UKSC 22
On appeal from:  EWCA Civ 803
Roberts (FC) (Appellant) v Gill & Co Solicitors and others (Respondents)
Lord Hope, Deputy President
JUDGMENT GIVEN ON
19 May 2010
Heard on 22 and 23 February 2010
Leslie Blohm QC
(Instructed by Chilcotts)
(Instructed by Barlow Lyde & Gilbert LLP )
The nature of Mark Roberts' new claim
The Limitation Act 1980 and the rules of court
Limitation Act 1980, section 35
"35. New claims in pending actions: rules of court.
(1) For the purposes of this Act, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced
(a) in the case of a new claim made in or by way of third party proceedings, on the date on which those proceedings were commenced; and
(b) in the case of any other new claim, on the same date as the original action.
(2) In this section a new claim means any claim by way of set-off or counterclaim, and any claim involving either
(a) the addition or substitution of a new cause of action; or
(b) the addition or substitution of a new party;
(3) Except as provided by section 33 of this Act or by rules of court, neither the High Court nor any county court shall allow a new claim within subsection (1)(b) above, other than an original set-off or counterclaim, to be made in the course of any action after the expiry of any time limit under this Act which would affect a new action to enforce that claim.
(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; and
(b) in the case of a claim involving a new party, if the addition or substitution of the new party is necessary for the determination of the original action.
(6) The addition or substitution of a new party shall not be regarded for the purposes of subsection (5)(b) above as necessary for the determination of the original action unless either
(a) the new party is substituted for a party whose name was given in any claim made in the original action in mistake for the new party's name; or
(b) any claim already made in the original action cannot be maintained by or against an existing party unless the new party is joined or substituted as plaintiff or defendant in that action.
(7) Subject to subsection (4) above, rules of court may provide for allowing a party to any action to claim relief in a new capacity in respect of a new cause of action notwithstanding that he had no title to make that claim at the date of the commencement of the action.
This subsection shall not be taken as prejudicing the power of rules of court to provide for allowing a party to claim relief in a new capacity without adding or substituting a new cause of action."
Rules of court
Rules of Supreme Court
"(5) No person shall be added or substituted as a party after the expiry of any relevant period of limitation unless either
(a) the relevant period was current at the date when proceedings were commenced and it is necessary for the determination of the action that the new party should be added, or substituted
In this paragraph "any relevant period of limitation" means a time limit under the Limitation Act 1980
(6) the addition or substitution of a new party shall be treated as necessary for the purposes of paragraph (5)(a) if, and only if, the Court is satisfied that
(a) the new party is a necessary party to the action in that property is vested in him at law or in equity and the plaintiff's claim in respect of an equitable interest in that property is liable to be defeated unless the new party is joined, or
(d) the new party is a company in which the plaintiff is a shareholder and on whose behalf the plaintiff is suing to enforce a right vested in the company
Civil Procedure Rules
"(2) 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.
(4) The court may allow an amendment to alter the capacity in which a party claims if the new capacity is one which that party had when the proceedings started or has since acquired
(Rule 19.5 specifies the circumstances in which the court may allow a new party to be added or substituted after the end of a relevant limitation period.)"
"(1) This rule applies to a change of parties after the end of a period of limitation under
(a) the Limitation Act 1980;
(b) the Foreign Limitation Periods Act 1984; or
(c) any other enactment which allows such a change, or under which such a change is allowed.
(2) The court may add or substitute a party only if
(a) the relevant limitation period was current when the proceedings were started; and
(b) the addition or substitution is necessary.
(3) The addition or substitution of a party is necessary only if the court is satisfied that
(a) the new party is to be substituted for a party who was named in the claim form in mistake for the new party;
(b) the claim cannot properly be carried on by or against the original party unless the new party is added or substituted as claimant or defendant; or
(c) the original party has died or had a bankruptcy order made against him and his interest or liability has passed to the new party.
(Rule 17.4 deals with other changes after the end of a relevant limitation period)."
Effect of the Limitation Act 1980 and the CPR
(1) A new claim means a claim involving either (a) the addition or substitution of a new cause of action; or (b) the addition or substitution of a new party: section 35(2).
(2) Any new claim made in the course of an action is deemed to have been commenced on the same date as the original action: section 35(1).
(3) No such new claim may be made after the expiry of any applicable limitation period, except as provided by rules of court: section 35(3).
