Claim form – Substitution of party – CPR 19.5 – Claim against appellant surveyor for negligent valuation – Claim form issued in name of parent company of mortgage lender – Claim form amended on application of respondents to substitute actual lender as claimant – Whether mistake as to name of claimant – Whether true identity of person intending to sue apparent to appellant – Appeal allowed
The appellant firm of surveyors produced a valuation report on a property in connection with a purchase for which the second respondent, a subsidiary of the first respondent, provided £216,000 in mortgage finance. The appellant valued the property at £250,000 in September 2003. However, in August 2006, following repossession by the second respondent, the house was sold for only £192,000.
In September 2009, shortly before the expiry of the limitation period, a claim form was issued in proceedings against the appellant for negligent valuation of the property. The form stated that the claimant sought damages and interest for negligence arising out of its reliance on the September 2003 valuation report for the purpose of its mortgage advance of £216,000. Owing to an error, the form was issued in the name of the first respondent, rather than that of the second respondent as the actual lender. The error was not corrected until January 2010, after the limitation period had expired, when the respondents applied to the court, under CPR 19.5, to substitute the second respondent as claimant. That application was allowed by the district judge and an amended claim form was issued thereafter. The appellant appealed.
Held: The appeal was allowed.
The following principles applied to an application under CPR 19.5 to substitute one party for another so as to correct a mistake in the claim form: (i) the mistake had to relate to the name of the party in question, not to its identity, so that substitution wold be permissible where the pleading identified the relevant party; (ii) the mistake had to have been made by the party that issued the process, under authorisation from the party that actually intended to sue; (iii) the true identities of both the party intending to sue and the party being sued had to be apparent to the latter, even if the wrong name had been used; and (iv) the effect of the amendment, if permitted, was to substitute a new party for the party named: Adelson v Associated Newspapers [2007] EWCA Civ 701; [2008] 1 WLR 585, Lockheed Martin Group v Willis Group Ltd [2009] EWHC 1436 (QB); [2010] PNLR 1 and Owners of the Sardinia Sulcis v Owners of the Al Tawwab [1991] 1 Lloyd’s Rep 201 applied.
In the instant case, the person who issued the claim form had made a genuine mistake. The solicitor who acted for both respondents had been mistaken in his belief that the first respondent was the lender. That mistake was as to the name of the party suing, within the generous interpretation of that concept set out in the authorities: Sardinia Sulcis applied. The description in the claim form was adequate to identify the relevant claimant as the party that had lent moneys to the purchaser in September 2003. However, the identity of the party intending to sue was not apparent to the party sued at any relevant time. The original valuation report did not indicate that the appellant had known that the lender was the second respondent and the pre-action correspondence did not assist the appellant in that respect. The appellant would have been aware of the mistake, and of the true identity of the claimant, only when it received the January 2010 application. Since it had known the identity of the correct claimant only after the limitation period had expired, the court should exercise its discretion against allowing the amendment: Adelson applied. There were no special factors to indicate a different course. Accordingly, the application to substitute the second respondent as claimant would be refused and the claim would be struck out under CPR 24.
Roger André (instructed by Berrymans Lace Mawer), of Manchester) appeared for the appellant; Lisa Linklater (instructed by Optima Legal, of Bradford) appeared for the respondents.
Sally Dobson, barrister
