CLAIMANTS SUED THE WRONG (NON-EXISTENT) DEFENDANT – AND THE LIMITATION PERIOD HAD EXPIRED: DON’T START BREAKING THE CROCKERY JUST YET

In The 52 Occupiers of the Ceramic Works v Bowmer & Kirkland Ltd & Anor [2021] EWHC 17 (TCC) District Judge Baldwin considered an application to substitute a defendant after the primary limitation period had expired.  The judge, if anything, was critical of the defendant’s stance.  The claimants’ applications were granted.

“Whilst there is no stricture within the Civil Procedure Rules 1998 for the parties to behave in a gentlemanly fashion, to use Mr Quiney’s word, the competitive and battlefield nature of civil proceedings must be seen to be tempered by the duty of the parties under r. 1.3 to help the Court to further the overriding objective and I am left pondering whether the type of battle engaged in here has been a proper use of both the resources of the Court and also of the financial resources of the parties, however much is at stake in these proceedings.”

THE CASE

The claimants brought proceedings  against B & K under the Defective Premises Act 1972 and alleging breach of a general duty of care in relation to the construction of residential and commercial units.   Pre-action correspondence took place naming B & K as the defendant and proceedings were issued, also naming B & K as the defendant.  It transpired that B & K, as sued, was  anon existent entity.  It was, therefore, to add the second defendant to the proceedings. The limitation period had expired.  The application was, in reality, an application for substitution of the defendant rather than an addition.

THE RULES

“Special provisions about adding or substituting parties after the end of a relevant limitation period

19.5

(1) This rule applies to a change of parties after the end of a period of limitation under –

(a) the Limitation Act 1980; …

(2) The court may add or substitute a party only if –

(a) the relevant limitation period was current when the proceedings were started; and

(b) the addition or substitution is necessary.

(3) The addition or substitution of a party is necessary only if the court is satisfied that –

(a) the new party is to be substituted for a party who was named in the claim form in mistake for the new party; …”

WHAT THE DEFENDANT ARGUED

The defendant opposed the application.

1. Mr Quiney advances B & K’s case that the Court should conclude that the Claimants have not made a simple mistake as to the name of the party intended to be sued, but rather that the evidence of repeated “errors” shows that a proper choice was made to sue the existing First Defendant or similar.

2. He accepts that the mistake was made by those involved in preparing the claim form, and thus, it seems that the satisfaction of the first limb of the Insight test is not in issue.

3. He further accepts that prior to the early part of 2020, certainly in January and perhaps up to March, it “appeared Brabners were getting it right”, having properly identified B & K.

4. Mr Quiney then asks, rhetorically, why the “error” arose.

5. His answer begins by contending that it should not be seen to be anything to do with colloquial references to “Bowmer and Kirkland” or the lack of the building contract, as there was plenty of information available, see for example [194], the memorandum created by Mrs Wood in January 2020 and the concession by Mr Willis, see para. 12 [382] as to the identity of the correct Defendant being known. Further, nothing should be read into M & R’s letter of 8^th April 2020, as the claim form was not informally sent until 9^th April [131].

6. What the Court should find, he submits, is that Mrs Wood made a positive choice on 6^th February 2020 to identify the current First Defendant as being a better entity to sue and, as such, a positive choice was made, supported by the ignoring by the Claimants of the fact that M & R “kept pointing out” that they were representing a different entity, ie the presence of the headings of their letters referring to B & K as their client. The fact that that choice further turned into suing a non-existent entity should be seen, it is said, as no more than a slip of the pen, but that should not distract the Court from being persuaded that the Claimants intended to sue a different entity than B & K, which, it seems to me, must mean an inferred intention to sue “Bowmer and Kirkland Limited”.

7. He asks the Court to reject the evidence relied upon by the Claimants as to the factual background leading to the error, suggesting that Mrs Wood’s recollection is unsatisfactorily incomplete or contradictory, particularly when seen in the context of the reconstruction evidence of Lena Barnes of M & R [415-418] on the issue of the online searches.

8. The Claimants, argues Mr Quiney, inexplicably ignored red flags, for example, the name and address of B & K on the 2014 AmTrust “Builder Counter Indemnity Agreement” [48], the address being entirely different from that of the First Defendant on the claim form.

