Harland & Wolff Pension Trustees Ltd v AON Consulting Financial Services Ltd.

This is an appeal (brought with the permission of the Master) from the judgment of Master Bowles dated 3 September 2008 (“the Judgment”), dismissing the application of the Appellant, Harland & Wolff Pension Trustees Ltd (“the Trustee”), to amend certain provisions of the Particulars of Claim (“the PoC”). The Master allowed certain uncontroversial amendments to be made, but refused to allow the key amendments, which can be found at paragraphs 21-25, 28, 29(ii) and 30(ii) of the draft amended PoC on the grounds that they introduced a new cause of action not arising out of the same or substantially the same facts and hence that the Court had no jurisdiction to allow them. The question on appeal is this: Was the Master correct to hold that he had no jurisdiction to allow the amendments which he refused?

The claim is brought by the Trustee as trustee of the Harland and Wolff Pension Scheme (“the Scheme”) against the Respondent, Aon Consulting Financial Services Ltd (“Aon”), who acted as pension advisers to the Scheme. It is a claim for damages for professional negligence in implementing what is known in pensions jargon as “equalisation”, ie the replacement of unequal normal retirement ages for men and women with an equal retirement age, as required by European law. Christopher Nugee QC and Paul Newman (who since the hearing has also attained the rank of QC) appear for the Trustee. Mr Stallworthy appears for Aon.

The Scheme was established in 1971 and at the material time was governed by a Definitive Deed and Rules dated 6 September 1988 (“the 1988 Deed”). It was by then a conventional final salary occupational pension scheme under which a Member retiring from Service at Normal Retirement Date (“NRD”) was entitled to a pension based on a proportion of Final Pensionable Pay for each year of Pensionable Service. A member retiring before NRD (but after age 50) could receive an early retirement pension but this would be reduced on an actuarial basis to take account of early payment.

NRD was defined as: age 65 for males (prior to April 1986) and 63 thereafter; and age 60 for females. Mr Nugee explains that, at the time, it was very common for UK pension schemes to have unequal retirement ages (because of the influence of the unequal retirement ages for the State Pension).

On 17 May 1990, in Barber v Guardian Royal Exchange (“Barber”) the European Court of Justice held that occupational pension benefits were “pay” for the purpose of article 119 of the Treaty of Rome and hence had to be equal as between men and women. This meant, among other things, that a man and a woman retiring at the same age had to receive the same pension for the same service. This was not the case with a scheme with unequal normal retirement ages such as the Scheme; Barber therefore effectively required that men and women should have the same retirement age. To limit the impact of the cost of the decision to schemes and employers, the ECJ decided that this requirement should only apply from the date of its decision, ie 17 May 1990.

Aon (then called Godwins) was retained by the Trustee to provide actuarial and pension benefit consultancy advice and services to the Scheme, including advice and services relating to the equal treatment requirement pursuant to Barber. It issued a paper on equalisation to the Trustee for a meeting on 25 March 1993. This put forward some proposals for the Trustee to consider. The main point for consideration was the adoption of a common retirement age of 63 for service after 17 May 1990, with protection for benefits earned by females prior to 1990.

At the meeting on 25 March 1993 the Trustee approved the proposal and resolved to equalise the NRD of male and female members of the scheme by increasing the NRD for women to age 63, such increase only applying in relation to service on and after 17 May 1990.

Pursuant to the power of amendment in rule 32 of the 1988 rules, on 7 September 1993 the Trustee executed a new deed and rules (‘the 1993 Deed and Rules’) which purported to effect the necessary equalisation by changing the NRD for female members to age 63 for pensionable service after 17 May 1990. The amendment was thus intended to have retrospective effect.

Although this retrospective increase in the NRD of female members was lawful and valid under domestic English law it was invalid under European law. I so held in my decision on a preliminary point. My judgment, dated 19 June 2006, can be found at [2006] EWHC 1778, [2007] ICR 429 and [2006] Pens LR 201. The period (from 17 May 1990 to the date of equalisation) is known in pensions jargon as the “Barber window” and the practical effect for the Scheme is that during the Barber window men are entitled to accrue benefits on the basis of an NRD of age 60.

The Trustee’s case, however, is that it was unaware that this backdating was ineffective and so administered the Scheme as if NRDs had been effectively equalised at 17 May 1990. It says that it did not discover the position until July 2001 when it was advised that the purported backdating was ineffective, with the result that the Barber window remained open until 7 September 1993 (the date of the 1993 Deed), and that the Scheme had several more millions of pounds of liabilities than had been appreciated.

The Trustee’s essential complaint now is that, as a result of Aon’s advice, the Trustee thought that this retrospective change was a legal, effective and inexpensive way of equalising retirement ages for male and female members of the Scheme; in fact the attempt to backdate to 1990 was ineffective which, on the Trustee’s case, meant that the true cost to the Scheme of equalisation was very much larger than Aon advised or the Trustee appreciated. The Trustee contends that Aon should have advised, but failed to so advise, that the period of service for which benefits of male members should be equalised to the level of benefits of female members did not end until the date of the execution of the 1993 deed and rules on 7 September 1993 rather than the date on which the 1993 Deed and Rules purported to take effect in respect of the change in NRD, namely 17 May 1990.

The Claim Form was issued by the Trustee on 29 April 2004 and the PoC were served on 23 August 2004. The Defence was served on 19 October 2004. A short Reply was served on 6 December 2004.

The PoC pleaded the facts as summarised above, namely: the effect of the Barber decision (paragraph 2); Aon’s retainer (paragraph 3); Aon’s duty of skill and care (paragraph 4); the unequal NRDs under the 1988 Deed (paragraph 5); Aon’s advice on equalisation for the 25 March 1993 meeting (paragraph 7); the Trustee’s resolution at that meeting (paragraph 8); the 1993 Deed (paragraph 11); the failure of the 1993 Deed to treat male members as if they had a right to retire at 60 for post-17 May 1990 service (paragraph 12(ii)(a) and (iii)); the fact that this was in breach of the European law requirement to equalise benefits upwards during the Barber window (paragraph 13(ii) and (iii)); and the allegation that Aon had acted in breach of its duties of care in failing to advise the Trustee appropriately as to equalisation and otherwise (paragraph 14). Certain other complaints which appear in the PoC are no longer being pursued.

I draw attention to the fact that paragraphs 20(ii)(b) and (c) of the original PoC made these two relevant allegations. First, in relation to the cost to the Scheme of equalisation during the Barber window, it was alleged that, if this liability had been recognised and valued at the date of the 1993 Resolution, the Trustee would have required further contributions from the Employer; secondly, it was alleged that, based on Aon’s advice, the Trustee resolved to equalise retirement ages at age 63 “on the basis that the cost would not be material as the vast majority of members would not be affected. This was not the case… Had the Trustee been given the correct advice and estimated cost, it would have sought ways to offset the cost of funding this additional liability by reducing future service costs…….”.

I do not propose to go into any more detail than that in relation to the PoC. Mr Stallworthy has gone into these PoC in considerable detail to demonstrate what is and what is not pleaded. There can be no doubt that the thrust of the claim relates to the alleged failures of Aon validly to effect equalisation although it has to be accepted by him that complaint is made about the advice leading up to the equalisation amendment. He is correct, however, when he says that the original PoC make no allegations of negligence about events after the execution of the 1993 Deed and Rules. Thus he emphasises that the loss claimed includes contributions which it is alleged the Trustee would have obtained from the Scheme Employer had the extra liability been recognised and valued at the date of the 1993 Resolutions (Mr Stallworthy’s emphasis).

Following the trial before me on the preliminary issue, two matters came to light which the Trustee wished to plead as set out in the draft amended PoC. Only one remains relevant on this appeal. The other amendment is not opposed since it has the effect of reducing the amount of damages claimed.

The matter which does remain live relates to a meeting of the Trustee held on 7 December 1993 at which the Trustee approved increases to pensions in payment. These increases had been agreed in principle at a previous meeting of the Trustee on 7 September 1993 and had been estimated to cost approximately £2.5m but implementation of the increases had been deferred pending completion of an exercise to identify other potential calls on the Scheme surplus. That exercise was carried out by Aon which produced a paper dated 2 November 1993 for the meeting on 7 December 1993. This paper showed an estimated surplus as at 1 January 1993 of £4.5m. It considered various possible applications of this surplus, one of which was the cost of equalisation estimated at £260,000. This item appeared under the heading “Barber Judgement” and was stated to be “required”.

