Case No: A3/2001/1369 & 1374
Neutral Citation No. [2002] EWCA Civ 369
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL ( CIVIL DIVISION) ON 
APPEAL FROM THE QUEEN’S BENCH DIVISION 
(COMMERCIAL COURT) HHJ HALLGARTEN QC
 SITTING AS A DEPUTY HIGH COURT JUDGE 
Royal Courts of Justice
Strand, 
London, WC2A 2LL

Monday 25 March 2002
Before :

LORD JUSTICE WARD
LORD JUSTICE CHADWICK
and 
LORD JUSTICE MANCE

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Between :

	MARIDIVE & OIL SERVICES (SAE) and Anor 	Appellant	
	- and -		
	CNA INSURANCE COMPANY (EUROPE) LIMITED	Respondent	

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(Transcript of the Handed Down Judgment of
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040,  Fax No:  020 7831 8838
Official Shorthand Writers to the Court)
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Joe Smouha (instructed by Messrs Holman, Fenwick & Willan) for the Appellant
Richard Millett (instructed by Messrs Howe & Keates) for the Respondent
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Judgment
As Approved by the Court

Crown Copyright ©

Lord Justice Mance: 

Introduction
1.	This is an appeal against the answers given by HHJ Hallgarten QC on 7th June 2001 to two out of four preliminary issues tried before him in the Commercial Court. We also have before us an application for permission to appeal, with the appeal to follow if such permission is granted, arising out of the judge’s order dismissing the claimant’s action in the light of his answers to the preliminary issues and ordering the claimants to pay to the defendant the costs of the whole of the action on the standard basis. The proceedings arise from an unusual document described as a “Lease Bond”.
2.	The terms of the Lease Bond are central to the issues that we have to consider, and I set them out in full:
“ANNEX 'E" to Uniform Time Charter for Offshore Service
Vessels Code Name: 'SUPPLYTIME 89" - dated 19th January 1998

LEASE BOND
Bond No. 158515684
COPY
KNOW ALL MEN BY THESE PRESENTS, That we, Oceanografia, S.A. de C.V.
(hereinafter called Principal) as Principal, and CNA Insurance Company (Europe) Limited of the United Kingdom (herein after called Surety) as Surety, are held and firmly bound unto P&I Club, The Shipowners' Mutual Protection and Indemnity Association (Luxembourg), (hereinafter called the Obligee) a legally representative of Maridive & Oil Services, (S.  A..E) in the penal sum of USD $406,000 (Four Hundred Six Thousand U. S. Dollars), for the payment of which the said Principal and Surety bind themselves, jointly and severally, firmly by these presents,

WHEREAS, the Principal has entered into a written agreement with
... the obligee as the legally representative of Maridive & Oil Services, (S.A.E.) who provides a marine support services to Principal with MARIDIVE VIII" as per BIMCO "Supplytime89" charter Part dated 19th January 1998.	

NOW, THEREFORE, the condition of this obligation is such that if the Principal should well and truly perform all agreements and conditions of said lease on the part of said Principal to be performed, then this obligation shall be void; otherwise to remain in full force and effect.
PROVIDED, HOWEVER, that the following express conditions shall apply:
FIRST:      That in the event of any default on the part of the Principal and upon written demand by the Obligee delivered by registered mail to CNA Insurance Company (Europe) Limited, Underwriting Office, 117 Fenchurch Street, London, EC3M 5DY, the Surety shall pay to Obligee the penal sum within a period of thirty (30) days.
SECOND:	That in no event shall the Surety be liable for a greater sum than the penalty of the bond.
THIRD:	Any suit, action or other proceeding in law or equity shall be, brought or maintained within thirty (30) days after the termination hereof.
FOURTH:	This Bond shall expire on 31st July 2000, unless previously cancelled by the Obligee on any date prior thereto or as may be extended thereafter as necessary by mutual agreement of Principal and Obligee and upon notice in writing from the Principal to the Surety's representative.”

3.	The charter was for offshore services in the Gulf of Mexico for 730 days firm from (in the event) 30th April 1998 with the charterer (“Oceanografia”) having options for two one year extensions. Notwithstanding the manner in which the box in the Lease Bond was completed, the charter was in fact between the first appellant (“Maridive”) and “Oceanografia”.  The inapposite completion of the box no doubt arose because the original charter provided for a Lease Bond to be executed in the form of Annex D to the charter by United States Fidelity & Guaranty Company in favour of Maridive as “Obligee”. However, on 19th March 1998 the charter was varied to provide as follows:
 	“With reference to the [charterparty] the following amendments have today been agreed by both Charterers (Oceanografia S.A.) and Owners (Maridive and Oil Services S.A.E.) and shall thereafter supersede anything in the original contract to the contrary:

1.	The Lease Bond per 'Annex D' of the contract is to be amended to reflect the following changes and as a result will be issued as per 'Annex E' (attached):

	a) The Lease Bond is to be issued in London under English law by CNA.
	
b) Owners hereby nominate The Shipowners' Mutual Protection and Indemnity Association (Luxembourg)..... to act as their U.K. representative in respect of the above mentioned Lease Bond and agree to The Shipowners' Mutual Protection and Indemnity Association (Luxembourg) being named on the said Lease Bond as 'Obligee' to act on Owners’ behalf. …"

4.	No evidence was adduced before the judge to explain the genesis of or background to this variation, or why therefore it was decided to introduce the second claimants (“the Club”) into the Lease Bond as (in terms) the “Obligee”.
The charter came to a premature end on or about 1st March 1999, with each party contending that this was due to the other’s repudiatory breach. A demand for payment under the bond was made by Holman, Fenwick & Willan on 4th May 1999 in the following terms:
“We are London solicitors instructed by Maridive Oil and Services (SAE) of Egypt ("Maridive").
We refer to a Lease Bond in the sum of US$406,000 executed in Maridive's favour as a Deed on 3rd April 1998.  Pursuant to the Lease Bond, CNA Insurance Company (Europe) Ltd agreed to act as Surety for the obligations of Oceanografia SA de CV, the Charterers of the “MARIDIVE VIII" and described as the Principal in the Lease Bond.  A copy of the Lease Bond is attached.  The original is held in our safe.
We write to advise you that Oceanografia has defaulted on payments due to Maridive under the Charterparty and the total sum outstanding currently stands at US$409,550.90 (plus interest). Copies of the relevant outstanding invoices are attached, under cover of a letter from Maridive confirming non-payment.  You have already seen a copy of Maridive’s letter of demand to Oceanografia dated 16th March 1998.
You should be aware that the Charterparty was terminated with effect from 1st March 1999 and Maridive's vessel was withdrawn.  Accordingly Maridive are further entitled to the demobilisation fee of US$ 100,000.
In the circumstances, on our client's behalf we now call upon you to make payment of US$406,000 within the 30 day period stipulated in the Lease Bond, to the bank account details set out below, being this firm's US$ Client Account:-
Lloyds Bank Plc, Fenchurch Street Branch (Sort Code: 30-93-23)
USD Client Account No: 11123106
In favour of Holman, Fenwick & Willan
We look forward to receiving confirmation by return that you are making immediate arrangements for payment of the full amount of Lease Bond.”
5.	We were told that, in subsequent correspondence, the respondent (“CNA”) took the single point that the Lease Bond constituted a conventional guarantee, and that Oceanografia had not been in default. Maridive and the Club began proceedings on 18th November 1999, pleading at the end of paragraph 5 of its particulars of claim that “a demand for payment of the sum of US$406,000 was made to CNA under the Bond on 4th May 1999”. In its defence served 8th February 1999 CNA took both the point that the Lease Bond was a conventional guarantee, and the point that no or no valid demand had been made by or on behalf of the second appellant, the Club, under the Bond. That led Holman, Fenwick & Willan to write to CNA on 13th March 2000 in the same terms as previously, save that the letter now commenced:
“We are the London solicitors instructed by Maridive Oil and Services (SAE) of Egypt (“Maridive”) and The Shipowners’ Mutual Protection and Indemnity Association (Luxembourg) (“SOP”).
We refer to a Lease Bond in the sum of US406,000 executed in SOP and Maridive’s favour as a Deed on 3rd April 1998. …..”
6.	In a reply served on 14th March 2000 Maridive and the Club pleaded that:
“On the true construction of the Bond, the written demand for payment from CNA was to be sent either by SOP, as Maridive’s agent, or by Maridive. Further or alternatively, the demand of 4th May 1999 was made by Messrs. Holman, Fenwick & Willan on behalf of both Maridive and SOP. Further a second letter of demand was sent to CNA by Messrs. Holman, Fenwick & Willan on behalf of SOP and Maridive on 13 March 2000.”
But no application was made to amend the particulars of claim. On the other hand no objection appears to have been raised, and certainly no application to strike out was made, in respect of the plea in the reply of the second demand. On 30th August 2000 the contractual period provided by condition 3 of the Bond for the bringing or maintenance of “any suit, action or other proceeding in law or equity” expired.

