APPLICATIONS TO AMEND: TOWER BLOCKS, FIRE SAFETY AND “FACTS” PLEADED IN THE DEFENCE: COURT OF APPEAL DECISION
In Mulalley & Co. Ltd v Martlet Homes Ltd [2022] EWCA Civ 32 the Court of Appeal upheld a decision that a claimant, seeking to amend its Particulars of Claim by referring to matters pleaded in the defence, was pleading to facts already in issue.
“This appeal raises the question: can a defendant plead a comprehensive defence to allegations of breach (which relies on matters not expressly addressed by the particulars of claim), and raise a separate case on causation (which it says would defeat the claimant’s claim in any event), and then seek to rely upon CPR 17.4(2) to deny the claimant the opportunity of amending its claim outside the limitation period to challenge the veracity of what the defendant has said and/or pleading that, even if that separate case on causation is made out, the defendant would still be liable to the claimant? As explained below, the wider circumstances in which this issue has arisen can be traced back to the tragedy of the Grenfell Tower fire on 14 June 2017, so the result may be of some significance to the construction industry”
THE CASE
The claimant brings an action against the defendant relating to the adequacy provision of fire protection in four high rise towers. The defendant pleaded a detailed defence. The claimant then sought permission to file amended Particulars of Claim referring to, and relying on, matters pleaded in the defence.
“41.6 If, as Mulalley contends at paragraphs 51 to 55, 59, 66, 73, 78.1, 84, 90 to 92, 93.2, 93.6, 94, 95 and 100 of its Defence, the losses claimed herein were caused by the fact that the insulation was EPS, Mulalley’s selection and use of EPS as insulation in the design and construction of the Cladding Works to each of Harbour Tower, Seaward Tower, Blake Court and Hammond Court was in breach of article 1 of the Articles of Agreement and/or clause 2.1 and/or clause 2.5.1 and/or clause 2.5.1a and/or clause 6.1.1.2 and/or clause 8.1.1 of the Conditions of Contract and/or paragraph GI 010 and/or paragraph GDI 001 and/or paragraph GDI 003 and/or paragraph GDI 004 and/or paragraph GDI 008 and/or paragraph GDI 010 of the Employer’s Requirements and/or sections 2(d) and 7 of the Contractor’s Proposals and/or of regulation 7 of the Building Regulations, in that the EPS panels were flammable or combustible..”
THE RULE IN GOODE -v- MARTIN
This case is easier to understand if you know the principles in Goode v Martin [2001] EWCA Civ 1899. In that case the claimant was injured in an accident on a yacht. The defendant filed a defence stating that the accident occurred in a different manner to that stated by the claimant. The claimant applied to amend the Particulars to plead that, even if the accident happened as alleged by the defendant the defendant was still negligent. This application was upheld by the Court of Appeal. Lord Justice Brooke stated:-
“I can detect no sound policy reason why the claimant should not add to her claim in the present action the alternative plea which she now proposes. No new facts are being introduced: she merely wants to say that if the defendant succeeds in establishing his version of the facts, she will still win because those facts, too, show that he was negligent and should pay her compensation.”
THE ISSUE IN RELATION TO THE PROPOSED AMENDMENT IN THE CURRENT CASE
The amendment could only be allowed if it did not represent a new cause of action or if it arose out of the same, or substantially the same, facts already raised in the case. The question was, therefore, did the Goode -v- Martin principles apply to this case.
THE JUDGMENT AT FIRST INSTANCE
The judge found that the amended claim was a new cause of action. However, by reason of the defence, the amended Particulars arose out of the same, or substantially, the same facts as were in issue in the case. The amendments were allowed.
THE APPEAL TO THE COURT OF APPEAL
The Court of Appeal upheld the judge’s decision on both issues.
89. I accept of course that, as the cases emphasise, this is always a matter of fact and degree in each case: what might appear in one authority to be of direct applicability to the case under review may, on analysis, be wholly distinguishable. But I am of the view that, for the reasons I have given, the present case fits comfortably within the approach set out in Brickfield v Newton, even before considering what was put in issue by Mulalley’s Defence.
