Mortgages — Possession — Limitation period — Whether mortgagee entitled to add money claim to possession proceedings after expiration of limitation period — Whether additional remedy a new claim under section 35(5)(a) of Limitation Act 1980 — Whether new claim raised new factual issues — Discretion
The claimant bank held a legal charge over the
defendants’ property, dated 12 October 1990, and a written guarantee by them,
of 25 May 1991, in respect of borrowings by their family company from the bank.
In April 1992, when the defendants’ indebtedness under the guarantee was
£931,704.59, the bank issued proceedings in the county court claiming
possession of the property. The pleading contained no money claim, although it
set out essential particulars that would have justified such a claim. The
defendants put in a defence and counterclaim seeking damages for
misrepresentation and breach of contract, and pleading set-off against the sums
due to the bank. In May 1998 the district judge allowed the bank’s application
to amend the particulars of claim to add a claim for a money judgment; that
order was upheld by the county court judge. The first defendant appealed on the
principal ground that the additional claim was statute-barred and there was a
substantial element of statute-barred interest.
necessarily a new cause of action. The claim for a money judgment was therefore
not a new claim under section 35(5)(a) of the Limitation Act 1980; there
was no prejudice in the form of a loss of an accrued defence of limitation
because the defendants had no such defence. The amendment raised no new factual
issues between the parties. If the money claim was a new claim under section
35(2) of the 1980 Act, the facts that the bank relied on in its amended
claim were the same or at least substantially the same as those in respect of
which possession had already been claimed and on which the defendants put in
issue their amended defence and counterclaim. Had the matter called for the
exercise of discretion, it would have been exercised in favour of the amendment
under RSC Ord
The following cases are
referred to in this report.
Ashley Guarantee plc v Zacaria [1993] 1 WLR 62; [1993] 1 All ER 254, CA
Dickenson v
Harrison (1817) 4 Price 282
Esso Petroleum Co Ltd v Alstonbridge Properties Ltd [1975] 1 WLR 1474; [1975] 3
All ER 358; (1975) 30 P&CR 170; 237 EG 881
Hancock Shipping Co Ltd v Kawasaki Heavy Industries Ltd (The Casper Trader) [1992] 1
WLR 1025; [1992] 3 All ER 132; [1991] 2 Lloyd’s Rep 237, CA
Letang v Cooper
[1965] 1 QB 232; [1964] 3 WLR 573; [1964] 2 All ER 929; [1964] 2 Lloyd’s
Rep 339, CA
Lloyds Bank plc v
Rogers unreported 19 December 1996
National Home Loans Corporation plc v Yaxley unreported 14 December 1996
Steamship Mutual Underwriting Association v Trollope & Colls (City) Ltd (1986) 33 BLR 77
Welsh Development Agency v Redpath Dorman Long Ltd [1994] 1 WLR 1409; [1994] 4 All ER
10; (1994) 38 Con LR 106
Yorkshire Bank plc v Hall [1999] 1 All ER 879, CA
This was an appeal by the
first defendant, Derek Edward Stuart Rogers, from a decision of Judge Anthony
Thompson QC in Bodmin County Court upholding an order of Deputy District Judge
Rutherford allowing the claimant, Lloyds Bank plc, to amend its particulars of
claim in proceedings against the defendants.
Miles Croally (instructed by Alison Trent &
Co) appeared for the appellant; Simon Browne-Wilkinson QC and Jeffrey Chapman
(instructed by Foot & Bowden, of Plymouth) represented the respondent; the
second defendant did not appear and was not represented.
Giving the first judgment, AULD LJ said: This is an appeal by
the first defendant, Mr Derek Rogers, from an amended order of Judge Anthony
Thompson QC on 8
decision of Deputy District Judge Rutherford allowing the plaintiff, Lloyds
Bank plc, to amend its particulars of claim for possession of mortgaged
property to add claims for principal and interest due under an associated
guarantee and an overdraft, and to reamend its amended reply and counterclaim.
