YOU CANNOT USE A REPLY TO PLEAD MATTERS THAT SHOULD HAVE BEEN IN THE PARTICULARS OF CLAIM

About ten minutes ago I sent off the material for a webinar I am giving tomorrow on drafting statements of case. Inevitably, therefore, a new and relevant case arrived on BAILLI* [the material was subsequently amended to include this] .  In Martlet Homes Ltd v Mulalley & Co. Ltd [2021] EWHC 296 (TCC) Mr Justice Pepperall considered the role of the Reply and held that it is inappropriate to put matters in the Reply that should have been in the Particulars of Claim.  The offending part of the Reply was, therefore, struck out. The claimant, however was given permission to amend their Particulars of Claim to plead the allegations in the appropriate place.

In my judgment, the terms of r.16.4(1)(a), the optional nature of the Reply, the rule restricting subsequent statements of case and the terms of the Practice Direction all point to the clear conclusion that any ground of claim must be pleaded in the Particulars of Claim. New claims must be added by amending the Particulars of Claim and cannot simply be pleaded by way of Reply. “

THE CASE

Shortly before the end of the (12 year) limitation period the claimant issued proceedings claiming damages following a construction dispute, in particular in relation to cladding.

THE REPLY

The Reply attempted to introduce new matters not set out in the Particulars of Claim.

    1. By its Reply, Martlet joined issue with the causation defence and insisted that the pleaded breaches of contract were an effective cause of the claimed loss and damage. It then pleaded:
“Alternative Case
80. Further and alternatively, even on Mulalley’s case on causation, the loss and damage which Martlet claims in these proceedings was caused by Mulalley’s further breach(es) of the Contract set out below.
81. Mulalley’s use of EPS as insulation in the design and construction of the Cladding Works to each of [the towers]:

81.1 Was in breach of article 1 of the Articles of Agreement and/or clause 6.1.1.2 of the Conditions of Contract and/or paragraph GI 010 and/or GDI 001 of the Employer’s Requirements, in that the use of combustible EPS panels meant that:

81.1.1 The external walls of those buildings did not adequately resist the spread of fire over the walls and from one building to another, having regard to the height, use and position of those buildings, contrary to Regulation 4 and Requirement B4(1) of the Building Regulations 2000.

81.1.2 The building fabric, elements and/or components did not provide for a minimum useful life of 70 years.

81.2 Was in breach of article 1 of the Articles of Agreement and of the warranty at Section 7 of the Contractor’s Proposals in that the use of flammable EPS panels meant that:

81.2.1 The Sto system that was installed was not suitable for tall constructions.

81.2.2 The Sto system that was installed would not achieve a class 0 fire rating in respect of those areas of the Towers above 18 metres.

82. In that regard, it is noted that Mulalley must accept that the materials which it used in the Cladding Works (specifically, the EPS insulation) did not comply with the Building Regulations 2000 as:

82.1 Mulalley’s own case at paragraph 59.3 is that the materials used in the Cladding Works did not comply with the Building Regulations which were in force as at 11 July 2017 (see paragraph 43.4 above); and

82.2 The relevant provisions of the Building Regulations 2010 which were in force as at 11 July 2017 (in particular, Regulations 4, 7 and Requirement B4(1)) were in identical terms in the Building Regulations 2000, i.e. those which were current at the date of the Contract.

83. Accordingly, if and to the extent that Mulalley’s case on causation is accepted, Martlet is in any event entitled to and claims the loss and damage identified at paragraph 61 of the Particulars of Claim as damages for Mulalley’s breaches of the Contract identified at paragraph 81 above.”
  1. At paragraph 17 of its Reply, Martlet clarified its case on defective design. As identified above, Martlet explained in relation to its original case that if and insofar as Mulalley contends that the works were carried out in compliance with its design, Martlet would maintain that the design was defective. It added, at paragraph 17.2, that Martlet also contended that the breaches pleaded at paragraph 81 of the Reply amounted to further breaches of Mulalley’s design obligations.