9. Similarly to his criticism of the evidence of Mrs Wood, he also criticises Mrs Williams and Mr Willis’ evidence as lacking clarity and he is sceptical that Mr Willis is likely to have missed the obvious errors in the letters of 6^th February 2020 and postulates that there must have been a positive choice to “change horses”. In any event, says Mr Quiney, the burden was on Brabners to get things right and not upon M & R to point out any possible errors. Whilst the correspondence post 6^th February 2020 could be evidence of repeated error making, it is more likely than not evidence that Brabners had made a decision and were sticking by it.

10. Mr Quiney also defends any decision not to point out any apparent errors once M & R became aware of the contents of the claim form, it being entirely permissible to take whatever tactical advantage might fairly arise in such circumstances. If it becomes apparent that there may be or is a fundamental error leading to an easy defence, it would be wrong for the client to lose this.

11. Any issue as to the timing of the pointing out of the error, once the die is cast, is not relevant to the jurisdictional test, but only, perhaps, in terms of any exercise of discretion, submits Mr Quiney. As such he commends B & K’s narrative to the Court and contends that the jurisdictional test is not made out. As I understand it, in summary, B & K’s position is that there was no essential mistake by the Claimants as to the name of the party intended to be sued, but rather a mistaken conscious choice to sue a different party, albeit coincidentally itself subsequently erroneously named, Adelson v Associated Newspapers [2007] EWCA Civ 701 paras 55 and 56 referring, this case falling into Leggatt J’s second category, see Insight @ para. 57.

12. Should the Court reach the stage of considering exercising its discretion, Mr Quiney argues that this should not be exercised.

13. He serially criticises the Claimants for repeatedly falling into error, characterising this as a gross example which should not be forgiven. B & K through M & R were simply legitimately trying to protect their own interests “on the battlefield” or “in the competition” that is litigation. Sometimes, Mr Quiney submits, if a windfall presents itself, then it is right and proper to act in the client’s interests, whether or not this is the “gentlemanly thing to do”, in order to take advantage of such, particularly so when the erroneous failure is of an egregious nature, as is suggested here.

14. The Court is also asked to weigh in the balance B & K’s suggestion that the claim is also a relatively stale one, it now being over three years since it was intimated, to the prejudice of B & K, remedial works having previously been done, despite the site inspection in December 2019. Against this, Mr Quiney suggests that the Claimant’s position is not as bad as is characterised by Mr Owen, namely there is still a claim against the architects and any claim against the solicitors will be subject to Brabners already having admitted their error, together with less chance of B & K being involved in terms of evidence.

WHAT THE JUDGE DECIDED

The judge did not accept the defendant’s submissions.

1. I am entirely satisfied that the First Defendant was named in the claim form in mistake for B & K, within the meaning of CPR r. 19.5(3)(a) and that the substitution of First Defendant as sought in this application is accordingly necessary within the meaning of CPR r. 19.5(2)(b), for the reasons which follow.

2. The inclusion of the First Defendant within the claim form was as a result of the combined actions of the relevant employees of Brabners, as conceded by Mr Quiney (see para. 35 above).

3. B & K, it is not disputed, is the correct contracting party for the purposes of these proceedings and was squarely in Brabners’ sights up to and including the site inspection in December 2019 and into January 2020. But for the supervening alternative descriptions or names manifesting themselves in the documentation from January 2020, there is no sensible conclusion to be drawn other than that B & K as building contractor would have been named as the First Defendant. This part of the test is traditionally perhaps more easily scrutinised when Particulars of Claim are served, unlike in this instance, but the claim form itself [116], I accept, sufficiently manifests an intention to bring the claim, inter alia, against the entity responsible for alleged defective construction, which can only have been B & K. I also accept the other evidential references relied upon by Mr Owen at para. 60(2)(b) of his skeleton. I don’t believe that this second part of the Insight test is seriously disputed, either.

4. I am singularly unpersuaded that there is any evidence to which any weight can or should rightly be attached that there was a conscious and deliberate, but erroneous, decision by the team at Brabners to change their focus away from B & K to Bowmer and Kirkland Limited, ultimately further erroneously named as Bowmer & Kirkland Limited, as I understand B & K’s position to be. To adopt this position, in my view, would be to fly in the face of the evidence in an attempted performance of an extreme form of mental gymnastics, which approach I roundly reject.