The bank’s claim against Mr and Mrs Rogers is for
possession of their property pursuant to the terms of a legal charge over it of
12
of borrowings by their family company from the bank.
On 27 April 1992, by which time the Rogers’
indebtedness under the guarantee was £931,704.59, the bank, by a summons and
particulars of claim issued in Launceston County Court, claimed possession of
the mortgaged property. Although the pleading contained no money claim, it did,
as required by CCR Ord 6 r 5(1), set out the essential particulars that would
have justified such a claim as well as the claim for possession. It recited the
material terms of the charge and of the guarantee, the making, on 9 August
1991, of a formal demand on the Rogers under the guarantee in respect of their
indebtedness under it in the sum of £820,165.72, their indebtedness under the
guarantee at the date of claim of £931,704.59 and the continuing accrual of
interest at specified rates.
The Rogers, by their amended defence and
counterclaim, admitted the charge and the guarantee but put the bank to strict
proof of their effect. They also admitted the making of the formal demand in
the amount specified, though putting the bank to strict proof of their alleged
indebtedness. Although there was no claim for money, only the pleaded factual
basis for it, they pleaded a defence of set-off and, by their defence and
counterclaim, they sought damages for breach of contract and/or
misrepresentation. Their case was that the bank, in making the formal demand
and the claim for possession, was in breach of a collateral oral agreement, or
had falsely or negligently represented to them when they entered into the
guarantee, that it would not enforce it and would continue to support their
company for at least two years. They also relied on further alternatives of
equitable estoppel and repudiatory breach of the guarantee or collateral
contract.
On 6 May 1998 Deputy District Judge Rutherford, on
the application of the bank, allowed it to amend its particulars of claim by
adding a claim for a money judgment. It sought to update the claimed
indebtedness under the guarantee and under the overdraft arising from the
accrual of further interest. It also added the date of demand for interest in
respect of the overdraft. Finally, it sought to add claims for repayment of the
total sum then outstanding under the guarantee and overdraft of about £1.5m
(after making deductions for interest accrued from the dates of demand outside
the limitation periods) and of continuing accrual of interest at specified
rates.
Mr Rogers challenges the judge’s upholding of that
order on three grounds: (1) the proposed amendment by addition of a money claim
was, in whole or a non‑severable part, a new claim that was
statute-barred under section 35(3) of the Limitation Act 1980; (2) it did not
qualify for allowance under section 35(5) and RSC Ord 20 r 5 (5) as applied to
the county court by CCR Ord 20 r 1, because it did not arise out of the same or
substantially the same facts in issue in respect of which relief had already
been claimed; and (3) in any event, the court should, in the exercise of its
discretion, refuse to allow the amendment. Mr Miles Croally, on behalf of Mr
Rogers, submitted that, at the very worst, the judge could have allowed the
amendment, save as to such part of it that, on examination, proved to be
statute-barred.
The bank’s case was that the proposed amendment
did not add a new cause of action and that it should be allowed in the exercise
of the court’s discretion to enable all the matters in issue to be resolved
together. It maintained alternatively that, if it did involve a new cause of
action, it arose out of the same or substantially the same facts as the cause
of action already pleaded and in issue and the court should in its discretion
allow it.
Mr Rogers’ main concern in opposing the amendment
was as to the interest claimed. The limitation period applicable to interest on
a sum secured by mortgage is six years from the date on which it becomes due
(1980 Act, section 20(5)), whereas that in respect of the recovery of mortgaged
land and of principal secured by the mortgage is in each case 12 years from the
accrual of the right of action (1980 Act, sections 15 and 20(1)(a)).
Mr
sums of principal and interest claimed, a substantial element of statute-barred
interest.
Section 35 provides, so far as material:
(1) any new claim made in the course of any
action shall be deemed to be a separate action and to have been commenced —
(b) on the same date as the original
action.
