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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 >> Laws & Ors v The Society of Lloyd's [2003] EWCA Civ 1887 (19 December 2003) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2003/1887.html Cite as: [2003] EWCA Civ 1887

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IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
MR JUSTICE COOKE

		Royal Courts of Justice Strand, London, WC2A 2LL
		19th December 2003

Lord Justice Waller:

Introduction

1. This is a further chapter in the Lloyd's Litigation. Certain Names who did not accept R&R have been pursued by Lloyd's for the Equitas premium, and have responded with claims against Lloyd's. In a judgment in the Commercial Court in Jaffray v The Society of Lloyd's Cresswell J spelt out the full background. By that judgment he held that Lloyd's made no representations to the Names, and in addition held that even if they had, the representations were not fraudulent. This court on appeal held that Lloyd's had made representations in brochures issued annually but confirmed that Lloyd's had not been fraudulent. Following that decision the Names, relying on the representations held by this court to have been made, applied to amend their pleadings to allege negligent misrepresentation or misrepresentation contrary to section 2 of the Misrepresentation Act 1967 ("the 1967 Act"). That application, as it was always recognised it would, faced resistance from Lloyd's, both by reference to section 14(3) of the Lloyd's Act 1982 ("the Lloyd's Act") in relation to Names who commenced their underwriting after the coming into force of the Lloyd's Act, and in relation to all Names by reference to the Limitation Act 1980 ("the 1980 Act").
2. As at October 1996 (the date of commencement of the Jaffray proceedings) the Names, following decisions in other cases, had accepted that section 14 of the Lloyd's Act would defeat any claims other than a claim in fraud. We append a copy of that section to this judgment. Putting it shortly for the moment, two key issues arose. (1) Could post Lloyd's Act Names rely on the coming into force of the Human Rights Act 1998 ("the HRA") and section 3 of that Act, in order to place a construction on section 14 of the Lloyd's Act which would allow for a claim in damages for negligent misrepresentation or misrepresentation under the 1967 Act? (2) Was there any way in which the Names could overcome the limitation defences that would be raised by Lloyd's?
3. Cooke J heard the applications to amend over 11 days. He held that section 3 of the HRA could not be relied on so as to provide a basis for arguing that a different construction should be placed on section 14 of the Lloyd's Act. He held that the date of the coming into force of the Lloyd's Act was July 1982 (not January 1983 as alleged by the Names). He held therefore that claims both in negligence and under the 1967 Act of any name commencing underwriting after July 1982 would be defeated under section 14 of the Lloyd's Act and were thus doomed to failure. He held in any event that, in relation to Names who had not previously alleged any negligent misrepresentation but only fraud after the Lloyd's Act came into force, the proposed amendment did not arise out of the same or substantially the same facts.
4. The judge said that Names who (as in the Sir William Jaffray pleading) had previously pleaded negligent misrepresentations in brochures prior to the coming into the force of the Lloyd's Act, and who were now seeking to amend to allege representations in the form found by the Court of Appeal, were pleading causes of action arising out of the same facts or substantially the same facts within the meaning of section 35(5) of the 1980 Act. He found however that on any view by virtue of section 14B of the 1980 Act there was a longstop of 15 years and thus no name could rely on a representation occurring more than 15 years before the commencement of proceedings to which they attributed damage. He held therefore that there was a potential window for certain Names who could demonstrate that they relied on a representation in a brochure within 15 years prior to the commencement of the relevant proceedings (October 1981 in relation to the proceedings against Sir William Jaffray and others sued at the same time as Sir William Jaffray, and a little later for all others) and commenced underwriting before July 1982.
5. He held that in any event these Names should only be allowed to amend their pleadings if they could demonstrate that they did not have the requisite knowledge under section 14A of the 1980 Act more than three years prior to the commencement of the relevant proceedings. He required further particularisation. There is to be a further adjudication by Cooke J in January 2004 on the question of knowledge and on the question as to which Names who commenced underwriting prior to July 1982 could arguably come within the window.
6. The overall effect of his decision was that some 36 Names who had commenced their underwriting at Lloyd's before July 1982 would have the opportunity of establishing that they fell within a window commencing 15 years prior to the commencement of the relevant proceedings (i.e. 11th October 1981 for those sued at the same time as Sir William Jaffray, and later for all others), and July 1982, (the date of the coming into force of section 14 of the Lloyd's Act).
7. The Names applied for permission to appeal the decision of Cooke J. Waller LJ ordered that the matter be adjourned for an oral hearing with appeal to follow if permission were granted. This court heard argument over a period of seven days. It announced its decision on the Human Rights issue, and the date of the Lloyd's Act issue at the conclusion of the oral arguments and prior to the commencement of the Bankruptcy Appeal.
8. This is the judgment of the court, to which all have contributed, giving reasons for the decisions already announced and dealing with the other issues which were argued.

Principles to be applied in relation to the granting of permission to appeal

9. Permission to appeal may be granted on one of two grounds: either on the basis that there is a reasonable prospect of success (the arguability basis) or on the basis that there is some other compelling reason why permission should be granted (the other compelling basis). As already indicated we heard argument over some seven days. Three of those days involved arguments on the Human Rights issue. As we indicated when we announced our decision on that aspect, although we formed the view that it was not in fact arguable that the HRA could have the effect contended for by the Names, we felt it right to recognise that full argument had been allowed by granting permission to appeal on the otherwise compelling basis. The HRA point is key. It is furthermore a point where testing arguability needed fuller argument and longer consideration than what we might call the norm. It was a point on which we heard argument on both sides. Having regard to the unique nature of this litigation, we formed the view that it was right to grant permission to appeal on the other compelling reason basis and to treat the hearing as the appeal. There are other points where it is right to recognise their arguability, and permission to appeal will be given on that basis. There are yet other points (on which we did not need to trouble those acting for Lloyd's) on which we shall refuse permission to appeal.

Principles on leave to amend

10. There was ultimately little dispute as to the principles. Peter Gibson LJ said this in Cobbold v London Borough of Greenwich August 9^th 1999 CA:

"The overriding objective is that the court should deal with cases justly. That includes so far as practicable ensuring that each case is dealt with not only expeditiously but also fairly. Amendments in general ought to be allowed so that the real dispute between the parties can be adjudicated upon, provided that any prejudice to the other party or parties caused by the amendment can be compensated for in costs and the public interest in the efficient administration of justice is not significantly harmed."

11. The correct approach is accepted to be the same as that which a court would have to an application for a summary judgment. The test is whether the case which the Names seek to put forward has a reasonable prospect of succeeding or whether there is some other compelling reason why there should be a trial. On a summary application it is not right to conduct a mini-trial. It is important to recognise that the more complex the case the less likely it will be that the case can be disposed of summarily: Lord Hope in Three Rivers DC v Bank of England [2001] UKHL 16, [2001] 2All ER 513 paragraph 95. There is a distinction between those cases where there are issues of fact, those cases where the facts should be found before the law should be decided and those cases where as a matter of law the case is simply bound to fail. It is further legitimate to take into account the history of the litigation, the complexity of the litigation, and the time and costs which might be saved if a point of law were decided one way or the other. There are risks which must be borne in mind of the short cut turning out ultimately to be the longest route. But this application must be placed in the context of the Lloyd's litigation as a whole. It follows many court battles and in particular the massive threshold fraud trial identified as the point to be tried at least in major part on the basis that other claims in negligence following the coming into force of the Lloyd's Act could not succeed. If the amendments were allowed, a further substantial trial would result, covering in large measure the same period but with a different focus. The court is entitled to be astute as to whether the amendments have any real prospect of success and spend some little time doing so.

The context in more detail

12. We append to this judgment the Introduction to the judgment of Cooke J.

Human Rights Act 1998

13. This point was dealt with by Cooke J after he had dealt with the limitation issues. It was dealt with first in argument before us and is an aspect on which we have already ruled. It is convenient to deal with our reasons at this stage.
14. The following chronology is important. By the end of 1996, there were some Names who had not accepted R & R and who were determined to fight. In October 1996 Lloyd's commenced proceedings against Sir William Jaffray and others claiming the Equitas premium. Other proceedings were commenced against other Names in January 1997, and certain proceedings were commenced by Names against Lloyd's e.g. Clyne, Aldrich and others. The counterclaim pleaded by Sir William Jaffray, who had commenced underwriting in 1982 prior to the coming into force of the Lloyd's Act, pleaded fraudulent misrepresentations for the whole period of his underwriting, and made an alternative plea of negligent misrepresentation for the period prior to the coming into force of the Lloyd's Act (paragraph 108). Lloyd's say that this pattern was in essence adopted by all those Names who ultimately became parties to the "threshold fraud trial" and who commenced underwriting before the Lloyd's Act came into force. There is an issue whether it was adopted by all, for example in relation to Mrs Mackenzie Smith, Mr Thomas-Everard and others whom Lloyd's allege never made a claim based on a representation in a brochure; but for present purposes we will include them all. Those Names who had commenced underwriting after the coming into force of the Lloyd's Act did not plead any negligent misrepresentation. They simply pleaded fraud. This was in recognition of the decisions of the Commercial Court and this court which by this time had confirmed that section 14(3) of the Lloyd's Act provided Lloyd's with immunity from damages save where they were shown to be acting in bad faith. See for example, the judgment of the Court of Appeal in Society of Lloyds v Leighs (1997) CLC 1398 at 1407-8 which said:

"Under s.14 of the Lloyd's Act 1982, the society is (with irrelevant exceptions) immune from liability at the suit of Names unless the act or omission complained of was done in bad faith. To our minds, given the all-embracing language used in the clause and the fact that (to all intents and purposes) the only claims of any relevance against the society by Names that could fall outside the statutory immunity would be claims of acting in bad faith ….."

15. Through 1998 and 1999, Colman J and Cresswell J identified and refined the threshold fraud point. Counsel for the represented Names before Cresswell J on 1^st July 1999 said this:

"My Lord, if we lose on the threshold fraud trial that will be, I would imagine, the effective end of the proceedings. I go along with my learned friend in saying that of course there is the theoretical possibility of the case in negligence being pursued, but wholly different considerations would apply … It may well be that, as I suppose all sides hope, that the disposal of this threshold trial fraud case will conclude the proceedings one way or the other."

16. The threshold fraud trial was then heard between January 2000 and July 2000.
17. On 2nd October 2000 the HRA came into force.
18. In November 2000, Cresswell J delivered his judgment. Shortly before the delivering of that judgment, the Names who were parties to the threshold fraud trial intimated a desire to amend their pleading to allege for the first time negligent misrepresentations post the coming into force of the Lloyd's Act, it being asserted that this was a claim that they would be entitled to make following the coming into force of the HRA. There is no dispute that if that application to amend had been made during 1998 or 1999 it would have been refused on the basis that it was doomed to failure by virtue of section 14(3) of the Lloyd's Act. As appears from Cooke J's judgment, the application made after the coming into force of the HRA was ultimately withdrawn following the finding by Cresswell J that there was no representation as alleged by the Names, but it is right to test the HRA argument by reference to a point in time immediately after the coming into force of the HRA.
19. What Mr Nardell has argued in simple terms is this. The time for testing whether section 14(3) of the Lloyd's Act operates as a bar to a claim for damages is at the trial of the action or, possibly he could argue, at the time when the court was considering whether to grant leave to amend. If that is right, then no retrospectivity is involved. The court is simply applying the section at the correct moment in time. He then argues that section 14(3), if construed as it has been heretofore, is a procedural bar to a claimant obtaining damages, and that if a court enforced that procedural bar it would be denying a claimant access to the court for the determination of his civil rights. That he submits, would infringe Article 6 of the European Convention on Human Rights ("the Convention"). He submits therefore that the court should endeavour to read section 14(3) in a Convention compliant way, and that if it could not the court would be bound to declare section 14(3) incompatible under section 4 of the Act.
20. This argument is reminiscent of the approach of the Court of Appeal as summarised at paragraph 156 of Lord Scott of Foscote's speech in Wilson v First County Trust Limited (No 2) [2003] UKHL 40, [2003] 3 WLR 568, which the House of Lords unanimously rejected. We will return to that summary below, but since this authority as it seems to us, disposes of Mr Nardell's arguments on the Human Rights aspect and indeed is really the only authority which needs extensive citation we will start with an explanation of what that case was about.
21. Wilson was concerned with section 127(3) of the Consumer Credit Act 1974 which provides:

"The court shall not make an enforcement order under section 65(1) if section 61(1)(a) (signing of agreements) was not complied with unless a document (whether or not in the prescribed form and complying with regulations under section 60(1) itself containing all the prescribed terms of their agreement) was signed by the debtor or hirer (whether or not in the prescribed manner)."

22. The chronology with which the House of Lords was concerned was as follows. Mrs Wilson signed an agreement in January 1999 pawning her car in return for a loan of £5,000. The agreement was a regulated agreement for the purposes of section 8 of the Consumer Credit Act. A regulated agreement is not properly executed unless the document contains all the prescribed terms: section 61(1)(a). When Mrs Wilson failed to repay the loan, and the pawnbroker threatened to sell the car, Mrs Wilson commenced proceedings in the Kingston-upon-Thames County Court claiming that not all the terms had been contained in the agreement which she had signed and that the agreement was therefore unenforceable by virtue of section 127(3). On 24^th September 1999, Judge Hull QC held that the agreement did contain all the terms and that it was enforceable. [He reopened the agreement as an extortionate bargain but that is irrelevant for our purposes]. Mrs Wilson appealed to the Court of Appeal, and the appeal was heard in November 2000 i.e. just after the HRA came into force in October 2000. The Court of Appeal found that the agreement did not contain all the required terms but thought it was arguable that applying section 127(3) as they were bound to do, with the effect that Mrs Wilson both kept her car and did not need to repay the loan, was an infringement of the pawnbroker's right to a fair trial guaranteed by Article 6(1) and the right to protection of property guaranteed by Article 1 of the First Protocol to the Convention.
23. The Court of Appeal accordingly adjourned the appeal for the Secretary of State for Trade and Industry to be represented. After the adjourned hearing, by a judgment dated 2^nd May 2001 [2001] EWCA Civ 633, [2002] QB 74, the Court of Appeal made a declaration of incompatibility under section 4 of the HRA. The Secretary of State appealed to the House of Lords. The House of Lords unanimously allowed the appeal. They did so on two grounds material to our consideration of Mr Nardell's arguments. First on retrospectivity, they held that it was not open to the court to make a declaration under section 4 unless the court had first construed the legislation under section 3(1) that to construe section 127(3) by use of section 3, in a way favourable to the pawnbroker would deprive Mrs Wilson retrospectively of the protection she acquired when entering into the agreement in 1999; and that section 3 should not be construed so as to alter existing rights and obligations provided by section 127(3). Second on whether section 127(3) engaged Article 6 at all, they said that Article 6 did not create substantive rights, but only guaranteed procedural rights to have a claim in respect of an existing civil right adjudicated by an independent tribunal; that section 127(3) restricted the substantive rights of the creditor by rendering a regulated agreement unenforceable unless the document contained certain prescribed terms; but that it did not bar access to the court to determine whether or not the agreement was in fact enforceable; and that section 127(3) was not incompatible with Article 6.
24. Lord Scott in the section of his speech dealing with retrospectivity described the process of reasoning of the Court of Appeal in this way at paragraph 156:

"Section 6(1) of the Act says that "It is unlawful for a public authority to act in a way which is incompatible with a Convention right". And sub-section (3) says that a "public authority" includes "a court or tribunal". It is plain that section 6 is looking to the future. It is not purporting to make unlawful a pre 2 October 2000 act of a public authority. It was section 6(1) on which the Court of Appeal relied in the present case. The reasoning proceeded like this—

i) the Court of Appeal is a public authority (see sub-section (3));

ii) it is unlawful for a public authority, and therefore for the Court of Appeal, to act in a way incompatible with a Convention right;

iii) if the relevant provisions of the 1974 Act are incompatible with a Convention right it is therefore unlawful for the Court of Appeal to give effect to them;

iv) the Court of Appeal is bound, by section 3, to try to read down the relevant provisions of the 1974 Act so as to render them compatible with the Convention; and

v) if that reading down is not possible, the Court of Appeal may make a declaration of incompatibility (see section 4).

This reasoning does not confront the issue of retrospectivity. It avoids it by concluding that if the trial, or, as in the present case, the appeal, takes place after 2 October 2000, the court is bound by section 6(1) to apply the 1998 Act without regard to whether the transactions or events in question predate or postdate the coming into force of the Act."

25. He then said at paragraph 157:

"My Lords, in my opinion, this conclusion cannot be accepted. The function of the court in civil litigation between private citizens is to adjudicate on their rights and obligations in issue in the case and to grant the relief, if any, requisite to reflect those rights and obligations. If the rights and obligations of the parties require a particular result to be reached, whether by dismissal of the action, an award of damages, the making of a declaration, the grant of an injunction, or otherwise, it is the duty of the court to deal with the case accordingly. For the court to do so cannot be an unlawful act under section 6(1)."

26. We start with this citation simply because it puts in clear terms how, even where (as in Wilson) the court was dealing with a section which by its terms was concerned with "enforcement" by the court, an argument similar to that of Mr Nardell which had been accepted by the Court of Appeal was rejected by the House of Lords.
27. In relation to retrospectivity, since the views of other members of the House could be said to differ in their reasoning it is right to set out certain of the reasoning in extenso:

Lord Nicholls of Birkenhead:

"20. Applying this approach to the Human Rights Act, I agree with Mummery LJ in Wainwright v Home Office [2001] EWCA Civ 2081, [2002] QB 1334, 1352, para 61, that in general the principle of interpretation set out in section 3(1) does not apply to causes of action accruing before the section came into force. The principle does not apply because to apply it in such cases, and thereby change the interpretation and effect of existing legislation, might well produce an unfair result for one party or the other. The Human Rights Act was not intended to have this effect.

21. I emphasise that this conclusion does not mean that section 3 never applies to pre-Act events. Whether section 3 applies to pre-Act events depends upon the application of the principle identified by Staughton LJ in the context of the particular issue before the court. To give one important instance: different considerations apply to post-Act criminal trials in respect of pre-Act happenings. The prosecution does not have an accrued or vested right in any relevant sense.

