England and Wales High Court (Queen's Bench Division) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		9 June 2009

MR JUSTICE BEATSON:

1. There are before me two applications. The first, made on 31 December last year, concerns the substitution of a party pursuant to CPR 19.5(3)(d)(i). The second, made on 22 January 2009, is an application by the claimant for an extension of time in which to serve its particulars of claim. The second application only arises if the first application, which is made by the defendant, is unsuccessful. Therefore, I consider that first.
2. By the first application the defendants, members of the Willis Group, seek to set aside an order made without notice by Master Fontaine on 22 December 2008 substituting Willis Group Limited and Willis Limited for the defendant originally named in the claim form, Willis Group Holdings Limited. The defendant does for the following basis. First, there was no mistake by the claimant as to the name of the party sued. Secondly, if there was a mistake, the defendant was misled because the true identity of the party the claimant was intending to sue was not apparent from the claim form or known to the defendant or known on any reasonable grounds.
3. The underlying claim out of which the two applications arise is a claim made by the claimant, Lockheed Martin Corporation, on 28 August 2008. That claim arises out of a global settlement between the claimant and London Market Insurance Companies on 29 August 2002. The total sum agreed in the settlement was US$124 million. Of this US$8.124 million was attributed to "unknown ship building London Market Insurers" and the sum paid to the claimant was reduced by this amount because the insurers remained unknown.
4. The proceedings issued on 28 August 2008 were thus filed shortly before the expiration of the limitation period. It is accepted for the purpose of these applications that that period expired at the latest on 26 November 2008.
5. The claim launched on 28 August 2008 was brought against Willis Group Holdings Limited, a Bermudian company, which is the senior or ultimate holding company in Willis Group, and against Marsh Limited. The proceedings against March Limited have been discontinued recently.
6. The claimant alleged that their brokers were negligent in the conduct of their business in failing to maintain proper records of those subscribing to the policies. The policy records, including the placement slips, have apparently been lost or been disposed of.
7. The original claim form describes the claim as:

"…for professional negligence arising from the Defendants' broking of insurance policies on behalf of the Claimant and its predecessors in interest prior to 1993. The Defendants' owed duties of care to the Claimant including a duty to maintain evidence of the terms, conditions and subscribing market to the policies of insurance sufficient to enable the handling of the claims made by the Claimant under the said policies, and collection of such sums from the subscribing market as may be payable by reason of a settlement of any claims."

8. The claim form states that in 2002 the claimant agreed to a settlement of its claim of London Market Insurers and release of liability for a total sum of US$124 million. It also states that the settlement was achieved in two stages. On 6 March 2002 a full and final settlement was agreed with certain underwriters at Lloyds of London whereby the underwriters agreed to pay a total of US$63 million.
9. On August 29, 2002 a full and final settlement was agreed with London Market Insurance Companies ("LMIC") whereby the companies agreed to pay US$40 million:.The several shares allotted to LMIC are stated to be set out in attachment and deed to the August settlement agreement. The LMIC agreement provided that a number of LMIC were excluded from the settlement. The settlement agreement provided for payment of the several allocated shares to be made within 90 days of execution of the agreement.
10. The claim form also states that the remaining US$21 million of the settlement amount was not allocated to individual LMIC. It represents the aggregate total of the amounts allocated to the insolvent insurers, plus an amount allocated to LMIC subscribing to those policies for which no subscribing market could be established by the expiration of the 90-day period.
11. The claim form states that the breach of duty to maintain records was a continuing breach and the damage caused by the said breach accrued on the expiration of the said 90-day period by reason of the admission of those amounts so allocated from attachment D to the August 29^th settlement agreement. The damage as claimed at that stage was stated to be the difference between the amounts claimed against the insolvent LMIC and US$21 million.
12. What happened was that the claim was sent to Willis Group Holdings Limited at 10 Trinity Square, London, an address which was no longer current for the Willis Group, which had moved to a new building. It did not reach the Willis Group until 19 December. When it did, it reached Ms Bolton-Jones, an inhouse solicitor employed by Willis Limited, who worked at the new address at 51 Lime Street. She has furnished a witness statement in support of the defendant's application dated 14 January 2009.
13. The application is also supported by three witness statements made by Mr Ogden, a partner in the firm of Ince & Co, made on 15 January, 17 April and 3 June this year. Ms Bolton-Jones in her statement notes that Willis Group Holdings is not an English company. Its registered address is 9 Trinity Square, Lower Lime Street. It is a Bermudian company, which is the ultimate holding company for various Willis corporate entities, a company quoted on the New York Stock Exchange, and valid service could not be effected on it in England.
14. Ms Bolton-Jones spoke to the claimant's solicitor, Mr Scanlan, on 19 December and explained these facts. She also informed him that the legal team in London was not authorised to accept service of the claim form for Willis Group Holdings Limited.
15. According to the attendance note she made, she also indicated that Willis Group Holdings Limited was not in existence on the dates referred to in the claim form, and this might be a problem for the claimant.
16. Following that conversation the claimant applied to Master Fontaine and made an application to change the name of the defendants and to substitute the names for Willis Group Holdings Limited and Marsh Limited to the companies of Willis Group Limited and Willis Limited. The former is the senior or ultimate holding company in England; the latter is a broking company which was formerly called Willis Faber Dumas.
17. That order came before the learned master on the same day and the amendment was made pursuant to CPR 19.5(3)(a)(i). CPR 19.5(2) provides that:

"The court may add or substitute a party only if,

(a) the relevant limitation period was current when the proceedings were started, and

(b) in addition or substitute is necessary."

18. 19.5(3) provides that:

"The addition or substitution of a party is necessary only if the court is satisfied,

(a) the new party is to be substituted for a party who is named in the claim form in mistake for the new party.

(b) the claim cannot be properly carried on by, or against, the original party unless the new party is added or substituted as claimant or defendant, or

(c) the original party has died and/or a bankruptcy order made against him, and his interests or liabilities asked of the new party."

Only (a) is relevant in this application.

19. The most recent statement of the position of the operation of this provision, a provision which has been said to be "notoriously causing problems", is in the decision of the Court of Appeal last year in Adelson v Associated Newspapers [2008] 1WLR 585. In that case the Court of Appeal in the judgment handed down by the then Lord Chief Justice, Lord Phillips, sought to clarify what the court described in paragraph 5 as "a difficult area of procedural law". The court had regard to the predecessor of CPR, Rule 19.5, Order 20 r 5 because (see paragraph 47 of the judgment) the court considered that the new rules were intended to replicate the provisions of Order 20 r 5. In paragraph 27 of the judgment Lord Phillips stated that the wording of order 20 r 5 suggests that the following requirements must be satisfied before an amendment can be made under that rule:

"The wording of Ord 20, r 5 suggests that the following requirements must be satisfied before an amendment can be made under that rule: (i) A mistake must have been made. (ii) The mistake must be genuine. (iii) The mistake must not have been misleading or such as to cause any reasonable doubt as to the identity of the person intending to sue or, as the case may be, intended to be sued."

20. Those requirements broaden or reflect the outcome of the decision of the Court of Appeal in the Sardinia Sulcis [1991] 1 LR 201 and in particular the summary of the criteria to be satisfied set out by Lloyd LJ.
21. The first and second requirements set out by Lord Phillips reflect the first requirement set out by Lloyd LJ. The third requirement set out by Lord Phillips reflects the second requirement set out by Lloyd LJ. The other two requirements set out by Lloyd LJ are not overly referred to by Lord Phillips as following from the wording of Order 20. Lloyd LJ stated that:

"The court must be satisfied (i) that there was a genuine mistake, (ii) that the mistake was to the misleading, (iii) that the mistake was not such as to cause reasonable doubt as to the identity of the person intending to sue and (iv) that it would be just to allow the amendment."

