Mercer Limited & Anor v Ballinger & Anor

On an application to amend after expiry of a limitation period, where the defendant establishes a prima facie limitation defence, the claimant must show that the defence is not reasonably arguable. Serious factual disputes about limitation should be determined at trial in separate proceedings, rather than summarily on the amendment application.

For the purposes of CPR 17.4 and section 35 of the Limitation Act 1980, the inquiry is whether the new claim would require investigation of facts materially outside those already in issue. Similarity of subject matter, duty, or professional discipline does not suffice. Each valuation was a separate exercise, and new allegations requiring distinct factual and causation enquiries did not arise from substantially the same facts.

The respondents were trustees of an occupational pension scheme. They brought a professional-negligence claim against the appellants, who had provided actuarial and administrative services. The pleaded claim concerned alleged errors in actuarial valuation reports for 1996, 1999 and 2001.

The trustees later sought to add claims concerning 2002 valuations, a further Minimum Funding Requirement allegation, and a new allegation concerning increases to pensions in payment. The judge held that the new claims were arguably time-barred. He nevertheless permitted the 2002-related amendments and the further Minimum Funding Requirement allegation, but refused the pension-increase amendment.

The appellants challenged the amendments concerning 2002. The respondents cross-appealed against refusal of the pension-increase amendment. The central issues were the burden on the limitation question and whether the new claims arose from the same or substantially the same facts as the existing claims.

1. Appeal allowed and cross-appeal dismissed. The judge should not have permitted the Category 4 amendments concerning the 2002 valuations, or the Category 5(i) amendments insofar as they concerned those valuations. He was right to refuse the Category 5(ii) amendments.

2. Where a proposed amendment adds a new claim and the defendant has shown a prima facie limitation defence, the claimant bears the burden of showing that the defence is not reasonably arguable. This follows from the relation-back effect of section 35(1) of the Limitation Act 1980. Permission would otherwise deprive the defendant of an arguable defence without a trial. A claimant may instead bring separate proceedings, in which the limitation issue can be resolved after disclosure and cross-examination.

3. For section 14A purposes, the relevant inquiry includes both actual knowledge and knowledge which the claimant might reasonably have acquired, including by appropriate expert advice. The trustees' bare assertion that the further matters first came to light in July 2013 did not show that the appellants lacked a reasonably arguable limitation defence. The finding did not finally determine that the claims were statute-barred.

4. The statutory requirement of the same or substantially the same facts protects a defendant from having to investigate evidence outside the ambit of the existing claim after limitation has expired. It requires analysis, not a broad impression of similarity.

5. The 2002 valuations were prepared at a different time, after the scheme had closed to further accrual, and in different conditions, form, data and assumptions. They would require investigation of distinct matters, including valuation bases, discussions with the trustees, negotiations with the employer and the counterfactual response to enhanced contributions. They therefore did not arise out of substantially the same facts.

6. The new pension-increase allegation concerned a different benefit calculation and discretionary limitation of increases. Although it arose in the familiar setting of actuarial valuation and invoked the same general duty, it required new and distinct factual, calculation and causation enquiries. It was therefore properly refused.

• Court of Appeal (Civil Division) — allowed the defendants’ appeal and dismissed the claimants’ cross-appeal: [2014] EWCA Civ 996.
• Chancery Division, Manchester District Registry — His Honour Judge Pelling, sitting as a High Court judge, held the proposed claims arguably time-barred; permitted the Category 4 and Category 5(i) amendments, but refused the Category 5(ii) amendments.