(4) Rules of court may provide for allowing a new claim, but only (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; and (b) in the case of a claim involving a new party, if the addition or substitution of the new party is necessary for the determination of the original action (i.e. any claim made in the original action cannot be maintained by an existing party unless the new party is joined as claimant or defendant): section 35(4), (5), (6). The relevant rules of court are in CPR 17.4 and 19.5.
(5) CPR 17.4(2) has the effect that a new claim may be added by amendment but only if the new claim arises out of the same facts or substantially the same facts as the original claim.
(6) CPR 19.5(2), (3) have the effect (among others) that a new party may be added only if the limitation period was current when the proceedings were started, and the addition of that party is necessary in the sense that the claim cannot properly be carried on by the original party unless the new party is added.
(7) Rules of court may allow a party to claim relief in a new capacity: section 35(7). The relevant rule is CPR 17.4(4), by which the court may allow an amendment to alter the capacity in which a party claims if the new capacity is one which that party had when the proceedings started, or has since acquired.
" 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  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'."
Joinder of the administrator
The trustee as a necessary party and the "special circumstances" rule
"No action or suit can be brought against a debtor to the estate but by the executor or personal representative of the testator. The whole management of the estate belongs to him. The right of it is vested in him, and cannot be taken from him by creditors or legatees. If he release a demand and is solvent, it is a devastavit in him, and he is personally answerable for the sum released. In cases of collusion or insolvency it may be proper to come here for satisfaction against the debtor; but there must always be some special case " (pp 171, 879)
"The established rule of the Court is certainly that in ordinary cases a debtor to the estate cannot be made a party to a bill against the executor: but there must be, as the cases express it, collusion or insolvency. That very principle admits, that, if there is solvency, the executor must pay: if there is collusion, both are liable.
Lord Hardwicke there in the judgment [Beckley v Dorrington] does not state any thing as to negligence. That is in the argument by the Counsel; and in Newland v. Champion (1 Ves. sen. 105) delay in the representative is also stated as one of the special cases, as well as collusion: but no notice is taken of the former in the judgment. If the general principle will not allow you to bring a bill against both the executor and a debtor in the given case, the same principle will apply to the case, where you bring a bill against the executor and a creditor improperly paid by the executor: that is, that, if there is no collusion, or special case, if the executor is not insolvent, he stands the middle man, responsible to the residuary legatee for the property, misapplied by paying a man as a creditor, who was not a creditor, as in the other case for the property outstanding in a debtor."
" when a trustee commits a breach of trust or is involved in a conflict of interest and duty or in other exceptional circumstances a beneficiary may be allowed to sue a third party in the place of the trustee. But a beneficiary allowed to take proceedings cannot be in a better position than a trustee carrying out his duties in a proper manner.
and (at 748) (after citing, among other cases, Travis v Milne; Yeatman v Yeatman; and In re Field, decd)
"These authorities demonstrate that a beneficiary has no cause of action against a third party save in special circumstances which embrace a failure, excusable or inexcusable, by the trustees in the performance of the duty owed by the trustees to the beneficiary to protect the trust estate or to protect the interests of the beneficiary in the trust estate."
"It is the trustee rather than the beneficiary who is entitled to maintain actions against third parties who commit torts with respect to the trust property or fail to pay debts held in trust. If the trustee improperly fails to bring such an action, the beneficiaries can compel the trustee by a suit in equity to do so, and, in order to settle the whole matter in a single suit, they can join the third party as a co-defendant".
"That in the circumstances of this case the company are necessary parties to the suit I do not doubt, for without the company being made a party to the action it could not proceed".
"To such an action as this the company are necessary defendants. The reason is obvious: the wrong alleged is done to the company, and the company must be party to the suit in order to be bound by the result of the action and to receive the money recovered in the action. If the company were not bound they could bring a fresh action for the same cause if the action failed, and there were subsequently a change in the board of directors and in the voting power. Obviously in such action as this is, no specific relief is asked against the company; and obviously, too, what is recovered cannot be paid to the plaintiff representing the minority, but must go into the coffers of the company. It was argued for the appellants that the company were made a party for the purpose of discovery only, and authorities were cited to shew that when no relief is asked against a party he cannot or ought not to be compelled to make discovery. But this argument and these authorities have no bearing on the present case, where, as already shewn, the action cannot proceed in the absence of the defendant company, and the defendant company are interested in and will be bound by the results".
