Supreme Court allows amendment to statement of claim despite statute of limitations running due to same facts.

THE SUPREME COURT

APPEAL NO. 204/2004

Kearns J.

Macken J.

Finnegan J.

BETWEEN

PAUL SMYTH

PLAINTIFF/RESPONDNT

and

HUGH TUNNEY, CAROLINE DEVINE AND CROFTER PROPERTIES LIMITED

DEFENDANTS/APPELLANTS

Judgment of Mr Justice Finnegan delivered on the 23rd day of January 2009

The respondent issued a plenary summons against the appellants on the 26th March 1996. In the endorsement of claim he

sought damages for defamation, injurious falsehood and negligent misstatement. There was delay in service of the plenary

summons and a statement of claim was not delivered until the 10th September 1998. The reliefs claimed in the statement of

claim are damages for malicious and/or injurious falsehood, defamation and conspiracy. By notice of discontinuance dated

the 11th August 1998 the action was discontinued against the third named appellant. Pursuant to an order of the court an

amended statement of claim was delivered on the 26th March 2001. The relevant facts are set out in paragraphs 4, 5 and 8

of the amended statement of claim as follows:-

4. In or about the period between 29th June 1992 and 26th October 1992 and thereafter until and about May 1995 a

series of phone calls of a malicious and defamatory nature were made on behalf or at the behest of or with the knowledge

and acquiescence of the first named defendant from phone lines and telephone apparatus in Classiebawn Castle,

Mullaghmore, Co. Sligo, i.e. from the phone numbers 071-66455, 071-66491 and 071-66326 which telephone lines were

listed in the names of Tunney Meats Limited and/or Hugh Tunney as subscriber. Phone calls of a similar nature were

made from phone lines and telephonic apparatus in the Gresham Hotel, Dublin, i.e. from phone lines now with the

number 01-8748145, which telephone lines were listed in the name of Hugh Tunney c/o The Gresham Hotel. The said

phone calls were made to the same parties as the aforementioned phone calls.

5. In these phone calls a female caller had claimed that Sherry, a criminal associate of a convicted drugs trafficker and

with excellent sources within the Garda, was part of a money laundering operation on behalf of the I.R.A. and that

monies were cleansed through an Irish company called Princeton Limited. It was alleged that a co-director of Princeton

Limited was Chief Superintendent Paul Smyth of the Garda (being the plaintiff herein). It is alleged that Chief

Superintendent Smyth had actively inhibited any enquires about Sherry and associates, allegedly by misuse of his

authority whilst head of personnel by transferring ‘troublesome’ officers. The phone calls in question were made to the

South East Regional Crime Squad of the British Police Forces at (inter alia) New Southgate branch office, 143 High

Road, London N1 1PM (phone number 181-3685100) and were received by Detective Inspector Stephen Condon and

Detective Constable Paul Edwards.

8. The allegations made in these phone calls were notified to An Garda Siochána by the British Police Forces concerned

which led to an investigation by An Garda Siochána to the prejudice, damage and detriment of the plaintiff.”

On the 11th February 2003 the respondent issued a motion seeking the following reliefs:-

“1. An order granting the plaintiff liberty to withdraw the notice of discontinuance of the 11th August 1998 as

against the third named defendant and liberty to proceed within proceedings as against the third named

defendant.

2. An order grant the plaintiff liberty to deliver an amended statement of claim in the form attached hereto.”

The motion was grounded on an affidavit of the plaintiff. Therein he deposes that a defence had been delivered by the first

named defendant but no defence had been delivered by the second named defendant. He deposes as to the reason for the

discontinuance of the action against the third named defendant as follows:-

“The reason for the discontinuance is that the calls were made by the said Ms Devine either on her

own behalf or on behalf of Mr Tunney and while she may also have made them on behalf of Crofter

Properties Limited it seemed unnecessary at that time to involve Crofter Properties Limited in

order to vindicate my reputation. Proving that Ms Devine acted on behalf of Crofter Properties

Limited seemed a burden which I need not take on with any associated risk of costs.”

On the 9th July 2002 the Supreme Court in a decision in an action Crofter Properties Limited v Genport Limited held that

Ms Devine, made the calls not only on her own behalf but also on behalf of Crofter Properties Limited.

Consequent on the withdrawal of the notice of discontinuance the statement of claim would require amendment. However in

addition the respondent sought to amend his claim by including claims arising from similar type telephone calls made to the

Revenue Commissioners and Phoenix Magazine. The respondent became aware of these telephone calls as a result of

discovery made in the action Crofter Properties Limited v Genport Limited. No leave was sought at any time to avail of this

discovery for the purposes of the present proceedings.

