Negligence claim — Amendment to pleadings — Appellant solicitor defending respondent’s negligence claim on ground claim time-barred — Alternative dispute resolution failing — Judge permitting last-minute amendment of respondent’s case and allowing claim — Whether prejudice to appellant — Whether claim time-barred — Section 14A of Limitation Act 1980 — Appeal allowed
The respondent was a sleeping partner in a business that refurbished and let residential properties. The business was operated by M. Partnership acquisitions were financed by a bank by way of mortgages, each of which contained a standard clause defining the liability of the mortgagor. In February 1993, a restructure took place, under which the various partnership mortgages were replaced with a single mortgage containing the same liability clause as before. At all times, the respondent entrusted the approval of legal documentation relating to the partnership to his brother H, who was a partner in the appellant firm of solicitors.
The bank subsequently brought a successful claim against the respondent in reliance upon the liability clause, having realised that the clause, as it was worded, made the respondent liable for all moneys owed to it by M, regardless of whether they were partnership debts.
The respondent brought a claim against the appellant. The appellant admitted negligence in failing to advise the respondent of the effect of the liability clause in both the old mortgages and the new, but contended that the claim was time-barred under the Limitation Act 1980. The parties engaged in alternative dispute resolution, which failed. The case went to a court hearing, at which the respondent sought to make a last-minute amendment to his pleadings to rely upon, inter alia, section 14A of the 1980 Act, pursuant to which he argued that his action was not out of time because he had not acquired the knowledge he needed to bring it until the date when the bank made its claim. The appellant contended that it would suffer prejudice if the amendment were permitted, since it had lost the opportunity to negotiate a settlement offer in the course of the mediation that took account of the section 14A point. The judge found that no prejudice would result, permitted the amendment, and held that the respondent’s claim succeeded on the pleadings as amended. The appellant appealed, contending that: (i) the amendment should not have been permitted; and (ii) in any event, the respondent should have failed on the section 14A point, as his claim in respect of the earlier mortgages was already time-barred by 1993.
Held: The appeal was dismissed.
1. The question of whether to permit the amendment had been a matter within the judge’s discretion, and there was no basis for interfering with his exercise of that discretion. He had taken all relevant factors into account, including the possibility of settlement negotiations, and he had been entitled to find that the appellant would suffer no prejudice. It would be wrong if a failed mediation could force a party into a position where he was unable to raise a relevant pleading in court: Dunnett v Railtrack plc [2002] EWCA Civ 303; [2002] 2 All ER 850 considered.
2. The judge had not been asked to decide whether the respondent’s claim arising from the earlier mortgages was statute-barred in 1993, and no factual material had been put before him upon which he could have found that it was. Accordingly, his decision was not open to challenge on that ground.
Nicholas Davidson QC and Anthony de Freitas (instructed by Crutes, of Newcastle-upon-Tyne) appeared for the appellant; Leolin Price CBE QC and David Ainger (instructed by Mark Gilbert Morse, of Newcastle-upon-Tyne) appeared for the respondent.
Sally Dobson, barrister
