AMENDMENT TO ADD NEW ISSUES THAT HAVE ARISEN SINCE ISSUE: CONSIDER THE OVERRIDING OBJECTIVE AND NOT THE RSC

February 7, 2017 · by · in Amendment, Civil Procedure

I said that there would be two posts about the judgment of Master Marsh in The Football Association Premier League Limited -v- O’Donovan [2017] EWHC 152 (Ch).  The first looked at the lifting of the automatic stay. Here we look at the judgment in relation to amendment.  The Master made some significant observations about amendment under the Civil Procedure Rules.

KEY POINTS

  • The Civil Procedure Rules give the court a general discretion in relation to allowing amendment.
  • Where there was no issue of limitation the court should exercise that discretion by way of reference to the overriding objective rather than the case law under the previous Supreme Court Rules.
  • The “relation back” rule of amendment (whereby the amendment was deemed to take place as if on the date of issue) was not set in stone. It was possible for a court to order that relation back should not take place or be to a different date.

THE CASE

It was an action against the first defendant alleging that live football matches shown in a pub breached the claimant’s copyright. The defendant stated he had filed  a defence but no defence was served.   Judgment was not entered and the claimant successfully applied to have the automatic stay lifted.   The claimant sought permission to amend the Particulars of Claim to include reference to the new logos and graphics.

THE JUDGMENT ON AMENDMENT

The Master’s judgment raised some issues in relation to amendment.

