The Dekagram: 8th April 2024

This week we bring you news of one of those applications that has it all – a jurisdictional challenge, a dispute over standing, and an objection to substitution of a party. When sorrows come, they come not in single spies, but in battalions, as good old Shakespeare would have us understand.

Meanwhile, the team is gearing up for the PEOPIL jaunt to Lisbon in two months’ time, there to discuss all things product liability, pharmaceutical, mass tort and road traffic accident related – we hope to see a goodly number of our readers there.

Defendant joined after limitation fails to challenge its substitution – Tintometer Ltd and Winterbourne Trustee Services Limited v Pitmans and Adcamp LLP

In the case of Tintometer Ltd and Winterbourne Trustee Services Limited v Pitmans and Adcamp LLP [2024] EWHC 370 (Ch), Mrs Justice Bacon was presented with an application to strike out a claim on the basis that the correct defendants had not been named on the claim form before the expiry of limitation. In dismissing the application, the court considered a number of provisions of the CPR, taking a common sense approach to each. Having done so, it ultimately held the lack of prejudice was fatal to the defendants’ challenge.

Background

The claimants brought the claim due to allegedly negligent pension advice provided in 2009/2010. However, because of name changes and corporate acquisitions, they put the wrong name on the claim form. The claim was issued in April 2021, and there were multiple agreements to extend time to serve the claim form between the claimants and the named defendants. By the time the claim form was served in September 2023, the correct defendant, Pitmans, had been identified. The claim form had been amended and Pitmans had been substituted in as a defendant.

Pitmans made a strike out application on the basis that it had been served with the claim form out of time. This brought a number of procedural issues before the court. These included:

• Should Pitmans have expressly contested the court’s jurisdiction in its acknowledgment of service and its strike out application?
• Did Pitmans have standing to apply to set aside one or more of the orders extending time for service?
• If the orders were not set aside, should the court nevertheless disallow the substitution of Pitmans as a Defendant?

Expressly contesting jurisdiction

Pitmans had not made express reference to a challenge to jurisdiction under CPR 11(1) either when filing its acknowledgment of service, or within its application for strike out. The court found that this was not fatal. The court held, at paragraph 60:

The relevant question is whether the defendants’ intentions were clear to the claimants from the documents filed by the defendants. In this case, the defendants’ intentions were indeed at all times clear and were understood by the claimants, and there is no suggestion by the claimants that they understood the defendants to have abandoned their application to set aside the orders extending time for service. On the contrary, the claimants proceeded to serve their evidence for this hearing on the basis that the defendants were pursuing their application to set aside the extensions of time for service, and the jurisdiction point was not raised as an issue until Mr Wood himself referred to Hoddinott in his skeleton argument. As in Pitalia, therefore, the defendants’ error is a technical one which can be readily corrected under r. 3.10.

Therefore, despite not making express reference to CPR 11(1), what was important was that Pitmans’ intention was clear in the substance of the strike out application – to bring the claim against it to an end on the grounds (among others) that one or more of the extension of time orders should be set aside, such that the claim was served out of time.

Standing under CPR 3.3(5)

The court considered whether Pitmans could apply to set aside the orders extending time under CPR 3.5.

CPR 3.3(4) – (6) states:

(4) The court may make an order of its own initiative, without hearing the parties or giving them an opportunity to make representations.

(5) Where the court has made an order under paragraph (4) –

(a) a party affected by the order may apply to have it set aside, varied or stayed; and

(b) the order must contain a statement of the right to make such an application.

(6) An application under paragraph (5)(a) must be made –

(a) within such period as may be specified by the court; or

(b) if the court does not specify a period, not more than 7 days after the date on which the order was served on the party making the application.

PItmans was not a party at the time when the orders granting extensions of time for service were made, so the question arose whether it had standing to apply to set aside those orders pursuant to CPR 3.3(5). For Pitmans, it was submitted that, once it was served with the claim form and became a defendant in the proceedings, it was “a party affected” by the extension of time orders within the meaning of CPR 3.3(5). The court rejected that argument. At paragraphs 76 – 77, it held:

The purpose of r. 3.3(4)–(6) is to enable the court to make an order without hearing the parties, subject to the safeguard that a party affected by the order may apply to set the order aside, with the hearing of such an application being treated as a rehearing of the issue, rather than a review of the decision: Al-Zahra (PVT) Hospital v DDM [2019] EWCA Civ 1103, §67. The corollary of that right to a rehearing is that it is circumscribed by a strict time limit: either seven days from service on the relevant party, or such other period as is specified by the court. That provides finality and avoids a situation where one or other party seeks to dispute the order long after it has been served on them, at a point at which the order has already taken effect.

The provisions of r. 3.3(4)–(6) must be interpreted as referring to the rights of the parties to the order in question. Those are the parties on whom the order will be served, and who will have the prescribed period from service to make their application to set aside. Rule 3.3(5) cannot sensibly be interpreted as giving a party subsequently joined to the proceedings the right to seek to unravel any and all orders made under r. 3.3(4), which may have been made years previously, and which may long since have been fully implemented by the relevant parties to the order.

