Necessity Supplies Ltd & Ors v Pricewaterhousecoopers LLP & Anor

When an amendment is sought after expiry of the limitation period, the court must first analyse whether it introduces a new claim and, if so, whether it arises from the same or substantially the same facts as the existing claim. That is a substantive question of law, not a case-management discretion. The comparison must focus on the essential factual allegations, abstracted from particulars. A new duty will usually constitute a new cause of action. Different breaches of an existing duty may raise a question of fact and degree. An appellate court should interfere with a discretionary decision only where the lower court exceeded the generous ambit within which reasonable disagreement is possible. An amendment should also identify adequately the factual basis of alleged loss.

The appellants appealed against an order of Deputy Master Linwood dated 5 June 2020, which permitted only amendments to their professional-negligence claim against PricewaterhouseCoopers LLP and Landwell to which the respondents consented.

The proposed amendments alleged, first, failures to advise about risks and the need for independent consideration in implementing a tax-planning scheme and, secondly, that individual appellants had suffered or might suffer losses arising from tax liabilities connected with settlements reached with HMRC. The central issues were whether the first category introduced a new claim under Civil Procedure Rules 1998, rule 17.4, whether it arose from the same or substantially the same facts, and whether the second category was adequately pleaded and should be allowed in the exercise of discretion.

1. Appeal dismissed. The first category of amendments introduced a new claim. The original pleading concerned errors in implementing the arrangements. The proposed amendments alleged a distinct duty to advise about risks and to ensure independent consideration at stages of the scheme, together with different breaches and a different causation case.
2. Under Civil Procedure Rules 1998, rule 17.4(2), reflecting section 35(1) of the Limitation Act 1980, permission for a new claim after expiry of limitation depends on whether it arises from the same or substantially the same facts. The court must compare the essential factual allegations, rather than particulars. The requirement is substantive and is not a matter of discretion.
3. The first category did not arise from the same or substantially the same facts. If allowed, the respondents would need to investigate what advice was given, when it was given, what records existed, and what the appellants or trustee would have done in the counterfactual situation. Those matters went beyond the factual ambit of the original claims.
4. The Deputy Master’s discretionary decision was within the generous ambit of reasonable disagreement. The appellate court therefore had no basis to interfere merely because it might have reached a different view on the comprehensibility of “independent consideration”.
5. The second category was also properly refused. The pleading did not adequately explain the basis on which the individual appellants had suffered or might suffer loss. The statutory framework did not remove the need to plead the underlying facts, including payments made, loss suffered, and the basis on which HMRC might seek to impose liability. The fourth ground disclosed no independent error.

• High Court (Chancery Division): Appeal against the order of Deputy Master Linwood dated 5 June 2020 dismissed.
• Permission to appeal: Granted by Mr Justice Miles on 27 October 2020.