Harland & Wolff Pension Trustees Ltd v AON Consulting Financial Services Ltd.

For limitation purposes, an amendment which adds loss consequential upon an already pleaded breach does not introduce a new cause of action merely because the loss resulted from later reliance or later events. The amendment must, however, be pleaded as consequential loss flowing from the original breach. A later act of negligence, relied on as an independent breach, ordinarily constitutes a new cause of action. It will be permitted under Limitation Act 1980, section 35 and CPR rule 17.4 only where it arises from the same or substantially the same facts. The comparison is qualitative and focuses on the facts requiring investigation, including the nature of the duty, breach and damage. An amendment adding consequential loss may nevertheless be refused in the court’s discretion where substantial delay causes irremediable prejudice.

The Trustee appealed from Master Bowles’s refusal to permit amendments to its professional-negligence claim against its pension advisers. The original claim concerned advice and drafting relating to the equalisation of male and female retirement ages. The proposed amendments sought to recover the loss said to have resulted when the Trustee later approved increases to pensions in payment, relying on an allegedly understated surplus.

The issues were whether the proposed amendments introduced a new cause of action, whether any new cause of action arose out of the same or substantially the same facts as the existing claim, and whether permission should be granted in the exercise of the court’s general case-management discretion.

1. Consequential loss. The proposed claim could be pleaded as loss flowing from the original advice and the original breach. The Trustee alleged that the original advice caused it to administer the Scheme on the footing that equalisation had been effective, and that the later benefit improvements were a consequence of that position. On that analysis, the amendment added a head of loss rather than a new cause of action.
2. New breach. A separate allegation that Aon negligently gave incorrect advice in November or December 1993 would be a new breach of duty. Although no new duty was alleged, the later advice occurred on a different occasion, for a different purpose, and would require assessment against the professional knowledge existing at that later date. That claim did not arise out of the same or substantially the same facts.
3. Statutory test. The purpose of section 35 of the Limitation Act 1980 is to prevent a defendant, after expiry of the limitation period, having to investigate facts outside the scope of the original claim. The test is a qualitative one. New facts are permissible only where they involve minor differences or matters collateral to the substance of the existing claim, rather than a major investigation.
4. Piggy-back amendment. The court could take account of amendments already allowed when applying section 35(5)(a). However, allowing the consequential-loss amendment did not permit the Trustee also to add a stale, independent breach of duty. The latter amendment was refused.
5. Discretion. The amendment limited to consequential loss was allowed in principle under CPR rule 17.1(2)(b), subject to redrafting. The Trustee was required to undertake not to rely on any breach by Aon in November or December 1993 to recover that loss. The proposed amendments alleging a new breach were refused.

1. High Court (Chancery Division): allowed in principle an amendment adding consequential loss flowing from the original breach, subject to appropriate drafting and an undertaking; refused amendments relying on a new breach of duty.
2. Master Bowles: on 3 September 2008, refused the contested amendments on the basis that they introduced a new cause of action which did not arise from the same or substantially the same facts.