England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
(Mr Justice Lloyd)

		Royal Courts of Justice Strand London WC2 Tuesday, 3rd July 2001

Tuesday, 3rd July 2001

1. LORD JUSTICE PETER GIBSON: I will ask Arden LJ to give the first judgment.
2. LADY JUSTICE ARDEN: This is an appeal with the permission of May LJ and Dyson LJ from the order of Lloyd J dated 20th December 2000. Lloyd J allowed an appeal from Deputy Master Weir and gave summary judgment against the claimant on the whole claim. Deputy Master Weir had dismissed an application to dismiss the action and gave permission to amend the particulars of claim. He made his order on 17th August 2000. There was an appeal from that order to the judge, together with an application for leave to amend, and there is an appeal before us from the order of Lloyd J and an application for permission to make further amendments to the particulars of claim and to adduce further evidence. There was also before us a cross-appeal by the respondents to adduce new evidence, but that has not been argued and therefore I will not deal with that matter in this judgment.
3. I now turn to summarise the claimant's case. As the issue before the judge was whether the claim disclosed a reasonable prospect of success, I proceed on the basis that the claimant will succeed in her allegations at the trial.
4. In 1987 Mr Aylwen, the husband of the claimant, took out a loan for £1 million from Boston Safe Deposit and Trust Company ("Boston Safe"). The loan was secured on a property known as 39 Green Street. It is said that he was going to develop this property. In 1990 Mr Aylwen agreed to sell 39 Green Street to the claimant, Mrs Aylwen, for £1.8 million. He agreed to sell it free from encumbrances on the basis that Mrs Aylwen was to assume responsibility for the secured loan with Boston Safe for £1 million and to pay the balance of £800,000 in cash. The claimant paid about £800,000 in settlement of that part of the purchase price.
5. Mr Aylwen and Mrs Aylwen signed the necessary transfer. The defendants acted as their solicitors on the transaction, but it is said that the defendants failed to advise that there was a caution against the property, they failed to register the transfer, they failed to transfer the obligations owed to the claimant and that they failed to tell the claimant, Mrs Aylwen, that Boston Safe had refused to extend the loan and that they had begun possession proceedings. It was also said that they had failed to protect Mrs Aylwen's interest in the property by a caution.
6. In April 1993 Boston Safe obtained an order for possession. The defendants failed to tell her about this. The arrears of interest were then about £100,000. Boston Safe obtained a possession order, and in May 1993 Boston Safe agreed to sell 39 Green Street for £1.3 million. Shortly after that date the claimant learnt about that transaction.
7. In December 1994 the purchaser resold 39 Green Street, but this time at the increased price of £1.9 million. On the sale by Boston Safe, Boston incurred a shortfall on its security and the claimant therefore received nothing back from the sale. On the other hand, she was not subject to the obligations to Boston Safe, which had remained with her husband.
8. What the claimant says is that she would have refinanced Boston Safe if she had known about the possession proceedings, and she would therefore have been able to retain the property, to develop it in her own time and to sell it herself later at a profit. I should add that it is well-known that the property market in London collapsed in the early 1990s.
9. As regards loss and damage, the claimant claims, first, the sums paid by Mrs Aylwen pursuant to the agreement between her and her husband to Boston Safe, including payments of mortgage interest, although those mortgage interest payments fell into arrears quite soon after the transaction between her and her husband in about 1992 for reasons which have not been explained. The second head of damage was loss of profit on resale or enfranchisement. The claimant says that the defendants knew about the intention to sell the property, when developed, at a profit. Third, there is a claim for the cost of alternative accommodation. I will deal with the evidence on that matter shortly. Fourth, there is a claim which the claimant seeks to add by her application to amend the pleadings on this appeal. This claim is for lost tax benefits sought to be obtained in the United States, plus recovery of interest and penalties to which she stands subject as a result, she says, of the loss of 39 Green Street.
10. In the proposed amended particulars of claim, a new paragraph 5A is to be added as follows:

"At all material times the Defendants by Mr Lewis knew that one of the effects of entering into the Sale Contract was to enable the Claimant to shelter from the United States tax a capital gain arising from the sale of her apartment at 65th Street, New York, and to enable her to set off the mortgage interest payments against rental income arising in the United States for United States purposes."