THE DEFENDANT’S APPLICATION TO STRIKE OUT THE REPLY

The defendant applied, successfully, to strike out those parts of the Reply that raised new allegations that should have been in the Particulars of Claim.  However the judge gave permission to the claimant to amend the Particulars of Claim to plead these matters.

THE CLAIMANT’S INAPPROPRIATE USE OF THE REPLY
    1. Mulalley’s application to strike out paragraphs 80-83 of the Reply is made pursuant to r.3.4(2)(a) of the Civil Procedure Rules 1998 which provides that the court can strike out the whole or part of a statement of case that discloses no reasonable grounds for bringing or defending the claim. Simon Hughes QC, who appears for Mulalley, argues that paragraphs 80-83 are not responsive to the Defence but seek to set up a new claim. That this is so is, he contends, put beyond doubt by the heading to the new paragraphs (viz. “Alternative Case”), paragraph 17.2 of the Reply and the proposed amendment to the Particulars of Claim.
    1. Jonathan Selby QC, who appears for Martlet, argues that paragraphs 80-83 of the Reply were properly pleaded in response to the causation defence. It is, he observes, inevitable that a Reply will contain new and different allegations from those contained in the Particulars of Claim since otherwise it will serve no purpose. The very purpose of a Reply is to deal with any different version of events pleaded in the Defence. Accordingly, Mr Selby argues that the Reply in this case does not fall foul of paragraph 9.2 of Practice Direction 16 because it is not “inconsistent” with Martlet’s primary case pleaded in the Particulars of Claim; and the prohibition in the Practice Direction upon new claims by way of a Reply must be read consistently with the meaning of a new claim under r.17.4. Further, relying on the decision in Herbert v. Vaughan [1972] 1 W.L.R. 1128, he submits that the rules do not in any event preclude a party from pleading a new argument in the Reply where it arises out of a line of defence.
DISCUSSION
    1. Particulars of Claim must include, among other matters, “a concise statement of the facts on which the claimant relies”: r.16.4(1)(a). Where a defendant denies an allegation in the Particulars of Claim, r.16.5(2) provides that:
“(a) he must state his reasons for doing so; and
(b) if he intends to put forward a different version of events from that given by the claimant, he must state his own version.”
    1. Pleading a Reply is, however, optional: rr.15.8 and 16.7, and (in this court) paragraph 5.5.3 of the TCC Guide. Indeed, a claimant who does not file a Reply is not taken to admit the matters raised in the Defence: r.16.7. While the rules give little guidance to what can be pleaded in a Reply, paragraph 9.2 of Practice Direction 16 provides:
“A subsequent statement of case must not contradict or be inconsistent with an earlier one; for example, a reply to a defence must not bring in a new claim. Where new matters have come to light the appropriate course may be to seek the court’s permission to amend the statement of case.”
    1. No party may serve a statement of case after a Reply without the permission of the court: r.15.9. While a Reply is reasonably commonplace, the editors of the 2020 edition of Civil Procedure (the White Book) rightly observe, at paragraph 15.9.1, that permission to serve subsequent statements of case will only be appropriate in the most exceptional circumstances and that the court is more likely to permit amendments to earlier statements of case.
    1. In my judgment, the terms of r.16.4(1)(a), the optional nature of the Reply, the rule restricting subsequent statements of case and the terms of the Practice Direction all point to the clear conclusion that any ground of claim must be pleaded in the Particulars of Claim. New claims must be added by amending the Particulars of Claim and cannot simply be pleaded by way of Reply. I reject Mr Selby’s submission that such view would deprive the Reply of all purpose. A Reply can be particularly useful in order to refute a ground of defence. For example, a Reply can properly plead:
20.1 a later date of knowledge pursuant to ss.14 or 14A of the Limitation Act 1980, or that the court should disapply the primary limitation period pursuant to ss.32A or 33 of the Act, in answer to a plea in the Defence that the claim is statute barred;
20.2 that an exemption or limitation clause was not incorporated into the parties’ contract or that it was of no effect in excluding or limiting liability because the clause did not satisfy the condition of reasonableness within the meaning of the Unfair Contract Terms Act 1977; or
20.3 that the defendant is estopped by some earlier judgment or representation from relying upon a particular defence.
