Amendment and limitation

Martin Canny explains recent case law on CPR 17.4(2) and the interaction with the Latent Damage Act 1986

Building work on Mr Bala Perampalam Chandra’s ill-fated Manchester hotel development project commenced in October 2001, ran significantly over budget in 2002 and came to an abrupt halt in August 2003 when his company’s financiers called in their loans and appointed receivers. Thereafter, his situation worsened as he was fixed with a significant element of the cost overruns incurred after the original contractors were re-appointed to complete the project, in addition to the sums he had personally guaranteed.


Proceedings were brought by him in May 2009 against the solicitors who had advised him, between 1999 and 2003, in relation to advice received in the course of negotiations with his bankers. He applied to amend his pleadings in November 2011 to include a claim of a failure to advise that a deed of warranty was unduly weighted in favour of the bank and building contractor, and of a failure to advise about the risk of losses if a step-in clause was invoked, such as by advising on an exit agreement. The amendment application was strongly opposed on limitation grounds, but HH Judge Anthony Thornton QC in his decision delivered in Chandra v Brooke North (a firm) [2013] EWHC 417 (QB) allowed the amendments. The judgment offers an interesting analysis of some of the points that can arise where a claimant seeks to argue that an entitlement to rely upon the Latent Damage Act 1986 (LDA 1986) takes his proposed amendment outside s 35 of the Limitation Act 1980 (LA 1980). In his case Mr Chandra sought to rely on the LDA 1986 by saying it was only when he received a decision in related High Court proceedings in January 2010 on the interpretation of contractual documents that he came to believe that the defendants were at fault.

Amendments after the expiration of the limitation period

Section 35 of the LA 1980 and CPR 17.4(2) provide the court with jurisdiction to allow an amendment to add a new cause of action that arises out of the same facts or substantially the same facts as those already advanced in the proceedings. It is a question of fact and degree  whether the matters sought to be added by amendment constitute a “cause of action” or whether they merely constitute the furnishing of additional particulars of one that is already pleaded. For example, in Co-Operative Group Ltd v Birse Developments Ltd [2013] EWCA Civ 474 a plea that a concrete slab was structurally unsound because of inadequate steel content was held by the Court of Appeal to constitute a different cause of action to the already pleaded case that the concrete was defective because it was not sufficiently thick. By contrast, in Aldi Stores Ltd v Holmes Buildings plc [2003] EWCA Civ 1882, the proposed amendment sought to add new claims for loss and these were held not to involve the addition of a new cause of action, even though additional facts would have to be pleaded and proven at trial to establish causation. The crucial factor was that no new duty and no new breach of duty were sought to be added. While brief consideration was given to these issues in Chandra v Brooke North (a firm), it is submitted that the new pleas were properly seen as falling on the wrong side of CPR 17.4(2) as the new allegations raised different issues to those already pleaded.

Interaction between the LDA 1986 and CPR 17.4(2)

The real focus of the arguments in Chandra v Brooke North (a firm) [2013] EWHC 417 (QB) was on whether the new pleas were statute barred at all by reason of the LDA 1986. Mr Chandra succeeded on this point against a background of having convinced the judge that the reason he thought he had suffered loss in 2003 and thereafter was that the bank had acted precipitously and aggressively in demanding repayment of the loans and re-appointing the contractor under a step-in clause. He was held only to have knowledge of the onerous nature of the step-in clause, and the related matters, from January 2010, when David Richards J gave judgment in the bank’s possession proceedings against him. HH Judge Thornton QC was somewhat generous in finding that Mr Chandra should not have sought advice on the interpretation of the contractual documents at an earlier point, but given the unusually onerous and rare nature of the offending clauses and the suggestion of concealment by the defendants his decision on this issue is perhaps not surprising. A further point of interest is that the recent decision of the Supreme Court in AB v Ministry of Defence [2013] 1 AC 78 on “knowledge” in the context of the personal injuries limitation provisions was not referred to in the judgment: its application to the interpretation of the LDA 1986 will have to await another occasion.

Martin Canny is a practising barrister and the author of Limitation of Actions in England and Wales, which was published by Bloomsbury Professional in July 2013

Category: 
Author details: 
Martin Canny

Martin is a practising barrister and the author of Limitation of Actions in England and Wales, which was published by Bloomsbury Professional in July 2013.