11. The sale contract is a defined term and it constitutes the agreement between Mr and Mrs Aylwen for the sale and purchase of the property for £1.8 million. In the particulars of claim the following items of loss are sought to be added to reflect the tax losses which the claimant says that she has suffered:

"(iv)The loss of tax savings in respect of both capital gains tax liability on the sum of £800,000 paid by the Claimant pursuant to the Sale Contract, and in respect of the income tax liability on the Claimant's rental income against which the Claimant has set off the interest payments made to the Boston Safe Deposit and Trust Company, which tax savings are now being challenged by the United States Internal Revenue Service;

(v)Such interest and penalties in respect of late payment capital gains tax and income to which the Claimant may become liable if the said challenge by the United States Internal Revenue Service is successful;

(vi)The loss of the tax saving in respect of income tax liability which the Claimant would have been able to claim by setting off the interest payments to Boston Safe Deposit and Trust Company (or some other mortgagee) against income arising in the United States in the period from June 1993 (when she vacated the Property) to December 1995 (when she purchased her present home and assumed a liability to make interest payments which are available to be set off against the United States income for tax purposes."

12. The evidence shows that the claimant had funds with which to redeem the mortgage and that since the sale by Boston Safe, as I have explained, there has been an increase in value of Green Street.
13. A defence has been filed in these proceedings which, among other defences, pleads that the loss was not reasonably foreseeable and puts in issue the remoteness of damage and causation and also relies on limitation. On 29th June 2000 the defendants made an application to have the action dismissed on the grounds of no reasonable prospect of success or no reasonable cause of action. There was a witness statement filed on behalf of the defendants by Kathryn Tregidgo dated 29th June 2000. This says that the property had diminished in value by the time Boston realised its security, that the interest paid to Boston Safe was paid for the use of property and that therefore there was no loss, that the loss was too remote and that there was no loss in fact incurred on the alternative accommodation. There are several other points made in that witness statement with which I need not deal.
14. On 24th August 2000 Deputy Master Weir dismissed the defendants' application. The defendants appealed to the judge. The defendants sought to adduce the fresh evidence of Ms Tregidgo in the form of a witness statement dated 13th November 2000. The thrust of this witness statement was that the contemporary documents from the defendants' file showed that the defendant well knew that Boston Safe had taken out possession proceedings in February 1993. However, all those matters are hotly disputed by the claimant. The judge refused leave for this new evidence. The exclusion of this witness statement was the subject of the cross-appeal which, as I have explained, has not been moved. When the matter came before the judge the claimant protested that the witness statement raised a new point but, from the papers before us, it appears that Mrs Aylwen in due course signed a further witness statement dealing with the point. She says, as I have explained, that she did not know about the possession proceedings until late May 1993.
15. I now turn to the judgment of the judge. He first dismissed the respondent's application to file new evidence. I need not, in the circumstances, explain why he rejected that application. He then turned to deal with the defendants' argument on loss.
16. The defendants' argument was that the loss was to be assessed at the date of breach. If Mrs Aylwen had been registered as proprietor, she would have been liable for the shortfall and therefore she suffered no loss by the defendants' negligence. She could have invested her money in some other London property and made the profit she says she could have made on 39 Green Street. This property was not unique. As regards the costs of alternative accommodation claimed in the sum of £132,000 (the premium paid to acquire a short lease for four years), the defendants submitted to the judge that she would have spent more than £132,000 if indeed she had retained Green Street because she would have had to have serviced a loan of a £1 million.
17. The judge agreed with the defendants' submissions. He gave a long judgment, and I intend to read one extract at page 26 (taking the printed numbers from the transcript). It expresses the judge's conclusion:

"Doing the best I can to assess the matter in the light of the submissions that have been made to me, it seems to me that Mr. Briggs is right that the loss which Mrs. Aylwen seeks to lay at the door of the defendant as being the consequence of their negligence is not, in law, to be regarded as the consequence of their negligence (if it was negligence, which I assume for present purposes), but it is the consequence of the choice that she made in the situation she found herself in, in June 1993, having to find an alternative property, having large resources available for the purpose, of which she could have deployed a larger part than she did in buying an asset in the London property market which would have had the same or a similar prospect of an upturn in value, according to the cyclical operation of the market, as 39 Green Street would have had. She chose, for her own reasons, not to do that with her money, and accordingly, in my judgment, that is the cause of her failure to make the profit that she says she was deprived of by the defendant's negligence, and not the defendant's negligence. For those reasons it seems to me, reviewing the Master's decision, albeit with the benefit of more cogent and no doubt more ample submissions than he had, that he was over-cautious in saying that the matter could not be seen to be clear and had to wait to trial; and in fairness to him it may be that if he had the benefit of listening to Mr. Briggs and Mr. Symons over the length of the period that I have had the pleasure of hearing them make their submissions, he would have come to a different conclusion.

At all events the conclusion that I come to, having excluded, as I say, the factual matter, is that in law Mr. Briggs is right that the case cannot succeed and that judgment ought accordingly to be given under CPR24 for the defendant."

