE SA’s favour. “56. There are a number of factors that point in this direction, and the evidence which has been relied upon by the Defendants and RSA does little to change the position. More detailed oral submissions will likely be necessary once the basis of the Defendants’ and RSA’s objections are known in more detail. At present and in summary: “56.1 The same allegations of fault and the same alleged loss will be advanced as in the claim originally pleaded; the difference is the party suing. “56.2 Refusing to grant permission would deprive AIGE SA of a proper, bona fide and valuable claim against the Defendants. “56.3 Refusing to grant permission would give the Defendants and likely RSA a windfall. They should be made to respond to the claim on the merits. “56.4 There is no prejudice to the Defendants that has been identified between being sued in the name of AIGE SA in August 2019, and now. “56.5 The Defendants’ liability was also investigated back in 2013, such that there is witness evidence available from that time. “56.6 The error was identified by AIGE SA’s side, and a proper evidenced application made at once. This is not a case where the claimant’s hand had to be forced by a strike out application, for example. It was not even raised by the Defendants / RSA. This is in contradistinction to many of the cases such as Parkinson and Irwin, where relief was nevertheless granted. “56.7 There has been no delay between the identification of the issue and the making of the application. “56.8 The Defendants were aware of the potential claim preaction. “56.8.1 This was both at the outset, and in the months leading up to the end of the limitation period. “58.8.2 Insofar as it is said that there was no correspondence with the Second Defendant, the reason for this has been explained by Ms Poonia, and the fact that the Defendants say that they are effectively one and the same, removes any substance that the argument ever had. “56.8.3 Notwithstanding the Defendants’ awareness of the claim by their directors, their directors (whether on the advice of their brokers or not) chose to do nothing to respond to the claim. “56.9 The financial position of the Defendants is not material, and neither is RSA’s protestation that it does not intend to indemnify the Defendants. “56.9.1 This is so as a matter of principle. “56.9.2 It is also so as a matter of practicality including because: (1) whatever RSA’s present position on indemnity, it appears from the Defendants’ evidence to have confirmed indemnity previously / waived any breaches – RSA’s position therefore appears to be very unattractive; and (2) there are clearly other assets about which nothing is said. “56.9.3 The impression one might get from Mr Davison’s [of DACB, RSA’s solicitor] statement for RSA is that RSA knew nothing of this until after proceedings were served. This is wrong – as explained by Ms Poonia, she was in contact with Mr Davison in August 2019 in relation to this matter.” “56.8.1 This was both at the outset, and in the months leading up to the end of the limitation period. “58.8.2 Insofar as it is said that there was no correspondence with the Second Defendant, the reason for this has been explained by Ms Poonia, and the fact that the Defendants say that they are effectively one and the same, removes any substance that the argument ever had. “56.8.3 Notwithstanding the Defendants’ awareness of the claim by their directors, their directors (whether on the advice of their brokers or not) chose to do nothing to respond to the claim. “56.9.1 This is so as a matter of principle. “56.9.2 It is also so as a matter of practicality including because: (1) whatever RSA’s present position on indemnity, it appears from the Defendants’ evidence to have confirmed indemnity previously / waived any breaches – RSA’s position therefore appears to be very unattractive; and (2) there are clearly other assets about which nothing is said. “56.9.3 The impression one might get from Mr Davison’s [of DACB, RSA’s solicitor] statement for RSA is that RSA knew nothing of this until after proceedings were served. This is wrong – as explained by Ms Poonia, she was in contact with Mr Davison in August 2019 in relation to this matter.”