Practice and procedure – Particulars of claim – Amendment – Respondent seeking damages against appellant alleging inadequate design and workmanship – Appellant denying alleged breaches causing loss – Respondent seeking to plead additional breach of contract in reply or amend particulars of claim – Judge striking out alleged new claim but permitting amendment – Appellant appealing – Whether respondent seeking to bring new cause of action – Whether amendment arising out of same or substantially same facts – Appeal dismissed
The respondent owned five high-rise towers in Gosport, Hampshire. The appellant was employed to act as design and build contractors to carry out extensive refurbishment work at the five towers between 2005 and 2008. The appellant’s work included the selection and installation of a proprietary external wall product (the STO system), involving expanded polystyrene (EPS) external wall insulation, horizontal fire barriers, and an overcoat of render.
Following the Grenfell fire, the respondent carried out checks on the towers and discovered major fire safety defects. The respondent issued a claim against the appellant at the end of the relevant contractual limitation period. Any claim in respect of one of the towers was statute-barred.
The original particulars of claim alleged inadequate design and workmanship relating to alleged deficient fire protection provided by the STO system installed in the four towers. The appellant denied the allegations relying, amongst other things, on a certificate which they said demonstrated that the STO system complied with the building regulations at the time.
The respondent served a reply which refuted the causation defence and sought permission to amend its particulars of claim to expressly state that the EPS combustible insulation did not comply with the building regulations at the time of installation. The appellant applied to strike out the alternative case on the basis that it was a new claim on new facts after the expiry of the limitation period.
The judge held that the alternative case should be struck out but granted permission to amend the particulars of claim because it arose from the same, or substantially the same, facts as those already in issue and so fell within CPR 17.4(2): [2021] EWHC 296 (TCC). The appellant appealed.
Held: The appeal was dismissed.
(1) When considering CPR 17.4 one had to consider: (i) whether it was reasonably arguable that the opposed amendments were outside the applicable limitation period; (ii) whether the proposed amendments sought to add or substitute a new cause of action; (iii) whether the new cause of action arose out of the same or substantially the same facts as were already in issue; and (iv) whether the court should exercise its discretion to allow the amendment: Ballinger v Mercer Ltd [2014] 1 WLR 3597 and Hyde v Nygate [2019] EWHC 1516 (Ch) applied.
In the present case, the opposed amendments were outside the applicable limitation period. The sole focus was on whether the EPS claim was a new cause of action and, if so, whether it arose out of the same or substantially the same facts as were already in issue.
(2) In order to ascertain whether the opposed amendments amounted to a new cause of action, the court had to compare the essential factual allegations in issue on the original pleadings with those proposed by way of amendment. A change in the essential features of the factual basis would introduce a new cause of action. The question to be resolved was one of fact and degree. One needed to look no further than for a change in the essential features of the factual basis relied upon, bearing in mind that the factual basis would include the facts out of which the duty was to be spelt as well as those which allegedly gave rise to breach and damages: Letang v Cooper [1965] 1 QB 232 and Co-Operative Group Ltd v Birse Developments Ltd [2013] PLSCS 88; [2013] BLR 383 considered.
In the present case, the proposed amendment fell on the wrong side of the line for the respondent. It was expressly pleaded as a contingent claim only to be relied upon if the appellant succeeded in showing that, despite the defective installation of the STO system, it was always going to be necessary to replace the system because of the selection and use of the combustible EPS insulation. Further, the emphasis of the original particulars of claim was on workmanship, whereas the combustible insulation claim was concerned with design choices: as a matter of fact and degree, the EPS combustible insulation claim constituted a new cause of action.
(3) The principle established in Goode v Martin [2002] 1 WLR 1828 was that any proposed amendment had to be considered by reference to the same or substantially the same facts as were already in issue, including those set out in the defence. Beyond that, it was a question of fact and degree.
Whether one factual basis was “substantially the same” as another factual basis involved a value judgment, but the relevant criteria had to have regard to the main purpose for which the qualification to the power to give permission to amend was introduced. “Substantially” was not synonymous with “similar”: Brickfield Properties v Newton [1971] 1 WLR 862 and Goode v Martin considered.
(4) The judge was right to decide that the features of the combustible insulation claim demonstrated that, although this was a new cause of action, it arose out of the same or substantially the same facts as had been set out in the original particulars of claim. The selection of combustible insulation claim merely identified a further reason for the replacement of the STO system. It might require a further investigation beyond that required by the original particulars of claim, but it supplemented the existing investigation, rather than doing away with it altogether. Although there had to be sufficient overlap to meet the test of the same or substantially the same facts, such overlap did not have to be total.
Further, the defence demonstrated beyond doubt that the combustible insulation claim arose out of the same or substantially the same facts: because the appellant had chosen to put particular facts in issue in defending itself, it could not be unfair to allow the respondent to turn those matters back on the defendant. The respondent’s argument that the combustible insulation claim arose out of the same or substantially the same facts fell on the right side of the line. The amendment was caught by CPR 17.4 and was rightly permitted.
Simon Hughes QC and James Frampton (instructed by Pinsent Masons LLP) appeared for the appellant; Jonathan Selby QC (instructed by Norton Rose Fulbright LLP) appeared for the respondent.
Eileen O’Grady, barrister
Click here to read a transcript of Mulalley & Co Ltd v Martlet Homes Ltd
