Startwell Ltd v Energie Global Brand Management Ltd & Anor

A court may not permit amendment to introduce a new cause of action after the applicable limitation period has expired unless the new claim arises from the same or substantially the same facts as an existing claim. Fraudulent misrepresentation and negligent or non-fraudulent misrepresentation are materially different claims. The statutory remedy under the Misrepresentation Act 1967 does not extend to fraudulent misrepresentations.

An instrument is not a deed unless its face makes that intention clear and it is validly executed as a deed. A contractual non-reliance clause may create a contractual estoppel where clearly drafted. Summary judgment and security for costs depend on the applicable procedural tests, with security capable of being ordered by instalments.

The claimant franchisee brought claims exceeding €2 million against the defendants arising from franchise agreements, including claims for misrepresentation, breach of contract and restitution. The defendants applied to amend the defence, sought summary judgment or strike-out of limitation-barred and misrepresentation claims, and applied for security for costs.

The claimant also appealed an order permitting amendment of its particulars to add deceit. The appeal concerned whether the proposed deceit claim was statute-barred and whether it arose from the same or substantially the same facts as the existing negligent misrepresentation claim. The court also had to determine whether the franchise agreements were deeds, whether contractual estoppel applied, and what security for costs was just.

1. Appeal. The appeal against permission to amend was allowed. The proposed deceit claim was a new claim because fraudulent misrepresentation and negligent misrepresentation involve materially different factual allegations. Under sections 32 and 35 of the Limitation Act 1980, and CPR 17.4, the relevant limitation question was whether the limitation period had expired when the amendment application was made. It had expired, and the proposed claim did not arise from the same or substantially the same facts as the existing claim.

2. Withdrawal and status of the IMFAs. Permission was granted to withdraw the admission that the International Master Franchise Agreements were deeds. On their proper construction, they were simple contracts. The agreements did not make clear on their face that they were intended to be deeds, and the signatures at the end were intended to authenticate the contractual terms. The execution of separate schedules as deeds did not alter that conclusion. There was no real prospect of establishing otherwise and no compelling reason for a trial.

3. Summary judgment. Claims for breaches before 1 August 2007 were statute-barred because the IMFAs were simple contracts and the ordinary six-year limitation period applied. The Option Notice misrepresentation claim was also time-barred. The claimant could not rely on section 32 of the Limitation Act 1980 by recasting its pleaded negligence case as deliberate or fraudulent misrepresentation. A fraudulent misrepresentation is inconsistent with the non-fraudulent statutory claim under section 2(1) of the Misrepresentation Act 1967.

   The Rodgers Side Letter claim could not succeed. No tenable pre-contractual duty to disclose its precise territorial scope was pleaded. Any contractual duty arose only after the contract was made. The claim was in any event barred by limitation and contractual estoppel.

4. Security for costs. The claimant’s remaining claims were bona fide and had reasonable prospects, but the evidence did not establish that any order would stifle them. Security was therefore ordered in stages, with a stay pending provision of each tranche, in order to balance the parties’ interests and avoid requiring a large capital sum immediately.

The judgment itself records an appeal from the order of Master Kay QC dated 6 October 2014 granting permission to amend. The appeal was allowed by the High Court, and the consequential costs orders were reversed.