"These rights the individual shareholder is allowed to assert in behalf of himself and associates, because the directors of the corporation decline to take the proper steps to assert them. Manifestly the proceedings for this purpose should be so conducted that any decree which shall be made on the merits shall conclude the corporation. This can only be done by making the corporation a party defendant. The relief asked is on behalf of the corporation, not the individual shareholder, and if it be granted, the complainant derives only an incidental benefit from it. It would be wrong, in case the shareholder were unsuccessful, to allow the corporation to renew the litigation in another suit involving precisely the same subject matter. To avoid such a result, a court of equity will not take cognizance of a bill brought to settle a question in which the corporation is the essential party in interest unless it is made a party to the litigation".
"That an equitable owner may commence proceedings alone, and may obtain interim protection in the form of an interlocutory injunction, is not in doubt; but it was always the rule of the Court of Chancery, and is, I think, the rule of the Supreme Court, that, in general, when a plaintiff has only an equitable right in the thing demanded, the person having the legal right to demand it must in due course be made a party to the action Further, under Order XVI., r. 11, no action can now be defeated by reason of the misjoinder or non-joinder of any party; but this does not mean that judgment can be obtained in the absence of a necessary party to the action, and the rule is satisfied by allowing parties to be added at any stage of a case. Subject to these observations, I think that the general rule is still operative "
"I am of opinion that where justice absolutely requires it, the action may, in spite of the legal technicalities, be allowed to proceed at the instance of the party who has the beneficial interest."
He referred, in support of that proposition, to a passage in Lord Herschells' speech in Rae v Meek (1889) 14 App Cas 558, 569, where he said:
"The alleged duty, if it existed at all, was to the trustees, and not to the beneficiaries. If there has been a breach of it, the trustees and not the beneficiaries are the parties to sue. There may be cases where, if trustees failed to call to account those who were under liability in respect of acts injurious to the trust estate, the beneficiaries might compel them to do so, or even enforce the right themselves."
"If the trustees do not think fit to raise an action against the debtors for certain debts, having doubts it may be how far they may be certain of success, is it for a beneficiary or beneficiaries to do so in their own name? I think they have no such right. And I do not think this is a matter of mere form; it is, in my view, a matter of substance, because if the law were otherwise, then the debtors of trust-estates, including amongst them law-agents who may have been employed by the trustees, would be liable to actions at the instance of many different persons of anyone having a beneficial interest in the trust-estate requiring them to pay the amount of their debts to the trustees. I think such actions are not competent, and that the only persons who can maintain actions to recover debts due to an executry or trust-estate are the administrators of the estate, the trustees or the executors. A beneficiary could not discharge the liability for a claim due to the trustees and I do not see that a judgment in an action at the instance of a beneficiary could be res judicata in a question with the trustees. It appears to me that the law would get into extreme confusion if we were to sanction actions of this kind raised by a beneficiary against one with whom he had no contract. The beneficiary has his rights against the trustees, for the trustees are in direct relation with him because of their having undertaken a trust for his behoof. But if beneficiaries seek to enforce by action a claim of any kind against a debtor to the trust, it appears to me that they must either compel the trustees to raise the question directly in their own names, or get authority to use their names, or get an assignation to the claim, and thereupon sue as assignees."
By contrast, Lord Young, in a characteristic, freewheeling judgment, argued, at pp 1058-1059, that, since everyone was in the action already, the beneficiaries should be able to proceed against the law agents.
"In my experience the Court has always refused to allow a party or a cause of action to be added where, if it were allowed, the defence of the Statute of Limitations would be defeated. The Court has never treated it as just to deprive a defendant of a legal defence."
The same uncompromising rule of practice was applied even in cases (such as Ingall v Moran  KB 160 and Finnegan v Cementation Co Ltd  1 QB 688) where the result was to shut out a meritorious claim, arising from a fatal accident, on what many would regard as a technicality. Indeed in the latter case Singleton LJ (at p699) described the point as "a blot upon the administration of the law."
"The Court may allow an amendment to alter the capacity in which a party claims if the new capacity is one which that party had when the proceedings started or has since acquired."
Here it is the last four words (added to Order 20 r5(4) in 1981) that made the important change.
"But I take these cases to have been decided on grounds of settled practice, albeit attributable to the parties' position vis a vis the Statute of Limitation. So far as I am aware, no judge said that it would be outside the jurisdiction of the Court to allow the amendment in question: and if it were thought to be a question of substantive law, this would surely have been the immediate and short answer to the application to amend."
