Mercer Limited & Anor v Ballinger & Anor

On a conventional application to amend, a defendant who raises a prima facie limitation defence places the burden on the claimant to show that the defence is not reasonably arguable. Seriously disputed factual issues require determination at trial. Reliance on section 14A of the Limitation Act 1980 requires consideration of reasonably obtainable knowledge, including through appropriate expert advice, as well as actual knowledge.

A proposed new cause of action must arise from the same or substantially the same facts already in issue. Similar allegations, a common duty or the same professional discipline do not establish that requirement. The court must analyse whether the amendment requires investigation of new and distinct factual matters.

Leslie Francis Ballinger and Nosko Trustees Limited, the current trustees of an occupational pension scheme, brought a professional negligence claim against Mercer Limited and Sedgwick Noble Lowndes Limited. The defendants had provided administrative and actuarial services to earlier trustees. The claim alleged that errors in actuarial valuations for 1996, 1999 and 2001 had understated liabilities and caused insufficient employer contributions. The employer subsequently entered liquidation, and the trustees claimed the value of contributions allegedly lost.

The trustees sought amendments extending the existing allegations to valuations prepared in 2002, adding a further reason why the uniform accrual assumption was negligent, and alleging a new error concerning increases to pensions in payment above the guaranteed minimum pension. His Honour Judge Pelling QC, sitting in the Chancery Division, found a reasonably arguable limitation defence. He permitted the first two categories of amendment but refused the third.

The defendants appealed the permission relating to the 2002 valuations. The trustees cross-appealed the refusal concerning pension increases and challenged the limitation finding as an additional ground for retaining permission. The questions were who bore the burden on the interlocutory limitation issue and whether the amendments arose from substantially the same facts already in issue.

Appeal allowed and cross-appeal dismissed. Tomlinson LJ delivered the judgment, with which Briggs LJ and the Master of the Rolls agreed.

1. The accepted amendment framework required consideration of whether limitation was reasonably arguable, whether the amendment introduced a new cause of action, and whether that cause arose from the same or substantially the same facts already in issue. Every disputed amendment introduced a new cause of action (paras [15]–[16]).
2. Under section 35(1) of the Limitation Act 1980, an amendment introducing a new claim ordinarily related back to commencement of the original action. Permission could therefore deprive a defendant of an otherwise arguable limitation defence. Once the defendant established a prima facie defence, the claimant had to demonstrate that it was not reasonably arguable. Seriously disputed factual issues could not be resolved summarily on a conventional amendment application (paras [25]–[29]).
3. Section 14A required consideration of actual knowledge and knowledge which the claimant might reasonably have acquired, including through appropriate expert advice. The solicitor's assertion that the additional issues first emerged during expert discussions did not explain why relevant knowledge could not reasonably have been acquired earlier. The trustees had failed to eliminate an arguable limitation defence, so permission could not be sustained under CPR 17.1(2)(b). This was an interlocutory finding, rather than a final determination that the claims were time-barred; separate proceedings remained available (paras [30]–[32]).
4. The relevant factual comparison derived from section 35(5), whose wording CPR 17.4 did not faithfully reproduce. The purpose was to avoid requiring investigation, after limitation had expired, of matters outside the existing factual enquiry. Substantially the same facts meant more than similar facts. Although borderline cases could involve impression, adequate analysis remained necessary (paras [33]–[38]).
5. The 2002 valuations concerned a scheme closed to further accrual and were undertaken in changed circumstances, using different data, assumptions and reporting arrangements. They required additional investigation into employer contributions, trustee negotiations and possible benefit reductions. Each valuation was an independent exercise. The analogy with additional buildings in Welsh Development Agency v Redpath Dorman Long Ltd was unsound. Permission for the 2002 claims, including the additional uniform accrual allegation, therefore had to be refused (paras [39]–[43]).
6. The pension increase amendments opened a distinct factual enquiry concerning benefits in payment and the trustees' discretion to limit increases. The existing duty, professional discipline and valuation reports did not satisfy the statutory requirement. Steamship Mutual v Trollope & Colls supported the distinction between a common duty and a common factual basis. The refusal of those amendments was upheld (paras [44]–[49]).

• Court of Appeal (Civil Division): In [2014] EWCA Civ 996 , unanimously allowed the defendants' appeal against permission for amendments concerning the 2002 valuations and dismissed the trustees' cross-appeal concerning pension increases.
• High Court, Chancery Division, Manchester District Registry: His Honour Judge Pelling QC found a reasonably arguable limitation defence, permitted the Category 4 and Category 5(i) amendments, and refused the Category 5(ii) amendments. No citation for that judgment was supplied.