The preliminary issues
7.	On 25th September 2000 Moore-Bick J. made an order (following, we were told, agreement between counsel) to this effect: 
“1 .	The Claimants have permission to amend paragraph 5 of the Particulars of Claim to add the words "alternatively 13th March 2000" (without prejudice to preliminary issue (iv) below).
2.	The following questions be tried as preliminary issues:
(i)	Whether on a true construction of the Bond the Defendant is entitled to take any defences available to Oceanografia under the charterparty in resisting a claim made against the Defendant under the Bond.
(ii)	If question (i) above is answered in the negative, whether the Defendant can contend that the Bond is unenforceable on the grounds that the obligations thereunder are penal.
(iii)	Whether a valid demand has been made under the Bond.
(iv)	If the only valid demand made under the Bond is that made on 13th March 2000, whether the Claimant can rely upon that demand in that it was made subsequent to the commencement of these proceedings.”
The particulars of claim were then amended and re-served, though only on 2nd February 2001.
8.	The four preliminary issues came before HHJ Hallgarten and were decided by his judgment and order of 7th June 2001. He answered the first two issues in the negative, on the ground that the Lease Bond was a true on-demand performance bond. No appeal is now pursued before us by CNA in respect of these answers. The judge went on to answer the third issue “Yes, but only by the demand made on 13th March 2000” and the fourth issue: “No”. He treated the fourth issue as embracing the question “whether or not the claim was time-barred”.
Issue (iii)
9.	Mr Smouha submits that the judge erred in respect of the third issue, on two grounds. First, it was wrong to restrict the status of “Obligee” to the Club. That description should be read or interpreted as referring to both Maridive and the Club, or possibly as referring to Maridive alone. Secondly, even if the Club was the only “Obligee” in terms of the Bond, still it was expressed to be “a legally representative [sic]” of Maridive in relation to the entry into of the Bond and even (inappropriately) as acting “as the legally representative [sic]” in relation (apparently) to the charter. Accordingly, Maridive as principal could, Mr Smouha submits, always intervene and demand payment direct to itself under the Bond.
10.	As to the first of these arguments, the Bond seems to me a clear enough agreement that the Obligee was to be the Club, and the Club alone. Under the first condition any demand was thus to be made by the Club and any payment was to be made to the Club. Likewise, under the fourth condition, the Bond was to be cancelled or extended by the Club. In the absence of any evidence at all to show the rationale of the Club’s introduction into the Bond, we cannot assume that it was a matter of insignificance to the parties. There must have been some reason. One possibility which occurs is that it may have been because CNA was unwilling to submit itself to exposure to a demand by Maridive, as opposed to the Club, which might be thought more likely to take an objective view of the justification for any demand, before making one. Another is that obligations or outstanding dues between Maridive and the Club led to the Club being interposed to give the Club some security. Speculative though these possibilities are, their existence as possibilities means that the terms of the Bond must be taken at face value and cannot simply be ignored or re-interpreted to circumvent what might on another view be seen simply as a technical defence.
11.	The argument of agency faces the difficulty that, in whatever capacity the Club entered into the Bond, its terms still require a demand by and payment to the Obligee, defined as the Club. The demand dated 4th May 1999 was in contrast a demand by Maridive for payment to Maridive. Even if Maridive was a party to the Bond through its “legally representative” the Club/Obligee, still a contractually valid demand could only be made by the Club as Obligee for payment to the Club in the same capacity.
12.	I add, though it is unnecessary for my decision, that I also have some doubt whether it would be right to treat Maridive as a party to the Bond through the Club. The words “a legally representative” may do no more than describe the Club’s status vis-à-vis the charterer, Maridive, rather than indicate an intention to make Maridive a party. Further, I doubt whether it is permissible to try to construe the Bond by reference to the charter, or its variation dated 19th March 1998. Although the origin of the Bond in the charter was clear, it is not shown that CNA or the Club was aware of the precise terms of the charter or of that variation. In any event, I do not consider that either the charter or the variation would carry matters any further.
13.	Mr Smouha invoked the now very well-known canons of construction confirmed by such authority as Mannai Ltd. v. Eagle Star Assurance Co. Ltd. [1997] AC 749. The reasonable person could not, he submitted, be left in any doubt that the letter dated 4th May 1999 was intended to be a valid demand made under the Bond. Therefore it must be read as complying with whatever the Bond required, or be read as a demand by and for payment to the Club. The authority he cites cannot however be carried to these lengths. The reasonable recipient of the letter of 4th May 1999 could not, in this case, safely assume that some mistake had been made with regard to the identity of the person on whose behalf and for whose account payment was being demanded.
14.	Accordingly, I consider that the judge was right to answer question (iii) as he did. The only valid demand was that dated 13th March 2000.
Issue (iv)
15.	I turn to the fourth issue. I start by observing that the object and scope of issue (iv) and of the agreed order for amendment “without prejudice to preliminary issue (iv)” were insufficiently thought through, and that this has led to difficulty and argument. This happens too commonly with preliminary issues, beneficial though they can be when properly conceived and defined.
16.	It has, however, at least been accepted on both sides that issue (iv) has two aspects. The first relates exclusively to the amendment, the second arises from the plea regarding the second demand contained in the reply served 14th March 2000. With regard to amendment, Mr Smouha started by asserting that the issue ordered covered only one procedural point; this was whether the court has power to allow an amendment of a claim to plead a valid demand not made until after the commencement of the proceedings which had themselves been begun on the basis of an invalid demand. Subject to that one point, he said, it had been decided by Moore-Bick J’s order that the amendment should be allowed. He acknowledged frankly that his clients would then argue that, for the purposes of the third condition in the Bond, it was sufficient that a suit or action had been brought on 18th November 1999 (well within the contractual time-limit); and that this would be so, even though that suit or action had been brought on an invalid demand and the claim could only succeed on the basis on a later claim not pleaded by the amendment until 2nd February 2001 (long after the expiry of the contractual time-limit and so at a time when a fresh suit or action based on the second demand could clearly no longer have been brought).
17.	HHJ Hallgarten considered that the question whether or not the claim was time-barred was “squarely within” issue (iv) of Moore-Bick J’s order dated 25th September 2000. Indeed, he said this in the context of a submission by Mr Millett that, even if the appellants were given permission to amend, some aspect of the dispute regarding time-bar might survive to the substantive trial. Mr Millett’s skeleton for the hearing before HHJ Hallgarten had identified as the “real question” both the procedural point and the permissibility of allowing an amendment which was time-barred when it was made, or when provisional permission was granted for its making. Mr Millett submitted in that skeleton both that fresh proceedings (which Maridive and the Club had also commenced relying on the second demand and which were later dismissed or abandoned) were time-barred by virtue of the contractual provision in the Lease Bond, and that the amendment in the present action allowed conditionally on 29th September 2000 and made on 2nd February 2001 was “equally time-barred”. He said:
“The Defendant’s agreement to permission was expressly without prejudice to issue (iv) which raised the very question whether the Claimant could rely on the new demand. The answer is that it cannot because (i) it was made subsequently to the original proceedings being brought, and (ii) as a subsequent demand, is now “relied on” (i.e. sued on) out of time”.
He went on to seek in any event to reserve time-bar as a substantive limitation defence. We were told that these points were all also argued before the judge, without objection as to their admissibility.
18.	The judge decided the issue whether the claim was time-barred against the appellants. His ground was that “an amendment made after the expiry of the contractual time-bar could not cure” a situation where “the original Particulars of Claim were defective, in that reliance was placed upon an invalid demand”. The notice of appeal and skeleton do not suggest that the judge was wrong to treat the issue of time-bar as being before him. On the contrary, the skeleton asserted that, despite the time-bar, an amendment could be allowed, subject only to the fetter imposed “by the threshold issue as to whether the amendments arise out of the same facts and matters”, which it went on to asset was “not in issue here”. Reliance was placed on Sion v. Hampstead Health Authority (The Times, 10th June 1994).
19.	I think that we should in these circumstances approach the matter on the same basis as the judge did, by taking issue (iv) to embrace not merely the stated fact that the demand was made after the commencement of proceedings, but also that the amendment was only being applied for after the expiry of the contractual period for suit or action. Further, the question whether the claim was time-barred after 30th August 2000 necessarily depends upon the proper construction of the Bond, so that we must, if necessary, also grapple with that. Further, it appears from the judge’s judgment (paragraph 27) that he was expressly invited by the parties by letter to determine whether, on the true construction of the third condition of the Bond, a suit, action or other proceedings was brought when the writ was first issued or served or when the amendment was ordered. In the light of the arguments we have heard, these are not the only possibilities.
