BTI 2014 LLC v PRICEWATERHOUSECOOPERS LLP & Anor

In determining whether an amendment introduces a new cause of action, the court must compare the bare minimum of essential factual allegations in the existing and proposed pleadings. Further particulars, instances or consequences of an existing breach do not necessarily create a new cause of action. The question is one of fact and degree, including whether the essential factual basis of the alleged breach and damage has changed.

For the statutory requirement that a new cause of action arise from the same or substantially the same facts, the court must apply the statutory wording and conduct a careful comparative assessment. The likely evidence at trial and the facts the defendant could reasonably have investigated are relevant. A new counterfactual is relevant but is not automatically decisive.

BTI, as assignee of Windward Prospects Limited’s claims, alleged professional negligence by PricewaterhouseCoopers LLP in auditing Windward’s 2007 and 2008 accounts. After the limitation period had expired, BTI sought permission to re-amend its pleadings.

The proposed Divisibility Amendments concerned expert factual advice relevant to a CERCLA divisibility defence in relation to the 2008 accounts. The proposed Total Costs Amendments alleged that total Fox River remediation costs had been underestimated in both sets of accounts and required expert evidence on that issue.

The central questions were whether the amendments introduced new causes of action, whether any new cause arose from the same or substantially the same facts, and whether permission should be granted.

1. Divisibility Amendments. The amendments did not introduce a new cause of action. The existing pleadings already alleged that PwC needed expert advice concerning the availability of a CERCLA divisibility defence after Burlington Northern. Legal advice and factual remediation advice were, in this context, two aspects of the same overall enquiry. The amendments principally pleaded further consequences of an already pleaded failure to obtain necessary expert advice.
2. Even if the Divisibility Amendments had introduced a new cause of action, it would have arisen from the same or substantially the same facts. The existing claim already required examination of the legal and factual availability of a reasonable basis of apportionment. Additional evidence concerning expertise and historical apportionment reports was not sufficiently substantial to alter that conclusion.
3. Total Costs Amendments. The existing pleadings criticised the estimate of the NCR/API Share but did not allege that total remediation costs were themselves underestimated, or that PwC should have obtained independent expert advice on that issue. The proposed amendments therefore changed the essential factual basis of the claim and introduced a new counterfactual concerning what a remediation expert would have advised. They did not arise from the same or substantially the same facts.
4. Because the Total Costs Amendments introduced a new cause of action outside the limitation period and failed the statutory same-facts test, the court had no power to permit them. The Divisibility Amendments were late, and the explanation for delay was weak, but the prejudice to PwC was relatively low and the prejudice to BTI from refusal was greater. Permission was therefore granted for those amendments under CPR 17.1(2)(b).
5. Permission for the Total Costs Amendments was refused. The parties were invited to agree the consequential order.