Therefore, the court concluded that Pitmans did not have standing, as it was not a party affected by the order, and held that any other conclusion would lead to significant uncertainty in litigation.

Application to disallow the substitution of Pitmans

Pitmans also challenged its substitution as a defendant under CPR 17.2. It was common ground that an application under CPR 17.2 to disallow an amendment substituting a party may be made on the grounds that if the court’s permission to amend had been necessary, permission would not have been granted. At paragraphs 113 – 114, the Mrs Justice Bacon explained:

In the present case, there is no dispute that Pitmans was added as a defendant after the expiry of the s. 14A Limitation Act period of three years from the claimants’ knowledge required to bring an action for damages. If the court’s permission to add Pitmans had been required, therefore, r. 19.6 would have been applicable. As set out above, that allows the court to add or substitute a party if the relevant limitation period was current when the proceedings were started (which is the case here) and if the addition or substitution is “necessary”: r. 19.6(2). Under r. 19.6(3), the addition or substitution of a party is necessary only in certain defined circumstances, the relevant circumstance here being that the new party is substituted for a party named in the claim form in mistake for the new party.

The naming of an LLP as the defendant to a claim for solicitors’ negligence, in the mistaken belief that the LLP provided the services said to have been performed negligently, failing to recognise that the services were in fact provided by the former partnership, is a mistake for which the court can grant relief under the provisions set out above: Insight Group v Kingston Smith [2012] EWHC 3644 (QB), [2014] 1 WLR 1448, §§56–7.

It was Pitmans’ position that the court should disallow the substitution on the grounds of delay and the consequent prejudice to Pitmans. Further, it was submitted that, if the court held that Pitmans did not have standing to set aside the orders extending time, that was a powerful reason to disallow Pitmans substitution under CPR 17.2.

The court reviewed similar case law, before ultimately noting that each case was fact dependant. Of relevance in this instance were the following points:

• The court had already found that the delays were “not caused by dilatoriness on the part of the claimant”. It also noted that, although the claim was served on Pitmans some 14- 15 years after the alleged negligence took place, “that is not a particularly unusual feature in a case in which reliance is placed on the extended time limit for bringing a negligence claim under s. 14A” (at paragraph 121).
• Pitmans submitted that there were steps that the claimants could have taken to identify the correct defendant sooner. While the court agreed that there were steps that could have been taken, those were identifiable with the benefit of hindsight. In the circumstances, it did not consider the explanations provided by the claimants as to why the issue was not identified sooner as either “implausible or unreasonable”. It noted that issue was not identified by either the originally named defendant nor their solicitors (who were also Pitmans solicitors), but by the claimant’s solicitors (at paragraph 123).
• It was important that the defendants that had been variously named on the claim form were “represented by the same set of solicitors, and are also covered by the same insurers. The situation is therefore precisely the same as in Insight v Kingston, in that the commercial reality is that the substitution of Pitmans will make no difference to the defence of the claim” (at paragraph 124).
• It was conspicuously absent from Pitmans’ submissions that the passage of time had negatively impacted its ability to obtain evidence defend the claim (at paragraph 125).

Mrs Justice Bacon went on to conclude at paragraphs 127 – 129:

In all of these circumstances Mr Wood’s submission that the partners of Pitmans should “not be vexed” by this matter goes nowhere. Most defendants do not wish to be vexed by a claim against them. That is not a reason to disallow the substitution of a defendant. What is relevant is whether the substitution of the defendant causes any real prejudice to that defendant, over and above the normal consequences for any defendant who has to address a claim made against it. None has been identified.

Nor does Pitmans’ inability to apply to set aside the extension of time orders assist it in this regard. This is not a situation where Pitmans is materially prejudiced by orders which were improperly made but which it is unable to challenge. Rather, for the reasons set out above, those orders were properly made and Pitmans is unable to demonstrate that they have led to any relevant prejudice to its position.

In conclusion on the final issue, therefore, I do not consider that it would be appropriate to exercise my discretion to disallow the substitution of Pitmans pursuant to r. 17.2. This is a claim which the claimants have pursued with reasonable diligence, and the delays have largely not been of their making. BDBP, the successor to Pitmans, has been aware of the claim since June 2021, and a single set of solicitors and single insurer stands behind both the former and the new defendants to the proceedings. No real prejudice has been identified as arising from the substitution of Pitmans as the correct defendant. In all the circumstances it is clearly in the interests of justice for the claim to be allowed to proceed against Pitmans. Any contrary conclusion would give Pitmans an unjustified windfall.

Conclusion

The approaches taken by the judge in relation to the various issues raised had common threads of fairness and common sense, and have provided helpful guidance on a number of technicalities.

About the Author

Kerry Nicholson takes instructions across all of chambers’ core areas. Prior to joining Chambers Kerry worked for the Government Legal Department working across a variety of departments in both litigation and advisory roles. She is now enjoys working within the team on travel related and other claims.