By order of 29th January 2004 the High Court (O’Sullivan J.) gave the plaintiff liberty to withdraw the notice of

discontinuance and liberty to deliver an amended statement of claim as sought and against that order the appellants now

appeal.

Withdrawal of the Notice of Discontinuance

The respondent in the High Court relied on two Canadian cases Adam v Insurance Corporation of British Columbia

[1985] 66 B.C.L.R. 164 and Pacific Centre Limited v Microbase Development Corporation, unreported,19th September

1990, Hynes J. In this court reliance was placed on the former. In that case the plaintiff instituted proceedings seeking

damages for personal injuries sustained when a bus in which he was travelling was in collision with a car against both the

bus driver and the owner and operator of the bus company and the unidentified owner and driver of the car. Shortly before

the trial date the action against the Insurance Corporation of British Columbia was discontinued as the plaintiff’s counsel

believed that the action was barred by the combined effect of the Insurance (Motor Vehicle) Act and Regulations relating to

the Workers Compensation Board. . Her counsel later learned of an unreported decision which indicated that the relevant

Regulation might have been ultra vires and as a result sought and obtained an order setting aside the discontinuance. At that

time the plaintiff’s action was statute barred. The defendant appealed against the order setting aside the discontinuance. The

issue in the action was whether the court had a discretionary power to set aside the notice of discontinuance and if so

whether that discretion had been properly exercised. The British Columbia Court of Appeal held that it had power to set

aside the notice of discontinuance but that it should not have been done in that case. The relevant rules of court contained

no provision for setting aside a notice of discontinuance. In the course of his judgment Esson J.A. referred to four Canadian

cases. In three of those cases the defendant had intended to counterclaim but had not launched a counterclaim before the

plaintiff discontinued and it was held that the defendant had been prejudiced in that it was not then in a position to assert the

right which it had wished to put forward by way of counterclaim. In each of those cases it was held that there was no power

to set aside a notice of discontinuance. However in Cusack v Garden City Press Limited [1978] 22 O.R. (2d) 126 (S.C.)

the plaintiff applied to set aside a notice of discontinuance. The matter was heard before a Master. In the course of his

judgment he said:-

“I feel that it must always be open to the court in proper circumstances to relieve against an act done either

by way of inadvertence or misapprehension and that this should be particularly so where no real prejudice to

the other side is demonstrated.”

The circumstances in the case were as follows. The plaintiff sought an interlocutory injunction and failed. His lawyer then

filed a notice of discontinuance. The plaintiff retained other lawyers and from that point on the notice of discontinuance was

disregarded and the matter was fully pleaded. The defendant then took the position that the action was not properly

constituted because of the notice of discontinuance. The plaintiff swore that he had not authorised his lawyer to take any

step by way of discontinuance.

Esson J.A. categorised the Cusack case as one in which the discontinuance was not the act of the plaintiff but also one in

which there were clearly acts on the part of the defendant taken with knowledge that there had been a discontinuance which

would amount to a waiver of any rights. This distinguished the case from that before him. In Cusack the word

“misapprehension” must have been intended to refer to misapprehension by the plaintiff’s original lawyer as to his

instructions. In the case before him there was no misapprehension and no mistake and no inadvertence but rather a

considered decision by the plaintiff to terminate the action. He went on to hold that the court must have an inherent

jurisdiction over its own process and there must be a discretionary power to relief against the consequences of

discontinuance without attempting to catalogue the circumstances which would justify the exercise of that power. He held

that the circumstances must be very special and may not go beyond the kind of inadvertence, mistake or misapprehension

which existed in the Cusack case. Further in the case before him the limitation period had expired after the discontinuance

and the effect of setting aside the notice would be to give a cause of action which would otherwise be clearly statute barred.

He allowed the appeal.

O’Sullvian J. accepted that the Statute of Limitations having regard to the nature of the torts relied upon might not in this

case have run against the respondent.

This decision does not appear to me to advance the respondents case. There was no question of inadvertence or mistake but

rather a deliberate decision not to proceed against the third named defendant with a view to minimising the risk as to costs.

The present case falls outside the very limited sphere in which the inherent jurisdiction envisaged by Esson J.A. would

operate.

