Co-Operative Group Ltd v Birse Developments Ltd & Ors [2013] EWCA Civ 474

Case No A1/2012 2911 AND 2912

[2013] EWCA Civ 474

IN THE COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

TECHNOLOGY AND CONSTRUCTION COURT,

Venue MANCHESTER DISTRICT REGISTRY

His Honour Judge Stephen Davies (sitting as a Judge of the High Court)

0MA50090

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date 01/05/2013

Before

LORD JUSTICE LONGMORE

LORD JUSTICE RIMER

LORD JUSTICE TOMLINSON

Between

Co-operative Group LimitedRespondent

(Transcript of the Handed Down Judgment of

WordWave International Limited

A Merrill Communications Company

165 Fleet Street, London EC4A 2DY

Tel No: 020 7404 1400, Fax No: 020 7831 8838

Official Shorthand Writers to the Court)

Simon Hughes QC and Tom Owen (instructed by DAC Beachcroft LLP) for Respondent

Fiona Sinclair (instructed by Clyde and Co Solicitors) for Appellant

Mark Cannon QC and Katie Powell (instructed by Reynolds Porter Chamberlain LLP) for Third Party Appellant

Hearing Hearing date : 26 March 2013

Judgment

Introduction

[1]This appeal raises the short question whether the Claimant/Respondent has in Paragraph 33A of its Re-Amended Particulars of Claim sought to add a new cause of action to those upon which it already relied in the proceedings. The judge below, His Honour Judge Stephen Davies, sitting in Manchester as a judge of the Queen’s Bench Division in the Technology and Construction Court, held that it had not. He granted permission to appeal to this court.

[2]The Claimant is the leasehold owner of a distribution centre known as Swift Valley Central in Rugby. It comprises two very large warehouses connected by an office accommodation block and an external hardstanding on an eleven acre site. It was developed by Kingspark Development Ltd (“Kingspark”) who contracted with the Defendant/Appellant, Birse Developments Limited (“Birse”) as main design and build contractor. Birse in turn sub-contracted the design and building of the internal warehouse floors to the Third Party/Appellant, Stuarts Industrial Flooring Limited (“Stuarts”). Since Birse seeks an indemnity from Stuarts in respect of any relevant liability to the Claimant, they have made common cause on this appeal as they did before the judge.

[3]On completion of the contractual works in September 1998 the distribution centre was leased to and occupied by the Claimant. In connection with the intended lease Birse provided to the Claimant collateral warranties in relation to the work which effectively put the Claimant into the position of the Employer under the head building contract. Hence the Claimant asserts against Birse a claim in breach of contract. Because the warranties were contained in a contract made under seal the relevant limitation period is twelve years.

[4]A Claim Form was issued in September 2010 with Particulars of Claim attached. It was common ground for the purposes of the appeal before us that the causes of action with which we are concerned accrued in September 1998 and that the September 2010 proceedings were brought in time so far as concerns causes of action then asserted. It follows that any amendment to the Particulars of Claim sought to be made after September 2010 with a view to introducing a cause of action upon which reliance had not hitherto been placed will be impermissible unless the new claim arises out of the same or substantially the same facts as are already in issue on any claim made in the original action – Limitation Act 1980, section 35; CPR 17.4(2). The judge held that the claim sought to be made in the re-amendment did not seek to introduce a new cause of action. Although the point did not therefore arise the judge went on to hold that the claim sought to be introduced by the re-amendment did not arise out of the same or substantially the same facts as are already in issue on any claim made in the original action. By a Respondent’s Notice the Claimant challenges this latter conclusion in the event that this court concludes that the proposed re-amendment does seek to introduce a new cause of action.

[5]In broad terms the Claimant complained in the original Particulars of Claim of a number of defects to three distinct areas of the property –(i) the external concrete hardstanding,

(ii) the drainage system and

(iii) the concrete floor slabs in the warehouses. Numerous breaches of contract are asserted in respect of each alleged defect. On this appeal we are concerned only with the allegations concerning the concrete floor slab inside the two warehouses.

