The Court of Appeal recently considered the application of CPR 17.4(3) (amendments to statements of case where a genuine mistake has been made) in Best Friends Group v Barclays Bank Plc  EWCA Civ 601. CPR 17.4 deals with amendments to statements of case after the end of a relevant limitation period. Part 17.4(3) provides that ‘the court may allow an amendment to correct a mistake as to the name of a party, but only where the mistake was genuine and not one which would cause reasonable doubt as to the identity of the party in question’.
CPR 17.4(3) sets out a three-stage test that must be satisfied: (1) Was the mistake genuine? (2) Was it a mistake which would not have caused reasonable doubt as to the identity of the claimant? And (3) if those questions were answered in favour of the applicant, should the court exercise its discretion in favour of the applicant?
Mr Bennett ran a number of veterinary practices from freehold premises and controlled Best Friends Veterinary Group (BFVG), an unlimited company running some of the veterinary practices. In 2006 and 2008, Mr Bennett entered into interest rate swap transactions with the defendant bank in his own name. During a review process, the bank accepted that the swap transactions justified the payment of compensation to Mr Bennett; and payments were made amounting to the sums paid by him under the swap transactions. No agreement was reached about compensation for consequential loss and Mr Bennett commenced proceedings against the bank in respect of consequential losses from the transactions.
However, the primary limitation period for the 2006 and 2008 transactions had expired and therefore the claims were issued outside the limitation periods. The expiry of the limitation periods for the 2008 swaps was expressly acknowledged in the claim form.
Due to a mistake by the claimant’s initial solicitors, the claimant was named as Best Friends Group; and the application before the judge and on the appeal proceeded on the basis that there had been a mistake and that Mr Bennett should have been named as the claimant.
In July 2015, the bank served its defence which was headed:
(1) Best Friends Veterinary Group
(2) Andrew Bennett (trading as Best Friends) Claimants
In its particulars of defence, the bank argued that ‘the swaps were entered into by Barclays and Mr Andrew Bennett… personally, not BFG. By way of a purported amendment to the claim form on 18 March, Mr Bennett was purported either to be substituted as the claimant or added as the second claimant (it is unclear which)’. The bank went on to plead that both the 2006 and 2008 swap claims were time-barred.
There subsequently followed a number of applications to try to correct the claim form and particulars to substitute BFG with Mr Bennett. In support of the application to amend, Mr Bennett’s solicitor’s witness statement stated, inter alia, that it had always been intended that the claim should be made by Mr Bennett as an individual for his losses; he had traded under a number of styles, including Best Friends Group and BFG and Best Friends, as well as his own name. The witness statement also blamed a junior colleague for a mistake in the title of the original claim form and delays in making previous substitute applications ‘due to an unfortunate series of absences from the office’.
The judge at first instance dismissed the claimant’s application and concluded that (1) the naming of Best Friends Group as the claimant was not a genuine mistake, (2) the naming of Best Friends Group would have caused reasonable doubt as to the identity of the claimant; and (3) in the circumstances, he should decline to exercise his discretion in Mr Bennett’s favour.
Court of Appeal
On appeal, Mr Bennett argued that, inter alia, it was clear that there had been a genuine mistake; the bank knew that the counterparty to all the swaps transactions was Mr Bennett and him alone; and the references in the pleadings to other entities, such as Best Friends and Best Friends Group, was not such as to give rise to reasonable doubt as to the party who it was intended should make the claim.
As to the judge’s conclusion assuming that, if a genuine mistake were made, it was such as to cause reasonable doubt as to the identity of the claimant, Mr Bennett was critical of the judge assuming an alleged agency on behalf of the claimant. Although Mr Bennett accepted that the particulars of claim included a claim for the combined losses of Mr Bennett and BFVG and that it also included losses based on a particular practice which could not form part of Mr Bennett’s losses, Mr Bennett argued that the judge gave too much weight to these matters.
Dealing with the first two questions, Simon LJ held that the evidence showed that Best Friends and BFG were manifestations of BFVG and that it was common ground that BFVG was the company through which Mr Bennett carried out his veterinary business. Mr Bennett was also the person who best knew how his overall business was conducted. It was he who must have given instructions for the bringing of the claim, including the allegations of deliberate concealment. It was, Simon LJ explained, a matter of professional obligation that a statement of case containing an allegation of fraud must be based on clear instructions to make such an allegation. Claims had also been made for losses that were not the losses of Mr Bennett. Therefore, Simon LJ held that ‘it was open to the judge to find that there was a degree of calculation in keeping all possible options open; and that there was sufficient justification for his view that the conduct of the litigation was such as to cause reasonable doubt as to the identity of the claimant’.
On the third question, the claimant submitted that the judge’s conclusion involved a penal approach to the exercise of discretion which led to a disproportionate result (see Insight Group Ltd v Kingston Smith (A Firm)  1 WLR 585; and American Leisure Group Ltd v Olswang LLP  EWHC 629 (Ch)). Simon LJ agreed it is not for the court to exercise its discretion so as to punish a party for a harmless error by its legal representative. However, his lordship did not consider that this is what occurred on the facts of the case and found that the judge was rightly concerned by the delay in making the application. The claim form had been issued at the end of the limitation period and the claim was conducted without any of the urgency that it should have had. Even when the issue of the proper identification of the claimant was specifically raised in the defence in July 2015, nothing was done to put the matter right.
Thus, the judge had correctly exercised his discretion under CPR 17.4(3). Simon LJ concluded by reinforcing the status quo on case management decisions when he said: ‘The judge made a discretionary decision at a case management hearing based on an evaluative judgment of the relevant facts. In the ordinary course appellate courts do not disturb such decisions unless the judge is shown to have erred in principle or reached a conclusion that was plainly wrong. For what is only the most recent authoritative restatement of this well-established approach, see Barton v Wright Hassall LLP  1 WLR 1119, Lord Sumption JSC at .’
The case serves as a useful reminder of the application of rules on amendment of statements of case following the expiry of limitation periods. Although the first two elements of the CPR 17.4(3) test may be satisfied, the court will consider all the circumstances of the case when exercising its discretion. Any delay is likely to be fatal to an application to amend statements of case.
Masood Ahmed is associate professor at the University of Leicester and a member of the Civil Procedure Rule Committee (@ahmedCivJustice)