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

At the hearing before the Recorder, the claimant conceded that the limitation period against the appellant had expired as I have said.

The Recorder rejected a submission on behalf of the appellant that the court had no jurisdiction to hear the application because the claim had never been served on the first defendant and had been discontinued against the second defendant. He noted that where a defendant has not been served in time, it remains possible for a claimant to make a retrospective application to extend time for service. The case law referred to such a claim as being “in limbo” but not as being “dead and buried or no longer on foot so far as the court is concerned”.

The Recorder rejected a further contention by the appellant that the claimant’s application could not fall within CPR 19.6 because, as a result of the discontinuance against the Second Defendant, there was no defendant for whom the appellant could be substituted as a new party. He accepted a submission on behalf of the claimant that it should not matter whether a notice of discontinuance was served the day before, or the day after, the application to substitute a party. He held that that conclusion followed from the words in rule 19.6(3)(a) “… the new party is to be substituted for a party who was named in the claim form in mistake for the new party” (emphasis added in the judgment). That was despite CPR 38.5.2 stating that the effect of service of notice of discontinuance is to bring the claim to an end.

The Recorder held that Lizst Price is “a party who was named in the claim form” and therefore the appellant could be substituted for it. The opposite view, he held, would involve reading those words in the rule as if they were in the present tense rather than the past tense.

Having found, for those reasons, that he had jurisdiction, the Recorder then considered the position under section 35 of the 1980 Act and CPR 19.6. He rejected a submission that the claim against the appellant would remain statute barred if substitution was permitted, holding that the effect of rule 19.6.2(a) is based on the “doctrine of relation back” i.e. its effect is that the substituted claim is deemed to have been commenced when the original claim was commenced.

The Recorder considered the background facts and concluded that the claimant’s original intention had been to sue the accountants who had prepared the company’s final accounts. The claimant or his solicitors, he found, had made a mistake of fact by naming Lizst Price as defendant because it was the successor company to 1^st Option Accounting Services Ltd, failing to appreciate that the accounts had in fact been prepared by the appellant, 1^st Option Consulting Services Ltd (and also believing that Brookson Ltd at some point had somehow taken over).

On the basis of that finding of a mistake of fact, the Recorder concluded that both of paragraphs (a) and (b) of rule 19.6.3 were satisfied. He noted that there had not been, and in his view could not have been, a submission that the pre-condition in rule 19.6.3(b) was not satisfied.

Having decided that he was empowered to permit the substitution, the Recorder went on to consider how to exercise his discretion. Rejecting arguments that the claim against the appellant was bound to fail and that there had been unreasonable delay in making the application, he permitted the substitution. That was in particular because of his view that the company providing the original accountancy services was at least partly to blame for the confusion as to its identity. He also concluded that allowing the application would not cause the appellant any prejudice other than the loss of its limitation defence.