20.	Mr Millett’s primary proposition remains, however, that no amendment can be made to introduce a cause of action arising out of facts occurring subsequent to the commencement of proceedings, where at the date of their commencement no cause of action existed so that the claim as originally issue was “incurably bad”. He relied upon Roban Jig & Tool Co. Ltd. and Elkadart Ltd. v Taylor [1979] 1 FSR 130. There the plaintiffs commenced proceedings in August 1995 as owners of the copyright in certain drawings, in which the judge held (on a summons to strike out the claim) that the pleadings contained no shadow of a suggestion that the plaintiffs had either a legal or any equitable title. Before striking out the claim relating to these drawings, the judge considered whether the defect was one which could be cured if the plaintiffs took an assignment of the copyright from the individuals owning the copyright, and then sought to amend. He concluded that it could not beso cured, after referring to Eshelby v. Federated European Bank [1932] KB 254 and 423. On appeal, his decision was upheld. Before the Court of Appeal, reference was evidently made to specific assignments in 1977, on which it was now suggested that the plaintiffs could and should be allowed to rely by way of amendment: see per Bridge LJ at p.143. Bridge LJ referred to Lord Denning MR’s statement in Alfred C. Toepfer v. Peter Cremer [1975] 2 LL.R. 118, 125, that the rule against allowing amendments to a claim to plead a subsequently arising claim is one of practice, not law, and can be departed from when the justice of the case required. Lord Denning went on to refer to the everyday practice of giving judgment for mesne profits, interest or loss of earnings arising post-writ. Bridge LJ recognised that “those departures in practice from the absolute rigour of the rule that a plaintiff cannot recover on a cause of action which accrued only after the writ was issued were the daily practice of the court”. But he went on to say that nothing “could possibly lead to the conclusion that it was appropriate to allow a plaintiff to amend so as to introduce a fact giving him a cause of action when at the time when the writ was issued he had no cause of action at all”.
21.	In Vax Appliances Ltd. v. Hoover plc [1990] RPC 656, the claim was for infringement of a patent relating to a cleaning head. The defendants counter-claimed for revocation of the patent. Later, they sought to amend to seek a declaration that a new cleaning head that they had by now developed did not infringe the patent. This represented a cause of action that did not exist at the date when the original counter-claim was made. Mummery J allowed the amendment. He distinguished Roban Jig as a case where the original claim was “incurably bad”, and pointed out that, since the decision in Eshelby, there had been two changes: first, the doctrine of “relator back” has been disapproved in Liff v. Peasley [1980] 1 WLR 781 and Ketteman v. Hansel Properties Ltd. [1987] AC 189; second, RSC O.18 r.9 gave a more general power to amend to include in a pleading matters arising since the date of the pleading. I interpose to say that that power was however subject to RSC O.18.r.15(2), precluding a plaintiff from raising in his statement of claim any cause of action which was not mentioned in the writ or did not arise from the same or related facts. Mummery J. pointed out that the matters sought to be introduced were “not a wholly new cause of action”.
22.	In Bastone & Firminger Ltd. v. Nasima Enterprises (Nigeria) Ltd. [1996] CLC 1,902 Rix J again took a general view of the court’s discretion to allow the addition (within the limitation period) of causes of action based on assignments subsequent to the writ, but was also able to distinguish Roban Jig on the facts. Finally, in Hendry v. Chartsearch Ltd. [1998] CLC 1,382, this court was concerned with proceedings begun in April 1994 claiming breach of an agreement for data processing and computer services, entered into with the defendants by a company Interface of which the plaintiff was chairman and with his wife owner. The defendants applied to strike out the claim on the ground that the plaintiff was not party to the agreement. The plaintiff maintained that, shortly before the hearing of the application, he had taken an assignment from his company of its claims against the defendants under the agreement. The defendants resisted leave to amend on the ground that it was not appropriate to add a fresh cause of action, unless the plaintiff had some valid cause of action at the date of the writ or counterclaim. Evans LJ (with whose judgment Henry and Millett LJJ agreed) said that scope of the Rules had changed since Eshelby, and that
“in accordance with modern practice generally, the court has a general discretion which should not be restricted by hard-and-fast rules of practice, if not of law, such as that suggested here”.
Evans LJ went on to say that the general discretion should be “exercised in accordance with the justice of the case”. He granted leave to amend, saying that the cause of action (breach of contract) remained the same, and that the amendment merely specified the reason why the plaintiff was entitled to pursue it.
23.	We are in my view bound by Hendry v. Chartsearch Ltd., which appears to me also to reflect the appropriate modern approach. Further, if and so far as it may be material, I do not regard the present case as one where, as at the date when Moore-Bick J. made his order allowing an amendment, the original claim could be said to be “incurably bad”. The validity or otherwise of the first demand was a properly arguable point, which was only decided after a preliminary issue (issue (i)) leading to full argument first before HHJ Hallgarten and now before this court.
24.	I therefore consider that, if the appellants had prior to 20th August 2000, sought permission to amend their particulars of claim to rely on the second demand, the court would have had power to grant and could properly have granted such permission. Although this is a matter which is probably anyway concluded in the appellants’ favour by Moore-Bick J’s order, I also consider that the court would have done so. It would not have been sensible to insist on separate proceedings being begun.
25.	Thus, the key to the respondent’s objection is the question of time-bar. I leave on one side for the moment the reply served 13th March 2000. Apart from the reply, the position is that, after 30th August 2000, the third condition precluded any fresh suit, action or other proceeding in law or equity to enforce a demand under the Bond. However, it is the appellants’ case that, if the amendment of the particulars of claim in the present action ordered by Moore-Bick J. stands, then the third condition will be satisfied because the present action was begun before 30th August 2000. I very much doubt that construction. The more likely reading of the third condition is in my view that it requires a suit, action or other proceeding to have been brought or maintained on the relevant demand before 30th August 2000, and that it is not sufficient to bring a suit, demand or other proceeding on another, invalid demand, made (on its true construction) by someone else.
26.	On that basis, leaving aside the possible effect of the reply, I do not consider that permission could appropriately be granted in September 2000 to allow an amendment to rely on the valid demand dated 13th March 2000, which was by then contractually time-barred.
27.	We were referred to the recent decision in Goode v. Martin [2001] EWCA CIV 1899, which concerned a yachting accident. This court there allowed an amendment after the expiry of a statutory limitation period, to rely on the version of events pleaded by the defendants. The position regarding statutory limitation is governed by Limitation Act 1980, s.35 and CPR 17.4. In that context, under s.35(1) a new claim made in the course of an action is deemed to be commenced on the same date as the original action. Under s.35(3), except as provided by s.33 (presently immaterial) or by rules of court, no such new claim (other than an original set-off or counterclaim) shall be added after the expiry of a limitation period under the Act. CPR 17.4(2) provides for circumstances in which a new claim may be so added. It is specifically limited to apply to circumstances where a statutory period of limitation has expired.
28.	In the light of the Human Rights Act, the court in Goode v. Martin interpreted the provisions of CPR 17.4(2) as if they contained additional words (which I have italicised), so as to read:
“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 or substantially the same facts as are already in issue on a claim in respect of which the party applying for permission has already claimed a remedy in the proceeding”.
29.	Goode v. Martin does not appear to me to assist. First, it is concerned with statutory limitation. Secondly (and still leaving on one side the reply), even the expanded interpretation which CPR 17.4(2) received in Goode v. Martin would not in my view benefit the present appellants. The new claim which they wish to pursue on the second demand does not arise out of the same or substantially the same facts as are already in issue on their original claim in respect of the first demand. The Bond is a common factor. But the essence of any entitlement under the Bond is a valid demand by and in favour of the right person. This gave rise to one limb of the defence to the original claim. The second demand is a quite separate demand; and does not raise this issue at all.
30.	So, if one leaves aside the reply, I would conclude that the amendment ordered in September 2000 and effected in February 2001 was not one which the court could properly order, since it related to a claim which was contractually time-barred. Does the reply alter this conclusion? Mr Smouha submits that it does. He referred to Renton Gibbs & Co. Ltd. v. Neville & Co. [1900] 2 QB 181. In that case the claim was for work and materials, the defendants, whilst denying that they were party to any such agreement, sought to set up by counter-claim in their reply a claim for damages for its breach in the event that they were found to be party. The court allowed this procedure, although there was no machinery for it in the rules. Collins LJ said that “it would be unjust to the plaintiffs to make them set up as a claim that which they only want as a defence and shield to the counter-claim”. Romer LJ said:
“If a plaintiff when he sees a counter-claim finds that he has omitted to raise a claim in addition to that already raised in the statement of claim, he ought, as a rule, to raise that claim by amendment of his statement of claim. That is the regular course, and that is what was directed to be done in the case of James v. Page (1888) 85 L. T.(Jo.) 157 before Manisty and Stephen JJ. To this rule there are exceptions. If on looking at the nature of the additional claim which the plaintiff wants to set up it appears to be one that cannot be added to the original statement of claim without inflicting hardship and injustice on the plaintiff, and further that it would be an injustice not to allow him to set it up, the Court has jurisdiction to allow him to set it up in his reply. That principle was laid down in Toke v. Andrews 8 QBD 428, a decision that was given in 1882, and has not been impugned up to the present time, and a decision which in my opinion did a great deal of good and ought to be upheld. In this case it is impossible to require the plaintiffs to amend their statement of claim and begin all over again, and it would be an injustice not to allow them to set up the claim as an answer to the counter-claim. I think that the Court ought in the circumstances of this case to allow the plaintiffs to set up their claim for breach of the contract in answer to the defendants' counter-claim founded on that contract, and to do this in the only way practically open to them, namely, by a counter-claim in reply to the counter-claim of the defendants.”
