Mulalley & Co. Limited v Martlet Homes Ltd

For the purposes of rule 17.4(2) of the Civil Procedure Rules 1998, the court must compare the essential factual bases of the existing and proposed claims. A materially different factual basis creates a new cause of action, even where the pleaded duties and loss are unchanged.

The inquiry into whether a new claim arises from the same or substantially the same facts includes facts put in issue by the defence. A claimant may respond to a defence by alleging that the defendant remains liable even if its factual case is accepted. The amendment need not reproduce the defence exactly, but must flow naturally from the facts it raises. “Substantially the same” requires substantial overlap and does not mean merely similar facts.

Mulalley had designed and installed an external wall cladding system containing combustible EPS insulation at four high-rise towers. After the Grenfell Tower fire, Martlet removed and replaced the cladding and claimed the resulting costs, initially alleging defects in the system’s design, specification and installation.

Mulalley’s defence asserted that the system complied with the regulations in force when installed. It also alleged that Martlet’s loss resulted from post-Grenfell requirements to remove combustible cladding, rather than from any breach by Mulalley. Martlet sought, after expiry of the limitation period, to amend its claim to allege that Mulalley’s original selection and use of combustible EPS was itself a breach.

Pepperall J, in [2021] EWHC 296 (TCC), held that this was a new cause of action but arose from the same or substantially the same facts already in issue, and permitted the amendment. Mulalley appealed; Martlet challenged the finding that the amendment was a new cause of action.

1. Both the appeal and the Respondent’s Notice were dismissed. The court upheld the order permitting Martlet’s post-limitation amendment.

2. Per Coulson LJ, with whom Baker LJ agreed, the proposed allegation was a new cause of action. The essential factual basis of the original claim principally concerned defective implementation of the cladding design, including fire barriers and fixings. The amendment instead alleged that the selection of combustible EPS was intrinsically unsuitable and was itself a contractual breach. It was a contingent claim which could defeat Mulalley’s separate causation defence, and therefore added a distinct factual basis and route to recovery.

3. However, the new claim arose from the same or substantially the same facts already in issue for section 35(5) of the Limitation Act 1980 and rule 17.4(2) of the Civil Procedure Rules 1998. The assessment includes facts raised in the defence. The principle in Goode v Martin [2001] EWCA Civ 1899 is not confined to amendments containing no factual elaboration beyond the defence. It permits an amendment based on the same factual case, with appropriate expansion, explanation or investigation, where it flows naturally from the defendant’s pleaded case.

4. Mulalley had expressly put in issue whether its selection of combustible EPS complied with the contract and the regulations in force when the works were performed. It had also relied on that asserted compliance as a building block of its causation defence. Martlet was entitled to allege that, even on Mulalley’s account of the relevant facts, the original selection of EPS was non-compliant and did not relieve Mulalley of liability. Any further investigation did not prevent the required substantial overlap, particularly as the defence had already made that investigation relevant.

5. Andrews LJ added that a defendant which puts a factual issue in play by its defence cannot use limitation to avoid the consequence of an adverse finding on that issue. The amendment was therefore properly allowed.

1. Court of Appeal (Civil Division) Dismissed Mulalley’s appeal and Martlet’s Respondent’s Notice, thereby upholding permission to amend.
2. High Court, Technology and Construction Court In [2021] EWHC 296 (TCC), Pepperall J held that the amendment pleaded a new cause of action but arose out of the same or substantially the same facts already in issue, and permitted it.