18. The question of tax losses was not, of course, argued before the judge, because that is one of the subjects of the application to adduce new evidence and the subject of the application to amend the particulars of claim.
19. I will now summarise the evidence which it is sought to put in on this appeal and which we have read de bene esse. It is contained in the fifth witness statement of Mrs Aylwen. I can summarise it as follows:

(1) She says she took 38 Trevor Square -- that is the property the subject of the short lease to which I referred -- because she had to act at great speed. She has a young family whom she had to accommodate and it was coming close to the summer holidays. In December 1995 she bought 1 Upper Brook Street. So, in consequence of the defendants' negligence, she was out of the property market for some two and a half years.

(2)She says that 39 Green Street is a unique property, and she describes it at some length. She says there were no similar properties in which to invest.

(3)As regards the loss of tax relief, she says she could not roll over a capital gain which she had made in 1981 and she could not set mortgage payments against her United States income as a result of the defendants' evidence.

20. There are already in evidence communications between the defendants' solicitors and Mr Bernard Schulmann, Mrs Aylwen's United States attorney, which show that the failure to register interest the property in her name by 4th November 1990 would significantly weaken her claim to meet time limits for making a tax-free exchange. I will have to refer to that matter below.
21. I will now turn to counsel's submissions.
22. Mr Nash (for the appellant) has, with persuasion, urged on us a number of submissions. He accepts that normally damages are to be assessed at the rate of the wrong. He has referred us in particular to Smith New Court v Citibank NA [1997] AC 254, and in particular to the passage in the speech of Lord Browne-Wilkinson at 265-6 and again, more particularly, to the passage in the judgment of Lord Steyn at 283-4. But, as that case shows, the breach date is not an inflexible rule. Mr Nash submits that the breach date rule stems from sale transactions; it has no real relevance here where the property is one in which the claimant had already made a substantial investment. Here she had paid the purchase price of $900,000 in cash and she had paid certain mortgage instalments. So, submits Mr Nash, the appropriate date is some later date and, on Mr Nash's submission, if the defendants seek to say that the claimant should have forestalled or diminished her loss in some way, then the correct course is for them to plead that she failed to mitigate her loss in accordance with the well-established principles of duty to mitigate. The significance, says Mr Nash, is that the onus would then be on the defendant to show that she had failed to mitigate appropriately.
23. Mr Nash's second principal submission was that the judge erred in treating the loss of 39 Green Street as the loss of a non-unique property which the appellant could replace. It is here that he adduces new evidence. The new evidence, as I have explained, makes essentially two points here. First, that the claimant was forced to find new accommodation very quickly; second, that 39 Green Street had special features. Mr Nash explains that the appellant was effectively ambushed by the point, which found favour with the judge, being taken for the first time on the hearing of the appeal.
24. As respects tax losses, Mr Nash relies on the fresh evidence to which I have referred and the new allegations which he seeks permission to include in the pleading. Again, he says that the claimant was effectively ambushed because it was not appreciated that it was going to be relevant to produce evidence on these matters before the judge. It was not appreciated that the tax losses might or would become a critical issue. Mr Nash recognises that to introduce the tax claims would raise problems under section 35 of the Limitation Act 1980, but he says it is simply a question of a new head of loss in that regard. He refers to Welsh Development Agency v Redpath Dorman Long [1994] 1 WLR 1409. He says that it was the same duty which the defendants owed with respect to the tax losses as is already pleaded. It was a duty to complete the transaction to keep the claimant informed of the progress until completion and any matter material to completion. All that is new is that the duty extends to the tax losses; and it is clear that one of the purposes of the sale contract was to enable the claimant to obtain tax shelter in respect of the United States tax position. He says that the documents show that the defendants knew that there was a case for relief and that it would be weakened if the transfer was not registered.
25. As respects the breach of duty, Mr Nash submits there that there was the same breach of duty, namely failure to ensure the transfer was registered, failure to ensure the Boston Safe mortgage was transferred to the claimant and failure to deal with the caution, and so on. The only additional facts that had come into the claim are the facts regarding the tax consequences for the claimant of the loss of the property.
26. As respects discretion Mr Nash directed himself to the points made by the respondent in their skeleton argument. He submits that it is not relevant, as the respondents suggest, that the claim is time-barred. He also rejects the respondents' submission that the matters on which the respondents rely in relation to permission to amend in the context of CPR Part 52 are not relevant. The position here is that the claimant may be deprived of a good claim by a side-wind as a result of the court proceedings below, and he stresses that there is a risk that applications to dismiss a claimant's case under CPR 3.4 and CPR 24.2 may be used oppressively. He contrasts the practice before and after the CPR as regards Order 14 and he also relies on the merits of the claim to tax relief and says that she has been wrong-footed by the defendants and that therefore it is just that this claim should be allowed to proceed rather than be stopped in its tracks at this stage.
27. I now turn to the respondents' submissions.
28. Mr Briggs QC, who appeared below, appears for the respondents. He accepts that the breach date rule is flexible, but he says that any variation is inapplicable here. The relevant question is whether some other property had the same profit earning capacity, and clearly there were other properties available in London which did. In any event, Mrs Aylwen and her husband were already trying to market the property in 1992. He says that Boston Safe sold the property in May 1993. The claimant heard about that very shortly thereafter. That date, he said, is the date when the loss crystallised. The market value of the property was what they obtained -- it is not suggested that the mortgagee sold at an under value -- and the market value of the property reflects the true value of the property. In this regard he has referred us to Jenmain v Steed & Steed [2000] Lloyd's Law Reports on Professional Negligence 549, a decision of the Court of Appeal, and in particular he has referred us to paragraph 31 in which Chadwick LJ says this:

"In the present case the measure of damages is the difference between the position in which the appellants would have been if they had been able to exchange contracts for the purchase of the property at £67,500 and the position in which they were having lost the opportunity to purchase the property at that price. The position in which they would have been if they had purchased the property for £67,500 is that they would have had the property; but they would not have had the £67,500 that they would have paid for that property. Unless it is shown that the value of the property on the day that they would have purchased is greater than the £67,500 that they would have had to pay for the property, they have suffered no loss. They have suffered no loss because what has happened is that what they lost is the opportunity to purchase the property at a price that was equal to or greater than its value. In principle, therefore - and in the absence of some special feature - the inability to purchase property at market price will not give rise to an award of damages under this head. It will not give rise to an award of damages because the failure to make the disclosure required by rule 6A(2) will not have lead to a position in which the prospective purchaser has suffered any financial loss."

29. The other member of the court was Beldam LJ, and he agreed with the judgment of Chadwick LJ.
30. Mr Briggs further submits that the breach date rule represents sound legal policy because it strips away other causes of loss, such as here, the decision not to reinvest. He accepts that the duty to mitigate is a related concept, but he says it does not arise in this case until the recoverable loss has been identified.
31. As respects fresh evidence, he submits that the evidence now desired to be adduced by the appellant could have been adduced before and that there are no grounds for supposing that the defendants would not rely on any point of law open to them before the judge.
32. As regards the application to amend the points of claim, Mr Briggs submits that there have already been two opportunities. The same principles should apply here as apply to adducing fresh evidence in the Court of Appeal. Second, he submits that the loss of tax relief was really attributable to the claimant's decision not to reinvest in another property and, in any event, he submits that loss was too remote.
33. Mr Briggs has examined the application of section 35 of the Limitation Act 1980 in his submissions. He says there are three relevant questions:

(1)is there a new cause of action?

(2)is it based on the same or substantially the same facts?

(3)is it appropriate to give permission to amend?

34. As respects the new cause of action Mr Briggs submits that the approach of the court is non-technical. He referred the court to the definition of Diplock LJ in Letang v Cooper on cause of action, that is:

"A cause of action is simply a factual situation the existence of which entitles one person to obtain from the Court a remedy against another person."

35. He also refers us to the analysis of the court in Steamship Mutual Underwriting Association v Trollope & Colls (City) Ltd [1986] 33 BLR 77, at 97-8 at 98-9, per Lord Justice May. He submits that the new claim would be more than a new head of loss arising out of the existing claim in negligence, and he says that here there would clearly be a new cause of action and it would not arise out of substantially the same facts; and he submits that it would be inappropriate for the court to give permission to introduce this claim at this late stage for the reasons that I have already indicated in the course of summarising Mr Nash's submissions.
36. I now turn to my conclusions.
37. In my judgment the judge was right on the evidence before him to proceed on the basis that the breach date rule applied here. What the appellant lost by virtue of the respondent's negligence was an asset, that is her beneficial interest in 39 Green Street. That asset had a value. One aspect of that value was its development potential, and the market value at the date the contract was entered into by Boston Safe represented its true value.
38. Mrs Aylwen has no separate claim, in my judgment, for loss of an opportunity to develop or enfranchise the property. If that were the right approach, she would be getting the value at some other date, effectively a date of her own choosing since, on Mr Nash's submission, that date would depend on her evidence at trial as to when she would have realised that profit. That value would be different because the market would have moved and movements in the property market are outside the loss recovered for a breach of duty by the solicitors. An alternative way of analysing this point is to say that there is nothing to suggest that this property could not be replaced. The claimant had the funds to reinvest. Had this been a situation in which the property could not be replaced because of lack of funds, the approach of the court to the loss might have been different depending on the precise facts. But in this case, in all the circumstances, in my judgment the breach date rule applies. As Mr Briggs submits, the breach date rule makes sound sense in this sort of case, otherwise there would be no obvious finite date when loss could be assessed. I further accept Mr Briggs' submission that the duty to mitigate does not arise at this stage. It only arises once the correct measure of loss has been ascertained.
39. I now turn to the fresh evidence. I have summarised the fresh evidence above. I now turn to summarise the principles on which the court gives permission for fresh evidence to be adduced on appeal.
40. Before the Civil Procedure Rules the position was that special grounds had to be shown before the Court of Appeal would admit new evidence. The principles were set out in Ladd v Marshall [1954] 1 WLR 1489 at 1491, and the conditions for the reception of fresh evidence were three-fold:

(i) it had to be shown that the evidence could not have been obtained with reasonable diligence for use at the trial;

(ii)the evidence had to be such that it again would have had an important influence on the result of the case, although it did not need to be decisive; and

(iii)the evidence had to be such as was presumably to be believed, or, in other words, it must be apparently credible, though it need not be in controvertible.

41. The principles in Ladd v Marshall were considered by the Court of Appeal in Hertfordshire Investments Ltd v Bubb [2000] 1 WLR 2318, and the Court of Appeal came to the conclusion that there was no need to show special grounds under the new procedural code, but that the principles established in Ladd v Marshall remained relevant to the exercise by the court of its discretion.
42. I have examined the new evidence sought to be put forward in this case. In my judgment this evidence could have been put forward at an earlier stage. It was clear at all material times that damages and causation were in issue, indeed were the principal issue. That is clear from the defence in the argument before the Master and the argument before the judge. For instance, in the defendants' skeleton argument before the Master, at page 116 of the court's bundle, the defendants say:

"Any claim for lost profits would not be a loss falling within the scope of the Defendants' duty to the Claimant. Alternatively, the Defendants did not cause any such loss. The same was caused by the Claimant's failure to embark upon some other equivalent property investment and by the general decline in the property market."

43. Further, I take the view that the new evidence does not meet the standard of credibility required by the guidelines in Ladd v Marshall. It was not explained why Mrs Aylwen had to take temporary accommodation in the form of a four-year lease: why she could not take more temporary accommodation, such as renting a property or some hotel accommodation to enable her to get back into the market quickly. Nor was it explained why this property, 39 Green Street, had some special potentiality for developer's profit which was not available elsewhere. There are absolutely no figures to show what this property could have generated by way of developer's profit as opposed to other properties in London at that time. For those reasons, I do not consider that this evidence would have had an important influence on this application.
44. The overriding objective to deal with cases justly (see CPR 1.1) is of course extremely important here, and the court must look to the question of the outcome of the case. But finality is also an important matter, and therefore there have to be restrictions on the evidence that can be adduced on appeal. I have looked carefully at the evidence and, in my judgment, this evidence should not be adduced. It does not convince me, moreover, that there is a case which should go to trial on these issues.
45. There was a claim in the particulars of claim for alternative accommodation. Mr Nash did not address separate argument to this. He did not abandon the claim, but he very fairly, properly and economically argued the case on the basis of the main claim, accepting that the alternative claim could not assist if the main claim failed; and clearly the position is that the cost of servicing the £1 million loan or the tying up of capital of that amount would have exceeded the cost of that alternative accommodation, and therefore I think that Mr Nash was right not to press that point.
46. I therefore turn to the tax losses issue. This involved the court in granting permission on two fronts. First, permission for the reception of new evidence and, second, granting permission for further amendments to the claimant's statement of case. So the issues are whether the court ought to receive that new evidence and whether the court ought to give permission for amendments to the statement of case. There are therefore two hurdles to be overcome: the fact that the draft points of claim are sought to be amended on this matter in the Court of Appeal -- I will call that the normal appellate hurdle -- and, in addition, because of the time that has elapsed, there are the hurdles imposed by section 35 of the Limitation Act 1980, which I will call the section 35 hurdle. I will turn to what I call the normal appellate hurdle first.
47. I have set out above the position on adducing fresh evidence on appeal under the CPR. Mr Nash submits that a more generous approach should apply on appeal against summary judgment under CPR 3.4 or 24.2, otherwise these new provisions of the CPR, which for the first time allow applications against claimants for summary judgment, could be used oppressively against claimants who, for some technical reason, have pleaded their case in a defective way. He submits that to approach the matter otherwise would be to reverse the previous practice under Order 14. He submits that the principles in Ladd v Marshall did not apply to an appeal against a refusal of leave to defend, although they did on an appeal against a refusal of summary judgment. The court should treat parties in the same way under the CPR and that the court should accordingly not apply the Ladd v Marshall principles on an appeal against an order for summary judgment.
48. I remind myself of the old Rules of the Supreme Court. The question of the Ladd v Marshall principles in relation to summary judgment was considered by the House of Lords in Langdale v Danby [1982] 1 WLR 1123 referred to in passages in the Annual Practice to which Mr Nash has referred us. In that case the Court of Appeal set aside a judgment under Order 86. That was a judgment granting specific performance again on a summary application. The Court of Appeal did so on the basis of evidence adduced for the first time in the Court of Appeal. The House of Lords held that the principles in Ladd v Marshall should have been applied. Lord Bridge, with whom the other members of the House agreed, held that:

"In the situation arising on an appeal to the House of Lords from a summary judgment the application of these conditions, and perhaps the conditions themselves, will require some modification. It may well be that the standard of diligence required of the defendant preparing his case in opposition to a summons for summary judgment, especially if under pressure of time, would not be so high as that required in preparing for trial. The second and third conditions will no doubt be satisfied if the further evidence tendered and is sufficient, according to the ordinary principles applied on applications for summary judgment to raise a triable issue. But I see no injustice at all in requiring the defendant to use such diligence as is reasonable in the circumstances to put before the judge on the hearing of the summons, albeit in summary form, all the evidence he relies on in defence; whereas it would be a great injustice to the plaintiff to allow the defendant to introduce for the first time on appeal evidence which was readily available at the hearing of the summons but which was not produced."

49. In the light of this decision, the practice of the Court of Appeal as recorded in the annual practice is to decline to admit fresh evidence even on an appeal against summary judgment unless the special grounds in Ladd v Marshall apply. It seems to me that a similar approach should apply to the reception of fresh evidence on applications under CPR 3.4 and 24.1 as now apply to other appeals (see Hertfordshire Investment v Bubb), respecting of course the type of difference in application of the principles to which Lord Bridge referred in Langdale v Danby. Moreover, I would accept that the same should apply to amendments to statements of case adduced for the first time in the Court of Appeal to avert the unfavourable outcome of an application to dismiss a claim under CPR 3.4 or CPR 24.2.
50. I therefore turn to the application of the principles to this case.
51. Should the court allow the new evidence or the proposed amendments sought to be deployed on this appeal? In my judgment the court should not do so for the following reasons. First, the evidence, which is in the fifth witness statement of Mr Aylwen, was available for submission in the court below; and I do not accept that appellant did not realise its importance and I do not accept that some special indulgence can be given to the appellant on the basis that she did not realise its importance until after the judge's judgment, when it was appreciated that the statement of case had been dismissed on the ground which I have explained above. In my judgment this approach is wrong in principle. It assumes that a party who wishes to assert that he has a good cause of action can ask the court to deal with his or her case in tranches, adding reinforcement when the first line of defence is seen to fail. If that approach is correct, it would undermine the finality of judgments and that is objectionable. Second, in my judgment the new evidence is incomplete. It does not purport to explain what the duty was to which Mr Lewis was subject in the light of the documentation which was already in evidence by this application.
52. I turn now to pages 76, 83, 85 and 88 of the court bundle. At page 76 is a letter dated 11th October 1999 addressed to Mr Schulmann from Mr Lewis. The heading is "Mrs Bennie Aylwen":

"As you may know we act for Mr and Mrs Aylwen the UK."

53. The last two paragraphs read:

"Would you please let me know as a matter of urgency what formal proof of purchase you will require to satisfy the requirements of the Internal Revenue. Mrs Aylwen will be signing a purchase contract in the usual way but the property will not actually be registered in her name until after the deadline.

Could we please speak on the telephone so that I may ensure that you have the necessary paperwork to shelter Mrs Aylwen's gain."

54. I would also refer to a short extract on an attendance sheet for 16th October 1990, which records conversation which Mr Lewis had with Mr Schulmann. The attendance note says this:

"We said that we intended to have a contract between Mr. and Mrs. Aylwen for the purchase of 39 Green Street for the sterling equivalent of US $3,231,176. As far as the mortgagee was concerned the internal revenue would regard this as being part of the purchase price so that one could deduct the cost of the mortgage from the purchase price.

We asked about the necessity of transferring the property physically from Mr. Aylwen to his wife and Mr. Schulmann said that the sale would need to be a real sale and accordingly we must proceed with the transfer and we would need to have stamp duty paid as well and lodge the transfer at the Land Registry prior to November 3rd.

We said that the Aylwens would not be at all happy about paying 1% stamp duty on the transfer price but Mr. Schulmann thought that it was an unacceptable risk to leave the property unstamped and therefore unregistered. We were after all talking about sheltering tax of approximately $1,000,000 and consequently stamp duty at 1% was a minimal cost in that connection."

