Skip page header and navigation

Introducing new claims after the expiry of limitation: the facts have got to be ‘in issue’

Details

In Libyan Investment Authority -v- King [2020] EWCA Civ 1690, the Court of Appeal considered whether the Court has power to permit a claimant to amend its case to include new claims after the expiry of a limitation period in circumstances where the Court had struck out the entirety of the original case.

Limitation

Most claims must be brought within a certain period, known as a limitation period. By way of example, claims in respect of simple contracts must be brought within six years and claims for a breach of an obligation contained in a deed must be brought within twelve years (Limitation Act 1980; LA 1980). If a limitation period has expired, the defendant has a complete defence to the claim.

However, there are circumstances in which a claimant may advance a claim that would otherwise be time barred. Sections 35(4) and (5) of the LA 1980 enables court rules to provide for allowing a new claim where ‘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’. The Civil Procedure Rules (CPR) duly allow new claims to be introduced in existing proceedings if they arise out of the same or substantially the same facts as a claim already in those proceedings (Rule 17.4(2)).

Background to the claim

The claimants issued proceedings on 18 July 2016 in respect of a joint venture agreement between the parties. In October 2018, HHJ Barker struck out the claimants’ particulars of claim against all defendants on the basis that there was no reasonable prospect of any of the claims succeeding (strike out order). However, the judge did not strike out the claim form on the basis that it might be possible for the claimants to re-plead their claims against certain of the defendants.

The claimants then applied to amend their particulars of claim to include new claims. Those new claims were potentially time barred and, as such, the claimants sought permission to rely on them pursuant to CPR Rule 17.4(2) referenced above. The application fell to be heard by HHJ Barker who granted the application on the basis that the new claims did arise out of the same or substantially the same facts as had been pleaded in the particulars of claim previously (albeit those particulars of claim had been struck out entirely).

The Court of Appeal granted the defendants permission to appeal on the question on whether HHJ Barker had the power to grant permission to amend when there was no claim ‘in issue’ in the action, all existing claims having been dismissed.

In response, the claimants argued that the intentions of HHJ Barker were clear (ie that the claimants should be given an opportunity to amend) and, if successful, the appeal would undermine those intentions. The claimant sought an amendment to the strike out order, either under CPR Rules 40.12 (the ‘slip rule’) or 3.1(7) (general power to amend a previous order).

Decision of the Court of Appeal

The Court held that CPR Rule 17.4 could only provide for the Court to permit a new cause of action to be pleaded after the expiry of the limitation period in the circumstances set out in section 35(5) LA 1980, ie the cause of action arises out of the same, or substantially the same, facts as are already in issue on a claim previously made in the action. That required identifying, at the time of the application for permission, what facts were then in issue and, as such, excluded facts that were no longer in issue (because, for example, they had been struck out). On that basis, it was not possible for the claimants to amend their struck out particulars of claim after the expiry of the limitation period.

However, the majority of the Court (Lord Justices Floyd and Arnold) considered that the strike out order ought to be amended under the slip rule to provide that the particulars of claim would only be struck out if the claimants did not apply for permission to amend. In effect therefore, the particulars of claim were ‘in issue’ at the time of the application and the facts therein could be considered by the court.

Consequently, the appeal was dismissed.

Comment

While the point addressed by the Court of Appeal was ‘novel’, it is not unusual for parties to litigation to seek to amend their claims after the expiry of a limitation period. The decision emphasises the importance of seeking to introduce such amendments at an early stage and certainly before the disposal of any aspects of the original claim. Further, it demonstrates the strict approach the courts will take to the wording of CPR Rule 17.4.

More generally, the case emphasises the risks of commencing proceedings ‘late in the day’; whenever a party contemplates litigation, limitation periods should be checked and claims progressed with the deadline in mind.

For further advice on limitation issues, please contact Kate Steele.

We can help you resolve business disputes through negotiation, mediation, arbitration or litigation. Our aim is to achieve resolution quickly and efficiently and to minimise the impact of a dispute on your day-to-day operations.

Where possible, we try to settle disputes without recourse to legal proceedings. However, when this is unavoidable, our very experienced and tenacious team will vigorously pursue a strategy set to achieve a successful outcome for you.

Clients in manufacturing, service industries, retail plcs, owner-managed businesses, accountants and other professionals rely on our clear, pragmatic advice, expert technical analysis and sound understanding of their business problems and commercial objectives.