Negligence — Houses with defective foundations — Claims by houseowners against builders, local authority and architects — Liability — Limitation Act — Unsatisfactory result of prolonged litigation — House of Lords divided on procedural point, with serious consequences for architects — In the end House of Lords had to deal only with appeal by architects without hearing any argument from other parties — Builders had not challenged in Court of Appeal the judgment against them by Judge Hayman at the trial and the local authority did not pursue in the House their challenge to the Court of Appeal’s decision against them — Architects’ appeal was dismissed by the majority in the House (Lords Templeman, Griffiths and Goff of Chieveley), the minority who would have allowed the appeal being Lords Keith of Kinkel and Brandon of Oakbrook — The majority decided that the House should not interfere with the discretion of the Court of Appeal in disallowing an amendment of the defence, submitted very late at the trial, which would, inter alia, have allowed the architects to plead that their liability was statute-barred — If the architects had been allowed to rely on the plea
The following
cases are referred to in this report.
Anns v Merton London Borough Council [1978] AC 728; [1977] 2 WLR
1024; [1977] 2 All ER 492; [1977] EGD 604; (1977) 243 EG 523 & 591, HL,
[1977] 2 EGLR 94
Byron v Cooper (1844) 11 Cl&Fin 556
Clarapede
& Co v Commercial Union Association
(1883) 32 WR 262
Junior
Books Ltd v Veitchi Co Ltd [1983] 1 AC 520;
[1982] 3 WLR 477; [1982] 3 All ER 201, HL
Liff v Peasley [1980] 1 WLR 781; [1980] 1 All ER 623, CA
Pirelli
General Cable Works Ltd v Oscar Faber &
Partners [1983] 2 AC 1; [1983] 2 WLR 6; [1983] 1 All ER 65; [1983] EGD 889;
(1982) 265 EG 979, [1983] 1 EGLR 135, HL
Seabridge v H Cox & Sons (Plant Hire) Ltd [1968] 2 QB 46; [1968] 2
WLR 629; [1968] 1 All ER 570, CA
Sparham-Souter v Town & Country Developments (Essex) Ltd [1976] QB 858;
[1976] 2 WLR 493; [1976] 2 All ER 65, CA
This was an
appeal by the architects, Jamieson Green Associates, against a decision of the
Court of Appeal (reported at (1984) 271 EG 1099, [1984] 2 EGLR 157) against
them. For reasons explained in the speech of Lord Keith the houseowners and the
local authority were represented before the House on the question of costs
only. The result was that on the merits of the appeal the House heard only the
arguments for the appellants.
Michael Ogden
QC and Mark Smith (instructed by Hewitt Woolacott & Chown) appeared on
behalf of the appellants; Christopher Symons (instructed by Herbert Smith &
Co) represented the plaintiff houseowners on the question of costs only; A E M
Cooper (instructed by Barlow Lyde & Gilbert) represented the Mid-Sussex
District Council on the question of costs only.
In his speech,
LORD KEITH OF KINKEL (who would have allowed the appeal) said: The proceedings
giving rise to this appeal have been characterised by an unusual number of
unfortunate vicissitudes, not the least unsatisfactory of which has been its
arrival in this House with the appearance of only one of the two appellants to
whom the Court of Appeal granted leave to bring it here and with respondents
who had no interest in presenting a contradiction of the appellants’ argument,
and consequently did not do so.
On May 27 1980
the respondents (whom I shall call ‘the houseowners’) commenced proceedings
against Hansel Properties Ltd (‘Hansel’), the builders of five houses in
Burgess Hill, West Sussex, which the houseowners had respectively purchased
from them in 1975. In the summer of 1976 all five houses began to show signs of
structural damage in the form of internal and external cracks. The houseowners
claimed damages from Hansel on grounds of breach of contract and in tort. The
claim was based on the inadequacy of the foundations of the houses. On April 28
1981 Hansel issued a third party notice to Mid-Sussex District Council
(‘Mid-Sussex’), claiming indemnity or contribution upon allegations of
negligence by the latter in approving the plans for the foundations and in
inspecting them during the course of construction. Mid-Sussex denied the
allegations against them and on August 18 1981 issued a fourth party notice to
Jamieson Green Associates (‘the architects’) claiming indemnity or contribution
from them on the ground of negligence in the design of the foundations. The architects
lodged a denial. The houseowners at first took no steps to have Mid-Sussex and
the architects joined as parties to the action, because their solicitors
believed that Hansel were sound financially. Later they began to have doubts
about this (which have since proved only too well-founded), and in June 1982
they issued a summons for leave to join Mid-Sussex and the architects as
defendants to the action. The summons was heard by Judge Sir William Stabb QC
on June 25 1982, and on that day, no opposition being offered by counsel for
Mid-Sussex and the architects, he made an order in these terms:
It is ordered
that: (1) The first third party and the fourth party be joined as defendants to
the action. (2) A statement of claim to be served on the first third party and
the fourth party within 21 days. (3) Defences to be served 14 days thereafter .
. . (7) The trial date for July 12 to be vacated and that the date for trial to
be fixed for November 22 1982 with an estimated length of ten days.
What happened
next was thus described by Lawton LJ in the course of his judgment in the Court
of Appeal [1984] 1 WLR 1274 at p1282:
This order did
not state explicitly that the specially endorsed writ should be amended.
Counsel for the plaintiffs was instructed to settle an amended statement of
claim. This he did. On or about July 26 1982 a court clerk employed by the
plaintiffs’ solicitors went to the central office to get the amended specially
endorsed writ stamped. A clerk there refused to apply the stamp on the ground that
the order of June 25 1982 did not provide for the writ endorsed with the
statement of claim to be amended. It did so by implication because it provided
that the third and fourth parties should be joined as defendants to the action.
It is to be regretted that the clerk decided as he did. By letters dated July
30 1982 the plaintiffs’ solicitors sent the third and fourth parties an amended
specially endorsed writ together with a draft consent order to put right that
which the clerk in the central office had said was wrong. The fourth parties’
solicitors returned the draft consent order duly endorsed on August 4 1982. The
third parties did the same on August 9. The plaintiffs’ solicitors returned to
court on September 8 1982. Judge Newey QC then made an order in these terms:
‘Upon reading the parties’ agreed terms it is ordered that: The plaintiffs have
leave to amend the statement of claim in the form annexed hereto.’
On September
9 1982 the writ was reissued. On September 17 1982 the plaintiffs’ solicitors
sent the third and fourth parties a copy of the order dated September 8, but
they did not serve them with a copy of the reissued amended writ, as they
should have done. Thereafter, the third and fourth parties behaved as if they
were the second and third defendants.
It is to be
added that copies of an amended statement of claim were also sent to the
solicitors for Mid-Sussex and for the architects.
The result is
that technically Mid-Sussex and the architects have never been properly joined
as defendants. But having entered defences and since participated in the
proceedings as defendants they could not now be heard to take that point.
The trial of
the action began before Judge Hayman, sitting as deputy Official Referee, on
November 23 1982 and continued for some time. On December 10 1982, after
counsel for the architects had concluded his submissions on the evidence and
counsel for the plaintiffs was in the course of making his, counsel became
aware of the decision of this House in Pirelli General Cable Works Ltd v
Oscar Faber & Partners [1983] 2 AC 1, judgment in which had been
delivered on the previous day. In that case the House, disapproving of certain
dicta in the Court of Appeal in Sparham-Souter v Town and Country
Developments (Essex) Ltd [1976] QB 858, held that the date of accrual of a
cause of action in tort for damage caused by the negligent design or
construction of a building was the date when the damage came into existence,
and not the date when the damage was discovered or could with reasonable
diligence have been discovered. The leading speech, concurred in by the others
of their lordships who heard the appeal, was that of Lord Fraser of
Tullybelton, who said at p16:
The
plaintiff’s cause of action will not accrue until damage occurs, which
will commonly consist of cracks coming into existence as a result of the defect
even though the cracks or the defect may be undiscovered and undiscoverable.
There may perhaps be cases where the defect is so gross that the building is
doomed from the start, and where the owner’s cause of action will accrue as
soon as it is built, but it seems unlikely that such a defect would not be
discovered within the limitation period. Such cases, if they exist, would be
exceptional.
Counsel for
Mid-Sussex and for the architects, reading the report of the decision in The
Times newspaper, perceived that they might have available to them a defence
of limitation, as the decision indicated that in a case of this kind the
limitation period began to run from an earlier date than had previously been
thought to apply. They accordingly applied for leave to amend their defences,
the proposed plea in the case of the architects being in these terms:
If (which is
denied) the third defendants were guilty of negligence or breach of statutory
or other duty whether as alleged or at all, time for the purposes of the
Limitation Acts began to run on the occurrence of one of the following events:
(a) the submissions to and/or approval by the local authority for building
regulations purposes of the plans drawn by the third defendant and/or the
approval by such authority of the excavations and/or foundations of the
plaintiffs’ premises allegedly constructed in reliance upon the said plans,
whereby the homes or back of them were defectively designed and/or built as
alleged by the plaintiffs; (b) the defective construction and/or completion of
the houses and/or of their foundations, as alleged by the plaintiffs; (c) the
purchase by the plaintiffs and each of them of their respective houses,
designed and/or constructed defectively as alleged by the plaintiffs; (d) the
settlement of the foundations wholly or in part or other movement or damage at
the said houses caused or contributed to by the defective design and/or
construction as alleged by the plaintiffs.
The third
defendants will contend that each of the events above mentioned occurred more
than six years prior to the joinder of the third defendants.