31.	Both Collins and Romer LJJ referred with approval to Toke v. Andrews 8 QBD 428. The claim there was for rent arrears of £446 as at Midsummer 1881. The tenancy was determined on 29th September 1881, and the defendant as outgoing tenant counterclaimed for £575 on an outgoing valuation of hay, straw and fodder. The plaintiff in his reply claimed to set off and counterclaim for £175 for the last quarter’s rent due on 29th September 1881.
32.	Neither of these cases is closely analogous to the present. There were particular circumstances in each justifying a departure from the general rule. In each the reply flowed from the defence for reasons which did not involve any potential deficiency in the original claim. The general principle remains that now embodied in CPR 16PD-10.2:
“A subsequent statement of case must not contradict or be inconsistent with an earlier one; for example a reply to a defence must not bring in a new claim. Where new matters have come to light the appropriate course may be to seek the courts’ permission to amend the statement of case”.
33.	I consider that the appropriate course in the present case would have been for the plaintiffs, after the second demand, either to have started fresh proceedings upon the second demand, or to have applied to amend the statement of case to rely upon it. The latter course would have involved obtaining either the respondent’s written consent or the court’s permission: see CPR 17.1.
34.	Contrary to the proper procedure, the appellants simply relied on the second demand in their reply. This was irregular, but it nonetheless amounted, in procedural terms, to the making of a new claim contrary to CP 16PD-10.2. Indeed, it was irregular because it amounted to the making of a new claim in the reply. A reply is a statement of case, and the appellants’ new alternative case was clear from 14th March 2000 onwards. Irregular though it was, I see no basis for treating it as a nullity. The respondents could of course have applied to strike out the reference in the reply to the second demand, e.g. under CPR 3.4(1) and (2). If the court had simply struck out the reference, without more, the new claim would have gone. But, on any such application, the court would also have had to consider what other courses might be open to it, pursuant to its general powers to make orders to deal with cases justly (cf. CPR 1.1(1) and 3.1(2)(m)) and/or pursuant to the specific provisions of CPR 3.10. CPR 3.10 provides:
“Where there has been an error of procedure such as a failure to comply with a rule or practice direction-
(a) the error does not invalidate any step taken in the proceedings unless the court so orders; and
(b) the court may make an order to remedy the error”.
35.	Had the respondents applied to strike out the reference to the second demand in the reply, at any time during the remaining five and a half months of the contractual limitation period up to 30th August 2000, the appellants would, without much doubt, have been stirred into applying to amend their particulars of claim and/or into commencing fresh proceedings. The court would, in my view, have been likely to decline to strike out the reply. Rather, it would have allowed the particulars of claim to be amended to plead the second demand, which would have regularised the reply. As it is, however, no such application was made. The respondents, presumably, either did not see anything wrong with the reliance placed on the second demand in the reply or preferred to let sleeping dogs lie.
36.	The court’s powers to remedy the irregularity continued in my judgment, unaffected by the expiry of any contractual limitation period on 30th August 2000. The amendment that Moore-Bick J. ordered on 25th September 2000 did not involve the introduction of any new claim into the proceedings after the expiry of the contractual limitation period. On the contrary, it regularised the procedural position relating to an existing claim brought in the action before such expiry. Thus, it was open to Moore-Bick J. on 25th September 2000 to permit, and the appellants on 2nd February 2001 to make, an amendment of the particulars of claim to rely on the second demand. 
37.	The question whether the new claim introduced by the reply constituted the bringing or maintenance of a suit, action or other proceeding within the terms of the third condition in the Bond is a question of construction of the Bond. But the concept of bringing or maintaining a suit, action or other proceeding can only be understood by reference to the domestic procedural law of whatever is the legal system under which it is suggested that such a suit, action or other proceeding has been brought or maintained. Once one concludes, as I do, that the reply on 14th March 2000 introduced a claim, which was, though irregular, nonetheless not a nullity, and that the irregularity can be cured by allowing the claim to be proceeded with by subsequent amendment of the particulars of claim, I have no doubt that the third condition was satisfied as from 14th March 2000.
Conclusion
38.	I therefore consider that the judge was wrong in relation to issue (iv), and the correct answer was: yes. It follows that his consequential dismissal of the appellants’ action must be set aside in any event.
The applications for permission to appeal
39.	This makes it strictly unnecessary to consider the appellants’ subsidiary application for permission to appeal against the judge’s order on the further ground that, even if we upheld the judge’s answer to issue (iv), still he was wrong to dismiss the action, since the appellants had asked for time to apply to amend to plead that the respondent was estopped from asserting that the first demand was invalid. I will consider this briefly however, since it was argued before us, and may still have some significance in costs.
40.	Even before us, Mr Smouha did not come armed with any draft or statement setting out how such an estoppel might run. He submitted that this was not necessary or appropriate. The appellants had asked for time, and the judge had refused them any. The only explanation about the nature of any estoppel given to the judge or to us was along lines which appear from Mr Smouha’s skeleton below:
“If necessary the Claimant will submit that the Defendant is estopped from taking objection to the validity of the first demand in its Defence, having corresponded at all times with the Claimant prior to the issue of proceedings on the assumed basis that there was no such defect.”
41.	The judge pointed out that any estoppel should have been raised in the reply, that it should certainly have been raised when the preliminary issues were being agreed and that it was in any event unsatisfactory for it to be raised one year after the reply (i.e. when the preliminary issues were being argued). It is impossible to quarrel with any of those statements. He refused further time and gave judgment on the pleadings as constituted.
42.	Had there appeared to be any basis for the suggested estoppel, I might still have had sympathy for the submission that the judge was too abrupt. Mr Smouha maintained that it was irrelevant to consider at this stage whether there was any merit in the suggested case of estoppel. I cannot however believe that its apparent weakness escaped the judge, and, even if it did, it seems to me that we are entitled and bound to consider whether it can have any conceivable prospect of success. There is no point in setting aside an order to allow a plea which has no prospect of success; and the appellants ought at this stage to be able to explain, even if only orally, what their general case is.
43.	The suggestion of an estoppel based on pre-action correspondence appears hopeless. No positive representation is suggested. No prejudice or inequity is suggested that could conceivably be regarded as precluding the respondent from raising a defence of invalidity of the first demand, as it did in their defence on 8th February 2000. The most that the appellants can say is that, if the respondent had raised the invalidity of the first demand before the appellants began the present action, the appellants would, probably, have served a second valid demand, and have sued on that also from the outset. But, once the defence was served, it was still open to the appellants to rectify the situation by serving a second, valid demand, as they did, and by commencing proceedings in time on it. Any extra costs involved in that course could be catered for by seeking an appropriate court order against the respondent. If, contrary to the conclusion that I have reached, the appellants did not commence such proceedings by their reply, but allowed the contractual limitation period to expire, that was their fault. There is no conceivable basis for treating that as prejudice deriving from correspondence or conduct of the respondents prior to the proceedings. But for my conclusion on the primary issues, I would therefore have refused permission to appeal on this ground against the judge’s refusal to allow further time and against his order entering judgment.
44.	Permission to appeal the judge’s order of 7th June 2001 was sought on one further ground, relating to costs. It was objected that the judge should not have ordered the appellants to pay the whole of the costs bearing in mind their success on issues (i) and (ii). I have sympathy with this ground. The judge is recorded as saying:
“Mine may be an old-fashioned view but where a party is successful I cannot see how he can only be entitled to a proportion of the costs”.
45.	That was not a correct approach, particularly under the CPR. Permission to appeal is justified on this ground. However, since we are setting aside the judge’s decision on issue (iv), and therefore also his dismissal of the action as a whole, it is not necessary to decide what order would have followed from a correct approach. We must hear counsel further on costs generally both in this court and below.
Lord Justice Chadwick:
46.	The first appellant, Maridive and Oil Services Ltd, is the owner of the vessel AHTS MARIDIVE III. The second appellant, The Shipowners’ Protection and Indemnity Association (Luxembourg), is a P & I Club. By a time charter dated 19 January 1998 Maridive chartered the vessel to Oceanografia S.A. By an addendum to the time charter, dated 19 March 1998, the charterer was required to provide a payment guarantee in the form of a Lease Bond in favour of the Club. The Bond, which is dated 3 April 1998, was executed by Oceanografia (described therein as “the Principal”) and by the respondent CNA Insurance Company Limited (“the Surety”). It bound Oceanografia and CNA to the Club (described in the Bond as “the Obligee”) in the penal sum of US$406,000 upon the stated conditions:
“FIRST: 	That in the event of any default on the part of the Principal and upon written demand by the Obligee delivered by registered mail to CNA . . . the Surety shall pay the Obligee the penal sum within a period of thirty (30) days.
SECOND:	That in no event shall the Surety be liable for a greater sum than the penalty of the bond.
THIRD:	Any suit, action or other proceeding in law or equity shall be brought or maintained within thirty (30) days after the termination hereof.
FOURTH:	This Bond shall expire on 31st July 2000, unless previously cancelled by the Obligee on any date prior thereto or as may be extended thereafter as necessary by mutual agreement of Principal and Obligee and upon notice in writing from the Principal to the Surety’s representative.”

