Standard Life Assurance Ltd v Metsec plc (2010) EWHC 2003 (Ch)
The claimants were the trustees of the Metal Sections pensions scheme and decided to bring a professional negligence claim against Standard Life Assurance Company (SLAC) which had provided administrative, actuarial and investment services to the scheme until 1999. In negotiations over a standstill agreement, Standard Life Assurance Ltd (SLAL) replied to the claimants since the liabilities of SLAC had been transferred to it in 2006. The claim form was issued in 2009 with both SLAC and SLAL as defendants and alleged a negligent failure to advise as to how to effect amendments to a final salary pension scheme in order to equalize the normal retirement age for men and women. The claimants subsequently removed SLAL as a defendant on the basis that it was clear that SLAC had been acting at all material times up to 2006.
After the claim form was served, the claimants discovered that, unusually, the transfer of business was effective to transfer SLAC's historic liabilities, thereby releasing SLAC from liability. The claimants applied to substitute SLAL as a defendant in place of SLAC on the basis that they did not have a claim against SLAC.
The master granted the application and this decision was upheld on appeal. Under CPR 19.5(3)(a), which applies where the new party is to be substituted for a party who was named in the claim form in mistake for the new party, there has to be a mistake as to the name of the party rather than the identity of the party. Applying the Sardinia Sulcis test, the claimants had intended to sue the entity which had breached the duties in question. That included an entity to whom those liabilities had been transferred to the exclusion of the continuing liability of the transferor, even though the claimants were unaware that such a transfer had happened. The judge rejected the argument that the mistake had to be a mistake in the original claim form since there is no reason to limit the rule in this way.
This is clearly the correct decision on the facts, given that the claimants had originally joined both Standard Life companies and had been provided with what was described by the judge as “scanty information” about the transfer of business from SLAC to SLAL. This is a very different situation from that where the relevant information is available to the claimants were they to have looked for it and where the substituted defendant is unaware of the claim or the identity of the correct claimants.
On a related note, the Court of Appeal has reviewed the decision of Beatson J in Lockheed Martin Corporation v Willis Group Limited on a renewed application for permission to appeal (www.bailii.org/ew/cases/EWCA/Civ/2010/927.html). The claimant brought an action against the wrong company in the Willis Group, alleging that their brokers were negligent in the conduct of their business in failing to maintain proper records of those subscribing to the policies. The judge had set aside an order for substitution of a party for the original defendant, holding that there had been a mistake as to name and not identity but that it had been misleading. Several other discretionary factors affected this decision – for example, the claim form was issued at the end of the limitation period without communication with Willis, a CompaniesHouse search would have revealed the correct Willis company without difficulty and the correct company was unaware of the claim until after the limitation period had expired. The Court of Appeal agreed with the result and refused to grant Lockheed permission to appeal but they differed from the judge in relation to the test to be applied. There is no requirement under CPR 19.5(3)(a) that the mistake was not misleading to the other party. This consideration is merely one to be taken into account as a matter of discretion.