22. In the present case Parliament cannot have intended that application of section 3(1) should have the effect of altering parties' existing rights and obligations under the Consumer Credit Act. For the purpose of identifying the rights of Mrs Wilson and First County Trust under their January 1999 agreement the Consumer Credit Act is to be interpreted without reference to section 3(1)."

Lord Hope of Craighead:

"96. In my opinion the issue about retrospectivity in this case resolves itself into a question as to whether section 3(1) permits the court, when it is determining after 2 October 2000 whether section 127(3) of the 1974 Act is compatible with FCT's Convention rights, to hold that the rights and obligations of parties to the agreement are, as a result of the coming into force of the relevant provisions of the 1998 Act on that date, different now from what they were at the time when the agreement was entered into in January 1999.

…

98. Then there is the general presumption that legislation is not intended to operate retrospectively. That presumption is based on concepts of fairness and legal certainty. These concepts require that accrued rights and the legal effect of past acts should not be altered by subsequent legislation. But the mere fact that a statute depends for its application in the future on events that have happened in the past does not offend against the presumption. For a recent example of this point reference may be made to R v Field [2002] EWCA Crim 2913; [2003] 1 WLR 882 (CA). In that case it was held that the making of a disqualification order under section 28 of the Criminal Justice and Court Services Act 2000 against a defendant from working with children in the future did not offend against the presumption where the offending behaviour had occurred before that Act came into force. It illustrates the point that there is an important distinction to be made between legislation which affects transactions that have created rights and obligations which the parties seek to enforce against each other and legislation which affects transactions that have resulted in the bringing of proceedings in the public interest by a public authority. The concepts of fairness and legal certainty carry much greater weight when it is being suggested that rights or obligations which were acquired or entered into before 2 October 2000 should be altered retrospectively.

99. Account may also be taken of the purpose of the 1998 Act. Its long title states that it was intended to give further effect to rights and freedoms guaranteed under the European Convention on Human Rights. The rights to which the Act gives effect are rights guaranteed by the Convention which the United Kingdom has already signed and ratified. In R v Field [2003] 1 WLR 882, 896E-F, para 61 the Court of Appeal accepted a submission by the Secretary of State for the Home Department that the court should take a more relaxed approach to a potentially retroactive element in legislation where its intended purpose was, as it clearly was in the case of section 28 of the Criminal Justice and Court Services Act 2000, to protect children. I would apply the same reasoning to section 3 of the 1998 Act. Its purpose is to ensure that legislation is read and given effect in a way that is compatible with Convention rights, so far as it is possible to do so, whenever the legislation was enacted. To restrict the application of the interpretative obligation, without exception, to "events" that happened or "transactions" entered into on or after 2 October 2000 would be to introduce a restriction which is not stated expressly anywhere in the 1998 Act. A restriction in such absolute and all-embracing terms would seem to be contrary to the intention of the legislation and incapable of being read into it by necessary implication.

…

101. Let it be assumed, then, that the effect of section 127(3) is to engage FCT's Convention rights and that it is possible to read and give effect to the subsection in a way that is compatible with them. This will, inevitably, have the consequence of removing from Mrs Wilson the protection which sections 61(1)(a), 65(1) and 127(3) were designed to give her when the agreement was entered into. It seems to me that the presumption against the retrospective effect of legislation ought to be given its full weight in these circumstances. The case may be regarded as a typical example of the situation where legislation in question affects transactions that have created rights and obligations which the parties to it seek to enforce against each other. I recognise that there may be cases (and I have referred to R v Field [2003] 1 WLR 882 as an example) where a more relaxed approach will be appropriate. There is an obvious attraction in a solution to the application of the presumption to the obligation in section 3(1) which depends on clear, bright line rules which do not admit of any exceptions. But rules of that kind would be bound to lead to unfairness in some cases or to have consequences that could not have been intended for other reasons. So I would prefer to base my decision in this case on the particular facts and circumstances. I would hold that the presumption would be violated in this case if section 127(3) were to be construed in FCT's favour in a way that deprived Mrs Wilson of the protection which it was designed to give her when she entered into the agreement on 22 January 1999."

Lord Hobhouse of Woodborough:

"130. The Executive, sections 6 and 7: Subject to certain qualifications, s.6(1) makes it unlawful for the Executive to act in a way that is incompatible with a 'Convention right' and s.7(1) empowers any victim of such unlawful conduct (or the threat of it) to take civil proceedings against the relevant authority or rely upon the 'Convention right' in legal proceedings. This, as regards the emanations of the Executive, i.e. public authorities, creates legal liabilities and, for the citizen, legal rights. These provisions therefore do raise a potential question of retrospectivity. S.22(4) makes express provision answering this question: as regards the victim defending himself against the authority in proceedings brought by the authority, the victim can rely upon his 'Convention rights' whenever the act in question took place, but otherwise s.7(1) only applies to acts occurring after s.7 came into force. Two consequences flow from this express provision. First it expressly provides a limited retrospective effect to part of s.7(1). Secondly, it carries with it the clear implication that the Act in general does not have retrospective effect. Thus, far from permitting a view that the Act should in general be construed so as to have a retrospective effect, the conclusion is confirmed that the Act should not (save for the limited exception in s.22(4)) be construed so as to have any retrospective effect.

…

132. The Judiciary, Article 6: Most of the other Articles are substantive and, in so far as they affect remedies or procedures, are dependent upon the engagement of the substantive provision. But Article 6 comes into a different category: it provides a right to a fair trial. This is a freestanding right and applies directly to the legal process and therefore (inter alia) directly to the conduct of the Judiciary. But the Article is drafted so as expressly to require that the proceedings be conducted in accordance with the law, that is to say the municipal law, in force at the relevant time - "an independent and impartial tribunal established by law" - "innocent until proved guilty according to law". These phrases correspond to those used in other Articles - "prescribed by law" - "in accordance with the law". Thus, once the Human Rights Act had been brought into effect, the litigant could call upon the tribunal before whom he is appearing to grant him the rights stated in Article 6. But it does not follow from this that he can claim a right under the Act in respect of earlier events or conduct or hearings. It is a question of the construction of the Act and whether it is to be given a retrospective effect. It certainly does not follow that merely because he is before a court on a later occasion, he can claim Article 6 rights in respect of some earlier hearing which took place before the Act came into force or require that the court apply s.3 of the Act in relation to something which occurred before it came into effect. In any event, in the present case there has been no denial to either party of their 'Convention rights' under Article 6."

28. Lord Rodger of Earlsferry points out the different ways in which the word retrospective can be used, and distinguishes between retroactive provisions which alter the existing rights of those whom they affect, and the provisions which are not retroactive but alter the existing rights only prospectively (see paragraph 188). The presumption against retroactivity does not apply to the latter (paragraph 192), but a sudden change to existing rights may be so unfair that it is to be presumed that Parliament did not intend the new legislation to affect them in that respect which he describes as the presumption against interference with "vested rights" (paragraph 193). That presumption is weaker than the presumption as to no retroactivity (paragraph 195). He refers to the presumption that legislation will not affect pending proceedings, and to the fact that "this narrower presumption will be that much harder to displace". He stressed that the above deals with "substantive law" - changes in matters of "pure procedure" have been treated differently (paragraph 199). He then said:

"Although, at a general level, the distinction between matters of substance and matters of pure procedure is readily understandable , in practice it has not always proved easy to apply, especially in relation to legislation on limitation or prescription. For that reason, in Yew Bon Tew v Kenderaan Bas Mara[1983] 1 AC 553, 558H-559A Lord Brightman cautioned against potential dangers lurking in the description of a measure as "procedural"."

29. Yew Bon Tew was a case concerned with whether an entitlement to plead a statute of limitation was an "accrued" right. The Privy Council held that it was and that the Malaysian Interpretation Act, section 30, which provided that the repeal of a written law shall not "affect any right ... accrued" applied to an Act which changed the limitation period from 1 year to three, so that a claimant who had issued his proceedings between three years and one year after the accident could not succeed.
30. Lord Rodger then said at paragraphs 209 and 210:

"209. The operative provisions of the 1998 Act must all apply in the same way when used to give effect to the same Convention right. But they may apply differently when used to give effect to different Convention rights. Article 6 embodies rights in relation to matters of procedure. When the 1998 Act is used to give effect to those article 6 rights in our domestic law, it provides remedies for defects in procedure. There is no presumption against purely procedural statutory provisions applying generally on commencement since no-one has a vested right to any particular form of procedure. It follows that, given its unqualified language, the 1998 Act applies generally from the date of commencement in so far as it gives effect to article 6 rights. That is only what one would expect. Suppose, for instance, that during the hearing of the appeal in this case the Court of Appeal had done something - such as refusing to listen to submissions on behalf of First County - which was incompatible with their rights under article 6(1). There can be no doubt that section 6(1) would have applied and that the Court of Appeal would have acted unlawfully in terms of it. Similarly, section 7(1)(b) would have applied and under it First County could have relied on their article 6(1) rights. Sections 3 to 5 would also have applied to the appeal for this purpose. So, if the alleged infringement of First County's article 6(1) rights had arisen out of a statutory provision regulating the procedure in the appeal, section 3 would have bound the Court of Appeal. Depending on how the statutory provision could be read under section 3, the Court of Appeal could also have used the mechanism in sections 4 and 5 to make a declaration of the incompatibility of the provision with article 6(1) rights.

210. In so far as articles of the Convention contain substantive rather than procedural rights, the presumption would be that Parliament did not intend that, when used to give effect to them, the operative provisions should interfere with vested rights or pending actions. It is, however, unnecessary, and would be unwise, to go through the various articles with a view to identifying those Convention rights in respect of which Parliament would or would not have intended the 1998 Act to apply generally on commencement. For example, I reserve my opinion on whether, because of the overwhelming importance and the absolute nature of articles 2, 3 and 4, Parliament would have intended that on commencement the Act would apply generally for the purpose of giving effect to them."

31. To summarise, Lord Nicholls was of the view that section 3(1) of the HRA did not apply to "causes of action accruing before the section came into force", but he emphasised that that did not mean that "section 3 never applies to pre-Act events". He instanced post-Act criminal trials relating to pre-Act events stressing the prosecution not having "an accrued or vested right in any relevant sense". Lord Hope was of the view that the section of the Consumer Credit Act was "a typical example where the legislation in question affects transactions that have created rights and obligations which the parties to it seek to enforce against each other"; he distinguished that from legislation which affects transactions that have resulted in the bringing of proceedings in the public interest by a public authority (such as in R v Field). He was clear that the presumption would be violated in the case of section 127(3). Lord Hobhouse was clear that there should be no retrospectivity and Lord Scott was also clear that there was nothing in the HRA to rebut the presumption against the HRA operating retrospectively "so as to alter accrued rights" [para 162], and was of the view that his reasons were substantially those of Lords Nicholls, Hope and Rodger [para 163].
32. It seems to us that so far as civil cases are concerned there was unanimity that the HRA was not to be construed as affecting "accrued rights". It may well be possible that true Article 6 rights could in any event never affect "accrued rights", being simply concerned with procedural matters as will appear when we come to deal with the engagement of Article 6. But parties may have gained an accrued right by the application of what on one view might seem a procedural measure.
33. The important point is that if one posed the question in this case - had Lloyds an accrued right or immunity by virtue of the application of section 14(3) prior to the coming into force of the HRA it seems to us there is only one answer. As at that date they had no liability in damages other than where bad faith could be established. That was the position from July 1982 and the position by reference to which they were entitled to conduct their affairs, and by reference to which many others also conducted their affairs. It was the position when the litigation in which these Names are involved commenced. If the presumption against retrospectivity is to be applied so that section 3 of the HRA, has no application to a section such as section 127(3) of the Consumer Credit Act which is directed at what the court shall not do in certain circumstances, it is unarguable that section 3 of the HRA could be used to place a different construction on section 14(3) of the Lloyd's Act especially in litigation between the parties which commenced before the HRA came into force.

Is Article 6 engaged?

34. In Wilson the House of Lords dealt independently with whether section 127(3) engaged Article 6 at all.
35. In most cases consideration of the engagement of Article 6 and the question of retrospectivity will be somewhat interlinked. We say that because if a provision is purely procedural, it is likely that its application to the rights of the parties will be postponed until the moment in time during the trial process that it has to be applied. But if it defines the substantive rights of the parties, it will be applicable as at the time when their rights crystallise. But as we have already said there can be provisions which appear procedural, where their application has vested rights in a party. Furthermore in Matthews v The Ministry of Defence [2003] UKHL 4, [2003] 1 AC 1163 - a recent decision of the House of Lords as to the application of Article 6 on which great reliance was placed by those deciding Wilson - it was pointed out by Lord Hoffmann how the drafting of legislation may appear to deal with substantive rights, but still fall foul of the mischief at which Article 6 is aimed: see paragraph 29.
36. In Matthews the court was concerned with section 10(1) of the Crown Proceedings Act 1947 which provided as follows:

"10.(1)Nothing done or omitted to be done by a member of the armed forces of the Crown while on duty as such shall subject either him or the Crown to liability in tort for causing the death of another person, or for causing personal injury to another person, in so far as the death or personal injury is due to anything suffered by that other person while he is a member of the armed forces of the Crown if--

(a) at the time when that thing is suffered by that other person, he is either on duty as a member of the armed forces of the Crown or is, though not on duty as such, on any land, premises, ship, aircraft or vehicle for the time being used for the purposes of the armed forces of the Crown; and

(b) the Minister of Pensions certifies that his suffering that thing has been or will be treated as attributable to service for the purposes of entitlement to an award under the Royal Warrant, Order in Council or Order of His Majesty relating to the disablement or death of members of the force of which he is a member:

Provided that this subsection shall not exempt a member of the said forces from liability in tort in any case in which the court is satisfied that the act or omission was not connected with the execution of his duties as a member of those forces."

37. Matthews was a claimant who had served in the Royal Navy between 1955 and 1968. In 1999 he was diagnosed as suffering from asbestos related injuries. He commenced proceedings on 22^nd March 2001. By its defence the Ministry of Defence contended there were no reasonable grounds for bringing the claim and referred to its intention to apply for a certificate under section 10. It was not until 11^th March 2002 that the Parliamentary Under Secretary of State at the Ministry of Defence signed a certificate as contemplated by section 10(1). Before Keith J there was an issue on retrospectivity. In the Court of Appeal that point was conceded by the Ministry because the challenge was to the issue of the Certificate, and it was that which was said to infringe Matthews' Article 6 rights.
38. Mr Gordon QC for Matthews conceded that if the legislation had "preserved the common law prohibition of claims in tort against the Crown", Matthews would have had no "civil right" the determination of which Article 6 could operate to protect: Lord Bingham, paragraph 13. It can be seen from the analysis of the Strasbourg case law in the opinion of Lord Walker of Gestingthorpe, that at one time that court was of the view that a substantive right under domestic law might fall foul of Article 6: see paragraph 129 with its reference to Osman v United Kingdom (1998) 29 EHRR 245 and to the court significantly withdrawing from that in Z v United Kingdom (2001) 34 EHRR 97, and paragraph 132 with its reference to the opinion of the Commission in Ashingdane v United Kingdom (1983) 6 EHRR 69. Lord Walker having traced the authorities through to Fogarty v United Kingdom (2001) 34 EHRR 302, referred to the "uncertain shadow of Osman still lying over this area of the law". But he was clear that Mr Gordon was correct to concede that to succeed in the House of Lords "he had to satisfy your lordships that section 10 of the 1947 Act constituted a procedural bar." At paragraphs 142- 143 Lord Walker said this:

"142. In my view Mr Gordon's concession was rightly made. Although there are difficulties in defining the borderline between substance and procedure, the general nature of the distinction is clear in principle, and it is also clear that article 6 is in principle concerned with the procedural fairness and integrity of a state's judicial system, not with the substantive content of its national law. The notion that a state should decide to substitute a no-fault system of compensation for some injuries which might otherwise lead to claims in tort is not inimical to article 6(1), as the Commission said in Dyer 39 DR 246 (in a report, specifically dealing with section 10 of the 1947 Act, which has been referred to with approval by the court in several later cases).

143. In the circumstances the appellant's argument clings ever more closely to the bare fact that Mr Matthews had a cause of action when he issued his claim form, and that his claim could not be struck out as hopeless unless and until the Secretary of State issued a certificate under section 10. But European human rights law is concerned, not with superficial appearances or verbal formulae, but with the realities of the situation: Van Droogenbroeck v Belgium (1982) 4 EHRR 443, 456, para 38; see also R (Anderson) v Secretary of State for the Home Department [2002] 3 WLR 1800, 1807, para 13. The appellant's argument does, with respect, ignore the realities of the situation. It is common ground that the Secretary of State does in practice issue a certificate whenever it is (in legal and practical terms) appropriate to do so. He does not have a wide discretion comparable to that of a foreign government in deciding whether or not to waive state immunity (which may be by no means a foregone conclusion, especially in politically sensitive employment cases). The decision whether or not to waive immunity in Fogarty really was a decision about a procedural bar, but I am quite unpersuaded that it provides a parallel with this case. The fact is that section 10 of the 1947 Act did in very many cases before 1987, and still does in cases of latent injury sustained before 1987, substitute a no-fault system of compensation for a claim for damages. This was and is a matter of substantive law and the provision for an official certificate (in order to avoid or at least minimise the risk of inconsistent decisions on causation) does not alter that. Section 10(1)(b), taken on its own, is a provision for the protection of persons with claims against the Ministry. I respectfully agree with Lord Bingham's analysis of the legislative history of the 1947 Act and with the conclusions which he draws from it."

