Court of Appeal clarifies restrictions on adding new claims to existing claim form despite arguable limitation defence

The Court of Appeal has clarified that the restrictions on adding new claims where there is an arguable limitation defence do not bite unless there is a real prospect of the court finding that limitation expired between the date the claim form was originally issued and the date of the amendment: Viegas v Cutrale [2024] EWCA Civ 1122.

Court rules allow a claim form (or other statement of case) to be amended without the court's permission before it is served. However, a defendant may apply within 14 days of the date of service for an order disallowing such amendments. As a practical matter, where there is any doubt as to whether an amendment made before serving the claim form may be vulnerable on limitation grounds, the claimant should consider issuing a protective claim form at the same time as making the amendment, to protect itself from allowing further time to run for limitation purposes if the court finds the amendment should be disallowed.

The Court of Appeal's decision also illustrates that the time limit for applying to disallow amendments runs from the date of service, even if there is a pending jurisdiction challenge. To avoid missing the deadline, while avoiding any real risk of submitting to the court's jurisdiction, the decision suggests that a defendant should either apply for an extension of time for the application to disallow or make it clear that that application is conditional on the court's jurisdiction being established.

The need to take steps within 14 days of service, regardless of a jurisdiction challenge, may give rise to particular difficulties in group litigation, in which multiple law firms may file multiple claim forms over a number of years, any of which may be amended before service to add new claims. Defendants will wish to keep an eye on potential limitation issues and consider whether to apply to disallow any amendments, or to extend time for such an application, each time a new claim form is served.

Finally, the decision also confirms that the court will be slow to find that there is an "implied sanction" where a rule or court order does not state an express sanction for breach. In particular, the court found there is no implied sanction for a failure to comply with the 14-day time limit to apply to disallow amendments, and therefore no need to apply for relief from sanctions where the deadline is missed. This is consistent with the Court of Appeal's approach in the recent case of Yesss (A) Electrical Ltd v Warren [2024] EWCA Civ 14 (considered here).

Background

The claimants are 1,548 Brazilian orange farmers who say they have suffered loss as a result of the defendants' participation in an alleged cartel in breach of Brazilian law dating from 1999 to at least January 2006.

The claims are brought in two claim forms, the first of which (“the Viegas claim”) was issued in September 2019. In advance of either claim form being served, the Viegas claim form was amended twice under CPR 17.1, which allows parties to amend statements of case without permission before they are served. The amendments were made in November 2019 and January 2020, with the overall effect being to add 1,361 claimants to the Viegas claim.

The defendants applied in June 2020 to challenge the English court's jurisdiction, but only one defendant was successful so the claims are proceeding against the other two defendants.

After the jurisdiction challenges had been determined, the remaining defendants applied for an order disallowing the amendments to the Viegas claim under CPR 17.2, which allows the court to disallow an amendment that was made without the need for the court's permission. An application under that rule must be made within 14 days of service of the amended statement of case.

It was common ground that there was an arguable case that the claimants' claims were time-barred by the time the amendments were made. The defendants argued, therefore, that the amendments should be disallowed because of s.35(3) of the Limitation Act 1980 and CPR 17.4, which restrict the circumstances in which a party can add a new claim after a relevant limitation period has expired (and, implicitly, none of the limited grounds on which amendments can then be made were relevant in this case).

The High Court refused the application to disallow the amendments. The judge considered that it would be appropriate to grant the application only if, as a result of the amendments, a reasonably arguable limitation defence had been prejudiced by the operation of "relation back", ie the rule under s.35(1) of the 1980 Act that a new claim made in the course of an action is deemed to have been commenced on the same date as the original action. The judge did not consider there to be any prejudice here since the defendants' case was that limitation expired in 2009. Accordingly, it made no difference to that case whether the new claims were commenced in September 2019 (when the Viegas claim was issued) or in November 2019 or January 2020 (when the amendments were made).

In any event, the judge considered that the defendants' applications were made too late, since they were made outside the 14-day time limit under CPR 17.2, and that she should not grant relief from sanctions under CPR 3.9.

The defendants appealed.