47.	The charter ended prematurely, in circumstances in which both charterer and owner contended that the other was in repudiatory breach. These proceedings were commenced by the owner and the Club, as co-claimants, on 18 November 1999.  Paragraph 5 of the particulars of claim served on that date was in these terms:
“Following Oceanografia’s wrongful repudiation of the charterparty on or about 1 March 1999, and Oceanografia’s failure to pay sums due under the charterparty, a demand for payment of the sum of US$406,000 was made to CNA under the Bond on 4th May 1999”.

 CNA  served a defence on 8 February 2000. It took the point, at paragraph 5(3), that no demand under the Bond had been served by or on behalf of the Club as the named Obligee. It was said that the demand of 4 May 1999 had been served on behalf of Maridive alone. In those circumstances, it was said, CNA had come under no liability under the Bond, and the claim should be dismissed on that ground alone.

48.	The defence prompted the service, on 13 March 2000, of a second demand. That demand was expressed to be served on behalf of both Maridive and the Club. On the following day, 14 March 2000, the claimants served a reply. Paragraph 6 was in these terms:
“Paragraph 5(3) of the Defence is denied. On the true construction of the Bond, the written demand for payment from CNA was to be sent either by [the Club], as Maridive’s agent, or by Maridive. Further or alternatively, the demand of 4th May 1999 was made by Messrs. Holman Fenwick & Willan on behalf of both Maridive and [the Club]. Further, a second letter of demand was sent to CNA by Messrs Holman Fenwick & Willan on 13th March 2000.”