90. That brings me to the third and most important reason for my conclusion. In my judgment, what is set out in the Defence demonstrates beyond doubt that the selection of combustible insulation claim arises out of the same or substantially the same facts as are already in issue. Importantly, this is the result of both the way in which Mulalley have chosen to defend themselves against the design allegations made in the original Particulars of Claim, and from a consideration of Mulalley’s separate causation defence. Although I address each in turn, I consider that, either way, the selection of combustible insulation claim “flows naturally” from the way in which Mulalley has pleaded its Defence. Indeed, as a result of the Defence, I am not even sure that it can be said that there is any investigation triggered by the amendment which was not already required.
91. As part of their defence to the design allegations in the original Particulars of Claim, Mulalley aver that the STO system that was installed (including the selection and use of what they accept was combustible EPS insulation), was not in breach of contract. They expressly plead that the EPS insulation, although combustible, was in accordance with the Building Regulations in force at the time (the Building Regulations 2000): see paragraphs 18-20 above. They even go so far as to set out at paragraph 35.1 of the Defence the particular BBA certificate which they say demonstrates such compliance.
92. In this way, whether or not the original design complied with the contract, and in particular whether or not the combustible EPS insulation was in accordance with the Building Regulations, is already in issue in this case. It has been expressly put in issue by Mulalley in their Defence, in considerable detail, in answer to the original allegations of negligent design. All Martlet are doing by way of the amendment is to say: “We dispute this aspect of your defence: we say that your original design, and in particular your selection and use of combustible insulation, did not comply with the contract and/or the Building Regulations”. Martlet must be entitled to put in issue what Mulalley say in defence to their original claim; otherwise they would be deprived of a fair trial (as per Brooke LJ in Goode v Martin). Put another way, what Martlet are doing by way of their amendment was expressly envisaged by Sales LJ in Mastercard (paragraph 60 above): because Mulalley has chosen to put particular facts in issue in defending themselves, there can be no unfairness in allowing Martlet to turn those matters back on the defendant.
93. Then there is Mulalley’s separate defence on causation, which is that at some point after the contract works were concluded, and certainly following the Grenfell fire, the STO system no longer complied with the Building Regulations, and had to be replaced, irrespective of the allegations in the original Particulars of Claim. A building block for the causation case is the assertion in the Defence that the STO system complied with an earlier iteration of the Building Regulations. Martlet are again entitled to counter that causation argument by saying that it would not relieve Mulalley of liability because, on a proper analysis, the STO system never complied with the contract.
94. For these reasons I consider that this case falls squarely within the principle set out in Goode v Martin. Indeed, in some ways, I consider this to be a stronger case than Goode v Martin because the selection of combustible insulation claim arises out of Mulalley’s defence to the original design allegations, as well as their separate case on causation. Mulalley may have chosen to defend themselves against the original design allegations in an expansive way, pointing (amongst other things) to the certificate which they say shows that their selection of the combustible cladding was in accordance with the Building Regulations 2000, but that does not mean that Martlet are not entitled to challenge what they say. Otherwise, we would be in an extraordinary position where Mulalley would be able to say what they wanted about the original design, and Martlet could not dispute it. So, irrespective of the separate causation case, the selection of combustible insulation claim arises out of the same or substantially the same facts as are already in issue.
THE JUDGMENT OF LADY JUSTICE ANDREWS
This short judgment encapsulates the key issue.
“I agree that the appeal should be dismissed for the reasons given by Lord Justice Coulson, who has comprehensively dealt with the many cases cited and arguments addressed to the court. However it seems to me that paragraphs 91-92 of my Lord’s judgment provide the short answer to the question whether the claim arises out of the same or substantially the same facts as are already in issue. A claimant ought to be able to submit to the court that the defendant is liable even if the version of events he has pleaded by way of defence is accepted. That was the position in Goode v Martin. Here the situation was different, because the cause of action that Martlet sought to introduce depended upon a factual issue raised in the defence being resolved against the defendant who raised it. However, I can see no reason in principle why the ability of the claimant to bring a claim arising from a matter put in issue by the defence should depend on the way in which that issue may be resolved. In the present case, the judge was undoubtedly right, for the reasons that he gave. Indeed, it would be invidious if a defendant, having deliberately put in issue the compliance of the building design with the Regulations in force at the time of construction, could escape the consequences of an adverse finding on that issue by using limitation as a shield against a claim relying upon the non-compliance.”