    1. In most respects the amendments are uncontroversial. The claimant wishes to bring the claim in line with the changed circumstances both as to a change in the law since the claim was issued and the new football season and the New Logos and Graphics. Applying the usual considerations, the application is a strong one:
i) The amended claim shows reasonable grounds and has a real prospect of success.
ii) The claim is at an early stage and the amendment in relation to the New Logos and Graphics could not have been made earlier than November 2016.
iii) There is no prejudice to the first defendant because he has opted not to serve a defence.
    1. During the course of the hearing I raised a concern with Ms Lane, who appeared for the claimant, about whether the claimant was seeking to add new causes of action which had not arisen when the claim was issued and, if so, whether there was an entitlement to do so. No limitation issue arises and the provisions of s.35 of the Limitation Act 1980 and CPR 17.4(2) have no bearing. However, the cases that have considered those provisions have had to grapple with the sometimes elusive notion of what constitutes a new claim – see Aldi Stores Ltd v Holmes Buildings Ltd [2003] EWCA Civ 1882 at [21] to [28] and HMRC v Begum [2010] EWHC 1799 (Ch) at [29] to [32]. I do not consider, however, there is any great difficulty here in determining that the claimant is seeking to add two new causes of action. In the case of the New Logos and Graphics, they were not broadcast for first time until after the claim was issued and in the case of the Film claim, the law was changed to permit such a claim after the same date and it is a distinct claim of a different nature to the claims pursued previously. Ms Lane relied upon the general indorsement on the claim form which indicates an intention to pursue claims for “copyright infringement”. She submitted that such an indorsement enabled the claimant to add new claims falling within the same genus, subject to obtaining permission. However, I do not consider the indorsement is of any real assistance because of its breadth. It would not be suggested, for example, that an indorsement basing a claim upon a “breach of contract” would enable the court, without more ado, to grant permission to add claims arising out of any contract, whether entered into before or after the claim was issued. That may not be a true analogy, but it illustrates the point.
    2. It might have been thought that the seemingly simple question of whether new causes of action may be added to a claim by amendment would be answered by a well-established line of authority or directly by the CPR. That appears not to be the case even where limitation is not an issue. The difficulties that arise mostly stem from concern about what is termed the doctrine of relation back (or ‘relator back’ as it is described in one case) and concerns about how to deal with cases concerning what is described as ‘incurable nullity’.
    3. As a general principle, it is plainly desirable to ensure as far as possible that all the issues between the claimant and the first defendant are resolved in one claim. This principle is reflected in CPR 7.3 which permits a single claim form to be used to start all claims “… which can be conveniently disposed of in the same proceedings”, although the inconvenience and cost of starting a second claim and having it consolidated is relatively limited. Support for the approach can also be found in the overriding objective.
    4. The issue I have to consider is whether it is inevitable that the claimant has to issue a second claim against the first defendant in order to pursue the two new claims? Although some of the authorities were immediately available at the hearing, I directed Ms Lane to lodge short written submissions on the point and I am grateful to her for the helpful submissions filed shortly after the hearing.
    5. The notes at 17.3.4 of the 2016 edition of the White Book refer to the position under the Rules of the Supreme Court and state:
“Under the previous rules, an amendment duly made, with or without leave, took effect not from the date when the amendment was made, but from the date of the original document which it amended. ….. Thus, when an amendment was made to the writ, the amendment dated back to the date of the original issue of the writ and the action continued as if the amendment had been inserted from the beginning: “the writ as amended becomes the origin of the action and the claim thereon endorsed is substituted for the claim originally endorsed” (per Collins MR in Sneade v Wotherton etc [1904] 1 K.B. 295 at 297)”.”
    1. The notes 17.3.5 (page 535) shed some light on the position under the CPR:
“Although amendments take effect from the date of the original document which it amended (see para 17.3.4 above) there is no absolute rule of law or practice which precludes an amendment to rely on a cause of action accrued only after the date of the original claim in circumstances where (but for the amendment the claim could fail (Maridive & Oil Services SAE v CNA Insurance Co (Europe) Ltd [2002] EWCA Civ 369.”
This is followed by a reference to British Credit Trust Holdings v UK Insurance Ltd [2004] EWHC 2404 Comm where the claimant was permitted to amend the claim to add a claim for declaratory relief in order to seek declaratory relief in respect of insurance claims arising after the proceedings had started.
    1. The summary in the notes, where referring to the decision in Maridive, suggests that the court’s ability to permit new causes of action to be added into a claim is limited to circumstances in which the claim lacks an essential element. A number of cases have had to consider whether an amendment may be permitted to cure a defect in the claim sometimes where the claim has been treated as suffering from incurable nullity, such as where the claimant brings a claim on behalf of the estate of a deceased person, and where the defect is less serious. In the recent decision in Haastrup v Haastrup [2016] EWHC 3311 (Ch) Master Matthews had to consider the scope of the court’s power where the claimant lacked title to sue at the time the claim was issued. His interesting discussion of the authorities at [40] to [49] identifies two strands of authority, one based upon Millburn-Snell v Evans [2012] 1 WLR 41 and Hussain v Bank of Scotland [2012] EWCA Civ 264 and based on Hendry v Chartsearch Ltd [1998] 1 CLC 1 and Maridive v CNA Insurance . However, he leaves the open the question of which line of authority is to be preferred. But I agree with Ms Lane’s submission that the issue of ‘incurable nullity’ in relation to the estate of a deceased person is some considerable distance from the issue I am considering. In those cases, the court has to decide whether to permit the claim to continue by an amendment curing a defect. It brings to bear different considerations to those in play where the claimant has a claim which is properly brought and does not suffer from any defects, such as a lack of title to sue, and merely seeks to add similar claims to those already included in the claim, albeit claims that arose after the claim was issued. Here, the parties will not change if the amendments are permitted and the claim will retain its essential character.
    2. I am not the first to suggest that it is not easy to discern a consistent pattern from the authorities in relation to the doctrine of relation back and whether it is an inflexible rule. I am by no means convinced that the notes in the White Book to which I have made reference tell the whole story, even in relation to the pre-CPR authorities. As Morrison J observed in British Credit Holdings v UK Insurance Limited [2003] EWHC 2404 (Comm):
