Summary of Court of Appeal Opinion

Factual and Procedural Background

The appeals, heard together, concern the interpretation of CPR r.19.6(3)(b) (the "second gateway") governing addition or substitution of a party after expiry of a limitation period where "the claim cannot properly be carried on by or against the original party unless the new party is added or substituted".

First appeal: The Plaintiff retained Company A to advise on a dividend and lease guarantee in January 2017. In December 2018 Company B acquired the partnership business of Company A but there was no novation of liabilities. Company A later changed name to Company A (new trading name) and was dissolved and restored. The Plaintiff issued a claim form naming Company B as defendant on 23 August 2022, later amending to add Company A (under its new name) and then to leave Company A as sole defendant. Service of the re-amended claim form on Company A had a deemed service date of 2 September 2024. Company A applied on 13 September 2024 to disallow the amendments made without permission; the deputy judge (Judge Halpern) refused to set aside the joinder/substitution on 30 January 2025.

Second appeal: The Claimants retained Company A in February 2018 and alleged negligent advice. They issued a claim form on 14 February 2024 naming Company B as sole defendant on the basis that Company B had assumed Company A's liabilities on acquisition. Company B applied to strike out on 4 September 2024. The Claimants sought permission on 25 January 2025 to amend to add particulars (novation/estoppel/acknowledgement) or to substitute Company A as defendant. The deputy judge (Judge Shea) declined to strike out and conditionally permitted substitution on 5 November 2025.

In both cases the relevant limitation period was running when the original proceedings were started but had expired by the time substitution/amendment to add Company A was sought.

Legal Issues Presented

1. How should CPR r.19.6(3)(b) (the second gateway) be interpreted where a claimant originally sues an acquiring firm (Company B) in the mistaken belief it assumed the liabilities of the original adviser (Company A), and later seeks to substitute Company A after limitation has expired?
2. Whether the second gateway requires (a) that, unless substitution occurs, the original claim cannot be determined on its merits, and (b) that the original and substituted claims must be the same "claim" in substance (what constitutes "the claim").

Arguments of the Parties

Appellants' Arguments

• The deputy judge in the first appeal misinterpreted s.35(6)(b) of the Limitation Act 1980.
• The deputy judge failed to give appropriate weight to the Court of Appeal's reasoning in Nemeti v Sabre Insurance Co Ltd.
• The judge erred in treating the claim against Company A as the same claim that had previously been made against Company B.
• In the second appeal, the deputy judge erred in law in holding substitution would be permitted under the second gateway.

Respondents' / Defendants' Arguments (Company A and Company B)

• The second gateway comprises two limbs which are not satisfied: (1) substitution is necessary for determination of the original action only where the original claim cannot be determined on its merits (a constitutional/procedural impediment), and (2) the original and new claims must be the same in every material respect (including facts alleged to establish liability of the originally sued defendant).
• If the appellants' construction were accepted, the second gateway would rarely, if ever, permit substitution of a defendant.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
The Sardinia Sulcis [1991] 1 Lloyd's Rep 201	Distinguishes mistake as to name from mistake as to identity for purposes of first gateway under predecessor rules.	Applied as authority that only a mistake as to name, not identity, satisfies the first gateway; binding for first gateway issues.
Adelson v Associated Newspapers Ltd [2007] EWCA Civ 701; [2008] 1 WLR 585	Held The Sardinia Sulcis test continues to apply in relation to CPR r.19.6(3)(a) (first gateway).	Treated as binding; constrained the court from extending first-gateway scope to mistakes of identity.
Insight Group Ltd v Kingston Smith [2012] EWHC 3644; [2014] 1 WLR 1448	Leggatt J (obiter on para (b)) analysed second gateway and proposed a two-part test: (1) original claim unsustainable against existing party; (2) same claim will be carried on against the new party.	The court analysed Leggatt J's obiter reasoning but declined to adopt aspects where inconsistent with binding authorities; considered Insight's obiter persuasive but not binding.
Letang v Cooper [1965] 1 QB 232	Classical definition of a "claim" as a factual situation entitling remedy.	Quoted for definitional background but held not to be directly determinative of second gateway due to differences in necessary pleaded facts after substitution.
Nemeti v Sabre Insurance Co Ltd [2013] EWCA Civ 1555	Considered scope of second gateway; Court of Appeal rejected a restrictive gloss that second gateway only covered procedural/constitutional defects; emphasised construing statutory words plainly.	Relied on to reject attempts to impose a narrow, context-driven gloss on the second gateway; treated as authority limiting first-instance reasoning that sought to narrow s.35.
Parkinson Engineering Services plc (in liquidation) v Swan [2009] EWCA Civ 1366; [2010] Bus LR 857	Allowed substitution of liquidator where the cause of action was the same and substitution was necessary to determine the original proceedings; emphasised identity of the cause of action.	Examined as authority showing substitution permitted where cause of action is the same and substitution is necessary for determination; distinguished because those cases involved substitution of claimant for the same underlying cause vested in the same entity.
Irwin v Lynch [2010] EWCA Civ 1153	Permitted substitution where the claim was the same though the named claimant lacked standing; emphasised substance over nominal identity.	Used with Parkinson to support a principle about sameness of claim, but distinguished on facts because those cases concerned claimant substitution and not substitution of defendant identity.
Re Eurocruit Europe Ltd (In liquidation) [2007] EWHC 1433 (Ch)	Discussed s.212 and procedural aspects of pursuing company's cause of action in winding-up.	Cited within analysis of Parkinson to explain that s.212 does not create a new cause of action but provides procedure for pursuing same cause in winding-up.
The Choko Star [1996] 1 WLR 774	Addressed transmission/merger of claimant after proceedings commenced; held substitution where claim was properly constituted within limitation period should be permitted.	Relied on to show that transmission/assignment after commencement ordinarily gives rise to no s.35 limitation issue; used to distinguish such cases from the present mistakes of identity.
Yorkshire Regional Health Authority v Fairclough Building Ltd [1996] 1 WLR 210	Approved the distinction between substitution where right/liability has passed and substitution that introduces a new claim; stressed Limitation Act does not apply to the former.	Applied to reinforce that substitution after transfer of rights/liabilities does not raise s.35 issues; used to distinguish the present appeals.
Roberts v Gill [2010] UKSC 22; [2011] 1 AC 240	Discussed legislative history of s.35 and the Law Reform Committee's approach; noted complexities and that rule committee could make provision for specific cases.	Referred to in analysing legislative history and limits of statutory wording; used to explain why s.35 may not cover every permutation of substitution.
Haward v Fawcetts [2006] UKHL 9; [2006] 1 WLR 682	Explained that the Limitation Act balances claimant and defendant hardships and that judges must give effect to statutory balance.	Invoked to emphasise statutory balance and caution against judicially rewriting limitation rules to achieve perceived fairness.
Various Claimants v G4S [2021] EWHC 524; [2021] 4 WLR 46	Considered amendments under CPR r.17.1 and the significance of the word "properly" in similar rule contexts.	Cited as an interlocutory authority dealing with related rule language; distinguished because Nemeti was not cited there and its approach differs from that rejected in Nemeti.

