Hoechst United Kingdom Ltd v Inland Revenue

Where an amendment is sought after expiry of the limitation period, the court must ask whether it adds or substitutes a new cause of action. If it does, permission may be given only where the new cause of action arises out of the same or substantially the same facts as an existing cause of action. A cause of action is identified by the material facts entitling the claimant to relief, rather than by the legal label attached to the claim. Separate payments made on separate occasions may give rise to separate causes of action, even where they arise from the same general statutory and factual background.

Hoechst United Kingdom Ltd had begun proceedings in 1995 seeking compensation or restitution for the timing disadvantage caused by advance corporation tax paid on dividends to its German parent. The pleadings identified six earlier ACT payments, made between 1989 and 1994. They did not identify a further ACT payment made in July 1995, although the statement of claim was served after that payment.

Hoechst applied to amend its pleadings to claim £102,238 in respect of the 1995 payment. The issue was whether the existing pleadings already covered that claim and, if not, whether amendment was permissible after expiry of the applicable limitation period.

1. The application was dismissed. The court nevertheless ordered that the application could be reconsidered after the future group-litigation test case on the limitation period for restitution of money paid under a mistake of law had been finally decided. Costs were subject to detailed assessment unless agreed.
2. Under section 35 of the Limitation Act 1980 and CPR 17.1(2)(b) and 17.4, an amendment sought outside the limitation period cannot be permitted where it adds or substitutes a new cause of action which does not arise out of the same or substantially the same facts as an existing pleaded cause of action.
3. The writ plainly did not claim relief in respect of the 1995 ACT because that payment had not been made when the writ was issued. The statement of claim, read as a whole, was likewise confined to the six payments quantified in its schedule. Its general reference to ACT paid since 1989 could not be detached from the pleaded quantification and prayer for relief.
4. A cause of action in this context consists of the factual situation which entitles the claimant to a remedy, including every material fact which the defendant would have a right to traverse. The court adopted the approach stated in Cooke v Gill and Letang v Cooper.
5. The 1995 ACT claim arose from a particular dividend paid in April 1995 and the consequential ACT payment made in July 1995. Those facts were not substantially the same as the separate dividend and ACT payments identified in the existing pleadings. The proposed amendments therefore added a new cause of action, and the court had no discretion to allow them on the assumed limitation footing.
6. The court left open whether a claim based on money paid under a mistake of law would have a later limitation starting point. That issue was reserved for a future test case.