39. Lords Bingham, Hoffmann, and Hope agreed with the speech of Lord Walker. They added observations of their own, but the essence of all their opinions was that Article 6 was concerned with procedural bars preventing claimants enforcing their civil rights, and that section 10 created a substantive limitation on the right to sue the Crown and the condition about the Secretary of State's certificate formed part of the substantive law. Lord Millett was of the same view but in addition he was unconvinced by the reasoning in Fogarty and thought that the better course would have been to hold that the claiming of state immunity (the subject matter of Fogarty)fell outside Article 6 altogether: see paragraph 103.
40. In Wilson, with the assistance of the reasoning in Matthews, Lord Nicholls at paragraphs 34 to 36 said this:

"34. The basic principle underlying article 6(1) is that "civil claims must be capable of being submitted to a judge for adjudication": see Fayed v United Kingdom (1994) 18 EHRR 393, 429, para 65. Thus a typical case within article 6(1) is where a person enjoys under national law what is arguably a civil right but the only forum for deciding a dispute over the existence or enforcement of the right is a tribunal which is not independent and impartial. So procedural bars on bringing claims to court may fall within article 6(1). So also may procedural bars having the effect of preventing claims being decided on their merits. Tinnelly & Sons Ltd v United Kingdom (1998) 27 EHRR 249, 288-292, paras 72 to 79, is an example of the latter. The issue of a "national security" certificate had the effect of preventing complaints of religious discrimination being considered on their merits by a Fair Employment Tribunal. That was a violation of article 6(1).

35. The distinction between the substantive content of a right and an unacceptable procedural bar to its enforcement by a court can give rise to difficulty in distinguishing the one from the other in a particular case. As a matter of drafting, a restriction on the scope of a right may be framed in several different ways. But the drafting technique chosen by the draftsman cannot be determinative of this issue. Human Rights conventions are concerned with substance, not form, with practicalities and realities, not linguistic niceties. The crucial question in the present context is whether, as a matter of substance, the relevant provision of national law has the effect of preventing an issue which ought to be decided by a court from being so decided. The touchstone in this regard is the proper role of courts in a democratic society. A right of access to a court is one of the checks on the danger of arbitrary power. In Matthews v Ministry of Defence [2003] 2 WLR 435, 477, para 142, Lord Walker of Gestingthorpe noted that article 6 is in principle concerned with the procedural fairness and integrity of a state's judicial system. Lord Hoffmann observed, at p 447, para 29, that it should not matter how the law is framed, provided one holds onto the underlying principle, which is to maintain the rule of law and the separation of powers.

36. In the present case the essence of the complaint is that section 127(3) of the Consumer Credit Act has the effect that a regulated agreement is not enforceable unless a document containing all the prescribed terms is signed by the debtor. In my view, thus framed, the complaint does not bring article 6(1) into play. In terms of labels, that is a restriction on the scope of the rights a creditor acquires under a regulated agreement. It does not bar access to court to decide whether the case is caught by the restriction. It does bar a court from exercising any discretion over whether to make an enforcement order. But in taking that power away from a court the legislature was not encroaching on territory which ought properly to be the province of the courts in a democratic society."

41. Lord Hope at paragraphs 105 and 108 said this:

"105. As the European Court said in Powell v United Kingdom (Application No 45305/99) (unreported) 4 May 2000:

'For the court, it still remains the case that an applicant must be able to demonstrate an arguable claim under domestic law that there has been a breach of a civil right actionable in law. It is still impermissible for the court to arrogate to itself the task of creating in favour of an individual a substantive right where none is recognised under domestic law.'

What article 6(1) seeks to do, then, is to protect the individual against anything which restricts or impairs his access to the courts for the determination of a civil right whose existence is at least arguable. But the precise scope and content of the individual's civil rights is a matter for each state party to determine: see also Matthews v Ministry of Defence [2003] 2 WLR 435, 452-453, paras 49-53.

…

108. The Court of Appeal said that the effect of sections 65(1) and 127(3) was to deprive the pawnbroker of its ability to enjoy benefit from the contractual rights arising from the agreement or from the rights arising from the delivery of the pawn: paragraph 32. But the fact is that FCT never had an absolute and unqualified right to enforce this agreement or to enforce the rights arising from the delivery of the motor car. Article 6(1) of the Convention and article 1 of the First Protocol cannot be used to confer absolute and unqualified rights on FCT which, having regard to the terms of the statute by which agreements of this kind are regulated, it never had at any time under the improperly executed agreement which it entered into."

42. Lord Hobhouse substantially agreed with Lords Nicholls and Hope: paragraph 145. Lord Rodger agreed with Lord Nicholls on this aspect: paragraph 215. Lord Scott thought that the contention that section 127(3) of the Consumer Credit Act infringed Article 6 of the Convention was "an impossible contention": paragraph 165.
43. Mr Nardell in a forceful and sustained argument sought to persuade us that section 14 of the Lloyd's Act when properly understood recognised causes of action as existing but then imposed a procedural bar against a claim in damages succeeding. This argument was supported by certain of the litigants in person including Mrs Strong, Mrs Makenzie Smith, and Ms Reisz and those for whom the latter two spoke. We mean no discourtesy if we do not repeat the submissions made to us because at the end of the day they came to the one point that section 14 of the Lloyd's Act provided a procedural bar and was not substantive in its nature.
44. Our view was and is that section 14 of the Lloyds Act is a clear example of a section which to use the words of Lord Nicholls, restricts the scope of rights. It may be said that the position under section 14 of the Lloyd's Act is clearer even than that under either section 127(3) of the Consumer Credit Act or section 10 of the Crown Proceedings Act 1947. Section 14 is plainly not a mere procedural bar. It confers a substantive immunity. Article 6 of the Convention is not engaged. The position would be the same if the HRA had been in force when the Lloyd's Act was enacted, or before these proceedings were commenced. On a true analysis, as we have made clear, the question whether Article 6 of the Convention is engaged is quite independent of any question of retrospectivity.
45. It was for these reasons that we ruled that the Names case on the Human Rights issue is unarguable. It is further for these reasons that we dismissed the appeal of those Names who commenced underwriting after July 1982 ("the post-Lloyd's Act Names").
46. Cooke J held that, even if the HRA had the effect that Lloyd's could not now rely upon section 14 of the Lloyd's Act by way of defence to claims of the post-Lloyd's Act Names, permission to amend should nevertheless be refused because the court had no jurisdiction to grant it under the provisions of section 35(5)(a) of the 1980 Act. It was and remains common ground that the Names would have to succeed on this point as well as on the human rights issue if permission to amend was to be granted. It follows that, in the light of our decision that, for the reasons explained above, the appeals of the post-Lloyd's Act Names must fail, this point may be seen as irrelevant.
47. However, since the point was argued in some detail and we were asked to express a view upon it, we will do so shortly, although our view is not necessary to our decision. We have also reached the conclusion that we should give permission to appeal on this point because it involved considerable debate, not only with regard to the difference between fraudulent and non-fraudulent misrepresentation, but also with regard to the relevance or otherwise under section 35(5) of the factual questions which would or might arise in deciding whether section 14(3) of the Lloyd's Act was proportionate if Article 6 was engaged. In this unusual case we give permission for the same reason as we did in connection with the human rights issue.
48. CPR rule 17.4(2) and section 35(4) and (5) of the 1980 Act provide as follows:

CPR 17.4(2)

"The Court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings."

Section 35(4)

"Rules of court may provide for allowing a new claim to which subsection (3) above applies to be made as there mentioned, but only if the conditions specified in subsection (5) below are satisfied, and subject to any further restrictions the rules may impose."

Section 35(5)

"The conditions referred to in subsection (4) above are the following –

a) In the case of a claim involving a new cause of action, if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the original action; and

b) In the case of a claim involving a new party, if the addition or substitution of the new party is necessary for the determination of the original action."

Although we quoted CPR rule 17.4(2), all the argument was directed to section 35(5) because it is that section which essentially confers jurisdiction on the court in this class of case. We shall therefore focus on section 35(5) of the 1980 Act and not on the rule.

49. It is common ground that the claims of the post-Lloyd's Act Names are unarguably time barred unless they fall within section 35(5)(a) of the 1980 Act: see section 35(1)(b) and (3) of the Act. It is not in dispute that the claims which the Names wish to advance are new claims which involve a new cause or causes of action within the meaning of section 35(5)(a). That is because none of them made claims in the Jaffray pleading (or any other pleading) based upon non-fraudulent misrepresentations after 5^th January 1983, which was the date on which the Names contended that the Lloyd's Act came into force. Neither a claim for damages for negligent misstatement or misrepresentation nor a claim for statutory misrepresentation under section 2(1) of the 1967 Act, which are themselves different causes of action, is the same cause of action as a claim for damages for fraudulent misrepresentation.
50. It follows from the words of section 35(5)(a) that the question is whether the new cause or causes of action arises or arise out of the same or substantially the same facts as are already in issue on any claim made in the original action. The judge considered that question by reference to the Names' proposed claims for damages for negligent misstatement, which it has been convenient to call negligent misrepresentation. He first held that the fact that the issue of fraud has been resolved is irrelevant because the words "in issue" in the section do not mean "in dispute" but "material to". No-one suggested that that was wrong.
51. The question was simply whether the action for negligent misrepresentation arises out of substantially the same facts as those in issue in the action for damages for fraudulent misrepresentation. The judge in our view correctly directed himself by reference to the following statement as to the policy of the section made by Hobhouse LJ in Lloyd's Bank plc v Rogers [1996] 3 EGLR 83 at page 86:

"The policy of the section is that, if factual issues are in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts."

52. It is common ground that there is no authority on what is meant by "substantially the same facts". That is no doubt because the words are tolerably clear and the question in each case is a factual one, depending upon the circumstances of the particular case. For example, it seems to us that the answer in a simple case involving one or two defendants may be very different from the answer in a complex case of this kind. These considerations are important because the exercise upon which the judge was engaged involved weighing up the allegations being made and proposed and forming a view whether on balance it could fairly be said that the action for negligent misrepresentation arose out of substantially the same facts as those in issue in the action for fraudulent misrepresentation. That balancing exercise was very much a matter for the judge and, in our view, this court should not interfere with his conclusion unless he erred in principle or was plainly wrong. We should not simply substitute our view for his, even if we would have reached a different conclusion if sitting at first instance.
53. It was and is common ground that some of the facts relevant to the two claims are the same or substantially the same, notably the nature of the representations and whether or not they were true. However the judge based his decision on the differences between the matters in issue in the threshold fraud claim and the matters involved in the new claim. He stressed that in the former case the court was concerned with the state of mind of named individuals, in particular as to whether they knew that the representations were false or were reckless as to whether they were true or false. He then considered what was involved in the new cause of action, based as it is upon alleged negligence.
54. In our view, the judge was right to make a comparison between the two and he was also right to hold that the two claims raise different issues. He did so by reference to a statement by Millett LJ (with whom the other members of the court agreed) in Paragon Finance Plc v DB Thakerar & Co [1999] 1 All ER 400:

"Whether one cause of action arises out of the same or substantially the same facts as another was held by this Court in Welsh Development Agency v Redpath Dorman Long Limited [1994] 1 WLR 1409 to be essentially a matter of impression. In borderline cases this may be so. In others it must be a question of analysis. In the Thakerar case Chadwick J observed that it would be contrary to common sense to hold that a claim based on allegations of negligence and incompetence on the part of a solicitor involves substantially the same facts as the claim based on allegations of fraud and dishonesty. I respectfully agree. In all our jurisprudence there is no sharper dividing line than that which separates cases of fraud and dishonesty from cases of negligence and incompetence."

55. It is fair to say, as the judge pointed out, that that was a case in which the claimant wanted to plead fraud in a case in which only negligence had been pleaded to date. However, the judge added that it was plain, not only from that decision, but also from any sensible analysis that an entirely different element is involved when amending to plead negligence, as opposed to fraud, as the Names' draft pleading showed.
56. We agree that there are conceptual differences between fraud and negligence and that they do not involve alleging the same facts and in many cases will not involve alleging substantially the same facts. However, whether they arise out of substantially the same facts will depend upon the facts of the particular case.
57. The judge was right to focus on the particular circumstances of this case. Thus he set out paragraph 106J of the Names' proposed pleading:

"Lloyd's was negligent in that it failed to exercise reasonable skill and care to ascertain prior to making the representation whether there was in fact a rigorous system of auditing in place which involved the making of a reasonable estimate of outstanding liabilities including unknown and un-noted losses".

58. The essential reasons for his conclusions can be seen from paragraphs 76, 79 and 80 of his judgment, which were in these terms:

"76. The facts relied on as indicating negligence or lack of reasonable grounds for belief require an investigation of what Lloyd's should and should not have done to investigate whether or not a rigorous auditing system was in place and whether that system "involved" the making of a reasonable estimate of outstanding liabilities. Despite abjuring any reference to any individual syndicates and their annual RITCs and despite the absence of any particulars as to what it was that Lloyd's should or should not have done, it is hard to see how the process of ascertainment of the operation of the system could involve anything other than exploration of the operation of the system in practice. The reference to the Business Plan and to the AU38 and AU38 (A) forms once again reveals that an investigation would be required into what Lloyd's should have understood about underwriting standards, about management information, about reserving standards and about the need for new regulatory principles in relation to accounting and auditing. It is clear that new and distinct issues arise which will not merely involve a re-run of the evidence heard at the Threshold Fraud Trial.

79. It is clear that different factual evidence and different expert evidence would be required to establish Lloyd's failure to meet the objective standards which the Names allege Lloyd's should have met. Whilst much of the background was explored in the Threshold Fraud Trial and the Judgment of Cresswell J explored in detail the systems which operated at Lloyd's, the focus there was upon the representations made, as originally pleaded by the Names, the accuracy of those representations and the state of mind of the 33 named individuals at Lloyd's who were alleged to be responsible for those representations. The fundamental basis of the allegations for negligent misrepresentation is entirely different from that for fraud, requiring an exploration of matters which did not arise in the Threshold Fraud Trial. In practice, an investigation would be required of the way in which Lloyd's regulated the market in order to ascertain whether or not it should have known of the deficient manner in which the audit system was working, both for the purpose of determining indemnity for the statutory claim and the common law claim.

80. This point is seen even more clearly when regard is had to the LMG Names form of pleading at paragraph 106 AA. In that paragraph, the LMG Names allege that there was a duty to ensure that an appropriate audit was taken and to determine the necessary reserves to be created on the syndicate accounts or to inform the Names of the inadequacy of those matters or the impossibility of them. The allegation is made that, in breach of statutory and common law duties, Lloyd's failed to take the necessary steps whilst making the representations complained of. Reliance on the Cromer Report finding and the Fisher Report, the inadequacy of monitoring premium income limits as a means of assessing risk, the absence of obligation to maintain up-to-date records of aggregate exposures on a gross and net basis or of calculations of probable maximum loss, all show the wide ambit of enquiry that would be necessitated if a plea of negligent misrepresentation were to proceed."

59. The judge concluded that in the light of those circumstances it could not properly be said that the new claims for negligent misrepresentation arise out of substantially the same facts as the prior pleaded claims for fraudulent misrepresentation in the later years. The judge also referred to the issues which potentially arose under the HRA. However, as we read his judgment, the essential reason why he reached the decision he did was by a comparison between the facts in issue in the fraud claim and the new cause of action alleging negligence.
60. Although the similarities between the underlying facts were stressed in argument on behalf of the Names and we recognise that there were many underlying facts common to the two cases, we have reached the clear conclusion that the judge was right to hold that the facts involved in the new cause of action, which focus on what those at Lloyd's should have done rather than what they knew, were not substantially the same as those which were in issue in the fraud trial, which was all about whether particular individuals knew that the alleged misrepresentations were untrue. Moreover that is so even if the Names' cases were limited in some way suggested by Ms Reisz. In any event we can see no basis upon which this court could say that in reaching that conclusion the judge erred in principle or was plainly wrong.
61. For these reasons we would dismiss the appeal on this ground were it necessary to do so. We would only add this. The exercise involved under section 35(5) is to decide first what facts were already in issue in the claim already made, here fraud, and then to decide whether the new cause of action arises out of the same or substantially the same facts. That involves focusing at the second stage, not upon every issue that might arise if the amendment were allowed, but upon the cause of action alleged. It is for that reason that on the facts here it was right to compare the issues in the fraud trial with the allegations of negligence. Although this is not a final view, we are far from convinced that it would be appropriate to put all the facts relevant to proportionality, if it had arisen, into the equation for the purposes of the exercise under section 35(5).
62. Finally, we should note that different considerations might well have arisen under section 35(5) if the new cause of action under consideration was based on section 2(1) of the 1967 Act. As further explained below in the context of our discussion of section 14A of the 1980 Act, the cause of action for damages for statutory misrepresentation does not involve making an allegation of negligence because the onus of showing reasonable grounds for believing that a misrepresentation is true is on the defendant. Thus, in the case of a new claim based on such a misrepresentation, it seems to us likely that (depending no doubt upon the facts of a particular case), where the representation was the same, a new claim for damages for a misrepresentation of the kind described in section 2(1) of the 1967 Act would be held to arise out of substantially the same facts as a claim for damages for fraudulent misrepresentation. However, so far as we are aware, such a conclusion would not assist the Names because of our conclusion that such a representation is not an action for damages for negligence within section 14A of the 1980 Act.