At this stage
neither counsel appears to have appreciated that, due to the events described
earlier, their clients had not been joined as defendants until at the earliest
September 9 1982. It seems to have been taken for granted that they had been
joined very soon after Judge Stabb’s order of June 25 1982. The evidence led in
the action had been to the effect that cracks in the five houses had been
discovered in the course of August and early September 1976. So counsel had in
mind to argue primarily that the houses were ‘doomed from the start’ within the
meaning of Lord Fraser of Tullybelton’s dictum, and paras (a), (b) and (c) of
the proposed amendments were directed to this aspect. Para (d) was directed to
a date such as was actually decided in the Pirelli case to have been
that upon which the limitation period had started to run. They did not believe
that they might have had a limitation defence under the law as it was
understood to have been before the Pirelli decision, and it seems that
they so informed Judge Hayman when moving the proposed amendments. Judge Hayman
allowed the amendments upon terms as to costs and offered all parties an
opportunity of leading further evidence if so advised, an opportunity of which
none of them took advantage. December 10 was a Friday, and it seems that in the
course of the ensuing weekend counsel discovered the true state of affairs
regarding the joinder as defendants of Mid-Sussex and the architects, and the
judge was told about it on the following Monday, December 13. The case was
adjourned until January 18 1983, when Judge Hayman, on the plaintiffs’
application, made an order amending that of Judge Sir William Stabb QC dated
June 25 1982 to the effect that time for joinder of Mid-Sussex and the
architects was extended to September 9 1982 and that the joinder was to be
effective as from July 30 1982.
On February 14
1983 Judge Hayman delivered a judgment in favour of three of the plaintiff
houseowners against Hansel and the architects and in favour of two of them
against Hansel only. Judgment was entered for Mid-Sussex against all the
plaintiffs. He found negligence to have been proved against all of Hansel,
Mid-Sussex and the architects, but that Mid-Sussex was not liable because it
had not been established that the condition of the houses presented any present
or imminent danger to the health or safety of the occupants — which in the
light of Anns v Merton London Borough Council [1978] AC 728 he
held to be a necessary condition of liability. In the case of the two
plaintiffs who failed against the architects he held that the latter succeeded
in their limitation defence in respect that it had not been established on the
evidence that physical damage to the two houses concerned had first occurred on
or after July 30 1976, viz less than six years before the date of joinder of
the architects, which he took as being July 30 1982.
The
houseowners and the architects appealed to the Court of Appeal. All the
houseowners appealed against that part of the judgment which dismissed their
claims against Mid-Sussex. The two whose claims against the architects had been
dismissed appealed against that part of the judgment. The architects appealed
against the part of the judgment which decided against them in favour of the
other three houseowners. All the houseowners also appealed out of time, with
leave, against the order of Judge Hayman, on December 10 1982, allowing
amendment of the defences of Mid-Sussex and the architects.
By a judgment
given on July 25 1984 the Court of Appeal [1984] 1 WLR 1274 (Lawton, Stephen Brown
and Parker LJJ) allowed the houseowners’ appeal against Mid-Sussex and also
that of two of them against the architects. They dismissed the architects’
appeal.
The appeal
against Mid-Sussex was decided primarily on the issue whether there was proof
of imminent danger to the health or safety of the occupants of the houses, as
to which the Court of Appeal reached a different conclusion from that of the
trial judge. There has been no appeal to this House on that issue and no more
need be said about it. The Court of Appeal also, however, in disposing of the
appeals, decided in favour of the houseowners a number of points on the issue
of limitation, and it is their decisions on these points which have given rise
to the instant appeal to this House by the architects. The Court of Appeal
granted leave to appeal here both to the architects and to Mid-Sussex, but the
latter decided not to prosecute their appeal and were represented before the
House on the question of costs only at the closing stages of the argument. The
houseowners, being holders of a judgment against Hansel, the architects and
Mid-Sussex, jointly and severally, appreciated that even if the architects
succeeded in their appeal they would still be in a position to recover the
whole of their damages from Mid-Sussex, and consequently they were not
represented for the purpose of argument on the merits of the architects’ appeal
but lodged a case and appeared by counsel only in relation to costs. The result
is that upon the merits of the appeal, which involve issues by no means easy of
resolution, your lordships have had the benefit of argument on one side only.
The issues
which arise in connection with limitation are four in number; first, what was
the date of joinder as defendants of the architects; second, whether the
joinder of the architects as defendants is for limitation purposes to be
related back to the date when the writ was originally issued against Hansel;
third, whether leave to amend so as to raise the defence of limitation should
have been granted as respects the whole of the proposed amendments or only as
respects paras (a), (b) and (c) of those amendments; and fourth, whether or
not, assuming that leave should have been granted only as respects paras (a),
(b) and (c), ie to the effect of allowing a limitation defence to be pleaded
solely on the ‘doomed from the start’ basis, that defence succeeds.
I will
consider the four issues in that order.
(1) Date of joinder
The houseowners
obtained leave to join the architects as additional defendants on June 25 1982,
but an effectively amended writ was not issued until September 9 1982, and that
writ was never served on the architects. The architects were, however, sent
copies of an amended statement of claim and they served defences to it dated
October 6 1982. There can be no doubt that by thus serving defences they waived
the necessity of serving the amended writ on them. Assuming that the defences
were served on the date which they bore, the architects became parties to the
action at the latest on October 6 1982. The question is whether by virtue of
RSC Ord 15, r8(4) they must be taken to have become parties on September 9
1982, the date when the effectively amended writ was issued. The relevance of
the question lies in the finding of the trial judge that the damage to the
fifth plaintiff’s house occurred on September 9 1976, precisely six years
earlier.
It is to be
observed at this stage that the Court of Appeal held that the trial judge had
no power to declare, as he purported to do by his order of January 18 1983,
that Mid-Sussex and the architects were defendants from July 30 1982. The
houseowners did not appear before your lordships to argue the contrary, and the
decision was clearly correct.
RSC Ord 15,
r8(4) provides:
Where by an
order under rule 6 or 7 a person is to be added as a party . . . that person
shall not become a party until –
(a) where the order is made under rule 6, the
writ has been amended in relation to him under this rule and (if he is a
defendant) has been served on him . . .
In the present
case the order for joinder was made under rule 6.
The natural
meaning of RSC Ord 15, r8(4)(a), according to the ordinary use of language,
would appear to be that a person added as a defendant does not become a party
until not only has the writ been amended but also the amended writ has been
served upon him. But in Seabridge v H Cox & Sons (Plant Hire) Ltd
[1968] 2 QB 46, upon the construction of an earlier version of the rule in the
same terms, the Court of Appeal took a different view. The plaintiffs in an
action for damages for personal injuries sought to add an additional defendant
and obtained leave accordingly under RSC Ord 15, r6. Amended writs were filed
and stamped at the central office under rule 8 on the third anniversary of the
accident, but were not served on the new defendant (India Tyres Ltd) until a
few days later. The Court of Appeal held that the amended writs took effect,
for limitation purposes, on the date of stamping, not that of service. Lord
Denning MR said, at pp 51-52:
The old rule,
Order 16, r11, said that when a party is added, the proceedings against such
party should ‘be deemed to have begun only on the service of such writ.’ If that rule had been the rule in existence
today, I feel that the words would have compelled the court to hold that, as
against India Tyres Ltd, the proceedings only began on September 21 1967, that
is, more than three years after the date of the accident and they would be
entitled to the benefit of the Statutes of Limitation. But that rule has been
altered. In 1962 the wording of it was changed. Again in 1964 it was changed
once more. We
‘Where by an
order under rule 6
that is, the
one we are concerned with
. . . a person
is to be added as a party . . . that person shall not become a party until —
(a) . . . the writ has been amended in relation to him under this rule and (if
he is a defendant) has been served on him . . .’
Mr Kidwell
argued that this new rule has the same effect as the old rule. It means, he
said, that the proceedings are not brought against the added defendant until he
is served. That argument convinced the master and the judge. They set aside the
service. But I am unable to accept the argument. We must read the new rules as
a whole. It seems to me that when the amendment is made in the prescribed
manner, namely, by the amendment being taken to the Central Office and filed
and the amended writ stamped, then at that moment the amended writ takes effect
as against the added defendant. That procedure is equivalent to the issue of a
writ against an original defendant. Once the amendment is made, the rules as to
service apply as against the added defendant, just as they do to an original
defendant on the issue of a writ: see Order 15, r8(2). The result is that the
plaintiff has to serve the added defendant within 12 months from the date when
the amendment is made.
I am prepared
to hold, therefore, that when an amendment is made adding a defendant, the
amendment takes effect when it is stamped in the Central Office. It takes
effect at that moment against that defendant equivalent to the issue of the
writ against him. If the amendment is so made within the three years, it is in
time, even though it is served later. In this particular case the amendment was
just in time. It was on the very last day of the three years. This still leaves
ample scope for Order 15, r8(4) when it says that ‘that person shall not become
a party until [he] has been served.’
That only means that he is not affected by notices, and he cannot enter
an appearance until he is served.
We were
referred to the county court rule, which is the same as the old Order 16, r11.
That has not been amended. In the county court, therefore, the old position may
prevail. But in the High Court I think a better rule now prevails. The
amendment takes effect when it is stamped in the Central Office.
Mr Kidwell
was forced to concede that, if the plaintiffs had issued another writ on
September 18 1967, on India Tyre Ltd, it would undoubtedly be in time, even
though it was served later. I think it should be the same when they add them as
defendants by amendment on that day. In good sense there ought to be no
difference. On a broad and liberal interpretation of the rules, there is no
difference.
Diplock LJ
agreed and so did Salmon LJ, albeit with some hesitation. That was a very
powerful court, but with the greatest respect to it, I have been unable to
accept the reasoning of Lord Denning as convincing. In my opinion, the plain
language of the rule must prevail and Seabridge should be overruled as
wrongly decided.
It follows
that the architects were not validly joined as defendants until they lodged
defences on October 6 1982, more than six years after damage to the fifth
plaintiff’s house occurred on September 9 1976.
