Factual and Procedural Background
The appeal arises from an order made by His Honour Judge Jack QC in the Bristol Mercantile Court on 10th December 1999, permitting the claimant to amend her statement of claim after the judge had delivered a final judgment dismissing her action and ordered accordingly, though that order had not yet been perfected. The defendants appealed this permission.
The dispute concerns an Agreement and Assignment executed on 8th December 1992 involving the claimant, a company in liquidation ("Company A"), and the liquidator (the first defendant), who was a partner in the second defendant firm. The Agreement concerned the sale of intellectual property rights in a set of materials known as the "Assessment Library," which were designed for use in assessment and development centres.
The Agreement explicitly assigned only copyright and similar rights, not physical property. A third party, a competitor of the claimant, had taken physical copies of the Assessment Library materials ("the Copies") from Company A. After a dispute, the Copies were returned to the claimant, who claimed she suffered substantial loss because the Copies had been in the competitor's possession for some months, damaging their value.
The claimant issued proceedings for damages for negligence and breach of contract on 30th September 1998, shortly before the limitation period expired. The defendants applied for summary judgment under Part 24 of the Civil Procedure Rules (CPR), arguing that the liquidator had no personal liability and owed no duty for the claimed losses.
During the hearing, the judge invited the claimant's legal advisers to consider a claim in conversion, though the claimant declined to pursue this before judgment was delivered. The judge dismissed the claimant's action on 24th September 1999. Subsequently, after receiving new legal advice, the claimant applied on 22nd October 1999 for permission to amend her statement of claim to include a claim in conversion, which would have been statute-barred by then.
The judge granted permission to amend on 10th December 1999 but ordered the claimant to pay the defendants' costs of the application and gave the defendants permission to appeal. This appeal follows.
Legal Issues Presented
- Whether the judge had jurisdiction, under the CPR, to grant permission to amend the statement of claim after delivering a final judgment and order dismissing the action but before the order was perfected ("Issue A").
- If jurisdiction existed, whether the judge misdirected himself in principle in exercising his discretion to reopen the matter and grant permission to amend, and whether this court should exercise its discretion to refuse such permission ("Issue B").
- Whether the judge had jurisdiction to permit amendment introducing new and otherwise statute-barred claims for rectification and conversion, having regard to section 35 of the Limitation Act 1980 and Rule 17.4 of the CPR ("Issue C").
- Whether the judge erred in principle or was plainly wrong in exercising his discretion to allow the amendment on the facts of the case ("Issue D").
Arguments of the Parties
Appellants' Arguments
- The judge had no jurisdiction to reopen his final decision after delivering judgment dismissing the action, as the order took effect immediately under CPR Part 40.7(1) ("Issue A").
- Even if jurisdiction existed, the judge erred in principle in reopening the matter and granting permission to amend; the discretion should be exercised to refuse permission ("Issue B").
- The judge lacked jurisdiction to allow amendments introducing new and statute-barred causes of action, given the restrictions in the Limitation Act 1980 and CPR Rule 17.4 ("Issue C").
- The judge misapplied his discretion in permitting the amendment, considering factors such as the claimant's impecuniosity, the unavailability or fading memory of a crucial witness, the lateness of the application, and the weakness of the new claims ("Issue D").
Respondent's Arguments
- The judge retained jurisdiction to vary or revoke an order before it was perfected, consistent with the overriding objective of the CPR to deal with cases justly ("Issue A").
- Permission to amend should be granted to allow the real dispute to be determined, especially where the other party can be compensated in costs and no injustice would result ("Issue B").
- The amendments related to claims arising out of the same or substantially the same facts as previously pleaded, thus satisfying the requirements of the Limitation Act and CPR ("Issue C").
- The judge properly exercised his discretion considering the circumstances, including that the new claims were part of the claimant's case from the outset and that the defendants had not suffered substantial prejudice ("Issue D").