(2) a new claim means… any claim involving…
(a) the addition or substitution of a new
cause of action …
(3) Except as provided by section 33… or by rules
of court, neither the High Court nor any county court shall allow a new claim
within subsection (1)(b)… to be made in the course of any action after
the expiry of any time limit … which would affect a new action to enforce that
claim…
(4) Rules of court may provide for allowing a new
claim… to be made…, but only if the conditions specified in subsection (5) below
are satisfied, and subject to any further restrictions the rules may impose.
(5) The conditions… are…
(a) in the case of a claim involving a new
cause of action, if the new cause of action arises out of the same facts or
substantially the same facts as are already in issue on any claim previously
made in the original action;…
RSC Ord 20 r 5 provides, so far as material:
(1) Subject to… the following provisions of this
rule, the Court may at any stage of the proceedings allow the plaintiff to
amend his writ, or any party to amend his pleading, on such terms… as may be
just and in such manner (if any) as it may direct.
(2) Where an application to the Court for leave
to make the amendment mentioned in paragraph… (5) is made after any relevant
period of limitation current at the date of issue of the writ has expired, the
Court may nevertheless grant such leave in the circumstances mentioned in that
paragraph if it thinks it just to do so…
(5) An amendment may be allowed under paragraph
(2) notwithstanding that the effect of the amendment will be to add or
substitute a new cause of action if the new cause of action arises out of the
same facts or substantially the same facts as a cause of action in respect of
which relief has already been claimed in the action by the party applying for
leave to make the amendment…
The appeal raises the following issues: (1) is the
bank’s proposed claim for money ‘a new claim’ within section 35, entitling the
Rogers to rely on a defence of limitation under section 35(3)?; (2) if so, does
the cause of action that it involves arise out of the same or substantially the
same facts as are already in issue on the original claim and in respect of
which the applicant has already claimed relief?; and (3) in either case, should
the judge have exercised his discretion to allow the amendment?
New claim or new
remedy
The judge said that the question for decision was
whether this is a new claim or simply a claim for a new remedy based upon the
same facts. He held that it was the latter:
this is not a new claim but this is, in
substance, simply new or different relief that is based upon the same cause of
action, the cause of action being based upon the mortgage deed and the
guarantee. While it would have been open to the plaintiff to have sought the
relief that it now seeks in the original proceedings, it simply did not do so;
but by asking or seeking the new relief, no further matter has to be pleaded
because it has already pleaded the indebtedness under the mortgage action. It
seems to me, therefore, that this is, strictly speaking, not a new claim at all
and that the plaintiff is, therefore, entitled to succeed under that first
head.
Mr Miles Croally submitted that pleaded facts
carrying an entitlement to a remedy require a specific prayer for that remedy
to turn it into a cause of action. He maintained that the bank’s proposed claim
for a money judgment is a new claim and/or a new cause of action within the Act
and the Rules, since it is a claim based on covenants in the mortgage deed and/or
under the guarantee. As such, he said that the money claim was distinct from
the existing claim, which is simply a mortgagee’s action for recovery of land,
not a claim to enforce the mortgage. He relied on an observation of Walton J to
that effect in Esso Petroleum Co Ltd v Alstonbridge Properties Ltd
[1975] 1 WLR 1474 at p1481F‑G. In addition, he submitted, in reliance on Dickenson
v Harrison (1817) 4 Price 282, that the principal secured by the
mortgage and the interest on it are distinct debts and are separately
recoverable, also giving rise to separate causes of action. He said that they
cannot, therefore, be separate from one another but both be identical to the
claim for possession. He also submitted that the separate and different
limitation periods applicable to the claims for possession and interest suggest
that they are separate causes of action since they are calculated by reference
to the date of the cause of action and a cause of action cannot have more than
one limitation period.
