The Limitation Act 1980 sets out the period within which a claim can be brought following a cause of action accruing. For example, section 5 states that an action founded on a simple contract cannot be brought after 6 years from the breach of contract.
Part 17 of the Civil Procedure Rules (CPR) concerns amendments to a claimant’s pleaded claim. If a new claim is to be added to a claim before the limitation date it usually only requires the court’s permission; however, if the limitation period has passed, permission is still required but amendments or additions can only occur if that 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’.
There can be scenarios where a claimant has issued a claim against a defendant just before a limitation date expires; and, in defending the claim, the defendant could raise an issue not particularised in the original claim. The claimant may then wish to amend the original claim to address the new matter first mentioned in the defence. Mulalley & Co Ltd v Martlet Homes Ltd was one such case in which that scenario arose.
The background to the case was that, following the Grenfell Tower fire, Martlet Homes discovered major fire safety defects in its buildings. Martlet brought a claim near the expiry of the limitation period for £8m against the design and build contractors, Mulalley & Co, due to alleged inadequate design and workmanship in relation to the external wall system.
In its defence, Mulalley stated that it had a certificate demonstrating that the system complied with the relevant building regulations that were in force at the time. Also, it was argued that the particular type of insulation used, which purportedly caused the loss to Martlet, was only prohibited in 2017; after the time of entering the contract.
As the limitation period had expired, Martlet sought permission from the Court to amend its particulars of claim to address that the insulation system did not comply with the building regulations in force at the time of the contract. The question was whether this new claim arose out of the same, or substantially the same, facts as the original claim.
At first instance, the judge found that the amended claim was a new cause of action, but it arose out of the same, or substantially the same, facts. Accordingly, the amendments to the claim were allowed.
Mulalley appealed this decision. The appeal raised the question of whether a defendant can plead a comprehensive defence to allegations of breaches and raise a separate case on causation, then rely on the Civil Procedure Rules to deny the claimant the chance to amend its claim outside of the limitation period to challenge the validity of the defendant’s defence
The Court of Appeal dismissed the appeal, granting permission to amend under CPR 17.4(2) and determined that the claim did in fact come out of the same or substantially the same facts as the issues originally pleaded. Lord Justice Coulson commented that the question of whether an amended claim arises out of the same, or substantially the same, facts is ‘an important one and may, post-Grenfell, be replicated in analogous situations at blocks of flats across the country’.
When considering the matter, the judges held that a claimant must be entitled to put in issue what a defendant states in defence to the original claim, otherwise they would be ‘deprived of a fair trial’ and that it would be discriminatory against a claimant if, having deliberately put in issue the compliance of the building design with Building Regulations, the defendant could escape the consequences of an adverse finding on that issue by using the limitation rules as a shield.
This judgement does not create any new principles but provides welcomed clarity for parties issuing cladding related claims near the expiry of limitation periods.
At Ellisons, we have a dedicated Building Safety team to assist you with any building safety matters. If you are a tenant, landlord, managing agent or contractor and you need advice on any aspect of building safety or cladding issues, please get in touch.