(2) Relation back
It has long
been a rule of practice that amendment should not be allowed for the joinder of
an additional defendant in a situation where a relevant period of limitation
has already expired in relation to the cause of action against him. The reason
for that rule of practice is, however, debatable. One theory is that an
additional defendant, joined unconditionally, becomes a party to the action as
from the date of issue of the writ against the original defendant, that is to
say, that joinder is related back to that date. That being so, it would be
unjust to join him as a defendant at a time when limitation has run in his
favour, because to do so would have the effect of depriving him of a valid
defence. This theory has the support of a long line of authority in the Court
of Appeal, which was examined by Stephenson and Brandon LJJ in Liff v Peasley
[1980] 1 WLR 781. In that case the correctness of the theory was challenged by
the citation of an old case in this House, Byron v Cooper (1844)
11 Cl & Fin 556. Brandon LJ expressed the opinion, obiter, that the
relation back theory was incorrect. He considered the true basis of the rule of
practice to be that no useful purpose would be served by joining an additional
defendant at a time when limitation had run in his favour, because he was not
to be deemed to have become a party at any earlier date than the actual date of
joinder and therefore would have an unanswerable defence.
In the present
case, if the relation back theory is correct, the result is that the joinder of
the architects would date back to May 27 1980, when the writ was originally
issued against Hansel. Limitation would therefore not be a good defence to any
cause of action that arose after May 27 1974, and since all the plaintiffs
purchased from Hansel in 1975 the defence raised by paras (c) and (d) of the
proposed amendments would be bound to fail. The Court of Appeal held that they
were bound by authority to accept the relation back theory and accordingly that
amendment in terms of these paragraphs should not have been allowed.
The Limitation
Act 1939, which was applicable at the material time, provides by section 2(1):
The following
actions shall not be brought after the expiration of six years from the date on
which the cause of action accrued, that is to say:
(a) actions founded on simple contract or on tort
. . .
A cause of
action is necessarily a cause of action against a particular defendant, and the
bringing of the action which is referred to must be the bringing of the action
against that defendant in respect of that cause of action. The causes of action
here against Mid-Sussex and the architects were separate and distinct from the
cause of action against Hansel. In my opinion, there are no good grounds in
principle or in reason for the view that an action is brought against an
additional defendant at any earlier time than the date upon which that
defendant is joined as a party in accordance with the Rules of Court. Further,
I consider Byron v Cooper to constitute clear authority in this
House against the relation back theory. That was a case under the Tithes Act
1832, which by section 1 provided for shortening of the time required for
establishment of a claim to inter alia exemption from tithes. Section 3
provided:
That this Act
shall not be prejudicial or available to or for any plaintiff or defendant in
any suit or action relative to any of the matters before mentioned, now
commenced, or which may be hereafter commenced, during the present session of
Parliament, or within one year from the end thereof.
The rector of
a parish filed a bill for an account of tithes against five defendants before
the expiry of the time so limited, and after the expiration of that time the
bill was amended by order of the court so as to add a further four defendants.
The House held that the latter were not deprived of the protection of section 1
of the Act. Lord Brougham said at p579:
The first
miscarriage in the court below, however, was to consider the whole defendants
to the suit, the whole nine appellants, as excluded from the operation of the
Act. The ground of this opinion was that the bill being originally filed before
August 16 1833, and the four last-named appellants being, under an order of the
Court of Exchequer, made defendants to that same bill, were as much excluded by
the third section of the Act as if they had been made originally defendants to
the bill filed on August 5 1833. This is as great and as manifest an error as
could well be committed.
And later, at
pp 579-580:
The parson is
permitted to add new defendants to his amended bill, in order to save delay and
expense; but each defendant so added is to be considered as sued by the
proceeding which makes him a defendant, and the date of his being added is the
date of the suit’s commencement quoad him; consequently the four last-named and
last-added defendants in this case were only sued in November 1834, and quoad
them the bill and the suit bear the date of November 1834. They do not fall,
therefore, within the description of the third section of the statute. They are
not defendants, to use the words of that statute, ‘in a suit or action
commenced within one year’ after August 16 1832, being the last day of the
session in which the Act passed.
Although the
wording of section 2(1) of the Limitation Act 1939 naturally differs from that
of section 3 of the Tithes Act 1832, that difference is not such as to
demonstrate an intention that a defendant brought into an action by amendment,
in respect of a cause of action separate from that against an existing
defendant, should be treated as having had the action brought against him at
the same time as it was brought against the latter.
Accordingly, I
find myself in respectful agreement with the provisional view expressed by
Brandon LJ in Liff v Peasley [1980] 1 WLR 781 at p 804 that the
‘no useful purpose’ theory, and not the ‘relation back’ theory, is the true
basis of rule of practice to which I have referred. It follows that, contrary
to the view taken in the Court of Appeal, the date of joinder of the architects
does not fall to be related back to May 27 1980 and that the Court of Appeal
was wrong to disallow paras (c) and (d) of the proposed amendments on the
ground of such relation back.
(3) Amendment
Having regard
to the conclusions I have reached upon the date of joinder issue and the
relation back issue, and irrespective of the dates upon which the houseowners’
causes of action against the architects are taken to have arisen, there can be
no doubt that on October 6 1982, when the architects effectively became
defendants to the action, they had available to them a cast-iron defence of
limitation. Whatever view be taken as to the dates when the causes of action
arose, these dates must all have fallen more than six years before October 6
1982. The latest possible dates were in late August and
dates picked on by para (d) of the proposed amendments.
The Court of
Appeal decided that irrespective of the relation back aspect para (d) of the
proposed amendments should not have been allowed. Lawton LJ said at [1984] 1
WLR 1274 at p 1285:
It would be
convenient, in my opinion, to start the unravelling of this surprising
mish-mash of legal issues by considering the procedural ones. The first in
point of time, and importance, is that raised by the amendments which were
allowed on December 10 1982. On that date the local authority and the
architects learned that they might have a limitation defence which they had not
known about before, that is to say the houses might have been ‘doomed from the
start’. This is what they then wanted to plead. Nothing more. They told the
judge that they did not want to plead that the claims had been statute-barred
when they were joined as defendants. They could have done so and, as I have
already commented, if they had, on the evidence, they could have argued that
the foundations had settled when or shortly before the cracks appeared. Paragraph
(d) of the amendments which were allowed was in substance nothing more than
what could have been put into the defences served but which was not. In my
judgment, an amendment in terms of paragraph (d) should not have been allowed.
The amendments allowed in paragraphs (a), (b) and (c) were of a different kind.
The local authority and the architects and their advisers had had no reason to
think before December 10 1982 that a cause of action could accrue if a house
were erected which, due to negligent design or construction was ‘doomed from
the start’. They wanted that issue tried and, in my judgment, they were
entitled to have it tried, provided that the plaintiffs were not prejudiced by
a late amendment. They were not because they were given an opportunity of
adducing more evidence. They decided not to take advantage of that opportunity.
Stephen Brown
LJ agreed with him. Parker LJ said at pp 1292-1293:
If . . . the
correct date for the purposes of limitation is September 9 1982, I would allow
the appeal as to sub-paragraph (d) of the amendment. It was clearly granted by
the judge upon a mistaken view of the situation and the fact that leave to
amend is discretionary is therefore of no significance. In the circumstances of
the case, no amendment should be allowed.
Whether or not
a proposed amendment should be allowed is a matter within the discretion of the
judge dealing with the application, but the discretion is one that falls to be
exercised in accordance with well-settled principles. In his interlocutory
judgment of December 10 1982, allowing the proposed amendments, Judge Hayman
set out and quoted at some length from the classical authorities on this topic.
The rule is that amendment should be allowed if necessary to enable the true
issues in controversy between the parties to be resolved, and if allowance
would not result in injustice to the other party not capable of being
compensated by an award of costs. In Clarapede & Co v Commercial
Union Association (1883) 32 WR 262 at p 263, Brett MR said:
The rule of
conduct of the court in such a case is that, however negligent or careless may
have been the first omission, and, however late the proposed amendment, the
amendment should be allowed if it can be made without injustice to the other
side. There is no injustice if the other side can be compensated by costs; but,
if the amendment will put them into such a position that they must be injured,
it ought not to be made.
The sort of
injury which is here in contemplation is something which places the other party
in a worse position from the point of view of presentation of his case than he
would have been in if his opponent had pleaded the subject-matter of the
proposed amendment at the proper time. If he would suffer no prejudice from
that point of view, then an award of costs is sufficient to prevent him from
suffering injury and the amendment should be allowed. It is not a relevant type
of prejudice that allowance of the amendment will or may deprive him of a
success which he would achieve if the amendment were not to be allowed. In my
opinion, no sensible distinction is to be drawn for this purpose between an
amendment seeking to plead limitation and any other sort of amendment. I am not
aware of any authority for drawing such a distinction, nor have I experience of
any practice to that effect.
In the present
case Judge Hayman allowed the proposed amendments believing, as did at the time
counsel who proffered the amendments, that the decision of this House in the Pirelli
case [1983] 2 AC 1 offered some prospect of a limitation defence which, owing
to the time element, would not have been available under the law as it was
understood to be prior to that decision. The effect of the decision was to set
back, in some cases at least, the date at which the limitation period started
to run. It is to be noted that in their original pleadings the houseowners had
made averments as to the date of the first defect in the houses ‘becoming
apparent.’ By amendment in answer to
those allowed by the order of January 10 1983 they altered that to
‘occurring.’ So the ground upon which
Judge Hayman allowed the amendments was that it had come to counsel’s notice
because of Pirelli that they might have a limitation defence which it
had not previously occurred to them that they might have. At that time counsel
appear to have been unaware of the procedural blunders which had led to their
clients not having been joined as defendants until a date which, upon the law
as it then stood under the Seabridge case [1968] 2 QB 46, was capable of
being identified as September 9 1982. There does not seem to be any question of
an earlier deliberate decision, taken in knowledge of these blunders, not to
plead limitation. In his interlocutory judgment of January 18 1983 Judge Hayman
stated that at the hearing of the application to amend all counsel apparently
took the date of joinder to have been June 25 1982. It may be inferred that if
they had known of the blunders counsel would have pleaded limitation from the
outset.