22. In Adelson's case the court stated (at paragraph 29) that most of the problems arise out of the difference between an error of identification and an error of nomenclature, a difference which was said to be sometimes elusive. The court stated that an error of nomenclature occurs where the claimant identifies the correct person as having caused him injury and describes him in the pleadings by the wrong name. An error of identification will occur where the claimant identifies an individual as the person who has caused him an injury, intends to sue that person, describes him by the correct name, but discovers that he has identified the wrong person.
23. The court stated (at paragraph 30) that where the claimant knows the attributes of the person he wishes to sue, for example the manufacturer of an object but has no personal knowledge of the identity of that person, a problem arises in distinguishing two types of error. The rule envisages that a defendant is identified by the claimant but is described by a name which is not correct.
24. Lord Phillips concluded that the mistake must be as to the name of the party and not as to the identity of the party (see paragraph 43). Such a mistake can be demonstrated where the pleading gives a description of the party and identifies the party but gives the party the wrong name in such circumstances: a "mistake as to name" is given a generous interpretation. The mistake will have been made by the person who issues the proceedings bearing the wrong name. The true identity of the person intended to be sued must be apparent to the latter, although the wrong name has been used. Finally, he stated that most if not all of the cases have proceeded on the basis that the effect of an amendment is to substitute a new party for the party named.
25. The reference to a "generous interpretation" is repeated in paragraph 56 which states that the test laid down in Sardinia Sulcis is a "generous test" of mistake.
26. The overall conclusions in Adelson are to be found in paragraphs 55 to 57. First, as a precondition, it is clear from the language of Rule 19.5(3)(a) that the person who has made the mistake must be the person responsible for the issue of claim. There is no question that that is so in this case. Here it is the claimant's solicitor, Mr Scanlan, from Scanlan & Co who made the claim. I will come to the evidence due course.
27. Secondly, it is stated in paragraph 55 that that person "must be in a position to demonstrate that, had the mistake not been made, the new party would have been named in the pleading". See also paragraph 69 which refers to a situation where, discussing the Morgan Est case, which the court said should not be followed. It is stated that if they are to fall within the rule claimants must establish that there was a mistake as to the group structure or the roles played by members of the group and would, but for that mistake, have included the particular people as claimants.
28. In the present case the evidence as to mistake is contained in Mr Scanlan's first witness statement dated 22 December. Mr Stafford-Michael relied on paragraphs 4 to 11 of this. Paragraphs 4 to 6 do not identify the mistake, they identify the claimant's purpose in issuing the claim form. Paragraph 4 states:

"The Claim Form was issued on the 28^th August to preserve the Claimant's position whilst a further investigation was being conducted. The purpose of the investigation was to establish the precise quantum sought from each of the Defendants. The Claimant has now established the total quantum (in excess of US$8 million) and is in the process of agreeing with the agents for the London Market Companies, access to the relevant documents which will enable the Claimant to particularise the Claim against each of the Defendants. It is anticipated that Particulars of Claim will be served by January 31^st 2009."

29. Paragraph 5 states that:

"If the proposed Defendants do not agree to an extension of time to serve the particulars, an application shall be made for an Order to do so in the first week of January 2009."

30. Paragraph 7 to 11 deal with service on Willis Group Holdings Limited. Paragraph 7 states that the new holding company for the Willis Group is Willis Group Holdings. Paragraph 8 states that the claim form was served on Friday 19 December by leaving it at the reception of the Willis building at 51 Lime Street and refers to a telephone conversation between Mr Scanlan and Ms Bolton-Jones who informed him that the service was ineffective because the company was a Bermudian company.
31. Mr Scanlan states: "I was surprised at her comments because I believed the Claimant had correctly named the appropriate holding company."
32. Paragraph 9 states that Mr Scanlan undertook a search at Company's House and reviewed the Willis Group website and he exhibits the results of that.
33. Paragraph 10 sets out the mistake:

"My searches revealed that the First Defendant had been misnamed. The Claimant should have been named as Willis Group Limited. This mistake was entirely understandable given the contents of the web site which consistently refer to Willis Group Holdings and gives the impression that this company is the principal company for the Willis Group. The web page does not refer to the fact, which I now accept, that this company is a Bermudian company. The Bermudian company was apparently set up as a vehicle to be quoted on the New York Stock Exchange. At no stage did the Claimant intend to issue proceedings against the Bermudian company. It intended to issue against Willis Group Limited, the senior UK company. My searches also revealed that Willis Limited should be named as a Defendant as they are the direct successor in interest to Willis Faber and Dumas Limited and Stuart Wrightson Limited."

