Otuo v Brierley

Where a claimant seeks to add a new claim by amendment, and the claim does not arise from the same or substantially the same facts as an existing claim, leave should generally be refused if the claim is arguably statute-barred and relation back would prejudice a limitation defence. Seriously disputed factual issues should not ordinarily be resolved on the amendment application; a preliminary limitation issue is appropriate only rarely. An erroneous limitation assessment affecting costs may justify appellate re-exercise of the costs discretion. The Civil Procedure Rules 1998 also permit permission to amend to be made conditional on payment on account of costs, although such a condition becomes pointless once the action has been tried and dismissed.

The parties had previously entered into a settlement agreement concerning a property partnership. The claimant later brought proceedings alleging breaches of that agreement and sought permission to re-amend his particulars of claim to add defamation allegations.

After witness evidence showed that the defamation allegation was unsustainable, the High Court deputy judge awarded the defendant 80% of the relevant costs, ordered £20,000 on account, and refused to make continued pursuit of the claim conditional on payment. The defendant appealed against the costs discount and the refusal of a conditional order.

The Court of Appeal allowed the appeal unanimously.

1. Limitation and amendment. Where a new claim does not arise out of the same or substantially the same facts as an existing claim, and it is arguable that the new claim is statute-barred, leave to amend should ordinarily be refused if the defendant has a reasonably arguable limitation defence which would be prejudiced by relation back under the Limitation Act 1980. The court should not resolve seriously disputed factual issues on the amendment application. It may instead direct limitation to be tried as a preliminary issue, but that course is rare and requires careful consideration of its procedural and costs consequences. These principles were explained in Chandra v Brooke North (a firm) [2013] EWCA Civ 559.
2. Error on the evidence. The claimant’s draft pleading indicated that he may have known of the alleged defamatory statement by 16 November 2012. It was therefore at least arguable that the statement had been made more than a year earlier and that the claimant had delayed unduly. The deputy judge could not properly find that there was no real prospect of proving earlier knowledge or treat the limitation issue as one on which the claimant had succeeded.
3. Unresolved statutory issue. The court left undecided whether section 32A of the Limitation Act 1980 could permit an arguably out-of-time new claim to be added by amendment notwithstanding section 35(3). Kitchin LJ considered the deputy judge’s view strongly arguable; Laws LJ considered the point extremely doubtful. The appeal did not require a final ruling because the evidential error was decisive.
4. Costs and conditional order. Since the defamation allegation had collapsed and the limitation reasoning could not justify a discount, the defendant was entitled to all of his costs of the amendment application. CPR Rule 3.1 empowered the court to make permission to amend conditional on payment on account of costs. Such an order was justified by earlier non-compliance and the absence of evidence of inability to pay, but the action had by then proceeded to trial and been dismissed, so imposing the condition would serve no useful purpose.

• Court of Appeal (Civil Division): In [2015] EWCA Civ 1143, the appeal was allowed. The defendant was awarded all costs of the amendment application. No conditional order was imposed because the action had already proceeded to trial and been dismissed.
• High Court of Justice, Chancery Division: On 14 April 2014, the deputy judge awarded the defendant 80% of the relevant costs, ordered £20,000 on account, and refused to make continued pursuit of the remaining claim conditional on payment.