JUDGE STRIKES OUT CLAIMS OF CLAIMANTS JOINED INTO ACTION AFTER CLAIM FORM WAS ISSUED: WHEN AMENDED PLEADINGS START TO RESEMBLE A RAINBOW

The case of  Various Claimants v G4S Plc [2021] EWHC 524 (Ch)is one that bristles with procedural issues.  Here we look at one issue – the judge striking out the claimants that were added after issue of the claim form and (arguably) after the limitation period had expired.  This was significant because these claimants added up to £92 million of the £102 million claimed.   This is a case that needs looking at more than once and I will return to the issues relating to relief from sanctions and “unidentified” claimants in later posts.  The basic message here is to highlight the dangers of  not including claimants at issue and of to seeking to rely on amendments after issue in circumstances where the limitation period has, or may have, expired.

 

 

Thus the claim form has 5 “Re-“s before the word “Amended” and a virtually complete spectrum of colours seldom seen on pleadings, and all before the claim form was served. The original number of claimants numbered 43. At its high point the claim form contained 182 claimants (after deletions and additions), before settling down to 93. (I take all these figures from the unchallenged account of Mr Rabinowitz. If it turns out they are a bit wrong it does not matter for the purposes of this application).”

 

THE CASE

The claimants brought actions alleging breaches by the defendant led to inaccurate share prices which led to losses.

Proceedings were issued and, after issue, numerous amendments made to the claim form.  Numerous new claimants were added.  The added claimants had a significant impact on the value of the claim they added up to £92 million of the £102 million claimed.

THE DEFENDANT’S CHALLENGE

After proceedings were served the defendant challenged the addition of the claimants who were added after issue of the claim form.

ADDING CLAIMANTS AFTER ISSUE AND THE LIMITATION ACT

 

The judge considered the relevant rules in detail.
The relevant statutory and procedural provisions
    1. As already indicated, the debate in this case turns around a handful of provisions of the CPR and the Limitation Act.
    1. Rules 17 and 19 deal with the addition of new parties. CPR 17.1 provides:
“17.1(1) A party may amend his statement of case at any time before it has been served on any other party”.
This is the provision relied on by the claimants as entitling them to have added (and subtracted) parties after issue of the claim form.
17.1(3) provides for the addition of parties after service:
“17.1(3) If a statement of case has been served, an application to amend it by removing, adding or substituting a party must be made in accordance with rule 19.4.”
17.2 provides a route for challenging any amendments carried out under 17.1:
“17.2(1) If a party has amended his statement of case where permission of the court was not required, the court may disallow the amendment.”
(2) A party may apply to the court for an order under paragraph (1) within 14 days of service of a copy of the amended statement of case on him.””
In this case the claimants say that G4S cannot challenge the addition of the added parties (or attempts to amend their names) because it did not apply under this rule within the 14 days or at all.
    1. CPR 17.4 provides for amendment after the expiry of the limitation period where the amendment is for purposes other than the addition or removal of a party, but it covers amending the name of a party. It is relevant to the 2011 point and the unidentified claimants point:
17.4(1) This rule applies where—
(a) a party applies to amend his statement of case in one of the ways mentioned in this rule; and
(b) a period of limitation has expired under—
(i) the Limitation Act 1980 …
(2) The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.
(3) The court may allow an amendment to correct a mistake as to the name of a party, but only where the mistake was genuine and not one which would cause reasonable doubt as to the identity of the party in question.
….
    1. Rule 19.4 deals with the “Procedure for adding and substituting parties”. It provides:
(1) The court’s permission is required to remove, add or substitute a party, unless the claim form has not been served.
(2) An application for permission under paragraph (1) may be made by—

(a) an existing party; or

(b) a person who wishes to become a party.

(3) An application for an order under rule 19.2(4) (substitution of a new party where existing party’s interest or liability has passed)—

(a) may be made without notice; and

(b) must be supported by evidence.

(4) Nobody may be added or substituted as a claimant unless—

(a) he has given his consent in writing; and

(b) that consent has been filed with the court.

    1. In the present case a point arises under 19.4 because it is said by G4S that there was no filed consent in writing to the addition of any of the added claimants.
    1. CPR 19.5 deals with adding or substituting parties after the end of a limitation period. By now its relevance will have become apparent. It provides:
“(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;

(b) the claim cannot properly be carried on by or against the original party unless the new party is added or substituted as claimant or defendant; or

(c) the original party has died or had a bankruptcy order made against him and his interest or liability has passed to the new party.

    1. CPR 17.4 and 19.5 reflect the provisions of section 35 of the 1980 Act. Its limits need to be borne in mind when construing the CPR, because it contains limits as to what can be done outside the limitation period.
“35. New claims in pending actions: rules of court.
(1) For the purposes of this Act, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced—

(a) in the case of a new claim made in or by way of third party proceedings, on the date on which those proceedings were commenced; and

(b) in the case of any other new claim, on the same date as the original action.

(2) In this section a new claim means any claim by way of set-off or counterclaim, and any claim involving either—

(a) the addition or substitution of a new cause of action; or

(b) the addition or substitution of a new party;

and ‘third party proceedings’ means any proceedings brought in the course of any action by any party to the action against a person not previously a party to the action, other than proceedings brought by joining any such person as defendant to any claim already made in the original action by the party bringing the proceedings.
(3) Except as provided by section 33 of this Act 17 or by rules of court, neither the High Court nor the county court shall allow a new claim within subsection (1)(b) above, other than an original set-off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Act which would affect a new action to enforce that claim. For the purposes of this subsection, a claim is an original set-off or an original counterclaim if it is a claim made by way of set-off or (as the case may be) by way of counterclaim by a party who has not previously made any claim in the action.
(4) Rules of court may provide for allowing a new claim to which subsection (3) above applies to be made as there mentioned, but only if the conditions specified in subsection (5) below are satisfied, and subject to any further restrictions the rules may impose.
(5) The conditions referred to in subsection (4) above are the following—

(a) in the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the original action; and

(b) in the case of a claim involving a new party, if the addition or substitution of the new party is necessary for the determination of the original action.

(6) The addition or substitution of a new party shall not be regarded for the purposes of subsection (5)(b) above as necessary for the determination of the original action unless either—

(a) the new party is substituted for a party whose name was given in any claim made in the original action in mistake for the new party’s name; or

(b) any claim already made in the original action cannot be maintained by or against an existing party unless the new party is joined or substituted as plaintiff or defendant in that action.”

THE JUDGE’S FINDINGS

In short the judge found that joinder of the “new claimants” could not take place

 

Conclusion on added claimants

    1. Drawing all those elements together I therefore conclude:
i) Joinder of the added claimants could not take place under 17.1 on its true construction.
ii) If that is wrong, then the defendant should be allowed to mount a challenge under 17.2.
iii) That challenge succeeds because there is an arguable limitation point which operates in relation to all the added claimants.
iv) In any event, the joinder fails for want of the filing of a prior signed consent.
v) Accordingly, the added claimants all fall to be struck out.