34. The claimant relies on what Mr Stafford-Michael referred to as the "opaque nature of the Willis Group". Mr Stafford-Michael relies on Mr Scanlan's evidence that the claimant intended to issue against the appropriate holding company and that Willis Group Limited is the senior UK company. As to the complexity of the group, the structure is exhibited to Mr Scanlan's first witness statement. Mr Stafford-Michael relies on a mis-description by Willis itself on its website, which refers to Willis Group Limited as listed on the New York Stock Exchange rather than Willis Group Holdings Limited, as such, to show the difficulties it faces.
35. The only evidence of the claimant's intention is in Mr Scanlan's first witness statement. There is no evidence of a mistake of a different nature to that stated in his evidence. Mr Stafford-Michael said that, as for adding Willis Limited, as the claimant was going to a lower level of the pyramid, having left Willis Group Holdings Limited, it is not surprising that there is an increase in the number of companies.
36. As far as the second requirement of CPR Rule 19 that the mistake not be misleading, Mr Stafford-Michael submitted that the Willis Group is able to identify the proper parties. He relied, by way of example, to Willis's response to a request made on 7 January about a Lockheed policy 55/4597 as showing that Willis was able to produce documents in response to such requests. This document is a cover sheet from Willis Limited Claims and Research Solutions in Ipswich. It is one of a number of such documents available to the claimant. It does not in fact relate to one of the missing policies, but it was relied upon to show that there would be no confusion.
37. Mr Stafford-Michael submitted that the defendant could see from the claim form is reference to Lloyds underwriters that the broker likely to be involved was one authorised to place business at Lloyds and thus an English entity, and also that, as the claims related to the period before 1993, they related to entities in existence before that date. He submitted that, relying on the case of Weston v Gribben [2006] EWCA Civ 1425, the test is whether the identity of the claimant or defendant could be changed without significantly altering the claim. He submitted that had since all the amendment sought to achieve was the naming of companies within the same group, it was difficult to see that this test was not satisfied.
38. He also relied on Horne-Roberts v SmithKline Beecham [2001] EWCA Civ 2006 in which the Court of Appeal approved as part of the approach adopted in the Sardinia Sulcis, in which it asked whether it was possible to identify an intended defendant by reference to a description more or less specific to the particular case. If it is, it is a mistake of the type covered by the rule.
39. He also relied on the fact that the statement of case in the claim form is capable of only one meaning: that the defendant is a company within the Willis Group responsible for breach of duty in failing to maintain records of insurance placed by a member of the group on behalf of Lockheed. For these reasons he invites me to reject the defendant's application.
40. Mr Dougherty, on behalf of the defendants, submits that there are several problems with the order made by Master Fontaine. The first is that there was no mistake as to the name because little thought had been given by the claimant as to who to name before the claim form was issued. To say that the mistake was one of name only, submitted Mr Dougherty, meant that the claimant must have focused on the identity of the proposed defendant in the first place. Mr Scanlan's evidence is that what the claimant was looking to was the "appropriate holding company" and Willis Group Holdings Limited was indeed the ultimate superior holding company.
41. Secondly, as far as the submissions that it was clear from the role of Lloyds' underwriters in the settlement that the broker was, or brokers, were United Kingdom brokers authorised to place business at Lloyds, Mr Dougherty submits that that is not clear. It is not clear that the insurance company defendants who were in the Unknown Shipbuilding London Markets Insurers category are not those with whom the business was placed.
42. While recognising the force of Mr Dougherty's submission, given the generous test of mistake in this context, I am prepared to assume for the purpose of this application that the claimant made a mistake as to name rather than identity. That does not, however, include Willis Limited. That is not a holding company. It is a trading and broking company. Mr Scanlan's first statement makes it clear that there was no intention to sue Willis Limited at the time the claim form was issued. It was only after 19 December that the claimant appreciated that proceedings ought to be brought against Willis Limited as the "successor" to Willis Faber and Dumas and Stuart Wrightson, although it is not in fact the successor to Willis Faber, but it is Willis Faber and Dumas under a different name.
43. In view of Mr Scanlan's evidence it is not possible to conclude that Willis Group Holdings Limited was named in mistake for Willis Limited. It is not a holding company. There was no intention to sue it when the claim form was issued. Thus, the second limb of the test set out at paragraph 55 of Adelson's case, that had the mistake not be made the new party would have been named in the pleading, is not satisfied. (See also Evans LJ in International Bulk Shipping and Services Limited v Minerals and Metals Trading Corporation [1996] 1 AER 1017 at paragraph 41.)
44. The problem in this case, as far as Willis Group Limited is concerned, is what identification with respect to a description of broker does to the per se identity of a defendant within the Willis Group. There are a large number of broking entities within the Willis Group. This takes us to the second limb of the test: whether the mistake was misleading to the other party. Did it cause reasonable doubt as to the identity of the party who is intended to be sued?
45. In Adelson's case Lord Phillips referred to Stocker LJ's words in the Sardinian Sulcis where he asks at page 209:

"Can the intending plaintiff or defendant be identified by reference to the description which is specific to the particular case, e.g. landlord, employer, owners or ship owners? If the identification of the person intending to be sued appears to be of such specific description any amendment is one of name, where it does not it will in many if not all cases involve the description of another party rather than simply the name."

Here the evidence of Mis Bolton-Jones is that it was unclear to the Willis Group Holdings Limited, the defendants, which entity the claimant was intending to sue. Her statement states that it was clear that Willis Group Holdings Limited was the wrong defendant because it was not a trading company but a holding company and also because it did not exist prior to about the year 2000. She states that it was not, however, clear who the intended defendant was because, given the nature of the claim, it was not clear that what was intended was to sue a holding company.

46. Her evidence is (see paragraph 15) that on receipt of the claim form, whether on 19 December or 24 December, following Master Fontaine's order, it was not obvious to her which company or companies the claimant intended to sue: "the claim form gave insufficient information with which we could readily identify the correct intended defendant to any proceedings."
47. Her evidence refers to the fact that, although there are references in the claim form to London Market Insurers, certain underwriters at Lloyds and London Market Insurance Companies, and those references meant that the defendant was likely to be an English broking company, that was not certain. First, the claimant was based in the United States and it was not clear whether the brokers were main or sub-brokers.
48. Secondly, the claim form suggested that there was no complaint with regard to the Lloyds insurers, but that the complaints were about the company placements. Ms Bolton-Jones and Mr Dougherty, in his submissions, also relied on the vagueness as to dates, the claim form referring to the period only as prior to 1993, and to the fact that there was no information given as to the type of policy or which policies were missing.
49. Thirdly, Ms Bolton-Jones's evidence and Mr Dougherty's submissions were that, although the company which was most commonly proceeded against in the UK was Willis Limited, it was not the only one. She refers to Stuart Wrightson, and Mr Dougherty also relies on that.
50. In the draft particulars of claim, which were served earlier this year, the allegations are made of risks brokered by four different Willis companies. The only companies the defendant has identified are Willis Limited and Stuart Wrightson Limited.
51. Mr Dougherty also relies on the fact that some of the policies will have been issued to the claimant's predecessor (see Mr Scanlan's fourth witness statement at paragraph 4). There is no dispute (see Mr Scanlan's fourth witness statement, paragraph 7) that the Willis Legal Department did not know who the intended defendant was when they received the claim. They did not get the settlement at the time they received the claim form. When they did receive the settlement they did not get the full documentation. In particular attachments A and B, respectively the Lockheed policies, and the particular companies subscribing to those policies were not furnished. As to the submission that the defendant's response to the request, the example of which I have referred, shows that it could identify the relevant company, that request quoted a policy number. The claim form, however, did not quote policy numbers.
52. Finally, I observe that the cases considered by the Court of Appeal in Adelson's case were all cases in which the party resisted the substitution of name knew who the intended party was. For the reasons I have given, I do not consider that the attack on Ms Bolton-Jones' evidence succeeds.
53. It was said by Mr Stafford-Michael that the difficulties arose from the complexity of the Willis structure. The complexity of that structure was surely known to experienced insurance solicitors such as Scanlan & Co. The decisions made when the claim form was issued were made on the basis of information on a web site, not on the basis of Company's House searches. Once those searches were made, Willis Group Limited and Willis Limited were identified in a short time.
54. It is accepted that the claim form was issued in a protective way because the limitation period was about to expire. There had been no communication with Willis prior to issuing the claim. Accordingly, although I accept that the claim was mistaken, the test under CPR Rule 19.5 requires that the true identity of the person intended to be sued must have been apparent to the other party, although the wrong name was used. Here all that was apparent is a description of the person intended to be sued, a broker. That does not identify the party, but a description. Moreover, it does not accord with who the claimant stated it wished to proceed against, an appropriate holding company.