Limitation of action

Introduction

63. At its outset the appeal raised a number of discrete questions relevant to proposed limitation defences raised by Lloyd's under the 1980 Act. As indicated above, we heard argument first on the question whether the effect of the coming into force of the HRA was to affect the rights and immunities conferred on Lloyd's by section 14 of the Lloyd's Act. We decided that it did not, so that Lloyd's is exempt from liability in respect of all causes of action which accrued after the Lloyd's Act came into force unless the act or omission complained of was done or omitted to be done in bad faith.
64. We announced that decision before hearing argument on the limitation issues. The effect of it was that some of those issues became irrelevant and we did not hear argument upon them. They were, or included, the date upon which the Names' causes of action accrued and an alternative argument advanced by the Names to the effect that there were some causes of action which were not prima facie statute barred. We therefore say nothing about those issues but will consider the issues which remained live under a number of specific headings. However, before doing so, we should briefly indicate their relevance in the context of the decisions made by the judge.
65. In paragraph 216 of his judgment the judge concisely summarised the following conclusions as being beyond serious argument:

"i) No claim by a Name for fraudulent or dishonest misrepresentation or fraudulent or dishonest non disclosure in relation to asbestos related losses is now maintainable following the decision of Cresswell J and the Court of Appeal, since the Orders of the Court required all such matters to be advanced and determined in the Threshold Fraud trial.

ii) Bad faith misrepresentations and bad faith non disclosure relating to asbestos related losses are the same as dishonest misrepresentations and dishonest non disclosure and are therefore also covered by the decisions of Cresswell J and the Court of Appeal and such claims cannot be maintained by any Name.

iii) Lloyd's owed no duty of care or statutory duty to advise the Names, to provide information nor to regulate the market and cannot therefore be liable for any failures to do so, whether committed in bad faith or not. This covers all the remaining claims advanced by any of the Names for which permission to amend is sought, other than negligent or statutory misrepresentation.

iv) All the claims made by the Names would be time barred if new proceedings were brought at today's date or at the date of the application for permission to amend, if the primary periods of limitation provided by section 2 of the 1980 Act are applied.

v) There has been no deliberate concealment by Lloyd's of any fact material to the Names' right of action in negligent or statutory misrepresentation within the meaning of section 32 of the 1980 Act and the running of the limitation period is not postponed for any Name under that section.

vi) Any claim by a Name based on a negligent or statutory misrepresentation made over 15 years before the issue of the writ or claim form against or by that Name is time barred under section 14B of the 1980 Act. In practice this means that all representations made prior to 11.10.1981 are caught by the provision together with some later representations, depending on the exact date of the operative representation in the Brochure to the particular Name and the date of the writ or claim form.

vii) Any Name who:

a) pursuant to the orders of Colman J of 30.6.98 and Cresswell J of 1.11.1999 notified a claim for an operative negligent misrepresentation made to him in a brochure after 10.10.1981 and before 5.1.1983 in the form set out in the Jaffray pleading and

b) can properly plead reliance on such a misrepresentation in concluding arrangements with Lloyd's and with Agents before 23.7.82. (so that his cause of action predates the operation of the 1982 Act) and

c) now advances such a claim for negligent or statutory misrepresentation in the terms of the misrepresentation found by the Court of Appeal in Jaffray

is now making a claim which arises out of substantially the same facts as the prior claim for negligent misrepresentation contained in paragraph 108 of the Jaffray pleading, and falls within section 35(5) of the 1980 Act and CPR 17.4., so that, for limitation purposes, the claim "relates back" to the date of the issue of the writ or claim form in that Name's action (the earliest such date being 10.10.1996) and may be able to pursue that claim, depending on subparagraph vi) and the operation of section 14 of the 1980 Act.

viii) Any claim by a Name for a negligent or statutory misrepresentation made after 5.1.1983 does not arise out of substantially the same facts or substantially the same facts as the prior claims for fraudulent misrepresentation in paragraph 29 of the Jaffray pleading so that the new claim cannot "relate back" to the issue of the writ or claim form. Such a Name cannot therefore rely upon section 35(5) of the 1980 Act or CPR 17.4 to make the new claim effective for Limitation Act purposes from the date of issue of the writ or claim form in the relevant action.

ix) It is accepted by the UNO Names, and it is clear, that all Names had the requisite knowledge, within the meaning of section 14 (A) (5)-(8) of the 1980 Act, to bring proceedings in respect of the misrepresentations now pleaded in draft by, at the latest, the date when they should have perused the Lloyd's Settlement Offer sent out to all Names with the Chairman's letter of 30.7.96. 2 months represents a generous period for such perusal.

a) Section 14A is therefore of no assistance to Names making new claims which cannot relate back to the date of a writ or claim form issued before 30.9.1999, (being 3 years from 30.9.1996-the date by when the Offer should have been studied). The claims which cannot "relate back" are those claims for misrepresentations made after 5.1.1983, referred to in sub paragraph viii) above. Those claims are irretrievably time barred now and cannot be saved by section 14A or any other section.

b) Section 14A may however assist those Names whose claims do relate back to the date of a writ or claim form, namely those claims for misrepresentations made between 11.10.1981 and 5.1.1983. (see paragraph vii) above) if they did not have the requisite knowledge before a date 3 years prior to the issue of the relevant writ or claim form.

x) Whilst in my judgment it is likely that all Names had the knowledge required to bring proceedings within s 14A (5)-(10) of the 1980 Act by October or December 1993, it cannot be said that the Names' position is not properly arguable at the stage of seeking permission to amend. Each Name's state of knowledge or constructive knowledge under section 14A(10) of the 1980 Act would have to be explored in evidence to ascertain what that Name knew or is to be treated as knowing.

xi) Section 14A of the 1980 Act has no application to claims for statutory misrepresentation.

xii) Any claim made by a Name for damages based on a negligent or statutory misrepresentation, upon which that Name relied in concluding underwriting arrangements first causing that Name damage after 23.7.1982 (the date when the 1982 Act came into force) is barred by section 14(3) of that Act, which gives Lloyd's immunity from suit for claims for damages.

xiii) In consequence of the above the only claims which have any realistic prospects of success and for which permission could be given are those brought by Names who have previously notified the Court of a claim for negligent misrepresentation made in the Brochure which was made to them after 11.10.1981 and was relied on by them in concluding arrangements with Lloyd's and underwriting arrangements with Agents prior to 23.7.1982 when the 1982 Act came into force. If those Names who have pursued such claims did not have the requisite knowledge under section 14A of the 1980 Act more than 3 years prior to the issue of the writ or claim form in their respective actions, they may be able to pursue those claims further, provided always that their claim is not barred by section 14(B) of the 1980 Act.

xiv) There appear to be a limited number of Names who fall into this category. There are further Names who notified claims for misrepresentation in the Global Accounts but not in the Brochures for the period mentioned in sub paragraph xiii) above. I gave leave to those Names to make further submissions on this point within 28 days, because they were taken by surprise when this point was taken in oral argument by Lloyd's, without any prior intimation.

xv) Proper particularisation of the date of the operative representation, the date of reliance in concluding arrangements with Lloyd's and with Agents is essential, as is a properly particularised case on knowledge for the purposes of section 14A of the 1980 Act before permission to amend can be given for any Name within sub paragraph (xiv)."

66. The effect of our decision is that, absent bad faith, the Names can only rely upon causes of action which accrued before the Lloyd's Act came into force, which the judge held was on the date it received the Royal Assent, which was 23^rd July 1982. The Names say that he should have held that that it came into force on 5^th January 1983, which was the day of the first meeting of the Council of Lloyd's, which came into existence pursuant to the Lloyd's Act. The effect of our decision (in agreement with the judge) is that no cause of action which accrued after the relevant date can succeed in the absence of bad faith.
67. Lloyd's submitted to the judge that all causes of action which accrued before either of those dates were time barred, principally by section 2 of the 1980 Act, which provides that an action founded on tort shall not be brought after the expiration of six years from the date on which the cause of action accrued. The Names sought to avoid the effect of that section in a number of ways, principally by relying upon section 14A of the 1980 Act, which provides in essence that in an action for negligence the limitation period may be three years from the date when knowledge of certain types is first acquired. The judge expressed doubt as to whether any of the Names fell within that category on the facts, but permitted certain Names to proceed further as set out in paragraph 216 xiii) to xv) of his judgment quoted above.
68. It seems to us to be convenient to consider the points raised in this part of the appeal by reference to the judge's conclusions as identified in paragraph 216. Many of those conclusions are no longer in dispute. Thus, for example, the conclusions in subparagraphs i) to iii) are no longer in dispute, subject to one point on bad faith. We shall consider the points made by the Names under the following headings, which broadly follow the order of the judge's summary:

i) Bad faith.

ii) Section 32 of the 1980 Act – concealment.

iii) Section 14A – statutory misrepresentation.

iv) Section 14B – the 15 year longstop.

v) Date the Lloyd's Act 1982 came into force.

vi) Names without brochure claims.

vii) Fairness of the proceedings.

viii) Other points.

i) Bad faith

69. In the light of the conclusions of this court in the Jaffray appeal, the UNO Names do not seek to argue any case based upon alleged bad faith. They were, in our opinion right not to do so. Some Names, led by Mrs Mackenzie Smith, initially applied for permission to rely upon bad faith and, although she did at one stage abandon such reliance, she later sought to resurrect the point. However, we have reached the clear conclusion that the judge was right to hold that any such reliance was bound to fail for the reasons he gave in his judgment and summarised in subparagraphs i) to iii) of paragraph 216. In short, this court had already rejected any asbestos related claim for misrepresentation or misstatement in bad faith and, in so far as it might be alleged that Lloyd's were guilty of bad faith in being in breach of a duty to advise Names, such an allegation could not succeed because of the decisions of the courts that no such duty exists: see paragraphs 35 to 37 of the judgment, where the judge referred to Price v Society of Lloyd's [2002] LIRLR 453, per Colman J at pages 459 – 460, referring to Society of Lloyd's v Clementson [1995] CLC 117 and to Ashmore v Corporation of Lloyd's (No 2) [1999] 2 LRR 620.
70. An appeal on this ground would have no prospect of success and there is no other compelling reason to give permission to appeal on the basis of it. We accordingly refuse permission to appeal on this ground.

ii) Section 32 of the 1980 Act – concealment

71. Here again, the UNO Names do not take the point but others do. Section 32(1) and (2) provide, so far as relevant:

"(1) Subject to subsections (3) and (4A) below, where in the case of any action for which a period of limitation is prescribed by this Act, either –

(a) the action is based on the fraud of the defendant; or

(b) any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant; or

(c) the action is for relief from the consequences of a mistake;

the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.

…

(2) For the purposes of subsection (1) above, deliberate commission of a breach of duty in circumstances in which it is unlikely to be discovered for some time amounts to deliberate concealment of the facts involved in that breach of duty."

72. Section 32(1)(a) no longer has any application because the action based on fraud failed both before Cresswell J and in this court. In our view, notwithstanding Mrs Mackenzie Smith's valiant attempts to argue the contrary, section 32(1)(c) has no possible application because this action is not for relief from the consequences of a mistake. It is an action by the Names for damages for negligent misrepresentation (in the sense of negligent misstatement) or for statutory misrepresentation. The Names do not seek relief from the consequences of a mistake within the meaning of section 32(1)(c) and nor do Lloyd's.
73. Mrs Mackenzie Smith, however, submits that Lloyd's deliberately concealed two documents, the Cromer Report and the Neville Russell letter, both of which are referred to in some detail in the judgment in the Jaffray appeal. The question is whether it is arguable that the facts stated in that report or letter were facts "relevant to the [Names'] right of action" which were "deliberately concealed from the Names" by Lloyd's.
74. A decision was made to send the Cromer Report to agents and not to Names as long ago as 1969 or 1970, which was of course well before even the events to which this action relates. We cannot see that any court could hold that the facts contained in it related to the Names' right of action. It is significant in this regard to observe that the later Fisher Report, which reviewed the issues of reserves and accounting, came into existence in 1980 and was sent to Names.
75. The Neville Russell letter was dated 24 February 1982. It is referred to in some detail in the judgment of this court in the Jaffray appeal. It was written by Neville Russell and addressed to Mr Randall as manager of Lloyd's audit department. It was part of the background to the Murray Lawrence letter, which was also considered in detail during the Jaffray appeal. In the light of the conclusions reached by this court in the Jaffray appeal we can see no basis upon which it could fairly be held that Lloyd's deliberately concealed it or the facts within it from the Names. The letter itself was not the kind of letter (addressed as it was) that one would expect to be disclosed to the Names. It may be that it can be said that Lloyd's, or those for whose acts or omissions it is vicariously liable, should have disclosed the concerns in the letter to Names and others in the market but we agree with the judge that it is inherent in the decision in the Jaffray appeal that Lloyd's did not know that it had committed any wrongdoing at any time between 1978 and 1988 and that in reality there is no evidence to support a case of deliberate concealment of a fact relevant to the Names' cause of action : see paragraph 60 of his judgment.
76. It follows that the judge's conclusion summarised at subparagraph v) of paragraph 216 is correct. Moreover, an appeal would have no real prospect of success on this ground and the UNO Names were in our view entirely sensible not to take the point.
77. In all the circumstances, we can see no other compelling reason why we should grant permission to appeal on this ground. We therefore decline to do so.

iii) Section 14A of the 1980 Act – statutory misrepresentation

78. As can be seen from the judge's summary, the claims which he has permitted to proceed to the next stage are limited to claims for what he called negligent misrepresentation. As we understand it, that is shorthand for claims in tort for breach of a duty of care in making a negligent misstatement of the kind identified in Hedley Byrne & Co Ltd v Heller & Partners [1964] AC 465. It is common ground that those claims are brought in actions "for damages for negligence" within the meaning of section 14A(1) of the 1980 Act. It follows that the state of knowledge of the claimant name is or was potentially relevant to the question whether the particular claim is time barred.
79. The Names also claim damages for what was called in argument statutory misrepresentation, that is a misrepresentation of the kind identified in section 2(1) of the 1967 Act. The judge held that an action alleging a misrepresentation of that kind was not an "action for damages for negligence" within the meaning of section 14A of the 1980 Act, so that the Names could not rely upon that section to extend the six year period for actions for tort in section 2. The Names argue that the judge was wrong so to hold.
80. We say at once that we give permission to appeal on this point, since it cannot fairly be said that the appeal had no real prospect of success. Actions for damages for statutory misrepresentations have been called actions for negligence, no doubt because it is fair to say that it is likely in many such cases that an important issue between the parties is likely to be whether the defendant had reasonable grounds for his belief that the alleged representation was true. Thus, for example, in Gran Gelato Ltd v Richcliff Ltd [1992] Ch 560 Sir Donald Nicholls V-C held that the defence of contributory negligence applied to concurrent claims for damages for the breach of a duty of care and for statutory misrepresentation under section 2(1) of the 1967 Act. He did so on the basis, as he put it at page 573D, that liability under section 2(1) "is essentially founded on negligence, in the sense that the defendant, the representor, did not have reasonable grounds to believe that the facts represented were true". See also at page 574A. See also HIH Casualty and General Insurance Ltd v Chase Manhattan Bank [2003] UKHL 6, [2003] 1 All ER (Comm) 349, where in a different context Lord Bingham (at paragraph 5) described the right to damages given by section 2(1) of the 1967 Act as a right given to "the victim of a negligent misrepresentation".
81. Those dicta are plainly of importance, but the question for decision depends upon the true construction of section 14A, which provides, so far as relevant, as follows:

"(1) This section applies to any action for damages for negligence, other than one to which section 11 of this Act applies, where the starting date for reckoning the period of limitation under subsection (4)(b) below falls after the date on which the cause of action accrued.

(2) Section 2 of this Act shall not apply to an action to which this section applies.

(3) An action to which this section applies shall not be brought after the expiration of the period applicable in accordance with subsection (4) below.

(5) For the purposes of this section, the starting date for reckoning the period of limitation under subsection (4)(b) above is the earliest date on which the plaintiff or any person in whom the cause of action was vested before him first had both the knowledge required for bringing an action for damages in respect of the relevant damage and a right to bring such an action.

(6) In subsection (5) above "the knowledge required for bringing an action for damages in respect of the relevant damage" means knowledge both -

(a) of the material facts about the damage in respect of which damages are claimed: and

(b) of the other facts relevant to the current action mentioned in subsection (8) below.

(7) For the purposes of subsection (6)(a) above, the material facts about the damage are such facts about the damage as would lead a reasonable person who had suffered such damage to consider it sufficiently serious to justify his instituting proceedings for damages against a defendant who did not dispute liability and was able to satisfy a judgment.

(8) The other facts referred to in subsection (6)(b) above are-

(a) that the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence; and

(b) the identity of the defendant; and

(c) if it is alleged that the act or omission was that of a person other than the defendant, the identity of that person and the additional facts supporting the bringing of an action against the defendant.

(9) Knowledge that any acts or omissions did or did not, as a matter of law, involve negligence is irrelevant for the purposes of subsection (5) above.

(10) For the purposes of this section a person's knowledge includes knowledge which he might reasonably have been expected to acquire-

(a) from facts observable or ascertainable by him: or

(b) from facts ascertainable by him with the help of appropriate expert advice which it is reasonable for him to seek:

but a person shall not be taken by virtue of this subsection to have knowledge of a fact ascertainable only with the help of expert advice so long as he has taken all reasonable steps to obtain (and, where appropriate, to act on) that advice."

82. The section works in this way. By subsection (1), it applies only to "actions for negligence" and, by subsection (2), it disapplies section 2, which (as stated above) provides for a six year limitation period for actions in tort. By the combined effects of subsections (3) and (4), it provides for a six year period or three years from a defined staring point, provided that the expiry of the three year period is later than the expiry of the primary six year period. By subsection (5), the starting date is specified as the date on which the claimant first had relevant knowledge. By subsection (6), that knowledge must include "the other facts mentioned in subsection (8)". By subsection (8)(a), one of the necessary facts is knowledge that "the damage was attributable in whole or in part to the act or omission which is alleged to constitute negligence".
83. Like any section of a statute, section 14A must be construed in its context in the Act as a whole. It is therefore appropriate to have regard to other relevant sections of the 1980 Act. Section 14B seems to us to be of assistance in this regard. We set it out in full below but it can be seen that it too applies only to "an action for damages for negligence" and, by section 14B(1)(a), the last of the relevant dates for the purpose of the 15 year long stop in the section is the last date on which there occurred any act or omission "which is alleged to constitute negligence".
84. It seems to us to be clear from sections 14A and 14B that they both expressly contemplate that an action for damages for negligence will involve the claimant relying upon an "act or omission which is alleged to constitute negligence": see sections 14A(8)(a) and 14B(1)(a). If there were no such acts or omission neither section could apply. In these circumstances, we do not see how an action for damages for the kind of misrepresentation identified in section 2(1) of the Misrepresentation Act 1967 could fairly be described as an action for damages for negligence within the meaning of either section 14A or 14B.
85. Section 2(1) of the Misrepresentation Act 1967 provides:

"2(1) Where a person has entered into a contract after a misrepresentation has been made to him by another party thereto and as a result thereof he has suffered loss, then, if the person making the representation would be liable to damages in respect therefore had the misrepresentation been made fraudulently, then that person shall be so liable notwithstanding that the misrepresentation was not made fraudulently unless he proves that he had reasonable ground to believe and did believe up to the time the contract was made that the facts represented were true."