Mr Simon Browne-Wilkinson QC, for the bank,
submitted that pleaded facts carrying an entitlement to a remedy do not need a
prayer for that remedy to turn it into a cause of action. He maintained that
the amendments to the bank’s particulars of claim, in particular the introduction
of a claim for a money remedy, did not add a new cause of action because it did
not introduce any factual allegation, not already pleaded, that the bank had to
establish in order to obtain a money judgment. His submission was that the
bank’s original pleading had alleged more than one cause of action, one in
respect of which it had already claimed a remedy and the other in respect of
which it was entitled to a money remedy subject to the judge’s general
discretion as to allowing amendments.
It is important to note that what makes ‘a new
claim’ as defined in section 35(2) is not the newness of the claim according to
the type or quantum of remedy sought, but the newness of the cause of action
that it involves. The formula employed in section 35(2)(a) and (5) is ‘a
claim involving… the addition or substitution of a new cause of action’. And
Ord 20 r 5(5) refers not to a claim but to ‘[a]n amendment the effect of which
is to add or substitute ‘a new cause of action”. Diplock
accepted definition of a cause of action in Letang v Cooper
[1965] 1 QB 232, CA, at pp242-3, as ‘simply a factual situation the existence
of which entitles one party to obtain from the court a remedy against another
person’, as distinct from ‘a form of action… used as a convenient and succinct
description of a particular category of factual situation’, is of importance.
It makes plain that a claim and a cause of action are not the same thing. It
follows, as Mr
may disclose more than one cause of action, although one of them may not be
individually categorised as such or the subject of a claim for a separate
remedy. However, as Mr Browne-Wilkinson submitted, it does not follow that a
claim so categorising it and/or seeking a remedy for it made for the first time
by amendment is the addition of a new cause of action so as to render it a new
claim.
That the draftsmen of section 35 and Ord 20 r 5
had the distinction in mind is underlined by their respective provision for new
claims by reference to substituted new causes of action, as well as additional
new causes of action. The remedy claimed — ‘any claim’ — may or may not be the
same; what makes the claim ‘a new claim’ is the newness of the substituted
cause of action. Thus, a claim for damages is a new claim, even if in the same
amount as originally claimed, if the claimant seeks, by amendment, to justify
it on a different factual basis from that originally pleaded. But it is not,
even if made for the first time, if it does not involve the addition or
substitution of an allegation of new facts constituting such a new cause of
action.
Here, as I have said, the original particulars of
claim, in their compliance with CCR Ord 6 r 5(1), contained all the essential
matters of fact — ‘the factual situation’ — upon which the bank now seeks to
rely by adding a claim for a remedy in money. Accordingly, in my view, the
introduction of that claim by the sought amendment, though a claim for a new
remedy, is not a new cause of action in that it does not add to the ‘factual
situation’ already pleaded. The distinction made by Walton
Petroleum Co Ltd v Alstonbridge Properties Ltd between a mortgagee’s
action to recover land and the enforcement of the mortgage security is
therefore not in point.
Thus, while a new cause of action is a new claim,
a claim for a new remedy is not necessarily a new cause of action. It seems to
me that this reasoning is consistent with Glidewell LJ’s summary of the
combined effect of the Act and the rule in Welsh Development Agency v Redpath
Dorman Long Ltd [1994] 1 WLR 1409, CA, at pp1415H-1416C, that a new cause
of action under the rule is a new claim under the Act. The general
applicability of that interpretation of the two provisions does not seem to me
to be restricted to the facts of that case, namely a claim for damages in
negligence where the amendment sought and granted under Ord 20 r 5(5) was for
further damages in respect of new ‘factual situations’, namely alleged further
breaches of duty: see Steamship Mutual Underwriting Association v Trollope
& Colls (City) Ltd (1986) 33 BLR 77, CA, per May LJ at p98.
