JFS (UK) Ltd v Dŵr Cymru Cyf

For limitation purposes, a claim in the action means a demand for relief. A positive averment made only by way of defence does not amount to such a claim.

Where a defendant’s original defence contains no set-off or counterclaim, a later set-off or counterclaim is an original claim within section 35(3) of the Limitation Act 1980. The statutory exception permits the court to allow it despite a cause of action that would be time-barred in a new action. The application proceeds under the general amendment power in Order 20, rule 5(1) of the Rules of the Supreme Court. Limitation remains relevant to discretion but is not, by itself, decisive.

JFS (UK) Ltd and Tilghman Wheelabrator Ltd appealed against an order of His Honour Judge Thornton QC in the Queen’s Bench Division, Official Referees’ Business. The judge had granted Dŵr Cymru Cyf leave to replace its defence with a substituted defence and counterclaim.

The original defence contained positive averments by way of defence but sought no relief. The proposed amendments included claims based on alleged misrepresentations and frustration, some of which would have been time-barred if brought in a new action. The appeal concerned the construction of section 35(3) of the Limitation Act 1980, the power to amend under the Rules of the Supreme Court, Order 20, rule 5, and the exercise of discretion.

Unanimous decision. Lord Justice Nourse gave the judgment of the court. Lord Justices Evans and Ward agreed. The appeal was dismissed with costs.

1. For the purposes of section 35(3) of the Limitation Act 1980, the expression claim in the action bears its correct legal meaning. It means a demand for some form of relief. A positive averment made by way of defence, without seeking relief, is not a claim in that sense.
2. The original defence therefore contained no previous claim by the defendant. The proposed set-off and counterclaim were original claims within the statutory definition. The prohibition on allowing a new claim after expiry of the relevant limitation period did not prevent the court from allowing them.
3. Section 35(4), and with it section 35(5), applied only to a new claim to which section 35(3) applied. They therefore had no application to an original set-off or counterclaim.
4. The Rules of the Supreme Court permitted a defendant to add a counterclaim to its defence instead of bringing separate proceedings. Where no counterclaim had been made originally, leave to amend had to be sought under the general power in Order 20, rule 5(1). Section 35(3) had widened the jurisdiction, and neither Order 20, rule 5 nor the former practice against adding a statute-barred cause of action could override the statutory exception.
5. The decision in Lloyds Bank PLC v Wojcik, an unreported decision of 19 December 1997, supported the same construction and approach. The judge had jurisdiction and power to allow the amendments. The Court of Appeal found no error of principle or plainly wrong exercise of discretion. Even on the assumption that all the claims were statute-barred, it would have allowed the amendments.

• Court of Appeal (Civil Division): The appeal was dismissed unanimously with costs. The court held that the proposed claims could be added under section 35(3) of the Limitation Act 1980 and the general amendment power in Order 20, rule 5(1) of the Rules of the Supreme Court: [1998] EWCA Civ 1443.
• Queen’s Bench Division, Official Referees’ Business: His Honour Judge Thornton QC granted leave on 27 February 1998 for Dŵr Cymru Cyf to substitute its defence and counterclaim. His reasons were given in a judgment dated 3 March 1998.