What is the test on an application to amend a 1954 Act lease renewal claim after the expiry of the section 25 or section 26 notice?
Pembury Estates & Lettings Ltd –v- Panzer Properties Ltd and Ors, Jan 2017, before HHJ Faber at Central London, unreported. Toby Bishop was counsel for the successful Respondent landlord.
It is not difficult to obtain permission to amend pursuant to CPR 17.2 at an early stage in proceedings, subject to the usual costs orders. However, permission to amend after the expiry of certain limitation periods may only be granted if the new claim arises out of the same or substantially the same facts as the original claim (CPR 17.4).
The Limitation Act 1980 does not prescribe a limitation period for 1954 Act lease renewal claims, but section 29A of the 1954 Act provides the court shall not entertain an application for a new tenancy after the date given in the landlord’s section 25 or tenant’s 26 notice.
On 21/09/2015 C issued a part 8 claim form seeking a new lease relying on s.24 of the Landlord and Tenant Act 1954. C pleaded a lease created by deed in 2002 and relied on a s.26 notice in which it requested a new lease to commence on 29/09/2015. It had issued with 8 days to spare.
D’s evidence in reply explained that, amongst the claim’s problems, the 2002 Lease was excluded from the Act.
On 10/12/2015 C filed and served particulars of claim pleading a new and factually inconsistent case, without seeking or obtaining permission to amend. C now averred it had the benefit of an express oral or implied monthly periodic tenancy arising in 2005. C’s director filed evidence to the effect that he was mistaken in pleading a different lease between different parties. D applied to strike out the second inconsistent statement of case (CPR PD 16 para 9.2) and for summary judgment on the flawed un-amended case.
At the hearing of D’s application, on 26/07/2016, C made an oral application without notice to amend to its new case. D opposed the application, arguing it was made 10 months after the expiry of a relevant limitation period and therefore the more stringent test in CPR 17.4 must be met.
The first instance judge decided: s.29A was a limitation period for the purposes of the CPR 17.4 test; the new case was not founded in the same or substantially the same facts; permission to amend was refused; the new and inconsistent case was struck out; and judgment for D was given on the un-amended case.
C was granted permission to appeal on 4 grounds, all were dismissed, only 1 is relevant for this article: CPR 17.4 did not apply: the ground was in two parts:
Part 1: The LTA 1954 does not allow amendment
Dyson LJ had decided in Parsons v George  1 WLR 3264 that the limitation period in the 1954 Act fell within the provisions in CPR 19.5(c), the rule providing for the substitution of parties after the expiry of a limitation period. CPR 19.5 is drafted in materially the same terms as CPR 17.4. C sought to overcome that authority by relying on San Vicente v Sec State for Communities and Local Government  EWCA Civ 817 which, it argued, was authority for the proposition that only a limitation period which prescribes a procedural bar falls within CPR 17.4(1)(b)(iii) and that s.29A operated as a substantive, rather than procedural, bar. San Vicente was concerned with public law proceedings under the Town and Country Planning Act and CPR 17.4, while Parsons v George was concerned with the 1954 Act and CPR 19.5.
C’s argument did not succeed, aside for the distinction between public and private law proceedings, the House of Lords had decided in Kammins Ballrooms Co Ltd v Zenith Investments (Torquay) Ltd  AC 850 that the limitation periods in the 1954 Act are procedural rather than substantive.
HHJ Faber on appeal applied the reasoning in Parsons –v- George . The limitation period at s.29A of the 1954 Act falls within CPR 19.5 and 17.4(1)(b)(iii) because the 1954 Act is an enactment which allows an amendment, or under which an amendment is allowed, because: ‘it is a legitimate use of language to say that something is allowed merely because it is not prohibited’.
Part 2: No new claim
New claim is a term defined in the Limitation Act 1980 as involving the addition or substitution of a cause of action or party.
C’s point was that D relied on a limitation period under the 1954 Act, not the 1980 Act, therefore D: ‘could not rely on the restrictive definition contained in the [1980 Act]: ‘claim’ was to be given its ordinary and natural meaning”. By C’s construction the ‘ordinary and natural meaning’ of claim was remedy and because C applied for a new lease under the 1954 Act in both its un-amended and amended statements of case there was no new claim.
C’s argument did not succeed. CPR 17.4 is drafted to reflect and has the same meaning as s.35 of the 1980 Act (HMRC v Begum  EWHC 1799 (Ch), paras 28-30; Ballinger v Mercer Ltd  1 WLR 3597, para 1). New claim means new cause of action, which term carries the meaning given to it by Diplock LJ in Letang v Cooper  1 QB 232 at 242 – 3, it is: “simply a factual situation the existence of which entitles one party to obtain from the court a remedy against another person … [as distinct from] a form of action … used as a convenient and succinct description of a particular category of factual situation”.
Relevance of the decision
Frequently a 1954 Act lease renewal claim will be issued shortly before the date in the notice and problems with it may not be identified before the expiry of the period, by which time it will be very difficult to get permission to amend. The consequences for the party seeking a continuation of the lease are very serious, the effect of s.26(5) is that the tenancy will have determined immediately before the date in the notice. The un-amended claim may be unsustainable; the original lease will have expired; there will be no continuation under the provisions of the Act; and they will have a substantial costs liability.
The person responsible for the flawed statement of case, whether a director or agent giving inaccurate instructions or a professional’s inadequate pleading, may face a substantial liability.