In my view, therefore, the judge was entitled to
allow the amendments in accordance with the well-settled principles summarised
in the notes to RSC Ord 20 r 8 in vol 1 of the Supreme Court Practice, at
20/8/86, namely that, however negligent the original omission or late the
amendment, a proposed amendment should be allowed if it can be made without
injustice to the other side. If I am right that the amendment sought is not a
new claim under section 35(5)(a), there is no prejudice in the form of a
loss of an accrued defence of limitation because the Rogers have no such
defence. Indeed, it would be unfairly prejudicial to the bank not to allow the
amendment since it would deprive it of a pleaded cause of action to which the
Rogers had no defence of limitation and when they are counterclaiming for
substantial damages against the bank. Subject to the updating of the figures
claimed, the amendment raises no new factual issues between the parties since,
by para 4 of their original defence, the Rogers put the bank to strict proof of
their indebtedness to it and relied on their counterclaim by way of set-off (no
longer possible in a mortgagee’s simple claim for possession: see Ashley
Guarantee plc v Zacaria [1993] 1 WLR 62, CA). The only possible
unfair prejudice to the Rogers is in costs consequential on the amendment,
which the district judge awarded them.
The same or
substantially the same facts
If, contrary to my view, the money claim is a new
claim under section 35(2), the next matter for decision is whether, under
section 35(5)(a) and Ord 20 r 5(5), when read together, the court may,
in its discretion, allow it out of time as a cause of action arising out of the
same facts or substantially the same facts as are already in issue on a claim
for relief already made by the applicant in the action. I say ‘when read
together’ because section 35(4) and (5) set out the minimum requirements for
the exercise of discretion under Ord 20 r 5(5), including the requirement that
the new cause of action must arise out of the same or substantially the same
facts ‘as are already in issue’ in the existing claim. Although the rule makes
no mention of such facts being ‘already in issue’, and refers to facts ‘in
respect of which relief has already been claimed in the action’, to the extent
that the two do not overlap, both apply.
The judge held that, as the facts pleaded by the
bank gave rise both to an entitlement to claim possession and also to a claim
for a money judgment, the new claim, if there was one, arose out of the same or
substantially the same set of facts.
Mr Croally submitted that the relevant facts for
this purpose are the facts that gave rise to the original remedy claimed and in
respect of which they were in issue, as required by section 35(5)(a),
namely possession. He said that, because compliance with CCR Ord 6 r 5 called
for particulars that were not a relevant issue for that purpose, section 35(5)(a)
was not engaged. He referred to its policy, as identified by Hobhouse LJ in Lloyds
Bank plc v Rogers, CA, unreported 19
the transcript:
The policy of the section is that, if factual
issues are in any event going to be litigated between the parties, the parties
should be able to rely upon any cause of action which substantially arises from
those facts.
He said that the right to possession arose under
the mortgage on default of payment of the amount due on demand and that the
precise amount would only have been relevant if there had been an offer to
redeem at an amount less than that demanded by the bank: see Ashley Guarantee
v Zacaria. He added that, although the Rogers, in their amended defence
and counterclaim, had put the bank to proof of the total amount of
indebtedness, the precise amount was not relevant to their defence to the claim
for possession. He said that to allow the bank to raise the matter now would
require determination of the appropriate interest rates applicable from time to
time over the years, thus expanding the issue far beyond what was or was not
agreed by way of the collateral agreement alleged by the Rogers.
Mr Browne-Wilkinson submitted that the bank had
already pleaded all the factual allegations necessary to establish its money
claim, save for some updating of the interest figure, and that there was,
therefore, at the very least, a considerable overlap between the cause(s) of
action already pleaded and that which the bank wished to plead by way of
amendment to satisfy the test.
The question is whether the new cause of action,
if any — the new factual situation entitling the bank to a remedy — arises out
of the same or substantially the same facts already in issue and the subject of
a claim for relief, namely the Rogers’ indebtedness to the bank under the
guarantee, and its extent. The clear intention of the Act and the rule is that,
regardless of the remedy already claimed, a new remedy arising out of the same
or substantially the same facts in issue may be allowed. If Mr Croally’s
submission were correct, no newly claimed remedy could be based on facts
already pleaded and in issue where the original pleading had not identified
them as being relevant to the proposed amended claim and the defendant had not
anticipated it by pleading specifically to it. Lloyds Bank plc v Rogers
is a good illustration. There, the court upheld the decision of the judge
below to allow the defendants to a bank’s claim to add, out of time, to their
defence of breach of duty by the bank in obstructing their attempts to
reschedule their liabilities, an allegation of libel arising out of wrongly
dishonoured cheques.