86. It is plain from the express terms of the section that, in order to allege a statutory misrepresentation of this type, the claimant need only allege that the representation was made, that it was intended to be relied upon, that it was in fact relied upon, that it was untrue, that he entered into the contract in reliance upon the representation and that he suffered loss as a result.
87. The key point for present purposes is that it is not necessary for the claimant to allege that the representation was made negligently. It is for the defendant to prove, in order to avoid liability, that he had a reasonable ground for believing that it was true and did believe that it was true. It follows, as we see it, that there is no "act or omission which is alleged to constitute negligence" as contemplated by sections 14A and 14B of the 1980 Act because it is not for the claimant to make any such allegation.
88. That conclusion seems to us to be consistent with other provisions of the 1980 Act. Sections 11 and 14 were the forerunners of sections 14A and 14B, which were inserted by section 1 of the Latent Damage Act 1986. Section 11 provides for an extension of the usual limitation period for personal injuries unless the claimant has knowledge of certain facts. For present purposes, it is only necessary to note that section 11 is in wider terms than sections 14A and 14B because it is not limited to actions for damages for negligence. It applies to personal injury actions "for damages for negligence, nuisance or breach of duty (whether the duty exists by virtue of a contract or of provision made by or under a statute or independently of any contract or any such provision)". Section 11 thus extends to an action for breach of contract or breach of duty.
89. We were referred to three cases which considered the application of section 14A to actions for breach of contract. The most recent was Michael Martin v Britannia Life Ltd [2000] Lloyd's Rep PN 412, but it is of little assistance because it was decided on its facts. The others were the decision of Mr Kenneth Rokison QC in Iron Trades Mutual Insurance Co Ltd v JK Buckenham Ltd [1990] 1 All ER 808 and the decision of this court in Société Commerciale de Réassurance v Eras International Ltd [1992] 1 Lloyd's Rep 570, both of which held that section 14A did not apply to an action framed in contract.
90. It is only necessary to refer to the decision in the latter case, in which the judgment of the court, comprising Mustill, Nourse and Nicholls LJJ, was given by Mustill LJ. At page 602 the court identified the question as whether section 14A extends to actions in contract or whether it is limited to cases where the duty of care, the breach of which constitutes the negligence relied upon, arises solely in tort. The court reached its conclusion without enthusiasm but also without doubt. Its reasoning can be seen from the following passage on page 602:

"Nevertheless, we find it impossible to resist the conclusion, in company with Mr Kenneth Rokison QC … in Iron Trade Mutual …, that as a matter of language s 14A cannot be applied to actions in contract. Even when the section is read in isolation, the words "any action for damages in (sic) negligence" denote in our minds an action asserting that the defendant has committed the tort of negligence, and are not wide enough to comprise what is often (albeit inaccurately) called "contractual negligence". This reading is reinforced by the express overriding of the ordinary provision for tort claims in s 2, coupled with the absence of any overriding of the provision for contractual claims in s 5."

The court added that the position was even clearer when reference was made to section 11, which it set out as we have done.

91. That conclusion is consistent with the view we expressed above. We agree that the words "any action for damages for negligence" (not "in negligence" as included in the above quote) denote that the defendant has committed the tort of negligence. Moreover, assuming that a claim for damages based upon a statutory misrepresentation is a claim in tort, as it may well be, for the reasons we have given we do not think that it can fairly be regarded for present purposes as an "action for damages for negligence" because it is not necessary to aver any negligent act or omission and because section 14A(8)(a) cannot work since there will be no "act or omission which is alleged to constitute negligence".
92. Finally in this regard, we should perhaps note in passing that the above conclusion makes it unnecessary to express a view on the question whether an action for damages of this kind is an action founded on a tort within section 2 of the 1980 Act or an action to recover a sum recoverable under an enactment within section 9 or even an action on a specialty within section 8. We would only say that it does not seem to us to be an action on a specialty. It does not perhaps matter whether it is an action within section 2 or 9 but our present view is that it is an action founded on a tort, albeit a statutory tort, and thus within section 2.
93. For the reasons given above, we have reached the conclusion that the judge was correct to hold in paragraph 216 (xi) that section 14A does not apply to a claim for damages for statutory misrepresentation. Nor does section 14B. The judge was also correct to hold that the sections both apply to what have been called negligent misrepresentations: see his conclusion at paragraph 216 (vi).

iv) Section 14B – the 15 year longstop.

94. Section 14B provides as follows:

"(1) An action for damages for negligence, other that one to which section 11 of this Act applies, shall not be brought after the expiration of fifteen years from the date (or, if more than one, from the last of the dates) on which there occurred any act or omission-

(a) which is alleged to constitute negligence; and

(b) to which the damage in respect of which damages are claimed is alleged to be attributable (in whole or in part).

(2) This section bars the right of action in a case to which subsection (1) above applies notwithstanding that-

(a) the cause of action has not yet accrued; or

(b) where section 14A of this Act applies to the action, the date of which is for the purposes of that section the starting date for reckoning the period mentioned in subsection (4)(b) of that section has not yet occurred; before the end of the period of limitation, prescribed by this section."

95. It is common ground that, where a claim is made by counterclaim, the relevant action is brought for limitation purposes when the claim form (or in this case the writ) is issued. It is thus also common ground that, for the purposes of section 14B, in a claim brought by counterclaim, the claimant must be able to point to a negligent act or omission 15 years or less before the date on which Lloyd's issued its writ. Since counterclaims were made in actions commenced by Lloyd's on different dates, and indeed some Names commenced their own actions, it follows that different longstop dates may apply to different claims.
96. In subparagraph (vi) the judge identified the latest date upon which a name must be able to point to a negligent act or omission as 11^th October 1981. As we understand it, he took that date because the earliest date on which a relevant action was brought by Lloyd's was 10^th October 1996, when Lloyd's commenced its action against Sir William Jaffray. As just stated, there are other relevant dates in the cases of other Names because there are cases in which Lloyd's brought proceedings against Names later and there are cases in which Names brought original actions against Lloyd's. However, no such date is earlier than 10^th October 1996.
97. We read section 14B in this way, which we think is accepted by both Lloyd's and the UNO Names. A name must be able to identify a negligent act or omission on or after 11^th October 1981 and before the date on which the Lloyd's Act came into force. If he or she can do so, he or she can in principle recover any loss flowing from the particular act or omission complained of, provided that the relevant cause of action accrued before the Lloyd's Act came into force, which (as the judge found and as appears below) was 23^rd July 1982. There are various possible such acts or omissions on the facts depending upon the facts of the particular name's case. They may include a misrepresentation made for the first time on or after 11^th October 1981 or a continuing misrepresentation which continued into that period or, if there was a duty to correct a misrepresentation which continued into that period, an omission to correct it within the period.
98. However, as we see it, only losses flowing from such a negligent act or omission within the period can be recoverable, assuming them otherwise to be recoverable. Contrary to a submission advanced by Mrs Mackenzie Smith, we cannot see how a name could recover losses sustained before the beginning of the 15 year period by relying on an act or omission after it began. We can see no possible use of section 14B, or indeed any other principle of law, which could entitle a name to recover historical loss of that kind incurred before the act or omission complained of.
99. We detect no difference between our views and those of the judge in this regard and we can see no sensible basis upon which we could properly give permission to appeal on this point.

v) Date the Lloyd's Act came into force

100. As stated in paragraph 216 xii), the judge held that the Lloyd's Act came into force on 23^rd July 1982. The question is whether he was right so to hold or whether the Act came into force on 5^th January 1983. This point is or may be important to a limited number of Names, possibly including Ms Reisz who (among others) addressed us on the point. We indicated in our decision in the course of the argument that this point was arguable and gave permission to appeal in this regard. We formed the view that this is a pure point of law which could be decided finally at this stage. We also announced our decision that the Act came into force, as the judge held, on 23^rd July 1982. We now give our reasons for that conclusion.
101. In reaching his decision, the judge followed the decision of Gatehouse J in Ashmore v Corporation of Lloyd's [1992] 2 Lloyd's Rep 620. In paragraph 131 of his judgment he drew attention to some of Gatehouse J's reasoning and said that he had reached his decision for the reasons given by Gatehouse J. The question is therefore whether that reasoning is correct.
102. Lloyd's case depends upon section 4 of the Interpretation Act 1978, which provides:

"An Act or a provision of an Act comes into force –

(a) where provision is made for it to come into force on a particular day, at the beginning of that day;

(b) where no provision is made for its coming into force, at the beginning of the day on which the Act receives the Royal Assent."

103. By section 21, an Act includes a private Act, which of course includes the Lloyd's Act. It is common ground that the Lloyd's Act received the Royal Assent on 23^rd July 1982. Lloyd's say that there is no provision in the Act which makes provision for section 14 to come into force on a particular day and that it follows from section 4 of the Interpretation Act that it came into force on that day.
104. The Names say on the other hand that, by virtue of paragraph 9 of Schedule 4 to the Lloyd's Act, section 14(3) did not take effect until the first meeting of the new Council on 5^th January 1983. Section 17 provides that "the transitional provisions contained in Schedule 4 to this Act shall have effect". Schedule 4 is divided into two Parts. Part I makes detailed provisions for the first members of the Council. Part II provides, so far as relevant:

"9. Until the first meeting of the Council, Lloyd's Acts 1871 to 1951 shall, subject to the provisions of this Schedule continue to have effect as though the Act had not been passed.

…

11. Section 20 (Exclusion from membership for violation of fundamental rules, &c.) of the Act 1871 (including the Schedule to that Act setting out the fundamental rules of the Society), section 12 (Power of Committee to temporarily suspend Members) of the Act of 1911 and byelaw 87 (vi) of the byelaws made pursuant to Lloyd's Acts 1871 to 1951 shall continue to have effect until a Disciplinary Committee shall be established by byelaws made under this Act, and where proceedings have been commenced against any person under either of such sections or under such byelaw, they may be continued in all respects until concluded as if the section of byelaw under which the proceedings had been commenced continued in full force and effect."

105. The opening words of section 14(3) of the Lloyd's Act provide:

"Subject to subsections (1), (4) and (5) of this section, the Society shall not be liable for any damages, whether for negligence or other tort, breach of duty or otherwise, in respect of any exercise of or failure to exercise any power, duty or function conferred or imposed by Lloyd's Acts 1871 to 1982 or any byelaw or regulation made thereunder - "

The short point taken by the Names, as Mr Weatherill QC put it in argument, is that, since neither the Committee of Lloyd's nor Lloyd's itself had immunity before the Act, there is no reason why the Act should be construed as conferring such immunity until the Council was set up and met and began exercising its regulatory functions under the Act. Why, he asked rhetorically, should the Committee or Lloyd's be immune from liability in damages for the misrepresentations in the 1982 brochure when it was not immune with respect to the 1981 brochure and the Council of Lloyd's had not yet been formed. There is undoubted force in these submissions.

106. The question is when section 14 came into force. It is common ground that the transitional provisions in Schedule 4 came into force on 23^rd July 1982, which is plainly correct because otherwise there would be no need for transitional provisions. In Ashmore Gatehouse J set out (at page 635) the history of Lloyd's and the Lloyd's Acts and correctly identified the principal purposes of the 1982 Act as follows:

"(i) the establishment of a Council of Lloyd's consisting of working members, external members and nominated members, to take over from the former Committee the management and regulation of the affairs of the Society; (ii) the transfer to the Council of the Society's former power to make byelaws, subject to certain safeguards; (iii) the setting-up by the Council of a Disciplinary Committee and Appeal Tribunal, coupled with the repeal of the particular processes of expulsion and suspension provided for in the earlier Acts; (iv) the separation of the activities of managing agents and brokers (ss 10, 11 and 12); (v) the granting of immunity by s 14."

107. Gatehouse J then referred to sections 10(3) and 11(4), which provided for restrictions affecting Lloyd's brokers and managing agents respectively. Section 10(1) provided that the Council should not permit a person to act as a Lloyd's broker if he was or was associated with a managing agent and section 11(1) provided the converse. Section 10(3) provided:

"If at the date of commencement of this Act a person who is a Lloyd's broker is associated with a managing agent subsection (1) above shall not apply by reason of such association to that Lloyd's broker for five years from that date."

Section 11(4) made similar provision, as it were, the other way round.

108. In that regard Gatehouse J said at page 635:

"Although not relied on in argument, it seems to me that this is a significant pointer to the date when the provisions of the Act itself came into force. Unless there was one specific date expressed, ie the date of the Royal assent, it would be difficult for the Council, as well as for the agents and brokers to know where they stood under the basic prohibitions in ss 10(1) and 11(1). And the need for that divorce, as well as the five year period, are wholly independent of the coming into operation of the new Council on some future and uncertain date."

109. There seems to us to be considerable force in that view. We at one time thought that sections 10(4) and 11(5) might militate against it because they provided that if, at any time after the date of the commencement of the Act, a Lloyd's broker became associated with a managing agent or vice versa, the Council should have power to permit the person concerned to continue to act as a broker or an agent as the case might be for a temporary period of no more than six months. On one view that might seem to suggest that the Act could not commence before the Council was formed, but on reflection it seems to us that those provisions merely made it clear that they were only to apply to cases in which the relevant association began at any time after the commencement of the Act, and there is no reason why that should not have been the date of Royal Assent and before the first meeting of the Council.
110. The essence of Gatehouse J's reasoning can be seen in this passage at the end of his judgment:

"In my judgment, the correct approach to timing is this. Obviously, Schedule 4 came into force on the passing of the Act and provided the procedure and timetable for electing the new Council. By implication from par. 2 of Schedule 4, Schedule 1 also came into force on that date, the old Committee being charged with the duty of setting-up the new register, without which the Council could not be elected. Schedule 2 is unhelpful on this issue; it merely provides for byelaws to be made by the Council once the Council has been elected. Schedule 3, "Repeals", though its operation is not expressly deferred to a later date, must by implication take effect only (at the earliest) from the date when the Council is in existence. There is, of course, no distinction between the various statutory provisions repealed, and they must all cease to have effect from the same date, whenever that is, subject only to Part II of the 4^th Schedule. The most significant repeals are of ss. 11 and 22 of the 1871 Act which respectively set up the (old) Committee and gave to it the management and superintendence of the affairs of the Society. Until the new Council was in operation those provisions had necessarily to continue, so as to avoid any lacuna in the management of Lloyd's. The expulsion and suspension provisions of the 1871 and 1911 Acts had to continue beyond the time when the Council came into existence: they had to continue in force until a Disciplinary Committee and the Appeal Tribunal were established.

There are two other points to note. First, s 15(1)(a) provides that:

'Subject to the provisions of Schedule 4 to this Act [ie the transitional provisions] the enactments specified in Schedule 3 to this Act are hereby repealed to the extent specified in the Schedule.'

This brings in the necessary continuity of management and the preservation of the old disciplinary processes until the new ones are in place, as mentioned above. But, as Mr Simon [for Lloyd's] points out, the opening words of reservation in s 15(1)(a) are absent from s 14. Secondly, he also points to par 3 of the 4^th Schedule, which provides:

In lieu of the general meeting of members of the Society which would be held in November but for this Act …

(I emphasise those words – as showing that the Act must have come into force before November 1982.)

Finally, the immunity given by s 14 is an immunity to the Society. It has nothing to do with the election of the new Council and there is no reason why its operation should not take effect until the first meeting of the Council."

111. We have set out that reasoning in detail because it seems to us to be compelling. Gatehouse J ended by saying, as is correctly accepted by the Names in the present case, that there is no express provision in the Act to support the submission that section 14(3) came into force only from the time of the first meeting of the Council. The only question is whether a provision to that effect should be implied or whether such a result should be achieved by a process of construction. The question is whether, in the words of section 4 of the Interpretation Act, a "provision is made for [the] coming into force" of section 14 of the Act. In our view there is no such provision, whether express or implied. It follows that the effect of section 4(b) is that the Act came into force at the beginning of the day on which the Act received the Royal Assent, namely 23^rd July 1982.
112. For these reasons, which are the same as those of Gatehouse J and thus of the judge, we dismiss the appeal on this point.

vi) Names without brochure claims

113. At a late stage of the oral argument before the judge, Lloyd's for the first time took the point that there were a number of Names who had not made what has been called a brochure claim and that they should not be permitted to do so by way of amendment. A brochure claim is a claim which relies in part upon a representation alleged to be contained in a brochure and is to be contrasted with a Global claim which equally relies, or more accurately relied, upon a representation said to be contained in the Globals. As indicated in paragraph 216 (xiv), the judge recognised that the Names were taken by surprise by the point and gave them an opportunity to make submissions relevant to it at a later date. They did so on 23 May 2003 but, by an order made on that day, the judge refused the applications for permission to amend to make a brochure claim by the twelve Names specified in paragraph 2 of the order.
114. All twelve Names were excluded from category one on a schedule served pursuant to an order of Colman J made on 30^th June 1998. In the sequence in which they joined Lloyd's, with the year they joined in brackets, they are Mr Griffith (1958), Mr Kingsley (1960), Mr Hulse (1962), Brigadier Finch (1965), Sir William Pigotte-Browne, (1972), Mr St George (1973), Mr Thomas-Everard (1973), Mr Hurst (1974) and Mrs Mackenzie Smith (1975). Mr Thomas-Everard says that his name was included in error, a point to which we will return. As we understand it, none of those Names had made a claim against Lloyd's, either by claim or counterclaim, until the schedule was served.
115. There are three other Names identified in paragraph 2 of the order of 23^rd May, namely Mr Johnston (1959), Mrs Johnston (1976) (there described as Mr and Mrs Johnson) and Mr M Richardson as executor for Mr N Richardson (1967). They were all plaintiffs in proceedings brought by Mr George Aldrich on 2^nd June 1998 ("the Aldrich proceedings"), either by way of a schedule to the points of claim endorsed on the writ or by way of a further schedule dated 26^th June 1998.
116. In order to reach a conclusion on these applications, it is necessary to give some account of the history of the litigation. As already stated, on 10^th October 1996 Lloyd's issued a writ against Sir William Jaffray, who commenced underwriting in 1982. On 21^st November 1997 Epstein Grower & Michael Freeman ("EGMF") served a defence and counterclaim on his behalf. In paragraph 28 he relied upon the 1980 brochure, which he alleged in paragraph 29 contained a number of representations, although none was formulated in the way in which this court later found were made in a number of brochures. There followed many allegations relevant to his case on fraudulent misrepresentation, which were much discussed before Cresswell J and this court.
117. In paragraph 108 (which was quoted by the judge in paragraph 6 of his judgment) there appeared this allegation:

"Alternatively, if it be held that the representations made as set out in paragraph 29 hereof were not made fraudulently by Lloyd's, Lloyd's was nevertheless under a continuing duty to its Names, including the defendant, to take the steps set out in paragraph 91 hereof. In breach of duty, negligently and/or in circumstances to which section 2(1) and/or 2(2) of the Misrepresentation Act 1967 applied, Lloyd's failed to take those steps or any of them. Insofar as the Defendant's claim arises alternatively in tort, the Defendant contends that the loss and damage which he sustained arises from tortious conduct by Lloyd's and its officers prior to 5^th January 1983, the date upon which Lloyd's Act 1982, and in particular section 14 thereof, came into effect and that his damage, all as set out above is recoverable from Lloyd's accordingly."

