Façade fire safety defects: when can particulars of claim be amended outside the limitation period?

Posted: 07/02/2022

The Court of Appeal has very recently published a judgment that focused on whether a claimant could amend its particulars of claim to raise a new cause of action outside of the limitation period. The case concerns façade fire safety defects and, as the Court of Appeal noted, this is an important issue in such claims, and one that, post the Grenfell fire tragedy, may be relevant for those bringing and defending claims over unsafe façade systems on other buildings across the country.

The case

The dispute between Martlet Homes Limited and Mulalley & Co. Limited relates to fire safety issues identified in five high-rise residential towers. Mulalley & Co. Limited (Mulalley) was engaged as the design and build contractor responsible for refurbishment works at the towers. Central to the dispute was its refurbishment which involved over-cladding the towers with a render system that contained combustible expanded polystyrene (‘EPS’) insulation.

The appeal follows the Technology and Construction Court’s (TCC) decision following Martlet Homes Limited’s (Martlet) interim application last year to amend its particulars of claim. Significantly, these amendments were being sought after the expiry of the limitation period. You can read our article discussing the TCC decision here.

Those familiar with the judgment will know that the TCC allowed the amendments to be made. Its decision was principally on the basis that while the amendments constituted a new cause of action/new claim (issue 1), they arose out of the same, or substantially the same, facts as already in issue (issue 2). These were the two issues being heard by the Court of Appeal, with Mullaley appealing issue 2 and Martlet cross appealing issue 1.

The amendments

Martlet issued proceedings against Mulalley in December 2019, right up against the limitation deadline. Its particulars of claim contained a variety of allegations of inadequate design and workmanship causing the need for replacement of the render system – albeit with emphasis on the latter. In its defence, while Mulalley admitted that some of its workmanship was defective, it maintained that its breaches had not caused Martlet any loss. This was because Mulalley said that the EPS insulation used within the render system, whilst compliant with the Building Regulations in force at the time of the project, was not now compliant with the current regulations. Therefore, it argued that the render system would have needed to be replaced now in any event.

Martlet denied this causation defence and, in its reply, argued in the alternative that Mulalley was in breach of contract for originally specifying an EPS render system. Mulalley asked the court to strike out this allegation of breach of contract and argued that it amounted to a new claim by Martlet. The TCC agreed and the ‘new claim’ in the reply was struck out. But, perhaps foreseeing this, Martlet had made an alternative application to amend its particulars of claim to include this line of argument. This application was successful with the TCC finding that the new claim arose out of the same, or substantially the same, facts as already in issue, thus meeting the applicable test for adding new claims post limitation.

The Court of Appeal

The Court of Appeal thus principally had two issues to consider: i) whether the amendments constituted a ‘new claim’; and ii) whether they arose out of the same, or substantially the same, facts as already in issue.

Is it a ‘new claim’?

The Court of Appeal decided that this was a new cause of action and thus dismissed Martlet’s cross appeal. It did so on the following basis.

• The claim was pleaded as a contingent claim. If the amendment had not been made and Martlet succeeded on its causation argument, then it would provide them with a complete defence to the action. This strongly supported this being a new cause of action by Martlett.
• A comparison of the practical realities between the old case and the new showed that the original claim focused on workmanship, rather than the design choices themselves.
• The nature, scope and extent of the original claim was compared with the nature, scope and extent of the amended claim.

Does the new claim arise out of the same, or substantially the same, facts as are already in use?

The Court of Appeal decided that the ‘new claim’ did arise out of the same, or substantially the same, facts as are already in use. It did so on the following basis:

• The Court of Appeal noted that the new claim cannot properly be said to ‘wipe out the old’. In that sense, it was distinguishable from a previous construction case of Co-Op v Birse, where a new claim failed the relevant test because it could properly be said to wipe out the old case.
• There was sufficient overlap between the new claim and the claim originally pleaded – although the Court of Appeal stressed this was matter of fact and degree. It also emphasised a general point that the relevant test is higher than the new claim arising out of similar facts; this is not sufficient.
• The new claim ‘flowed naturally’ from the way Mulalley pleaded its defence. Essentially, therefore, the defence put the new claim in issue. However, interestingly, the Court of Appeal also said that the new claim also arose out of the same, or substantially the same, facts as had been set out in the original particulars of claim. In other words, the new claim passed the relevant test even before consideration of the defence.    

Comment

This judgment is welcome guidance for practitioners seeking to amend particulars of claim after the expiry of limitation, an occurrence not uncommon in fire safety related disputes.

However, that said, it remains the position that not pleading a client’s case fully at the outset is a risky business. The Court of Appeal was clear that each case will be judged upon its own facts, and it should be noted that this appeal did not consider the question of the court’s overriding discretion as to whether to grant post-limitation amendments - even if the relevant test described above is met.

In addition, the Court of Appeal has provided defending parties with a difficult consideration when preparing the defence - that is, to what extent does the defence bring new issues into play, such that the claimant may be afforded an opportunity to amend its case.

This article has been co-authored with Emma Crompton, trainee solicitor in the construction and infrastructure team. 

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