One of the
reasons given by Judge Hayman, in that interlocutory judgment, for backdating
the joinder of Mid-Sussex and the architects, was that counsel for these
parties had disclaimed on December 10 1982 any intention of arguing that the
houseowners’ claims would be time-barred apart from Pirelli, and that in
these circumstances it would be unjust to the plaintiffs to hold that these
parties should be discharged at least as regards the first four plaintiffs (the
evidence being that the damage to the fifth plaintiff’s home occurred on September
9 1982), because these parties had in some way waived any right they might have
had to be discharged, through not having applied to have their joinder set
aside. It is not altogether easy to follow the reasoning of the judge. The fact
that counsel have overlooked the availability of some defence does not mean
that they have elected not to pursue it. Mid-Sussex and the architects had the
opportunity to lodge defences only some three months before the trial started.
By lodging defences they must be taken to have waived the procedural
irregularities to the effect of being properly joined when they did so, which
in the case of the architects was October 6 1982. But if, having discovered the
true position, they had proposed to amend in order to plead limitation at any
time up to the start of the trial, it is clear that they could not reasonably
have been refused leave to do so. When the amendments were actually proffered,
during closing speeches towards the end of the trial, it was a matter for very
careful consideration whether allowance of them would result in any prejudice
to the plaintiffs beyond what could be compensated by an award of expenses.
That would be so whether the proffer of the amendments was prompted by Pirelli
or by the late discovery of an extraordinary and hitherto unsuspected series of
procedural blunders. The effect on the plaintiffs by way of prejudice or lack
of it was exactly the same in either case.
In the event,
Judge Hayman was told about the discovery of the blunders and that counsel for
the second and third defendants now wished to rely not only on the ‘doomed from
the start’ argument but also upon a limitation defence based on a period
starting when the damage to the houses actually occurred, on December 13 1982.
He then neither recalled his order of December 10 nor altered it so as to
exclude para (d) of the proposed amendments, though at that stage and in those
circumstances it would clearly have been competent for him to have done so. It
does not seem to have occurred to counsel for the plaintiffs to invite him to
take that course. If he had been so invited, he might in my opinion, in the
light of all the circumstances, have reasonably and properly exercised his
discretion against excluding para (d). I do not consider that the interlocutory
judgment of January 18 1983 can be read as indicating that he would not have
done so.
The judgments
in the Court of Appeal on this issue do not canvass the principles to be
applied in the exercise of the discretion to allow or disallow late amendments.
They do not allude to the short period of time which elapsed between the second
and third defendants being given the opportunity to lodge defences and the
commencement of the trial, nor to their counsel having informed Judge Hayman on
December 13 1982 of their altered position in the light of their discovery of
the procedural blunders. They do not allude to any practice of disallowing late
amendments designed to raise a defence of limitation. Upon the whole matter I
am of the opinion that the very brief reasons given by the Court of Appeal for
their decision do not indicate that they had due regard to the applicable
principles and to all relevant circumstances. I would, therefore, hold that, in
so far as they purported to exercise their discretion afresh, their exercise of
it was erroneous and capable of being corrected. I understand,
(4) The ‘doomed from the start’ argument
The
appellants’ presentation of this argument involved two aspects. In the first
place it was maintained that the houseowners’ respective causes of action
accrued not when the physical damage to their houses occurred but when they
became the owners of houses with defective foundations. It was argued that they
then suffered economic loss because the houses were less valuable than they
would have been if the foundations had been sound. The proposition that a cause
of action in tort accrued out of negligence resulting in pure economic loss was
sought to be vouched by reference to Junior Books Ltd v Veitchi Co
Ltd [1983] 1 AC 520. That case was also cited in Pirelli v Oscar
Faber & Partners [1983] 2 AC 1, in support of the argument that, since
in that case there was economic loss when the chimney was built, the cause of
action arose then. The argument was clearly rejected in the speech of Lord
Fraser of Tullybelton, concurred in by all the others of their lordships who
participated in the decision. At p 16 he expressed the opinion that a latent
defect in a building does not give rise to a cause of action until damage
occurs. In the present case there can be no doubt that the defects in the
houses were latent. No one knew of their existence until damage occurred in the
summer of 1976. This branch of the argument for the architects is, in my
opinion, inconsistent with the decision in Pirelli and must be rejected.
In the second
branch of the argument it was maintained that a distinction fell to be drawn
between the case where the defect in a building was such that damage must
inevitably eventuate at some time and the case of a defect such that damage
might or might not eventuate. The former case was that of a building ‘doomed
from the start’ such as was in the contemplation of Lord Fraser of Tullybelton
when he made reference to that concept in his dicta in Pirelli. In the
present case the houses were doomed from the start because the event showed
that damage was bound to occur eventually. My Lords, whatever Lord Fraser may
have had in mind in uttering the dicta in question, it cannot, in my opinion,
have been a building with a latent defect which must inevitably result in
damage at some stage. That is precisely the kind of building that Pirelli
was concerned with and in relation to which it was held that the cause of
action accrued when the damage occurred. This case is indistinguishable from Pirelli
and must be decided similarly. The second branch of the architects’ argument
fails. I understand that all your lordships agree.
My Lords, in
view of the decision of the majority on the amendment issue, the appeal must be
dismissed. The appellants will pay the costs of the respondents and of
Mid-Sussex.
In his speech,
LORD BRANDON OF OAKBROOK (who would also have allowed the appeal) said: The
five plaintiffs in the action in which this appeal arises were the purchasers
in 1975 of houses which had been built on defective foundations. By reason of
those defective foundations the houses later developed serious structural
damage. The plaintiffs might have incurred very substantial costs in making
good the defects and repairing the damage, but they chose instead to sell their
houses at prices much reduced by the defects and damage concerned.
Subsequently, the five plaintiffs began an action to recover the losses which
they had suffered by reason of these events. At first the plaintiffs sued the
builders as sole defendants. Later they joined the local authority and the
architects who designed the houses as second and third defendants respectively.
The action was
tried by Judge Hayman, sitting as a deputy Official Referee. By an order made
on February 14 1983 he decided: (1) that all five plaintiffs succeeded against
the first defendants; (2) that all five plaintiffs failed against the second
defendants; (3) that the first, second and fifth plaintiffs succeeded against
the third defendants; (4) that the third and fourth plaintiffs failed against
the third defendants; and (5) that, as between the first and third defendants
where both were liable, liability should be apportioned 60% to the first
defendant and 40% to the third defendants. The judge further stated in his
judgment that, if he had found the second defendants also liable to the
plaintiffs he would, as between all three defendants, have apportioned
liability 50% to the first defendants, 15% to the second defendants and 35% to
the third defendants.
The third
defendants appealed and the plaintiffs cross-appealed to the Court of Appeal
[1984] 1 WLR 1274 (Lawton, Stephen Brown and Parker LJJ). By the order of that
court dated July 25 1984: (1) the third defendants’ appeal against so much of
the judge’s order as made them liable to the first, second and fifth plaintiffs
was dismissed; (2) the cross-appeal of all five plaintiffs against so much of
the judge’s order as dismissed their claims against the second defendants was
allowed; (3) the cross-appeal of the third and fourth plaintiffs against so
much of the judge’s order as dismissed their claim against the third defendants
was also allowed; (4) liability as between the three defendants was apportioned
50% to the first defendants, 15% to the second defendants and 35% to the third
defendants; and (5) leave was given to both the second and third defendants to
appeal to your Lordships’ House.
Appeals to
your Lordships’ House were initiated by both the second and the third
defendants, but the former later withdrew their appeal. The result of such
withdrawal was that the plaintiffs, who by the order of the Court of Appeal had
a judgment in their favour against the second defendants, ceased to have any
interest in the outcome of the third defendants’ appeal. The consequence of
that was that, so far as the substance of the third defendants’ appeal is
concerned, your lordships heard only counsel for them, with no opposition on
behalf of either the plaintiffs or the second defendants. Counsel for these two
latter parties were, however, heard on the subject of costs.
My Lords, four
questions arise on this appeal. The first question is when did the plaintiffs’
causes of action against the third defendants accrue. The second question is
when was action brought by the plaintiffs against the third defendants. The
third question is whether, having regard to the answers to the first and second
questions, the plaintiffs’ claims against the third defendants were
time-barred. The fourth question is whether, the trial judge having allowed a
very late application by the third defendants for leave to amend their defence
by adding a plea that the claims against them were time-barred, the Court of
Appeal was right to disallow a crucial part of that amendment. I shall call
these four questions the accrual issue, the joinder issue, the time-bar issue
and the amendment issue respectively, and I shall consider them in the order in
which I have stated them. Before doing so, however, it will be convenient to
draw attention to a decision of your Lordships’ House which was given at a time
when the trial of the present action had reached a very late stage and had an
important bearing on the course which the trial then took. That decision is Pirelli
General Cable Works Ltd v Oscar Faber & Partners [1983] 2 AC 1,
which was given on December 9 1982.
The
decision in the Pirelli case
It was held by
the Court of Appeal in Sparham-Souter v Town and Country Developments
(Essex) Ltd [1976] QB 858 that the date of accrual of a cause of action in
tort for damage caused by the negligent design or construction of a building is
the date when the damage is discovered or could with reasonable diligence have
been discovered. In the Pirelli case your Lordships’ House held that
this decision of the Court of Appeal was wrong and that the date of accrual of
the cause of action was the date when the damage resulting from the negligent
design or construction first came into existence. Lord Fraser of Tullybelton,
who delivered the leading speech in that case, while holding that the general
rule was that which I have just stated, referred in two passages in his speech
to the possible existence of special cases in which a building might be regarded
as so defective as to be ‘doomed from the start’, in which event the date of
accrual of the cause of action might be the date when the building was
constructed. These passages, however, were not necessary to the decision of the
appeal and were therefore no more than obiter dicta.
