Samba Financial Group v Byers & Anor

A new cause of action introduced after expiry of the limitation period may relate back only if it arises from the same or substantially the same facts as are already in issue. Similarity is insufficient. The court must compare the factual investigations reasonably required by the existing and proposed claims.

The pleadings will ordinarily determine which facts are already in issue. Rarely, evidence deployed on an earlier interlocutory issue may establish that additional facts are already in issue. Brief assertions of good faith do not place in issue a detailed case alleging knowledge, failures to inquire and unconscionable receipt. Permission must be refused where the amendment would require investigation and evidence well beyond the ambit of the existing claim.

SICL alleged that shares held for it on trust had been transferred to Samba in breach of trust. Its original proceedings sought a declaration under Insolvency Act 1986, section 127, that the transfer was void. After the Supreme Court held that the transfer was not a disposition within that provision, the proceedings were remitted so that SICL could seek permission to amend.

Birss J permitted SICL to replace its failed statutory claim with a detailed constructive trust claim alleging Samba's knowledge, conduct and failures to inquire. He held that Samba's earlier assertions of good faith meant that substantially the same factual questions were already in issue. Samba appealed on the limitation issue.

The central question was whether the constructive trust claim arose from the same or substantially the same facts as were already in issue, as required by section 35 of the Limitation Act 1980 and CPR rule 17.4(2).

1. Appeal allowed. The order granting permission to re-amend the particulars of claim was quashed. The 2013 action was bound to fail without the amendment and should be dismissed, with written submissions invited on costs.

2. Section 35(5)(a) of the Limitation Act 1980 and CPR rule 17.4(2) impose a substantive jurisdictional condition. Where limitation has arguably expired and the amendment introduces a new cause of action, the court must decide whether that cause of action arises from the same or substantially the same facts as are already in issue. This is a matter of analysis, not ordinary case-management discretion: Ballinger v Mercer Ltd [2014] 1 WLR 3597 and Mastercard Inc v Deutsche Bahn AG [2017] EWCA 272 applied.

3. The statutory purpose is to prevent a defendant from losing an accrued limitation defence where the amendment would require investigation and evidence concerning matters outside the ambit of the existing factual dispute. “The same or substantially the same” does not mean merely similar. The existing and proposed claims therefore require a substantive factual comparison.

4. The constructive trust claim depended on a multitude of facts concerning Samba's knowledge, attributed knowledge, commercial relationships and possible inquiries over a lengthy period. The relevant inquiry was highly sensitive to its factual, legal and commercial context, consistently with Papadimitriou v Crédit Agricole Corpn and Investment Bank [2015] 1 WLR 4265.

5. Samba's brief earlier assertions of good faith did not establish that it had investigated this extensive factual case. SICL had consciously omitted a constructive trust claim, and its case alleging absence of good faith had remained unformulated. The new pleading was therefore of an entirely different character and required investigation well beyond anything reasonably required by the original statutory claim.

6. McCombe LJ further held that pleadings will ordinarily be the primary, and probably the only, source for determining what facts are already in issue. Exceptionally, an extensive evidential contest on an application may show that facts are already in issue before formal pleading. Floyd LJ regarded a pleadings-only approach as provisionally attractive but left the point open because it did not affect the outcome. Sir Ernest Ryder agreed with both judgments.

1. Court of Appeal (Civil Division): Allowed Samba's appeal, quashed permission to re-amend and held that the 2013 action should be dismissed: [2019] EWCA Civ 416.

2. High Court, Chancery Division: Birss J permitted SICL to re-amend its particulars of claim and dismissed Samba's applications for a stay or strike-out: [2017] EWHC 3106 (Ch).

3. Earlier appellate proceedings: The Court of Appeal would have lifted an earlier forum stay. The Supreme Court subsequently held that the transfer was not a disposition for section 127 of the Insolvency Act 1986 and remitted the proceedings to the High Court so that SICL could seek permission to amend. Citations for those decisions are not stated in the judgment.