The existing statement of case

[6]The claims made in the original action are for present purposes to be found in the Amended Particulars of Claim. Paragraph 13 sets out relevant contractual terms concerning “Concrete Work”. “. . . the Employer’s Requirements which formed part of the Building Contract contained the Specification for the sub-structure which provided inter alia as follows: . . . 2.06 CONCRETE WORK Concrete work will comply with BS8110 and carried out to the Structural Engineer’s requirements. 2.08 GROUND FLOOR SLAB A reinforced concrete ground slab will be provided to all ground floor areas within the buildings. The slab in respect of the warehouse areas will be designed in accordance with the BCA Interim Technical Note ll, Loading Category 3, Classification:

“Heavy” and will accommodate a uniformly distributed superimposed loading of 50.00 KN/m 2 (1000 lbs/ft 2) and pallet racking of 70 KN/leg (racking leg loading based on leg centres of 2.70m along length, 0.09m centres across width and 0.20m centres for back legs where positioned back to back). Ground floor movement joints will be designed so that no vertical movement occurs. The ground floor slab will be constructed so that the top surface is within the tolerances as defined in Concrete Society Technical Report No 34 of FM2 Property IV and free movement areas, and ±10mm from datum. Local level variations shall not exceed ±3mm in a 3.0m straight edge in any direction. Each warehouse floor slab shall be constructed with not more than 9 No. bays and saw cut joints within the slab shall not be made less than 9.0m apart, unless constrained by pallet layout. Saw cut and bay joints shall be infilled with suitable filler during construction and to accessible floor areas twelve months after the date of practical completion. A floor joint design drawing shall be produced and issued to the Tenant’s representative for agreement before construction commences. On completion of each warehouse area floor slab a profileograph survey will confirm the achieved surface tolerance, prior to any fitting out works taking place. Where appropriate, the slab will be designed and constructed in accordance with the recommendations of “The Cement and Concrete Association Technical Report No 550 and BCA Interim Technical Note II”

. The surface will be power floated and treated with a proprietary surface hardener and penetrating dust inhibitor in accordance with the manufacturer’s instructions. A 1,200 gauge P.I.F.A. polythene damp-proof membrane will be laid beneath the ground floor slab. The office ground floor slab to be designed to take an imposed loading of 15kN/m 2 (300 lbs/ft 2) with a surface tolerance and finish appropriate to the specified floor finishes.” 7. Paragraph 15 is also relevant to the pleaded duties:- “The Defendant also had the following further obligations arising out of or in connection with the Building Contract: (i) There was a term necessarily implied into the Building Contract that the Defendant would carry out and complete the Building Contract Works so that, upon completion, they would be fit for their intended purpose, namely a high quality distribution warehouse complex. (ii) There was a term necessarily implied into the Building Contract that the Defendant would carry out and complete the Building Contract Works in a good and workmanlike manner. (iii) There was a further term necessarily implied into the Building Contract that the Defendant would carry out and complete the Building Contract Works using materials of good quality. (iv) Further, insofar as the Defendant was a specialist carrying out specialist design and/or construction as part of the Building Contract Works, the Defendant owed to its employer a duty of care at common law in the performance of that specialist design and/or construction work.” Paragraph 28 is headed “The Defects in the Property” and so far as relevant provides as follows:- “28. The Property suffers from defects, which may be summarised in this way: . . . (iii) The slab in Warehouses 1 and 2 has failed inter alia in the following general respects: (a) In Warehouse 1 there are cracks up to 20mm wide in the floor that run parallel to the main movement (IDC) joints. Mid-bay cracking has appeared in numerous locations, with crack widths of up to 6mm, substantially exceeding the normal width of structural cracks of 0.3mm. There are misplaced dowels at the IDC joints, preventing them opening and closing properly. (b) In Warehouse 2 mid-bay cracking has appeared in some locations, with crack widths of up to 1mm, substantially exceeding the normal width of structural cracks of 0.3mm. The slab is below the design thickness of 150mm (less 15mm tolerance), being only 112mm thick in places. The arrises to the main construction joints have deteriorated to such an extent that the central aisle is unusable, because the IDC joints were not designed to be armoured. At certain locations, particularly in the north-west bay, there is severe cracking and displacement, with a 100mm step in the surface of the slab, attributable to defects in the underlying foundation.” It will be apparent from the foregoing that there are two deletions from the original Particulars of Claim. Paragraph 30 deals with “Breach and Causation”. It reads:- “The defects in and damage to the Property described in paragraph 28 above have been caused by the breaches of contract and/or breaches of duty of the Defendant, as more particularly set out below.” It is in paragraph 33 that particulars are given of the breaches said to be relevant to “Failure of the Slab in Warehouses 1 and 2”. That paragraph reads:- “33. The failure of the slab in Warehouses 1 and 2, described in paragraph 28(iii) above, has resulted from poor and/or inadequate workmanship and/or design in respect of the slab and/or in respect of the preparation and/or improvement of the ground underneath the slab and/or a failure to adhere to the Employer’s Requirements contained in the Main Contract. In particular: (i) The failure to design the floor to meet the intended use as an industrial warehouse, in particular provision of non-armoured joints in conjunction with 50m bay sizes, which has resulted in damaged arrises in Warehouses 1 and 2. (ii) The failure to construct to the design intent and in accordance with good practice, in particular the installation of locked IDC joints resulting in wide cracking and areas of the slab that are below the required thickness. (iii) The inadequacy of the ground improvement works in the area underneath the slab in Warehouse 2, which failed to deal with the tendency of the existing sub-base material, given its physical and chemical composition, to cause movement and/or heave which would then adversely impact upon the condition of the slab. (iv) The absence of sawn joints at not less that 9m centres within the slab, which resulted in inadequate provision for expansion and contraction of the slab which, in turn, has resulted in the cracking and other damage evident within the slab in Warehouses 1 and 2.”

