Property — Negligence proceedings — Claim form specifying wrong claimant — Appellant seeking to add or substitute new party — Appropriate test for determining whether substitution appropriate — Whether judge erring in allowing joinder of additional claimant — Appeal dismissed — Cross-appeal allowed
The appellant sought compensation for the loss of property interests in Spain, which were valued at £12m, that he allegedly owned. He claimed to have been deprived of them by an allegedly fraudulent scheme. He alleged that a document in Spanish had been prepared, purportedly made and signed by him, but that it was a false document on which his signature had been forged. The signature had been notarised in London by the first respondent, who was authorised to act in Scotland but not England. The notarisation had been confirmed by the second respondent, the Foreign & Commonwealth Office.
The appellant obtained judgment against the first respondent in default but, since he was uninsured and had no assets, the judgment was worthless and if the appellant were to recover any worthwhile compensation, it was from the second respondent for negligence and misfeasance in public office. He contended that it should have been apparent to the second respondent that the first respondent was not authorised to act as a notary in England and that, without its confirmation, the fraudulent scheme could not have gone ahead.
The second respondent applied to strike out the claim since the proceedings had been brought in the appellant’s name, when the legal owner of the property was a Spanish company (Grass), of which he was the sole director. The appellant applied to join Grass as an additional claimant. The judge struck out the claim against the second respondent but allowed Grass to be joined as a second claimant under CPR 19.5(3)(b) on the basis that the claim could not proceed unless a new party was added. However, the joinder was limited to the extent of enabling the appellant to maintain a claim based upon an alleged two-thirds beneficial interest under a trust of which Grass was alleged to have been a trustee. Grass was also required to give security for costs.
The appellant appealed arguing that the use of his name, rather than that of Grass, in the proceedings had been erroneous, so that a change of parties should be allowed, pursuant to CPR 19.5(3)(a). The second respondent cross-appealed.
Held: The appeal was dismissed and the cross-appeal allowed.
No substitution was justified under CPR 19.5(3)(a). In determining whether it would be appropriate to add or substitute a party within that rule, a convenient working test might be to ask whether it was possible to change the identity of the claimant or the defendant without significantly changing the claim. That was a sensible consistent approach but, in the present case, the amendments that would be necessary to formulate the particulars of a claim by Grass, as they stood at the hearing before the judge, would be too substantial to pass the test: Morgan Est (Scotland) Ltd v Hanson Concrete Products Ltd [2005] EWCA Civ 134; [2005] 1 WLR 2557 and The Sardinia Sulcis [1991] 1 Lloyd’s Rep 201 distinguished.
Furthermore, joining Grass as an additional claimant could not be justified under CPR 19.5(3)(b). The judge’s order had been designed to enable the appellant to assert a claim based upon the loss of his alleged beneficial interest. However, that claim was based upon a duty of care that was held not to exist. This was not a case in which a claim based upon a two-thirds beneficial interest could not properly be carried on by the appellant unless Grass was added or substituted as claimant. The claim could not be carried on because the judge held that it was bad in law.
Mark Warwick (instructed by Cartwright Cunningham Haselgrove & Co) appeared for the appellant; Robert Jay QC and Adam Robb (instructed by the Treasury Solicitor) appeared for the second respondent; the first respondent did not appear and was not represented.
Eileen O’Grady, barrister
