Savings and Investment Bank Ltd v Fincken

Whether an amendment adds a new cause of action after limitation depends on comparing the essential facts pleaded before and after amendment at the highest appropriate level of abstraction. Further particulars or instances of an existing breach do not create a new cause of action. The remedies claimed do not determine that question.

Where rescission is resisted on the ground of affirmation, summary judgment is inappropriate if the claimant’s knowledge and conduct leave a real factual issue for trial. A claimant’s ignorance of an additional alleged misrepresentation may therefore prevent the court from treating affirmation as conclusively established.

A bank alleged that a debtor had induced it to execute a settlement deed by falsely representing that he had disclosed all material assets. After limitation had expired, the bank sought to plead the non-disclosure of a valuable shotgun, known as the Boss, as a further breach of warranty and further particular of fraudulent or negligent misrepresentation.

A deputy master permitted that amendment and refused the debtor summary judgment on the bank’s claim to rescind the deed. Lightman J reversed both decisions. The bank appealed and also challenged the refusal to permit allegations concerning six other guns.

The central questions were whether pleading the Boss added a new cause of action and whether the bank had so clearly affirmed the deed that its rescission claim had no real prospect of success.

1. Appeal allowed in part and cross-appeal dismissed. Peter Gibson LJ delivered the judgment, with which Robert Walker and Keene LJJ agreed. The proposed allegations concerning the Boss were permitted, and the deputy master’s refusal of summary judgment on rescission was restored. The refusal to permit allegations concerning the other guns was upheld.
2. Under section 35 of the Limitation Act 1980, the court compares the essential facts pleaded before amendment with those pleaded afterwards. Non-essential instances and particulars are excluded. The material facts must be selected at the highest appropriate level of abstraction. The relief claimed does not define a cause of action, which denotes a factual situation.
3. The contractual cause of action consisted of the warranty and its breach when the deed was made. Although a specific undisclosed asset had to be proved, discovery of the Boss merely supplied a further instance or particular of the existing breach. It did not add a new cause of action.
4. The same conclusion applied to fraudulent and negligent misrepresentation. The representation, alteration of position and damage remained unchanged. The Boss supplied a further instance of falsity and, for deceit, a further particular of fraud. The essential facts therefore did not materially change.
5. The allegations about the other six guns were properly refused. There was no valuation of them individually and no adequate basis for treating the disparate guns as a collection. The deputy master was entitled to conclude that there was no realistic prospect of proving that they met the deed’s £5,000 materiality threshold.
6. Summary judgment under rule 24.2(a)(i) of the Civil Procedure Rules 1998 was inappropriate. Although the bank had invoked contractual remedies before learning of the Boss and the debtor had a powerful affirmation argument, the effect of the bank’s ignorance was a factual question requiring consideration of all the circumstances at trial. The court did not determine the parties’ wider competing submissions on the law of affirmation. It held only that the bank was not wholly without a real prospect of succeeding.

• Court of Appeal (Civil Division): The bank’s appeal was allowed as to the Boss amendment and rescission. Its challenge concerning the other six guns was dismissed. The deputy master’s permission to plead the Boss and refusal of summary judgment were restored.
• High Court, Chancery Division: Lightman J allowed the debtor’s appeals, holding that the Boss allegation added a new cause of action and giving summary judgment against the rescission claim. He left standing the refusal to permit the other-guns allegations.
• Deputy Master: Deputy Master Bartlett permitted the Boss amendment, refused the other-guns amendments and dismissed the debtor’s application for summary judgment on rescission.