[7]Pausing there, it is apparent that the allegations thus far are of cracking of the concrete slab, damaged arrises, areas which are below the required thickness and movement and/or heave.

[8]Paragraph 36 of the pleading seeks to tie in the generalised allegations of breach made in paragraph 33 with the particular terms of the contract said to have been broken by Birse. Paragraph 36 reads:- “36. The defects in, and damage to, the slab in Warehouses 1 and 2 have been caused by the breaches of contract of the Defendant. In particular:(i) The slab in Warehouses 1 and 2 did not comply with sections 2.06 and 2.08 of the Specification within the Employer’s Requirements in that the slab was not a reinforced concrete slab designed to BS8110 or was not designed or built in accordance with industry standards such as Concrete Society Technical Report TR34. Further, this was a breach of clauses 2.1, 2.5.1.1.1, 2.5.1.1.2, 2.5.1.1.3, 2.5.1.2, 2.5.2 of the Building Contract and also a breach of the further obligations set out in paragraph 15 above, together with a breach of clauses 4.1.1., 4.1.2 and/or 4.1.3 of the Defendant’s Warranty.

(ii) The slab in Warehouses 1 and 2 did not comply with section 2.08 of the Specification with the Employer’s Requirements in that the slab did not contain sawn joints at not less than 9m centres. Further, this was a breach of clauses 2.1, 2.5.1.1.1, 2.5.1.1.2, 2.5.1.1.3, 2.5.1.2, 2.5.2 of the Building Contract and also a breach of the further obligations set out in paragraph 15 above, together with a breach of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Defendant’s Warranty.

(iii) The sub-base beneath Warehouses 1 and 2 did not comply with the requirements of TR34 such that, as a result, the slab was of insufficient thickness in places which has, in its turn, led to cracking in the slab; in the alternative, the slab was of insufficient thickness in any event. This was a breach of clauses 2.1, 2.5.1.1.1, 2.5.1.1.2, 2.5.1.1.3, 2.5.1.2, 2.5.2 of the Building Contract and also a breach of the further obligations set out in paragraph 15 above, together with a breach of clauses 4.1.1, 4.1.2 and/or 4.1.3 of the Defendant’s Warranty.

(iv) The jointing system used in Warehouses 1 and 2 was not fit for its intended purpose and/or it was not installed correctly, in that the joint was not armoured against normal wear and tear; it was experimental in its design; and was laid with debonded dowels that were not horizontal leading to locking of the joints and cracking in the slab. This was in turn a breach of clauses 2.1, 2.5.1.1.1, 2.5.1.1.2, 2.5.1.1.3, 2.5.1.2, and/or 2.5.2 of the Building Contract; a breach of the further obligations set out in paragraph 15 above; and accordingly a breach of clauses 4.1.1, 4.1.2 and 4.1.3 of the Defendant’s Warranty.”