Moreover, whether proposed pleaded facts are the
same, or there is a sufficient ‘overlap’ to make them substantially the same as
those already in issue, is a matter of impression, as Glidewell LJ said in Welsh
Development Agency v Redpath at p1418B-D. In that case, the court
was not prepared to overturn the trial judge’s allowance of an amendment in a
claim in tort for differential settlement of two units on a building site to
add claims for damages in respect of another 10 units on the site, even though
there were the following differences between the two claims: the degree of
differential settlement, the usage and, hence, the loading of the ground under
the units, the timing of the settlement and the nature of the damage. By
contrast here, the differences of fact introduced by the proposed amendment
were the addition (in para 12A) of an allegation of a demand in July 1991 in
respect of the relatively small amount due under the overdraft, and (in paras
14A and B) of up-to-date figures of indebtedness under the guarantee and on the
overdraft in March 1998.
In my view, the judge was entitled to hold, as he
did, that the proposed amendment, if a new claim, would have satisfied the
requirements of both the Act and the rule. The facts on which the bank relies
in its amended claim are undoubtedly the same, or at least substantially the
same, as those in respect of which possession has already been claimed and
which the Rogers have put in issue in their amended defence and counterclaim.
The same or
substantially the same facts — discretion
The judge indicated that had the matter called for
an exercise of discretion under Ord 20, r 5(2) and (5), he would have relied on
the following factors: (1) refusal to allow the amendment would not have
precluded the bank from instituting fresh proceedings in respect of the
principal and arrears of interest, although the claim in respect of the
interest could only be in respect of the last six years; that would lead to
costly duplication of proceedings probably resulting in consolidation;
(2)
to defend the money claim; and (3) that it was better to allow the money claim
to be tried in the same action as the Rogers’ counterclaim for damages.
Mr Croally submitted, in the event of the second
issue arising for consideration and the bank’s success on it, that the court
should exercise its own discretion. He maintained that the matters mentioned by
the judge were irrelevant or inaccurate. He said that they showed his failure to
understand that the amendment, if allowed, would deprive the Rogers of a
defence of limitation. More particularly, he said that the judge was mistaken
in crediting the bank with an argument that part of the claim in respect of
statute-barred interest could be ‘factored out’. (However, the judge did not
state that he relied on that argument.) He said that the judge was mistaken in
his expressed belief that a refusal of leave to amend would have no other
effect than to permit the bank to institute a fresh money claim, which could
then be consolidated with the possession action, since it too would be caught
by the defence of limitation. He said that the judge’s reliance, as the
decisive factor, on the need to avoid duplicity of actions was also
misconceived, since the critical issue was whether an amendment should be
allowed so as to override a defence of limitation. Finally, he said that the
judge’s speculation that the Rogers might not obtain legal aid to defend a
fresh action was irrelevant.
Mr Croally submitted that the most important
consideration against the exercise of discretion under RSC Ord 20 r 5(2) and
(5) to allow the amendment would be that it would deprive the Rogers of an
accrued defence of limitation to a claim for a different remedy with a shorter
limitation period than that governing the original action. He also referred to
the delay — six years from the issue of proceedings, and the lack of
explanation for it. He initially submitted that, not only was there no
explanation for the delay, but the bank appeared to have made a positive
election to seek only possession. He referred to its resistance in August 1994
to the Rogers’ attempt to transfer the action to the High Court on the ground
that, as it was a possession action, the county court had exclusive
jurisdiction under section 21 of the County Courts Act 1984. Finally, he
referred to likely prejudice to the Rogers, allegedly resulting from the delay,
if the new claim is allowed, namely their lack of certain bank statements
before 1988 and the bank’s inability to trace
them if they had been available for discovery.
