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England and Wales Court of Appeal (Civil Division) Decisions


You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Compass Group v Hobart Manufacturing Co Ltd [2002] EWCA Civ 441 (13 March 2002)
URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/441.html
Cite as: [2002] EWCA Civ 441

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Neutral Citation Number: [2002] EWCA Civ 441
No A2/2002/0012

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ORDER OF MR JUSTICE GARLAND

Royal Courts of Justice
Strand
London WC2
Wednesday, 13th March 2002

B e f o r e :

LORD JUSTICE KENNEDY
LORD JUSTICE MANTELL
SIR SWINTON THOMAS

____________________

COMPASS GROUP
- v -
HOBART MANUFACTURING CO LTD

____________________

(Computer Aided Transcript of the Palantype Notes of
Smith Bernal Reporting Limited, 190 Fleet Street,
London EC4A 2HD
Tel: 0171 421 4040
Official Shorthand Writers to the Court)

____________________

MR P ENGELMAN (Instructed by Ford & Warren of Leeds) appeared on behalf of the Appellant
MR R BRENT (Instructed by Herbert Smith of London) appeared on behalf of the Respondent

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

  1. LORD JUSTICE MANTELL: On 31st July 1996 the Little Chef Restaurant at Fenstanton, Cambridgeshire was almost completely destroyed by fire. The cause of the fire is said to have been a fat fryer which overheated. The fat fryer had been supplied by Hobart Manufacturing Company Ltd ("Hobart") in August 1994 at which time, as it seems likely, the Little Chef Restaurant, together with many others of same name, was owned by Forte (UK) Ltd, now known as Travel Rest Services Ltd. Back in July 1996 Forte (UK) Ltd was a wholly owned subsidiary of Forte Roadside Restaurants Ltd, of which the entire shareholding is now owned by Hospitality Holdings Ltd which, in turn, is a wholly owned subsidiary of the Compass Group Plc ("Compass"). Compass was incorporated on 29th September 2000. The cost of putting right the damage to the Fenstanton Little Chef was substantial, over £500,000.
  2. Compass sued Hobart, alleging breach of contract, misrepresentation, breach of statutory duty and negligence. By its defence, Hobart, while denying liability in any event, raised questions of limitation and title to sue. That led to cross-applications by Compass to add or substitute Travel Rest and Little Chef as claimants and by Hobart to strike out the claim.
  3. The applications came before Mr Justice Garland on 20th December 2001. He refused the application to add or substitute fresh parties and struck out the claim in its unamended form. This is the appeal from those orders. Mr Justice Garland had held that the claim in contract was time barred, as it clearly was, and, in any event, that Compass was not a contracting party, as it clearly was not. There is no appeal against those holdings. The judge also held that Compass had no title to sue in tort, not having suffered any damage for the good and sufficient reason that it was not in existence at the material time. There is no appeal against that holding either. It followed by the same reasoning that any claim by Compass based on breach of statutory duty and/or misrepresentation must also wither and die. No complaint is made as to that, as it is not with regard to the refusal by the judge to add Little Chef as a party. The appeal rests solely on the contention that the judge was wrong not to allow the addition or the substitution of Travel Rest as a claimantat in an action founded solely in tort.
  4. The judge advanced two main reasons for refusing the application. The first was that while Travel Rest or Forte (UK) may have had an interest in the property at the material time and may even have been the operators of the restaurant business, the evidence that they had suffered damage by the fire was too vague to justify an entitlement to be made a party. At pages 7 and 8 of the judgment the judge said:
  5. "What is said on behalf of the defendant"
  6. I interpose, that is Hobart,
  7. "is that the evidence that Forte UK Limited had an interest in the property and/or were the operators of Little Chef is confused and uncertain. They may well have been the operators; there is evidence to that effect. But what interest had they in the property? Some research has been done by looking in the Land Registry. It appears possible that Forte UK Ltd had a leasehold interest but what that interest was is, at the moment, anybody's guess ,because they appear alternatively as sub-tenants under a long lease carved out from a very long lease, being sub-tenants at a peppercorn rent, and then seem to re-appear as sub-sub-tenants with an intermediate lessor, Granada Roadside Restaurants. The matter is complicated by the fact that the bill for rebuilding the Little Chef from the contractors was sent to Granada Roadside Restaurants; the invoice for the architects' fees went to Forte Roadside Restaurants; and Forte UK, on the documents before the court are shown as paying some £2,200 for items of catering equipment."
  8. A little later:
  9. "It can probably be said that there are indications that Forte UK had a proprietary interest. It is probable that they were the operators. But there are the difficulties to which I have adverted, and it seems to me that if they wish to be joined as parties to an action, they must be able to plead affirmatively what their title was and what their loss is, because until one gets to that stage anything less is so vague and uncertain that the defendant cannot reasonably be expected to plead to it; a defendant must know who is claiming the loss, and why."
  10. The second basis for refusing the application is rather more technical and gave rise to the reason for permission to appeal being granted. Put shortly, the point is this. What was being asked for so the judge concluded was not the addition of a party but the substitution of a party as to which the relevant rule is Part 19.2 (4) which provides -
  11. "The court may order a new party to be substituted for an existing one if -
    (a) the existing party's interest or liability has passed to the new party; and