The learned High Court judge was not referred to any authorities other than the Canadian authorities which I mention. This

is not an area devoid of authority. Order 26 Rule 1 of the Rules of the Supreme Court in England and Wales was identical to

Order 26, Rule 1, in the Rules of the Supreme Court (Ireland) 1905. Order 26, Rule 1, was repeated in the Rules of the

Superior Courts 1962 and again repeated in the Rules of the Superior Courts 1986 with an amendment not relevant here

relating to discontinuance on consent. Excluding that amendment Rules of the Superior Courts 1986 provide as follows:-

“The plaintiff, may at any time before receipt of the defendants defence, or after the receipt thereof before taking any

other proceeding in the action (save any interlocutory application), by notice in writing in the Form No. 20 in Appendix

C wholly discontinue his action against all or any of the defendants or withdraw any part or parts of his alleged cause of

complaint, and thereupon he shall pay such defendant’s costs of the action, or, if the action be not wholly discontinued,

the costs occasioned by the matters so withdrawn. Such costs shall be taxed. (The plaintiff may, however, at any time

prior to the setting down of any cause for trial wholly discontinue his action, with or without the costs to be paid by any

party, upon producing to the proper officer a consent in writing signed by all parties or by their solicitors and such costs

(if any) shall be taxed). Such discontinuance or withdrawal as the case may be shall not be a defence to any subsequent

action.”

In England and Wales the Rules remained identical with some amendments not material to this case up to the introduction of

the Civil Procedure Rules in 1998. Accordingly decisions of the Courts in England and Wales while not binding are

persuasive.

A starting point as to the law in this jurisdiction is Wylie on the Judicature Acts. At page 437 he states that Order 26, Rule 1,

forms a complete code as to the discontinuance of an action or the withdrawal of a defence or counterclaim and cites as

authority Fox v Star Newspaper Company [1898] 1 Q.B. 639 a judgment of the Court of Appeal. That judgment was

upheld by the House of Lords reported at (1900) A.C. 19. The rule in issue in that case is identical to that in the 1905 Rules.

Chitty L.J. in the Court of Appeal said:-

“It seems to me that order XXVI is intended to form a complete code applicable to the whole subject of discontinuing an

action.”

This view of Order 26, Rule 1, persisted in England and Wales – service of a notice of discontinuance put an end to the

action but without prejudice to the right of the plaintiff to institute fresh proceedings on the same grounds but subject to an

exception where service of a notice of discontinuance was an abuse of the court’s process when the discontinuance could be

set aside on application by the other party to the cause.

In Castanho v Browne and Root (U.K.) Limited [1981] A.C. 557 the facts were as follows. The plaintiff, a Portuguese,

resident in Portugal, sustained injuries in an accident when employed by the second defendant, a Panamanian company, on

an American ship lying in an English port. Proceedings were instituted in England seeking damages for the injuries. On

consent two interim payments were made to the plaintiff and a defence delivered admitting liability. The plaintiff then

commenced an action in Texas and discontinued the English action. The American proceedings if successful would result in

a greatly enhanced award by way of general damages and punitive or exemplary damages. In the High Court Parker J. held

that the notice of discontinuance was in these circumstances an abuse of the process of the court and struck out the notice

of discontinuance and injuncted further prosecution of the proceedings in Texas. The Court of Appeal by a majority (Shaw

and Brandon L.JJ., Denning M.R. dissenting) allowed an appeal against both orders. In the High Court Parker J. and in the

Court of Appeal Denning M.R. in his dissenting judgment held that it is possible to treat a notice of discontinuance which

complies with the Rules of Court as an abuse of process and that the court has jurisdiction to strike it out. The House of

Lords agreed. The House of Lords thus established an exception to the general rule that Order 26, Rule 1, was a complete

code and that as the rule did not provide for the striking out of a notice of discontinuance the court had no power to do so.

In Ernest and Young v Butte Mining Plc [1996] 1 All E.R. 623 Robert Walker J. said:-

“Discontinuance is the process by which a plaintiff (or plaintiff by counterclaim) may put an end to the whole of his

claim and the proceedings in question. It has featured in the Rules of the Supreme Court for well over a century, having

superseded all the procedures such as non-suit or voluntary dismissal of a bill in chancery (see Fox v Star Newspaper

Company Limited [1900] A.C. 19)…a plaintiff’s apparently unfettered right to discontinue before or within fourteen

days after the defence is, however, subject to the overriding rule that discontinuance will not be permitted if it is an

abuse of process.”

The issue in Ernst & Young was whether or not in the particular circumstances the discontinuance was an abuse of process.

