Pleadings – Amendment – Section 14A of the Limitation Act 1980 – Court granting permission to amend particulars of claim but giving permission for defendants to seek to set aside order – Defendants contending amendments statute-barred – Whether court erring in law in allowing amendments – Whether amendments being statute-barred – Application dismissed Between 1999 and 2004, the claimants in the first action invested in a new business venture to redevelop an office building into a hotel. The claimants used the claimant in the second action, a wholly-owned dormant subsidiary of one of their companies, to purchase and redevelop that property and then to run it as a hotel once it was opened. In June 1999, the claimants retained a partner in the first defendant to act for them in all matters concerning the hotel redevelopment project. In March 2004, the hotel was sold with a shortfall of £4.118 million on the amount owing to the bank which subsequently issued possession proceedings to enforce the claimants’ personal guarantees over their matrimonial home. The first defendant had been incorporated in 2005 as an LLP (the second defendant) and in 2009, the claimants issued proceedings against both defendants, which were stayed by agreement pending the resolution of the possession proceedings. In January 2010, David Richards J upheld the bank’s claim in the possession proceedings: [2010] EWHC 105 (Ch). As a result of critical comments made about the defendants in that judgment, the claimants formed the view that the damage suffered had been caused by the partner’s negligent advice and failure to give advice about the huge and unquantifiable risk to them of various agreements. Accordingly, the claimants applied for permission to amend their original particulars of claim to add new claims in the light of the judge’s decision. The master endorsed the applications to amend on 15 November 2011 but gave the defendants permission to apply to set the orders aside. The defendants applied to set aside the order on the ground that the amendments raised fresh claims which were time-barred by the Limitation Act 1980. The questions for the court were: (i) whether the master had been justified in allowing the amendments; (ii) whether he had revoked the order when he indicated that it would not be made without a hearing of the defendants’ application to have it set aside; and (iii) whether the amendments raised new causes of action and, if so, whether they were statute-barred. Held: The application was dismissed. (1) The master’s decision to make the amendment orders was fully justified and within his case management powers. The orders were, in consequence valid and took effect from the moment they were made. The course taken by the master did not prejudice the defendants since they were at liberty to apply to have the orders set aside if they applied in time and showed that the amendments raised new causes of action which the claimants were not entitled to obtain permission to make. The claimants might be severely prejudiced if they were not granted permission to amend prior to 15 November 2011 since the application might relate to new causes of action which would be statute-barred on that date unless the court had previously permitted them to be added by amendment. Equally, if the stay was not lifted in the future, the amendments would not be capable of being pursued but if they were not now granted and the stay was subsequently removed, the claimants would have lost the opportunity to rely on any new causes of action contained in the amendments. (2) By directing that the orders would not be made without a hearing, the master was not seeking to revoke the orders but was directing that they should not be drawn up and sealed without a hearing. The master had no jurisdiction to revoke the order he had previously made since it had to be revoked by way of a decision to change his mind made prior to the sealing of the order. The master had been correct to issue a direction that the orders should not be sealed, which was in the nature of a stay order on the sealing of the order, since the defendants’ time to apply to have the orders set aside had passed and the sealing of the orders might otherwise take place before the defendants’ application to set them aside could be heard. (3) In reality, the claimants had not been aware that the defendants’ negligence had exposed them to huge and unquantifiable liabilities until they had read and digested the critical findings in the judgment of David Richards J which made a series of critical findings. It was only when the judgment became available that it was clear that the damage was not attributable to the bank but to the defendants’ negligence in not advising them properly. It followed that the three-year limitation period had only started when the judgment became available in January 2010 when the claimants had undoubtedly acquired knowledge essential for them to bring their amended claim against the defendants with appropriate expert legal and fact-finding advice which it had been reasonable for them to seek. Furthermore, since the claimants had been subject to a stay agreement between 1 October 2009 and the master’s endorsements on 15 November 2011, they “had no right to bring” the amended claim to trigger the starting date because section 14A(5) of the 1980 Act required them both to have acquired the relevant knowledge and to have the right to bring the action. They acquired the first in January 2010 but the second only on 15 November 2011. Therefore, the starting date of the three-year period in which the claimants might bring their amended claim under section 14A was also the date on which the new claims were brought. (4) In all the circumstances, the defendants’ applications to strike out the orders permitting amendment would be dismissed and the claimants’ applications for the orders to be draw up, sealed and served, would be allowed with the costs of the amendments and re-amendments to be reserved to the case manager. Per curiam: Had the court been persuaded that the new claims and causes of action added by the amendments were statute-barred and that the three-year limitation period had expired prior to that date, it would still have exercised the residual discretion to dismiss the applications. The justice of the case was overwhelmingly in favour of the orders made by the master. The claimants appeared in person; Jamie Smith (instructed by DAC Beachcroft LLP) appeared for the defendants. Eileen O’Grady, barrister