    (b) it is desirable to substitute the new party so that the court can resolve the matters in dispute in the proceedings."
  12. The judge took the view that the application could not be brought within that sub-rule because there was no question, as it is conceded, that Compass's interest had passed to Travel Rest. So, as an alternative basis for his decision, he held that Compass had failed to bring itself within the relevant rule. This is how he put it in the judgment at page 9:
  13. "A procedural difficulty is that once the Compass Group Plc have disappeared as being wholly inappropriate claimants, what is sought by the amendment is not the addition of a claimant in the form of Forte UK, but, as I said, whoever at the end of the day will turn out to be an appropriate claimant. This is a substitution, and a substitution is only possible under CPR 19.2 (4) (a) if the interest of the substituted party has passed to the new party, and there is no question here of any assignment of the cause of action or of the right to litigate. I simply add that of course a party cannot be added, as opposed to substituted, after the expiration of the limitation period; that would achieve nothing in any event; but CPR 19.5 (2) (a) makes that absolutely clear."
  14. The appellant, in its written grounds prepared by Mr Engelman of counsel who appeared below and before this court, has conceded that if the judge was right with regard to the application of Part 19, that is the end of the appeal. So, as he submitted, it would be sensible to consider the effect of that rule before turning to the factual position. The rule, in its relevant parts, reads as follows:
  15. "(1) This rule applies where a party is to be added or substituted except where the case falls within rule 19.5 (special provisions about changing parties after the end of a relevant limitation period).
    (2) The court may order a person to be added as a new party if -
    (a) it is desirable to add the new party so that the court can resolve all the matters in dispute in the proceedings; or
    (b) there is an issue involving the new party as an existing party which is connected to the matters in dispute in the proceedings, and it is desirable to add the new party so that the court can resolve that issue.
    (3) The court may order any person to cease to be a party if it is not desirable for that person to be a party to the proceedings."
  16. In sub-rule (4) are the provisions with regard to substitution which I have already recited.
  17. For my part, I cannot see why sub-rule (2) should not apply to the circumstances of this case. Of course if the judge is right to consider that the claim had already been struck out, there could be no opportunity for an application to add a party. That would have been the end of the matter. Before the judge wasconsidering these two applications together. At the time he came to consider whether or not to allow the application to add a party there was an existing claimant in the form of Compass Group Plc.
  18. Therefore it would appear to me that on a literal reading of the rule, and in particular (2) (a), it was open to the judge under the rules to allow the application if he thought fit. Thereafter it would have been open to him - also under sub-rule (3) - to order that Compass Group Plc should cease to be a party. It is said by Mr Brent, who appears on behalf of Hobart, that that is to do damage to the policy behind the rule. I do not accept that argument. We are enjoined to read these rules in a way which will achieve justice between the parties in the most economical manner available.
  19. So for my part, I would consider it was open to the judge to allow the application if he thought fit.
  20. There was the other reason for the judge refusing the application. Before us, an application has been made by Mr Engelman to admit further evidence. He brought our attention to the relevant rule - Part 52, rule 11 - and, by invoking its terms, has invited us to accept two further witness statements, one by Mr William Gandy Bennett and another by a Mr Davison. The effect of Mr Bennett's evidence, if accepted, would be to show that at the relevant time, as had been assumed by the judge, it was indeed the case that Forte Ltd was the sub or sub-sub-lessee of the premises and, further, that they were operating the restaurant business at those premises. The statement from Mr Ian Davison is by way of explanation for that crucial evidence having been put before the court at this very late stage.
  21. For my part, I am unimpressed by the reasons offered for the late submission of the evidence. Nonetheless, the court has ruled that the evidence should be admitted with a view to securing a just result as between the parties and with a view to saving time and expense. On that basis this court is better equipped than was the learned judge. Given the evidence from Mr Bennett, it seems to me that the application by Compass to be added as a party is substantially strengthened. It is protested that even in the form in which it now appears the evidence does not cross all the t's and dot all the i's with regard to who it was who suffered loss. It seems to me that those are issues which, if to be tried out at all, should be tried out in the main action. What has to be established in order to support an application for a party to be added is a prima facie case, and the evidence of Mr Bennett, in my view, does precisely that.
  22. For those reasons, I would allow the appeal to the extent that Travel Rest may be added to a party under the relevant rule, and were an application to be made under sub-rule (3) that Compass should be deleted as a party I would be inclined to accede to that application also.
  23. That still leaves the pleadings in something of a mess. I would have thought those are matters which must be dealt with hereafter. It may be that if the court is of the view that this appeal should be allowed, questions of costs will arise.
  24. SIR SWINTON THOMAS: I agree.
  25. LORD JUSTICE KENNEDY: I also agree.
  26. Order: Appeal allowed with the costs below and today to be paid by appellant subject to detailed assessment.


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URL: http://www.bailii.org/ew/cases/EWCA/Civ/2002/441.html