The
accrual issue
The Court of
Appeal, applying the ground of decision in the Pirelli case, held that
the plaintiffs’ causes of action against the third defendants accrued at the
various times when the structural damage to their houses, consequential on
their originally defective foundations, first came into existence. The court
rejected the contention put forward for the third defendants that the houses
were ‘doomed from the start,’ and that, on the basis of the observations of Lord
Fraser of Tullybelton in the Pirelli case to which I referred earlier,
the plaintiffs’ causes of action accrued when the houses were built. This
contention was renewed by the third defendants before your Lordships’ House.
The argument of counsel, as I understand it, proceeded as follows. Where a
house was built on defective foundations, a buyer of it might suffer two kinds
of damage. The first kind of damage was physical, in the form of consequential
structural failure or damage. The second kind of damage was economic loss, in
the form of diminution in market value. In the case of the first kind of
damage, the buyer’s cause of action against any party for negligence in respect
of the defective foundations accrued when the consequential structural failure
or damage occurred. But, in the case of the second kind of damage, the
diminution of market value was present from the time of the original
construction, and it was at that earlier time that the buyer’s cause of action
in respect of such diminution accrued. The plaintiffs in the present case had
sued for the second kind of damage, namely, diminution of market value. Their
causes of action had, therefore, accrued at the date when the houses were
built.
In my opinion,
this contention cannot be supported. I do not know what special cases Lord
Fraser of Tullybelton had in mind when he referred in his speech in the Pirelli
case to buildings ‘doomed from the start’. It may be that he was only keeping
open the possibility of the existence of such special cases out of major
caution. Be that as it may, however, I am quite sure that he was not seeking to
differentiate between causes of action in respect of making good defects or
damage on the one hand and causes of action in respect of diminution in market
value on the other. In any case, on the facts of the present case it seems that
the plaintiffs, in reselling their houses at a loss, were acting reasonably in
mitigation of their damage, so that the distinction between the two kinds of
damage relied on is one of form rather than substance.
In my view,
there is nothing in the facts of the present case which would take it out of
the general principle laid down in the Pirelli case and put it into some
special class of case, if there be one, of buildings ‘doomed from the start’.
It follows
that I would answer the first question by saying that the plaintiffs’ causes of
action against the third defendants accrued at the dates on which the
consequential structural damage to their houses first came into existence.
The time
of joinder issue
My Lords, the
unhappy course of the plaintiffs’ action, so far as the joinder of the second
and third plaintiffs is concerned, is set out fully and clearly in the judgment
of Lawton LJ in the Court of Appeal [1984] 1 WLR 1274 at pp 1281-1284, and I do
not think that it is necessary for me to recount it in detail again here. The
outcome of it all was that, although the plaintiffs obtained leave to join the
local authority and the architects as additional defendants on June 25 1982, no
effectively amended writ was issued until September 9 1982, and even then it
was never served on the new parties. The latter, however, were sent copies of
the amended statement of claim and later served defences to it without waiting
for any amended writ to be served on them. The defence of the second defendants
is undated; that of the third defendants was served on October 6 1982. By
serving defences in this way the second and third defendants waived the service
on them of the amended writ, and in the case of the third defendants they must
be taken to have done so on the date of service of their defence, that is to
say on October 6 1982.
Leave to join
the local authority and the architects as additional defendants had been given
under RSC Ord 15, r6. Rule 8(4) of Order 15 provides:
Where by an
order under rule 6 or 7 a person is to be added as a party . . ., that person
shall not become a party until —
(a) Where the order
is made under rule 6, the writ has been amended in relation to him under this
rule and (if he is a defendant) has been served on him . . .
My Lords, in
my opinion the plain effect of this rule is that defendants added under RSC Ord
15, r6, become parties to the action in which they are joined when, and only
when, an amended writ is served on them. In Seabridge v H Cox &
Sons (Plant Hire) Ltd [1968] 2 QB 46 the Court of Appeal (Lord Denning MR
and Diplock and Salmon LJJ) held that, on the true construction of an earlier
rule in the same terms, a writ amended to join an additional defendant took
effect from the time when it was stamped in the central office, and that the
provision that an added defendant shall not become a party until the amended
writ has been served on him only meant that he was not affected by notices and
could not enter an appearance until he has been served. With great respect to
the exceptionally distinguished judges who constituted the Court of Appeal on
that occasion, I cannot agree with their interpretation of the rule, which
appears to me to be contrary to the plain language of it. I would, therefore,
hold that the Seabridge case was wrongly decided and should be
overruled.
For the
reasons which I have given, I am of opinion that the third defendants did not
become parties to the action, and were not therefore effectively joined, until
October 6 1982.
The
time-bar issue
My Lords, the
Court of Appeal held that the joinder of the second and third defendants, which
they regarded as having occurred on September 9 1982, the date of issue of the
amended writ, once it had been made related back to the date of the original
writ. They so held because they regarded themselves as bound by previous
decisions of the Court of Appeal to do so.
It was common
ground that, despite the passing of the Limitation Amendment Act 1980 (c24) and
the Limitation Act 1980 (c58), the Limitation Act 1939 applied to the action in
this case. The reason for this is that the action was begun on May 27 1980
before either of the Acts of 1980 had come into force. Section 2(1) of the
Limitation Act 1939 provides:
The following
actions shall not be brought after the expiration of six years from the date on
which the cause of action accrued, that is to say:-
(a)
actions founded on simple contract or on tort . . .
The question,
therefore, is when was action brought by the plaintiffs against the third
defendants within the meaning of section 2(1) above. In my opinion, there can
be only one answer to that question: it was when the third defendants, by
waiving service on them of the amended writ, first became parties to the action,
that is to say on October 6 1982.
The theory
that, at common law, and apart from anything in either of the Acts of 1980, the
joinder of a defendant to an existing action relates back to the date of the
original writ was examined in depth by a two-judge Court of Appeal in Liff
v Peasley [1980] 1 WLR 781. Stephenson LJ was one of the two judges and
I was the other. That case proceeded on the basis, which is not open to
question, that there was an established rule of practice prohibiting the
joinder by amendment of an additional defendant after the expiration of a
relevant period of limitation in his favour. The question discussed in the
judgments, however, was whether that rule of practice was founded on the
concept of relation back (the relation back theory), in that to allow such
joinder would deprive the added defendant of an accrued defence, or on the
concept that to allow such joinder would serve no useful purpose (the no useful
purpose theory), in that the added defendant would, if joined, have an unanswerable
defence of time-bar. It was not necessary for the disposal of that case to
decide finally which of these two concepts was correct. However, in the
judgment which I gave I expressed a strong provisional view that the rule of
practice was founded on the no useful purpose theory and not on the relation
back theory, and I gave what appeared to me to be convincing reasons for that
view. While it is more appropriate for the rest of your lordships than for me
to decide whether the provisional view which I expressed in Liff v Peasley
is correct or not, I stand by that view and the reasons which I gave for
holding it. It follows that I consider that the Court of Appeal was wrong to
accept and apply the relation back theory in this case.
With the
relation back theory out of the way, it is clear on the findings of fact of the
judge that the structural damage to the houses complained of occurred more than
six years before October 6 1982, which is the date on which I have held that
action was first brought by the plaintiffs against the third defendants. It
follows that the plaintiffs’ claims were by then time-barred.
The
amendment issue
My Lords, the
decision in the Pirelli case was given, as I indicated earlier, on
December 9 1982. By then the trial was nearing its end with counsel making
their final speeches. On December 10 1982 counsel for the third defendants,
having become aware of the decision in the Pirelli case, applied to the
judge for leave to amend the third defendants’ defence by raising a plea of
limitation. He subsequently put before the judge a draft of the proposed
amendment, which involved adding to the existing defence of the third
defendants a new para 3A in these terms:
Further or
alternatively the Plaintiffs’ claims are statute-barred by reason of the
following facts or matters:
PARTICULARS
If (which is
denied) the third defendant was guilty of negligence or breach of statutory or
other duty whether as alleged or at all, time for the purposes of the
Limitation Acts began to run on the occurrence of one of the following events:
(a) the submission to and/or approval by the local authority for building
regulations purposes of the plans drawn by the third defendants and/or the
approval by such authority of the excavations and/or foundations at the
plaintiffs’ premises allegedly constructed in reliance upon the said plans,
whereby the homes or back of them were defectively designed and/or built as
alleged by the plaintiffs
(b) The defective construction and/or completion
of the houses and/or of their foundations, as alleged by the plaintiffs.
(c) The purchase by the plaintiffs and each of
them of their respective houses, designed and/or constructed defectively as
alleged by the plaintiffs.
(d) The settlement of the foundations wholly or
in part or other movement or damage at the said houses caused or contributed to
by the defective design and/or construction as alleged by the plaintiffs.
The third
defendants will contend that each of the events above mentioned occurred more
than six years prior to the joinder of the third defendants.
Counsel for the
second defendants also applied for leave to make a similar amendment at the
same time.