The defendant had intimated an intention to counterclaim. There were discussions between the plaintiff’s and the

defendant’s solicitors. Both solicitors were aware that if the action should be discontinued prior to the service of the

counterclaim the counterclaim would not survive there being no action in existence at the date of service. The plaintiff’s

solicitor agreed to discuss the terms upon which the action should continue, that is the counterclaim, after the discontinuance

while all times her intention was to discontinue and rely on the discontinuance to defeat the intended counterclaim as at the

time of discontinuance the statute would have run against the defendant and the plaintiff would have had a defence on the

basis of the statute against any proceedings subsequently instituted by the defendant. In holding that the service of the notice

of discontinuance in these circumstances was an abuse of process Robert Walker J. said:-

“Heavy, hostile commercial litigation is a serious business. It is not a form of indoor sport and litigation solicitors do

not owe each other duties to be friendly (so far as that goes beyond politeness) or to be chivalrous or sportsmanlike (so

far as that goes beyond being fair). Nevertheless, even in the most hostile litigation (indeed, especially in the most hostile

litigation) solicitors must be scrupulously fair and not take unfair advantage of obvious mistakes: see the decision of the

Court of Appeal in Darby and Co. Limited v Weldon (No. 8) [1990] 3 All. E.R. 762 (this was not cited by counsel but the

general principle is, I think, uncontroversial). The duty not to take unfair advantage of an obvious mistake is intensified

if the solicitor in question has been a major contributing cause of the mistake.”

While the issue was determined on the basis of abuse of process the circumstances come closer to those in which equity

would grant relief, that is, fraud, accident or mistake,. However, no case has been cited in this or in neighbouring jurisdiction

where a notice of discontinuance has been struck out on such a basis. Abuse of process is narrower in scope than the

equitable principles in that it concerns the inherent power of the court to prevent misuse of its procedure in a way which

although not inconsistent with the literal application of its procedural rules would nevertheless be manifestly unfair to a party

to the litigation or would otherwise bring the administration of justice into disrepute.

Gilham v Browning & Another [1998] 2 All E.R. 68 also concerned the striking out of a notice of discontinuance for abuse

of process. In the course of his judgment May L.J. said:-

“It is, of course, important to recognise on the one hand that the court uses a jurisdiction to strike out for abuse

sparingly and in plain cases where there has been misuse of the court’s process, and on the other that the court is not

constrained by fixed categories of circumstances in which the court has this power.”

There are many other cases reported to like effect: see Hunter v Chief Constable of West Midlands [1981] 3 All E.R. 727

at 729 and Fakih Bros v A.P. Moller (Copenhagen) Limited [1994] 1 Lloyd’s Rep. 103. The cases consistently recognise

that the rule does not provide for the withdrawal of a Notice of Discontinuance by the party who has served the same. The

court has not been referred to any case in this jurisdiction or in England and Wales where this has been permitted. There is

no report of such case in either jurisdiction recognising an inherent jurisdiction to do so. Even if such jurisdiction should

exist this is not a case in which it should be exercised. The decision to serve the notice of discontinuance was a conscious

and advised one. The withdrawal of the notice of discontinuance at this stage would likely deprive the third named appellant

of a defence of the Statute of Limitations.

Having regard to the foregoing I would allow the appeal and set aside the order of the High Court which gave leave to the

respondent to withdraw the notice of discontinuance.

Amendment of Statement of Claim

Exhibited on the application was an amended form of statement of claim. Many of the amendments are in anticipation of the

third named appellant being re-joined in the action as a result of withdrawal of the notice of discontinuance. Clearly these

are no longer relevant. In addition however the respondent seeks to rely on the

additional publication to Phoenix magazine and the Revenue Commissioners and it is necessary to consider whether these

amendments should be permitted. In short the respondent seeks to plead new facts and on foot of these to recover damages

on the basis of the original causes of action pleaded. In addition the respondent seeks to add additional causes of action

namely:

(i) wrongful interference with economic interests of the plaintiff;

(ii) negligence and breach of duty.

The application is made pursuant to Order 28 Rule 1 of the Rules of the Superior Courts which provides as follows:-

“The court may at any stage of the proceedings allow either party to alter or amend his endorsement or

pleadings in such manner and on such terms as may be just, and all such amendments shall be made as may be

necessary for the purpose of determining the real questions in controversy between the parties.”