5. The best that can be said, in my view, in criticism of the evidence from the team at Brabners is that they do not have a precise or exact recollection of every step, but they are materially quite clear and persuasively so, in my judgment, that this was a pure and genuine error, which was not spotted. Further, the evidence does not support any contention that the error was repeated independently and suspiciously on countless occasions, but rather I find it was repeated on two or three occasions in February / March 2020 by the end of which time the claim form was issued and, at all material times during this period when the error was or ought to have been known to M & R, without relevant demur from the opponent. I am satisfied that each witness could not be clearer that no such deliberate decision was made, see the references at para. 62(2)(c)(vi) of Mr Owen’s skeleton.

6. In my judgment, there is not one scintilla of evidence in the documentation disclosed which might begin to found a suspicion that these witnesses were engaged in any sort of cover-up of a disastrous decision to “change horses”, which must be a consequential conclusion accompanying a finding of the sort contended for by Mr Quiney, nor anything in the evidence as a whole to sow the seeds of any theory that any sensible lawyer of the type instructed by the Claimants, knowing what the members of this team did up to and into January 2020, might begin consciously and deliberately to look elsewhere, other than to B & K for the building contractor defendant. This was ultimately, in my judgment, a “confusing of similar names” and a “perils of the use of shorthand” type of situation which fed on itself, leading to a genuine error as to the actual name of the intended building contractor defendant, spread as it was amongst three lawyers, and of the type no less forgivable than that contemplated by Leggatt J at para. 57(1) of Insight. I would describe this situation as at the least serious end of the types of cases which might fall into that category, namely the claimant sues “x limited” having intended to sue “xyx limited” in the mistaken belief that “x limited” is “xyx limited”.

7. I utterly reject any characterisation by B & K that the error was positively or intentionally pointed out by M & R by means of their letter headings and thus consciously ignored by Brabners. This could not be further from reality in my judgment. The first time that it can legitimately be said that the error was actively pointed out was on 31^st July 2020. In my judgment, it is highly likely that M & R became alive to the error by 11^th June 2020, when they began to press for the service of the claim form, described by Mr Owen as the setting of a trap, and I find they were potentially on notice of it on 1^st April 2020 with the service of the Claimant’s first application and draft order. On balance, I tend more to the feeling that the error was actually spotted later rather than sooner, and that fortifies me in my acceptance of the Claimants’ position that this was an easy error both to make and thereafter to overlook. I rather suspect that both sides equally failed to spot it for some time. For example, M & R themselves were quite capable of falling into an error of similar nature, see the heading of their letter of 11^th June 2020 [146].

8. As such, I now turn to considering whether I should exercise my discretion pursuant to CPR r.19.5(2).

9. I have equally no hesitation in so doing.

10. In my judgment, B & K through their solicitors, M & R, have been entirely apprised of the material factors throughout enabling them to defend this claim on the merits. They were aware that they were being pursued up to and including the site inspection in December 2019. They continued to respond, through M & R, in a material fashion, engaging with relevant issues, including enquiries as to the indemnity position arising in the subrogated aspect of the claim, from then until 11^th June 2020.

11. At some stage, it would seem, from the tenor of the submissions I have heard (the evidence of Mr Frankland being somewhat less forthcoming on this and on his general reaction to the error creeping into the correspondence), that B & K were alerted to the potential and potentially far-reaching legal advantage which could be achieved in successfully arguing this substitution point. At no stage, prior to the service of the claim form, were they minded to point out the error which, I have found, was likely to have come to their attention in advance of such service, given clear and obvious change of approach from 11^th June 2020 onwards, because any advantage would be lost, the Claimants being entitled to amend without permission prior to such service, CPR r.19.4(1).

12. The prejudice to B & K is, I conclude, minimal and, where material, ie anything which has accrued from June 2020 onwards, equally of their own making in deciding to take this point in the manner that they have.

13. Whilst there is no stricture within the Civil Procedure Rules 1998 for the parties to behave in a gentlemanly fashion, to use Mr Quiney’s word, the competitive and battlefield nature of civil proceedings must be seen to be tempered by the duty of the parties under r. 1.3 to help the Court to further the overriding objective and I am left pondering whether the type of battle engaged in here has been a proper use of both the resources of the Court and also of the financial resources of the parties, however much is at stake in these proceedings.

14. As such it would be entirely unjust for the Court to refuse to exercise its discretion. There was no material delay once the error with highlighted. I agree wholeheartedly with Mr Owen that this is a paradigm example of a situation where such discretion ought to be exercised and I give permission for the substitution sought accordingly.