The Trustee now wishes to plead that, if Aon had advised the Trustee appropriately in March 1993 and in relation to the making of the 1993 Trust Deed and Rules in relation to equalisation in November and December 1993:

Mr Nugee is at pains to point out that the Trustee does not allege that Aon got its November figures wrong as a calculation. The complaint is that it did not apply a correct basis: the valuation was wrong precisely because Aon assumed that equalisation had been effectively backdated when, as is now established, the purported backdating was invalid.

Aon objects to these amendments. It says that they relate to a new cause of action which was time-barred when they were sought to be made, the application to amend being dated 15 February 2008. The Master agreed and refused permission to allow these amendments

In his skeleton argument, Mr Stallworthy draws attention to a letter from PricewaterhouseCoopers Legal to Aon’s solicitors dated 27 February 2007. It revealed that the Scheme’s NRD was equalised not by the Trustee’s 1993 Resolutions on 25 March 1993 or by the 1993 Deed and Rules, but rather by a resolution of the Scheme’s Employer on 24 March 1992 (“the Employer’s Resolution”), that is to say a year earlier. That of course meant the Barber window closed on 24 March 1992 rather than 7 September 1993.

He also identifies a raft of deletions to which no objection is made but which are indicative, he says, of the really significant change in the case which the amendments bring about, and a raft of new allegations. He says these are sought to be made following the revelation of the Employer’s Resolution. Whether or not that was the genesis of the amendment proposal, I do not know. But what is clear is that these proposed amendments are substantial and include the deletion of a significant part of the negligence claims against Aon. Nonetheless, the central plank remains namely that if Aon had advised about equalisation properly in 1993 up to and until the 1993 Deed and Rules, and had drafted those documents in a way effective to satisfy the equalisation requirements, certain actions would have been taken which were not taken. Thus it is alleged that the common retirement age would have been moved to 65 rather than 63 with a corresponding reduction in Scheme liabilities; and it is said that further contributions could and would have been obtained from the Employer which can no longer be obtained. The claim for increased administration costs also remains.

The following proposed amendments are, however, opposed:

The new paragraph 28 reads as follows:

“If Aon had advised the Trustee appropriately (as it should have done but failed to do as pleaded in paragraph 27 above), it would when valuing the Scheme and advising the Trustee of the cost of the liability to the Scheme of the benefit adjustments for the Barber window, have advised the Trustee of the true and accurate cost to the Scheme of such liability. In fact it did not do so but failed properly to recognise or value the true cost of the liability. The Trustee will rely on its failure to do so:

(i)

as an example of Aon’s failure to advise the Trustee appropriately as to the equalisation of members’ retirement ages; and/or

(ii)

as a consequence of its breaches of duty as alleged in Paragraph 27 (i) to (iii) above; and/or

as a further breach of its contractual and/or tortious duties of care.”

It is not, of course, possible to understand the full import of paragraph (ii) without knowing what is in paragraph 27. This alleges that Aon was in breach of its duties of care referred to in paragraph 4 (which sets out the general duty of care);

“by failing to advise the Trustee

(i)

appropriately as the equalisation of members’ retirement ages;

(ii)

that the Trustee’s proposed treatment of certain categories of members of the Scheme was contrary to the equal treatment requirements; and

(iii)

to seek legal advice as to the lawfulness of the 1993 Resolution {or the 1993 Deed and Rules}” [The Master refused to allow the amendment to add the words in the {} brackets. There is no appeal from that refusal.]

As the PoC originally stood, the context of paragraph 27 (paragraph 14 of the original PoC) was rather different from its context in the proposed PoC. In the original PoC, the only facts and matters relied on related to the advice given in relation to, and the drafting of, the equalisation amendments in September 1993. Nothing was pleaded in relation to events thereafter. However, in the context of the proposed paragraphs 21 to 25 of the amended PoC (which the Master disallowed) paragraph 27 can be read as an allegation that Aon was also in breach of duty in failing to give the advice set out in paragraph 27 at the time of the events set out in paragraph 21 to 25. The introduction of paragraphs 21 to 25 (were I to allow it) would arguably have a consequential change in the meaning of paragraph 27. Accordingly, Mr Nugee now accepts that paragraph 14 of the original PoC is to be read as if the words “in March 1993 and in drafting the 1993 Deed and Rules” had appeared after the words “Aon was” at the beginning of paragraph 14 and that the proposed paragraph 27 should include words to make that clear. Further, the words “in November 1993” should appear after the words “have advised”. What consequence this has for the amendment application I will consider in due course.

The reasons for the Master’s decision appear in the following few paragraphs.

First, he approached the issue on the basis that if there were a new cause of action in the proposed amendments, it should be assumed to be statute-barred for the purposes of the application; any argument that the claim was not statute-barred under s14A of the Limitation Act 1980 (“LA 1980”) was not appropriate to be dealt with on this application but would have to be dealt with in separate proceedings. Accordingly, the jurisdiction to allow the amendments only arose if (i) they did not give rise to a new cause of action or (ii) any new cause of action arose out of the same, or substantially the same, facts as already pleaded: paragraphs 24-27 of the Judgment.

The Master held that the amendments gave rise to a new cause of action. It seems from paragraphs 28-32 of the Judgment that this was not because they raised an additional head of loss, or a different duty of care owed by Aon. Rather it was, according to paragraphs 33-36 of the Judgment, because the matters alleged in respect of the December 1993 meeting constituted an allegation of a breach of duty different from that already pleaded, being matters “of such a nature as to render the cause of action in tortious breach of duty to which the breach is said to relate a different cause of action than that originally pleaded”.

He drew a distinction as he saw it between two breaches:

The Master stated that that decision was made on the basis of further advice received from Aon as a result of the further exercise carried out by them. He considered it to be clear on that basis that the conduct, said to give rise to the consequent alleged loss of £6.5m, was entirely separate and distinct and, therefore, constituted a different breach of duty other than that originally pleaded. It was by reason of the new matters pleaded – the incorrect and allegedly negligent advice given to the meeting in December 1993 – that the Trustee incurred a cost to the Scheme of £2.5 million which it would not otherwise have incurred.

The Master then considered the way in which the claim was put in paragraph 28 of the draft amended PoC, which I have already set out. The Master commented on these in paragraphs 37-46 of the Judgment as follows:

He accordingly concluded in paragraph 43 of the Judgment that the proposed amended pleading did plead a new cause of action. It pleaded a different breach of duty from that originally pleaded, giving rise to a different loss from that originally pleaded, and did not simply plead a new example, or instance, of an already pleaded breach, or, merely add a new head of loss to those said to arise from the original breach. He repeated this conclusion in paragraph 46 of the Judgment.

He then turned to consider whether the new cause of action arose out of the same, or substantially the same facts as already pleaded. He considered it to be clear (see paragraphs 47 and 48) that the new cause of action did not arise out of the same or substantially the same facts as already pleaded: and that nothing in relation to the December 1993 advice could be found in the original pleading. He considered (see paragraph 55 of the Judgment) that the new claim would require Aon to investigate matters going significantly beyond the ambit of those requiring to be investigated under the original claim, namely the facts relating to and arising out of the December 1993 meeting; this would, in his view, be contrary to the policy of Section 35(1)Limitation Act 1980 as identified by him in paragraphs 53.

Although his decision on his absence of jurisdiction to allow the amendments strictly rendered the consideration of the exercise of discretion unnecessary, the Master said that he would, had he had such jurisdiction, have exercised his discretion against allowing the amendments, due to the prejudice suffered by Aon by the passage of time which had elapsed since the December 1993 advice as appears from paragraphs 58-65 of the Judgment.

The Trustee submits that the Master erred in:

Mr Stallworthy supports the Master’s decision for very much the reasons which the Master gave whilst articulating them in different language.

Before considering the parties’ respective positions in detail, I should say something about the relevant law.

Section 35(1) LA 1980 provides that any “new claim” made in the course of an action shall be deemed to be a separate action. As to the date of commencement of the separate action, paragraph (b) of that subsection deems the new claim to have commenced on the same date as the original action.

Sections 35(3) –(5) LA 1980 provide:

“(3)

Except as provided … by rules of court, neither the High Court nor any county court shall allow a new claim within subsection (1)(b) above … 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. …

(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 …”.

A “new claim” is defined in section 35(2). Relevantly, it provides:

“(2)

In this section a new claim means … any claim involving …

(a)

the addition … of a new cause of action…..”.