There followed particulars of negligence, one of which was that, if the regulation of the market had been carried out with proper and reasonable care, the representations alleged could not have been made.

118. Thereafter a number of counterclaimants in other proceedings, also represented by EGMF, adopted Sir William's pleading by exhibiting it to their counterclaim, while making specific allegations which related to their own particular circumstances. We were told that everyone in that category made a brochure claim but that none of them joined before 1978.
119. In paragraph 2 of the points of claim in the Aldrich proceedings, in which EGMF also acted for the plaintiffs, it was alleged that each of the Names in the schedule claimed damages for fraudulent and/or negligent misstatement and/or misrepresentation arising out of or made in the course of his or her admission as a name "in particular statements made in the Lloyd's Brochure for Applicants for Underwriting Membership for each of the years 1977 to 1990 and the representations as to the profitability of Lloyd's contained in the" Globals.
120. We should also mention an action brought by Mr John Clyne against Lloyd's by writ. He too was represented by EGMF. In the points of claim served in that action on 28 November 1997 Mr Clyne relied upon representations contained in the 1973 brochure. He also relied on a number of other documents including later brochures and Globals. He began underwriting in 1974.
121. In February 1998 EGMF issued a summons seeking an order that the Names scheduled to the summons be permitted to serve a general counterclaim in a form similar to that served by Mr Hopcroft. The summons was heard by Colman J, together with other applications, on 29^th June 1998. The order made on 30 June 1998 included the following:

"3. EGMF will by 1 September 1998 write to Freshfields stating:

(i) The different categories of claim advanced by all client Names for whom EGMF act analysed by reference only to the Threshold Fraud Point.

(ii) Which of the Names who rely on a claim or counterclaim as the case may be for fraud fall within each of the categories listed under (i).

The Threshold Fraud Point refers to the issue whether Lloyd's made representations which it knew to be untrue and/or as to which it was reckless whether they were true or false and whether such misrepresentations were communicated to the Names and if so, when."

122. Paragraph 14 of the order provided that the actions by counterclaim brought by Sir William Jaffray and by Mr Hopcroft and others, the action brought by Mr Clyne and the Aldrich proceedings be tried together and that any application in one action be treated as an application in all the other actions, each such application to be brought in the Jaffray action.
123. Pursuant to that order a detailed document was prepared by counsel and served on Lloyd's on behalf of all the Names by Grower, Freeman & Goldberg ("GF&G"), who now acted on their behalf. It contained two schedules. The first schedule was entitled "the different categories of claim advanced by Names for whom GF&G act analysed by reference to the threshold fraud point". It divided all the Names represented by GF&G into categories, of which there were twenty-one in all. Of those, only category one made allegations with respect to brochures. The remainder all related only to the Globals. It is therefore necessary to quote only the first two as follows:

"CATEGORY ONE

Damages for fraudulent and/or negligent misstatement and/or misrepresentation arising out of or made prior to his or her admission as a Name in particular statements made in the Brochure for Applicants for Underwriting Membership for the year of joining between the years 1977 and 1995.

CATEGORY TWO

Damages for fraudulent and/or negligent misstatement and/or misrepresentation arising out of the representations as to the profitability of Lloyd's contained in the Global Reports and Accounts in the years 1977 to 1995"

The remaining categories divided the representations in the Globals into periods of a year until 1995 or 1996.

124. It can be seen that the brochure representations in category one, which expressly included negligent misstatement and misrepresentation, were limited to those made to Names who joined in 1977 and later. There was thus on the face of it no brochure claim in respect of any claimant name who joined before 1977. With the single exception of Mr Clyne, that was consistent with the claims or counterclaims as pleaded in the actions referred to in the order. In particular it was consistent with the allegations in the Aldrich proceedings. Those proceedings included claims by Names who joined Lloyd's before 1977 but, as stated above, no brochure claim was pleaded by any such name. That must have been a deliberate decision.
125. Schedule two was a schedule of Names which indicated which category or categories of claim or counterclaim identified in schedule one was or were being advanced in the case of each name. The schedule was entitled "the Names who rely on a claim or counterclaim as the case may be for fraud and fall within each of the Schedule One categories as listed below." For present purposes the important point is that in the first version of the schedule eleven of the twelve Names referred to in paragraph 2 of the order of Cooke J are named but none of them is included in category one. The twelfth, Mr Thomas-Everard, appeared on a corrected version a day or so later and did not appear in category one either. The categories all began at category two and encompassed a number of specific categories excluding category one.
126. The only person on the schedule who joined in 1976 or earlier later who was stated to have a category one claim was Mr Clyne. He was included notwithstanding the definition of category one quoted above, no doubt because of the way his claim had been pleaded. Him apart, none of the Names referred to in paragraph 2 of the judge's order of 23^rd May 2003 had commenced an action against Lloyd's before the schedules were sent to Lloyd's under cover of a letter from GF&G dated 16^th September 1998.
127. That letter was in these terms:

"After careful consideration with our Counsel, we attach herewith two Schedules compiled in accordance with the Order of Mr Justice Colman of 30 June 1998."

128. It is clear from that letter and indeed from the form of the schedules that careful consideration was indeed given to what names to include and to which categories each name should be put into. Moreover, it is also clear that it was intended that the schedules should make clear, not only what claims were being made by each name for fraudulent misrepresentation, but also what claims each was making for negligent misstatement or misrepresentation.
129. It was suggested in the course of the argument that, in the light of the terms of paragraph 3 of Colman J's order quoted above, the schedules were essentially focusing on fraudulent misrepresentations because of the threshold fraud point. We of course accept that that was an important purpose of the schedules, as the titles to each schedule indicate. However, we are unable to accept the submission that it was not also intended to make clear in the schedules what other claims were to be advanced. That is apparent, not only from the clear statements in the schedules but also in Mr Michael Freeman's first witness statement dated 3^rd February 2003, where he said this:

"8. The Order also required me to serve Particulars of the causes of action advanced by Names in various categories and of the Names advancing each cause of action. That information was provided in the form of two schedules together with the covering letter. … "

130. Although Mr Freeman is not quite right about the terms of the order, there can be no doubt that he (and no doubt counsel and the Names themselves) intended that the schedules should set out the nature of each name's case in respect of each cause of action or type of claim. This was of particular importance in the case of Names who had not yet commenced proceedings or made a counterclaim because over twenty years had elapsed since 1977 and everyone on the Names' side must have appreciated that there was a risk (to put it no higher) that some at least of their causes of action might be time barred. It was thus of crucial importance to commence proceedings or the equivalent as soon as possible. It was no doubt thought, in our view correctly, that the service of such a schedule would be the equivalent of commencing proceedings in the light of Colman J's order but it would have been a high risk strategy to omit reference to causes of action for other than fraudulent misrepresentation in the hope that they could if necessary be advanced at a later stage.
131. In paragraph 15 of his second statement dated 12^th May 2003 Mr Freeman says that 1977 was chosen as the date from which there was knowledge of such fraudulent misrepresentation and that schedule one therefore covers only the period from 1977 to 1995 inclusive for the purposes of the Threshold Fraud Point. That may be the reason that the date was chosen but, as we see it, the position is made clear by paragraph 8 of Mr Freeman's first statement, the terms of the covering letter and the terms of the schedules themselves.
132. In these circumstances we can only conclude that the claims for negligent misstatement and misrepresentation were carefully identified in schedule one and the categories referable to each name were deliberately decided upon before schedule two was finalised. It follows that, viewed as at September 1998, none of the twelve Names intended to make a brochure claim at all. Indeed, if the schedules were not intended to make a claim for non-fraudulent misrepresentation at all, it is far from clear when any such claim was made by those who had not until then made a claim or counterclaim.
133. Leaving the particular cases of Mrs Mackenzie Smith and Mr Thomas-Everard on one side for the moment, it was submitted that, even if that were so, the position changed thereafter by reason of the way the threshold fraud point developed. Case management of the threshold fraud point was taken over by Cresswell J, who (for example) made an order on 1^st November 1999. By that time, consistently with Colman J's order of 30^th June 1998, the Jaffray pleading was treated as the relevant pleading for the purposes of the threshold fraud point. By paragraph 1 of the order, Cresswell J gave the Names permission to amend the points of defence and counterclaim in relation to particular points they wished to take which were relevant to the fraud issues. By paragraph 2, he gave permission for a number of further Names to be added to the action as counterclaimants and, by paragraphs 3 to 5, he gave particular Names permission to join the action as claimants, directing that for limitation purposes various claims were deemed to have commenced on 19^th July, 23^rd September and 29^th September 1999.
134. By paragraph 8 he directed that anyone who wished to make a claim for fraud against Lloyd's must join the action and he also gave directions as to how that should occur. In addition he made a statement on the Commercial Court website to the effect that anyone who wished to make such allegations should join the action. The threshold fraud issue was to be tried in January 2000 and would relate to three sample Names but would resolve all allegations of fraud in respect of asbestos related losses between 1978 and 1988.
135. As a result of those directions, some Names came forward and were added and the Jaffray pleading was further amended both up to and during the trial. No alterations were, however, made to the parts of the counterclaim referred to above in which non-fraudulent allegations were made. It was submitted that all those added as parties by the orders of Cresswell J should be treated as making claims for non-fraudulent misrepresentation. We see that there is some force in that submission with regard to those Names who joined the action in that way. However, none of the counterclaims (including that of Sir William Jaffray) included brochure claims in respect of joiners before 1977 and it seems to us to be very doubtful, to put it no higher, that any new name could be treated as making such a claim merely by joining the action in 1999. In fact only two such people have been identified and in each case we accept Mr Aldous' submission that their claims would be barred by the 15 year longstop.
136. In any event, none of the Names mentioned in paragraph 2 of the judge's order of 23^rd May 2003 fall into that category. For these reasons we can see no escape from the conclusion that, with the possible exception of Mrs Mackenzie Smith and Mr Thomas-Everard, none of the twelve Names advanced a brochure claim. They did advance non-fraudulent misrepresentations but only those stated in categories other than category one, which was the only category which included a brochure claim.
137. The position of Mrs Mackenzie Smith is different in this respect. On 6 November 1998 she wrote a letter to GF&G sending them copies of two brochures, published by Lloyd's in 1972 and 1974, which contained representations which are very similar to those with which the Jaffray appeal was concerned. In the letter she stated that that information would necessitate changes to the categorisation of the Names in schedule two. She said that they would certainly bring five more people into category one. We have a redacted copy of the letter so that we cannot tell from it who the other Names are. We might be able to deduce who they are but none of them has relied upon the letter. No evidence has been adduced by or from Mr Freeman as to what decisions were made in the light of the letter but the fact is that no attempt was made to alter the Names' categories in schedule two.
138. It was not suggested that the letter or its contents were sent to Lloyd's at the time and, although we have some sympathy with Mrs Mackenzie Smith, we do not see how the fact that earlier brochures were found or the contents of a letter to her solicitors can affect the position as between the parties. The same is true of the position of the other Names to whom the letter referred. Again we do not know what action was taken on the letter so far as they were concerned, whoever they were.
139. We turn to Mr Thomas-Everard. Here the position is somewhat different. He was not included on the first version of schedule two, which was the version enclosed with the letter of 16^th September 1998. However, on the next day, 17^th September 1998, GF&G sent a fax to Freshfields attaching a further letter dated 16^th September from GF&G which was entitled second letter. That letter stated that Freshfields should by now have received the schedules, that page 1 of schedule two was incomplete, that GF&G apologised for the error and page 1 should be replaced with a new corrected page 1 which was attached. The corrected page 1 included Mr Thomas-Everard and showed him as having joined in 1973. He was shown as being in categories 2 to 17 and not in category one.
140. Mr Thomas-Everard's case is that he was included in error. He says that he was not a member of UNO at the time and that GF&G had no authority to put his name on the schedule. Curiously, in the course of the proceedings before the judge on 23^rd May 2003, Mr Freeman told the judge that he thought that the schedule attached to his second witness statement, which included Mr Thomas-Everard's name, was an earlier version, incorrectly including Mr Thomas-Everard. We do not think that that can be so in the light of the correcting fax of 17^th September referred to above.
141. The evidence shows that EGMF acknowledged service of Lloyd's writ claiming the Equitas premium in February 1997 on Mr Thomas-Everard's behalf, even though it may well be that the original reason for that was to avoid his being served personally. Until 11^th March 1999, when More Fisher Brown took over the representation of Mr Thomas-Everard and other Names, EGMF or GF&G remained his solicitors on the record. Despite that, Mr Thomas-Everard says that he was a litigant in person in 1998. He refers in particular to a hearing before Colman J on 20^th March and to an appeal to this court. He says that he was a litigant in person in that connection from May to August 1998 and refers to a particular exchange he had with Mr Grabiner QC, who was then representing Lloyd's when he says that Mr Grabiner accepted that he was acting in person. He says that he only became a UNO name when he paid a subscription on 4^th November 1998.
142. Lloyd's accept that he did act as a litigant in person during part of 1998 in connection with Lloyd's application for summary judgment and the appeal from Colman J's order but submit that there is no reason to think that GF&G did not have authority to add Mr Thomas-Everard's name to schedule two. We agree. As Mr Nicholas points out in his recent statement, if that schedule was served in error, it is difficult to see how he ever became a counterclaimant. Given the acknowledgment of service, the fact that Mr Freeman's firm remained on the record for Mr Thomas-Everard throughout, the correction of schedule two and the fact that a list of documents had been served on his behalf by 18^th November 1998 all lead to the conclusion that GF&G were treated by all as having the authority to include his name on the schedule and that from that moment he was correctly treated as a counterclaimant in the action. We also note in this regard that, although Grower Freeman continue to act for him, no evidence has been adduced from them explaining the position in a manner favourable to the case he is now making.
143. In these circumstances we have reached the conclusion that the judge was right to reach the conclusion which he did on 20^th June 2003, when he considered this specific point. We have only considered the point in some detail because Mr Thomas-Everard was away on that date and was not aware that it would be considered by the judge.
144. We have considered whether there is any basis upon which we can assist these Names to be included with those who can proceed to the next stage. We have concluded that there is not. For the reasons we have already given, we can see nothing in the case management aspects of the case to lead to the conclusion that the twelve Names have in some way kept open a brochure claim. The position is simply that they in effect pleaded a case which did not include a brochure claim because they all joined Lloyd's before 1977 and a deliberate decision was made not to include a brochure claim in such cases.
145. We have considered whether in these circumstances it could be said that the proposed new cause of action, namely the brochure claim, arises out of the same or substantially the same facts as are already in issue in the action, namely the fraudulent misrepresentations or the non-fraudulent representations made in the Globals between 1977 and, say, 1982, within the meaning of section 35(5) of the 1980 Act. We have reached the conclusion that the answer to that question is no. We have already considered the relationship between the fraudulent and non-fraudulent claims in this context and expressed our view to that effect. The issues raised by alleging misrepresentations in brochures before 1977 do not in our view arise out of substantially the same facts as allegations arising out of the Globals thereafter. If they did, it is far more likely than not that these allegations would have been included in the first place.
146. In so far as other Names have made brochure claims, it has not been argued that section 35(5) is wide enough to enable a claimant to introduce claims which arise out of substantially the same facts as claims already made, not by that claimant, but by another. It would no doubt be possible to frame a statutory provision to that effect but it is, as we understand it, common ground that section 35(5) cannot be construed to have that effect.
147. The only other basis upon which it has been suggested that the twelve Names or some of them can be included is by estoppel by convention. The general principle is not in dispute. It was stated in this way in the third edition of Spencer Bower and Turner, Estoppel by Representation, at page 157, as approved by this court in Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1984] 1 QB 84, especially by Brandon LJ at pages 130-1:

"This form of estoppel is founded, not on a representation of fact made by a representor and believed by a representee, but on an agreed statement of facts, the truth of which has been assumed, by the convention of the parties, as the basis of the transaction into which they are about to enter. When the parties have acted in their transaction upon the agreed assumption that a given state of facts is to be accepted between them as true, then as regards that transaction each will be estopped against the other from questioning the truth of the statement of facts so assumed."

148. The judge rejected this submission on the basis that there was no common assumption shared by Lloyd's that Mrs Mackenzie Smith had brought or was entitled to bring a brochure claim even though it was not included in schedule two. We agree. The judge summarised the position thus:

"All that Mrs Mackenzie Smith can rely upon is Lloyd's silence. There is not shown to be any shared assumption in the context of litigation where she was aware that Lloyd's was opposed to all her efforts to advance claims against Lloyd's particularly those sought by amendment following the Court of Appeal's decision. Without any common assumption or the evincing of a common assumption in conduct crossing the line between the parties or acquiescence in an assumption of Mrs Mackenzie Smith, there is no basis for an estoppel based upon the Texas Bank case or indeed an estoppel of any other kind".