Court's Reasoning and Analysis

Judge Zacaroli began by accepting that Adelson remains binding on the first gateway: a mistake as to identity falls outside the first gateway, which requires a mistake as to name. That left only the second gateway for resolution: whether substitution was "necessary" because "the claim cannot properly be carried on by or against the original party unless the new party is added or substituted".

The court analysed competing approaches: (i) a restrictive construction advanced at first instance in Nemeti (that the second gateway addresses procedural/constitutional defects preventing determination on merits) and (ii) the broader obiter approach in Insight Group (Leggatt J) and supporting Court of Appeal authorities (Parkinson, Irwin) which permit substitution where the same cause of action cannot be maintained against the original party but can be maintained against the proposed substitute.

The court rejected a gloss that the second gateway applies only to claims that cannot be determined "on their merits" for procedural or constitutional reasons, noting that prior authority (Nemeti on appeal) cautioned against adding such a gloss and that the statutory words should be construed plainly. The court emphasised that Parkinson and Irwin concerned substitution of claimants where the cause of action remained vested in the same entity; those decisions did not support an expansive rule permitting substitution of a defendant where the identity of the defendant substantively changes.

The court further considered authorities addressing post-commencement transmission of claims (The Choko Star; Yorkshire Regional Health Authority) and concluded those situations do not raise s.35 issues because they involve no new cause of action and no limitation problem.

The court identified two core issues under the second gateway: (1) whether the requirement imports a need to show the original claim cannot be determined on merits (the court rejected a narrow procedural-only reading); and (2) the meaning of "the claim" and how closely the original and substituted claims must correspond. The court held that the claims must be the same in substance—i.e. the essential facts giving rise to liability must be the same—and distinguished cases where substitution simply corrects the nominal party for cases where substitution would change the identity of the defendant whose liability is asserted.

The court concluded that, on the authorities and proper construction, the second gateway does not support the substitutions sought in these appeals where the claimant sued Company B in the belief Company B had assumed Company A's liabilities (a mistake as to identity excluded from the first gateway) and where substitution would involve a substantive change in the identity of the defendant. The court noted anomalies and incoherence that would follow from an expansive construction and observed that any correction to the scope of the first gateway should be addressed by the Supreme Court.

Holding and Implications

APPEALS ALLOWED

Holding: The court would allow both appeals (the orders below permitting substitution/joinder are set aside for the reasons given).

Implications: The direct effect is that the deputy judges' decisions permitting substitution or conditional substitution are overturned. The court emphasised adherence to binding authority on the first gateway (Adelson) and limited the scope for invoking the second gateway to situations where the substituted claim is the same in substance as the original; questions about widening the first gateway remain for the Supreme Court.