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

With reference to ground 1, the appellant’s counsel Ms Veerabathran submits that when the application to permit the substitution came before the Recorder, the appellant could not be substituted for Lizst Price because, by operation of the Notice of Discontinuance and CPR 38.5.2, Lizst Price was no longer a party to the claim.

She submits that the Recorder was therefore wrong to decide that CPR 19.6 could be applied to the situation and that that rule, even with its reference to a party who “was named” in the Claim Form, could not override the specific provisions in Part 38 which set out the effect of discontinuance.

She also submits that he was wrong to refer to “the happen-chance of whether a notice of discontinuance was served one day before or one day after an application”, because the important date is the date when the Court considers whether to permit a substitution, not the date when the substitution application is issued.

Ms Veerabathran also submits that the Recorder wrongly had regard to the existence of an unserved, expired Claim Form as against Brookson, when this was irrelevant to the issue before him.

With reference to ground 2, Ms Veerabathran relies on two cases. The first is Armes v Godfrey Morgan Solicitors Ltd [2018] 1 WLR 936 where the Court of Appeal emphasized that the then CPR 19.5 (now 19.6) permits the substitution of one party for another outside the limitation period but not the addition of a new party and, therefore, the difference between those two concepts. The second is Viegas v Cutrale [2024] EWCA Civ 11222 at [66] – [70] where Newey LJ accepted without demur the first instance judge’s ruling that one “cannot substitute a nullity; there is nothing to be substituted” (see [66]).

That being so, she submits, the Recorder erred by allowing the appellant to be “substituted” for a non-party.

As to ground 3, Ms Veerabathran submits that the Recorder erred by finding significance in the word “was” in rule 19.6.3(a), and that the point of the rule is to permit substitution where a party was named by mistake. Such a mistake will always have occurred in the past, which is why that tense is used to describe it. Therefore the Recorder was wrong to say that the appellant’s case meant that the words “who was named in the claim form” were redundant.

As to ground 4, Ms Veerabathran submits that the Recorder applied rule 19.6.3(a) in a manner contrary to the meaning of section 35. That section is headed “new claims in pending actions” and, at the date of the Recorder’s decision, no part of the claim was in any real sense “pending”. Nor, she submits, could the appellant satisfy the requirement of section 35(5)(b) that the substitution “is necessary for the determination of the existing action”, because here the existing action had effectively come to an end.

Ms Veerabathran also relies by analogy on Sayers v Smithkline Beecham Plc and Ors [2004] EWHC 1899 (QB) at [5] where Keith J noted, in the context of a group action that, even if claimants who had discontinued their claims were subsequently permitted by the court to rejoin the proceedings, “they will be treated as bringing a new claim” and would lose the benefit of the original date of issue of their claim for the purposes of limitation. In the present case, she submits, the benefit of the original date of issue must have been lost when discontinuance occurred, such that it cannot be revived for a claim against a substituted new party.

As to the fifth ground (ground 7 in the Notice of Appeal), Ms Veerabathran submits first that the claimant did not rely on CPR 19.6.3(b) at the hearing and therefore it was not fair to base any order on it, and second that it is not satisfied in any event: it could not be said that the claim “cannot properly be carried on by or against the original party unless the new party is added or substituted” where the claim could not be carried on at all, that party having dropped out of the claim.

For the claimant, Ms Tew of counsel relies on the Recorder’s findings, from the evidence before him, about the circumstances in which the Notice of Discontinuance was served. The claimant and his solicitor had mistakenly believed that accounting services had been provided by 1st Option Accounting Services Ltd. After Clyde & Co had corrected that belief on 5 October 2022 there was a delay of 5 months before the substitution application was made, but that, the Recorder found, did not cause more than minimal prejudice to the appellant because, in order for the letter of 5 October 2022 to be sent, Clyde & Co must have thoroughly investigated the circumstances of the claim and the identity of the appropriate defendant.

Ms Tew submits that the Recorder’s order was rightly made where there was a live claim against Lizst Price at the time when the substitution application was made and the Notice of Discontinuance, though served in error, could be read as subject to that application, and also the unserved and expired claim form at the time of the Recorder’s decision remained “in limbo” as against Brookson (as it was put by Sir David Eady in Jerrard v Blyth [2014] EWHC 647).

Ms Tew also points out that, subject to the effect of the Notice of Discontinuance, there has been no challenge to the Recorder’s finding that the test under CPR 19.6(3)(a) was satisfied or his exercise of his discretion.

She further submits that there was no restriction on the Recorder’s powers under section 35 or rule 19.6 which prevented him from ordering substitution. Section 35 does not expressly require that the original action must be live as against the defendant for whom a new party will be substituted, at the time when the application to start the new claim is heard by the court. Unless Ms Veerabathran is right about the effect of the Notice of Discontinuance, the criteria were satisfied.

As to ground 3, Ms Tew invites me to uphold the Recorder’s reasoning about the tense used in rule 19.6(3)(a).

As to the respondent’s ground A, Ms Tew accepts that rule 19.6(3)(b) was not the focus of the hearing below. However, she relies on Office Properties PL Limited (in liquidation) and others v Adcamp LLP and Richard Chenery [2025] EWHC 170 (Ch), where David Halpern KC held that that paragraph does not mean that the claim, where the order is made, will be continued by or against the original party. Instead the test should be read as requiring that “the claim by or against the original party cannot properly be carried on unless the new party is added or substituted”. That slightly amended test, she submits, is satisfied on the facts of this case.

Ms Veerabathran also opposes the respondent’s ground A. She contends that the claimant should not be allowed to take a new point under paragraph (b) of rule 19.6(3) which would necessitate the complete recasting of the substitution application. And in any event, she submits that an alternative case under paragraph (b) has no merit. The reason why the claim against Lizst Price cannot be carried on is the discontinuance, rather than the issue of which company is the appropriate defendant. And, she submits, the Notice of Discontinuance provides an answer to any application under paragraph (b) just as it does under paragraph (a).

If I do allow the claimant to rely on paragraph (b), Ms Veerabathran submits that he nevertheless must fail on the facts. She points out that the Claim Form (as opposed to the Particulars of Claim directed against Lizst Price) referred without limitation to “the accounts of the Claimant’s former company showing the Claimant owed it money”. That could encompass the 2013 and 2014 accounts and therefore it is not clear that the original claim issued against Lizst Price, who (under their former name) produced at least the 2013 accounts, could not be carried on without substitution.