Relying on the Defence to plead a new, time-barred claim – Court of Appeal provides clarity
The Court of Appeal has provided clarity on a claimant's ability to bring an otherwise time-barred claim in reliance on facts raised in the Defence.
In the recent case of Mulalley & Co. Ltd v Martlet Homes Ltd [2022] EWCA Civ 32 the claimant was permitted to introduce a new claim, post-limitation, in response to what was potentially a full defence to the original Particulars of Claim.
Facts
The Defendant had designed and installed external wall systems (involving wall insulation, fire barriers, and an overcoat of render) for five high-rise residential towers owned by the Claimant. Following the Grenfell fire tragedy, the Claimant carried out checks on the wall systems. Major fire safety defects required their replacement. Proceedings against the Defendant were issued at the end of the contractual limitation period.
The Particulars of Claim mostly focused on allegations of inadequate workmanship. The Defence denied the allegations and relied upon a certificate allegedly evidencing compliance with the Building Regulations previously in force. The Defence also argued that the wall systems needed to be replaced because of combustible insulation within them which, the Defendant argued, was not a prohibited material at the time of their installation. This insulation issue was not pleaded in the Particulars of Claim; it might therefore have afforded the Defendant a complete defence.
The Claimant sought to amend its Particulars to plead that (i) the insulation in the wall systems did not comply with the Building Regulations then in force, and (ii) the Defendant was liable for selecting and installing the insulation used (the "Amendment"). By this time, however, the limitation period had expired. The Defendant argued that the Amendment constituted a new claim and was statute-barred.
The relevant law
Section 35(5)(a) of the Limitation Act 1980 permits a claimant to add an otherwise time-barred claim to existing proceedings only "if the new cause of action arises out of the same facts or substantially the same facts as are already in issue on any claim previously made in the original action".
This is also reflected in CPR 17.4, which provides: "where… a party applies to amend his statement of case… and a period of limitation has expired… 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."
The Court of Appeal therefore had to consider whether the Amendment:
- Was a new claim; and, if so –
- Did it arise out of the same facts or substantially the same facts as were already in issue?
Decision
If the Amendment was not a new claim it could not have been time-barred.
The Court of Appeal found that the Amendment was a new claim because, among other reasons, it was expressly pleaded as a "contingent" claim and it focused on design choices (whereas the original claim primarily focused on workmanship).
The same or substantially the same facts as were already in issue?
If the Amendment – as a new claim – did not arise out of the same or substantially the same facts, it would have been time-barred.
The decision in Goode v Martin [2001] EWCA Civ 1899 was central to the Court's analysis. The claimant in that case sustained severe head injuries while sailing as a guest on the defendant's yacht. The defence contested the facts relied upon by the claimant, providing a different account. The claimant was allowed to plead a new claim (otherwise time-barred) because she did not introduce any additional facts or matters beyond those raised by the defendant himself. The Court commented: "All that Brooke LJ did in Goode v Martin was to say that, if a defendant advanced a new case in its defence, and the claimant wanted to say that, even on that basis, the claim was still good, then the claimant should be permitted to do so."
In the Court of Appeal's judgment, the Amendment did arise out of the same or substantively the same facts as were already in issue. It explained:
"Mulalley may have chosen to defend themselves against the original design allegations in an expansive way, pointing (amongst other things) to the certificate which they say shows that their selection of the combustible cladding was in accordance with the Building Regulations 2000, but that does not mean that Martlet are not entitled to challenge what they say…
… A claimant ought to be able to submit to the court that the defendant is liable even if the version of events he has pleaded by way of defence is accepted."
The Court also explained:
"because Mulalley has chosen to put particular facts in issue in defending themselves, there can be no unfairness in allowing Martlet to turn those matters back on the defendant."
Comment
Claimants should take comfort from the judgment. They will not be prevented from introducing new claims in response to points raised in the Defence, even if they would otherwise be time-barred.
Defendants, on the other hand, should take care. Facts pleaded in defence of one claim might afford a claimant the opportunity to plead additional claims – even if the limitation periods have already expired. What might, at first, appear to be a total defence might only invite additional claims.
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