49.	The time for payment under the second letter of demand – if that were the effective demand – expired on 12 April 2000. The claimants did not, thereupon, commence new proceedings in reliance on the second demand. But some months later they applied to amend paragraph 5 of the particulars of claim. As amended the paragraph would read:
“Following Oceanografia’s wrongful repudiation of the charterparty on or about 1 March 1999, and Oceanografia’s failure to pay sums due under the charterparty, a demand for payment of the sum of US$406,000 was made to CNA under the Bond on 4th May 1999 alternatively 13th March 2000”.

50.	That application came before Mr Justice Moore-Bick on 25 September 2000; together with an application for the trial of preliminary issues. Issues (iii) and (iv), in the terms agreed by the parties, were:
“(iii)	Whether a valid demand has been made under the Bond.

(iv)	If the only valid demand made under the Bond is that made on 13th March 2000, whether the Claimant can rely upon that demand in that it was made subsequent to the commencement of these proceedings.”

Mr Justice Moore-Bick directed the trial of issues in the terms agreed. He gave permission for the amendment of paragraph 5 as sought, but “without prejudice to preliminary issue (iv) below”. 	
 
51.	The preliminary issues were tried by His Honour Judge Hallgarten QC. In determining issue (iii), he held that the only valid demand made under the Bond was that made in the second letter, dated 13 March 2000. I agree with that conclusion; for the reasons given by the judge and by Lord Justice Mance, whose judgment I have had the advantage of reading in draft. There is nothing that I wish to add to those reasons.

52.	The judge’s task, in relation to issue (iv), was made difficult by the fact that the arguments advanced on behalf of CNA paid little regard to the form in which that issue had been posed. On a true analysis, two distinct questions arise on the facts: (a) whether, on the hypothesis that the proceedings had been commenced prematurely (in that, in the absence of a valid demand, no liability had arisen under the Bond on or before 18 November 1999), that defect could be cured by an amendment to plead a valid demand made after the commencement of the proceedings; and, if so, (b) whether an amendment to cure that defect, made after 30 August 2000 (the last day of the contractual limitation period imposed by condition 3 of the Bond) should be permitted. On one view, it is only the first of those two questions – question (a) – that is posed by issue (iv). The issue is confined, on a literal construction, to the question whether a claimant who has commenced proceedings at a time when there was no cause of action can amend his claim to rely on a cause of action which has accrued subsequently. It does not encompass the distinct question – question (b) - whether (in such a case) an amendment to rely on a cause of action which has accrued after the commencement of the proceedings can be made at a time when new proceedings based on that cause of action would be barred by the contractual limitation period agreed between the parties. 

53.	It is not clear – at least to me – that the judge appreciated that issue (iv), as posed, required an answer to the question which I have identified as question (a); nor what answer he would have given to that question if he had thought it necessary to address it separately. He referred to the argument advanced by counsel (Mr Millett) on behalf of CNA with apparent approval – see the first sentence of paragraph 23 of his judgment:
“. . . leave to amend should not be given to introduce matters giving a claimant a cause of action, when at the time when proceedings were issued, he had none (see Roban Jig and Tool Ltd v Taylor [1979] FSR 130, in particular per Bridge LJ @ 144), so that the claim was “incurably bad” (see Beecham Group Plc v Norton Health Care Ltd [1997] FSR 81 per Jacob J @ 94).”

But his conclusion, in the first sentence of paragraph 24, elides question (a) with question (b):
“Had matters rested there, I would have favoured the submissions presented by Mr Millett: in so far as the Claimants’ case rests on an amendment made 25.9.00, since the original Particulars of Claim were defective, in that reliance was placed upon an invalid demand, an amendment made after expiry of the contractual time-bar could not cure the situation.”

54.	Mr Millett has pursued his argument on question (a) in this Court. Lord Justice Mance has reviewed the relevant authorities. It is unnecessary for me to rehearse them in this judgment. I agree with his conclusion that we are bound by the decision of this Court in Hendry v Chartsearch Ltd [1998] CLC 1,382. There is no absolute rule of law or practice which precludes an amendment to rely on a cause of action which has arisen after the commencement of the proceedings in circumstances where (but for the amendment) the claim would fail. The court has a discretion whether or not to allow the amendment in such a case; a discretion which is to be exercised as justice requires. In the present case I have no doubt that, had the claimants sought to amend their particulars of claim (so as to rely on the demand of 13 March 2000) within the period from 12 April to 30 August 2000, they should have been permitted to do so. There was no reason why they should have been required to commence new proceedings.

55.	On the basis that issue (iv), as posed, required an answer to question (a), I would hold that the judge was wrong to answer issue (iv) with an unqualified “No”. The answer to issue (iv), as posed, is that the claimants can rely on the demand made on 13 March 2000 notwithstanding that it was made subsequent to the commencement of these proceedings. There is, I think, considerable force in the submission that, in the light of that answer, the question which I have identified as question (b) - whether an amendment to plead that demand, made after 30 August 2000, should be permitted – had already been determined by the order made by Mr Justice Moore-Bick on 25 September 2000. That order gave the necessary permission to amend paragraph 5 of the particulars of claim subject only to the qualification: “(without prejudice to preliminary issue (iv) below)”. But if – contrary to that submission – it was intended that the judge should address question (b) in reaching his determination on issue (iv) – as, plainly, he did – then the answer which reflected his reasoning would have been: “No, because an amendment to rely upon the demand of 13 March 2000 could not be made after expiry of the contractual time-bar on 30 August 2000”.

