This is an appeal from a judgment of HHJ Havery given on 22^nd July 2004. It is with his permission.

The Judge permitted an amendment of the proceedings so that two new claimants could be added to the sole original claimant and for consequential amendments. The defendants say he had no power to do that or that if he did he ought to have refused permission on the grounds of discretion.

In 1998 an engineering contractor, Miller Civil Engineering Ltd. (“company A”) built a large tunnel as part of a waste water treatment plant. It involved the use of pipe sections made by the defendants. Some parts of the pipe were damaged during a jacking process. As a result a significant number of pipe sections had to be removed and replaced. This took time and caused additional cost.

The pipe sections were bought from the defendants. It is said that the damage which occurred to them was due to defective manufacture or design and that accordingly the defendants are liable for breach of contract in the sum of about £1/2m. The defendants say that the pipes were perfectly good. In addition, however the defendants say they have a technical defence. This appeal is only about the latter and specifically about whether or not it can be overcome by the joinder of parties.

The points arise in this way. Shortly before the expiry of the limitation period the original sole claimant (“company B”, then called Morgan Est (Scotland) Ltd.) issued the proceedings. The claim form, correctly, asserted that company B was formerly called Miller Civil Engineering Services Ltd. But it went on to assert, wrongly, that the original pipe supply contract was between B and the defendants and that it, B, was the company which had the trouble with the defective pipes and that it was it which suffered the consequential loss and damage.

By their defence the defendants took inter alia the point that the original contractor was company A called Miller Civil Engineering Ltd and not B. They said they were never in contractual relationship with B. They added denials that they were in breach of the contract they did have with A and that any claim by A would now be statute barred.

The response was the application the subject of this appeal. It was to add two claimants, namely company A and a company called Morgan Est plc (“company C”). This was accompanied by an explanation of the position. This was as follows:

Company A was the original contractor and purchaser of the pipes from the defendants. This was the company which had in fact suffered the damage and which accordingly originally owned the cause of action against the defendants;

By a first assignment, company A’s cause of action was assigned to company B, then called Miller Civil Engineering Services Ltd.

Company B then changed its name to Morgan Est (Scotland) Ltd.

Company B then assigned the cause of action to a further company Morgan Est Plc (“company C”).

Thus in law the position was that the legal title to the cause of action remained in A but the benefit of that cause of action was now vested in C.

So there were two distinct blunders:

The particulars of claim asserted, wrongly, that company B was the contracting party and made no mention of any assignment;

The solicitors were not aware of the second assignment to company C.

The application to join companies A and C and make appropriate amendments to the pleadings were made pursuant to CPR rules 17.4 or 19.5. The relevant rules read as follows:

a party applies to amend his statement of case in one of the ways mentioned in this rule; and

a period of limitation has expired under –

the Limitation Act 1980; or

the Foreign Limitation Periods Act 1984 or;

any other enactment which allows such an amendment, or under which such an amendment is allowed.

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.

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.”

The court may add or substitute a party only if –

the addition or substitution is necessary.

Rule 19.5 (note not rule 17.4) implements s.35 of the Limitation Act 1980. This reads as follows:

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 –

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

In the case of any other new claim, on the same date as the original action.

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

The addition or substitution of a new clause of action; or

The addition or substitution of a new party;

Except as provided by section 33 of this Act or by rules of court, neither the High Court nor any 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.

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.

The conditions referred to in subsection (4) above are the following –

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

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.

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 –

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

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.”

It may be noted that Rule 19.5 virtually adopts s.35 – and indeed neither side contended that the slight difference in wording made any difference to the meaning. It may further be noted that no “further restrictions” were imposed by the rules.

Prior to the 1980 Act there was no provision corresponding to its s.35. Limitation was governed by the Limitation Act 1939. The general rule for actions founded on simple contract or tort was that they:

Not infrequently the apparent black and white, unforgiving nature of that provision caused injustice. So, for instance, where a defendant was wrongly named in error. In 1965 that injustice was partly alleviated. But of course this could only be done within the constraints of the Limitation Act itself. Order 20 r.5 of the RSC provided:

The inwardness of this rule was that it allowed amendment of the name of a party even if that apparently meant that a new party was being named, if in reality you could see who was really meant. It can in retrospect be seen as an application of the Mannai Investments principle [1997] AC 749. A graphic everyday example is when you accidentally use the dog’s name when talking to your wife about your son – she knows who you really mean. The rule did not fall foul of the Limitation Act because you were not in substance bringing in a new party.

The rule was made pursuant to the powers contained in s.99(1)(a) of the Supreme Court of Judicature Consolidation Act 1925. The rule survived an early attack on its vires made in Mitchell v Harris Engineering[1967] 2QB 703 where the earlier cases of injustice are discussed by Lord Denning MR.