The power of the Court to allow an amendment is found in CPR 17.4. It provides:

“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 meaning of “new claim” within that rule is clearly the same as a “new claim” within section 35(2) and so envisages the addition of a new cause of action. The term “cause of action” itself, however, is not defined in LA 1980 or in the CPR. It can mean different things in different contexts. Mr Stallworthy has referred me to what some judges have had to say about this:

Diplock LJ’s definition was approved in Steamship Mutual Underwriting Association Ltd v Trollope & Colls (City) Ltd (1986) 6 Con LR 11 at 30; (1986) 33 BLR 77. In relation to that latter case, May LJ made some apposite and helpful observations at 33 BLR p 98 where, after noting that the original claim related only to defective air-conditioning in the building and that the original cause of action was restricted to that, he said this:

“I do not think one can look only to the duty on a party, but one must look also to the nature and extent of the breach relied upon, as well as to the nature and extent of the damage complained of in deciding whether, as a matter of degree, a new cause of action is sought to be relied upon. The mere fact that one is considering what are, as it is said, after all only different defects to the same building, does not mean in any way that they are constituents of one and the same cause of action.

Thus I conclude that whether there is a new cause of action in any circumstances is a mixed question of law and fact”.

On the facts of that case, the Court concluded that the claims in respect of defective air-conditioning and defective brick-work were claims in respect of different causes of action. This was so notwithstanding that these contractual claims arose out of the same contract. In effect, there were separate defects giving rise to one or more breaches of contract causing separate losses and thus giving rise to different causes of action.

Letang v Cooper was also considered by Millett LJ in Paragon Finance plc v D B Thakerar & Co [1999] 1 AER 400 at p 405. He did not think that Diplock LJ was saying anything different from Brett J:

“However the definition is formulated, only those facts which are material to be proved are taken into account. The pleading of unnecessary allegations or the addition of further instances or better particulars do not amount to a distinct cause of action. The selection of the material facts to define the cause of action must be made at the highest level of abstraction”. (see p 405 e-f).

Thus in Letang v Cooper, the question was whether a claim for damages for personal injury sustained as a result of the defendant’s negligence was a claim for ‘damages for negligence’ within section 2(1) Limitation Act 1939 as amended. Let me quote what Millett LJ says about this:

“The question in Letang v Cooper was whether a claim for damages for personal injuries sustained as a result of the defendant's negligence was a claim for 'damages for negligence' within the meaning of s 2(1) of the Limitation Act 1939 as amended by s 2 of the Law Reform (Limitation of Actions) Act 1954 even though the claim was expressly pleaded in trespass. Diplock LJ ([1964] 2 All ER 929 at 936, [1965] 1 QB 232 at 245) held that where actual damage in the form of personal injuries has been sustained by the plaintiff 'every factual situation which falls within the description “trespass to the person” is, where the trespass is unintentional, equally aptly described as negligence' (my emphasis). His reasoning was: (i) trespass to the person may be intentional or unintentional; (ii) intent is therefore not one of the facts which is material to be proved to constitute the cause of action; (iii) accordingly unintentional trespass may be equally aptly described as negligence.

But it is important to observe what Diplock LJ was not saying. He was not saying that trespass and negligence are the same cause of action, or that intentional trespass could equally aptly be described as negligence, or that a cause of action in which it was material to prove intent could equally well be described by the name of a cause of action in which it was not. This would make any distinction between different causes of action illusory and destroy the practical utility of the concept.”

Even so, “cause of action” can be used in a different sense which separates the concept of the cause of action from the facts giving rise to that cause of action. In this sense, a given set of facts can give rise to different causes of action. The present case provides an example. If Aon have been negligent, then the Trustee (subject to question of limitation) has a cause of action in contract and a cause of action in tort. In other words, “cause of action” can be used in the sense of the juridical basis for the particular remedy sought in the context of the facts established.

It is not altogether clear that the classic definition of cause of action is entirely apposite in the context of section 35 LA 1980. I share the unease which Robert Walker LJ expressed in Smith v Henniker-Major & Co [2003] Ch 182 at p 21 paragraphs 95-6 which are worth setting out in full:

“95 I have to say that in the context of section 35 of the Limitation Act 1980 I am uneasy about the process of lifting either of these classic definitions out of the legal lexicon, as it were, and reading them into the language of section 35(5)(a). The notion of "a factual situation" which "arises out of the same facts or substantially the same facts" as another set of facts is not an easy one to grasp. Probably the answer lies in Millett LJ's observation, in Paragon Finance plc v D B Thakerar & Co [1999] 1 All ER 400, 405: "The selection of the material facts to define the cause of action must be made at the highest level of abstraction."

96 So in identifying a new cause of action the bare minimum of essential facts abstracted from the original pleading is to be compared with the minimum as it would be constituted under the amended pleading. But in applying section 35(5)(a) the court is concerned on a much less abstract level with all the evidence likely to be adduced at trial: see Goode v Martin [2002] 1 WLR 1828, 1838, approving Hobhouse LJ's observation in Lloyds Bank plc v Rogers The Times, 24 March 1997; Court of Appeal (Civil Division) Transcript No 1904 of 1996 : "The policy of the section is that, if factual issues are in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts."”

Mr Nugee relies on Aldi Stores Ltd v Holmes Buildings plc [2003] EWCA Civ 1882 (“Aldi”) at [26]-[28] per Dyson LJ to establish the proposition that, in the case of a negligence claim, the introduction of a new head of loss (even if involving new allegations of causation) does not involve the introduction of a new cause of action.

So far as material for present purposes, all that needs to be said about the facts of this case is that it concerned a design and build contract between Holmes Ltd (the claimant) and Laporte Industries Ltd, the owner of a proposed retail park, whereby Holmes agreed to construct a number of units. Holmes did this on the advice of structural engineers, WSP Ltd, as to the nature of the site. Under the terms of the agreement with Laporte, WSP were required to, and did, enter into deeds of warranty with two proposed lessees, Aldi and B&Q. The works were completed in 1995. On June 22, 2001 Aldi issued proceedings against Holmes under its deed of warranty, alleging defects in its premises. On September 28, 2001 Holmes issued Part 20 proceedings against WSP alleging negligence and breach of contract and claiming damages equal to an indemnity for any damages recoverable by Aldi, alleging that the defects were due to bad advice provided to it by WSP. On May 7, 2002 B&Q also issued proceedings against Holmes, again alleging defects in its unit. On July 10, 2002 Holmes duly brought Part 20 proceedings against WSP in respect of this claim, again alleging bad advice as to the nature of the site.

To avoid a possible limitation defence as regards the B&Q claim, Holmes sought permission to amend its Part 20 claim in respect of its liability to Aldi so as to include in addition its liability to B&Q. WSP argued that this was impermissible, since (a) it involved the addition of a new and statute-barred claim within section 35(2) LA 1980 (b) the B&Q claim did not arise out of substantially the same facts as the Aldi claim and (c) in any case the court should exercise its discretion to disallow the amendment. The Court of Appeal allowed the amendment.

That was a case where no new duty and no new breach of duty was alleged; Dyson LJ saw the amendments as doing no more than add new heads of loss to those already pleaded. The amendments simply sought to say that, as a result of WSP’s negligence, Holmes had suffered damage not only in the form of its liability to pay damages to Aldi but also in the form of its liability to pay damages to B&Q.

Dyson LJ accepted that to prove its loss in respect of liability to B&Q, Holmes would need to prove causation. But that was not considered enough on the facts of the case to show that there was a new cause of action. This was for two reasons.

The first reason was this: the essential reliance, already pleaded, was the reliance on WSP’s advice in entering into the building contract. Notwithstanding that the Aldi guarantee and the B&Q guarantee were entirely different guarantees, they both stemmed from the Holmes’ obligation under its contract with Laporte to enter into them. Once the building contract was made, then it was foreseeable that, unless Holmes was to act in breach of its contract with Laporte, it would execute the deeds of warranty. The case was different, on Dyson LJ’s analysis, from cases such as Gordon v Wheatley & Co (a firm) [2000] Lloyd’s Rep PN 605 (discussed at paragraph 23 of the judgment) where “the essential complaint is that the defendant has given allegedly negligent general advice in reliance upon which the claimant has voluntarily entered into a series of transactions”.