Mr Browne-Wilkinson pointed out that, although the
deprivation of an accrued limitation defence is a relevant consideration, the
discretion under Ord 20 r 5(2) and (5) arises in that very context and that the
wording and limited nature of the exception suggested ‘a predisposition’ to the
allowance of a qualifying amendment. He relied also on the arguments that he
had advanced on the general exercise of discretion regardless of limitation,
namely: (1) that a party should normally be allowed to amend where it would not
be unjust to the other party, especially where it enables all related issues to
be determined in the same proceedings; (2) that the amendment raises no new
factual matters of which the Rogers did not have adequate notice, in
particular, the alleged extent of their indebtedness to the bank on which they
have taken issue from the start; and (3) it would be unjust to deprive the bank
of its money claim when the Rogers have a substantial counterclaim for damages.
There is firm and clear authority of this court in
the judgment of Staughton LJ, with whom Kerr LJ agreed, in Hancock Shipping
Co Ltd v Kawasaki Heavy Industries Ltd (The Casper Trader) [1992] 1
WLR 1025, CA, at pp1029H-1030E, that the loss of an accrued defence of
limitation is a relevant consideration under this provision and that there is a
burden of persuasion on the applicant to satisfy the court of the justice of
allowing an amendment having that effect. However, the loss of such a defence
cannot be determinative since the rule expressly permits the exercise of a
discretion that will have that effect. The length of and reason for delay and
any resultant prejudice from delay also appear to be relevant: see eg per
Hobhouse and Simon Brown LJJ in Lloyds Bank plc v Rogers at pp7
and 10. However, as Mr
feature of almost all Ord 20 r 5(5) applications to amend.
As to whether there is any force in Mr Croally’s
suggestion that the bank, by its resistance in 1994 to transfer of the matter
from the county court, had then elected to proceed only on the possession
claim, much depends on whether it did so on an understanding, right or wrong,
that the law prevented it from pursuing an associated money claim in the county
court. Counsel’s researches on the matter following their oral submissions on
the appeal show that there is some uncertainty whether, at the material time,
both the possession claim and a money claim could have been transferred to the
High Court: see National Home Loans Corporation plc v Yaxley
unreported 14 December 1996, a decision of Rattee J; and Yorkshire Bank plc
v Hall [1999] 1 All ER 879, a decision of this court disapproving Rattee
J’s judgment. But what is certain is that, even if the action had included from
the start a claim for payment of principal and interest under the guarantee,
the county court would have had jurisdiction to try it; see the County Courts
Act 1984, as amended, sections 15 and 21(1) and (3); the Courts and Legal
Services Act 1991, section 1; and the High Court and County Courts Jurisdiction
Order 1991 (SI 1991 No 724), Articles 1 and 2(1). In the light of that outcome,
and not knowing whether the bank appreciated the true legal position, the
highest at which Mr Croally finally put his case was that the circumstances of
the bank’s resistance to transfer from the county court, ‘while not
conclusive’, suggest ‘a possibility’ that the bank might have decided to
confine its claim to one for possession. In my view, that is no foundation for
his suggestion that the bank’s conduct in this respect is a factor to be
weighed against it in the exercise of the court’s discretion. The incident, as
Mr
Finally, as to such prejudice to the Rogers as
there may be from missing documents, it does not seem to me to arise from the
bank’s delay in seeking the amendment. The missing documents concern matters on
which they have already taken issue on the possession claim and in their
defence of set-off and counterclaim. Moreover, it seems to me that the
prejudice, if any, in missing early bank records is to the bank in establishing
principal and interest owed rather than to the Rogers in disentangling what is
statutorily barred interest.
