This dilemma for a defendant’s solicitor usually happens pre-action, when the claimant is working out who to sue and may be asking for an extension of time for service. It is particularly acute where potential defendants are linked in some way, whether as part of a group of companies or where a partnership has become an LLP.
The defendant strayed over the wrong side of the line in the recent case of Parkin v Alba Proteins Ltd. The claimants complained of a continuing nuisance by odour over several years emanating from rendering operations at a site in Cumbria. The focus of the claim was the period from 2005 to 2006.
The site was operated over the relevant period by three companies within the Leo Group:
2005 to 2006: Alba Proteins Ltd (D1);
2007 to 2011: Alba Proteins Penrith Ltd (D2), and
2011 to 2013: Omega Proteins Ltd (D3).
In September 2009 the claimants’ solicitors wrote to D2. They explained that they were claiming in respect of the alleged nuisance and asked for confirmation that D2 was the appropriate defendant. They sent a similar letter to D1 shortly afterwards. The letters (and two subsequent letters to D1) were not acknowledged.
In June 2010 the claimants’ solicitors wrote to the parent company. D2 replied rejecting “any liability for unsubstantiated allegations” but without stating when it had operated the site. In detailed correspondence and a site visit later that year, nothing was said to the claimants to suggest that D2 had not been responsible for the site during the crucial period from 2005 to 2006.
A claim form was issued against D2 in December 2010. The claimants applied for a group litigation order (GLO) and disclosure in March 2011. In two contested hearings, nothing was said about when D2 became responsible for the site. The GLO was made.
It was not until D2 served its defence in July 2012 that it stated when it had operated the site. This was a “bolt out of the blue” for the claimants who then realised that they had sued the wrong defendant. The defence stated that D3 was the current operator but made no reference to D1.
The claimants’ solicitors sent several letters to D2 and D3’s solicitors asking for the identity of the site operator from 2005; these were ignored. The role of D1 was only confirmed once the claimants indicated that they were going to add D1 as a defendant. D1 raised a limitation defence.
The claimants’ application
The claimants put their case in three ways:
1. D2 was estopped from denying that it had operated the site from 2005.
2. Section 32(1)(b) of the Limitation Act 1980 applied to extend the limitation period on the basis that D2 had deliberately concealed a fact relevant to the claimants’ right of action.
3. D1 should be added as a defendant under CPR 19.5.
Holroyde J rejected the estoppel argument under 1 above but upheld the claimant on both 2 and 3. The claimants were entitled to a declaration that their claim against D1 was not statute-barred.
The claimants relied on The Henrik Sif, a damaged cargo case where the claimant agreed an extension of time for beginning proceedings with one of two contractually-linked defendants. The judge held that the defendant that had entered into the standstill agreement knew that the claimants mistakenly believed it to be the correct party and deliberately encouraged that belief. He held that the defendant was estopped from denying liability.
Holroyde J distinguished this decision on the ground that it concerned a contractual relationship between the claimant and the defendant whereas this case concerned a tort. To find an estoppel in these circumstances would be to permit estoppel to be used as a sword rather than a shield, a finding that would have startling consequences.
D2 argued that it had not deliberately concealed any relevant fact because it was under no obligation to volunteer information about D1’s responsibility for the site. The judge did not accept that this was merely a case of silence on the part of D2; he concluded that there was active misrepresentation by D2 that caused the claimants to believe that D2 was the correct and only defendant for the relevant period of their claim. For almost three years, D2 did not suggest that it was the wrong defendant for any part of the claim.
The judge inferred close collaboration between the three companies from the fact that there appeared to be no impediment to D2 having access to documents relating to the periods when D1 and D3 were responsible for the site. D2 acted for the benefit, and as agent, of D1 in concealing a relevant fact from the claimants and the court. He held that, pursuant to s32(1)(b) of the Limitation Act 1980, the period of limitation for the claim against D1 did not begin until July 2012 when the claimants received the defence.
Addition of a defendant after the end of the limitation period
Holroyde J held that CPR 19.5(3)(b) applied on the ground that the claim for damages for nuisance during 2005 and 2006 could not be continued unless D1 was added as a defendant. Alternatively he would have been prepared to find that CPR 19.5(3)(a) applied. The claimants wanted to sue the company responsible for operating the site in 2005 and 2006. A mistake as to whether that company was D1 or D2 could properly be regarded as a mistake as to name rather than identity (see The Insight Group v Kingston Smith).
Although there is no general duty owed by one party to litigation to correct the mistakes of the other, there are circumstances in which deliberately allowing the other party to continue in a mistaken belief about the correct defendant to sue or the effectiveness of an agreed extension of time will be unconscionable. In these circumstances, the court is likely to help out the claimant in one of the ways discussed in the present case, leading to a costly exercise that will not benefit the defendant.
The following factors will affect the way the court approaches this issue:
- Is the claimant the author of its own misfortune?
Where the claimant’s solicitor has failed to make the right enquiries or been slow to pick up hints, the court will be loath to help out – see, for example, Bethell Construction Ltd v Deloitte & Touche. If the claimant is a litigant in person the court is likely to be more sympathetic, not least because they will not have the option of suing their solicitor for getting it wrong.
- Are the potential defendants part of the same group of companies or closely connected in some other way?
This was material in the present case. It is central to the shipping cases about estoppel and unconscionability, The Henrik Sif and The Stolt Loyalty. It will also be relevant to CPR 19.5 applications where the claimant has sued the LLP instead of the partnership at the date the cause of action accrued – see The Insight Group v Kingston Smith and Quayle v Rothman Pantall & Co.
- How have the defendant interests behaved?
Limiting exchanges with the claimant will reduce the risk that an estoppel might arise but failing to reply to enquiries and correspondence is likely to prejudice the judge. Proper enquiries should be met with brief statements of fact, but there is no duty to identify the correct defendant.
Click here to read the judgment in Parkin v Alba Proteins Ltd.