Practice and procedure – Amendment of claim – Claim against appellant contractor for breach of contract in respect of defective floor in warehouse – Claim alleging various defects and seeking to recover cost of remedial works – Limitation period expiring – Subsequent application to amend claim allowed – New claim alleging need for complete replacement of floor owing to inadequate load-bearing – Whether amendment permissible – Whether alleging new cause of action – Appeal allowed
The appellant was the main design and build contractor engaged by the developer of a distribution centre in Rugby, comprising two large warehouses connected by an office block and external hardstanding. It subcontracted the design and build of the internal warehouse floors to a flooring subcontractor. In September 2008, the respondent took a lease of the finished centre and went into occupation. The appellant gave collateral warranties to the respondent in relation to the building work, effectively putting the respondent in the position of the developer under the main building contract.
In September 2010, the respondent issued a claim for breach of contract against the appellant in relation to defects in the building work, including cracking to the concrete floor slabs in the warehouse, alleged to result from poor and inadequate workmanship and non-compliance with various of the employer’s requirements set out in the contract. It claimed for the cost of necessary repairs plus commercial and operational losses caused by the defects. It was common ground that the cause of action had accrued in September 2008 but that the September 2010 proceedings were brought within the applicable 12-year limitation period.
The respondent later applied to amend its particulars of claim. It sought to assert that the warehouse floor slabs had an inadequate steel fibre content, with the result that the floor would not meet the pallet racking leg load requirements set out in the contract and should be condemned owing to a high probability that it would fail in service.
The appellant contended that the new claim was time-barred since it introduced a new cause of action and did not arise out of the same or substantially the same facts as were already in issue in the original claims; it relied on section 35 of the Limitation Act 1980 and CPR 17.4(2) in that regard.
Allowing the amendment in the court below, the judge held that it did not introduce a new cause of action although, had it done so, it would not have arisen out of the same or substantially the same facts as the original claims. The appellant appealed; its appeal was supported by the flooring subcontractor, against which it claimed an indemnity in the event that it was held liable.
Held: The appeal was allowed.
Where different facts were alleged to constitute a breach of an already pleaded duty, it would be a matter of fact and degree whether a new cause of action was relied on. It would normally be necessary to look no further than whether there was a change in the essential features of the factual basis relied on, bearing in mind that the factual basis would include the facts out of which the duty was to be spelled. The court had to compare the essential factual elements of the cause of action already pleaded with those of the cause of action proposed: Commissioners for HM Revenue and Customs v Begum [2010] EWHC 1799 (Ch) and Steamship Mutual Underwriting Association v Trollope & Colls Ltd (1986) 33 BLR 77 applied. Although it would usually be easy to see on which side of the line the case fell, there might sometimes be a grey area where different views were possible. If the new breach did not arise out of the same, or substantially the same, facts as those already in issue on a claim made in the original action, it was likely to be a new cause of action.
It was clear on which side of the line the instant case fell. The allegation that the warehouse floors required complete replacement, on account of the insufficient steel content, rendered wholly academic the original claim for the cost of replacing specific sections, repair to individual cracks and replacement and repair of joints. The original allegation was of a group of relatively disparate defects in the floors, capable of disparate replacement and repair; there had been no existing case of structural inadequacy of the entirety of the concrete floors in the warehouses. It was now alleged that the concrete from which the floors were made suffered from a systemic defect that had to result in its entire condemnation and replacement because of its inability to withstand the design loan. That relied on a particular and specific facet of the contractual duty of which no breach had hitherto been asserted, namely the ability to withstand a particular pallet racking leg load, and on facts that were wholly different from those previously relied on, namely the inadequate steel content. The new allegations amounted to an entirely new and different cause of action.
The judge below had erred in his approach to the issue of whether there was a new cause of action. However, he had been correct in his conclusion that the amendment sought did not arise from the same, or substantially the same, facts as were already in issue in the action. Accordingly, the amendment should be disallowed.
Fiona Sinclair QC (instructed by Clyde & Co LLP) appeared for the appellant; Simon Hughes QC and Tom Owen (instructed by DAC Beachcroft LLP, of Manchester) appeared for the respondent; Mark Cannon QC and Katie Powell (instructed by Reynolds Porter Chamberlain LLP) appeared for the flooring subcontractor.