I was not taken to Gordon v Wheatley & Co by counsel. Having looked at it, I do not find it of direct assistance since the issue there was when the loss accrued, the choice being the various dates outside the limitation period when each transaction took place (as the defendant submitted) or was it at some later date within the limitation period when the potential risk crystallised into an actual loss. It does not assist in the present case in deciding whether the new claim can be said simply to claim an additional head of loss arising out of the same breach of duty giving rise to no new cause of action. The defendant did not argue that there was only one cause of action which accrued when the first transaction was entered into. It did not need to do so because, if the claimant were right, even that cause of action would not have been time-barred. Further, the defendant was the adviser at the time of each transaction and it would no doubt have been argued that the defendant was under a continuing duty to advise in relation to the Financial Services Act.

The second reason given by Dyson LJ in Aldi was in essence a factual assessment. Dyson LJ gave the example of a person claiming damages in negligence for personal injury who does not claim loss of earning; he subsequently loses his job and seeks to add a claim for loss of earnings. He would have to prove that the defendant’s negligence caused the loss of earnings but that would not mean that there was a new cause of action. He also cites by way of example Stock v London Underground Ltd (30^th July 1999, unreported, Court of Appeal). This was decided in the context of payment into court in respect of a cause of action rather than in the context of limitation; but it shows that a single breach of duty, negligent tunnelling, could result in a single cause of action notwithstanding the huge disparity in the nature and extent of two items of loss claimed.

I do not think that Aldi goes quite as far as Mr Nugee submits. I would, however, agree with him to this extent: I consider that his proposition is correct provided that the substance of the new claim can be pleaded simply as a consequence of the facts originally pleaded. For example, in a case of negligent advice, it is permissible to expand the relief to claim further loss arising as a consequence of actions taken in reliance upon the advice where those actions and reliance were pleaded in the original claim. But the limits of the proposition must be kept carefully in mind; the court must be satisfied that the amendment to the pleaded case is simply to add a new head of loss and not to introduce, for example, a new act of negligence which is relied on other than as part of the chain of causation leading from the original breach.

There may well be a difference in this context depending on the juridical basis for the relief claimed. A cause of action in contract is, generally speaking and certainly for limitation purposes, complete when the breach takes place and it is not necessary to show damage: see for instance Chitty on Contracts 30^th ed Vol 1 at 28-032. Something which gives rise to a breach of contract can in some cases also give rise to breach of a common law duty of care but a cause of action in negligence is only complete when damage is established. It is possible in appropriate cases to find concurrent causes of action in contract and tort with the possibility, therefore, of different limitation periods.

Where a claim is founded in contract, then a single action or failure which gives rise to a breach of contract can, it seems to me, give rise to only one cause of action in contract. The question will be whether a loss which is claimed was caused by the breach. Whether, in a particular case, there is a single action or failure may not be absolutely clear and the court will need to decide. Thus in the case of defective construction work, there may be a single breach of contract in failing to deliver a building complying with the contractual specification (giving rise to one cause of action subsuming all the defects) or a series of breaches in which different categories of defect (air conditioning, brickwork, design) give rise to separate causes of action. But where the case is analysed as a single action or failure, there is only one breach of contract and, so it seems to me, only one cause of action in contract.

It does not necessarily follow, in a particular case, from the fact that there is only one cause of action in contract in relation to separate heads of loss claimed that there is a single cause of action in tort as well in relation to those separate heads of loss. Take, for instance, a case of solicitor’s negligence. The solicitor gives one piece of advice as time T1 which is negligently wrong. The client acts on that advice shortly afterwards, as time T2. Then without taking further advice, perhaps even after the retainer has come to an end, the client acts on that advice again at time T3. As a result of each act of reliance on the advice, the client suffers loss.

It seems to me that there is a single breach of contract at time T1 and the question of recovery of loss is simply one of causation. There is a single cause of action. The client may face all sorts of difficulties in recovering in respect of the second action at time T3, for instance arguments about whether he was entitled to rely on the advice, especially if the solicitor was no longer retained. Indeed, he would also face difficulties if he obtained confirmation of the advice just before time T3 since the question would then arise whether the client in fact relied on the original advice at all at that time. But as a matter of pleading, there would be nothing objectionable in a contractual claim seeking to recover the second loss in respect of the single breach of contract and there could be no doubt, I think, that each head of loss is recoverable, if recoverable at all, by virtue of the same cause of action. In this sort of context, see also paragraph 126 below.

It is also clear that there is, in that example, only a single breach of duty which could give rise to a claim in negligence. However, it will be a mixed question of law and fact (the details of which would need to be investigated) whether the two losses claimed are part and parcel of the same cause of action. It might be said that the new reliance on the original advice, giving rise to an entirely different loss, is enough to constitute a separate cause of action. In other words, reliance in a contractual context can be seen as part of the issue of causation of loss and not as a component of the cause of action for limitation purposes; but that same reliance may, in the context of the tort of negligence, be seen as giving rise to a separate cause of action.

With that example is to be contrasted, I consider, an example where the second action at time T3 is taken, not in reliance upon the original advice, but on the assumption that what was done at time T2 pursuant to that advice was valid. It is far more difficult, in a case such as that, to see how there could be a separate cause of action; the cause of action is constituted by the first loss and the question is then simply one of causation.

None of this is to say that damages are not an element which needs to be taken into account in determining whether there is a new cause of action. The nature of the damage may show that there must be a new cause of action because it could not fall within a cause of action already pleaded. In that context I bear in mind Mr Stallworthy’s references to Darlington v O’Rourke James Scoffield & McCarthy [1998] EWCA Civ 1664, [1999] Lloyds Rep PN 33 and Steamship Mutual Underwriting Association Ltd v Trollope & Colls (City) Ltd. In the former, Sir Iain Glidewell (with whom the rest of the Court agreed) contemplated a comparison of the unamended and the amended pleadings in order to determine (a) whether a different duty is pleaded (b) whether the breaches pleaded differ substantially; and where appropriate (c) the nature and extent of the damage of which complaint is made. In the latter, May LJ (with whom the rest of the Court agreed) did not think that one could look only to the duty on a party, but one must look also to the nature and extent of the breach relied upon, as well as to the nature and extent of the damage complained of in deciding whether, as a matter of degree, a new cause of action is sought to be relied upon.

As to the issue of whether a new cause of action arises out of the same or substantially the same facts as are already in issue, the legislative purpose should be borne in mind. That is explained by Colman J in BP Plc v Aon Ltd [2005] EWHC 2554 at [52]-[55]:

“52 At first instance in Goode v Martin [2001] 3 All ER 562 I considered the purpose of section 35(5) in the following passage:

Whether one factual basis is "substantially the same" as another factual basis obviously involves a value judgment, but the relevant criteria must clearly have regard to the main purpose for which the qualification to the power to give permission to amend is introduced. That purpose is to avoid placing a defendant in the position where if the amendment is allowed he will be obliged after expiration of the limitation period to investigate facts and obtain evidence of matters which are completely outside the ambit of, and unrelated to those facts which he could reasonably be assumed to have investigated for the purpose of defending the unamended claim.

53 In Lloyds Bank plc v Rogers (No.1) [1997] TLR 154 Hobhouse LJ said of section 35:

‘The policy of the section was that, if factual issues were in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts.’

54 The substance of the purpose of the exception in subsection (5) is thus based on the assumption that the party against whom the proposed amendment is directed will not be prejudiced because that party will, for the purposes of the pre-existing matters [in] issue, already have had to investigate the same or substantially the same facts.

55 It follows that if that party would not previously have had to investigate the same or substantially the same facts for the purposes of a pre-existing claim because he never had been party to such a claim, the prejudice which the exception assumes not to exist does indeed exist. If the amendment is allowed that party has to embark upon investigating a claim against him which arises out of facts which he would not previously have been concerned to investigate.”

Further, I agree (as did the Master) with Mr Nugee when he says that the issue is very much a matter of impression: see Welsh Development Agency v Redpath Dorman Long [1994] 1 WLR 1409, 1418D per Millett LJ. This gives rise to essentially a qualitative judgment: The Convergence Group plc v Chantry Vellacott [2005] EWCA Civ 290 at [104] per Jonathan Parker LJ, who went on to say (at [105]) that it was more or less inevitable in a case of factual complexity that an amendment would seek to plead new facts, but it does not follow that a new claim does not arise out of substantially the same facts as the claim already pleaded. And as he points out, the impression must nevertheless be derived from a reasoned assessment of the relevant factors.