In each example, the claimant would be pleading new facts in order to refute a defence, but it would not be pleading a new claim. Equally, while there is no obligation to respond upon the facts, a Reply can usefully admit a fact alleged in the Defence (thereby avoiding the cost and trouble of needing to prove the fact and allowing the court and parties to focus on the real issues) while explaining why such admitted fact does not provide a defence to the claim. Or a Reply can deny an allegation of fact and usefully explain why such allegation must be wrong.
    1. Not only is the proposition that one can advance a new claim in a Reply contrary to the clear terms of the Practice Direction, but it is also inherently undesirable and contrary to the overriding objective of dealing with cases justly and at proportionate cost. If such practice were to be condoned, claimants would not need to be precise in their formulation of the Particulars of Claim since they could always have a second bite of the cherry when pleading the Reply. Defendants would have to seek permission from the court in order to answer by way of Rejoinder any new claims pleaded in the Reply, which might in turn call for a Surrejoinder from the claimant. Further, a claimant seeking to bring a new claim after the expiry of the limitation period could sidestep r.17.4 altogether (although possibly not s.35 of the Limitation Act 1980) by avoiding the need to make any amendment.
    1. I reject Mr Selby’s submission that the prohibition in the Practice Direction upon pleading new claims in the Reply must be construed as a reference to new claims that would not, by r.17.4, be allowed to be pleaded by way of a post-limitation amendment. One has only to compare the terms of the Practice Direction with r.17.4(2) (which I discuss in more detail below) to see that the former is a broad ban on pleading new claims by way of a Reply while the latter provides a narrow power to allow some new claims to be pleaded by way of a post-limitation amendment.
    1. Although Mr Selby addressed me on the terms of the equivalent rule in the former Rules of the Supreme Court 1965, I do not find either the terms of Ord. 18 r.10 or the pre-1999 case law to be particularly helpful. In any event, the principle that Mr Selby takes from the old cases of Renton Gibbs & Co. Ltd v. Neville & Co. [1900] 2 Q.B. 181 and Herbert v. Vaughan [1972] 1 W.L.R. 1128 does not assist Martlet in this case:
23.1 In Renton Gibbs, the plaintiff sued for a little under £114, being the price of work done and materials supplied to the defendant’s order. The defendant admitted the claim but counterclaimed for £3,000 by reason of the claimant’s alleged breach of an entirely different contract entered into before the plaintiff’s incorporation. By its Reply, the plaintiff denied being a party to or bound by the pre-incorporation contract but contended that, if the company were liable, it would seek to set-off against any such liability a claim for unliquidated damages for breach of the contract. In such unusual circumstances, the Court of Appeal held that the plaintiff was not relying on the claim under the disputed contract as an independent claim but as a shield against the defendant’s counterclaim. Accordingly, it was properly raised by way of Reply. Nevertheless, Romer LJ identified, at page 187, the general rule in the same terms as I find it to be under the Civil Procedure Rules 1998:

“If a plaintiff when he sees a counterclaim finds that he has omitted to raise a claim in addition to that already raised in the statement of claim, he ought, as a rule, to raise that claim by amendment of his statement of claim.”

23.2 Renton Gibbs was considered by Goff J, as he then was, in Herbert v. Vaughan. The judge rightly stressed, at page 1133G-H, the key point in the Victorian case:

“That, therefore, was not setting up a new claim consistent or otherwise with the old claim but was legitimately using what could be raised as a new claim as an answer to a defence, and for no other purpose, and was therefore properly included in the reply.”

23.3 In the instant case, Martlet does not seek to rely on its alternative case in respect of the use of combustible EPS boards purely as a shield to some counterclaim by Mulalley, rather it relies on such case to establish liability upon its claim. It is no matter that Martlet has no need of its alternative case if it can prove causation on the basis of its original case; this is still a new claim by which, quite independently of the particulars pleaded in the original Particulars of Claim, Martlet seeks now to establish its claim for damages.
  1. For these reasons, the alternative case was not properly raised by way of Reply and I strike out paragraphs 80-83.