Decision

The Court of Appeal dismissed the defendants' appeal, but only on the basis that the claimants undertook to the court that they would not rely on relation back and would treat the amendments as effective from the dates they were made. Newey LJ gave the lead judgment, with which Lewis and Nugee LJJ agreed.

Adding new claims when there is an arguable limitation defence

On the defendants' primary case, the fact that the new claims were arguably time barred by the time they were made in itself meant the amendments should be disallowed.

The Court of Appeal rejected that argument, agreeing with the judge below that an amendment should be refused or disallowed only where there is a prospect of prejudicing a limitation defence as a result of relation back. The fact that there is an arguable limitation defence at the time of the amendment is not sufficient; the defendant's position on limitation must be made worse.

The Court of Appeal considered that this approach clearly emerged from previous Court of Appeal authorities and it also made "good sense". As Newey LJ commented:

"There is no evident reason why a new claim should not be permitted if the claimant would be no better off had the claim been made from the outset."

Prospect of prejudice in this case

The defendants argued, in the alternative, that they could be prejudiced by relation back if the amendments were allowed to stand. Although neither side had pleaded that limitation expired in the short period between the issue of the Viegas claim and the dates of the amendments, the claimants accepted that it was open to the trial judge to find that limitation had expired on an alternative date to those pleaded.

Newey LJ noted that the authorities suggest amendments should be refused or disallowed where a limitation defence is "reasonably arguable". In his view, that could not be appropriate unless, on the facts, there was "a solid basis for thinking" that a limitation defence could be prejudiced by relation back – although the threshold could not be a high one. Any real prospect of that happening should suffice.  

In the present case, the Court of Appeal concluded that the possibility of the defendants being prejudiced by relation back could not be discounted. It was common ground that, under Brazilian law, the three-year limitation period could potentially run from the date on which a claimant acquired the relevant knowledge. It could not be said with certainty that that date would not fall between the issue of the Viegas claim form and the amendments, particularly as the claimants had demonstrated how there was scope for a significant event, for limitation purposes, to have occurred in late 2016 (ie three years before the relevant interval of time).

Accordingly, the amendments would fall to be disallowed if the defendants were permitted to apply under CPR 17.2.

Implied extension to time limit for applying to disallow amendments?

The defendants argued that it could not have been intended that the 14-day time limit under CPR 17.2 would apply where a defendant was disputing the court's jurisdiction.

The claimants, in contrast, argued that there was no difficulty with this as a defendant could avoid any risk of submitting to the jurisdiction by either: (i) applying within the 14-day period for an extension of time, to enable the jurisdiction challenge to be determined before the application to disallow the amendments; or (ii) making it clear in the application under CPR 17.2 that it was made conditionally on the court ruling that it had jurisdiction over the claims.

The Court of Appeal agreed that a defendant who took either of those courses would run no real risk of submitting to the jurisdiction. In any event, the language of CPR 17.2 was perfectly clear in providing for an application to be made within 14 days of service of the amended statement of case. There was no scope for qualifying it in the way the defendants suggested.

Implied sanction?

The judge had proceeded on the basis that, as the defendants had missed the deadline under CPR 17.2, they would need relief from sanction in order to be able to apply for the amendments to be disallowed. On appeal, however, the defendants argued that there was no express or implied sanction for breach of CPR 17.2, and therefore no need for relief from sanctions.

The Court of Appeal referred to Yesss v Warren (referred to above), in which the court had reiterated that not every rule or order had a built-in sanction, even if it was expressed in mandatory terms. In the present case, Newey LJ said it was evident from that case that the scope for identifying further implied sanctions (beyond the established cases of a late appellant's notice or respondent's notice) was "very narrow".

That hurdle was not met in the case of CPR 17.2, and so the question of whether the defendants should be allowed more time was to be determined by reference to the overriding objective. Unlike with an application for relief from sanctions, therefore, the matter should not be approached on the basis that the starting point was that the sanction was appropriate.

On balance, in the present case, the court would have been minded to allow the defendants to pursue the application. However, the claimants had offered to undertake that they would not rely on relation back, if that were necessary for the amendments to be allowed to stand. On that basis, there could be no danger of relation back depriving the defendants of any limitation defence, and so the appeal was dismissed.