“… the picture is confused: judges appear not to agree with one another.”
    1. Ms Lane relies on the decision of the Court of Appeal in Maridive v CNA Insurance Company and in particular to the passages in the judgment of Mance LJ where he discusses the authorities, all of which pre-date the introduction of the CPR:
“[20] Mr Millett’s primary proposition remains, however, that no amendment can be made to introduce a cause of action arising out of facts occurring subsequent to the commencement of proceedings, where at the date of their commencement no cause of action existed so that the claim as originally issue was ‘incurably bad’. He relied upon Roban Jig & Tool Co Ltd v Taylor [1979] FSR 130. There the plaintiffs commenced proceedings in August 1995 as owners of the copyright in certain drawings, in which the judge held (on a summons to strike out the claim) that the pleadings contained no shadow of a suggestion that the plaintiffs had either a legal or any equitable title. Before striking out the claim relating to these drawings, the judge considered whether the defect was one which could be cured if the plaintiffs took an assignment of the copyright from the individuals owning the copyright, and then sought to amend. He concluded that it could not be so cured, after referring to Eshelby v Federated European Bank [1932] KB 254 and 423. On appeal, his decision was upheld. Before the Court of Appeal, reference was evidently made to specific assignments in 1977, on which it was now suggested that the plaintiffs could and should be allowed to rely by way of amendment: see per Bridge LJ at p. 143. Bridge LJ referred to Lord Denning MR’s statement in Alfred C Toepfer v Peter Cremer [1975] 2 LI Rep 118 at p. 125, that the rule against allowing amendments to a claim to plead a subsequently arising claim is one of practice, not law, and can be departed from when the justice of the case required. Lord Denning went on to refer to the everyday practice of giving judgment for mesne profits, interest or loss of earnings arising post-writ. Bridge LJ recognised that ‘those departures in practice from the absolute rigour of the rule that a plaintiff cannot recover on a cause of action which accrued only after the writ was issued were the daily practice of the court’. But he went on to say that nothing ‘could possibly lead to the conclusion that it was appropriate to allow a plaintiff to amend so as to introduce a fact giving him a cause of action when at the time when the writ was issued he had no cause of action at all’.
[21] In Vax Appliances Ltd v Hoover plc [1990] RPC 656, the claim was for infringement of a patent relating to a cleaning head. The defendants counterclaimed for revocation of the patent. Later, they sought to amend to seek a declaration that a new cleaning head that they had by now developed did not infringe the patent. This represented a cause of action that did not exist at the date when the original counterclaim was made. Mummery J allowed the amendment. He distinguished Roban Jig as a case where the original claim was ‘incurably bad’, and pointed out that, since the decision in Eshelby, there had been two changes: first, the doctrine of ‘relator back’ has been disapproved in Liff v Peasley [1980] 1 WLR 781 and Ketteman v Hansel Properties Ltd [1987] AC 189; second, RSC, O. 18, r. 9 gave a more general power to amend to include in a pleading matters arising since the date of the pleading. I interpose to say that that power was however subject to RSC, O. 18, r. 15(2), precluding a plaintiff from raising in his statement of claim any cause of action which was not mentioned in the writ or did not arise from the same or related facts. Mummery J pointed out that the matters sought to be introduced were ‘not a wholly new cause of action’.”
    1. Mance LJ went on the consider the first instance decision in Bastone & Firminger Ltd v Nasima Enterprises (Nigeria) Ltd [1996] CLC 1,902 and the decision of the Court of Appeal in Hendry v Chartsearch Ltd [1998] CLC 1,382 and concludes that the Court was bound by the decision in Hendry v Chartsearch Ltd which reflects the “appropriate modern approach”.
    2. Chadwick LJ and Ward LJ both agreed with Mance LJ on this point. Chadwick LJ said at [54]:
“I agree … we are bound by the decision of this court in Hendry v Chartsearch Ltd [1998] CLC 1,382. There is no absolute rule of law or practice which precludes an amendment to rely on a cause of action which has arisen after the commencement of the proceedings in circumstances where (but for the amendment) the claim would fail. The court has a discretion whether or not to allow the amendment in such a case; a discretion which is to be exercised as justice requires.” [my emphasis]
    1. I remark, with appropriate caution and respect, that it is, to my mind, surprising the Court of Appeal in Maridive considered that it was bound by a decision pre-dating the CPR, which effected major changes to the manner in which litigation is to be conducted, and after approving dictum from Lord Denning in Alfred C Toepfer v Peter Cremer that the rule against permitting amendments to bring in new causes of action was a rule of practice, not a rule of law. If that is right, it might be thought that a rule of practice under the RSC need not be perpetuated under the CPR unless its provisions expressly require it, particularly with the overriding objective in mind.
    2. The facts of Hendry v Chartsearch Ltd explain the qualification to the principle as it is put forward by Chadwick LJ. In that case the plaintiff pursued a claim based upon an “Exploitation Agreement” under which a company named Interface obtained rights to exploit a copyright it held. The claim did not contain an allegation that the benefit of the agreement had been assigned to the plaintiff or that he was a party to the agreement. The claimant sought permission to re-amend the statement of claim to rely upon an assignment of the benefit of the agreement to him. The Court of Appeal overturned the judge’s refusal to grant permission to amend. He had determined that the court could not, or should not, permit what was regarded as a new cause of action to be added to the claim. Evans LJ in giving the leading judgment said:
“In accordance with modern practice generally, the court has a general discretion which should not be restricted by hard-and-fast rules of practice, if not of law, such as that which is suggested here. The judge therefore was wrong to consider that the court had no power to give leave to make the re-amendment.”
    1. Evans LJ also approved the first instance decision of Mummery J in Vax Appliances Ltd v Hoover Plc [1990] RPC 656 (the facts are summarised in the citation from Maridive in paragraph 21 above). After referring to RSC Order 18 rule 9 and RSC Order 20 rule 5 he observed that the court’s power to grant permission to amend a pleading was in the most general terms and when on to say:
“I do not find in the rules or in the cases any absolute rule against granting leave to introduce a new cause of action which has arisen since the date of the writ or the relevant pleading. This is not a case like Roban Jig & Tool where the plaintiff has no cause of action at all at the date of the writ and the plaintiff had to rely on a title to copyright which he had acquired after the writ was issued; in that type of case the writ is incurably bad. It is not capable of being made good by amendment, since it is not a case of adding or substituting a new cause of action by amendment. There was no cause of action at the date of the service of the counterclaim. The cause of action was for the revocation of the patent. What the defendants wish to do is to add an alternative claim for a declaration of non-infringement, which the court can grant pursuant to its statutory powers under section 71 of the Patents Act 1977. Nor is this a case like Eshelby, where the amendment had to be made to the writ which, by reason of the application of the “relation back” doctrine, meant that the writ would pre-date the cause of action. Since Eshelby, Lord Brandon’s comments in the cases I have mentioned make it clear that the addition of a new cause of action does not related (sic) to the writ or pleading in question; it dates only from the time when the amendment is made. It is also clear from the provisions of Order 18, rule 9, which are in a different from the equivalent provisions which were in force at the time when the Eshelby case was decided, that there is power to include in a pleading matters which have arisen since the date of the pleading. Further, in my view, the matters sought to be introduced are not a wholly new cause of action.”
    1. In British Credit Trust Holdings v UK Insurance Ltd, to which I have already made a passing reference, the claimant sought permission to amend the particulars of claim to include a prayer for a declaration that it was entitled to claim under a policy of insurance losses that occurred after the claim was issued. The primary point concerned whether there was already a claim for such relief by virtue of the relief sought it the claim form albeit that it was not carried through to the particulars of claim. The issue concerning amendment surfaced because the insurance policy had a contractual limitation period and the court had to consider whether by allowing an amendment the claimant might be able to avoid the effect of the limitation provision due to the effect of the doctrine of relation back.
    2. Having referred to the decision of the House of Lords in Ketterman v Hansel Properties and to Maridive the judge analysed the principles, so far as relevant to this case, in the following way:
i) Where a new defendant is added the normal position is that the claim against him will date from the time he is joined and not from the date the action was begun;
ii) There is no reason in principle why a different rule should apply to an application to add a new cause of action.
iii) The doctrine of relation back will only be a relevant consideration if the other party’s position will be prejudiced if the new claim takes effect earlier than the date on which permission to amend was granted.
    1. The judge went on to say at para.[32]:
“As I understand the position, following Ketterman, the courts adopt, as always, a pragmatic approach. A new party joining the action is entitled to look at as though the action were started on the day he joined and the court might insist that that is recorded as a condition of permission to amend. So also with a new cause of action: it starts from the date it is first made. But if there is an existing claim which needs amendment then the amendment will relate back so that the claim begins as though in its amended form from the date when the pleading in question was first delivered. These simple rules produce no difficulty. In respect of any amendment, the court is entitled to impose such conditions as it thinks fit, including, I think, conditions as to the date from which the proposed amendment is to take effect. The doctrine of relation back does not apply inflexibly, the court can adjust its operation to achieve the overriding objectives.”
    1. To my mind it is right to be cautious about the pre-CPR authorities when considering the jurisdiction of the court to grant permission to amend a statement of case. The regime under the Rules of the Supreme Court (RSC) so far as they related to pleadings was markedly different to the CPR. Under the RSC Order 18 the rules contained considerably more technical provisions than are seen in the CPR. Order 18 rule 9 provided that (subject to rule 15(2)): ” a party may in any pleading plead any matter which has arisen at any time, whether before or since the issue of the writ.” Rule 15(2) restricted the effect of rule 9 by providing that:
“A statement of claim shall not contain any allegation or claim in respect of a cause of action unless that cause of action is mentioned in the writ or arose from facts which are the same as, or include, or form part of, facts giving rise to a cause of action so mentioned; but, subject to that, a plaintiff may in his statement of claim alter, modify or extend any claim made by him in the indorsement of the writ without amending the indorsement.” [my emphasis]
    1. So far as amendment is concerned, under the RSC the court was given a wide-ranging power to permit an amendment under Order 20 rule 5 with rule 5(4) permitting an amendment to alter the capacity in which a party sues even where that capacity was acquired since the date of commencement of the claim. The pre-CPR authorities dealing with title to sue, where the issue is one of capacity rather than the wrong person having brought the claim must be seen in the light of that rule.
    2. In the CPR the provisions of rule 16.4 and Practice Direction 16 are for the most part general in nature, save for specific instances of information that has to be provided. The power to amend in CPR 17.3 is equally broad. CPR 17.4 deals with amendments after a limitation period has expired and gives effect to s.35 of the Limitation Act. S.35(1) gives statutory effect to the doctrine of relation back for the purposes of limitation, but only for the purposes of the Act. It does not follow, to my mind, that necessarily the doctrine survives as a freestanding doctrine that applies inflexibly to all claims. Indeed, were a strict application of the doctrine to have survived the introduction of the CPR, it would have been made explicit in CPR 17.3 Instead, the rule that governs amendment in non-limitation cases is silent on the subject and merely gives the court a discretion to exercise in considering the application for permission to amend.
    3. There is what may be described as a difference of spirit between the RSC and the CPR. The latter opens with the broad sweep of the overriding objective which is to enable the court to deal with a case justly and at proportionate cost so far as is practicable. It might be thought that if the approach under the RSC had some flexibility about the addition of new causes of action and the effect of relation back, save in incurable nullity and limitation cases, it is unlikely the CPR was intended to be more restrictive, save where it makes express provision such as in CPR 17.4(2).
    4. As a result of this perhaps over-lengthy discussion of the cases, I consider that the answer to the question I posed to Ms Lane is clear. The dicta in British Credit Trust Holdings accurately reflects the current state of the law and, so far as relevant to this case, it can be summarised as follows:
i) There is nothing in the CPR or the general law that prevents a party adding a new cause of action to a claim subject to different considerations applying in cases of ‘incurable nullity’ and in cases where limitation is an issue (by virtue of the Limitation Act). In the case of the latter, s.35 of the Limitation Act 1980 and CPR 17.4 apply.