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Re Barrell Enterprises [1973] 1 WLR 19 |
Jurisdiction of a court to reopen or vary an order before it is perfected; exercise of discretion only in exceptional circumstances. |
Recognised as establishing the "Barrell jurisdiction," but court considered whether it survived CPR and concluded it still exists but must be exercised cautiously. |
| Biguzzi v Rank Leisure Plc [1999] 1 WLR 1926 |
CPR as a self-contained procedural code superseding previous authorities. |
Supported the view that CPR governs jurisdiction and procedure, diminishing reliance on pre-CPR authorities. |
| Charlesworth v Relay Roads Ltd [1999] 4 All ER 397 |
Principles for reopening issues after judgment; discretion to reopen requires exceptional circumstances. |
Applied to assess whether permission to amend after judgment should be granted; emphasised need for exceptional circumstances. |
| Ladd v Marshall [1954] 1 WLR 1489 |
Criteria for admitting fresh evidence or reopening issues after trial. |
Referenced as requiring exceptional circumstances for reopening issues post-judgment. |
| Paragon Finance plc v D.B. Thakerar & Co. [1999] 4 All ER 400 |
Definition of "cause of action" relevant to amendments and limitation. |
Adopted to determine that the claims for rectification and conversion constituted new causes of action. |
| Letang v Cooper [1965] 1 QB 232 |
Definition of cause of action as factual situation entitling remedy. |
Used to clarify the meaning of cause of action in context of amendment and limitation. |
| Fannon v Backhouse (1987) 30 July Lexis |
Interpretation of "facts in issue" for Limitation Act purposes. |
Rejected narrow construction; facts material to claim satisfy requirement even if not disputed. |
| Lloyds Bank v Rogers (1997) The Times 24 March |
Policy of Limitation Act section 35(5) regarding facts "already in issue". |
Referenced but court rejected argument that facts must be in issue at date of permission to amend. |
| Britoil Plc v Hunt Overseas Oil Inc. & Others (unreported CA, 1994) |
Preconditions for rectification of written agreements. |
Applied to assess whether claim for rectification arose out of substantially the same facts. |
Court's Reasoning and Analysis
The court first considered whether the judge had jurisdiction to permit amendment after delivering a final judgment dismissing the action but before the order was perfected. It concluded that under CPR Rule 3.1(7), the court retains power to vary or revoke an order until it is sealed, and thus the judge had jurisdiction to grant permission to amend.
Regarding the exercise of discretion to reopen the matter, the court noted the principle from Re Barrell Enterprises that reopening after judgment should only occur in exceptional circumstances. However, it acknowledged that the CPR's overriding objective to deal with cases justly requires a flexible approach.
The court found that the claimant's abandonment of a conversion claim before judgment and subsequent decision to pursue it after receiving new legal advice did not amount to exceptional circumstances justifying reopening. The claimant had multiple opportunities to raise the claim earlier and chose not to. The court emphasized the need for finality in litigation and that allowing such reopening would undermine that principle.
On the issue of whether the amendments introduced new causes of action, the court accepted the judge's view that both rectification and conversion claims were new causes of action under the Limitation Act 1980 and CPR Rule 17.4. Nonetheless, the court agreed that these claims arose out of the same or substantially the same facts as originally pleaded, satisfying the statutory requirements for amendment.
Finally, the court considered the exercise of discretion in allowing the amendment. It took into account the lateness of the amendment, the claimant's impecuniosity, potential prejudice to the defendants due to the unavailability or fading memory of a key witness, and the weakness of the new claims. Given the earlier conclusion that the judge erred in reopening the order, the court did not find it necessary to definitively rule on the exercise of discretion but noted that the appellants' submissions raised serious concerns.
Holding and Implications
The court delivered a split decision:
Sir Christopher Slade and Lord Justice Roch allowed the appeal, holding that the judge erred in principle in exercising his discretion to reopen the order dismissing the action and grant permission to amend. They held that the discretion should be exercised in favor of the appellants, refusing permission to amend and dismissing the claimant's action against both defendants.
Lord Justice Clarke dissented, concluding that the judge had jurisdiction and did not misdirect himself in principle in exercising his discretion. He would have dismissed the appeal and upheld the permission to amend.
The direct effect of the majority decision is that the claimant is refused permission to amend her statement of claim and her action is dismissed. No new precedent is established beyond clarifying the cautious application of the jurisdiction to reopen orders after judgment under the CPR and the exercise of discretion in such circumstances.