The attacks on the vires of Ord 20, r 5 were therefore rejected. Further insights into the history of these developments can be obtained from the judgments of Hobhouse J in Payabi v Armstel Shipping Corporation (The Jay Bola)  QB 907, 922 928; Staughton LJ in Hancock Shipping Co Ltd v Kawasaki Heavy Industries Ltd  1 WLR 1025, 1028 1030; and Mance J in Industrie Chimiche Italia Centrale v Alexander G Tsavliris & Sons Maritime Co (The Choko Star)  1 WLR 774.
". . . being used in the sense of legal competence or status to bring or defend a claim. It is a competence that one may have in one's own right or on behalf of another person. ... In my judgment the same meaning of capacity must apply in CPR r17.4(4). This means that the alteration in capacity which is referred to is an alteration from a representative capacity, or personal capacity, to another representative capacity, or (in the case of a representative claim) to a personal capacity."
That is how it was put by Arden LJ in Haq v Singh  1 WLR 1594, paras 18-19, and I agree that that is the right meaning in the context. The best example of a representative capacity is that of an executor or administrator of a deceased person, both offices being included in the compendious expression "personal representative".
"In no sense is the nature of the action altered. The plaintiffs still wish to claim that which they claimed in the beginning. Nor are they suing in a different capacity. Although they now wish to claim by virtue of their right as equitable assignees of the benefits of the principal to the original contract, they still sue in their personal capacity as principals through the same agency on the contract albeit through an assignment of the benefit to them."
Where one person acquires property as a bare trustee or nominee for the benefit of one or more other persons who are absolutely entitled beneficially, the analogy with an equitable assignment is obviously closer (see for instance Harmer v Armstrong  Ch 65).
"To summarise, a plaintiff who seeks to bring a derivative action under the general law must allege, in the initiating process, facts that show that he or she falls within a recognised exception to the prima facie rule that the proper plaintiff in an action in respect of a wrong alleged to be done to a corporation is the corporation itself. If the initiating process fails to make those allegations, it is liable to be struck out if the defendant chooses to apply to have it struck out . . . But there is no requirement under the general law relating to derivative actions for leave to be obtained before a plaintiff commences such an action."
So while he need not obtain prior leave from the court, he must plead the special circumstances entitling him to the court's indulgence. Those special circumstances are part of his cause of action.
"The problem addressed by Ord 15, r 7 is different: during the course of the proceedings there has been some change affecting the identity of the correct claimant, which could not have been dealt with (or normally even predicted) when proceedings were originally issued."
He then explained why there was no problem under the Limitation Act.
"In all such situations, of which death is only the most striking, it seems self-evident that any existing proceedings, properly constituted within the limitation period, should be allowed to continue for or against the party to whom the relevant right or obligation has been transferred in law; and that this should be permitted whether the transfer occurs before or after the expiry of the limitation period."
In the Yorkshire Regional Health Authority case the Court of Appeal approved and followed The Choko Star.
"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."
The other classic definition referred to was that of Brett J in Cooke v Gill (1873) LR 8 CP 107, 116.
i) The new claim is a 'claim involving the addition of a new party' within the meaning of section 35(2)(b) and (5)(b) of the Act and CPR 19.5(2)(b).
ii) It follows from section 35(5)(b) that the addition of the new party must be 'necessary for the determination of the original action' and from section 35(6)(b) that it is not to be regarded as 'necessary' unless any claim already made in the original action 'cannot be maintained ... against' the respondent unless the new party is joined. CPR 19.5(3)(b) reflects section 35(6)(b) except that it provides that the court must be satisfied that 'the claim cannot properly be carried on' against the respondent unless 'the new party is added as claimant or defendant'.
iii) The appellant cannot satisfy that test of necessity because he cannot satisfy the court that his own personal claim could not be maintained or carried on against the respondent unless the administrator was added as a defendant.
"To such an action as this the company are necessary defendants. The reason is obvious: the wrong alleged is done to the company, and the company must be party to the suit in order to be bound by the result of the action and to receive the money recovered in the action."
The principle is now reflected in CPR 19.9(3) in these terms:
"The company, body corporate or trade union for the benefit of which a remedy is sought must be made a defendant to the claim."
"Although the CPR contains no provision that requires it, where a derivative claim is brought by the beneficiary of an estate, at some stage in the proceedings the personal representative should be joined as a defendant."
In para 32 Arden LJ said: "It is sufficient that it has to be done at some stage." In putting the principle in that way, she made it clear that it might be appropriate to permit joinder, not at the outset, but at a later stage of the proceedings.