Mulalley & Company Ltd v Martlet Homes Ltd
| Jurisdiction | England & Wales |
| Judge | Lady Justice Andrews,Lord Justice Baker,Lord Justice Coulson |
| Judgment Date | 24 January 2022 |
| Neutral Citation | [2022] EWCA Civ 32 |
| Docket Number | Case No: CA-2021-000535 |
| Year | 2022 |
| Court | Court of Appeal (Civil Division) |
[2022] EWCA Civ 32
Lord Justice Coulson
Lord Justice Baker
and
Lady Justice Andrews
Case No: CA-2021-000535
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
TECHNOLOGY AND CONSTRUCTION COURT (QBD)
MR JUSTICE PEPPERALL
Royal Courts of Justice
Strand, London, WC2A 2LL
Simon Hughes QC & James Frampton (instructed by Pinsent Masons LLP) for the Appellant
Jonathan Selby QC (instructed by Norton Rose Fulbright LLP) for the Respondent
Hearing date: 14 December 2021
Approved Judgment
INTRODUCTION
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 claimant/respondent (“Martlet”) are the owners of five high-rise towers in Gosport in Hampshire. Their predecessors in title employed the defendant/appellant (“Mulalley”) to act as the design and build contractors to carry out extensive refurbishment work at the five towers between 2005 and 2008. Mulalley's work included the selection and installation of a proprietary external wall product called the STO system, involving expanded polystyrene (“EPS”) external wall insulation, horizontal fire barriers, and an overcoat of render. Following the Grenfell fire, Martlet carried out checks on the towers and discovered major fire safety defects. These investigations were carried out right at the end of the relevant contractual limitation period. Indeed, by the time these proceedings were commenced, it was recognised that one of the five towers could not be included because any claim in respect of it would be statute-barred.
The original Particulars of Claim contain a variety of allegations of inadequate design and workmanship relating to what is said to be the deficient fire protection provided by the STO system installed in the four towers. In their pleaded Defence, Mulalley deny the allegations of bad design by relying, amongst other things, on a certificate which they say demonstrated that the STO system complied with the Building Regulations at the time of the refurbishment work. Mulalley go on to allege that the reason why the STO system needed to be removed and replaced was because of the presence of the combustible EPS insulation within the STO system which, they say, was a prohibited material in 2017 (but not at the time of their contract). Thus Mulalley say that the cause of Martlet's loss was Martlet's need to comply with the Government's new advice and requirements in 2017, and not any breach of contract on their part.
Martlet sought permission to amend the Particulars of Claim to say expressly that the EPS insulation did not comply with the Building Regulations at the time of the contract and that the causation defence arose out of Mulalley's wrongful choice and subsequent use of the STO system and, in particular, the inclusion within that system of the combustible EPS insulation. Mulalley objected to those amendments on the basis that they involved a new cause of action, which did not arise out of the same or substantially the same facts as had been pleaded in the original Particulars of Claim, and which was statute barred. Pepperall J (“the judge”) agreed that it was a new claim, but concluded that it arose out of the same or substantially the same facts as were already in issue, and permitted Martlet to make the amendments. Mulalley appeal against that decision.
In addition to Mulalley's argument that the judge was wrong to conclude that the new claim arose out of the same or substantially the same facts as were already in issue, there is a second question for the court, raised in Martlet's Respondent's Notice. They argue that the judge was wrong to find that the amendments amounted to a new cause of action. Logically, that point falls to be decided first: a consideration of whether the claim arises out of the same or substantially the same facts as were already in issue is only required at all if the amendments amount to a new cause of action.
THE OUTLINE FACTS
Mulalley were engaged as design and build contractors by Martlet's predecessors in title, Kelsey Housing Association Limited (“Kelsey”). The works comprised the refurbishing of the existing towers and included the over cladding of the external walls with the STO system. This comprised expanded polystyrene (EPS) insulation boards fixed to the external walls, with horizontal fire barriers (made up of mineral wool) in between the sections of the insulation to correspond to each floor of the towers. The EPS and fire barriers were then covered with an acrylic render.
The contract was in the JCT 1998 Standard From of Building Contract with Contractor's design incorporating both standard and bespoke amendments. Under that contract the core obligation at Article 1 required Mulalley to “complete the design for the Works and carry out and complete the construction of the Works”. Because it was a design and build contract, the contract documents included both Employer's Requirements and Contractor's Proposals.
There were numerous clauses of the contract and the Employer's Requirements which set out the basic obligations on the part of Mulalley in respect of design and workmanship. It is unnecessary to set out all those pleaded in the Particulars of Claim. However, they included:
a) Clause 2.1 which provided:
“The Contractor shall upon and subject to the Conditions carry out and complete the Works referred to in the Employer's Requirements, the Contractor's Proposals…, the Articles of Agreement, these Conditions and the Appendices in accordance with the aforementioned documents and for that purpose shall complete the design for the Works including the selection of any specifications for any kinds and standards of the materials and goods and workmanship to be used in the construction of the Works so far as not described or stated in the Employer's Requirements or Contractor's Proposals.”
b) Clause 2.5 which provided:
“2.5.1 Insofar as the design of the Works is comprised in the Contractor's Proposals and in what the Contractor is to complete under clause 2 and in accordance with the Employer's Requirements and the Conditions (including any further design which the Contractor is to carry out as a result of a Change in the Employer's Requirements), the Contractor shall have in respect of any defect or insufficiency in such design the like liability to the Employer, whether under statute or otherwise, as would an architect or, as the case may be, other appropriate professional designer holding himself out as competent to take on work for such design who, acting independently under a separate contract with the Employer, had supplied such design for or in connection with works to be carried out and completed by a building contractor not being the supplier of the design.
2.5.1a In addition to the foregoing, the Contractor hereby accepts responsibility for the design of the Works and every part thereof and for the selection and standards of all and any materials, goods and workmanship forming part thereof.
c) Clause 6.1.1 which provided:
“.1 Clause 6.1.1.2 shall apply except to the extent that the relevant part or parts of the Employer's Requirements state specifically that the Employer's Requirements comply with the Statutory Requirements.
.2 The Contractor shall comply with… any Act of Parliament, any instrument, rule or order made under any Act of Parliament, or any regulation or byelaw of any local authority or of any statutory undertaker which has any jurisdiction with regard to the Works…”
d) Clause 8.1 which provided:
“.1 All materials shall so far as procurable be of the respective kinds and standards described in the Employer's Requirements, or, if not therein specifically described, in the Contractor's Proposals or specification referred to in clause 5.3…
.2 All workmanship shall be of the standards described in the Employer's Requirements, or, to the extent that no such standards are therein specifically described, in the Contractor's Proposals or specifications referred to in clause 5.3. If no such standards are so described the workmanship shall be of a standard appropriate to the Works.
.3 All work shall be carried out in a proper and workmanlike manner…”
e) Paragraph GI 010 of the Employer's Requirements which provided:
“Nothing contained within these Employer's Requirements is intended to override any statutory requirements or the requirements of Fire Officers, etc. The Designer/Design and Build Contractor is required to ensure that the ultimate designs satisfy such other requirements notwithstanding anything contained within this document.”
f) Paragraph GDI 001 of the Employer's Requirements which provided:
“The Works are to be designed and constructed in accordance and compliance with all relevant and related Statutory Requirements, Codes of Practice, British Standards, Material Manufacturer's and Supplier's recommendations, Agrément Certificates, Professional or Trades or Suppliers Bodies recommendations, and the like.”
g)...
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