| [2010] UKSC 22 | 33 |
97. For much of the 20th century the same approach was taken. In themuch-cited
case of Mabro v Eagle,Star and British Dominions Insurance Co Ltd [1932] 1 KB
485 , 487 Scrutton LJ said:"In my experience the Court has always refused to
allowa party or a cause of action to be added where, if it were allowed, the
defenceof the Statute of Limitations would be defeated. The Court has never
treated itas just to deprive a defendant of a legal defence."The same
uncompromising rule of practicewas applied even in cases (such as Ingallv
Moran [1944] KB 160 and Finneganv Cementation Co Ltd [1953] 1 QB688 ) where
the result was to shut out a meritorious claim, arising from afatal accident,
on what many would regard as a technicality. Indeed in thelatter case Singleton
LJ (at p699) described the point as "a blot upon theadministration of the law."
98. These hard cases turned on the technical butlong-established distinction
between the position of an executor (whosestanding relates back to the
deceased's death, and is merely confirmed byprobate) and an administrator
(whose title depends on, and dates from, thegrant of letters of
administration). That distinction has ceased to berelevant, for present
purposes, because of section 35(7) of the Limitation Act1980 and CPR r17.4(4)
(made pursuant to section 35(7)). Rule 17.4(4) (replacingthe former RSC Order
20 r5(4)) provides:"The Court may allow an amendment to alter the capacityin
which a party claims if the new capacity is one which that party had whenthe
proceedings started or has since acquired."Here it is the last four words
(added toOrder 20 r5(4) in 1981) that made the important change.
99. Section 35 of the Limitation Act 1980 was enacted togive partial effect to
the recommendations of the 21st Report (Final Report on Limitation of
Actions)of the Law Reform Committee (Cmnd 6923), published in September 1977.
It wasthe first statutory provision which (by the prohibitory terms of
subsection(3), and subject to the important exceptions in subsections (4) to
(8)) made itthe Court's duty, and not merely a long-standing rule of practice,
to refuseamendments which subvert an established defence based on the
Limitation Act. Incases where the amendment was not prohibited, the Court
retained itstraditional discretion whether or not to permit an amendment, that
discretionbeing exercisable by reference to what was just (embodied, since
1999, in the"overriding objective" in CPR 1.1).
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100. Although section 35 of the Limitation Act 1980 was thefirst provision in
a limitation statute which referred to rules of court, rulesof court (made
under section 99 of the Judicature Act 1925) had already startedto acknowledge
the existence of limitation statutes. As Millett LJ pointed outin Yorkshire
Regional HealthAuthority v Fairclough Building Ltd [1996]1 WLR 210 , 216, RSC
Order 20 r.5 (which apart from r.5(4) was in forcelong before section 35 came
into force on 1 May 1981) gave a limited power toamend pleadings even after the
expiration of the limitation period. As early asthe mid-1960s questions had
been raised as to whether Order 20 r5 was intravires: Rodriguez v RJ Parker
(Male) [1967] 1 QB 116 (Nield J); Mitchell v Harris Engineering Co Ltd
[1967] 2 QB 703 (Court of Appeal). In the latter case RussellLJ said at p721,
after referring to Mabro and some of the other earlier cases:"But I take these
cases to have been decided on groundsof settled practice, albeit attributable
to the parties' position vis a vis theStatute of Limitation. So far as I am
aware, no judge said that it would beoutside the jurisdiction of the Court to
allow the amendment in question: andif it were thought to be a question of
substantive law, this would surely havebeen the immediate and short answer to
the application to amend."The attacks on the vires of Ord 20, r 5were therefore
rejected. Further insights into the history of thesedevelopments can be
obtained from the judgments of Hobhouse J in Payabi v Armstel Shipping
Corporation (TheJay Bola) [1992] QB 907 , 922- 928; Staughton LJ in Hancock
ShippingCo Ltd v Kawasaki Heavy Industries Ltd [1992] 1 WLR 1025 , 1028 - 1030;
and Mance J in Industrie Chimiche Italia Centrale vAlexander G Tsavliris &
Sons Maritime Co (The Choko Star) [1996] 1 WLR 774 .
101. I shall come back to some wider issues arising onsection 35 and the
Yorkshire Regional Health Authority case, but first I wantto look more closely
at the concept of capacity which is the focus of section35(7) and CPR r17.4(4).
In this context "capacity" is"… being used in the sense of legal competence
orstatus to bring or defend a claim. It is a competence that one may have
inone's own right or on behalf of another person.¦ In my judgment the
samemeaning of capacity must apply in CPR r17.4(4). This means that the
alterationin capacity which is referred to is an alteration from a
representativecapacity, or personal capacity, to another representative
capacity, or (in thecase of a representative claim) to a personal capacity."