ii) The CPR encourages the parties to resolve all the issues between them in one claim and this accords with the approach set out in the overriding objective. This is not a requirement of the CPR but the court will lean in favour of adding claims rather than requiring an additional claim to be issued where possible.

Where the two exceptions referred to in paragraph i) and ii) do not apply;

iii) In cases where permission to amend is granted to add a cause of action that existed at the date the claim was issued, in non-limitation cases, it will normally be related back to the date the claim was issued and the claim will be treated as having included the additional claims as from the date of issue. There may be circumstances where this is not appropriate and the court may grant permission to amend on terms as to the date the added claims took effect. This might be relevant, for example, to interest and costs.

iv) The court’s power to permit amendments where new claims are being added, as Morrison J observed in British Credit Trust Holdings, allows the court to impose conditions when granting permission to amend such as to make it clear, in appropriate cases, that the amendment takes effect upon the date of the order or such earlier date as the court specifies.

v) To my mind, and perhaps controversially, the doctrine or rule of relation back is no more than a rule of thumb, save where it finds statutory force in s.35 of the Limitation Act 1980. In the vast majority of cases it is convenient that a claim is treated as including all the amendments as if they were included as at the date of issue of the claim. It is, however, not an essential or necessary effect of an amendment and the court may grant permission to achieve a different outcome.

vi) I would only add that it is plainly preferable for a claimant to include all the claims it wishes to pursue in the claim when issued and there may be many cases where it is more appropriate for additional claims to be made by issuing a new claim. It does not follow that simply because the court has power to permit an amendment adding a new claim, it will necessarily exercise its discretion to do so. As will all such decisions, the provisions of the overriding objective are paramount.

Conclusion
  1. For the reasons given above it is appropriate to lift the stay arising pursuant to CPR 15.11 and to grant permission to amend the particulars of claim in the terms of the draft filed with the court. In the case of the two new claims, I propose that they will take effect not from the date of issue of the claim but in from the 13th August 2016 being the opening date of the 2016/17 season. To the extent that it is necessary I will consider written submissions from the claimant on this point.

 

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