On the other side of the coin the bank has a
substantial claim for money due to it, the facts supporting which, save for
some updating, it has particularised from the start and in respect of which the
Rogers have always put it to strict proof. It may be that initially the bank
thought it could rely on the enforcement of its security to recoup its losses.
In my view, it is not a misuse of the power given by Ord 20 r
allow it to override the limitation period by seeking an alternative remedy
arising out of the same or substantially the same facts in issue to cover any
shortfall on the security the subject of the claim for possession. If it were necessary,
I would exercise my discretion under that rule in favour of the amendment.
Accordingly, I would dismiss the appeal.
Agreeing, EVANS
LJ said: I agree with Auld
dismissed on the second and third ground set out in his judgment; namely that
the court has a discretion to allow the amendments under section 35(5)(a)
of the Limitation Act 1980 and RSC Ord 20 r
claim for interest was made, in part, more than six years after the interest
became due, and that the judge’s exercise of discretion cannot be interfered
with in the present case.
On the first ground, however, I have reached a
different conclusion, and I will set out my reasons briefly. I would hold that
amending the particulars of claim to include a claim for sums due as principal
and interest under the guarantee adds causes of action that are ‘new claims’
under section 35 and Ord 20 r 5, respectively. They are different causes of
action from the claim for possession of the appellants’ property under the
legal charge and guarantee, which was the only claim first made.
This would be self-evident, in my view, were it
not for the fact that the original pleading contains full particulars of the
sums allegedly due under the guarantee, and these allegations were challenged
in the defence. Indeed, the respondents pleaded a defence of set-off and made
their own money claims. Therefore, the bank submits, the ‘factual situation’ (per
Diplock LJ in Letang v Cooper [1965] 1 QB 232 at pp242-3) that
entitles it to make the money claims is already pleaded, and the original
pleading includes those causes of action, although there was no claim for that
particular remedy or form of relief.
I disagree. The reason why the particulars of
claim included particulars of the sums allegedly due is the fact that Ord 6 r
5(1) of the County Court Rules directed that it should. Given the presence of
those factual allegations, the money claims are conspicuous by their absence
from the pleading. There could be many explanations for this, but the fact
remains that the claims were not made. There is even a suggestion that the bank
may have relied upon the absence of a money claim at one stage of these
proceedings, but the evidence is unclear.
The judge drew the distinction between introducing
a new cause of action (‘new claim’) and claiming new or different relief when
the cause of action remains the same. The distinction is certainly valid. For
example, no ‘new claim’ would be added if the amendment introduced a damages
claim to an injunction claim based upon a cause of action already pleaded in
support of an injunction claim. The cause of action remains the same although
the relief is different and the amendment is necessary for that reason
(statutory considerations apart).
But that is not the situation here. The bank first
omitted and now seeks to include the money claims. It is submitted that a cause
of action consists solely of the ‘factual situation’ and that an express claim
for a particular remedy is not essential to it. But if the remedy is omitted and
the cause of action is different from the one that gives rise to the right to
relief originally claimed, then, in my judgment, two conclusions follow.
First, the plaintiff has not relied upon the cause of action that gives rise to
the proposed form of relief, and second, by seeking leave to amend so as to
claim that relief he is adding that cause of action to the original pleading.
This may be objected to as unduly technical, but
if it is, that is because pleadings are (were) technical documents and the
rules as to amendment refer to the legal concept of ’causes of action’. I find
Mr Croally’s excellent submissions compelling on this issue, including his
reminder that a claim for negligence for breach of professional duty arising
out of the same facts may be made both in contract and tort, and it can be
important (eg for limitation purposes) to know whether both or
few words, used in their correct legal sense, however technical that may be.
The power to permit amendment after expiry of the
limitation period under the ‘same facts or substantially the same facts’
formula in section 35(5) and Ord 20 r 5(5) is necessary and beneficial in order
to prevent legal technicalities of this sort from producing an unjust result.
In my judgment, those are the operative provisions in the present case.
Appeal
dismissed.