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That is how it was put by Arden LJ in Haq v Singh [2001] 1 WLR 1594 , paras
18-19, and Iagree that that is the right meaning in the context. The best
example of arepresentative capacity is that of an executor or administrator of
a deceasedperson, both offices being included in the compendious
expression"personal representative".
102. When a personal representative takes proceedings assuch, he is making a
claim in a representative capacity, and his claim formmust state what that
capacity is (CPR r16.2 (3)). In the usual case where thedeceased's estate has
not been fully administered, the personal representativeconducts the
proceedings for the benefit of all those interested, whether ascreditors or as
beneficiaries, in the assets of the estate. No residuarybeneficiary has an
equitable interest in the assets, only the right to havethem properly
administered. It is worth emphasising this elementary pointbecause much of the
argument addressed to the Court on behalf of the appellantwas based on a
supposed analogy between the relationship between a properlyconstituted
personal representative and a residuary beneficiary, on the onehand, and an
assignor and an equitable assignee, on the other hand. In myopinion that
supposed analogy is misleading. As Holroyd Pearce LJ said in Robinson v Unicos
Property Corporation Ltd [1962] 1 WLR 520 , 526, where theplaintiffs wished to
amend to plead an assignment:"In no sense is the nature of the action altered.
Theplaintiffs still wish to claim that which they claimed in the beginning.
Norare they suing in a different capacity. Although they now wish to claim
byvirtue of their right as equitable assignees of the benefits of the
principalto the original contract, they still sue in their personal capacity as
principalsthrough the same agency on the contract albeit through an assignment
of thebenefit to them."Where one person acquires property as abare trustee or
nominee for the benefit of one or more other persons who areabsolutely entitled
beneficially, the analogy with an equitable assignment isobviously closer (see
for instance Harmerv Armstrong [1934] Ch 65 ).
103. Just as there is no real analogy between an equitableassignee and a
beneficiary interested in an unadministered residuary estate, sothere is in my
opinion no real analogy between the assignee of a pending causeof action and a
residuary beneficiary or a minority shareholder who seeks(under the general
law, and not under special statutory provisions) to bring aderivative action on
behalf of a deceased person's estate, or a company. Where,after an action has
been commenced, the cause of action is assigned ortransmitted by operation of
law, the assignment or transmission is not part ofthe cause of action. It makes
it necessary to join the new claimant as a partyand it needs to be recorded in
the pleadings, but
| [2010] UKSC 22 | 36 |
it does not amount to a new cause ofaction. Not so with a claimant who is not
invested with the office of personalrepresentative, but nevertheless seeks to
bring a derivative action. AsCampbell JA observed, writing for the Court of
Appeal of New South Walesin Oates v Consolidated CapitalServices Pty Ltd
[2009] NSWCA 183, para 105:"To summarise, a plaintiff who seeks to bring
aderivative action under the general law must allege, in the initiating
process,facts that show that he or she falls within a recognised exception to
the primafacie rule that the proper plaintiff in an action in respect of a
wrong allegedto be done to a corporation is the corporation itself. If the
initiatingprocess fails to make those allegations, it is liable to be struck
out if thedefendant chooses to apply to have it struck out.¦ But there is no
requirementunder the general law relating to derivative actions for leave to be
obtainedbefore a plaintiff commences such an action."So while he need not
obtain prior leave fromthe court, he must plead the special circumstances
entitling him to the court'sindulgence. Those special circumstances are part of
his cause of action.
104. In the ordinary case of a simple assignment ortransmission of a cause of
action after proceedings have been commenced, noquestion of limitation arises.
That was the point that Millett LJ madeforcefully in the Yorkshire Regional
Health Authority case at p218 (see alsoEvans LJ at p221). The contrary
argument, rejected by the Court of Appeal, wasthat RSC Order 15 r6 and Order 20
r5 formed a comprehensive code governingamendments after the expiration of the
limitation period. I have no doubt thatthe Court of Appeal was right in that
conclusion, although I am not sure that Iagree with (or indeed understand) the
refinements of Millett LJ's reasoning atp218. Possibly the draftsman of the CPR
felt some residual doubt about theposition, because CPR 19.5 (3)(c) has added
to the post-expiry code a newprovision which covers some (but not all) cases of
transmission of a cause ofaction (or liability). That particular oddity is not
remarked on in the LawCommission's 2001 paper Limitation of Actions (Law Com
270) which brieflydiscusses the topics of amending pleadings at paras 5.5 to
5.19.
105. In the Yorkshire Regional Health Authority case MillettLJ and Evans LJ
referred (at pp219 and 222 respectively) to the"impressive and penetrating" and
"scholarly" judgment ofMance J in The Choko Star 1996 1 WLR 774 , to which I
have alreadyreferred briefly. The Choko Star seems to be the first case in
which it wasnecessary (because of the wrong turning taken in Toprak Enerji
Sanayi AS v Sale TilneyTechnology plc [1994] 1 WLR 840) to consider whether
the transmission of a pending cause of action had implicationsunder the
Limitation
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