[9]In the introductory words to paragraph 36 the reference to “defects in the slab” is a reference back to paragraph 28(iii) and the reference to “damage to the slab” is a reference to paragraph 33. I note in particular the reliance upon BS 8110 and Concrete Society Technical Report TR 34, both of which are pleaded at paragraph 13. I draw attention also to the reliance upon clause 2.08 of the Specification pleaded at paragraph 13 as the source of the obligation to provide saw cut joints not less than 9m apart.

[10]It is also of importance to have regard to the consequences said to flow from these alleged breaches of contract and/or duty. Paragraphs 41 and 42 read:- “Loss and Damage Resulting from Breach 41. As a result of the breaches of contract and/or duty of the Defendant, set out above, the Claimant has suffered loss and damage, namely to the extent that there are very substantial defects in the Property. This means that:(i) A repair scheme addressing all of the defects, together with the material risk of future damage, will need to be designed and constructed at the Property, at very significant expense to the Claimant.

(ii) There will be engineering and other professional fees associated with the design and implementation of a repair scheme at the Property.

(iii) The Claimant has suffered lost rental in circumstances where, as a result of the defects, the Claimant has been unable to find a commercial tenant.

(iv) Further commercial and/or operational losses have been, and continue to be, incurred by the Claimant as a consequence of the defects in the Property. 42 Accordingly, the Claimant is entitled to claim, and claims in these proceedings, damages for breach of contract and/or breach of duty. The Claimant’s claim for damages iswas set out in a Schedule of Loss and Damage dated 25 November 2011 and a draft Amended Schedule of Loss is to be served on the Parties by Friday 20 July 2012, pursuant to the Court order of 19 June 2012.”

[11]The (unamended) Schedule of 25 November 2011 is a substantial document. Paragraph 63 identifies the remedial works required as follows:- “63. In addition to the general matters described above, the remedial works in the warehouses generally fall within the following categories:(i) Remedial works to cracks in the floor slab: (a) Replacement of sections of the cracked and/or damaged floor slab; and (b) Repair of individual cracks not covered by replacement works.

(ii) Remedial works to IDC joints: (a) Replacement of IDC joints; and (b) Repair of IDC joints.” The work required is then exhaustively particularised. The cost is put at about £381,000. It is relevant to note that the work allegedly required falls far short of complete replacement of the floor slabs. (a) Replacement of sections of the cracked and/or damaged floor slab; and (b) Repair of individual cracks not covered by replacement works.

The proposed re-amendment

[12]It is against this background that the proposed re-amendment falls to be examined. It is contained in paragraph 33A. Paragraph 33A is a very long paragraph which it is unnecessary to set out in full. The judge set out at paragraph 35 of his judgment the opening sentences and then summarised the effect of the fifteen sub-paragraphs and I reproduce here that part of his judgment beginning with the quotation from paragraph 33A itself:- “. . . “33A In the course of works being carried out, and testing, in connection with the remedial work, the claimant has discovered that the steel fibre content of the concrete used by the defendant for the construction of the internal slab warehouse floor is substantially less than the value that had previously been assumed. The consequence of this finding, which follows from testing, is that all of the internal slab is now understrength and liable to early failure if not replaced, particularly when this finding is considered together with the available evidence on inadequate thickness of the slab in many areas.” (It is then pleaded that “the foregoing” is a breach of specified clauses of the building contract, of implied terms and duty of care, and of specified clauses of the defendant’s warranties.) 36. I do not intend to set out the following 15 subparagraphs in full. In summary, the case has (sic) advanced is that:(i) Prior to testing during the course of the remedial works the claimant and its advisers had reasonably assumed that the slabs were designed to be 150 mm thick with a steel fibre content of 30kg/m 3.

(ii) However testing revealed that the steel fibre content was significantly less than assumed, with the result that it would not meet the racking leg load requirement found in the Employers Requirements. The structural capacity of the floor is also significantly reduced by reason of the reduced steel fibre content, both by itself and/or coupled with the reduced floor thicknesses found in a number of areas on inspection during the course of the remedial works.

