Abbey National Plc v John Perry & Co & Ors

An amendment does not plead a new cause of action merely because it removes an inaccurate legal label, supplies particulars, or adds facts supporting an existing claim. The court compares the factual situation and remedy pleaded before and after amendment. In a claim based on breach of duty, relevant considerations include whether a different duty, substantially different breaches, or materially different damage is alleged. A solicitor’s authority to apply mortgage money depends on the construction of the instructions. Clear wording may make compliance a condition of that authority, although such a result requires particularly clear language. A pleading alleging breach of trust is not demurrable merely because the pleaded trust or authority issue remains to be determined at trial.

Abbey National brought claims against solicitors who had acted for lenders and borrowers in property transactions. After limitation periods had expired, the bank sought amendments to its statements of claim and permission to serve replies relying on section 32 of the Limitation Act 1980.

Rimer J allowed the amendments, treating them as new causes of action arising from the same or substantially the same facts, and permitted the replies. The solicitors appealed. The central issues were whether the amendments introduced new causes of action and whether the proposed pleadings were legally demurrable or inconsistent with the limitation plea.

1. Appeal dismissed. The amendments and the draft replies were properly allowed. The order was affirmed with costs, summarily assessed at £15,000 plus VAT.
2. The removal of the description of the solicitors as constructive trustees, leaving them described as trustees, did not introduce a new cause of action. The distinction was one of legal terminology rather than substance.
3. The added allegations that the mortgage advance could be applied only to complete a purchase at the stated price, and that it had been applied to a transaction at a lower price, supplied or amplified particulars of the existing breach-of-trust claim. They did not introduce a different factual situation, duty, breach, or remedy.
4. Where an amendment is said to plead a new cause of action, the court should compare the original and amended pleadings. In a claim based on breach of duty, the relevant comparison includes whether a different duty is pleaded, whether the breaches differ substantially, and, where appropriate, the nature and extent of the damage.
5. The court did not decide whether the instructions made compliance a condition of the solicitors’ authority to complete. That was a matter of construction for trial. The observations in Target Holdings Ltd v Redferns and Bristol and West Building Society v Mothew were relevant, including the need for very clear wording before instructions produce that result. The pleading was not demurrable.
6. Permission to serve the section 32 reply was correctly granted. The accepted pleading alleged intentional breaches of duty, but not that the solicitors knew at the time that their acts constituted breaches of duty. On that basis, no separate issue arose on the appeal.
7. Lord Justice Chadwick added that any allegation that solicitors knew or must have known that the transaction was concealed might require clarification as to whether dishonesty was alleged. That issue was not decided.

• Court of Appeal (Civil Division): [2001] EWCA Civ 1630. Appeal from the order of Rimer J was dismissed with costs.
• High Court, Chancery Division: Rimer J allowed the amendments and permitted Abbey National to serve its proposed replies.