Henderson & Jones Limited & Ors v Grange Heating Services Limited & Ors

On an application to amend pleadings, the court must identify whether the proposed case introduces a new cause of action by comparing the essential factual elements of the existing and proposed claims. A more detailed formulation or different emphasis does not necessarily create a new cause of action. If a new cause is identified, the court assesses whether it arises from the same or substantially the same facts; complete factual overlap is unnecessary, and the question is substantially one of impression. At an early procedural stage, difficult or developing claims such as transferred loss and rights under the Contract (Rights of Third Parties Act) 1999 should not ordinarily be shut out if reasonably arguable, although the pleading must identify its legal basis with precision.

The claimants sought permission to amend particulars of claim arising from Legionella outbreaks at The Feathers Hotel. The proposed amendments focused on an alleged failure by the first defendant to advise that the hotel’s plumbing system required complete removal and replacement, rather than remedial works. They also pleaded transferred loss and reliance on section 1 of the Contract (Rights of Third Parties Act) 1999.

The first defendant argued that the amendments introduced a new, limitation-barred cause of action and that the transferred-loss and third-party-rights pleas were unsustainable. The central issues were whether the amendments introduced a new cause of action, whether any new cause arose from substantially the same facts, and whether the additional pleas were reasonably arguable.

1. Amendment and limitation. Section 35 of the Limitation Act 1980 and CPR Part 17.4(2) require comparison of the essential factual elements of the existing and proposed causes of action. The proposed amendments added detail and a more focused formulation concerning the advice required, but alleged no new factual basis. They therefore did not introduce a new cause of action.
2. Substantially the same facts. Alternatively, any new cause of action arose from substantially the same facts. The test does not require complete overlap. The relevant assessment concerned the negotiations and contractual documents, the performance of the works, and the allegation as to what should have occurred. Whether the claims arise from substantially the same facts is substantially a matter of impression.
3. Discretion. The application was made at an early stage and the proposed case was closely connected with the existing pleading. Permission should therefore be granted, subject to the need for clear and properly particularised pleadings.
4. Transferred loss. It was inappropriate at the amendment stage to determine the uncertain boundaries of the transferred-loss principle. The plea was reasonably arguable and should not be shut out. The claimants had to state whether they relied on the narrower or broader formulation and identify the extent of the alleged entitlement.
5. Third-party rights. It was reasonably arguable that the claimants could rely on section 1 of the Contract (Rights of Third Parties Act) 1999. The pleading had to identify the contractual term said to be enforceable under section 1(1) and the class intended to benefit under section 1(3).
6. Further particulars. The remaining amendments were treated as amplification or development of claims already in issue. A real-prospect-of-success assessment was not required for such amendments. Permission was granted without prejudice to the first defendant’s right to seek strike-out, summary judgment, or determination of a preliminary issue.