Order 28, Rule 1, was considered by the High Court in Krops v Irish Forestry Board Limited [1995] 2 I.R. 113. The

plaintiff’s wife was killed in an accident when the car in which she was travelling was struck by a falling tree. Proceedings

were instituted claiming damages arising out of her death, which it was pleaded, was caused by the negligence, breach of

duty and breach of statutory duty of the defendants. The plaintiff sought leave to amend the statement of claim by the

insertion of the words “and nuisance”. Keane J. (as he then was) considered the law in England and Wales under the Rules

of the Supreme Court 1965 Order 20 Rule 5 and went on to consider whether as a matter of principle the same approach

should be adopted in this jurisdiction. Since Weldon v Neal [1887] 19 Q.B.D. 394 both in England and Wales and in this

jurisdiction an amendment would not be permitted if it would deprive the defendant of a defence under the Statute of

Limitations. However in England and Wales in Chatsworth Investment Limited v Cussins (Contractors) Limited [1969]

W.L.R. on considering the new rule of court held that Weldon v Neal should not be applied in its full vigour and that an

amendment should be allowed whenever it is just to do so even though it may deprive the defendant of a defence under the

Statute of Limitations. There were a number of conflicting decisions. Ultimately the controversy was resolved by legislation

in favour of a more liberal approach to amendment. Having considered the English authorities Keane J. dealt with the Irish

rule as follows:-

“Treating it as a matter of principle, I think one can start by positing a somewhat extreme set of

circumstances. A person is injured in a traffic accident and issues proceedings within the limitation period. In

his statement of claim, he described the accident as having happened at O’Connell Avenue, Finglas, Co.

Dublin. In fact, the point at which the accident occurred is in the City of Dublin. A pedantic counsel asks the

court to permit an amendment of the statement of claim. At this stage, the limitation period is run. The trial

judge allows the amendment notwithstanding that the limitation period has expired, on the ground that

Weldon v Neal has no application as neither a new cause of action nor any new facts of any significance are

being added.

It is obvious that in such a case the defendant is not deprived of any defence under the Statutory of Limitations

1957: he never had such a defence in the first place since the plenary summons and statement of claim were

issued within the limitation period. That example simply serves to illustrate that the pleadings which initiate

an action in this court carried with them from the time they are issued or delivered the potentiality of being

amended by the court in the exercise of its general jurisdiction to allow a party to amend his endorsement of

claim or pleadings ‘in such manner and on such terms as may be just’. Where, as here, an amendment, if

allowed, will not in any way prejudice or embarrass the defendant by new allegations of facts no injustice is

done to him by permitting the amendment. In that sense, it is true to say that the amendment does not in truth

deprive him of a defence under the Statute of Limitations 1957: since the proceedings were always capable of

amendment in such manner as might be just in order to allow the real question in controversy between the

parties to be determined, it cannot be said that the defendant was at any stage in a position to rely on the

Statute of Limitations 1957.

The evolution of the law in the neighbouring jurisdiction demonstrates, I think, that the difficulties that have

arisen can be traced, no so much to the decision in Weldon v Neal, as to an over-rigid application of the

principle laid down in that case. Where, as here, the plaintiff seeks to add a new cause of action arising out of

– to borrow the words of the English rule – ‘the same facts or substantially the same facts’ there seems no

reason why this court, even in the absence of a corresponding rule in this jurisdiction, should be precluded

from permitting such an amendment.

I will accordingly allow the amendment sought.”

Order 28, Rule 1, was considered by the Supreme Court in Croke v Waterford Crystal, [2005] 2 I.R. 383. It was held that

on an application to amend the first matter to be considered by the court is whether the amendment sought is necessary for

the purpose of determining the real questions in controversy in the litigation. The court will consider whether the amendment

can be made without prejudice to the other party. If the possible prejudice is exposure of the other party to additional

expense that can be regulated by a suitable order as to costs. A very late application to amend is less likely to succeed

particularly if the amendment is a purely technical point. Krops v Irish Forestry Board Limited was expressly approved of.

In summary the law as to amendment now is that an amendment will be allowed if it is necessary for the purposes of

determining the real issues in controversy between the parties. The addition of a new cause of action by amendment will be

permitted notwithstanding that by the date of amendment the Statute of Limitations had run if the facts pleaded are

sufficient to support the new cause of action. Facts may be added by amendment if they serve only to clarify the original

claim but not if they are new facts. Simple errors such as an error in date or an error as to location which do not prejudice

the defendant and enable the real questions in controversy between the parties to be determined will be permitted.

The amendment sought here by way of the addition of causes of action does not satisfy these requirements. In order to

sustain the new causes of action additional facts are required to be pleaded and indeed the notice of motion sought

amendment of the statement of claim by the addition of the necessary pleadings of fact. These amendments should be

disallowed. Similarly the amendment of the statement of claim by pleading additional facts relating to additional publication

to the Revenue Commissioners and Phoenix Magazine should be disallowed. The Statute of Limitations may well have run

and the defendants would be prejudiced by the amendments sought as to additional publication.

I would allow the appeal and refuse the plaintiff leave to withdraw the notice of discontinuance and refuse the plaintiff leave

to amend his statement of claim.

Smyth v Tunney & Ors