Issue Now or Accept a Standstill? Defective Defendant Name and Imminent Limitation
Your client, a sole trader trading as North Quay Bindery, has a breach of confidence and unlawful means conspiracy claim against a former operations manager, Ms Iyer, and her new employer. The confidentiality contract is with Corvane Logistics Ltd, but the draft claim form prepared by your trainee names Corvane Holdings Ltd, the parent company. The cause of action accrued 5 years and 11 months ago; the limitation period is six years. Ms Iyer's solicitors have offered a written 'standstill' for 28 days to explore settlement, but Corvane Holdings' solicitors have not responded. Your client is anxious about costs and wants to wait for the standstill before issuing. The court fee for issue is £1,800, and the client has £2,500 in the litigation budget. A Companies House search yesterday revealed the misnomer. The claim would be issued in the Business and Property Courts, where service must be effected within four months.
1. What is the immediate procedural risk in accepting the 28-day standstill, and what should you do before the limitation date?
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The standstill is not a limitation agreement unless it is binding and covers the claim; ordinary negotiations do not stop time running. The claim is already at five years eleven months, so waiting 28 days would extinguish the claim. Issue is the only certain protection. Issue against the correct legal entity, Corvane Logistics Ltd, and Ms Iyer before the limitation date. You can then agree to defer service or extend time for service if the rules permit, and continue settlement talks without losing the claim. Issuing against Corvane Holdings Ltd would be a misnomer: substituting the correct company after limitation requires the court to be satisfied the mistake was as to name, not identity, and that the intended defendant was the real target. That is possible but not risk-free. Advise the client that the £1,800 issue fee is a fraction of the risk; recoverability can be addressed in any settlement. Also confirm whether the conspiracy claim is properly pleaded against each defendant.
2. If the claim is issued against Corvane Holdings Ltd by mistake, what must you show to substitute Corvane Logistics Ltd after the limitation period, and what practical steps improve the chance?
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You need to bring the case within the rule allowing a new party to be substituted after limitation. In general you must show: (a) the claim against the correct defendant arises out of the same facts or substantially the same facts as the existing claim; (b) the mistake was a genuine mistake as to name, not a deliberate choice of the wrong defendant; (c) the correct defendant was the party you intended to sue; and (d) the defendant will not suffer prejudice that cannot be compensated in costs. The court has discretion; delay and any failure to correct promptly count against you. Practical steps: apply immediately; put in evidence from the trainee and the file showing the intended target; exhibit the contract, Companies House records and correspondence; notify Corvane Logistics' insurers; do not serve the wrong company; consider issuing a fresh claim if time has not expired or if a standstill can be obtained; and preserve all documents. If the court refuses, the claim may be struck out or the wrong defendant may have a costs claim.
3. What advice should you give about the standstill and costs if the claim is issued but settled within 28 days?
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Issuing does not prevent settlement. The standstill can be recorded in a written agreement that preserves the parties' positions on costs and confidentiality while the claim is served or service is deferred. If the matter settles within 28 days, the claimant should seek the issue fee and any reasonable pre-issue costs as part of the settlement; otherwise those costs are thrown away. The defendant may resist paying the fee if it says the claim was issued unnecessarily, so the agreement should deal with costs expressly. Advise the client that the £1,800 is a sunk cost once issued but may be recoverable; the bigger risk is losing the claim altogether by waiting. If the defendant will not confirm a limitation waiver, issue. If it will, obtain the waiver in writing and diarise the expiry date.