Manorshow Ltd v Boots Opticians Professional Services Ltd

Substitution of a defendant is appropriate where the wrong party was joined because of that party’s conduct and substitution enables the real dispute to be resolved without prejudice. Under CPR 19.2(4), the court may substitute a party where the existing interest or liability has passed and substitution is desirable for resolving the dispute. The rule should be applied practically and in the round. A claimant may reasonably rely on the proposed defendant’s occupation, dealings, representations and conduct when identifying the correct legal tenant. Costs of substitution may be ordered against the wrongly joined party where its conduct caused the error.

Manorshow, the landlord and reversioner, brought a dilapidations claim against Boots Opticians Professional Services Ltd (BOPSL). The parties accepted that European Vision Ltd (EVL), formerly Dolland & Aitchison Ltd, was the correct tenant and defendant. Manorshow applied under CPR 19.2(4) to substitute EVL for BOPSL. BOPSL resisted the application and separately applied to strike out the proceedings.

The issue was whether substitution should be permitted, having regard to the parties’ conduct, the history of occupation and lease negotiations, and any resulting prejudice.

1. Substitution allowed. EVL was substituted for BOPSL under CPR 19.2(4). The court accepted that BOPSL had been mistakenly joined as a result of its own conduct.
2. The court considered the relevant circumstances in the round. BOPSL had occupied the premises, its solicitors had dealt with the continuation of the tenancy and negotiated a replacement lease, and the new lease recorded BOPSL’s surrender of its existing interest. Before proceedings, BOPSL’s solicitors indicated that an assignment had occurred but said that the documents could not be located.
3. The court rejected the argument that a payment advice stating that rent was paid on behalf of EVL showed that Manorshow knowingly sued the wrong defendant. That wording did not outweigh the surrounding evidence on which Manorshow was entitled reasonably to rely.
4. There would be no prejudice to EVL, which had known of the proceedings, or to BOPSL, which was a related company. Amendments to the Particulars of Claim were required, but that was not a reason to refuse substitution.
5. The separate strike-out application was unnecessary. It was dismissed as otiose because the claim would have been struck out if substitution had failed.
6. Manorshow was awarded the costs of the substitution application and BOPSL was ordered to pay the costs of the strike-out application. The costs of setting aside the default judgment remained subject to the earlier no-order-as-to-costs agreement. Costs of the agreed stays lay where they fell. BOPSL was entitled to the costs of its defence and other post-stay costs not falling within the substitution or strike-out applications.