(iii) The conclusion, in subparagraph (n) is that “there remains a high probability that the floor could fail in service due to undetected thin areas beneath or adjacent to racking legs, irrespective of the fibre content. However, the evidence now available that the fibre content is also low and below what would be needed in a design of compliant 150 mm thickness, is also reason to condemn the floor.” To this summary by the judge I would add sub-paragraphs (m) and (n) of the proposed paragraph 33A of the Re-Amended Particulars of Claim which read as follows:- “(m) Significantly, the floor has never seen, as far as the Claimant is aware, the intended racking leg load of 70kN, which would require five levels of racking stacked with 1.4t “euro-pallets” either side of the central frame, back to back. This type of loading was never intended to be used by Woolworths, and the racking was only rated at 50kN leg load. However, these loads could easily happen when a future tenant re-rates the racking at 70kN and stores pallets of paint or other liquids, steel components, stone/cement, or paper ream. Loads from the wheels of heavy-duty high-reach fork-lift trucks would also be much more severe than has been the case previously. (n) There remains a high probability that the floor could fail in service due to undetected thin areas beneath or adjacent to tracking legs, irrespective of the fibre content. However, the evidence now available that the fibre content is also low and below what would be needed in a design of compliant 150mm thickness, is also reason to condemn the floor.”

[13]I also set out here as relevant paragraphs 37 and 38 of the judge’s judgment:- “37. There is no amendment to paragraph 36. However, during the course of the hearing, I suggested to Mr Hughes QC that if, as appeared clear from the content of paragraph 33A, the claimant was contending that the effect of the reduced steel fibre content, whether by itself or in conjunction with the reduced floor thicknesses, rendered the defendant in breach of specific obligations imposed by the Employers Requirements, particularly the obligation appearing in paragraph 2.08, set out in full in paragraph 13, that the slab should be designed to accommodate a pallet racking leg loading requirement of 70 KN/leg, then that would need to be pleaded in terms in paragraph 36. Although Mr Hughes submitted that it was sufficient that paragraph 36 pleaded that the slabs did not comply with paragraph 2.08 of the Employers Requirements, I have to say that I remain of the view that it would be necessary to plead this specific non-compliance expressly in order to allow that claim to be advanced in these proceedings. 38. There was no amendment to paragraphs 41 and 42, other than to refer to the draft amended schedule of loss which was to be served in accordance with the order of 19 June 2012 but which, as I have already identified, has not in fact yet been served. It is common ground nonetheless, as I have also already identified, that if permission is given the amended schedule of Loss will include a claim that it is necessary to take up and replace the existing slabs in both warehouse floors at a very substantial cost, both direct and indirect, by reason of the matter is [sic] sought to be introduced by paragraph 33A.”

[14]The cost of replacement of the floor slabs in both warehouses has in fact subsequently been quantified at approximately £2.5M, and substantial consequential losses are also asserted. The allegation that the warehouse floors require complete replacement on account of the insufficient steel fibre content, if successful, renders wholly academic the originally pleaded claim for the cost of replacement of specific sections, repair to individual cracks and replacement and repair of IDC joints.

[15]The judge was I think right to identify that the specific source of the allegation that the concrete floor should have a steel fibre content of 30 kg per cubic metre is paragraph 2.08 of the specification, in that the allegation is that a steel fibre content of that order was required in order to ensure that the floor could accommodate a pallet racking leg load of 70KN.

[16]Mr Simon Hughes QC for the Claimant submitted that paragraph 33A is to be regarded as either further particularisation of an existing allegation of breach of contract as set out in paragraphs 28(3), 33 and 36 of the Particulars of Claim or an explanation of a decision to take up the whole slab rather than to repair it – what he termed “a technical explanation of the failure”.

