Cladding Fire-Safety Claims: Court leniency to amending pleading
February 2022A recent Court of Appeal judgment, regarding a claim in respect of cladding fire-safety issues, allowed the claimant to amend its claim notwithstanding limitation arguments raised by the defendant. The decision indicates that the Courts may adopt a lenient approach to issues of limitation in these types of claims.
In Mulalley & Co Ltd v Martlet Homes[1] The Court of Appeal was asked to determine whether the original claim could be amended to include ‘new’ allegations, despite being outside the limitation period at the time of amendment. The Court held that the ‘new’ cause of action arose from the “same facts or substantially the same facts” that had been pleaded in the original claim. Therefore, permission to amend the claim was granted under CPR 17.4
LJ Coulson stated that the question as to whether a ‘new’ claim arose out of the same or substantially the same facts already in issue was “an important one and may, post-Grenfell, be replicated in analogous situations at blocks of flats across the country.”[2] The decision is therefore likely to have a wide impact on the Court’s approach to pleadings in cladding fire-safety claims.
Background
Martlet are the owners of five high-rise towers fitted with allegedly non-compliant cladding. Mulalley were hired to undertake various refurbishment works at the towers between 2005 and 2008, including the design and installation of the external cladding. The works were completed in 2008 and the external wall cladding make-up was an STO system which involved expanded polystyrene (“EPS”) external wall insulation, horizontal fire barriers and an overcoat of render.
In 2017, following Grenfell, Martlet carried out inspections of the towers’ cladding and discovered fire safety issues. As a result, Martlet issued and served proceedings against Mulalley alleging inadequate design and workmanship regarding the cladding system.
However, the investigations carried out by Martlet were close to the end of the applicable contractual limitation period. As a result, by the time Martlet served proceedings, one of the five towers was not included in the pleadings as a claim in respect of it would have been statute-barred.
In its defence, Mulalley denied any breaches and that it had caused any loss on the basis that Martlet would have had to replace the cladding and EPS insulation in any event post-Grenfell. It also argued that the STO system it had installed had complied with the Building Regulations in place at the time the works were carried out.
Martlet subsequently applied for permission to amend its original Particulars of Claim to expressly state that the EPS insulation did not comply with Building Regulations and, therefore, Mulalley’s decision to install the EPS cladding was a breach of contract. Mulalley opposed the application on the basis that the amendments amounted to a ‘new’ cause of action which fell outside the applicable limitation period.
At first instance, the Court found that Martlet’s proposed amendments did amount to a ‘new’ claim’ but one that arose out of substantially the same facts and therefore allowed Martlet’s amendments. Mulalley appealed the finding. See Martlet Homes Limited v Mulalley & Co Limited [2021] EWHC 295 (TCC) – Beale & Co (beale-law.com)
Court of Appeal Judgement
CPR 17.4 sets out the circumstances under which a party can amend its original Particulars of Claim when the limitation period has expired. CPR 17.4(2) empowers the Court to permit amendments to a statement of case which would introduce a ‘new’ claim if it arises out of the same (or substantially the same) facts as a claim already pleaded.
Was it a ‘new’ cause of action?
Whilst it was noted that there was a relatively strong case for saying that Martlet’s proposed amendments to the original Particulars of Claim did not amount to a ‘new’ cause of action at all, the Court found that it was because:
- The claim was expressly pleaded as a contingent claim.
- The original claim alleged breaches of contract based on workmanship and the implementation of Mulalley’s design choices rather than the design itself. The original claim did not allege a component part of the STO system was of itself an inadequate material or unfit for purpose. The ‘new’ claim instead alleged failures in the design focusing on the inherent unsuitably of the cladding system.
- When compared to the original claim, there were sufficient differences between the nature, scope and extent of the amended claim to comprise a ‘new’ (and differing) cause of action.
Were the facts the same or substantially the same as those already in issue?
The Court concluded the ‘new’ claim did arise from substantially the same facts set out in the original Particulars of Claim.
It found that the claim in question, at the crux of it, was about the defective cladding system and the EPS insulation in particular. This was the sufficiently wide unifying feature such as to link the ‘new’ allegations with the existing ones. A ‘new’ claim concerning the EPS insulation simply identified a further reason for replacement of the STO cladding system.
The Court also noted that it would be extraordinary if Mulalley could adopt a position regarding the original design that Martlet could not dispute nor challenge. Lady Justice Andrew reinforced that view in her concurring judgment stating that: “it would be invidious if a defendant, having deliberately put in issue the compliance of building design with the Regulations in force at the time of construction, could escape the consequence of an adverse finding on that issue by using limitation as a shield against a claim relying upon the non-compliance.”[4]
Consequently, Martlet’s amendments to the original pleading of its EPS claim were permitted despite being outside the limitation period. This was, in part, a result of Mulalley defending itself in an expansive manner and asserting that their selection of the cladding was in accordance with the applicable Building Regulations 2000.
Comment
This is not the first case where the Court has considered these issues for cladding fire-safety claims.[5] A pattern is emerging of the Courts adopting a wide and Claimant friendly approach with respect to amending pleadings and limitation. Indeed, the Courts have now arguably opened a path for the amendment of cladding fire-safety claims in circumstances where the limitation period may previously have been deemed to have passed. This is probably judicial policy making at work.
Of course, whilst Martlet was successful in being able to amend its original Particulars of Claim, it is still better for parties to plead their claim in full at the outset, particularly when faced with a looming expiry of limitation.
[1] [2022] EWCA Civ 32, 24 January 2022
[2] Paragraph 83, Mulalley & Co Ltd v Marlet Homes Ltd [2022] EWCA Civ 32, 24 January 2022
[3] Martlet Homes Limited v Mulalley & Co Limited [2021] EWHC 295 (TCC) – Beale & Co (beale-law.com)
[4] Paragraph 103, Mulalley & Co Ltd v Marlet Homes Ltd [2022] EWCA Civ 32, 24 January 2022
[5] See RG Securities (No.2) Ltd v (1) Allianz Global Corporate and Specialty (2) Building Lifeplans Ltd (3) R Maskell Ltd [2020] EWHC 1646 (TCC)
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