Rules were indeed made to implement s.35 of the 1980 Act after it came into force. But these were by way of amendment of RSC Ord. 15 r.6. It is not necessary to set these out for present purposes.

The courts considered rule 20.5 in a number of cases, the effective culmination of which was The “Sardinia Sulcis [1991] 1 Lloyd’s LR 201. Lloyd LJ in giving the leading judgment said this after quoting the rule:

Later he said (p.207):

He then grappled with the words identity of the person intending to sue…” (this being a “wrong plaintiff” case). He did so, however, by considering mainly “wrong defendant” situations. He said (p.207):

Lloyd LJ’s distinction between cases of right description/wrong name and a wrong description/wrong name served as the basis for the further application of RSC Ord. 20 r.5. The courts did not find it particularly easy to apply. Even in the Sardinia Sulcis itself it was applied liberally in favour of allowing amendment. What had happened was the vessel had been damaged in a collision with another vessel. The charterers had paid for the repairs. The charterers then started proceedings in the name of the owners against the owners of the other vessel. But the name was wrong: the original owner had merged with another company and ceased to exist. By Italian law it was that other company which was the owner of the vessel and of the right to sue. It was alleged against the solicitors that the claim was by a non-existent company and they were sued for breach of warranty of authority. An application to amend to put matters right was made. When Lloyd LJ came to apply his test he said this:

The Sardinia Sulcis interpretation of Ord.20 r.5 was further explained by Evans LJ in International Bulk Shipping and Services Ltd v Minerals and Metals Trading Corporation of India [1996] 2 Lloyd’s LR 474 at p. 480:

The first of these was Gregson v Channel Four Television 11 July 2000, The Times, 11 August 2000. The claimant had sued for an alleged libel which had been broadcast and put on the internet. The company sued was dormant but had a very similar name to the company responsible for the broadcast and internet site. Amendment was allowed under CPR rule 17.4(3). The defendant argued that rule did not apply and the case could only come within Rule 19.5. The point of this was that he could (or thought he could) then argue that the proceedings had not been served in time. May LJ said:

Peter Gibson LJ was to the same effect:

One might have thought that from then on the Sardinia Sulcis would have been considered as sunk. But it has, as will be seen, resurfaced or at least its ghost has.

May LJ went on in Gregson to note the difference between r.17.4 and r.19.5. He said:

It was in the next case that the Sardinia Sulcis reappeared. This was Horne-Roberts v SmithKline Beecham[2001] EWCA (Civ) 2006, [2002] 1 WLR 1662. The claimant alleged that he had been damaged by a vaccine. He sued Merck but, after the limitation period, discovered that the vaccine had been made by SmithKline. So he applied to substitute them for Merck and was allowed to do so pursuant to the rule 19.5 power. Keene LJ said this:

Mr Andrew Bartlett QC, for the respondents, submits that the Court of Appeal here proceeded on an erroneous assumption. The previous Ord. 20(5) was not intended to implement s.35 of the 1980 Act at all. It predates the Act and was intended to allow party substitution subject to what could be permitted by the Limitation Act 1939. The Sardinia Sulcis cannot be regarded as an authority on s.35. Hence it cannot be regarded as an authority on CPR 19.5 which implements s.35. Mr William Norris QC for the appellants found no answer to this. To the consequences of this I shall return.

Before passing from Horne-Roberts I should mention two other points. First that it shows the width of the Sardinia Sulcis test itself – to allow a complete stranger to be sued outside the limitation period is a very strong thing. The other is that the court (see per Keene LJ at para. 44) saw the backstop as being the discretion under s.35.

The next case referring to the Sardinia Sulcis was Parsons v George[2004] EWCA (Civ) 912[2004] 1 WLR 3264 at p. 3273. Here the claim was by a tenant against his landlord. The landlord was wrongly named in the claim form. The tenant was allowed pursuant to rule 19.5 to substitute the correct landlord who had not in any way been misled. Dyson LJ said:

Finally there is Kesslar v Moore & Tibbits [2004] EWCA (Civ) 1551. The claimant wished to sue her former solicitors for negligence. By the time she sued, the firm, called Kundert and Co., had ceased to exist. The former partners worked for a firm which called itself Moore and Tibbits (incorporating Kundert and Co). She used that name in her claim form. Amendment to substitute the names of the former partners was allowed pursuant to rule 19.5. Buxton LJ applied the Sardinia Sulcis right description/wrong name test. He said in para. 13:

Of more relevance to the present case is this sentence in para 23:

Sedley LJ agreed. He further had regard to the overriding objective. His concluding sentence is important. He said:

Latham LJ agreed with both judgments. I take this as leaving it open whether the Sardinia Sulcis test sets out the ambit of rule 19.5.