55. At page 83 of the bundle there is a fax to Mr Schulmann from Mr Lewis which sets out details of the proposed sale from Mr Aylwen to Mrs Aylwen. On the second page of the fax, reference is made to stamp duty of £8,000. Mr Lewis then explains that, as a matter of English law, the registered estate would remain vested in Mr Aylwen until registration of the transfer. He continues:

"The reason why this is of particular significance in this case is that the Land Registry Charge Certificate (which currently has Mr. Aylwen as the Registered Proprietor) has a Caution registered against it. The reason why there is a Caution entered on the Land Registry Charge Certificate is because in 1988 Mr. Aylwen entered into a Contract to sell the property to a Company known as Riverway Limited. Contracts were duly exchanged on the transaction and Riverway Limited paid a substantial deposit. Completion was due to take place in July 1989 but Riverway were unable to complete due to financial difficulties. Certain legal procedures then followed whereby a Notice to Complete was served on Riverway Limited and when that expired Mr. Aylwen was free to (a) retain the deposit paid and (b) sell the property elsewhere. As Riverway Limited disputed the fact that the deposit was not refundable (litigation is continuing) they have refused to consent to the Caution being removed. As far as the Land Registry are concerned when they receive our application to register Mr. Aylwen as the new owner they will automatically serve a Notice on Riverway Limited advising that an application relating to a sale has been received. Riverway Limited then have the choice of:-

(a)Consenting to the Transfer

(b)Objecting to the Transfer

(c)Consenting to the Transfer subject to the Caution remaining.

Due to the litigious circumstances it is highly unlikely that Riverway Limited will cooperate in agreeing to consent to the Transfer taking place subject to the Caution remaining. In order to obtain the removal of the Caution Court proceedings will need to be commenced. The Land Registrar may throw out the application to transfer the property from Mr. Aylwen to Mrs. Aylwen if Riverway Limited refuse to consent to the transfer with the Caution remaining in place and invite us to submit a fresh application once the Caution has subsequently been removed through Court proceedings. In these circumstances under English Property Law the legal estate would not have passed to Mrs. Aylwen.

Having pointed out the above I think it is worth bearing in mind that from an English Tax point of view it is, for example, the date of exchange of Contracts that is relevant for capital gains tax computations. Is the position the same of U.S. fiscal law?

From the above you can see that there could be an argument as to whether or not the legal title had actually passed to Mrs. Aylwen. However, Mr. Aylwen would have taken all steps to dispose of his interest and Mrs. Aylwen would have an enforceable right to have the property transferred to her. Can you confirm that this would be sufficient for your purposes."

56. Then the reply comes back from Mr Schulmann dated 26th October 1990:

"Dear Mr Lewis:

Reference is made to your fax dated October 26, 1990. Previously to receiving same I met with Axel Aylwen and he advised me of the `Caution' but your memorandum clearly sets forth the problems being faced in effectuating the transfer of title. In my opinion the failure to transfer actual title to the premises before November 4, 1990 would significantly weaken the client's position in meeting the time limit qualifications set forth in a tax free exchange."

57. It is not suggested that Mr Schulmann did not communicate with Mrs Aylwen about this deadline.
58. In the light of this correspondence what was Mr Lewis's duty? Mr Nash submits it was simply to ensure that the transaction was completed. But it was impossible to do that until early 1992, and even then all he could do was a damage limitation exercise, that is limit the extent to which (in Mr Schulmann's words) Mrs Aylwen's claim for tax relief was already weakened by the fact that the sale was not completed before 4th November 1990. In the light of that evidence to which I have referred, it is impossible to accept the draft amendments in the points of claim which suggest that the duty arose out of the instructions to do with conveyancing between Mr and Mrs Aylwen on the sale by Mr Aylwen to Mrs Aylwen of 39 Green Street. That, in my judgment, is not tenable in the light of the limited documentation before us. The position was clearly more complex than that.
59. It is not clear what Mr Lewis was asked to do, and what he accepted responsibility for doing, for the fate of Mrs Aylwen's taxable claim. Furthermore, it is not correct to say that the entry in the sale contract was to enable the claimant to shelter capital gain from the sale of her apartment at 65th Street, New York, and to enable her to set off mortgage interest payments against rental income arising in the United States for United States tax purposes: see paragraph 5(viii) of the proposed amended points of claim. Mr Schulmann, as is clear from the documents I have read, advised that this was not the effect of the contract. Moreover, "the loss" means the whole of the loss of the tax relief. That claim cannot succeed in the absence of a plea which cannot be made that the transfer could have been made by the 4th November 1990. For all these reasons, in my judgment, the court should not allow the application to adduce fresh evidence or to amend the statement of case.
60. That leaves the section 35 hurdle, which is an additional hurdle faced by Mrs Aylwen on that application. In the light of my conclusions thus far, I can deal with this matter quite briefly.
61. Section 35 of the Limitation Act 1980 provides:

"(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) ...

