Home Information Cases Roy Phelps v Spon-Smith & Co (1999)

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Roy Phelps v Spon-Smith & Co (1999)

Summary

The claimant had an arguable case that a chose in action had been equitably assigned to him by his trustee in bankruptcy. A subsequent bankruptcy adjudication did not revest that chose of action in the trustee. Causes of action pleaded in the statement of claim which went beyond those set out in the writ were not nullities, and amendment of the writ would be allowed to regularise the position, notwithstanding that the limitation period might have expired.

Facts

Claimant's appeal against an order of Deputy Master Weir dismissing the claimant's action against the defendant firm of solicitors for damages for negligence and for a payment on account. The issues on the appeal were: (a) whether, as at the date of issue of the writ, the cause of action was vested in the claimant or in his trustee in bankruptcy ('the trustee'), following two separate bankruptcy orders; and (b) whether certain parts of the statement of claim should be struck out as going beyond the scope of the causes of action identified in the writ, in circumstances where corrective amendment was said not now to be possible due to the expiry of the limitation period. The claimant was adjudicated bankrupt in October 1994. The claimant contended that, by reason of the terms of certain correspondence between himself and the trustee, his claim for damages against the defendant was equitably assigned to him by the trustee. On 14 November 1995, the plaintiff was again adjudicated bankrupt on a petition which was issued in error, since the relevant debt should have been the subject of a proof in the existing bankruptcy. Rather than annulling the second bankruptcy order, the court ordered that the two petitions should be consolidated, and that the date of presentation of both petitions should be deemed to be the date of presentation of the first petition. The claimant issued his writ in April 1996, claiming damages for loss and damage arising from the sale of a company with which he was formerly concerned. The statement of claim, as subsequently served, pleaded three causes of action which were additional to that set out in the writ. The defendant contended that: (i) even if there had been an equitable assignment of the chose in action in relation to the present action, the effect of the second bankruptcy order was to revest that chose in action in the trustee such that the claimant had no right to maintain this action; and, in the alternative, (ii) those causes of action which went beyond the scope of that set out in the writ should be struck out, and that corrective amendment should not be allowed as the applicable limitation period in respect of those additional causes of action had expired. The Deputy Master struck out the action on the basis of (i) above.

Held

(1) The claimant had an arguable case that there had been an equitable assignment of the chose in action to him. It was not permissible to resolve that issue on this application, given the potential relevance of background information. Investors Compensation Scheme Ltd v West Bromwich Building Society (1998) 1 WLR 896, 914-5 applied. The object of the consolidation order was to merge the second bankruptcy in the first. Thus any vesting under the second bankruptcy was deemed to have occurred before the equitable assignment to the claimant, and had no effect on that assignment. (2) The three additional causes of action were undoubtedly beyond the scope of the original writ. One was not time-barred; as to the other two it was impossible, on the paucity of facts as presently pleaded, to determine whether or not the limitation period had expired. However, even if the period had expired, the claimant was not seeking to raise "new" claims after expiry, since the pleaded causes of action were not to be regarded as nullities, given the terms of RSC O.2 r.1. Whether or not the discretion to permit an amendment such as was sought in the present case should only be exercised in an exceptional case, the court was satisfied that this was such a case.

Appeal allowed. Action restored. Permission to appeal.

Chancery Division
Nicholas Strauss QC
Judgment date
15 November 1999
References

LTL 16/11/99 : (1999) 96(46) LSG 38 : (2000) 144 SJLB 6 : Times, November 26, 1999