Del Grosso v Payne & Payne (A Firm)

After expiry of the limitation period, a new cause of action may be added only where it arises out of the same or substantially the same facts already in issue. The comparison is primarily between the existing and proposed pleadings. It requires rigorous analysis, rather than definition at an excessive level of abstraction merely because the claims concern the same meeting or transaction. Material changes to the retainer, alleged duties, causative mechanism, loss and damages, particularly where they require substantial new factual investigation, may take the amendment outside the statutory gateway under the Limitation Act 1980. A defendant’s pleading or correspondence cannot enlarge the facts in issue unless it genuinely forms part of the pleaded case. If the gateway is not satisfied, consequential discretionary applications fall away.

Payne & Payne, a firm of solicitors, appealed from a judgment of HHJ Roger Kaye QC in the High Court on 16 August 2006. The respondent’s original claim alleged negligence and breach of contract in failing to advise about a break clause in an under-lease. After limitation had expired, he sought to amend the claim to allege a wider retainer, advice concerning commercial plans and a different basis of causation and loss. The High Court held that the amendments constituted a new claim but arose from the same or substantially the same facts, allowed them in its discretion and granted relief from sanctions under CPR 3.9. The central issue was whether the statutory conditions for introducing the new cause of action had been satisfied.

1. The Court of Appeal unanimously allowed the appeal. Lord Justice Pill gave the leading judgment, with which Lord Justice Tuckey and Lord Justice Maurice Kay agreed.

2. Section 35 of the Limitation Act 1980 permits a new cause of action to be introduced after limitation has expired only where it arises out of the same or substantially the same facts already in issue. The question is substantially one of impression in borderline cases: Welsh Development Agency v Redpath Dorman Long Ltd [1994] 1 WLR 1409. However, where the proposed amendment materially changes the case, the issue requires analysis. The court relied on the approach in Paragon Finance v DB Thakerar & Co [1999] 1 AER 400.

3. The relevant comparison was between the original and amended Particulars of Claim. The defendant’s pleading and correspondence could illuminate matters actually raised, but the reference to the respondent being driven by commercial considerations did not admit that advice about his overall commercial plans formed part of the retainer. The court had to assess the pleaded case, not the correspondence in isolation.

4. The amended claim materially widened the retainer, alleged different breaches of duty, advanced a different causative mechanism and claimed loss on a fundamentally different basis. It would require extensive investigation of new factual matters, including the availability and possible purchase of the head-lease. Those differences meant that the new cause of action did not arise from the same or substantially the same facts. The principle that technical defects should not prevent amendment under section 35(5), noted from Sterman v EW and JW Moore Limited [1971] QB 596, did not assist the respondent.

5. CPR 17.4(2) gives effect to section 35 and is to be read in accordance with section 33(5), as stated in Goode v Martyn [2002] 1 WLR 1828. Once the statutory gateway failed, the discretionary permission to amend and the application for relief from sanctions did not arise. The appeal was allowed on all three grounds. The claimant was ordered to pay the defendant’s agreed appeal costs of £18,000.

1. Court of Appeal (Civil Division): On 1 March 2007, unanimously allowed the appeal, holding that the proposed new cause of action did not satisfy section 35(5) of the Limitation Act 1980. The further rulings on amendment discretion and relief from sanctions therefore did not arise. Citation: [2007] EWCA Civ 340.

2. High Court of Justice, Queen’s Bench Division, Leeds District Registry: HHJ Roger Kaye QC held that the amendments were a new claim but arose from the same or substantially the same facts, permitted the amendments in his discretion and granted relief from sanctions under CPR 3.9.