It will be
observed that there is a fundamental distinction between paras (a), (b) and (c)
of the above particulars on the one hand and para (d) on the other. Paras (a),
(b) and (c) were designed to enable the third defendants to contend that the
houses, the subject-matter of the action, came within the special category of
buildings ‘doomed from the start’, as contemplated by Lord Fraser of
Tullybelton in the observations made by him in the Pirelli case to which
I referred earlier. On that basis the third defendants wished to contend that
the plaintiffs’ cause of action against them accrued when the houses were built
or even earlier, with the result that, even if the doctrine of relation back
applied, such cause of action was already time-barred when the original writ
was issued. By contrast, para (d) was designed to enable the third defendants
to contend, in reliance on the ground of decision in the Pirelli case,
that the plaintiffs’ cause of action against them accrued when the structural
damage to the houses first came into existence. On that basis they might also
succeed in a defence of limitation, but only if they could persuade the judge
that, having regard to Liff v Peasley, the doctrine of relation
back did not apply. It is material to add that, on the facts as found by the
judge, para (d) would have served the third defendants just as well for this
purpose if the plaintiffs’ cause of action against them were treated as having
accrued at the time laid down in Sparham-Souter v Town and Country
Developments (Essex) Ltd [1976] QB 858, namely, the time when the
structural damage was discovered or could with reasonable diligence have been
discovered. The significance of this is that a plea analogous to that made in
para (d), but based on the Sparham-Souter case instead of the Pirelli
case, could readily have been included in the third defendants’ defence at a
much earlier stage of the proceedings and certainly well before trial.
The second and
third defendants’ applications to amend their defence were, as might have been
expected, strongly opposed by the plaintiffs. The judge, however, in a reasoned
judgment of considerable length, decided to allow them on terms that the second
and third defendants should pay the plaintiffs’ costs of the amendment and of
the adjournment which he directed should follow it in any event. In his
judgment the judge said:
I now have
before me a draft amended defence from Mr Cordara on behalf of the third
defendants. Of the relevant sub-para (a), (b) and (c) relate to the ‘doomed
from the start’ point. Sub-para (d) is based on the ratio decided of the Pirelli
case.
That statement
was, so far as it went, entirely correct.
With regard to
the principles on which his discretion to allow or refuse the applications to
amend should be exercised, the judge referred to the notes to RSC Ord 20, r5,
in the Supreme Court Practice 100th ed (1982) and to the authorities
there cited. The effect of these authorities can, I think, be summarised in the
following four propositions. First, all such amendements should be made as are
necessary to enable the real questions in controversy between the parties to be
decided. Second, amendments should not be refused solely because they have been
made necessary by the honest fault or mistake of the party applying for leave
to make them: it is not the function of the court to punish parties for
mistakes which they have made in the conduct of their cases by deciding
otherwise than in accordance with their rights. Third, however blameworthy
(short of bad faith) may have been a party’s failure to plead the
subject-matter of a proposed amendment earlier, and however late the
application for leave to make such amendment may have been, the application
should, in general, be allowed, provided that allowing it will not prejudice
the other party. Fourth, there is no injustice to the other party if he can be
compensated by appropriate orders as to costs.
Guiding
himself by the authorities, the effect of which I have summarised above, the
judge decided, not without some doubt and hesitation, to allow the proposed
amendments. The further hearing of the case was adjourned to the beginning of
the following term.
On January 18
1983 the judge, on the application of the plaintiffs, made an order that the
joinder of the second and third defendants should take effect from July 30
1982. The Court of Appeal rightly held that the judge had no jurisdiction to make
such an order and the making of it can therefore be disregarded. It is,
however, material to refer to certain passages in the judgment, again of
considerable length, which the judge gave when making the order. In paras 2 to
5 of his judgment the judge said:
. . . On
Thursday December 9 1982 the House of Lords delivered judgment in Pirelli
General Cable Works Ltd v Oscar Faber & Partners (now reported:
[1983] 1 All ER 65). That judgment caused a stir, to say the least, in the
present case. On Friday December 10 application was made by the second and
third defendants to amend their defences in order to plead limitation in the
light of the Pirelli judgment.
At the time
of the application, both Mr Cordara and Mr Brunner [counsel for the third and
second defendants respectively] made it plain that neither of them was seeking
to say that the claims were statute-barred . . . under the law as it was
understood to be before the Pirelli judgment, the law as laid down in Sparham-Souter
v Town and Country Developments (Essex) Ltd [1976] QB 858 CA.
The matter
was fully argued on that basis, and in the event I gave leave to these two
defendants to amend their defences.
Some
reference was made at the time to the date of the order giving leave to join
the second and third defendants which was June 25 1982. It would seem that the
matter was further investigated over that weekend, because by Monday December
13 Mr Cordara and Mr Brunner had apparently changed their minds. (I imagine
that over the weekend it was discovered, or appreciated for the first time,
that the actual joinder was not effected until September 9 1982.) Mr Symons [counsel for the plaintiffs]
informed me on that Monday morning that Mr Cordara and Mr Brunner wished to argue
that the claims were statute-barred in any event as the cracks had appeared
over six years before the date of joinder.
My Lords,
three matters appear to me to emerge from this part of the judge’s judgment.
First, the judge gave leave to reamend on December 10 1982 after being told by
counsel for the second and third defendants that they were not seeking to say
that the claims against them were statute-barred in any event, that is to say
even on the basis of the law as it was thought to be before the Pirelli
case. Second, on December 13 the judge was told by counsel for the plaintiffs
that counsel for the second and third defendants had resiled from what they had
said to the judge in this respect on Friday December 10. Third, despite counsel
for the second and third defendants having resiled in this manner, the judge
did not consider that their doing so gave him reason to disallow para (d) of
the amendment, which he could well, if he had thought it right, have done.
The Court of
Appeal took a different view about para (d) of the amendment. Lawton LJ, after
explaining the various issues in the case, said [1984] 1 WLR 1274 at p 1285:
It would be
convenient, in my opinion, to start the unravelling of this surprising
mish-mash of legal issues by considering the procedural ones. The first in
point of time, and importance, is that raised by the amendments which were
allowed on December 10 1982. On that date the local authority and the
architects learned that they might have a limitation defence which they had not
known about before, that is to say the houses might have been ‘doomed from the
start’. This is what they then wanted to plead. Nothing more. They told the
judge that they did not want to plead that the claims had been statute-barred
when they were joined as defendants. They could have done so and, as I have
already commented, if they had, on the evidence, they could have argued that
the foundations had settled when or shortly before the cracks appeared.
Paragraph (d) of the amendments which were allowed was in substance nothing
more than what could have been put into the defences served but which was not.
In my judgment, an amendment in terms of paragraph (d) should not have been
allowed. The amendments in paragraphs (a), (b) and (c) were of a different
kind. The local authority and the architects and their advisers, had no reason
to think before December 10 1982 that a cause of action could accrue if a house
were erected which, due to negligent design or construction, was ‘doomed from
the start’. They wanted that issue tried and, in my judgment, they were
entitled to have it tried, provided that the plaintiffs were not prejudiced by
a late amendment. They were not because they were given an opportunity of
adducing more evidence. They decided not to take advantage of that opportunity.
Stephen Brown
LJ said [1984] 1 WLR 1274 at p 1291 that he agreed with the judgment of Lawton
LJ.
Parker LJ said
[1984] 1 WLR 1274 at p 1292:
If, upon
joinder, there is a relation back as, in common with the judgment given by
Lawton LJ and for his reasons, I hold that there is, any amendment seeking to
raise limitation in respect of any cause of action accruing after May 26 1974
ought to be and to have been refused, because any such amendment would be
purposeless. It would inevitably fail. Since none of the plaintiffs
purchased until 1975, it follows that sub-paragraphs (c) and (d) of the
amendment should not, in any event, have been allowed.
The situation,
therefore, is that three separate reasons were given in the Court of Appeal for
disallowing para (d) of the amendments. The first reason, relied on by Lawton
and Stephen Brown LJJ, was that, when the application for leave to amend was
made on December 10 1982 counsel for the second and third defendants had told
the judge that they did not wish to plead that the claims against them had been
statute-barred in any event, that is to say even on the basis of the law as it
was understood to be before the Pirelli case. The second reason, also
relied on by Lawton and Stephen Brown LJJ, was that the plea raised by para (d)
was in substance a plea which could have been raised, on the basis of the law
as it was understood to be before the Pirelli case, when the defences
were first served, but had not been so raised. The third reason, relied on by
Parker LJ, was that, because of the relation back theory, para (d) of the
amendment was bound to fail and was therefore purposeless.
With regard to
the first reason it is true that, when counsel for the second and third
defendants applied for leave to amend on Friday December 10 1982, they told the
judge that they did not wish to argue that the claims against them were
statute-barred even on the basis of the law as it was thought to be before the Pirelli
case. However, as I pointed out earlier, by reference to what the judge said
later on the occasion of the plaintiffs’ misconceived application for an order
back-dating the joinder of the second and third defendants, the judge was
informed by counsel for the plaintiffs on Monday December 13 1982 that counsel
for the second and third defendants had changed their minds in this respect and
now did wish to argue that the claims against them were statute-barred even on
the basis of the law as it was understood to be before the Pirelli case.
I pointed out further that, despite the judge having been informed of this
change of intention, the judge did not see fit to revoke his previous allowance
of para (d) of the amendments, as he would certainly have been entitled to do.
In the result, while it may be right to say that the judge allowed para (d) of
the amendments originally on a basis which subsequently proved to be incorrect,
he nevertheless adhered to his original decision, instead of revoking it, after
being informed of the true position. In so far, therefore, as the first reason
relied on in the Court of Appeal is that, when the judge allowed para (d) of
the amendments on December 10 1982, he was misled as to its purpose, it seems
to me clear that, after all misapprehension in that respect had been removed by
what he was told on December 13 1982, he nevertheless stood by his previous
decision. In these circumstances I do not consider that there is any real
substance in the first reason relied on in the Court of Appeal.
With regard to
the second reason, it amounts to no more than this, that the second and third
defendants made a serious mistake in the conduct of their cases by not raising
a plea of limitation in their original defences. On the authorities, to the
effect of which I referred earlier, this circumstance ought not to be regarded
as of itself precluding the giving of leave to amend, in the absence of any
prejudice to the plaintiffs which could not be compensated for by appropriate
orders as to costs. I cannot see that there was any such prejudice.
