KA-2024-000202 - [2025] EWHC 1646 (KB)

The claimant was a 50% shareholder in a company called Sansborders Consultants Ltd (“SBC”). From about 2011 SBC instructed accountants to assist with the preparation of its annual accounts.

Initially the accounts were prepared by 1^st Option Accounting Services Ltd. At some point no later than 2015, that service was instead provided by the appellant, 1^st Option Consulting Services Ltd.

Final accounts were signed off on 15 August 2016. They did not state the name of the accountants who had prepared them.

The final accounts contained a reference to a balance owed by the claimant to SBC on his director’s loan account. In a liquidation of SBC in 2018, the liquidator sought repayment from the claimant.

On 16 June 2022, the claimant’s then solicitors sent a protocol letter addressed to “Brookson One”, setting out a claim against them for negligent accounting services provided to SBC and the claimant.

On 30 August 2022, the claimant issued a Claim Form against two Defendants for professional negligence relating to SBC’s accounts. His case is and was that he did not owe a debt to SBC and that the accountants had been retained by him personally as well as by SBC.

The First Defendant was Brookson Ltd (“Brookson”), whose parent company had acquired the shares in the parent company of the appellant company, 1^st Option Consulting Services Ltd. The Second Defendant was Lizst Price Accounting Ltd (“Lizst Price”), formerly known as 1^st Option Accounting Services Ltd.

On 5 October 2022 Clyde & Co, instructed by Brookson and the appellant, sent a response to the protocol letter. They stated inter alia that “the correct defendant in this matter is 1^st Option”, which in context was a reference to the appellant, and not to 1^st Option Accounting Services Ltd (now Lizst Price). They denied liability on the facts.

On 9 December 2022 the Claim Form was served on Lizst Price with Particulars of Claim which named that company as the only Defendant. It alleged negligence in the preparation of the final accounts of 15 August 2016 and loss arising from it.

The 4 month validity of the Claim Form expired on 30 December 2022. It had not, and never has been, served on Brookson Ltd. There has never been an application for an extension of time for service, and the claim against Brookson would eventually be struck out on that company’s application by the Recorder on 14 October 2024.

By a Defence dated 30 January 2023, Lizst Price stated at paragraphs 2b and 7b that the Final Accounts were prepared by Brookson, but also at paragraph 4b that SBC had instructed the appellant rather than Lizst Price to provide accountancy services and that the shares in a holding company which owned 100% of the appellant were transferred to Brookson in March 2017.

On 15 March 2023, the claimant applied for “an order substituting [the Appellant] as Defendant in the case, in place of Lizst Price Accounting Limited. Pursuantto CPR 17.4(3) and CPR 19.4 and CPR 19.5 on the basis that Lizst Price Accounting Ltd was named as a Defendant by mistake”, the limitation period having expired (“the application”).

On 26 April 2024, before the application was heard, the claimant’s solicitors served a Notice of Discontinuance on Lizst Price, bringing the claim against that company to an end.

The application came before the Recorder on 3 May 2024. A question arose as to whether the limitation period against the appellant in fact had not expired and the Recorder permitted the claimant to amend the application to seek an order adding, rather than substituting, the appellant as a defendant on that basis. The amended application was dated 17 May 2024 and sought “An order adding 1^st Option Consulting Services Limited as a Defendant, pursuant to CPR 19.4. Or in the alternative, an order substituting 1^st Option Consulting as a Defendant in the case, in place of Lizst Price pursuant to CPR 17.4(3) and/or CPR 19.6 on the basis that Lizst Price Accounting Ltd was named as a Defendant by mistake”.”

However, in a late skeleton argument for the adjourned hearing of the application, the claimant abandoned the application for the appellant to be added rather than substituted, on the basis of evidence showing that limitation in fact had expired.

The application was heard on 5 July 2024. On 14 October 2024 the Recorder handed down judgment allowing the application. This appeal is against that decision.

The Judge erred in law and/or in principle and/or in fact by making an order substituting the Appellant in place of Lizst Price in circumstances where the claim against Lizst Price had already been discontinued in its entirety.

The Judge erred in law and/or in principle by making an order that, in substance, procures the addition of a defendant after the expiry of limitation in circumstances where there is no power to make such an order under section 35(6)(a) of the Limitation Act 1980 (the “1980 Act”), and therefore no such power under CPR rule 19.6(3)(a).

The Judge erred in law by concluding that the thrust of rule 19.6(3)(a) is that the original defendant simply “was named in the claim form”.

The Judge erred in law by interpreting rule 19.6(3)(a) in a manner that is contrary to the express wording, effect and rationale of section 35 of the 1980 Act.

The Judge erred in law and/or fact in holding at [30] that “No submissions were made to the effect that the pre-condition in CPR 19.6.3(b) is not met. Indeed, any such submission would have been surprising and without foundation.”

The pre-condition in CPR 19.6.3(b) is met. The application for substitution succeeds on this basis, further or in the alternative to CPR 19.6.3(a).