Summary

An amendment to a claim to alter the capacity of the claimant claimed from a personal one to a representative or derivative one was permitted, as the new representative claim arose out of the same or substantially the same facts as the existing claim.

Facts

The claimant (B) applied to amend his particulars of claim against the defendant building society (N). N cross-applied to strike out B's particulars of claim or, alternatively, for summary judgment against him.

A company (H) had acquired a property. B claimed that he was the beneficial owner of the property but it was only in his proposed amendments that he particularised that he had personally provided the funds. N had lent monies for construction work which was secured by two legal charges over the property and a debenture charging all H's assets. HMRC had carried out investigations into money laundering and obtained a restraint order against B in respect of his assets including the property but it was ultimately discharged. N demanded repayment of the loans and appointed an administrative receiver. The receiver continued construction works with a view to selling the property and it was eventually sold to another company. H was struck off. B maintained that the receiver had not taken appropriate steps to obtain the best price for the property.

N submitted that (1) B's claim should be struck out as no steps had been taken in the proceedings for a substantial period of time and N's employees who had knowledge of relevant events had left N's employment; (2) the amendments sought had no realistic prospect of success as there was no credible evidence that B was the beneficial owner of the property; (3) B could not amend the capacity in which he sued from a personal capacity to a representative one where the limitation period had expired as its effect was to add a new claim.

Held

(1) Once proceedings had been issued, N should have taken steps to obtain statements from relevant personnel; it was clear that important written records had been preserved and it was not a case where oral evidence was likely to be critical. In any event, the issue of beneficial ownership of the property was not one on which N would have any direct evidence. The burden was on B to prove his case. Furthermore, the proper value of the property was an issue for factual and expert evidence and not one where N would have had witnesses. Consequently, N's application to strike out the proceedings was dismissed (see paras 20-21 of judgment). (2) It could not be concluded that B had no real prospect of success demonstrating that he was the beneficial owner of the property. There was clear, contemporaneous evidence that B had provided the purchase monies (paras 28-29). (3) B's claim was based on his being the true owner of the property, as he had provided the purchase monies, and H was a mere nominee or bare trustee. On that basis B had a real prospect of succeeding in a derivative claim, provided that H was joined as a party before final judgment. Although H had been struck off, it had not been dissolved so it could not be said that B had no real prospect of success in showing that it existed for the purpose of being added as a party to the proceedings (para.48). The amendment to treat B's claim as a representative rather than a personal one involved a new cause of action, since the capacity in which a claim was made was an essential part of the cause of action. However, it was equally clear that the new representative claim arose out of substantially the same facts as the existing claim and therefore the amendment should be permitted, Roberts v Gill & Co [2010] UKSC 22, [2011] 1 A.C. 240 applied (para.79).

Application granted; cross-application dismissed