[17]I do not regard either of these characterisations of the proposed paragraph 33A as appropriate. The gravamen of the allegation in this paragraph is that the floor has a fundamental design fault in that it is of insufficient strength to withstand a pallet racking leg load of 70KN. This is attributed principally to the shortfall in required steel fibre content, although also to the variable thickness of the concrete which is alleged to be in some places insufficient. What is said is that the floors have not yet been exposed to the maximum design pallet racking leg load of 70KN but were that to occur there would be a high probability that the floors would fail in service in consequence of which it is necessary that they be wholly replaced. Thus paragraph 33A is not concerned with the existing cracking in the floors or its cause. Paragraph 33A is concerned with cracking in the floors which might, indeed so it is said, would probably occur in the event that the floors are exposed to their full warranted design pallet racking leg load. Central to paragraph 33A is the hitherto unpleaded allegation that the steel fibre content of the concrete was less than contractually required.

[18]The question for decision is whether paragraph 33A introduces a new cause of action, not previously relied upon in the original action.

The law

[19]A cause of action is, as Diplock LJ famously observed in Letang v Cooper

[1965] 1 QB 232

at 242/3, “a factual situation the existence of which entitles one person to obtain from the court a remedy against another person”. Longmore LJ in Berezovsky v Abramovich

[2011] 1 WLR 2290

at 2309 expressed the concept in essentially the same way: “A cause of action is that combination of facts which gives rise to a legal right”.

[20]In the quest for what constitutes a “new” cause of action, i.e. a cause of action different from that already asserted, it is the essential factual allegations upon which the original and the proposed new or different claims are reliant which must be compared. Thus “the pleading of unnecessary allegations or the addition of further instances or better particulars do not amount to a distinct cause of action” – see Paragon Finance v Thakerar

[1999] 1 All ER 400

at 405 per Millett LJ. “So in identifying a new cause of action the bare minimum of essential facts abstracted from the original pleading is to be compared with the minimum as it would be constituted under the amended pleading ” - see per Robert Walker LJ in Smith v Henniker-Major

[2003] Ch 182

at 210.

[21]The court is therefore concerned with the comparison of “the essential factual elements in a cause of action already pleaded with the essential factual elements in the cause of action as proposed” – see per David Richards J in HMRC v Begum

[2010] EWHC 1799 (Ch)

at paragraph 32. “A change in the essential features of the factual basis (rather than, say, giving further particulars of existing allegations) will introduce a new cause of action” – ibid, paragraph 30.

[22]Where an amendment pleads a duty which differs from that pleaded in the original action, it will usually assert a new cause of action – see per Sir Iain Glidewell in Darlington Building Society v O’Rourke [1999] PNLR 365 at 370. However as Sir Iain went on to observe, where different facts are alleged to constitute a breach of an already pleaded duty, the courts have had more difficulty in deciding whether a new cause of action is pleaded. Particularly has this been so in construction cases. Thus in Steamship Mutual Underwriting Association v Trollope and Colls

[1986] 33 BLR 77

a claim in respect of a defect in brickwork caused by a breach of the self-same duty as had earlier been relied upon to found a claim in respect of air-conditioning pipes in the cavity walls was regarded by the Court of Appeal as a new claim, whereas on apparently indistinguishable facts the Court of Appeal had in Idyll Limited v Dinerman [1971] 1 CLJ 294 regarded claims in respect of the roof as asserting the same cause of action as the original claim founding on the same duty in relation to defects in the brickwork and functions of the building. In the former case May LJ offered the guidance that one must look not only to the duty, but also to the nature and extent of the breach relied upon, as well as to the nature and extent of the damage complained of in deciding whether, as a matter of degree, a new cause of action is sought to be relied upon. The question to be resolved is therefore one of fact and degree. For my part I am not convinced that one needs to look further than for a change in the essential features of the factual basis relied upon, bearing in mind that the factual basis will include the facts out of which the duty is to be spelled as well as those which allegedly give rise to breach and damage. I respectfully agree with Lloyd LJ, as he then was, later Lord Lloyd of Berwick, who observed in the Trollope and Colls case, at page 101, that “in most cases it will be easy to say on which side of the line the case falls”. But as Lloyd LJ observed, there will sometimes be a grey area, where different views are possible. I would not therefore dissent from the following distillation of the principles by Jackson J, as he then was, in Secretary of State for Transport v Pell Frischmann

[2006] EWHC 2909 (TCC)

at paragraph 38:- “(i) If the claimant asserts a duty which was not previously pleaded and alleges a breach of such duty, this usually amounts to a new claim. (ii) If the claimant alleges a different breach of some previously pleaded duty, it will be a question of fact and degree whether that constitutes a new claim. (iii) In the case of a construction project, if the claimant alleges breach of a previously pleaded duty causing damage to a different element of the building, that will generally amount to a new claim.” I would simply add my own gloss to the effect that if the new breach does not arise out of the same or substantially the same facts as those already in issue on a claim previously made in the original action, it is likely to be a new cause of action.