Mr Stallworthy completes the picture by referring to The Society of Lloyd’s v Henderson [2008] 1 WLR 2255, relying on the following passages:

“53 Before us, it was argued that a new claim sufficiently “arises out of” the same facts as an existing claim if there is a sufficient nexus between the old and the new claim, in the sense that some or a substantial part of the facts relied on to promote the new claim were relied on to promote the old claim. That takes far too broad an approach to the rule, which it effectively rewrites. The new claim does not arise out of the facts on which the old claim was based if, in order to prove it, new facts have to be added. That is why this court has said that the basic test is whether the plea introduces new facts: Goode v Martin [2002] 1 WLR 1828, para 42.

54 The additional possibility that the new facts are substantially the same as those already relied on is limited, P & O Nedlloyd BV v Arab Metals Co [2005] 1 WLR 3733, para 42, per Colman J, to:

“something going no further than minor differences likely to be the subject of inquiry but not involving any major investigation and/or differences merely collateral to the main substance of the new claim, proof of which would not necessarily be essential to its success.”………”

“58 I should also add this. Mr Jenkins properly drew our attention to the judgment in Society of Lloyd's v Laws [2003] EWCA Civ 1887 , where in commenting on comparison between the old and the new claims required by CPR r 17.4(2) under the rubric of “substantially the same facts” this court said, at para 52:

“That balancing exercise was very much a matter for the judge and, in our view, this court should not interfere with his conclusion unless he erred in principle or was plainly wrong. We should not simply substitute our view for his, even if we would have reached a different conclusion if sitting at first instance.”…”

Although this is the Trustee’s appeal, I have found it helpful to consider Mr Stallworthy’s arguments first. In that way I can address Mr Nugee’s attack on the Master’s decision and Mr Stallworthy’s support of the Master at the same time.

I have some sympathy with Mr Stallworthy when he describes the structure of the proposed amended PoC as opaque. That opacity he says disguises the reality: on analysis it becomes clear that the Trustee seeks to add new claims within the meaning of section 35 LA 1980. He is clearly correct when he identifies the following differences from the original claim on that view of matters:

None of the above matters formed any part of the original PoC or were in issue in any way in the action as originally formulated. Indeed, Aon’s paper dated 2 November 1993, the Trustee’s meetings on 7 September 1993 and 7 December 1993 and the grant by the Trustee of increases to pensions in payment were not even mentioned in the original PoC.

Mr Stallworthy submits that the reality that this is an entirely new claim is further illustrated by considering the changes between the Trustee’s 1^st draft Amended PoC proffered on 11 June 2007 and its 2^nd draft Amended PoC proffered on 7 January 2008. I do not attach any weight to this submission. It is neither here nor there in my view how, at an earlier stage, the Trustee articulated a new claim; indeed it remains the case that a new claim may be being made in just the way that the Master held and Mr Stallworthy asserts. The question is whether there is also a way of pleading the new head of damage – the £6.5 million – as a loss which follows from the original advice and which is sufficiently caused by that original advice as to be recoverable within the contemplation of the law.

In relation to paragraph 28, Mr Stallworthy focuses on the words “the true and accurate cost to the Scheme of such liability”. He says that the failure to do this on 2 November 1993 and/or 7 December 1993 (or I suppose at any other time in that period) is not a mere “example” or “consequence” of breaches alleged in the original PoC. He says that this is apparent from the fact that the first draft Amended PoC pleaded it as a new and separate breach of duty in paragraph 27(iii).

Mr Stallworthy submits that the Trustee cannot alter the true characterisation of the proposed amendments simply by, as it is put in Mr Nugee’s and Mr Newman’s skeleton argument, “carefully and deliberately eschewing any characterisation of what happened in December 1993 as a fresh breach of duty” in its proposed amendment; the fact that the context is a pleading does not permit the Trustee to ignore substance in favour of its own preferred characterisation. He cites Millett LJ in what he describes as an instructive passage in Paragon Finance Plc v D B Thackerar & Co (above) at 406h:

“a cause of action is defined by its factual ingredients, not by the name ascribed to it. As Juliet observed of the rose, its essential character is not dependent on the name by which it is called”.

He finds support for his conclusion by reference to the proposed paragraph 27 of the amended PoC, formerly paragraph 14 of the original PoC. He makes the same point about the context of paragraph 14 as I have made in paragraph 27 above. As I have said, Mr Nugee now accepts that paragraph 14 is to be read as if it had expressly provided as I have indicated. If a similar express restriction were to be included in paragraph 27, this point falls away since paragraph 27 would then clearly be referring only to events in 1993 up to and no later than the making of the 1993 Deed and Rules. Moreover, if that were done, paragraph 28(ii) would likewise be referring only to the consequences of the breaches of duty up to that date.

The date of any alleged breach of duty is critical in this context because the particular understanding of those working and advising on occupational pension schemes developed between 17 May 1990 when the decision in Barber was given and 28 September 1994 about what the temporal limitation imposed by Barber entailed, a factor I acknowledge in my judgment on the preliminary issue in this case. That date was the date of the decision in a number of conjoined appeals: van den Akker v Stichting Shell Pensioenfonds Case C-28/93; Coloroll Pension Trustees Limited v Russell Case C-200/91; Smith v Avdel Systems Limited Case C-408/92.

Accordingly, Mr Stallworthy submits that at whatever level of abstraction, the Trustee’s reference (or vague reference as he would describe it) in paragraph 14 of the original PoC alleging a failure to advise “appropriately as to the equalisation of members’ retirement ages” cannot be treated as an all-embracing catch-all permitting the Trustee to amend to add any allegation about any advice given by Aon at any time so long as it has some relation to equalisation (however effected).

Hence, he submits, to make good its new claim the Trustee has to amend to allege the following essential new facts (amongst others):

He says that these are all facts on which the new claim depends, including facts about damage. The new claim could not succeed without these key new averments being introduced.

Mr Stallworthy also submits that the amendments do not arise out of the same or substantially the same facts as the claim already made by the Trustee against Aon.

To the extent to which it is said to be a matter of impression as to whether a new claim arises out of the same or substantially the same facts, Mr Stallworthy submits that it is impossible, given the Master’s careful and detailed judgment, to contend that his conclusion is outside the generous ambit within which reasonable disagreement is possible.

He relies on a comparison of the original PoC and the proposed amended PoC to demonstrate a fundamental change in the basis of the claim adopting the words of Pill LJ in Del Grosso v Payne & Payne [2007] EWCA Civ 340 at [25]:

“The newly alleged breaches of duty are significantly different from those already made and they relate to the expanded retainer alleged. The basis on which loss is alleged to have been suffered has changed fundamentally. Damages are calculated on an entirely different basis. All aspects of the claim involve considerable enquiry into new factual issues which are material to the cause of action.”

He therefore concludes that there is no jurisdiction to permit the amendments sought.

He relies on that case and another, Major Dhillon & Another v Siddiqui & Others [2007] EWHC 2936, as examples of situations where the claims arose from the same central failing on the part of the professional (namely their failure in Del Grosso to advise appropriately about a break clause and in Major Dhillon to advise about mitigation tax on bonuses) but where the new cause of action nonetheless was held not to have arisen out of the same or substantially the same facts. Rather, the new claim would have required consideration of different advice on different dates, causing different loss. I do not doubt that it is not necessarily sufficient for a claimant seeking to amend to show that the new claim arose from the same central failing. But that proposition does not really assist in determining, in any particular case where there is a central failing, whether the new claim does or does not give rise to a new cause of action and if it does whether it arises out of the same or substantially the same facts.

Mr Stallworthy submits that, in the present case, the new claim which the Trustee seeks to introduce would cause Aon significant unfairness by requiring it to try to investigate new factual issues over 15 years after the event (and many years after the expiry of all limitation periods). By way only of example:

Mr Nugee starts with paragraph 28(ii) of the proposed amendments. He accepts that if the Trustee cannot succeed on paragraph 28(ii), it cannot be in any better position with paragraph 28(i) and (iii); but if it succeeds on paragraph 28(ii) then according to him, he should succeed, too, on paragraph 28(iii) at least.

The Master approached the matter (Mr Nugee accepts that this was correct) by looking at the question of a new cause of action under 3 heads: Do the new amendments plead (i) a new duty (ii) a new breach and/or (iii) a new loss? As to these Mr Nugee submits:

Mr Nugee accepts that the amendment in paragraph 28(iii) does plead a new breach; this is after all what is pleaded in terms. The original purpose of paragraph 28(i) was to suggest that the breach alleged in paragraph 28 was the same breach as that already alleged in paragraph 27. Given that it is now accepted that paragraph 27 (both as originally pleaded and in the proposed amended PoC) is confined to the period up to the execution of the 1993 Deed, Mr Nugee accepts that the attempt to make that suggestion is hopeless.

