The recent Court of Appeal decision in Godfrey Morgan Solicitors (a Firm) v Armes [2017] EWCA Civ 323 demonstrates how critically important it is to identify the correct name of the entity you want to sue.
The facts
Mr Armes had retained Godfrey Morgan Solicitors (the Firm) to act for him in a personal injury and employment claim in 2006. Both claims were compromised.
Godfrey Morgan Solicitors Limited (the Company) was incorporated in 2007. The Firm and Company ran in parallel as distinct businesses.
The Company sued Mr Armes for unpaid fees in 2013, and he successfully defended those proceedings on the grounds that he had no contractual relationship with the Company (having instructed the Firm). It is therefore surprising that when he issued a professional negligence claim - alleging only the employment claim should have been compromised - that he chose to name the Company as the defendant.
No doubt realising the error, Mr Armes then attempted to add the Firm as an alternative defendant. By that date, the limitation period for the professional negligence claim had expired.
The Firm applied to set aside the amendment as it was outside the limited circumstances set out in CPR 19.5(3)(a) in which a new party can be added after the expiry of the limitation period. The relevant rule permits the addition or substitution of a party only if:
"the new party is to be substituted for a party who was named in the claim form in mistake for the new party."
The decision
The Court of Appeal disallowed the amendment, with Burnett LJ emphasising the distinction between adding and substituting a party. The key is that the claimant must have intended to sue A instead of B, not in addition to B.
In this case, Mr Armes was not substituting one party for the other; he was seeking to pursue both defendants for as long as it took to work out which was vicariously liable for the alleged negligence of the solicitor who entered into the compromise agreement on his behalf. It was only because Mr Armes' current solicitors could not decide whether the Company or the Firm was vicariously liable that the Firm was added on an "and/or" basis. The Firm was being added, not substituted, for the Company, so the amendment was disallowed.
Comment
This judgment helpfully clarifies the distinction between adding and substituting a new party under CPR 19.5(3)(a). However, the real lesson to be learnt from this case is the need to check the correct names of any potential parties to an action in plenty of time, and certainly well before the expiry of the limitation period. The merger of firms of solicitors, or incorporation either as limited companies or limited liability partnerships, is increasingly common so this is an issue which frequently arises. Failing to correctly identify the parties to a professional negligence claim may be a stroke of luck for those of us who defend claims, but may result in the claimant solicitor themselves becoming a defendant.
