When can you amend Particulars of Claim out of time?

Emma Chiaramello looks at the guidance provided by the Court of Appeal on when a claimant can amend their Particulars of Claim.

The case of Mullaley & Co Ltd v Martlet Homes Ltd [2022] EWCA Civ 32 was always likely to be of interest to the construction industry in the current climate given its subject matter; cladding. However it has gained wider interest and importance both inside and outside the construction industry because of the guidance provided by the Court of Appeal on when a claimant can amend their Particulars of Claim notwithstanding time bar issues (under CPR 17.4(2)). The court even went as far as to comment that this case fits more squarely with the legal principles set out in Goode v Martin [2001] EWCA Civ 1899 (the leading judgment on this point) than the facts of Goode v Martin itself.

Background

The claimant (Martlet Homes Ltd) was the owner of 4 high rise tower blocks which were refurbished by the defendant (Mullaley & Co Ltd) under a Design and Build Contract, using cladding which contained flammable EPS (expanded polystyrene) as insulation. Following a review after Grenfell, the claimant discovered major fire safety issues and brought a claim against the defendant for breach of the contract. The c£8m of damages sought included the reinstatement works and the cost of a waking watch.

The original Particulars of Claim focused on the defendant’s workmanship. In the defence, the defendant said that the EPS would have to be removed in any event as a result of new requirements that came in after the Grenfell disaster, and not as a result of any breach of contract by the defendant. In other words it was the use of EPS, which it said was allowed by Building Regulations at the time, that was the real problem and which caused the claimant’s loss.

The claimant replied to the defence and then sought permission to amend its particulars of claim to allege that even if the defendant was right regarding causation, it was still liable because using EPS in the cladding was a design fault and therefore still constituted breach of contract for which the defendant was liable.  The claimant wished, particularly, to take issue with the defendant’s assertion within its defence that the EPS complied with Building Regulations at the time.  The defendant opposed the amendments on the basis that this was a new cause of action and the claimant was out of time (limitation having expired).

Established Law

The leading judgment on this case is Goode v Martin [2001] EWCA Civ 1899. In this case the claimant also wanted to amend their particulars of claim following receipt of the defence. Whilst Goode v Martin related to a personal injury claim, its relevance is as a helpful demonstration of how rule CPR 17.4(2), relevant to amending particulars of claim, should be applied.

CPR17.4(2) states that: “The court may allow an amendment whose effect will be to add or substitute a new claim, but only if the new claim arises out of the same facts or substantially the same facts as a claim in respect of which the party applying for permission has already claimed a remedy in the proceedings.”

In Goode v Martin, the amendment was allowed. It was held to be a new cause of action but having arisen from the same or substantially the same facts already detailed out in the original particulars of claim, issued prior to the claim becoming time barred. 

The Mullaley Decision

The matter was decided at first instance in the Technology and Construction Court in the claimant’s favour. The court held that the amendment did amount to a new cause of action but that it arose from the same or substantially the same facts as had already been raised in the defence. The defendant appealed and the matter was considered by the Court of Appeal.

The Court of Appeal noted that the original particulars of claim focussed on workmanship rather than design and did not allege that any particular part of the cladding was inadequate. They therefore agreed with the TCC that the amendments which all related to the selection of EPS amounted to a new cause of action. It was specifically cited that if the allegations were made out, it may deprive the defendant of their defence. The next step was therefore for the court to consider whether or not the amendments arose from the same or substantially the same facts as already pleaded in the case. The defendant said they did not, and that the claimant was relying on new facts or matters beyond that which was pleaded. The basis of this argument was that the selection of the EPS was a new fact or matter separate to the defendant’s factual reference to its use and compliance with building regulations at the time.

The Court of Appeal did not accept the defendant’s argument and found that when the judge in Goode considered “the same or substantially the same facts”, they considered this as allowing a claimant to amend their Particulars of Claim to plead back to the defendant facts pleaded by the defendant (the same facts), but give some leeway for explanation or elaboration (or substantially the same facts). Otherwise the claimant would not be able to add anything to the pleaded claim, which would not make practical sense. However do note that “substantially the same” allows some lee-way to expand but does not allow enough lee-way to simply plead something similar to that which has been raised in the case.

In short, the Court of Appeal upheld the TCC’s decision and allowed the claimant to amend their particulars of claim.

Conclusion

This case provides further guidance on CPR 17.4(2) and the interpretation of the previous leading authority of Goode v Martin. It should also serve as a warning to all parties to litigation. For defendants, beware that limitation having passed does not necessarily mean you are safe from further claims or new causes of action (although the court still has discretion to prevent amendments even if they align with cases such as this and Goode v Martin). Also, be very careful not to include in your defence any new matters which are not already raised and which a claimant may turn around and use against you to strengthen the basis of their claim:  Courts are likely to take the view that Claimants are entitled to put any such matters in issue in order to ensure a fair trial.   For claimants, there is a need to consider alternative causes of action and ideally encapsulate these within your first pleading, because there is no guarantee you will be able to include them later on.  When preparing a pleading it is always helpful for both parties to put themselves in the shoes of the opposing party. This helps to avoid not only risking their claim/defence but also the hefty cost of procedural applications such as this. Whilst this case does not shed any light on the Court’s views of each side’s underlying substantive arguments, any future trial judgment is likely to be extremely informative for contractors facing similar cladding claims. 

For more information or to discuss the issues raised in this article, please contact the Construction and Engineering Team.