Chandra and another v Brooke North (a firm of solicitors) and another; BPC Hotels Ltd v Brooke North (a firm of solicitors) and another
Pleadings – Amendment – Section 14A of the Limitation Act 1980 – Court granting permission to amend particulars of claim but giving permission for defendants to seek to set aside order – Defendants contending amendments statute-barred – Whether court erring in law in allowing amendments – Whether amendments being statute-barred – Application dismissed Between 1999 and 2004, the claimants in the first action invested in a new business venture to redevelop an office building into a hotel. The claimants used the claimant in the second action, a wholly-owned dormant subsidiary of one of their companies, to purchase and redevelop that property and then to run it as a hotel once it was opened. In June 1999, the claimants retained a partner in the first defendant to act for them in all matters concerning the hotel redevelopment project. In March 2004, the hotel was sold with a shortfall of £4.118 million on the amount owing to the bank which subsequently issued possession proceedings to enforce the claimants’ personal guarantees over their matrimonial home. The first defendant had been incorporated in 2005 as an LLP (the second defendant) and in 2009, the claimants issued proceedings against both defendants, which were stayed by agreement pending the resolution of the possession proceedings. In January 2010, David Richards J upheld the bank’s claim in the possession proceedings: [2010] EWHC 105 (Ch). As a result of critical comments made about the defendants in that judgment, the claimants formed the view that the damage suffered had been caused by the partner’s negligent advice and failure to give advice about the huge and unquantifiable risk to them of various agreements. Accordingly, the claimants applied for permission to amend their original particulars of claim to add new claims in the light of the judge’s decision. The master endorsed the applications to amend on 15 November 2011 but gave the defendants permission to apply to set the orders aside. The defendants applied to set aside the order on the ground that the amendments raised fresh claims which were time-barred by the Limitation Act 1980. The questions for the court were: (i) whether the master had been justified in allowing the amendments; (ii) whether he had revoked the order when he indicated that it would not be made without a hearing of the defendants’ application to have it set aside; and (iii) whether the amendments raised new causes of action and, if so, whether they were statute-barred. Held: The application was dismissed. (1) The master’s decision to make the amendment orders was fully justified and within his case management powers. The orders were, in consequence valid and took effect from the moment they were made. The course taken by the master did not prejudice the defendants since they were at liberty to apply to have the orders set aside if they applied in time and showed that the amendments raised new causes of action which the claimants were not entitled to obtain permission to make. The claimants might be severely prejudiced if they were not granted permission to amend prior to 15 November 2011 since the application might relate to new causes of action which would be statute-barred on that date unless the court had previously permitted them to be added by amendment. Equally, if the stay was not lifted in the future, the amendments would not be capable of being pursued but if they were not now granted and the stay was subsequently removed, the claimants would have lost the opportunity to rely on any new causes of action contained in the amendments. (2) By directing that the orders would not be made without a hearing, the master was not seeking to revoke the orders but was directing that they should not be drawn up and sealed without a hearing. The master had no jurisdiction to revoke the order he had previously made since it had to be revoked by way of a decision to change his mind made prior to the sealing of the order. The master had been correct to issue a direction that the orders should not be sealed, which was in the nature of a stay order on the sealing of the order, since the defendants’ time to apply to have the orders set aside had passed and the sealing of the orders might otherwise take place before the defendants’ application to set them aside could be heard. (3) In reality, the claimants had not been aware that the defendants’ negligence had exposed them to huge and unquantifiable liabilities until they had read and digested the critical findings in the judgment of David Richards J which made a series of critical findings. It was only when the judgment became available that it was clear that the damage was not attributable to the bank but to the defendants’ negligence in not advising them properly. It followed that the three-year limitation period had only started when the judgment became available in January 2010 when the claimants had undoubtedly acquired knowledge essential for them to bring their amended claim against the defendants with appropriate expert legal and fact-finding advice which it had been reasonable for them to seek. Furthermore, since the claimants had been subject to a stay agreement between 1 October 2009 and the master’s endorsements on 15 November 2011, they “had no right to bring” the amended claim to trigger the starting date because section 14A(5) of the 1980 Act required them both to have acquired the relevant knowledge and to have the right to bring the action. They acquired the first in January 2010 but the second only on 15 November 2011. Therefore, the starting date of the three-year period in which the claimants might bring their amended claim under section 14A was also the date on which the new claims were brought. (4) In all the circumstances, the defendants’ applications to strike out the orders permitting amendment would be dismissed and the claimants’ applications for the orders to be draw up, sealed and served, would be allowed with the costs of the amendments and re-amendments to be reserved to the case manager. Per curiam: Had the court been persuaded that the new claims and causes of action added by the amendments were statute-barred and that the three-year limitation period had expired prior to that date, it would still have exercised the residual discretion to dismiss the applications. The justice of the case was overwhelmingly in favour of the orders made by the master. The claimants appeared in person; Jamie Smith (instructed by DAC Beachcroft LLP) appeared for the defendants. Eileen O’Grady, barrister