Lockheed Martin Corp v Willis Group Ltd

Under CPR 19.5, post-limitation substitution requires the limitation period to have been current when proceedings began and the substitution to be necessary. Necessity includes a genuine, causally relevant mistake and a claim that cannot properly continue against the original party without the new party. The rule preserves a discretion. The court observed obiter that the former requirement that a mistake cause no reasonable doubt about the intended defendant is not an additional formal condition under CPR 19.5. It may inform discretion and is assessed objectively. A party with no properly pleaded cause of action cannot be substituted merely as a surrogate for claims against another group company.

Lockheed issued proceedings shortly before expiry of the limitation period arising from a global insurance settlement. It named Willis Group Holdings Limited, a Bermudian ultimate holding company, rather than Willis Group Limited, the principal UK holding company. Lockheed later sought substitution under CPR 19.5. Master Fontaine permitted the amendment, but Group and Willis Limited successfully applied to set aside that order. Beatson J set aside the order and dismissed the claim on 9 June 2009 (2009 Folio 430).

Lockheed renewed its application for permission to appeal. It no longer pursued substitution of Willis Limited. The central issues were the meaning of mistake under CPR 19.5, whether absence of reasonable doubt was a further jurisdictional requirement, and whether substitution of Group was necessary when the pleaded duties arose from broking activities but no cause of action against Group had been identified.

1. Disposition. Rix LJ delivered the leading judgment. The Court of Appeal unanimously refused the renewed application for permission to appeal because there was no real prospect of success. Waller LJ and Wilson LJ agreed.
2. CPR 19.5. The rule permits post-limitation substitution only where the limitation period was current when proceedings began and substitution is necessary. Necessity requires the claim to be incapable of being properly continued against the original party unless the new party is added or substituted. The word may preserves a discretion even where the jurisdictional conditions are met. The court assumed in Lockheed’s favour that Group had been named by a genuine and causally relevant mistake.
3. Obiter discussion of mistake and discretion. The additional requirement derived from RSC Ord 20, r 5, that the mistake must not mislead or cause reasonable doubt about the intended party, is not a further formal condition of CPR 19.5. The reasoning in The Sardinia Sulcis [1991] 1 Lloyd's Rep 201 survives only as a substantive test concerned with identifying the intended party by a sufficiently specific description. Any question of notice or possible prejudice is an aspect of discretion and is judged objectively. There is no inflexible requirement that the correct defendant knew of the claim before limitation expired. The court treated the discussion under this heading as obiter.
4. Necessity and cause of action. The pleaded duties concerned the activities of Lloyd’s brokers and the maintenance of broking records. Group was a holding company, and Lockheed did not explain why those duties were owed by Group rather than by Willis Limited or its predecessors. There was no allegation that Group had assumed responsibility for centralised records or otherwise incurred the pleaded duties. Without a properly stated cause of action against Group, substitution was not necessary and there was no jurisdiction to substitute it after limitation. Group could not be used as a surrogate defendant for claims against the broking companies. The court therefore did not need to consider the alternative abuse-of-process reasoning based on Nomura International plc v Granada Group Limited [2007] EWHC 642 (Comm).

1. Court of Appeal (Civil Division): Renewed application for permission to appeal refused on 30 July 2010.
2. Queen's Bench Division, Commercial Court: Beatson J set aside Master Fontaine's order permitting substitution and dismissed the claim on 9 June 2009 (2009 Folio 430).
3. Master Fontaine: Permitted amendment of the claim form to substitute Willis Group Limited and Willis Limited on 22 December 2008.