149. We entirely agree. We can see no basis for any such estoppel, including the failure of Lloyd's to take this point until a late stage. We agree with Mrs Mackenzie Smith that it is most unfortunate that the point was taken late, but there was no common assumption shared by Lloyd's that they would not take the point.
150. We have been somewhat troubled by some aspects of these points and think that in this unusual case there are compelling reasons to give permission to appeal with regard to them but we have in the end concluded that the arguments advanced on behalf of the twelve Names cannot succeed, that the appeal must fail and that paragraph 2 of the judge's order of 23^rd May 2003 must stand.

vii) Fairness of the proceedings

151. We now turn to a point on the fairness of the proceedings before Cooke J. This is a point taken by Ms Reisz for herself and those for whom she spoke. Other represented Names and indeed other litigants in person including Mrs Mackenzie Smith and Mr Butler expressly disavowed the point.
152. Among those for whom Ms Reisz spoke was Mrs Doll-Steinberg represented by her husband. It was he that came and addressed us orally on the point. He drew our attention to the skeleton argument put in on behalf of these Names for the hearing before the judge on 23^rd May 2003. In that skeleton argument submissions were made to the effect that where there were litigants in person the judge had been wrong to allow Lloyd's extensive arguments, both written and oral, to be given the weight they were. This turned what the Names thought would be a preliminary hearing into an 11 day hearing ranging over substantive issues which it was submitted the litigants in person were not prepared to meet. The submission was further that the judge placed undue time constraints on the proceedings by wishing to produce his judgment before the Easter recess, whereas there was no reason why the matter should not have been adjourned to allow further time for the litigants in person to prepare arguments.
153. The judge dealt with those submissions when giving judgment on 23^rd May 2003: see pages 87 and 88 of the transcript. He pointed out how at all times the Names had been given full freedom to develop their own submissions "first following the UNO Names' counsel, and indeed adopting in very large part the submissions made so aided [probably a mistranscription for "ably"] by those counsel". There were as he also pointed out very substantial skeletons put in on behalf of the UNO Names and by what were termed the LMG Names [Names represented by another firm of solicitors for a period] "at that stage many of the litigants in person belonging to the LMG group". He pointed out how the majority of the determinative arguments were marshalled by counsel for the UNO Names. He also pointed out how some litigants in person having said they were prepared to make submissions on the Friday 11^th April, then said they wished further time and were given until the Monday
154. Mr Doll-Steinberg repeated the submissions made in the above skeleton before us. He further quoted the judge's judgment on this aspect, and suggested that the Judge had not understood the real point being made. That point was that litigants in person simply had not come prepared to deal with full arguments rather than what was thought to be going to be a preliminary issue, and he suggested that if we upheld the judge on this aspect it would become a precedent and be understood to mean that a powerful party could simply bring out formidable arguments at a preliminary hearing leaving litigants in person without the means of answering the same.
155. It is quite unfair to characterise the way the litigants in person were treated at the hearing in March and April 2003 as countenancing a powerful party simply being able to ride roughshod over litigants in person. It must have been obvious to all when Lloyd's served their written skeleton many weeks before the hearing before the judge that substantial points were going to be argued. The lawyers representing many Names again in lengthy written submissions dealt with those arguments in detail. The hearing was fixed for six days. It must have been obvious that in litigation in which there had already been a six month fraud trial with a substantial appeal to the Court of Appeal, Lloyds would fight hard to resist any amendment and that the court would be likely to look with some care at the question whether leave to amend should be given.
156. At the hearing before the judge the major arguments on the determinative points were undertaken by the lawyers. Litigants in person were then given ample opportunity to make their own submissions. Mr Doll-Steinberg has not pointed to any argument which he says that, given further time, would have been put forward by himself or any litigant in person and which was relevant to permission to amend. He made some reference to "Judicial Review" but with respect that does not bear in any way upon the arguments that the judge or this court had to consider.
157. In conclusion, this point was quite unarguable and we therefore refuse permission to appeal with regard to it.

viii) Other points

158. A number of other points were taken in what were extensive submissions made by and behalf of the Names. It is, we think, necessary to refer to only three, one raised by Mr Butler and two by Mrs Mackenzie Smith.
159. The first is Mr Butler's point that Lloyd's are not protected by section 14 of the Lloyd's Act from claims for misrepresentation of the kind which the Names seek to advance here because the representations were made to members of the public and not to members of the Lloyd's community within the meaning of section 14(1). This is an ingenious point but in our judgment it is bound to fail because of the express terms of section 14(2)(c).
160. As appears from the text of section 14 appended hereto, section 14(2)(a) identified particular classes of person as members of the Lloyd's community. It is common ground that none of the claimants was such a person at the date the representation was made to him or her in a brochure before he or she joined, although that would not of course be true once he or she became a member. However, the problem which this submission faces is section 14(2)(c) which includes as a member of the Lloyd's community:

"(c) a person who is seeking or has sought to become a member of the Lloyd's community in one or more of the capacities listed in paragraph (a) above."

One such capacity is a member of Lloyd's.

161. Mr Butler says that a member of the public who reads a brochure is not yet seeking to become a member of Lloyd's but is merely a member of the public. However, the Names' case is that they relied upon the representations in the brochures as an inducement to persuade them to become members. In these circumstances there is, in our view, no escape from the conclusion that when the name relied upon the representation in the brochure, which is a necessary element of the tort complained of, he or she was "seeking … to become a member of Lloyd's" within the meaning of section 14(2)(c). It follows that this point cannot succeed and that we have no alternative but to refuse permission to appeal in relation to it. This is in any event a point which should have been taken long ago and it would be wrong to allow it to be taken now.
162. The first of the points made by Mrs Mackenzie Smith is that the judge should not have dismissed claims by the Names that Lloyd's was in breach of its duty to regulate the market. However, in our view, the judge was bound to reach that conclusion in the light of the authorities, notably Price, to which we have already referred and which decided that Lloyd's owed no such duty to the Names. The only arguable case identified to date must be based on the representations in the brochures identified by this court in the Jaffray appeal. Permission to appeal must be refused on this ground.
163. The second point made by Mrs Mackenzie Smith is that she and other Names have a claim in restitution and that it is never too late, as she put it, to waive the tort and to claim a restitutionary remedy, which would not be barred by section 14 of the Lloyd's Act because it would not require the name to claim damages but would permit some form of restitution to avoid liability to Lloyd's for the Equitas premium.
164. There are two or more overwhelming difficulties in the way of this submission. The first is that, since it does not rely upon the HRA, this point could have been taken long ago and it is now far too late to rely upon a new defence to Lloyd's claim to the premium. The second is that it is a further attempt to raise a set off against Lloyd's claim which was rejected by the courts some years ago. The third is that we can see no basis for a restitutionary claim. However analysed, what the Names are seeking to do is to set up a claim for damages for misrepresentation or breach of duty against Lloyd's in circumstances in which, in respect of post Lloyd's Act claims, we have held that Lloyd's are exempt under section 14(3). Whether Names can recover in respect of pre-Lloyd's Act claims depends upon whether they fall within the window identified by the judge and not upon a classification of the claims as restitutionary.
165. In these circumstances, we can see no prospect of the Names succeeding on these points, or indeed any other further points which were touched upon in the course of the argument and we have no alternative but to refuse permission to appeal in respect of them.

Conclusions

166. In the result none of the points advanced by the Names succeeds and the orders of the judge stand.
Order:- The appeal of what are termed in the judgment the post-Lloyd's Act Names dismissed; the judgment contains the decision and reasons for either granting or refusing permission to appeal on a number of points, and where permission has been granted the decision and reasons for dismissing the appeals; counsel to lodge a minute of order; permission to appeal to the House of Lords is refused. (Order does not form part of the approved judgment) Annex

Schedule 1

Mr Justice Cooke:

Introduction.

167. On 3^rd November 2000 Cresswell J gave judgment on the "Threshold Fraud Point", as it was known, in a number of actions. In actions commenced by Lloyd's against various Names who had refused to accept the R & R settlement offer of July 1996, claims were brought in respect of premium for reinsurance of their liabilities to Equitas and counterclaims were raised by those Names. In other actions, Names had themselves brought claims, the common thread between the Names' claims and counterclaims being allegations of fraudulent misrepresentation made by Lloyd's in brochures and other publications issued by them which, it was said, induced the Names to become members of Lloyd's and to enter into agreements with Members Agents and Managing Agents. For a comprehensive account of the background, and the extensive history which lies behind the "Threshold fraud" trial, reference should be made to the terms of the lengthy judgment of Cresswell J and the appendices to it. The Names appealed against the decision of the learned Judge and that appeal was rejected on 26^th July 2002 in another lengthy judgment delivered by Waller LJ on behalf of the Court of Appeal. Once again, reference should be made to that judgment for the background to the appeal.
168. By an Order dated 30^th June 1998, Colman J had ordered that four specific actions should be tried together and the Threshold Fraud point determined, following exchanges of pleadings and evidence in accordance with the directions he made. There was a requirement to identify the different categories of claim advanced by different Names by reference to the Threshold Fraud Point which was, at that stage, defined as:

"the issue whether Lloyd's made misrepresentations which it knew to be untrue and/or as to which it was reckless whether they were true or false and whether such misrepresentations were communicated to the Names and if so when".

Of those Names so identified, who had not at that stage served a claim or counterclaim alleging fraud against Lloyd's, one claimant from each category was to serve a pleading incorporating such part of the Points of Defence and Counterclaim already served on behalf of Sir William Jaffray as he might be advised and setting out any particular matters relating to the Threshold Fraud Point which applied to their claim. By a letter of 16^th September 1998 Schedules were served by solicitors acting for the UNO Names setting out the categories of claim and those Names who were pursuing them. Only one category, Category 1, related to misrepresentations in the Brochure for Applicants for Underwriting Membership for the year of joining. As it turned out, the categories overlapped in the content of their cases (the other 20 categories related to the Global Report and Accounts produced by Lloyd's in relation to closed years of account between 1977 and 1995) so that it became unnecessary to draft a multiplicity of pleadings and that of Sir William Jaffray which pleaded reliance on the Brochure became the key pleading.

169. By a further Order dated ₁st July 1999, the allegations of fraud to be tried on the 11^th January 2000 were further refined, being confined to the period 1978 to 1988 and by reference to the alleged fraud of 33 named persons at Lloyd's. In addition to the matters previously referred to, the issue of reliance by 3 sample Names was also to be determined. It was specifically provided that the Names would not seek to investigate at trial the position of any particular Lloyd's syndicate or seek to show that any such syndicate wrongly closed any years of account: nor would any allegations of fraud be made against panel auditors: nor would the Names seek to investigate at trial the manner in which any particular firm of auditors conducted the audit of any Lloyd's syndicate for any particular syndicate year of account. Moreover the only allegation to be made as to the withholding of material information from underwriters or auditors by Lloyd's was that Lloyd's had failed to distribute the Murray Lawrence letter of 18^th March 1982 to the Members Agents, an issue which was ultimately determined against the Names by Cresswell J at the Threshold Fraud Trial.
170. On 1^st November 1999, Cresswell J made a further order for directions. In this order, as in others, additional Names were identified as counterclaiming Names and in each case, where the Name had no existing proceedings, a date was specified as the deemed date of commencement for Limitation Act 1980 purposes. He ordered that any Names who wished to advance allegations of fraudulent inducement to become or remain an Underwriting member of Lloyd's by reason of Lloyd s failure to disclose the nature and extent of the market's liability for asbestos related claims had to provide written notice by a specified date, failing which they would thereafter be precluded from advancing such allegations without the permission of the Court. As a result of this order (as appears from the statement sent on the Court's instructions to Names who were in dispute with Lloyd s) the Court hoped to ensure that all fraud arguments would be enshrined in the Threshold Fraud Trial and would be determined once and for all between Lloyd's and all non-accepting Names however such fraud claims were framed whether by reference to misrepresentation or non-disclosure of information
171. As finally reformulated in the Re-Re-Amended Points of Defence and Counterclaim of Sir William Jaffray, the fraud alleged against Lloyd's was contained in a series of representations made in the Lloyd's Brochure and by reference to the Aggregate Results/Global Reports and Accounts which Lloyd's issued annually and upon which the Name relied in deciding to join or remain in Lloyd's and in deciding on premium limits and the continuation of underwriting. The details of these alleged representations are set out in the judgment of Cresswell J and the judgment of the Court of Appeal. It was alleged that the representations were false because Lloyd's knew, at the time of making such representations that the minimum audit reserves were manifestly inadequate in the light of its knowledge of the Lloyd's market's exposure to asbestos related liabilities, as set out in paragraph 34 of the Re-Re-Amended Points of Defence and Counterclaim. As part of the plea of falsity, in paragraph 34.2, it was alleged that Lloyd's failed to make proper and full disclosure of material information relating to the exposure of the Lloyd's market to potentially huge and escalating asbestos related claims and that, moreover, Lloyd's failed properly to regulate the manner in which syndicates or their auditors reserved for and accounted for such potential liabilities.
172. In addition to these pleas there was an additional plea in paragraph 108 which read as follows:-

"Alternatively, if it be held that the representations made as set out in paragraph 29 hereof were not made fraudulently by Lloyd's, Lloyd's was nevertheless under a continuing duty to its Names, including the defendant, to take the steps set out in paragraph 91 hereof. In breach of duty, negligently and/or in circumstances to which section 2(1) and/or 2(2) of the Misrepresentation Act 1967 applied, Lloyd's failed to take those steps or any of them. Insofar as the Defendant's claim arises alternatively in tort, the Defendant contends that the loss and damage which he sustained arises from tortious conduct by Lloyd's and its officers prior to ₅th January 1983, the date upon which Lloyd's Act 1982, and in particular section 14 thereof, came into effect and that his damage, all as set out above is recoverable from Lloyd's accordingly.

Particulars of Negjjgence.

1. If and insofar as the Defendant may fail to establish that the facts appertaining to asbestos-related liability as hereinbefore pleaded were known to Lloyd's or that Lloyd's closed its eyes thereto, those facts were at all material times known to Lloyd's and to each of its Committee and/or Council members;

2. The representations made in paragraph 29 could not have been made by Lloyd's or any officer or Council or Committee member if any care had been taken to ascertain the facts before authorising communication in the forms pleaded to the Defendant and other external Names;

3. If the regulation of the market by Lloyd's had been carried out with any proper or reasonable care, Lloyd's would not have failed to take the steps set out in paragraph 91;

4. In the premises, Lloyd's had no reasonable grounds at any material time for believing that the facts represented were true."

173. Whilst framed obscurely, this plea was primarily a plea of negligent failure to take the steps set out in paragraph 91 of the pleading which can be summarised as follows:-

i) Failure to make full and proper disclosure to the Names, when publishing the Global Reports and Accounts, of the estimates of the likely extent and growth of future asbestos related claims.

ii) Failure to give directions as to the minimum levels of reserves necessary for syndicates with any material exposure to asbestos related claims to cater for their potential liability.

iii) Failure to give clear and appropriate directions to syndicates with any material exposure to asbestos related claims to keep open the 1979 and subsequent years of account wherever the syndicate was unable to assess and quantify fairly such claims for the purpose of fixing the reinsurance to close (RITC).

iv) Failure to give clear and appropriate directions to underwriting agents or otherwise to ensure that full and proper disclosure was made to all Names of the syndicates' exposure to asbestos related liabilities and the treatment by the syndicates in their accounts of their liability to such claims and

v) Failure to give clear and appropriate directions to Lloyd's auditors in relation to the treatment of asbestos related liabilities in such accounts so as to ensure that inequitable or inadequate figures for RITC were not incorporated in the syndicate accounts.

174. In addition to this primary allegation in paragraph 108 it can be seen that there was a reference to those failures taking place in a context to which the Misrepresentation Act 1967 applied and in the particulars of negligence (subparagraphs 2 and 4) it was alleged that the representations pleaded in paragraph 29 could not have been made by Lloyd's if any care had been taken to ascertain the facts before authorising communication in the form in which it took place. Moreover, Lloyd's had no reasonable grounds at any material time for believing that the facts represented were true.
175. It is therefore the position, and it is accepted by Lloyd's, that there were, on the face of the pleading, allegations of negligent misrepresentation and statutory misrepresentation made before the 5^th January 1983 which, the Names alleged, was the date upon which the Lloyd's Act 1982 came into force. That date is the subject of dispute between the parties.
176. Following the Threshold Fraud Trial and shortly before judgment was given by

Cresswell J, the Names raised the possibility of amending their pleading to include

new allegations of negligent misrepresentation after 5^th January 1983 and, following

the judgment the matter came before the learned Judge once again and resulted in an

order made by him on 27th April 2001. Because the Judge had found that no

representations had been made as alleged, it was accepted by leading counsel for the

UNO Names, that the amended case could not be regarded as having a reasonable

prospect of success, unless there was success in the envisaged appeal from the

decision of the Judge. In consequence, the Judge dismissed both the Names' claims

and counterclaims and their application for permission to amend to include the later

allegations of negligent misrepresentation which, they alleged, they were entitled to

pursue by virtue of the coming into force of the Human Rights Act in October 2000.