Sally Dobson, barrister
Practice and procedure – Amendment of claim – Claim against appellant contractor for breach of contract in respect of defective floor in warehouse – Claim alleging various defects and seeking to recover cost of remedial works – Limitation period expiring – Subsequent application to amend claim allowed – New claim alleging need for complete replacement of floor owing to inadequate load-bearing – Whether amendment permissible – Whether alleging new cause of action – Appeal allowedThe appellant was the main design and build contractor engaged by the developer of a distribution centre in Rugby, comprising two large warehouses connected by an office block and external hardstanding. It subcontracted the design and build of the internal warehouse floors to a flooring subcontractor. In September 2008, the respondent took a lease of the finished centre and went into occupation. The appellant gave collateral warranties to the respondent in relation to the building work, effectively putting the respondent in the position of the developer under the main building contract.In September 2010, the respondent issued a claim for breach of contract against the appellant in relation to defects in the building work, including cracking to the concrete floor slabs in the warehouse, alleged to result from poor and inadequate workmanship and non-compliance with various of the employer’s requirements set out in the contract. It claimed for the cost of necessary repairs plus commercial and operational losses caused by the defects. It was common ground that the cause of action had accrued in September 2008 but that the September 2010 proceedings were brought within the applicable 12-year limitation period.The respondent later applied to amend its particulars of claim. It sought to assert that the warehouse floor slabs had an inadequate steel fibre content, with the result that the floor would not meet the pallet racking leg load requirements set out in the contract and should be condemned owing to a high probability that it would fail in service.The appellant contended that the new claim was time-barred since it introduced a new cause of action and did not arise out of the same or substantially the same facts as were already in issue in the original claims; it relied on section 35 of the Limitation Act 1980 and CPR 17.4(2) in that regard.Allowing the amendment in the court below, the judge held that it did not introduce a new cause of action although, had it done so, it would not have arisen out of the same or substantially the same facts as the original claims. The appellant appealed; its appeal was supported by the flooring subcontractor, against which it claimed an indemnity in the event that it was held liable.Held: The appeal was allowed.Where different facts were alleged to constitute a breach of an already pleaded duty, it would be a matter of fact and degree whether a new cause of action was relied on. It would normally be necessary to look no further than whether there was a change in the essential features of the factual basis relied on, bearing in mind that the factual basis would include the facts out of which the duty was to be spelled. The court had to compare the essential factual elements of the cause of action already pleaded with those of the cause of action proposed: Commissioners for HM Revenue and Customs v Begum [2010] EWHC 1799 (Ch) and Steamship Mutual Underwriting Association v Trollope & Colls Ltd (1986) 33 BLR 77 applied. Although it would usually be easy to see on which side of the line the case fell, there might sometimes be a grey area where different views were possible. If the new breach did not arise out of the same, or substantially the same, facts as those already in issue on a claim made in the original action, it was likely to be a new cause of action. It was clear on which side of the line the instant case fell. The allegation that the warehouse floors required complete replacement, on account of the insufficient steel content, rendered wholly academic the original claim for the cost of replacing specific sections, repair to individual cracks and replacement and repair of joints. The original allegation was of a group of relatively disparate defects in the floors, capable of disparate replacement and repair; there had been no existing case of structural inadequacy of the entirety of the concrete floors in the warehouses. It was now alleged that the concrete from which the floors were made suffered from a systemic defect that had to result in its entire condemnation and replacement because of its inability to withstand the design loan. That relied on a particular and specific facet of the contractual duty of which no breach had hitherto been asserted, namely the ability to withstand a particular pallet racking leg load, and on facts that were wholly different from those previously relied on, namely the inadequate steel content. The new allegations amounted to an entirely new and different cause of action.The judge below had erred in his approach to the issue of whether there was a new cause of action. However, he had been correct in his conclusion that the amendment sought did not arise from the same, or substantially the same, facts as were already in issue in the action. Accordingly, the amendment should be disallowed.Fiona Sinclair QC (instructed by Clyde & Co LLP) appeared for the appellant; Simon Hughes QC and Tom Owen (instructed by DAC Beachcroft LLP, of Manchester) appeared for the respondent; Mark Cannon QC and Katie Powell (instructed by Reynolds Porter Chamberlain LLP) appeared for the flooring subcontractor.Sally Dobson, barrister