Where he submits that the Master has gone wrong, however, is in assuming that the same answer must be given in relation to paragraph 28(ii) as is given in relation to paragraph 28(iii). In paragraph 28(ii), the pleaders (Mr Nugee and Mr Newman) have pleaded that what happened in December 1993 was a consequence of the already-pleaded breach in March 1993. 

Mr Nugee then identifies the relevant question as being whether this pleads a new cause of action. In answer to this question, he says that the answer is clearly “No”.  As a matter of pleading, paragraph 28(ii), according to him “carefully and deliberately eschews any characterisation of what happened in December 1993 as a fresh breach of duty”.  It only becomes a fresh breach of duty, in the view of the Master, because he, the Master, transforms the matter as actually pleaded in paragraph 28(ii) into something which is not pleaded namely, a new breach of duty. But, he submits, paragraph 28(ii) manifestly alleges, not a new breach of duty, but a consequence of an existing breach of duty.

As a matter of language, I have to agree with him when he says that this cannot be said to be an impossible or forced way of putting the case. Indeed the Master himself recognised the force of this when he said:

“I would accept that the advice given to the December 1993 meeting must have been posited upon Aon’s belief, or understanding, that equalisation had been effected as from May 1990, pursuant to its advice accepted by the Claimant in March 1993, and that to that extent it was consequential upon Aon’s earlier advice.”

Moreover, even though there may be an issue on the facts, there must be a well-arguable case (to put it at its lowest) that Aon did value the cost of equalisation at only £260,000 because it assumed, in accordance with its own advice earlier in the year, that the equalisation had been effectively backdated. If that is correct, then it can readily be understood what is meant when it is said that the advice was consequential on the earlier alleged breach.

Mr Nugee’s real point is that the advice which was the source of all the errors and, ultimately, of the Trustee’s decision to grant benefit improvements, was the earlier advice. The Trustee’s cause of action to recover the loss incurred as the result of that benefit improvement is the same cause of action as that to recover the loss originally claimed. Questions of causation will of course arise; Aon will no doubt want to raise a defence based on a break in the chain of causation. Mr Nugee suggests that it would be a strong thing to say that the chain of causation was broken by advice given by Aon itself in November and December 1993. That is not, however, an obvious proposition given that the Trustee itself seeks to allege a new breach of duty. In any case, whether the chain was broken is a matter which he says can only be decided on the facts and it is not a matter for a pleading point.

Let me illustrate the point by reference to a change in the facts. Suppose that by November 1993, Aon had been replaced as advisers by a new adviser, NewAd. Suppose that NewAd had acted in precisely the way which Aon in fact acted, failing to advise the Trustee that the earlier purported equalisation was ineffective (whether because NewAd failed to address the issue at all or simply assumed that the advice given by Aon leading to the 1993 Deed and Rules was correct). In these circumstances, the Trustee might well have a cause of action against NewAd. That cause of action would correspond to the new claim which, on the Master’s analysis and in accordance with Mr Stallworthy’s submissions, is a new cause of action which does not arise out of the same or substantially the same facts and matters as the original claim.

However, the fact (if it be a fact) that the Trustee would have a claim against NewAd does not entail that it has no claim against Aon for the new head of loss in reliance on the original breach of duty. Such a claim might, it has to be acknowledged, face considerable problems. In particular, the Trustee would need to show reliance on Aon’s original advice, something which might prove very difficult indeed since it could be said that reliance was placed only on the advice of NewAd and that the chain of causation was broken. That, however, would be a factual question. It would not be a point which could be taken in relation to a pleading which alleged such reliance (although if the facts were clearly against the claimant, then amendment should be refused just as a pleading which included such an allegation could be struck out).

In any event, on the actual facts of the present case, Mr Nugee says that the only reason (or at least the only reason relevant for present purposes) why the valuation carried out by Aon was wrong was that it was carried out on the basis that the equalisation on which Aon itself had advised was valid. In other words, the incorrect valuation was a consequence of the invalid equalisation. The Trustee can properly say that the loss which flows from implementation of the benefit improvements was a consequence of the original incorrect advice; if the correct advice had been given in the first place, the benefit improvements would not have been granted (or I might add at least not at the level granted). As I have already mentioned, Mr Nugee suggests that it would be wrong to hold that the chain of causation is broken where it is the self-same adviser, Aon, which gives the earlier and the later advice.

In those circumstances, the Trustee ought, so the argument goes, to be entitled to plead as an additional head of damages the loss which it seeks to claim in respect of the benefit improvements which it would not have awarded had equalisation been effected in a valid manner. Ignoring for the moment the shape of the proposed amended PoC, this additional claim could, I perceive, be pleaded in a conventional way as follows:

I agree with Mr Nugee’s submissions that the new claim which he seeks to raise can be pleaded simply as consequential loss flowing from the original advice given in relation to equalisation leading up to and including the 1993 Trust Deed. It is possible to plead the matter without alleging or relying on any breach of duty on the part of Aon in November to December 1993. Indeed, it is possible to plead the matter without alleging that Aon would have advised differently in that period if it had advised properly originally; but that might be seen as an unhelpful way of putting it because the reality of the Trustee’s case is (i) there was a breach of duty in relation to equalisation leading to (ii) increased benefits; but (ii) only follows from (i) because the person advising about the cost of (ii) (ie Aon itself) advised about the cost incorrectly and that was because Aon has advised incorrectly in the first place.

In my judgment, such a pleading insofar as it is based on breach of contract would not introduce a new cause of action but would simply introduce a new head of damage just as was the case in Aldi. Whether or not there were further breaches of contract in November to December 1993, the new claim is based on the alleged breach of contract in the period leading up to the 1993 Deed. Any loss which flows from that original breach must, it seems to me, flow from the same cause of action as the loss originally claimed. There may be a break in the chain of causation affording Aon a defence; but unless Aon can establish that, or some other defence, it cannot defeat the claim on a limitation point.

In my judgment, the new claim based on the original breach of duty and pleaded as consequential loss does not give rise to a new cause of action in negligence either. But in case that is wrong, it is clear that the new cause of action in negligence arises out of the same or substantially the same facts as the new claim based on the original breach of contract.

The conclusion, therefore, is that an amendment to add this new head of loss does not fall within LA 1980 or within CPR 17.4. It falls to be dealt with according to ordinary principles under CPR 17.1(2)(b). I will return to this later.

In refusing the proposed amendments, the Master did not, so it appears to me, to address fully the argument which Mr Nugee now puts to the effect that paragraph 28(ii) is doing no more than assert a new head of loss. I do not think that he can be criticised for the way he dealt with the matter since it also seems to me that the amended PoC as currently drafted do not clearly assert the claim which Mr Nugee now wants to put forward. What the Master seems to have done was to decide what he considered that the amended PoC actually alleged, reaching the conclusion that they alleged a new cause of action and only a new cause of action.

Similarly, Mr Stallworthy’s skeleton argument before me did not, in my view, meet the points which Mr Nugee makes. Like the Judgment, it is addressed at what is actually pleaded in the proposed amended PoC and attempts to categorise it exclusively as a new cause of action. However, before me the points of principle have been fully argued. I consider that I should address the matters of principle and not restrict myself to the precise wording of the proposed amended PoC. If I do allow an amendment, it may be that the opaqueness of the current draft will carry some costs consequence for the Trustee, but that is a matter for further argument.

I ought to say something more about what the proposed amended PoC do say and I make the following points.

First, paragraph 28 starts by referring to the advice which Aon should have given. It was only in argument before me that that was clarified as a reference to advice which should have been given in March 1993 and in drafting the 1993 Deed and Rules. Until that clarification, it might have been read as referring to advice which should have been given right up to December 1993.