With regard to
the third reason, I have already expressed my opinion that the relation back
theory is not well-founded, and, if I am right about that, it follows that the
third reason is not well-founded either.
The opinion
which I have formed on this part of the case is that, having regard to the
authorities to which the judge referred in his judgment, he had a discretion,
when he was properly informed about the purpose of para (d) of the amendments
on December 13 1982, to let stand the order relating to it which he had made,
on a partly mistaken basis, on December 10 1982. I stress that I think that he
had a discretion to do this: I do not go so far as to say that he was bound to
do so.
On the footing
that the judge had a discretion to allow para (d) of the amendment to stand, I
do not consider, for the reasons which I have given, that the Court of Appeal
were justified, on any of the three grounds relied on by them, to interfere
with the exercise of that discretion.
Conclusion
The result of
the view which I have expressed on the four issues which I set out earlier is
that the third defendants were entitled to rely on limitation as a defence to
the plaintiffs’ claims and that they were entitled to succeed in that defence.
It follows that I would myself allow the third defendants’ appeal.
I understand,
however, that a majority of your lordships have reached a conclusion different
from mine on what I have called the amendment issue, being of the opinion that
the Court of Appeal were right to disallow para (d) of the particulars under
para 3A of the third defendants’ amended defence. Having regard to the views
which I have expressed on what I have called the accrual issue, the third
defendants’ defence of limitation can only succeed if they are allowed to rely
on para (d). It follows that, if as a result of the majority view of your
lordships para (d) is disallowed, the third defendants’ appeal, instead of
succeeding as I think that it should, must fail.
LORD TEMPLEMAN
(in favour of dismissing the appeal) said:
The houses
were negligently designed and sited by the fourth party architects. The houses
were negligently constructed by the defendant builders. The foundations of the
houses were negligently inspected by the third party local authority. The
houses were completed, purchased and occupied by the end of 1975. As a result
of the negligence of the architects, the builders and the local authority,
damage was sustained by the houses. According to the trial judge, the damage to
no 34 occurred about August 4 1976 and was discovered on August 11 1976. The
damage to no 32 occurred about August 7 1976 and was discovered on August 14
1976. The damage to no 42 occurred about September 2 1976 and was discovered on
September 9 1976. The damage to no 36 was discovered on August 11 1976. The
damage to no 38 was discovered on September 3 1976.
Under the law
as understood in Sparham-Souter [1976] QB 858 the claims against the
architects and the local authority were time-barred six years after the date
when the damage was discovered, ie not later than September 9 1982. Under the
law laid down in Pirelli [1983] 2 AC 1 the claims against the architects
and the local authority were time-barred six years after the date when the
damage occurred, ie not later than September 9 1982 unless the houses were
‘doomed’ in which case time may have expired before July 30 1982. The trial
judge granted leave to plead the Limitation Act but he also ordered that the
joinder of the third and fourth parties to the action was to take effect from
July 30 1982.
The architects
and the local authority now successfully contend that they were not joined in
the action until October 6 1982. But in my opinion they cannot have the benefit
of that success and at the same time ignore the conditions which the trial
judge imposed upon them. The architects and the local authority cannot have it
both ways. If they were not joined in the action until October 6 1982 then,
when they were joined, time had expired under the law as expounded in Sparham-Souter
or as corrected in Pirelli. The architects and the local authority
delivered their defences in October 1982. They did not plead the Limitation
Act. They did not apply to amend their defences until December 10 1982 after
the trial had been completed save for closing speeches and judgment. The
architects and the local authority now rely on the leave granted to them by the
trial judge to rely on the Limitation Act, but they can only rely on his order
to the extent to which it was intended. By back-dating, ineffectually as it
turned out, the joinder of the third and fourth defendants to July 30 1982 the
trial judge clearly intended to prevent any reliance on the Limitation Act save
on the footing that the houses were ‘doomed’.
I agree with
my noble and learned friend, Lord Keith of Kinkel, about the date of joinder,
the inappropriateness of relation back, and the ‘doomed from the start’
arguments. But for the reasons I have indicated, and in agreement with the views
expressed by my noble and learned friend, Lord Griffiths, about the late
amendment in order to plead the Limitation Act, I would dismiss this appeal.
LORD GRIFFITHS
(also in favour of dismissing the appeal) said:
The
amendment of the defences
I am of
opinion that there are no grounds that would justify interfering with the
discretion exercised by the Court of Appeal to disallow para 3A(d) of the
amendment of the third and fourth defendants’ defences made on December 10
1982. In order to explain my reasons it is necessary to set out the history of
the litigation before the amendment.
By a writ
dated May 27 1980 the plaintiffs claimed damages against the first defendants,
the builders, for breach of contract and/or negligence in the construction of
houses which they had sold to the plaintiffs. By a third party notice dated
April 28 1981 issued against the local authority, the Mid-Sussex District
Council, the first
ground that the third party had negligently approved the foundations of the
houses and granted building regulation consents in breach of their statutory
duties. By a fourth party notice dated August 18 1981 the third party claimed
an indemnity against the fourth party, the architects of the houses, alleging
breach of duty to the plaintiffs.
The plaintiffs
did not immediately join the third and fourth parties because they did not
realise that the builders might be insolvent. By the summer of 1982, however,
the plaintiffs had anxieties about the solvency of the builders and so on June
25 1982 they obtained an order that the third and fourth parties be joined as
defendants to the action and that a statement of claim be served on them within
21 days. This order was unopposed by the solicitors for the third and fourth
parties because as the law was understood at that time pursuant to the decision
of the Court of Appeal in Sparham-Souter v Town & Country
Developments (Essex) Ltd [1976] QB 858, the plaintiffs’ causes of action
were believed to arise when they first observed the damage to their houses. In
the statement of claim it had been pleaded that the dates upon which the
defects first became apparent fell between August 11 1976 and September 9 1976
and accordingly they all fell within the limitation period of six years and the
third and fourth parties raised no objection to the order.
On July 26
1982 the plaintiffs’ solicitors went to the Central Office to have the amended
specially endorsed writ stamped. The clerk in the Central Office refused to
apply the stamp because the order of June 25 1982 did not explicitly provide
for the writ endorsed with the statement of claim to be amended. To overcome
this difficulty the plaintiffs’ solicitors wrote a letter dated July 30 1982 to
the third and fourth parties’ solicitors enclosing an amended specially
endorsed writ together with a draft consent order. Both solicitors returned the
draft consent order duly endorsed. On September 8 1982 the plaintiffs’
solicitors obtained an order from Judge Newey in the following terms:
Upon reading
the parties’ agreed terms it is ordered that: the plaintiffs have leave to
amend the statement of claim in the form annexed hereto.
On September 9
1982 the writ was reissued. On September 17 1982 the plaintiffs’ solicitors
sent the third and fourth parties a copy of the order dated September 8 1982.
The plaintiffs’ solicitors did not serve a copy of the reissued amended writ on
the third and fourth parties as they should have done, but nevertheless the
third and fourth parties both delivered defences.
For the
reasons given by Lord Keith of Kinkel, a defendant does not become a party
until not only has the writ been amended but also the amended writ has been
served on him. When the third and fourth parties delivered their defences they
thereby waived the necessity for service of the amended writ and accordingly
became parties to the action from the date of delivery of defence, which in the
case of the fourth party, the appellants, was October 6 1982.
It will be
observed from the chronology that at the time the fourth party delivered their
defence they both knew that they had not been joined as defendants until
October 6 because they had been asked to consent to the amendment of the writ
on July 30 and on September 17 they had received a copy of the order dated
September 8 which in fact gave leave to amend the writ. By the time they were
joined, namely on October 6 1982, over six years had elapsed since the date
upon which it was pleaded that the plaintiffs first discovered the defects in
their houses. But the third and fourth defendants did not plead by their
defences that the claims were statute-barred. Whether this was deliberate or
inadvertent, I do not know. The weight of authority at that time was in favour
of the view that the joinder would relate back to the date of the original writ
for the purpose of limitation and on that view of the law there would be no
purpose of pleading the statute of limitations. On the other hand, if they had
wished to pursue the defence that the claims were time-barred because time ran
until the date of joinder then they had all the information necessary to enable
them to do so. I cannot accept that they were in any way misled by the
plaintiffs’ failure to act as quickly as they might have done after they had
obtained the order to join them as defendants on June 25.
The trial of
the action started on November 23 1982 and lasted some two weeks during which
the second and third defendants fought the claim on its merits. During the
course of the plaintiffs’ final speech an application was made on behalf of the
second and third defendants to amend their defences and raise a plea that the
claims were time-barred pursuant to the statute of limitations. This
application was occasioned by the publication of the decision of your
Lordships’ House in Pirelli General Cable Works Ltd v Oscar Faber
& Partners [1983] 2 AC 1 which had been delivered on December 9 1982.
I will pause
here to consider what would have been the fate of this application if the Pirelli
decision had not been published during the course of the hearing. I have never
in my experience at the Bar or on the Bench heard of an application to amend to
plead a limitation defence during the course of the final speeches. Such an
application would, in my view, inevitably have been rejected as far too late. A
defence of limitation permits a defendant to raise a procedural bar which
prevents the plaintiff from pursuing the action against him. It has nothing to
do with the merits of the claim which may all lie with the plaintiff; but as a
matter of public policy Parliament has provided that a defendant should have
the opportunity to avoid meeting a stale claim. The choice lies with the
defendant and if he wishes to avail himself of the statutory defence it must be
pleaded. A defendant does not invariably wish to rely on a defence of
limitation and may prefer to contest the issue on the merits. If, therefore, no
plea of limitation is raised in the defence the plaintiff is entitled to assume
that the defendant does not wish to rely upon a time-bar but prefers the court
to adjudicate on the issues raised in the dispute between the parties. If both
parties on this assumption prepare their cases to contest the factual and legal
issues arising in the dispute and they are litigated to the point of judgment,
the issues will by this time have been fully investigated and a plea of
limitation no longer serves its purpose as a procedural bar.
