Civil litigation brief

It is always embarrassing to find that you have issued proceedings against the wrong party, and doubly embarrassing if the limitation period has expired. Triply embarrassing may be the finding that proceedings have been issued on behalf of the wrong claimant.

To cater for this contingency some relief is provided by CPR 19.5(2) and (3), which deals with the substitution of parties after the expiry of the relevant limitation period and states:

'(2) The court may add or substitute a part only if '“ (a) the relevant limitation period was current when the proceedings were started; and(b) the substitution. . . is necessary.

(3) The substitution is necessary only if the court is satisfied that '“ (a) the new party is to be substituted for a party who was named in the claim form in mistake for the new party.

(b) the claim cannot be properly on by or against the original party unless the new party is added or substituted as claimant of defendant.

CPR 17.4

CPR 17.4 states: '17.4(1) This rule applies where '“

(a) a party applies to amend his statement of case in one of the ways mentioned in this rule; and (b) a period of limitation has expired under (i) the Limitation Act 1980; (ii) the Foreign Limitation Periods Act 1984; or (iii) any other enactment which allows such an amendment, or under which such an amendment is allowed.

(2) The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.

(3) The court may allow an amendment to correct a mistake as to the name of a party, but only where the mistake was genuine and not one which would cause reasonable doubt as to the identity of the party in question.'

Prior to the decision in Adelson & Las Vegas Sands Corp v Associated Newspapers Ltd [2007] EWCA Civ 701 (CA, 11 June 2007) CPR 19.5 in particular had given rise to some difficulties.

There were contradictory Court of Appeal decisions on the issue. The Court of Appeal, in one judgment given by the entire court, attempted to clarify these issues.

Facts in Adelson

Adelson was a libel case brought by an individual and a company (the second claimant) following allegations made in a newspaper article. The limitation period for libel is one year. Proceedings were issued within the year.

When the defence was filed it admitted that the second claimant was a company which controls and directs a number of companies but pointed out that, according to its own annual report, the second claimant was 'a parent company with limited business operations. Our main asset is the stock of our subsidiaries'.

It pointed out that it was other subsidiary companies that appeared to be the most appropriate claimants.

Some 11 months later (and after the expiry of the limitation period) the claimants issued an application to amend the claim form to join two other companies as co-claimants. The proposed amendment also made substantial additions to the particulars of claim.

Component parts: RSC Ord 25, r5

The court observed that there were three requirements before an amendment can be made under Order 25, r5:

• A mistake must have been made.
• That mistake must have been genuine.
• The mistake must not have been misleading or such as to cause any reasonable doubt as to the identity of the person intending to sue, or as the case may be, being sued.

This in turn gives rise to a number of questions:

• What is the nature of the mistake?
• Who is responsible for the mistake?
• What criteria govern whether the mistake is misleading and, in particular, must the court be satisfied that, despite the mistake the person intended to be sued should have been aware of the true identity of the person intending to sue and that he was the person intended to be sued?
• Can an amendment under this rule have the effect of substituting a new party?

RSC Ord ord 20, r5

The court examined the authorities on the subject in detail and came to the following conclusions about the principles applying to the previous Supreme Court Rules on the matter RSC Ord 20, r5.

It concluded that the authorities under this provision gave rise to the following principles:

• The mistake must be as to the name of the party and not as to the identity of the party. Such a mistake can be demonstrated where the pleading gives a description of the party that identifies the party, but gives the party the wrong name. In such circumstances a 'mistake as to name' is given a generous interpretation.
• The mistake will be made by the person who issues the process bearing the wrong name.
• The true identity of the person intending to sue and the person intended to be sued must be apparent to the latter although the wrong name has been used.
• Most if not all of the cases seem to have proceeded on the basis that the effect of the amendment was to substitute a new party for the party named.

A study of these principles is important because, the Court of Appeal held, 'there is good reason to believe that the new rules were indeed to replicate the provisions of O.25.r.5'.

Applied to the current rules

CPR 19.5(3)(a) makes it a precondition of substituting a party on the ground of mistake that: 'The new party is to be substituted for a party who was named in the claim form in mistake for a new party.'

• The person who has made the mistake must be the person responsible, directly or indirectly, for the issue of the claim form.
• That person must also be able to demonstrate that, had the mistake not been made, the new party would have been named in the pleading.
• The nature of the mistake must be as to the name rather than the identity of the party.

Most cases involve circumstances where:

(i) There was a connection between the party whose name was used in the claim form and the party intending to sue, or intended to be sued.(ii) Where the party intending to be sued, or his agent, was aware of the proceedings and of the mistake so no injustice was caused by the amendment.

• In circumstances where the correct defendant was unaware of the claim until the limitation period had expired the court will be likely to exercise its discretion against giving permission to amend to the defendant.

Mistake in the current case

The difficulty in the current case was that there was no evidence that the decision to issue in the name of the existing second claimant was a 'mistake'. The claimants had to establish that those responsible for the particulars of claim were under a mistake as to the group structure or roles played by the members of the group and, but for that mistake, would have included the proposed third and fourth claimants as parties from the outset. This would be the very minimum that had to be achieved. As it was, the claimants had not sought an explanation from the legal advisers who represented them when they issued proceedings. Because there was no evidence, and no reason to believe that the legal advisers had made a mistake, the conclusion that the Court of Appeal reached was that there was no evidence that the second defendant had been named in the claim form 'in mistake for any other company.'

Where parties have been allowed to substitute

It helps to illustrate the rules by giving examples of cases where the courts have given permission to amend under this rule.

• Gregson v Channel Four Television Corporation [2000] CP Rep 60. Proceedings were issued against Channel Four Television Limited, a dormant wholly owned subsidiary of the appropriate defendant. Nobody was misled by this error.
• Borne-Roberts v SmithKline Beecham [2001] 1 WLR 1662. The wrong manufacturer of a batch of vaccine had been pursued (although the Court in Adelson had some reservations in relation to the rationale in this case).
• Parsons v George [2004] EWCA Civ 912. A claim was brought against the wrong person as the landlord. The solicitors who had been served were acting for the actual landlord and must have understood that the claimants were seeking to apply for a new tenancy from the competent landlord.
• Kessler v Moore & Titbits [2005] PNLR 17. The claimant erroneously sued a firm of solicitors which had taken over a firm of which the proposed defendant had been a partner. The particulars of claim had made it clear who the claimant intended to sue.