Morgan EST (Scotland) Ltd v Hanson Concrete Products Ltd

After expiry of a limitation period, an application to change parties under rule 19.5 of the Civil Procedure Rules must be decided from the rule’s language, subject to section 35 of the Limitation Act 1980 and the overriding objective. The former right-description/wrong-name test does not define the jurisdiction.

The expression “in mistake” should receive a liberal construction. The jurisdiction exists to correct mistakes, and distinctions between different kinds of mistake should not obstruct justice. The loss of a limitation defence arising solely from the claimant’s error is not, without more, relevant prejudice. A beneficial owner may also be joined where its presence is necessary for the claim to be carried on properly and to bind it to the result.

A contractor bought concrete pipe sections for a tunnel project and allegedly suffered loss when some sections were damaged. Proceedings for breach of contract were commenced within the limitation period by a related company which had neither contracted with the defendant nor retained the beneficial interest in the claim.

The original contractor had assigned the benefit of the cause of action to the named claimant, which later assigned it to another group company. The legal title remained with the original contractor, while the final assignee held the beneficial interest.

HHJ Havery QC in the Technology and Construction Court permitted the original contractor and final assignee to be added after expiry of the limitation period. The appeal concerned whether rule 19.5 of the Civil Procedure Rules conferred that power, whether the former right-description/wrong-name test limited the jurisdiction, and whether permission should have been refused as a matter of discretion.

1. The appeal was dismissed. Subject to removal of the incorrectly named claimant, the proceedings could continue in the names of the original contractor and the final assignee. Hooper LJ agreed with the judgment of Jacob LJ.

2. Rule 19.5 must be interpreted from its own language, with regard to the overriding objective and within the limits imposed by section 35 of the Limitation Act 1980. The right-description/wrong-name test formulated under the former Rules of the Supreme Court in The Sardinia Sulcis did not define the limits of rule 19.5. That test had been devised under a materially different rule which pre-dated section 35.

3. The Court was not bound by the use of that test in the three post-CPR decisions. Those decisions proceeded on the mistaken assumption that the former rule had implemented section 35; the use of the test did not affect their results; none expressly held that it exhausted the jurisdiction; and the point had been reserved in the latest decision. The preferable approach was that stated in Gregson v Channel Four Television: the new procedural code should be applied on its own terms.

4. The expression “in mistake” in rule 19.5 should not be construed restrictively. The Limitation Act 1980 had liberalised the previous law, and the overriding objective favoured a jurisdiction capable of putting mistakes right. The pleadings and evidence showed that the named company had plainly been inserted by mistake for the company entitled to assert the legal claim. The original contractor could therefore be substituted.

5. The loss of a limitation defence which arose solely from the other side’s blunder was not relevant prejudice. The evidence explaining the mistake was unsatisfactory and the mistake was self-inflicted, but the first-instance judge had considered both matters and committed no error of principle in exercising his discretion.

6. Alternatively, the case would have satisfied the former right-description/wrong-name test. The intending claimant could properly be described as the person holding the right to sue under the contract.

7. The final assignee, as beneficial owner, ought to be joined under rule 19.5(3)(c) so that it would be bound by the result. The Court did not decide whether rule 19.5(3)(a), considered alone, permitted addition as distinct from substitution.

1. Court of Appeal (Civil Division): By [2005] EWCA Civ 134, dismissed the appeal. It upheld the permission to change the claimants, subject to removal of the incorrectly named company.
2. Technology and Construction Court: HHJ Havery QC permitted the original contractor and the final assignee to be added as claimants and allowed consequential amendments. No neutral citation is stated.