Secondly, paragraph 28 refers to what Aon would have advised (Mr Nugee clarifies this as referring to November 1993) about the cost to the scheme of the Barber liability if it had advised properly at the earlier times. It failed to give such advice. That failure is relied on in the ways set out in paragraphs (i) to (iii). In particular, that failure is relied upon in paragraph (ii) as a consequence of Aon’s earlier breaches. So far so good. But paragraph 29 then goes on to allege what would have happened if Aon had acted in accordance with its duties of care (ie its duties in contract and tort with no reference to any particular time period). Paragraphs 29(i) and (ii) set out the consequences of those breaches of duty, without distinguishing between the breaches set out in paragraph 27 (relating to the original advice) and paragraph 28(iii) (relating the failure just referred to ie in November 1993). Those consequences are alleged to be as follows:

I have to say that, reading paragraphs 27 to 29 together, the impression is given that paragraph 29(i) is referring back to the loss flowing from the original breach of duty and that paragraph 29(ii) is referring to the loss flowing from the new breach of duty alleged in paragraph 28(iii). In particular, if one reads the opening words of paragraph 29 together with paragraph 29(ii)(a), one finds the allegation that:

“Had Aon acted in accordance with its duties of care as aforesaid…(a)(ii) it would have advised the Trustee….[before granting benefit increases]….[about the cost of equalisation]”

The more natural reading of that is as an allegation that such advice should have been given pursuant to the duty of care, not that it would, as a matter of fact, have been given had Aon complied with its duty at an earlier time (ie in relation to equalisation). That then colours how one would read paragraph (b); read naturally, it seems to be an alleged consequence of paragraph (a).

It is only a close textual analysis that reveals the possibilities (to put the matter at its lowest) that

I do not propose to resolve these issues of construction. It is now clear what Mr Nugee wants to plead and unless the “piggy back” arguments (which I will come to in a moment) allows him to retain the entire proposed amended PoC, the correct course is to allow him to modify the current draft to make it unambiguous assuming the discretion to allow amendment at all is exercised in favour of the Trustee.

Mr Nugee submits that even if he is wrong in saying that paragraph 28(ii) (or, I would say, at least what it is intended to plead when read with paragraph 29) does not raise a new cause of action, it nonetheless falls within the Court’s jurisdiction to allow that amendment, as it arises out of the same or substantially the same facts as originally pleaded, so as to come within CPR r.17.4(2). I have already looked at the law on this aspect in paragraphs 67ff above.

Mr Nugee submits that it is essential to focus on the key factual allegation, which is that Aon assumed, and hence led the Trustee to believe, that the cost of complying with Barber was not significant. This is in effect already pleaded: see paragraph 20(ii)(c) of the unamended PoC where it is pleaded as follows:

“Based on Aon’s advice, the Trustee resolved to equalise retirement ages at 63 on the basis that the cost would not be material as the vast majority of members would not be affected. This was not the case…….”

  There are of course some new facts pleaded, but it is submitted that the thrust of the new case is precisely the same as the thrust of the old one: that Aon wrongly advised on equalisation, and hence on its cost; that it told the Trustee that to equalise in the way it suggested would be lawful and effective and of immaterial cost; and that the Trustee acted on that advice in various ways. 

What is different, it is said, is only that the Trustee now seeks:

Further, although the Trustee accepts that it is pleading a new loss, Mr Nugee says that is immaterial to the question of whether there is a new cause of action and so ought to be of little or no weight when considering whether a new cause of action (where there is one) is based on substantially the same facts.

I reject these alternative submissions. It may be that the question remains: Did Aon get the method of equalisation wrong? But that question arises in relation to two separate pieces of advice. First, the advice given when effecting equalisation; secondly, the advice given when proposing the enhancement of benefits. Those are separate pieces of advice giving rise to separate breaches of duty (assuming the facts in favour of the Trustee). The second piece of advice might be seen as a consequence of the first piece of advice; that is why it can be argued that the loss flowing from the enhancement of benefits is a consequence of the first piece of advice and therefore not time-barred.

However, on the hypothesis now under consideration that paragraph 28(ii) does introduce a new cause of action and that the new head of loss cannot be claimed as damages for the earlier breach of duty, that argument has been rejected and it is therefore necessary to rely on the later breach to establish the new head of loss. It is then impossible, I consider, to see the cause of action based on the later breach as arising out of the same or substantially the same facts as the cause of action based on the earlier breach. The rejection of the proposition that the existing cause of action can be relied on must entail the rejection also of the proposition that the later loss has been caused by the earlier breach. If that is so, then it is a wholly distinct set of facts which gives rise to the later cause of action and not the same, or substantially the same facts.

To look at this the other way round, I ask myself how it could be that the later cause of action could arise out of the same facts or substantially the same facts, as the earlier cause of action without the loss and damage caused, on the very special facts of the present case, by the later breach having been caused also by the earlier breach. My answer to my own question is that it cannot be so.

Applying the law as I have discussed it at paragraphs 67ff above, I conclude that the new claim does not arise out of the same, or substantially the same, facts and matters as the existing claims.

This is not quite an end of the case in relation to paragraph 28(ii). Assume, for the sake of the argument, that I allow an amendment to claim the new head of loss as damages in respect of the earlier breach of duty. The question then arises whether a further amendment should then be allowed to assert further breaches of duty in November and December 1993. The argument would be that, having allowed the introduction of the factual allegations necessary to establish the new head of loss, the new breach of duty would arise out of the same or substantially the same facts as the original claim as amended by the amendment for which permission has already been granted. This is the “piggy back” argument referred to above.

In this context, Mr Nugee relies on the decision of Richard Sheldon QC in Major Dhillon & Another v Siddiqui & Others to which I have already referred in a different context. Relying on that case (at paragraphs 28 to 35, citing Welsh Development Agency v Redpath [1994] 1 WLR 1409 at 1416H-1417A and Lloyds Bank plc v Rogers (The Times, 27 March 1997)), Mr Nugee submits that it is well established that the Court can take into account any amendments which it has already decided to allow. I agree with Mr Sheldon’s conclusions and thus with Mr Nugee’s submission. As a matter of jurisdiction I can therefore take account of the amendments which I would allow in deciding whether the new head of loss claimed viewed as damages pursuant to a new cause of action arises out of the same, or substantially the same, facts as a claim already pleaded.

Although one of the main purposes of section 35 is to avoid a defendant needing to investigate matters necessarily distant in time which he did not need to investigate in relation to the original claim, the cases which I have considered earlier in this judgment show that the new claim does not arise out of the facts on which the old claim was based if in order to prove it new facts have to be added. And it only arises out of substantially the same facts if the new facts “go no further than minor differences likely to be the subject of enquiry but not involving any major investigation and/or differences merely collateral to the main substance of the new claim” as Colman J put it.

The new claim, which will be based on a breach of contract and breach of duty of care by Aon in November to December 1993, involves a new cause of action. Although no new duty of care will be involved, a new breach of duty is involved. It seems to me that the facts which will go to establish an alleged breach of duty in November to December 1993 may be very different from the facts which go to establish what Aon would have done in that period had it advised correctly in the first place. For instance, the understanding of Barber was developing. We see the significant decisions of the ECJ in 1994 but there is no reason to think that views were not developing also between the date of the original advice in the period up to November 1993. It is a possibility that what was not negligent in July was negligent in December. It must be remembered that Aon does not accept – and it is certainly not a matter for summary judgment – that it was negligent at all in relation to the equalisation issue. It has to address the issue of what was or was not negligent up to the time of the 1993 Trust Deed and Rules. But, so far as concerns the original claim, including the new head of consequential loss claimed, it is not relevant to know what the state of the art was in November or December since nothing turns in relation to the existing claim on whether or not Aon was negligent at the later date. But if the new claim is allowed to be asserted as a new breach of duty, the state of the art in November to December 1993 will need to be investigated since a failure to advise in that period will be judged by the expertise of the notional competent adviser in that period and not by a possibly different standard earlier in the year.

For that reason alone, I do not think that the case falls within section 35(5)(a) LA 1980. But even if that is wrong, and absent any other factual matters which would also take the case out of the subsection, I would not in my discretion allow an amendment to include the new claim in reliance on a new breach of duty. [I will deal with the exercise of discretion in relation to the new claim as a further head of loss in relation to the existing breach later.] It would, in the unusual circumstances of this case, not be a just result to allow such an amendment. Ordinarily, when it is sought to add a new cause of action in reliance on section 35(5)(a) and CPR 17.4(2), the original claim will, of course, have been brought within time. In Major Dhillon, the first amendment dealt with by the judge (the basis for the “piggy back” amendment) was made within the limitation period relevant to that claim. Accordingly, the second amendment dealt with by the judge arose out of substantially the same facts as were already to be found in the claims made in the original pleading together with the first amendment which fell within the limitation period relevant to those claims. That is in contrast with the present case where the amendment which I am prepared to allow to introduce the new claim is being made long after the expiry of the primary limitation period.

