Nemeti & Ors v Sabre Insurance Co Ltd

A party may be added or substituted after limitation has expired only within the circumstances authorised by Limitation Act 1980, section 35, and the Civil Procedure Rules. The court has no general discretion to permit substitution merely because justice appears to favour it.

Under section 35(6)(b), substitution is necessary only where a claim already made cannot be maintained against the existing party and the same claim will be carried on against the new party. A statutory indemnity claim against an insurer and a negligence claim against a tortfeasor are different causes of action, even when both arise from the same accident and alleged negligence. Substitution cannot be used to replace an unsustainable claim with a new claim against a new defendant.

Romanian passengers injured in a road accident issued proceedings against the vehicle’s insurer shortly before expiry of a non-extendable Romanian limitation period. They relied on regulation 3 of the European Communities (Rights against Insurers) Regulations 2002, mistakenly believing that the allegedly negligent driver was insured and that the Regulations applied.

After discovering that the statutory direct claim could not succeed, the claimants sought to substitute the deceased driver’s estate and pursue negligence. They intended, if successful, to seek payment from the insurer under section 151 of the Road Traffic Act 1988. Master Eastman permitted substitution, but HHJ Cotter QC allowed the insurer’s appeal, dismissed the amendment application, struck out the claims and entered judgment for the insurer: [2012] EWHC 3355.

The central issue was whether substituting the estate after expiry of limitation was “necessary” under section 35(5)(b) and (6)(b) of the Limitation Act 1980 and CPR 19.5.

1. Appeal dismissed unanimously. Section 35 of the Limitation Act 1980 and CPR 19.5 specify the circumstances in which a new claim involving a new party may be introduced after expiry of limitation. Outside those circumstances, the court has no power or general discretion to permit substitution merely to do justice after a mistake.

2. The debate over whether section 35 should receive a generous or restrictive interpretation was unhelpful. The court should construe its unvarnished words without adding a gloss such as “technical necessity”. Under section 35(6)(b), substitution requires a claim already made which cannot be maintained against an existing party unless the new party is joined or substituted. The authorities concerning claims incapable of being maintained by the original party involved continuation of the same claim by the correct party.

3. The original claim was not a negligence claim for personal injury against the insurer. Its essential additional element was regulation 3 of the European Communities (Rights against Insurers) Regulations 2002. It was effectively a statutory indemnity claim, limited by the insurer’s liability to its insured. It was properly constituted against the insurer but failed for substantive reasons because the necessary statutory conditions were absent.

4. The proposed claim was instead a negligence claim against the alleged tortfeasor’s estate, seeking a judgment for personal-injury damages. The driver’s alleged negligence underlay both proceedings, but that common factual foundation did not make the causes of action identical. Potential enforcement against the insurer under section 151 of the Road Traffic Act 1988 did not alter the identity of the claim.

5. The proposed substitution was therefore intended to launch a new claim against a new party, rather than maintain a claim already made. It was not “necessary for the determination of the action” within section 35(5)(b) and (6)(b). Questions concerning notice, prejudice and discretion consequently did not arise.

1. Court of Appeal (Civil Division): Dismissed the claimants’ appeal and upheld the refusal of substitution: [2013] EWCA Civ 1555.
2. High Court: HHJ Cotter QC allowed the insurer’s appeal from Master Eastman, dismissed the amendment application, struck out the claims and entered judgment for the insurer: [2012] EWHC 3355.
3. Master: Master Eastman authorised substitution of the deceased driver’s estate for the insurer.