Court of Appeal: limitation applied
Appeal judges have rejected the pleas of a claimant who, faced by two law firms with similar names set up by the same solicitor, sued the wrong one.
Lord Justice Burnett said it was too late, after the limitation period had expired, for Michael Armes to sue Norfolk-based Godfrey Morgan Solicitors (GMS) for professional negligence.
Burnett LJ said although new clients from the end of December 2007 were clients of Godfrey Morgan Solicitors Limited (GMSL), GMS and GMSL were run by Mr Morgan “in parallel as distinct businesses”, and with different VAT registration numbers.
He said that Mr Armes sent a letter before action to GMSL “written on the premise” that the company was responsible for the alleged negligence “but with no apparent consideration of whether that was right or not”.
Burnett LJ said the Limitation Act 1980 and the Civil Procedure Rules did not give courts the power, “whenever it considers it equitable to do so”, to bring in a new party after a limitation period expires.
“Parties are entitled to rely upon limitation as providing protection, save in so far as legislation and rules of court otherwise provide. The position is different before the limitation period expires: a claimant may issue proceedings against whomsoever he chooses.
“If he has joined a party who can demonstrate that it cannot be liable, a claim may be struck out, or summary judgment obtained. There may be costs implications. Equally, amending to join an additional party within the limitation period is not subject to the same strictures.”
The Court of Appeal heard in Godfrey Morgan Solicitors v Armes [2017] EWCA Civ 323 [1]that Mr Armes was employed by Norfolk County Council between 2002 and 2006, and claimed to have suffered injuries resulting from work-related stress.
GMS acted for him in a personal injury claim and an employment law claim. Both claims were compromised in October 2007, but Mr Armes argued that GMS was negligent, and the personal injury claim should have been handled separately.
The following year, GMS issued separate proceedings regarding the personal injury claim, but they were struck out on the grounds of the compromise agreement. Mr Armes instructed solicitors to launch a professional negligence action.
In separate proceedings, GMSL sued Mr Armes for unpaid fees, a claim rejected by a deputy district judge in 2013, on the basis that Mr Armes had no contractual relationship with the company (GMSL), but only with the firm (GMS).
“The correct position relating to the responsibility of the company and the firm, at least as it emerged in the evidence before the judge, is that the claimant’s retainer was indeed throughout with the firm,” Burnett LJ said.
“He entered into an agreement with the firm in August 2006 and at no time entered into any contractual arrangement with the company.”
Burnett LJ said GMS was run as a partnership until September 2007, when it became a sole practice under Mr Morgan, before GMSL started trading in October 2007.
“The two entities then ran in parallel as distinct businesses with, for example, different VAT registration numbers. They were regulated as different entities by the Solicitors Regulation Authority.”
Burnett LJ said professional negligence proceedings were issued in the county court in October 2013, the day before the limitation period expired. In February 2014 they were amended, and the name of GMS added to GMSL.
GMS applied to the court to disallow the amendment, on the grounds that the amendment was outside the limited circumstances set out in CPR 19.5 and section 35 of the Limitation Act.
Both the district judge and Judge Moloney QC, sitting as a High Court judge at Norwich County Court, rejected the law firm’s application. Judge Moloney concluded that it was a matter of substitution of a defendant, which is permitted, rather than addition.
However, allowing the firm’s appeal, Burnett LJ ruled that the amendment amounted to the “addition of a new party outside the limitation period” and was not sanctioned by the rules”.
Lords Justices Henderson and Beatson agreed.