177. When the matter came before the Court of Appeal, as appears from the terms of the Court of Appeal judgment, the Court reformulated the alleged representations made to the Names at paragraphs 309 to 322 and, having done so, then found at paragraphs 374 to 376 that those representations were false. The Court then went on to hold that it had not been shown that Lloyd's had knowledge of the falsity of such representations with the result that the Names' claim failed on appeal, just as it had at first instance. (The Court of Appeal also rejected the Names application for permission to appeal on the basis that they had not received a fair trial).
178. The Court of Appeal found that the brochures contained "a representation that there was in place a rigorous system of auditing which involved the making of a reasonable estimate of outstanding liabilities including unknown and un-noted losses." They found furthermore that those at the centre of Lloyd's must have intended the representation to be understood in that way and that it was material, in the sense that it was intended to be relied on. Despite the fact that the point had never been pleaded in this way before, the Court of Appeal found that an ordinary person applying to become a Name would reasonably conclude that the brochure did contain such a representation.
179. It is important to note that the Court of Appeal, at paragraphs 375 and 376, found that the representation was false simply on the basis that, when R&R was carried out in 1996, so many syndicates were shown to be massively under reserved, that this demonstrated that the system had not been producing reasonable estimates of outstanding liabilities over the years. With the benefit of hindsight, the Court commented that it was clear that the un-noted losses (IBNR) were grossly underestimated throughout the relevant period. The Court made it plain that this was not an indictment of particular underwriters or auditors and that they had not explored the way in which such estimates were made by individual syndicates or individual auditors. There was therefore no question of any finding of negligence or unreasonableness on the part of those making the estimates or audits at the time those estimates were made. There was no finding that the estimates were unreasonable in the light of the facts and circumstances known at the time the representations were made. The simple fact was that "as it turned out most syndicates were under reserved".
180. As a consequence, the Court of Appeal found that throughout the relevant period the system did not involve the making of a reasonable estimate of outstanding liabilities including unknown and un-noted losses. It is important in this context to emphasise that the words used by the Court of Appeal, namely "the system simply had not been producing reasonable estimates of outstanding liabilities over the years" have to be understood as meaning that the system had not been producing sufficiently accurate estimates of outstanding liabilities to be relied on as opposed to estimates which were unreasonable at the time they were made. The basis of the Court of Appeal's decision as to falsity therefore did not depend upon anything more than the fact that, when seen at the time of R&R, the reserves made and RITC premium charged were grossly insufficient in respect of the liabilities incurred for prior years. Such a finding could only be put upon this basis since, in accordance with the earlier orders made by the Commercial Court, there had been no investigation into the individual assessment of any particular RITC premium by a syndicate or its audit for any of the years in question.
181. By an order dated 28^th October 2002, the Court of Appeal spelt out the consequences of its decision. It refused applications for a stay of execution, of enforcement of judgments obtained against any Name for that person's Equitas premium, of any costs orders made in specified Lloyd's litigation or of any writ or claim forms issued or to be issued in respect of Central Fund debt. By paragraph 8(2) the Court refused the application of the Names to discharge the order made by Cresswell 27^th April 2001, in which he dismissed the Names' claims and refused permission to amend but, in a passage in parenthesis, the Court stated that "for the avoidance of doubt nothing [in that order] shall prevent the Names or any of them making a further application for permission to amend to the Commercial Court.
182. It is in these circumstances that the current applications for permission to amend arise and, it is agreed, are to be treated as such, notwithstanding the absence of any current pleading to amend, following Cresswell J's order striking out and dismissing the claims/counterclaims. The applications are of a somewhat confused nature because of the changes in representation of a number of Names and the appearance of some as litigants in person, making representations either orally or in writing. In essence however, the UNO Names represented by More Fisher Brown and Grower Freeman have produced 3 forms of draft pleading for 3 sample Names who represent pre 1982 joiners of Lloyd's, 1982 joiners and post 1982 joiners.
183. A Re-Re-Re-Amended Points of Defence and Counter-claim has been produced in the name of Mr. Laws (the sample 1982 joiner) which deletes large tracts of the prior form of pleading of Sir William Jaffray but maintains that Lloyd's owed a duty of care and a statutory duty under the Lloyd's Acts to manage and superintend the affairs of the Society lawfully and to advance and protect the interests of Names. At paragraph 29 the draft pleading alleges that the Annual Brochure contained representations to the effect that "Lloyd~ had put in place within the Lloyd's market a rigorous system of auditing which involved the making of a reasonable estimate of outstanding liabilities including unknown and un-noted losses." In paragraph 30 it is alleged that the representations were knowingly made by Lloyd's and intended to be understood by the Names in the manner pleaded and in paragraph 31 that Lloyd's knew and intended that prospective Names would read and rely upon the brochure and the statements and representations contained in it for the purposes of considering whether or not to become a Name. Paragraphs 32 and 33 then plead inducement whilst paragraph 34 sets out the falsity of the representation on the basis of the judgment of the Court of Appeal to which I have already referred. The particulars of falsity read as follows

"As evidence of falsity of the pleaded representation the Defendant will rely on the fact that when Reconstruction and Renewal (R&R) was carried out, syndicates at Lloyd's were massively under reserved. The Defendant will contend that such under reserving demonstrates that the audit system put in place by Lloyd's for the Lloyd's market had not and was not capable of producing reasonable estimates about outstanding liabilities during the period 1982 to 1989".

184. The draft pleading therefore tracks the Court of Appeal's holdings in essence, save for making the additional point that the under-reserving revealed at R&R demonstrated that the audit system "was not capable of producing reasonable estimates of outstanding liabilities" during the relevant period and pleading a duty of care, negligent misrepresentation and statutory misrepresentation.
185. At paragraphs lO6A —106E the plea is made of Lloyd's liability under the Misrepresentation Act 1967, with reliance upon admissions made by Lloyd's in its Business Plan dated April 1993 and to a number of AU38 and AU38 (A) forms for 1986, 1987 and 1988, together with those for the Merrett syndicates at 31^st December 1981 and 31^st December 1982. At paragraphs 106A-lO6K, the plea is made of negligent misrepresentation by Lloyd's in circumstances where it is alleged that Lloyd's owed a duty of care in making representations. Paragraph 112 then maintains that section 14(3) of the Lloyd's Act 1982 ("the 1982 Act"), is ineffective to exempt Lloyd's from liability for these misrepresentations because of the terms of the Human Rights Act 1998 ("the HRA"), whilst putting Lloyd's to proof that the misrepresentations were made in respect of a power, duty or function conferred or imposed by the Lloyd's Acts or any bye law or regulation made thereunder relating to the admission or non-admission to or continuance of membership of Lloyd's. In the alternative, it is contended that if section 14(3) is effective to exclude a remedy in damages, it is not effective to preclude the granting by the Court of other relief, including a stay in relation to any judgment given against the Name in Lloyd's favour. Because Mr Laws' draft pleading was one of the lead pleadings this action is entitled with his name, whilst previously entitled by reference to Sir William Jaffray who is no longer a party to this action.
186. In addition to the draft pleading in the name of Mr. Laws, there was a draft pleading in the sample name of a pre 1982 Joiner, Mr Thomas-Everard, in virtually identical form and a further draft Re-Re-Re Amended Points of Defence and Counterclaim in the name of Mr. Harris, a post 1982 joiner. Both the Laws and Thomas-Everard pleadings incorporated the larger section of the Harris pleading setting out the case that Lloyd's is liable for any misrepresentation notwithstanding the immunity apparently provided by section 14(3) of the 1982 Act.
187. The essential point raised is that the 1982 Act must now be read and construed by the court by reference to the HRA. It is pleaded that, prior to 2^nd October 2000 (the date when the HRA came into force), the only claims which could be maintained against Lloyd's were for fraudulent misrepresentation and that the contrary was not properly arguable, by reason of s 14(3) of the 1982 Act. Since the coming into force of the HRA however, it is maintained that any such construction would be incompatible with Convention rights, namely the Names' right of access to the courts to have the merits of their non fraud claims against Lloyd's determined and their right to a fair trial under Article 6(l) of the Convention scheduled to the HRA. Section 14 of the 1982 Act, it is alleged, interferes with such rights and engages Article 6 of the Convention so that it can only be enforced to the extent that it is a necessary interference with those rights and a proportionate means of pursuing a legitimate aim which justifies such interference. These issues are, it is said, pre-eminently a matter for determination on evidence at trial.
188. At one stage. a number of Names ("the LMG Names") were represented by Memery Crystal who issued an application to amend on their behalf on 17^th February 2003. Memery Crystal ceased to act for these Names shortly before the hearing of the current application. Some of the Names for whom they acted, then reverted to representation by More Fisher Brown or Grower Freeman, whilst others represented themselves. Re-Re-Re-Amended Points of Defence and Counterclaim for five sample Names (Messrs. Hulse, Wilson and Starkey, Mrs Mackenzie Smith and Mrs Doll-Steinberg) had been drafted by Memery Crystal at a time when they were represented by them. The allegations contained in those draft pleadings were similar to but not identical to those in the draft pleadings to which I have already referred. Equally they were similar to, but not identical with, one another. Put shortly, the additional or different allegations to those of negligent misrepresentation as alleged by the UNO sample Names included:-

i) Breach of duty to the Names and bad faith in failing to disclose the inacequacy of the audit system, both before and after the representations made in the brochures.

ii) Misrepresentations:

a) That the underwriting accounts were stringently checked by qualified and experienced auditors to assess the solvency position of the underwriting syndicates.

b) That Lloyd's required syndicates' annual reports and accounts to show a true and fair view of the profit and loss of syndicates for closed years of account.

c) That Lloyd's conducted itself with the utmost good faith.

d) That the market was properly regulated by Lloyd's.

iii) Breach of duty in not ensuring that a proper audit was effected.

iv) Breach of duty in not informing Names of the inadequacy of audits or the impossibility of a proper audit.

v) These breaches of duty to the Names were expressed to be of common law or statutory duties.

vi) The allegation that Lloyd's deliberately concealed the Names' right of action so that the Names could not and did not discover the matters complained of until November 1997.

189. The Litigants in person all adopted the arguments put forward on behalf of the UNO Names in relation to the HRA. In addition, apart from Mr Butler, each adopted (at least as an alternative) the LMG Names' Skeleton argument which had been provided to the Court before Memery Crystal came off the record. Each Litigant in person also provided points of his/her own and adopted all the arguments put forward by other Names whether represented or not as alternative arguments to their own. To the extent that any different case or argument was pursued, this is set out in this Judgment.

(i) Mrs Mackenzie Smith who had previously been represented by Memery Crystal, produced a further draft Re-Re-Re-Amended Points of Defence and Counterclaim which differed from that which had been drafted previously for her and for Messrs Hulse, Wilson, Starkey and Mrs Doll-Steinberg.

(ii) None of the other Litigants in person produced a draft pleading but each made out a case and wished to avail himself or herself of permission to amend to take points as to negligent misrepresentation and a number of other complaints, which have essentially been summarised already in this Judgment.

(iii) In Schedule 1 appears a list of the UNO Names represented by More Fisher Brown and in Schedule 2 appears a list of the UNO Names represented by Grower Freeman Listed in Schedule 3 to this Judgment are the names of the Litigants in person who made an application for permission to amend and were not represented by Solicitors or Counsel

(iv) Where any Name was previously an LMG Name but is not in Schedule 1 or 2, I have treated his/her application as an application to amend in the same form as the sample draft pleadings submitted by Memery Crystal, save for Mrs Mackenzie Smith, who had her own draft. Where the individual LMG name has re-joined UNO, I have determined the matter on the basis of the UNO draft pleadings

(v) For reasons which appear later in this Judgment any differences in the form of draft pleadings made no difference to the outcome of the application.

190. The Individual Litigants in Person:-

(i) Mrs Mackenzie Smith in her draft pleading sought to plead misrepresentation in the 1972 and 1974 Brochures to the same effect as that found by the Court of Appeal in later Brochures alleging their falsity and Lloyd's lack of belief or alternatively lack of reasonable grounds to believe in the truth of those representations. In the particulars of falsity, she sought to plead that from 1974 onwards and throughout the relevant period there was not in place a rigorous system of auditing which involved the making of a reasonable estimate of outstanding liabilities including unknown and un-noted losses, relying upon the revelation of under-reserving in R & R and the Court of Appeal's Judgment in relation to the falsity of representations made in later years on this basis. Otherwise her pleading largely followed that of the LMG Names.

(ii) Mr Sydney Butler sought permission to amend, adopting in principle the application of UNO Names. He claimed for negligent misrepresentation leading to his joining Lloyd's in 1987 and contended that the Lloyd's Act was inapplicable to misrepresentations made to persons who were being recruited as prospective members of Lloyd's at the time, rather than actual members. He also relied on section 3 of the Misrepresentation Act, maintaining that Lloyd's could not rely upon section 14(3) of the 1982 Act to grant immunity. His case also was that Lloyd's had failed to make disclosure of the commission arrangements with an intermediary who recruited him, failed to regulate the market to ensure that bye-laws about disclosure of commission arrangements were enforced, failed to notify him of the obligation of disclosure which lay upon the intermediary, failed to disclose the Neville Russell letter and failed to disclose the depth of the asbestosis problem. He contended that these failures to disclose were not dealt with in the Threshold Fraud Trial. Moreover, his case was that he could not have been aware of his causes of action until the Court of Appeal decision and that those causes of action were not viable before that.

(iii) Mr Christopher Starkey made written submissions but adopted all the submissions of Mrs Mackenzie Smith and those in the LMG Names' Skeleton Argument as well as the submissions made on behalf of the; UNO Names. He specifically made the point that he wished to rely upon section 3 of the Misrepresentation Act, on Lloyd's knowledge that the audits were not rigorous or true and fair (despite the terms of the Court of Appeal's decision) and that US Securities Law should be applied in this litigation so that he had a remedy whether the representations made were innocent or not. In his first Litigant in person's statement he relied upon fraudulent inducement, the inapplicability of the 1982 Act to his position as a prospective member of Lloyd's, to bad faith non-disclosure on Lloyd's' part and the distinction between regulatory functions and commercial functions of Lloyd's.

(iv) I should mention at this point that Mr Cary Harrison III appeared before me to say that he did not pursue an application for leave to amend since he did not need to do so. He agreed to be bound by the decision of the Court in relation to the general issues of limitation and Lloyd's immunity to suit, by reference to the Human Rights Act argument. He wished the points made in his written submissions to be taken into account in this context, which I agreed to do. In his submissions he maintained that Lloyd's had fraudulently failed to disclose the asbestosis problems, had made untrue representations in the Brochures and had negligently failed to regulate the market. He said he was fraudulently induced to join by reason of such non-disclosure and misrepresentation. He joined Lloyd's for the 1989 underwriting year and said he had no requisite knowledge of his cause of action until 1997 or 1998. He adopted the IJNO Names' argument in relation to immunity and the Human Rights Act but said that his own limitation position was different from that of anyone else.

(v) Other Litigants in person such as Mrs Strong, Mrs Reisz, Mr Burns and Mr

Wilson (for himself and Mrs Wilson) addressed the Court as did Mr Doll-

Steinberg on behalf of his wife, whilst others such as Mr Johnstone and Mr

Goodwin-Self made written representations which took the same points as

those I have already summarised.

191. All the draft pleadings and cases put forward asserted that the representation alleged were continuing, (in the sense of not being withdrawn) as well as being repeated in later Brochures, and were false both at the time when the Name in question joined Lloyd's and concluded agreements with his or her Agents and throughout the time each continued to underwrite. The representation continued to be relied on at the point of potential resignation or change of underwriting arrangements for the following year. The falsity was that set out by the Court of Appeal, namely that "throughout the relevant period there was not in place a rigorous system of outstanding liabilities including unknown and un-noted losses". Moreover each Name relied, as particulars of falsity, on the fact that, when R&R was carried out, syndicates at Lloyd's were found to be massively under-reserved. The Names' draft pleadings contend that such under-reserving demonstrates that the audit system put in place by Lloyd's for the Lloyd's market had not and was not capable of producing reasonable estimates of outstanding liabilities during the relevant period.
192. On analysis therefore all the claims of negligent misrepresentation except for those of LMG set out in paragraph 22(ii) (b)—(d) of this Judgment are identical or similar to those advanced in the UNO Names' draft pleadings. There are allegations of bad faith or fraud in failure to disclose the inadequacy of the audit system between 1978 and 1988, failure to disclose other matters and failure to inform or advise as well as failure to regulate the market. The remaining allegations are equivalent allegations of negligence in failing to regulate the market or of failure to disclose, inform or advise whether of matters affecting the audit system or otherwise, together with an allegation of deliberate concealment which relates to the issue of limitation, but for which no particulars are provided, save by Mrs Mackenzie Smith.
193. lt should also be noted that some of the UNO Names and some of the litigants in person expressed no desire to pursue a claim against Lloyd's for damages. All they

18 C. xiv

Lloyd's Act 1982

Liability of the Society, etc.

14.— (1) This section shall only exempt the Society from liability in damages at the suit of a member of the Lloyd's community.

(2) For the purposes of this section a member of the Lloyd's community shall be—

(a) a person who is—

(i) a member of the Society;

(ii) a Lloyd's broker;

(iii) an underwriting agent;

(iv) an annual subscriber;

(v) an associate;

(vi) a director or partner of a Lloyd's broker or an underwriting agent;

(vii) a person who works for a Lloyd's broker or underwriting agent as a manager; or

(b) a person who has been a member of the Lloyd's community in one or more of the capacities listed in paragraph (a) above; or

(c) a person who is seeking or who has sought to become a member of the Lloyd's community in one or more of the capacities listed in paragraph (a) above.

(3) Subject to subsections (1), (4) and (5) of this section, the Society shall not be liable for damages whether for negligence or other tort, breach of duty or otherwise, in respect of any exercise of or omission to exercise any power, duty or function conferred or imposed by Lloyd's Acts 1871 to 1982 or any byelaw or regulation made thereunder—

(a) in so far as the underwriting business of any member of the Society or the costs of his membership or the business of any person as a Lloyd's broker or underwriting agent may be affected; or

(b) in so far as relates to the admission or non-admission to, or the continuance of, or the suspension or exclusion from, membership of the Society; or

(c) in so far as re1ates to the grant, continuance, suspension, withdrawal or refusal of permission to carry on business at Lloyd's as a Lloyd's broker or an underwriting agent or in any capacity connected therewith; or

(d) in so far as relates to the exercise of, or omission to exercise, disciplinary functions, powers and duties; or

(e) in so far as relates to the exercise of, or omission to exercise, any powers, functions or duties under byelaws made pursuant to paragraphs (21), (22), (23), (24) and (25) of Schedule 2 to this Act;

unless the act or omission complained of-

(i) was done or omitted to be done in bad faith; or

(ii) was that of an employee of the Society and occurred in the course of the employee carrying out routine or clerical duties, that is to say duties which do not involve the exercise of any discretion.

(4) Nothing in this section shall affect any liability of the Society in respect of the death of or personal injury to any person, and for the purposes of this section the expression "personal injury" means bodily injury, any disease and any impairment of a person's physical or mental condition.

(5) Nothing in this section shall exempt the Society from liability for libel or slander.

(6) For the purposes of this section "the Society" means the Society itself and also any of its officers and employees and any person or persons in or to whom (whether individually or collectively) any powers or functions are vested or delegated by or pursuant to Lloyd's Acts 1871 to 1982.