55. I turn to the question of discretion. If I am wrong as to whether the identity of the person who was intended to be sued should have been apparent on reasonable inquiry to the other party, here the Willis entities, the question is whether, in the exercise of discretion, the substitution should be allowed. I accept Mr Stafford-Michael's submissions that this is in a sense like a strike out, because not to the permit the substitution would be to prevent the merits of a dispute coming before the court because of a limitation period. But that is the nature of limitation periods.
56. I also understand that the claimants found difficulties in identifying proper defendants. Those difficulties largely arose because of the lateness of the instructions to their present solicitors in respect of these claims almost at the expiry of the limitation period. When the claim form was issued the claimants accepted that they were unable to plead the particulars of case at that stage. They assumed they would get information within a four-month period. I accept that they sought to get that information in a timely way and, save for their omission to make an application for an extension of time for the particulars, once they started acting, after the issue of the claim form, they did not delay.
57. However, there is no explanation whatsoever as to what happened in the six years from the date of the settlement. The problem of the unknown policies was known then. Secondly, it does not appear, it is not said, and Mr Stafford-Michael did not suggest otherwise, that any research had been conducted prior to the service of the claim form to identify the correct defendant. Thirdly, the defendant was unaware of this claim on any view until after the expiry of the limitation period. In Adelson's case the Court of Appeal (at paragraph 57) approved the statement of Keene LJ in Horne-Roberts v SmithKline Beecham [2002] 1 WLR 1662 at paragraph 42. Keene LJ said that in such a case the court would be likely to exercise its discretion against permission to make the amendment. That is the position in this case. In these circumstances, where there has been no explanation given as to what happened during the six years before Scanlan & Co were instructed, the claimant provides no reason to displace that general predisposition.
58. Fourthly, at the time the claim form was issued the claimant could not plead its claim. Mr Dougherty relied on the decision of Cooke J in Nomura v Granada Group [2007] EWHC 642 to the effect that it is an abuse of process to issue a claim form in such circumstances. In particular he relied on paragraph 38 of the judgment. There are differences between this case and that one. There is more detail in the claim form in this case than there was in the Nomura case. The claim in this case is not contingent. But paragraph 38 of the judgment in Nomura indicates that a claimant must be in a position to proceed and formulate particulars of claim when the claim form is issued. That this is so, it is also seen from CPR 7.7 whereby a defendant may call for a claim form to be issued on 14 days' notice.
59. In this case the claimant could not plead until a considerable time after the claim form was issued. It could not do so until March of this year. It did not know which documents had been lost. It could not particularise those, and, it could not particularise the basis of the negligence claim or the loss suffered because of that negligence. See in particular the emails sent to Mr Cooke of Navigam(?) dated 25 November which states that the claim cannot proceed without identifying the missing market policies. See also the letters dated 3 December to Peter Judge seeking disclosure, to Holmans dated 19 January, and Mr Scanlan's second and fourth statements, respectively paragraphs 16 and 17.
60. While recognising the differences between this case and the factual scenario that Cooke J was considering, the inability of the claimant to formulate particulars of claim at the time of where was the claim form was issued is not a mere formality but went to substance. There are other procedural defects which Mr Dougherty relied on, the service of Master Fontaine's order without the application notice, and service of the amended claim without the particulars of claim, and the fact that the particulars of claim were not served prior to the expiry of the claim form. I have taken these into account, but they are make-weight arguments, not in themselves of significance.
61. For the reasons I have given, however, I allow the defendant's application to set aside Master Fontaine's order. In these circumstances it is not necessary for me to consider the claimant's application.