If a defendant
decides not to plead a limitation defence and to fight the case on the merits
he should not be permitted to fall back upon a plea of limitation as a second
line of defence at the end of the trial when it is apparent that he is likely
to lose on the merits. Equally, in my view, if a defence of limitation is not
pleaded because the defendant’s lawyers have overlooked the defence, the
defendant should ordinarily expect to bear the consequences of that
carelessness and look to his lawyers for compensation if he is so minded.
Mr Ogden
submitted that the authorities obliged a judge to allow an amendment no matter
how late it was made nor for what reason, provided the other party could be
properly compensated by an award of costs. He relied upon the authorities set
out in the Annual Practice and in particular the decision of Brett MR in
Clarapede & Co v Commercial Union Association (1883) 32 WR
262 at p 263:
The rule of
conduct of the court in such a case is that, however negligent or careless may
have been the first omission, and, however late the proposed amendment, the
amendment should be allowed if it can be made without injustice to the other
side. There is no injustice if the other side can be compensated by costs . . .
This was not a
case in which an application had been made to amend during the final speeches
and the court was not considering the special nature of a limitation defence.
Furthermore, whatever may have been the rule of conduct a hundred years ago,
today it is not the practice invariably to allow a defence which is wholly
different from that pleaded to be raised by amendment at the end of the trial
even on terms that an adjournment is granted and that the defendant pays all
the costs thrown away. There is a clear difference between allowing amendments
to clarify the issues in dispute and those that permit a distinct defence to be
raised for the first time.
Whether an
amendment should be granted is a matter for the discretion of the trial judge
and he should be guided in the exercise of the discretion by his assessment of
where justice lies. Many and diverse factors will bear upon the exercise of
this discretion. I do not think it possible to enumerate them all or wise to
attempt to do so. But justice cannot always be measured in terms of money and
in my view a judge is entitled to weigh in the balance the strain the
litigation imposes on litigants, particularly if they are personal litigants
rather than business corporations, the anxieties occasioned by facing new
issues, the raising of false hopes, and the legitimate expectation that the
trial will determine the issues one way or the other. Furthermore, to allow an
amendment before a trial begins is quite different from allowing it at the end
of the trial to give an apparently unsuccessful defendant an opportunity to
renew the fight on an entirely different defence.
Another factor
that a judge must weigh in the balance is the pressure on the courts caused by
the great increase in litigation and the consequent necessity that, in the
interests of the whole community, legal business should be conducted
efficiently. We can no longer afford to show the same indulgence towards the
negligent conduct of litigation as was perhaps possible in a more leisured age.
There will be cases in which justice will be better served by allowing the
consequences of the negligence of the lawyers to fall upon their own heads
rather than by allowing an amendment at a very late stage of the proceedings.
I now turn
back to the present case. The Pirelli decision showed that the
plaintiffs’ causes of action arose when the damage to their houses occurred and
not when they first discovered the damage. The decision also raised the
possibility that a cause of action might arise at a much earlier date if a
building was ‘doomed from the start’. If a plea of limitation based upon an
assumption that the cause of action arises at the date of discovery of the
damage bars the claim it must follow that the plea will also bar the claim if
it arises at the date of damage, because the date of damage must be earlier in
time than the discovery of the damage. Therefore, if the third and fourth
defendants had raised the plea of limitation based on the date of the discovery
of the damage in their defences it would have been available to defeat the
claim which arose on the date of the damage occurring. As I have already
pointed out, whether or not the plea succeeded depended upon whether the terminus
ad quem for the purposes of limitation was October 1982, the date of
joinder, or May 27 1980, the date of the original writ. As in the circumstances
of this case the damage, namely the cracks, must have occurred relatively
shortly before they were discovered, the claim of limitation would succeed if October
1982 was the crucial date but fail if it was May 1980. The decision in Pirelli,
therefore, in so far as it held that the cause of action arose at the date of
the damage had no effect on any decision made by the defendants as to whether
or not they should plead limitation nor on their failure to do so.
In these
circumstances it is hardly surprising that when on December 10 1982 the third
and fourth defendants applied for leave to amend to raise the plea of
limitation, they told the judge that they were not seeking leave to amend to
allege that the claims were statute-barred in any event.
The
possibility of arguing that these houses were ‘doomed from the start’ did,
however, introduce a new factor into the defence of limitation. The design and
construction of the houses had begun over six years before the date of the
original writ so that even if the date of the original writ was the terminus
ad quem the claims might still be statute-barred. Taking the law as it
stood before the decision in Pirelli, this possible defence of
limitation could not reasonably have been expected to be in the minds of the
defendants’ legal advisers at the time the defences were settled. The first
three amendments contained in sub-paragraphs (a), (b) and (c) all related to a
defence of limitation based upon an allegation that the houses were ‘doomed
from the start’. The final amendment (d) was, however, in wider terms and
permitted the defendants on the face of its wording to argue that even if the
houses were not ‘doomed from the start’ and the cause of action arose at the
date of the damage they were all statute-barred by October 1982. It is,
however, quite apparent that neither the judge at the time he allowed the
amendment nor the defendants when they applied for it had any intention that
such an argument should be received by the court. The defendants had said that
they did not intend to argue that the claims were statute-barred in any event.
December 10
was a Friday, and over the weekend I suspect that the third and fourth defendants’
advisers awoke for the first time to the possibility that these claims might
have been statute-barred at the time they were joined as defendants even under
the law as it was previously understood. I say suspect because it may be that a
conscious decision had been taken to accept that their joinder would relate
back to the date of the original writ and it was, therefore, not worth pleading
a time-bar. However that may be, the judge was informed on December 13 1982
that the defendants now wished to argue that on the basis of amendment (d) the
claims were time-barred in any event.
In order to
give the parties an opportunity to consider the position the judge adjourned
the case until the following term. The plaintiffs’ counsel, appreciating the
danger that the claims might be statute-barred if it was held that the terminus
ad quem was the date of joinder, took out a summons seeking a declaration
that the proceedings against the third and fourth defendants had commenced or
were deemed to commence on or before July 30 1982. The judge after hearing
argument made an order on January 18 1983 that the joinder of the third and
fourth defendants was to take effect from July 30 1982. The judge was not asked
to reconsider the terms of amendment (d) or to alter it. But the effect of his
order radically altered the effect of amendment (d) by providing that the terminus
ad quem for limitation purposes moved back from October 1982 to July 30
1982. It necessarily follows that the judge would not have allowed amendment (d)
on December 10 1982 if he had appreciated that its effect was to provide that
the claims were statute-barred by the time that the defendants were joined in
October 1982. If that had been his intention, there would have been no point in
making the order he did on January 18 1983. When the judge exercised his
discretion to allow the amendment on December 10 1982 he clearly did not
appreciate that it permitted or was intended to permit the third and fourth
defendants to argue that the claims were statute-barred in any event by October
1982.
In these
circumstances the Court of Appeal having held that the judge had no power to
rectify the effect of the amendment by backdating the joinder to July 30 1982
were free to substitute their own discretion for that of the judge, which had
clearly been based on a misapprehension. The appellants in their written case
concede that the Court of Appeal were free to exercise their own discretion but
contend that in the circumstances of this case they were bound as a matter of law
to exercise it in favour of allowing the amendment.
My Lords,
assuming that the third and fourth defendants knew, or ought to have known,
that they were not joined until October 1982, ample grounds exist to justify
the refusal of the Court of Appeal to allow amendment (d). The only extra
argument that the Pirelli decision made available for limitation
purposes was that these claims were statute-barred if the terminus ad quem
was the date of the original writ and that argument depends upon the view that the
houses were ‘doomed from the start’. This argument is available under
amendments (a), (b) and (c). If the defendants had wished to plead that these
claims were time-barred in any event by October 1982 they should have pleaded
it in their defence. It would have been a truly technical defence as they could
hardly have claimed to be taken by surprise and therefore at a disadvantage as
they had been parties to the proceedings in their capacity as third and fourth
parties since April and August 1981 respectively.
In considering
how they should exercise their discretion, the Court of Appeal were entitled to
take into account the following among other factors, that these were personal
plaintiffs, that the trial was nearly ended and the merits of the case had been
fully investigated, that the defendants had in fact been parties to the
litigation since August 1981, and that they had no one but themselves to blame
for not pleading limitation in the original defence if they had wished to do
so. Here were ample grounds upon which to exercise the discretion in favour of
refusing amendment (d) and I agree with the decision of the Court of Appeal.
I have had the
advantage of reading the speech of my noble and learned friend, Lord Keith of
Kinkel, on the remaining issues in this appeal, namely ‘relation back,’ ‘date
of joinder,’ and ‘doomed from the start’. I agree with his reasoning and
conclusions on each of these issues. However, as I agree with the Court of
Appeal that amendment (d) should not have been allowed by the trial judge, it
follows that I would dismiss this appeal.
LORD GOFF OF
CHIEVELEY (also in favour of dismissing the appeal) said:
I have had the
opportunity of reading in draft the speeches of my noble and learned friends
Lord Keith of Kinkel and Lord Griffiths. Like Lord Griffiths, I am in agreement
with the opinion expressed by Lord Keith of Kinkel on the issues concerned with
‘relation back,’ ‘date of joinder,’ and ‘doomed from the start’. I also agree
with Lord Griffiths that, for the reasons given by him, there were ample
grounds upon which the Court of Appeal could exercise their own discretion in
favour of refusing amendment (d). I would therefore dismiss the appeal.
The appeal by
the architects was dismissed, the appellants to pay the costs of the houseowners
and the local authority in the House of Lords.