(b) ... on the same date as the original action.

(2) In this section a new claim means any claim ... involving either

(a)the addition or substitution of a new cause of action

...

(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..."

62. The appropriate rule is CPR 17.4, but I do not think that I need to read that. The effect of section 35 is that, if an additional claim is allowed to be added, it will relate back to the commencement of the action (see subsection (1)).
63. As Mr Briggs has submitted, there are three issues to be resolved. Does the tax claim amount to a new cause of action? Does it arise out of substantially the same facts? Should the court allow the claim as a matter of discretion?
64. We were taken in some detail to two decisions of this court Welsh Development Agency v Redpath Dorman Long Ltd [1994] 1 WLR 1409 and Steamship Mutual Underwriting v Trollope & Colls (City) Ltd [1986] 33 BLR 77.
65. The Welsh Development case is the leading authority. So far as material it concerns the amendment to extend claim in tort in respect of defective foundations of two out of 12 factory units to include all the remaining units. The court upheld the decision of the judge, applying the definition of "cause of action" given by Diplock LJ in Letang v Cooper which I have already read, that the claim was a new claim but that it arose out of substantially the same facts. The court further agreed with the judge that whether or not a new cause of action arises out of substantially the same facts as already pleaded is substantially a matter of impression. Moreover, since the judge had not misdirected himself in any way and it was clear that he had taken all the material factors into account, the court declined to interfere and dismissed the appeal in that case.
66. We were also referred to Steamship Mutual, which falls the other side of the line. The claim made against the relevant defendants was originally in respect of the air-conditioning of the building. It was sought to amend to sue in respect of a different defect in respect of a different defect in the same building, namely defects in the construction of wall. In short, it was held there was a new claim and that the question was whether the cause of action arose out of the same set of facts and was one of degree. We were referred to the judgment of Lloyd LJ at 100 to 101 of the report in a passage in which he says this:

"Mr Harvey asked us to say that all incidents or items of damage to property arising out of breaches of the same duty by the same defendant give rise to but a single cause of action. That is a proposition which he says is equally true, whether the property be a car (to take an example which he mentioned) a building, or a series of buildings on an estate; whether there be a single breach of the duty in question, or several breaches, and whether the damage occurs on one occasion or on several separate occasions, however widely separated in time. Otherwise, says Mr Harvey, it will be impossible to know where to draw the line in any given case. He submits that his proposition has been established as a matter of principle by the decision of this court in Idyll Limited v Dinerman Davison & Hillman & Ors, to which my Lord has referred, and by which Mr Harvey submits we are bound.

Like my Lord I am unwilling to accept Mr Harvey's proposition whether as a rule of law or even as a rule of thumb. In each case it will depend on the facts whether the damage gives rise to a separate cause of action, or not. I accept that it follows from that that in some cases it will be necessary to draw an awkward line. But so it would, I apprehend, even if Mr Harvey's proposition were correct. In any event, drawing lines in doubtful cases is one of the things that judges are for.

In most cases it will be easy to say on which side of the line the case falls. In Conquer v Boot and Idyll v Dinerman the case fell clearly on one side.

In my judgment this case clearly falls on the other, as the Official Referee has held. But even if it fell in the grey area, where different views were possible, I would hesitate long before reaching a different conclusion from a judge of such wide experience in this field as the judge in the present case."

67. I have considered these cases and Mr Nash's submissions. My provisional view was that in the present case there would have been a new cause of action. However, in the light of the conclusion which I have reached in relation to the proposed amendment (that it does not accord with the documents before us), in my view it is impossible to reach a final view on the responses to the questions posed by the section 35 hurdle issue until the exact nature of the duty relied on is known, for example, to determine whether it is a new cause of action for the purposes of section 35 or whether it arises substantially out of the same facts. Accordingly, in respect of this matter I find it impossible to reach a final conclusion.
68. For all the reasons that I have given in this judgment, in my judgment, the appeal and the applications to admit new evidence and amend the pleadings should be dismissed.
69. LORD JUSTICE KAY: I agree.
70. LORD JUSTICE PETER GIBSON: Despite the able submissions of Mr Nash for the appellant, for the reasons given by my Lady, I too would dismiss this appeal and refuse the application by the appellant to adduce further evidence and to re-amend the particulars of claim.
Order: Appeal dismissed with costs subject to detailed assessment.