56.	It would be possible to allow this appeal on the narrow ground that the only question posed by issue (iv) was whether a claimant who has commenced proceedings at a time when there was no cause of action can amend his claim to rely on a cause of action which has accrued subsequently – question (a) – to which the answer should have been “Yes”. But I have no doubt that it would be inappropriate to take that course. The question whether an amendment to rely upon the demand of 13 March 2000 could be made after the expiry, on 30 August 2000, of the limitation period agreed between the parties – question (b) – is a real question in the present case; and I find it impossible to take the view that either of the parties, or Mr Justice Moore-Bick, intended that that question should be determined by the order made, without argument, on 25 September 2000. That question having been addressed by His Honour Judge Hallgarten QC and argued on this appeal, the proper and convenient course is for this Court to decide it. 

57.	I agree with Lord Justice Mance, for the reasons which he gives, that (but for the reply served on 14 March 2000) the answer to question (b) would be “No”. Like my Lord, I take the view that permission to amend could not be granted in September 2000 so as to introduce a cause of action which was, by then, subject to a contractual time-bar. The claimants can obtain no assistance from the provisions in CPR 17.4(2) – which, in terms, apply only to statutory limitation – or from the recent decision of this Court in Goode v Martin [2001] EWCA 1899.

58.	Nor do I think that the claimants obtain assistance from the decision of this Court in Renton Gibbs & Co Ltd v Neville & Co [1900] 2 QB 181. There is no doubt that, if they wished to rely on the demand of 13 March 2000 without the need to issue a new claim form, the course which the claimants should have taken, in order to comply with the Civil Procedure Rules, was to apply, after 12 April 2000, to amend their particulars of claim – see CPR 16 PD 10.2. But the failure to take that course does not lead to the conclusion that the course which they did take – that is to say, the service of a reply on 14 March 2000 in which reliance on the second demand was pleaded – was of no effect. It was, at most, an error of procedure which the court had power to remedy under CPR 3.10. The relevant question, as it seems to me, is not whether the course which the claimants took was procedurally irregular. The relevant question is whether, having regard to the service of the reply on 14 March 2000, the proceedings current on 30 August 2000 were proceedings on which the claimants could rely for the purposes of the third condition in the Bond.

59.	The answer to that question turns on the true construction of the Bond. What does the third condition require? Is it enough that there is current at the end of the relevant limitation period (30 August 2000) a “suit, action or other proceeding” in which the claimants have raised a claim based on the demand on which they were then able to rely – the demand of 13 March 2000? In my view that is all that the third condition does require. The requirement is that, as at 30 August 2000, the claimants should be pursuing proceedings based on a valid demand. That requirement was met on the facts of the present case. The contention that, as at 30 August 2000, the claimants were not pursuing a claim under the Bond which was based on the demand of 13 March 2000 – because reliance on that demand appeared in a reply rather than in particulars of claim – would, I think, have been dismissed by commercial men as fanciful. Our courts should seek to provide solutions to commercial disputes which commercial men will recognise as sensible and just.        

60.	On the basis that these proceedings, as they were on 30 August 2000, were proceedings on which the claimants could rely for the purposes of the third condition in the Bond, the answer to question (b) - whether an amendment made after 30 August 2000 in order to remedy what is properly identified as a procedural error should be permitted – is not in doubt. The amendment has no effect on the ability of the claimants to satisfy the requirement in the third condition of the Bond; and there is no reason to disallow it on that (or any other) ground.