A new cause of action? Discussion

[23]In my judgment it is very clear on which side of the line the present case falls. As Miss Fiona Sinclair for Birse succinctly submitted, the original allegation here was of a group of relatively disparate defects in the floors capable of disparate replacement and repair. There was no existing case of structural inadequacy of the entirety of the concrete floors in the two warehouses. What is now alleged is that the concrete of which the floors are constructed suffers from a systemic defect which must result in its entire condemnation and replacement because of its inability to withstand the design load to which it has never yet been subjected. The allegation by way of re-amendment is in my judgment an allegation of an entirely new and different cause of action. It relies upon a particular and specific facet of the contractual duty owed of which no breach was hitherto asserted, viz the design capability to withstand a pallet racking leg load of 70KN. The relevant specific duties of which breach had hitherto been alleged are the obligation to design to BS8110, to design and build in accordance with Concrete Society Technical Report TR 34 and to comply with that part of the Specification which requires sawn joints at not less than 9m spacing. There is no reference to any of these duties in paragraph 33A because they are irrelevant to the case being there advanced. The new allegation relies upon facts wholly different in kind from those hitherto relied upon, viz, the inadequate steel fibre content. Finally the consequences alleged are, again, wholly different in kind from those hitherto alleged, giving rise to the need to replace the entirety of the two floors and thereby rendering academic the question whether the contractors were, so far as concerns the concrete floors in the warehouses, in breach of duty in the manner hitherto alleged.

[24]The judge below directed himself by reference to the appropriate principles but, in my view, failed properly to apply them when it came to the point of decision. Thus at paragraph 43 he asked himself “What is the existing claim about?”, a question which in my view fails to focus upon the relevant enquiry, which is as to the essential features of the factual basis relied upon. It is I think possible that the judge was led astray by the language used by Millett LJ in Paragon Finance at page 405 where he spoke of making the selection of the material facts to define the cause of action “at the highest level of abstraction”. I think that Millett LJ meant no more than that one must look to the bare minimum of essential facts, and that these are to be abstracted from the original pleading, as Robert Walker LJ put it in Smith v Henniker-Major.

[25]However it was at paragraph 46 of his judgment that the judge, I consider, fell into clear error. He there said this:- “. . . It is clear that this development, like those under consideration in the Steamship Mutual, WDA and Aldi cases, is a substantial and complex structure (or series of structures). My view is that since the existing claim is advancing a claim for damages for breach of contract in relation to design, workmanship and non-compliance with the Employers Requirements which is limited to 3 specified elements of that development, one being the internal warehouse concrete floor slabs, then it follows that further allegations of further defects in those slabs, even though they involve separate and distinct allegations of breach and allegations of loss, are nonetheless part of the same cause of action. . . .”

[26]I cannot agree with the judge that an allegation of a further defect in the slabs arising out of design, workmanship or failure to comply with the contractual requirements must, necessarily, be an assertion of the same cause of action as that upon which reliance has already been placed, simply because breaches in relation to design, workmanship and failure to comply with contractual requirements are already in play. That approach ignores the importance which the judge had earlier recognised of identifying the essential facts upon which reliance is placed. Furthermore the judge’s (correct) conclusion that the further allegations involve separate and distinct allegations of breach and separate and distinct allegations of loss is in my view incompatible with his ultimate conclusion that they are “part of the same cause of action”. It is, rather, indicative that they comprise a new and different cause of action.

[27]Thus the judge never asked himself whether as a matter of fact and degree the further allegations assert a new cause of action. Since that question is a question of mixed law and fact, we would not in any event be formally constrained by the judge’s conclusion in the same manner as where the court is concerned with an exercise of discretion. As it is however we must simply resolve the question ourselves. I am quite clear, for the reasons which I have given, that paragraph 33A seeks to assert a new cause of action.

