Convergence Group Plc & Anor v Vellacott

An amendment made after expiry of a limitation period may introduce a new claim yet still arise from substantially the same facts as the existing claim. The question requires a qualitative and reasoned assessment of the litigation as a whole. New factual allegations do not necessarily entail substantially different facts.

Relevant considerations include whether the allegations concern a continuous course of conduct under the same retainer, the same subject matter and duties, the same alleged loss, and evidence which would already be examined at trial. General wording in a pleading cannot itself create a claim which has not otherwise been pleaded.

Chartered accountants sued two companies for unpaid fees arising from advice and services concerning a proposed group restructuring. The companies counterclaimed in contract and negligence, alleging defective advice, cumulative delay and the loss of an opportunity to fund an international telecommunications project.

After the limitation period had expired, the companies sought to add allegations concerning an earlier period, valuations, the formation of another company and an earlier deadline for completing the restructuring. Master Price refused certain amendments. Lloyd J dismissed the appeal from the Master and refused most of the remaining amendments because they introduced new claims which did not arise from substantially the same facts as the pleaded claims.

The central issues were whether the amendments introduced a new claim for the purposes of rule 17.4(2) of the Civil Procedure Rules and, if so, whether that claim arose from the same or substantially the same facts as the existing counterclaim.

1. Permission to appeal was granted and the appeal was allowed. The first-appeal test under rule 52.3(6) of the Civil Procedure Rules applied to the proposed amendments as a whole, notwithstanding that the challenge concerning some amendments constituted a second appeal. Alternatively, the conclusion reached after full argument supplied a compelling reason under rule 52.13(2).

2. The existing pleading did not allege negligence during the first year of the retainer. Its specific allegations began in November 1997. The expression “at all material times” referred to the periods of breach already pleaded. General wording could not create a claim which had not otherwise been pleaded. The proposed amendments therefore introduced a new claim and engaged rule 17.4(2).

3. Whether a new claim arises from substantially the same facts as an existing claim requires a qualitative judgment based on a reasoned assessment of all relevant circumstances. The presence of additional factual allegations is not decisive. In this case the pleaded facts disclosed a continuous course of advice and services lasting three or more years, given under a single retainer and directed to the same proposed restructuring. The amendments relied on the same duties, added no new loss and concerned evidence which would already require examination at trial.

4. The allegations relating to the first year, the advice given in 1998, the formation and role of Amalfi Holdings Ltd, the valuations and the proposed earlier completion date consequently arose from substantially the same facts as the existing claim. The statutory condition in rule 17.4(2) was satisfied.

5. An appellate court should be slow to interfere with a qualitative assessment of this kind. It may nevertheless form its own view where it possesses the same information as the lower court and the reasons below do not show that all relevant considerations were taken into account. The Master gave only brief reasons on the critical issue, while the judge supplied no independent reasons concerning the matters decided by the Master. The Court of Appeal was therefore entitled to determine the question for itself.

1. Court of Appeal (Civil Division): Granted permission to appeal and allowed the appeal, holding that the proposed amendments introduced a new claim which nevertheless arose from substantially the same facts as the existing claim: [2005] EWCA Civ 290.

2. High Court: Lloyd J dismissed the appeal from Master Price and refused most of the remaining proposed amendments, concluding that the new claims did not satisfy rule 17.4(2) of the Civil Procedure Rules.

3. Master: Master Price refused the amendments he had time to consider because they introduced claims concerning an earlier period which did not arise from the same or substantially the same facts as the existing claim.