61.	It follows that I would allow this appeal. I would set aside the order dismissing the claim. In those circumstances it is unnecessary to consider the applications for permission to appeal on other grounds; but I should not be taken to dissent from the views expressed by Lord Justice Mance in relation to those applications.
Lord Justice Ward : 
62.	On 12th December 2000 Moore-Bick J. made these orders:-
“1.	The Claimants have permission to amend paragraph 5 of the Particulars of Claim to add the words “alternatively 13th March 2000” (without prejudice to preliminary issue (iv) below).
i)	2.	The following questions be tried as preliminary issues:
ii)	...
iii)	(iii)	Whether a valid demand had been made under the Bond.
iv)	(iv)	If the only demand made under the Bond is that made on 13th March 2000, whether the Claimant can claim upon that demand in that it was made subsequent to the commencement of these proceedings.”
63.	On 7th June 2001 His Hon. Judge Hallgarten Q.C., sitting as a deputy High Court Judge, ordered that the answers to the preliminary issues were, as to question (iii), “Yes, but only by the demand made on 13th March 2000”;  and, as to question (iv), “No”.  I agree with my Lords that the appeal relating to the third issue should be dismissed for the reasons given by Mance L.J.  I also agree that the application for permission to appeal be disposed of as my Lord has proposed and for the reasons he gives.  I deal only with the fourth issue.
64.	There has been some confusion as to precisely what was intended to be covered by the order Moore-Bick J. made.  As drafted, paragraph 1 is an order giving permission for an amendment to be made.  The particulars of claim were duly amended and the statement of case was re-served as amended on 2nd February 2001.  Henceforth, the question of whether the amendment should have been allowed or whether it should have been refused could not arise again in the court below.  The deed was done.  Permission was not given “subject to” the fourth preliminary issue as if to confer on the judge trying the preliminary issue some jurisdiction to reverse the order.  It was “without prejudice” to the resolution of the fourth issue.  All the order did, therefore, as I see it, was to preserve the right of the defendant to argue the preliminary issue and gain what subsequent advantage it could from a ruling in its favour.  The fact that the Particulars of Claim had been amended would not prejudice either a subsequent application somehow to strike it out under CPR Part 3.4 or an application for summary judgment under CPR 24.  All arguments about whether the amendment related back to the issue of the claim, or only to the date permission was granted, or to the date of the amendment actually made pursuant to that permission or to the earliest date on which the new cause of action arose were open questions, all unresolved.  
65.	If that is the correct view to be taken of paragraph 1 of the order, then His Hon. Judge Hallgarten ought not to have been concerned with points of practice on amendment of a statement of case.  He had no appellate jurisdiction nor could that be conferred upon him.  He was bound by the grant of permission and could not go behind it.  He was not to embark on a re-run of the question whether or not an amendment should be permitted.
66.	If contrary to that position, he was required to consider whether an amendment should have been permitted, then two questions of practice and procedure relating to amendment would arise:
(i)	The “Roban Jig issue” [Roban Jig & Tool Co. v Taylor [1979] F.S.R. 130]:  should the claimant be permitted to amend the claim to add a cause of action which only accrued after the claim was issued?
(ii)	The “time-bar or CPR 17.4 issue”:  should permission be granted to add a cause of action which was already time-barred when the application to amend was made?  The relevance and effect of the reply arises within this question.
These are separate and distinct points.  Either one could be fatal to the proposed amendment.
67.	If, however, His Hon. Judge Hallgarten was not entitled to question the permission to amend, and was solely to determine literally whether, in circumstances where the amendment had been made, the claimant could rely on the second demand as the only valid demand when that demand was subsequent to the issue of the proceedings, then it seems to me that the question only has relevance for two other issues:
(i)	“The construction issue”:  as a matter of construction of the third provision of the Lease Bond, was “any suit, action or other proceeding in law or equity [...] brought or maintained” by 30th August 2000 or, in other words, was there a good limitation defence available under the terms of the Lease Bond?
(ii)	“The “relation back” issue”:  the amendment having been allowed and a new cause of action having been thereby introduced, does the new claim (or is it deemed to) relate back to the issue of the proceedings in like manner to the operation of section 35(1) of the Limitation Act 1980, or to the date when the amendment was made in like manner to Ketteman v Hansel Properties [1987] 1 A.C. 189 or, as a middle way between those two extremes, to the date the cause of action on the second demand accrued?  Assuming that a contractual limitation defence is available, the court would still have to determine the date when the new claim took effect to determine whether the defence succeeded.
These are also separate and distinct questions.
68.	As I have understood what happened below, one way or another, both the two pleading points ( the Roban Jig point and the time-bar/CPR 17.4 point) were argued before the judge and both are referred to by him in his judgment (although he may not have made it quite clear how he was deciding the Roban Jig point standing in isolation).  I understood Mr Millett to have flagged up the substantive point of construction of proviso 3 in his skeleton argument.  As the judge said:-
“Mr Millett also purported to reserve the right to submit later – presumably at trial – that whatever my ruling, the claim was nonetheless time-barred, but for my part I venture to doubt whether there is anything for Mr Millett to reserve:  whether or not the claim was time-barred is in my view squarely within question (iv).”
According to Mr Smouha, as I understood him, full argument on the construction point was not advanced before the judge.  Nevertheless both parties agreed we should resolve the issue, and so argument was addressed upon it to us, and like my Lords I propose to resolve that question.
69.	Because argument was addressed to us on all points (save perhaps the relation back point about which no-one except me was too bothered), I start with the procedural points on amendment, even though I doubt whether the judge should have entertained them.
The Roban Jig Issue.
70.	I agree with my Lords, whose judgments in draft I have had the chance to read, that we are bound by Hendry v Chartsearch Ltd. [1998] C.L.C. 1, 382 where Evans L.J. held at paragraph 23:-
“In accordance with modern practice generally, the court has a general discretion which should not be restricted by hard-and-fast rules of practice, if not of law, such as that which is suggested here.  The judge therefore was wrong to consider that the court had no power to give leave to make the re-amendment.  In my view, he was wrong also to consider that the discretion was somehow restricted by what he called “the principles set out in Eshelby “[Eshelby v Federated European Bank Ltd. [1932] 1 K.B. 254]” and in Roban”.  It is a general power which in modern parlance has to be exercised in accordance with the justice of the case.”
I shall return in a moment to consider where the justice of this case lies.
The Time-Bar/CPR 17.4 Issue.
71.	The first point to note is that this is a contractual time-bar.  Consequently CPR 17.4 does not arise because by 17.4(1):-
“This rule applies where
(a)	a party applies to amend his statement of case in one of the ways mentioned in this rule;  and
(b)	a period of limitation has expired under –
(i)	the Limitation Act 1980:  or
(ii)	the Foreign Limitation Periods Act 1984 or
(iii)	any other enactment which allows such an amendment or under which such an amendment is allowed.”
72.	Because the limitation is not a statutory one, the question more precisely formulated is in what circumstances, if at all, should the court permit an amendment to a statement of case to add or substitute a new claim after the expiry of a contractual period of limitation?  Since CPR 17.4 is not directly in play, there is strictly no need to establish the jurisdiction or threshold set by that rule, as amplified by Goode v Martin [2002] 1 All E.R. 620, that the new claim must arise out of the same or substantially the same facts as are already in issue on a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.  Since there is no threshold requirement imposed through the application of CPR 17.4, Part 17 gives no specific indication of the principles upon which the court should exercise its discretion to permit the amendment.  The guidance is given by the overriding objective.  The case must be dealt with justly.  Thus this question merges with the Roban Jig question.
The Justice of the Case.
73.	The justice of the case ordinarily demands that an amendment should generally be allowed in order that the real dispute between the parties can be adjudicated.  The real dispute is whether the defendant should be held liable because of its failure to pay after the lawful demand made on 13th March 2000.  On the other hand fairness requires the court to balance against the claim for that remedy the prejudice suffered by the defendant in being deprived of a defence which at the date the amendment was made was a possible accrued defence of the expiry of a contractual period of limitation.  It is necessary to see how that accrued defence arose.  Here it accrued because the claimant mistakenly failed fully to respond to the challenge to the validity of the first notice for the reasons given in the defence.  The claimant responded only in part by sending the second demand and by asserting the validity of that second demand in its reply.  Time had not then expired.  What the claimant did not do was to seek to amend the particulars of claim.  The meaning of the reply was, however, clear:  the claimant was asserting that even if the defence challenging the validity of the first notice was good, yet the claim should still be allowed because the second notice was one which could not be impugned.  Thus the effect of the reply was to re-iterate the claim.  What is procedurally objectionable is that the reply falls foul of CPR 16 P.D. 10.2  in that:-
“A subsequent statement of case must not contradict or be inconsistent with an earlier one;  for example a reply to a defence must not bring in a new claim.  When new matters have come to light the appropriate course may be to seek the court’s permission to amend the statement of case.”
74.	There was, thus, an error of procedure because of the failure to comply with that practice direction but the error did not invalidate the step taken in the proceedings:  see CPR 3.10.  However irregular, the claim made in the reply stood.  Had this been a statutory period of limitation to which CPR 17.4 applied, I would have treated the reply as claiming a remedy in the proceedings and as putting in issue the same facts as arose out of the new claim.  All the material averments for the new claim were already pleaded - a good second demand and a continuing failure to pay.  Had the claimant sought to amend the particulars of claim relying on the failure to pay after that second demand and before the expiry of the contractual time-bar, then permission would undoubtedly have been given.
75.	In my judgment giving the claimant the opportunity to correct procedural irregularities and to frame a claim which was obviously there and obviously, albeit erroneously thought to be effective, should prevail over the prejudice to the defendant in denying it an accrued defence.  The interests of justice and the balance of fairness between the parties in my judgment comes down in favour of the claimant.  Consequently both the Roban Jig issue and the time-bar issue should be decided in the claimant’s favour.
The Construction Issue.
76.	The particulars of claim claimed payment of the sum fixed by the Lease Bond.  It was based on the first demand subsequently found to be invalid but unless and until the proceedings were struck out, they were proceedings capable of being maintained.  For the reasons I have attempted to explain, the reply also contained a claim for payment of the same sum based on the second demand.  Although irregular, that too was capable of being maintained and could be maintained unless and until it was struck out.  Together the particulars of claim and the reply constituted an action within the meaning of the third proviso which had been brought before and was being maintained when the time-bar fell.  The commercial purpose of the third proviso was to enable the defendant to close its books if no proceedings had been brought within a month of termination.  Here proceedings were on foot.  Both demands had been put in issue, however irregularly, before the termination of the agreement.  No man of commerce would have considered the books had been closed in those circumstances.  Giving the words the meaning which make good commercial and business commonsense, then the third proviso is satisfied by the proceedings as they were constituted.  In those circumstances the time-bar did not fall and the limitation defence does not arise.
77.	That conclusion makes it unnecessary to decide the relation back issue.
78.	I would therefore allow the appeal.
Order:	appeal allowed;  order not to be drawn for 14 days pending counsel lodging an agreed minute of order (with liberty to apply if agreement cannot be reached.
(Order does not form part of the approved judgment)