Arising out of the same or substantially the same facts?

[28]Mr Hughes valiantly attempted to persuade us that the judge was wrong to conclude, as he did at paragraphs 51 and 52 of his judgment, that the new claim does not arise out of the same or substantially the same facts as are already in issue in the action. As Robert Walker LJ pointed out in Smith v Henniker-Major at page 210, in applying s.35(5)(a) of the Limitation Act 1980 the court is concerned with all the evidence likely to be adduced at trial. As Hobhouse LJ observed in Lloyds Bank plc v Rogers The Times, 24 March 1997; Court of Appeal (Civil Division) Transcript No 1904 of 1996: “The policy of the section is that, if factual issues are in any event going to be litigated between the parties, the parties should be able to rely upon any cause of action which substantially arises from those facts”.

[29]At paragraph 51 of his judgment, under the sub-heading “The same or substantially the same facts”, the judge said this:- “If I am wrong in my conclusion in relation to the new claim, I consider that the claimant cannot successfully rely in the alternative upon this argument. That is because I do accept the arguments of Ms Sinclair and Mr Cannon QC that to introduce the steel fibre content claim would involve a major investigation, both pre-trial and at trial, into facts and matters which are not on the existing statement of case on the agenda at all for trial. In particular, I accept their submissions that if the steel fibre content claim was allowed to be added, that would involve a major investigation into:(1) The original design for the floor slabs in terms of thickness and steel fibre content. I accept Mr Cannon’s submission that notwithstanding the references in the existing Particulars of Claim to isolated areas of floor thickness, there would have been no need to consider the design so far as thickness or steel fibre content on the existing pleading.

(2) The extent to which the floor slabs have been constructed using steel fibres with a content below 30kg/m 3, and the consequences of that in terms of the structural adequacy of the floor slabs in the long term. Mr Hughes QC submitted that this would inevitably have been raised at trial, because now that it is known it is a factor which the experts would undoubtedly have wished to raise in order to support or to criticise (as the case may be) the remedial works solution adopted by the claimant. However I do not accept that submission. On the current pleaded case the claim would be limited to damages for the repair costs. There would be no slab replacement claim in play. It follows that there would be no necessity to investigate the structural adequacy of the slabs. Furthermore, even if I was wrong about that, it would be perfectly possible for the claimant’s expert to refer to the steel fibre content issue to support the remedial scheme on a technical basis, without it becoming in issue at trial. That is because it would be no different to other cases where a particular remedial scheme is being justified by reference to one factor or series of factors which are said to be the defendant’s legal responsibility and others which are not. The court would be concerned with the latter category only as relevant to the question whether the remedial scheme was justified by reference to the matters for which the defendant was liable, which is very different to the enquiry necessary where they are also relied upon as further allegations of breach by the defendant.

(3) Whether or not the use of concrete with a steel fibre content of below 30kg/m 3 rendered the defendant in breach of its obligations in relation to design, workmanship or the Employers Requirements, including an investigation into whether or not it meant that the specified rack loading requirement could not be guaranteed, and the consequences of that upon the “lettability” of the unit.

(4) The nature and extent of the proposed remedial scheme to address this particular problem, i.e. complete replacement, and its justification on cost and other grounds. The costs incurred. Whether or not the claimant could also claim what would not appear to be the wasted costs already incurred in undertaking the more limited remedial works previously identified.”

[30]I agree with the judge’s analysis and with his conclusion at paragraph 52 that “It cannot be said that the steel fibre content claim arises out of the same or substantially the same facts”.

Costs

[31]Mr Hughes had an outstanding application for permission to appeal against the judge’s costs order below, contending that an award to the Claimant of its costs of the application to amend only “in the case” as opposed to “in any event” was insufficiently generous and contrary to the modern approach. I have some sympathy with this argument but in the event the proposed cross-appeal on costs does not arise.

[32]Accordingly I would allow the appeal and disallow the proposed Paragraph 33A of the Re-Amended Particulars of Claim. I would invite counsel to agree how best the judge’s complex order of 1 November 2012 should be amended in order to reflect the outcome of the appeal.

[33]I agree.

[34]I agree also.

Cited in 23 later judgments

and 14 more of the most senior