It is true that in one of the case referred to by the judge, Welsh Development Agency v Redpath Dorman Long [1994] 1 WLR 1409, the first amendment (giving rise to the “piggy back” claim in that case) was itself made after the expiry of the limitation period, but it introduced a contractual claim reflecting the existing negligence claim. As the result of the introduction of that contractual claim in relation to 2 of a larger number of industrial units, an amendment was allowed to introduce a contractual claim in relation to the remaining units. But this was not under section 35; rather it was because the contractual claim in relation to the remaining units involved the same cause of action as the contractual claim in relation to the original 2 units. Finally, a claim in tort was admitted in relation to the remaining units on the basis that the claim in relation to them arose out of substantially the same facts as the contractual claim for which amendment had already been allowed. But those facts are far removed from those of the present case. One might think that that case for allowing the amendments provided there was jurisdiction was compelling; indeed, no comment was made in the Court of Appeal about the exercise of discretion and it is not apparent how the judge below dealt with this.

In the present case, as the pleadings currently stand, Aon does not need to investigate the matters which it is sought to introduce by amendment. It is one thing to allow the Trustee to amend its pleading to add a further head of loss consequent upon the original advice. It is quite another to allow the Trustee also to rely on a further breach of duty by way of “piggy back” claim. On any basis, the new claim will require investigation of events taking place many years ago. If I allow the amendment to add a further head of loss, Aon may suffer a measure of prejudice from having to investigate as best it can events that long ago and to defend its position on the basis of the best evidence it can now obtain. But in relation to the new claim pleaded simply as a further head of consequential loss, Aon has arguable defences and, in particular, will wish to run an argument that the chain of causation is broken. That defence, and perhaps others, are not available in relation to the new claim if it is allowed to proceed on the basis of a new breach of duty. I see no reason why Aon should have to suffer the prejudice in relation to an entirely different claim brought many years after the expiry of the relevant limitation period simply because it would, if I allow the limited amendment, have to investigate the relevant facts and matters anyway. This case does not, as I perceive it, fall within the policy of section 35 LA 1980 as described in the cases discussed earlier in the judgment.

Accordingly, I would refuse to allow any amendment to the PoC which introduces any allegation of a new breach of duty even if I were prepared to allow the more limited amendment to introduce the new claim as an additional head of loss in respect of the original breach.

I turn now to the exercise of the court’s discretion in relation to the limited amendment ie to add the new claim as a further head of loss. The Master stated that, even if he had had jurisdiction to allow the amendments, he would not in fact have exercised his discretion by doing so. It was not a fully reasoned decision; the Master himself said as much in saying that it might be helpful were he to “indicate, at least in outline,” how he would have determined that question. Mr Nugee submits that his views on discretion are no more than obiter observations which are in no way binding upon the appellate court.

It is important to identify the amendment in respect of which the Master gave his indication. When he indicated how he would have exercised his discretion, he did so on the footing that he had jurisdiction to allow the amendments which he had found gave rise to a new cause of action. He decided he had no jurisdiction because (a) there was a new cause of action and (b) that did not arise out of substantially the same facts. He must, it seems to me have addressed the exercise of his discretion on the footing that he was dealing with a new cause of action, but one which arose out of substantially the same facts as the existing claim. Moreover, he was addressing the discretion in relation to the entire amendment and did not consider the limited amendment (the new head of loss) and the wider amendment (the new breach of duty) separately. I must therefore be especially cautious in how I treat his indication given that I have held that the limited amendment does not involve a new cause of action.

As Mr Nugee correctly submits, it is the well-established principle that amendments in general ought to be allowed so that the real dispute between the parties can be adjudicated, unless there is prejudice to the other party which cannot be compensated in costs: see for instance paragraph 17.3.5 of vol.1 of Civil Procedure 2008. The Master recorded in paragraph 62 of the Judgment that he had before him no evidence at all to assist the court in the exercise of any discretion. As he put it:

“Aon has not put in specific evidence of the difficulties it may have in investigating the matters pertaining, particularly, to the December 1993 meeting. Nor, at this stage, do I have any information as to the extent that the matters sought to be put in issue, in respect of and relating to that meeting, are in fact in dispute.”

And so he recognised that the court was left simply with the core fact that any grant of permission to amend, in respect of the matters pertaining to the December 1993 meeting, would require Aon, fifteen years after the event, to investigate those particular matters for the first time. He nonetheless said this:

“….it seems to me that realistically, that is, in itself, seriously prejudicial to Aon”.

Although it was the passage of time that led the Master to the conclusion he expressed, he also stated that he could only speculate that the facts surrounding the September and December 1993 meetings and the decisions taken would be agreed or that the relevant documents (principally minutes) would allow an accurate reconstruction of relevant events.

Mr Nugee says that there is no justification for drawing the conclusion that Aon would inevitably be prejudiced and he submits that the Master’s conclusion was unwarranted. He says that the new material relies on documented facts, which Aon has not disputed, and which it has not said it will be difficult to try; and although technically the trial Judge will need to consider what happened in December 1993 as well as March 1993, it is unrealistic to suppose that it will change the shape of the trial significantly or at all.  According to him, the essential question is and always has been whether Aon was negligent in advising that equalisation could be lawfully effected in the way it advised.  The Trustee does not dispute that, if this equalisation had been effective, Aon would have been right to value the cost as immaterial; but equally, Aon cannot seriously dispute that, if equalisation was ineffective, the cost was very much higher than it advised.  This is indeed precisely why it is said that the loss claimed in respect of the December 1993 advice flows from the initial mistake.

That is true as far as it goes. But although the main thrust of the trial may remain focused on that essential question, there can be no doubt that the addition of the new head of loss brings in a significant set of new facts. It may well be that the bare facts about what Aon did and did not advise in November to December 1993 are not open to serious doubt. But there is likely, I would have thought, to be dispute about whether the advice about equalisation, rather than the later advice in November to December 1993, was causative of the loss claimed.

Mr Stallworthy relies on a number of factors. First, he points out the amendment will introduce a stale claim 5 years into the proceedings, 7 years after the Trustee had sufficient knowledge to raise the claim and outside the 15-year long-stop which would otherwise apply under section 14B LA 1980. That is not quite the full picture since the application to amend was dated February 2008 and thus less than 5 years in and inside the 15 year period (which does not apply in the case of a contractual claim).

Secondly, he says that the Master’s views cannot simply be dismissed as obiter, relying on what was said by Robert Walker LJ in Smith v Henniker-Major at paragraph 84. The judge below had held that he had no jurisdiction to allow a proposed amendment but had indicated how he would have exercised his discretion if the condition in CPR 17.4(2) had been satisfied. Robert Walker LJ regarded that expression of view by the judge as;

“not an off-the-cuff remark, but as a considered view from which this court should differ only on the limited grounds on which it is permissible for an appellate judge to interfere with a judge’s exercise of his discretion.”

Mr Stallworthy says that I must pay the same respect to the Master’s observations in the present case. I agree with Mr Stallworthy that I should not differ from the Master save on those limited grounds. However, the Master has not, as explained above, indicated how he would exercise his discretion in relation to the limited amendment which does not introduce a new cause of action. Accordingly, I consider it is open to me to exercise the discretion myself and appropriate that I should do so.

Thirdly he says that Aon would wish to call further witnesses in the relation to the December 1993 matters and that it is possible that some witnesses would be unavailable. This submission from the bar is however not supported by any evidence. Mr Nugee says that he does not understand why different witnesses would need to be called from those that would be relevant to events earlier in the year. I am very much in the dark about these rival submissions in the absence of evidence.

However, fourthly, he accepts that delay alone is not necessarily enough. But he points out that this is a very stale claim. There must come a time, I would have thought, where an amendment which adds a new claim without involving a new cause of action, should be refused on the basis that the delay is so great that a rebuttable presumption of prejudice should arise.

I have not found this exercise of discretion easy. On balance, I consider that the limited amendment should be allowed. However, I consider that I should make it a condition of allowing such amendment that the Trustee undertakes to Aon and the court not to seek at any time hereafter to further amend the PoC to rely on any breach of duty by Aon in November to December 1993 in order to recover the new head of loss now sought to be recovered and to seek such recovery only as a loss consequential upon the alleged breach of duty before and up to the date of the 1993 Trust Deed and Rules.

Mr Nugee should produce a final version of proposed amendments which reflects the contents of this judgment. Subject to appropriate drafting, which I hope can be agreed with Mr Stallworthy, I will allow the amendments in principle to introduce the new claim as a further head of loss and damage flowing from the original breach. It may be that if paragraphs 28(i) and (iii) are deleted, the current draft will require very little alteration other than to include some modifications as discussed at the hearing and further detailed in Counsel’s responses to my emails seeking further limited submissions.