AIG Europe Ltd v McCormick Roofing Ltd & Ors

Under CPR rule 19.5, substitution after expiry of the limitation period is available where the original claim cannot properly continue without the new party, provided the claim remains the same. A dissolved or wrongly named claimant does not make the proceedings a nullity where substitution can regularise the claim.

A mistake in suing in the name of the original rights-holder rather than its assignee may be a mistake as to name, rather than identity. The requirement of avoiding reasonable doubt as to identity applies to CPR rule 17.4, not CPR rule 19.5(3). Once a gateway under rule 19.5 is established, the court exercises a broad discretion, balancing prejudice, limitation consequences, the nature of the mistake and the surrounding circumstances.

AIG Europe SA applied to replace AIG Europe Ltd as claimant in negligence proceedings arising from a fire during roofing works. AIG Europe Ltd had ceased to exist following a corporate restructuring and merger, and the cause of action was said to have passed to AIG Europe SA.

The application was opposed by the roofing companies and their liability insurer. The central questions were whether substitution was permitted under CPR rules 19.5(3)(a) or (b), whether the proceedings were a nullity because the named claimant no longer existed, and whether the court should exercise its discretion in favour of substitution after expiry of the limitation period.

1. The application was granted. AIG Europe SA was substituted for AIG Europe Ltd.

2. CPR rule 19.5(3)(b) is a gateway provision. The court must be satisfied that the claim cannot properly be carried on by or against the original party unless the new party is added or substituted. The principle derived from Parkinson Engineering Services plc v Swan and Irwin v Lynch is that the original claim must be unsustainable by the existing party and the same claim must be capable of being continued by the new party. The present claim satisfied that test.

3. The argument that proceedings issued in the name of a company which had ceased to exist were a nullity was rejected. CPR rule 19.5(3)(b) was intended to provide a remedy in such circumstances.

4. CPR rule 19.5(3)(a) also applied. The mistake was genuine and fell within the distinction between a mistake of name and a mistake of identity. A mistaken decision to sue in the name of the original party entitled to sue, rather than in the name of an assignee, could constitute a mistake as to name. The absence of a reasonable doubt as to identity was not a requirement of rule 19.5(3)(a), although it remained relevant under rule 17.4.

5. The court could consider the Particulars of Claim served with the Claim Form when assessing its effect on the recipient. A later document might be of limited assistance in determining the drafter’s state of mind, but it could be relevant to the exercise of discretion.

6. In exercising discretion, the court considered the defendants’ prejudice, the loss of an accrued limitation defence, the early investigation of the fire, the fact that the defendants were not misled, and the innocent nature of the mistake. Those factors, taken together, justified substitution.