Fay of London Limited v Axis Speciality Europe SE

Where an amendment introduces a claim which may be statute-barred and does not arise from the same or substantially the same facts already in issue, permission may be refused even if the application is framed under CPR r.17.1 rather than r.17.4. The court should ask whether the defendant has a reasonably arguable limitation defence and whether relation back creates a real prospect of prejudice to that defence. The court need not finally determine a difficult limitation question at the amendment stage. The claimant may instead issue a fresh claim. A new ground of appeal will generally be refused where it was not raised below, the respondent lacked adequate time to address it, or it would require new factual argument or evidence.

Fay appealed from Master Pester’s refusal, by judgment dated 30 May 2025 and order dated 16 June 2025, to permit amendment of its pleadings. Fay sought to add a fraudulent breach of trust claim against Axis, sued as insurer under the Third Party (Rights Against Insurers) Act 2010. It was common ground that Axis had a reasonably arguable limitation defence under section 21(3) of the Limitation Act 1980.

The appeal concerned whether that defence was relevant because the application had been made under CPR r.17.1, whether the Master had applied the correct prejudice-based test, whether a difficult limitation question should be left to trial, and whether section 21(1)(a) removed any limitation period.

1. Appeal dismissed. Master Pester had correctly refused permission to add the fraudulent breach of trust claim, leaving Fay free to issue a fresh claim.
2. The relevant question did not depend on whether Fay labelled the application as one under CPR r.17.1 or CPR r.17.4. The rationale was the potential prejudice caused by relation back: amendment could deprive Axis of the benefit of an arguable limitation defence, whereas a fresh claim would not create that disadvantage. The same reasoning applied whether Fay argued that no limitation period existed or that an applicable period had not expired.
3. The correct approach, drawn principally from Viegas v Cutrale [2025] 1 WLR 1467, was to refuse amendment where there was a reasonably arguable limitation defence and a real prospect that relation back would prejudice it. The threshold for such prejudice was not high.
4. Ground 1(b), arguing that the Master had failed to assess prejudice, was a fresh ground. Permission was refused because the point had not been raised below, Axis had not had adequate preparation time, and the proposed argument involved factual issues concerning the timing of payments and the operation of section 32 of the Limitation Act 1980. In any event, the court would have upheld the refusal because relation back could deprive Axis of its limitation defence.
5. It was insufficient that the limitation question was difficult or that Fay had a real prospect of succeeding on it. The court should not finally resolve the developing and fact-sensitive question whether section 21(1)(a) or section 21(3) applied on an amendment application.
6. The distinction between category 1 and category 2 constructive trustees identified in Paragon Finance plc v DB Thakerar & Co remained a substantial issue for determination on fuller evidence and argument. No final conclusion was expressed.

• Chancery Appeals (ChD): The appeal from Master Pester’s judgment dated 30 May 2025 and order dated 16 June 2025 was dismissed. Permission to appeal on Grounds 1, 2 and 3 was granted by Adam Johnson J on 15 December 2025.