London Market - December 2009

Error on claim form, substitution, intention to sue, identity of party

In Lockheed Martin Group v Willis Group Ltd (9 June 2009) the applicants, Willis Group Limited and Willis Limited, applied to set aside an order which substituted them for the originally named defendant, Willis Group Holdings, on the claim form.

The respondent had entered into a US$124 million settlement with London market insurance companies. US$8.124 million was attributed to “unknown ship building London Market Insurers” and the sum paid to the claimant was reduced by this amount because the insurers remained unknown. Shortly before the limitation period expired proceedings were brought by Lockheed alleging that its brokers were negligent in failing to maintain proper records of those insurers subscribing to the policies.  It was believed by Willis that service had not been properly effected as Willis Group Holdings, Berumuda, had been named instead of Willis Group Ltd, UK.  By then the limitation period had expired.

Willis Group submitted that there was no mistake by Lockheed as to the name of the party sued. Rather insufficient thought had been given about who to name on the claim form and that it had misled the defendant.  Lockheed submitted that it had at all times intended to issue proceedings against the senior United Kingdom company in the Willis group and not the Bermudian company and had made a mistake as to the name; that mistake had not misled the defendant.

Rule 19.5 of the CPR provides that a party can be substituted only if the original party was named "in mistake".  In the Court of Appeal decision of Adelson v Associated Newspapers, Lord Phillips laid down certain requirements before an amendment could be made, including:

1. "The mistake must not have been misleading…  as to the identity of the person… intended to be sued."
2. The mistake must be as to the name of the party and not as to the identity of the party.  In other words the claimant must identify the correct person but merely misname them, rather than identifying the incorrect person.

Held
Mr Justice Beatson concluded “I allow the defendant's application to set aside Master Fontaine's order” which allowed substitution:

• Under CPR r.19.5(3) the mistake must be as to the name of the party, not the identity. “Mistake as to name" is broad. Given the generous test of mistake, it could be said that Lockheed made a mistake as to the name rather than identity when suing the holding company.
• However, the same did not apply to the trading and broking company. It was clear that there was no intention to sue this party when the claim form was issued.  The second limb of the (Adelson) test was not satisfied, Willis Limited was not a holding company.
• The mistake was misleading to the other party, causing reasonable doubt as to the identity of the party who was intended to be sued.
• The failure to identify the correct entity to be sued was largely due to the inexplicable late actions of the claimant near to the expiry of the limitation period.  As a matter of discretion the court would not have allowed the substitution.