Before the Judge the principal argument was whether or not the case fell within the Sardinia Sulcis principle as embodying the limits of Rule 19.5. Before us, by his respondents’ notice, Mr Bartlett widened the debate – as to whether that principle truly embodied the limits of rule 19.5. In the alternative he submits that this case falls within the principle, supporting the Judge’s reasoning.

I have come to the clear conclusion that the Sardinia Sulcis right description/wrong name test does not set the limits of Rule 19.5. It was devised for a wholly different rule and not for s.35 of the 1980 Act under which rule 19.5 was made. If anything it is more relevant to r.17.4 with its requirement that the mistake be “not one which would cause reasonable doubt as to the identity of the party in question.” It is those words which echo the former Ord. 20 r.5 “not misleading or such as to cause any reasonable doubt as to the identity of the person intending to sue or, as the case may be, intended to be sued.”

In so holding I have of course considered whether I am bound by the use of the Sardinia Sulcis test in the trinity of post-CPR cases, Horne-Roberts, Parsons and Kesslar. I do not think I am for the following reasons:

They each make the fundamentally wrong assumption that the Sardinia Sulcis test was framed to apply a rule implementing s.35 of the 1980 Act. It was not.

In fact the use of that test made no difference, the words of the rule are at least wide enough to include it;

No member of any of the courts held explicitly that the limits of the rule were embodied by the test;

In the last of the cases, Kesslar, two members of the Court reserved the position;

The first of the cases, Gregson, made it clear that decisions under either rule 17.4 or 19.5 should turn on the new rules and not older authorities;

The Sardinia Sulcis test does not take into account the overriding objective.

I conclude that the right approach is to apply the words of rule 19.5 without regard to the Sardinia Sulcis but with regard to the overriding objective, bearing in mind however that the limit of the rule must be the limit set by the empowering section, s.35. Much the better approach is that set out in Gregson. Citation of old authorities under different rules simply obscures the debate. The Sardinia Sulcis should be allowed to sink back to the ocean bottom. It muddies the waters.

The same goes for the application of rule 17.4 – though the wording here is much closer to the old rule. And it should be remembered that there may be overlap between the two rules (see Gregson). It does not matter if there is, save possibly on some point of discretion or service, neither of which arise here.

With that I turn to see whether rule 19.5 applies to this case. One goes through a series of steps:

There is no reason to construe “in mistake” restrictively. On the contrary it is important to remember that the source of the rule was the 1980 Act which had the obvious intention of liberalising the position from that under the 1939 Act. Likewise the overriding objective of doing justice is likely to be undermined if one gets finicky about different sorts of mistake. The jurisdiction is for putting things right.

In the present case there was clearly a mistake about naming B. The very form of the particulars of claim suggest that it was A that was intended to be named (see Buxton LJ quoted in para. 28 above). The rather meagre, muddled and second-hand evidence in support of the application by a Mr Sayers does say this much:

Assuming that was so it is a little difficult to see why the assignment to B was not pleaded. A more logical view is that it was intended to name A. But I do not think it matters – there was a clear mistake one way or another. Things can and should be put right by substituting A for B. There is no prejudice to the defendants. They are deprived of an unmeritorious defence arising solely from a blunder by the other side – that does not count as prejudice.

Mr Norris objected that if one says “I intended the claim to be by the party holding the right to the claim” one is using the wide test expressly eschewed by Lloyd LJ in the Sardinia Sulcis. That may be so, but why does that matter if no-one is prejudiced?

Actually, however, I would, if necessary, hold that the case does fall within the Sardinia Sulcis. I need say no more than that I think the learned Judge was right when he said:

Accordingly I would allow the substitution of B by A. As to C, the current beneficial owner of the right to sue, it can and ought to be joined pursuant to the provisions of rule 19.5(3)(c). As beneficial owner it ought to be present so that it will be bound by the result, see Three Rivers District Council & Ors v Governor and Company of the Bank of England [1996] QB 292 at p.313 (per Peter Gibson LJ). I did not understand Mr Norris to object to such joinder if A is joined.

Mr Norris had a second point – that in respect of a case said to be within r.19(3)(a) only substitution of a party can be permitted. It falls away if B is taken out as a party, as Mr Bartlett was happy should happen. So there is no need to rule on the point.

Finally Mr Norris had two points on discretion. First that the evidence in support and by way of explanation of the mistake was, as I have already said unsatisfactory and second that the blunder was of the claimants’ own making. The Judge considered both points and nonetheless allowed the amendment. I can see no error of principle here – indeed the second error (own making) will generally be the case where someone is trying to put something right.

Subject, therefore, to B being removed from the case, I would dismiss the appeal and allow the case to go forward in the names of A and C.

I agree.