Co-Operative Group Ltd v Birse Developments Ltd & Ors [2014] EWCA Civ 707

[2014] EWCA Civ 707Case No A3/2013/3191+(A)
IN THE COURT OF APPEAL (CIVIL DIVISION)
[2013] EWHC 1790 (TCC)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION, TECHNOLOGY AND CONSTRUCTION COURT
Mr Justice Akenhead
[2013] EWHC 3145 (RCC)
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 22/05/2014
Before
LORD JUSTICE TOMLINSONLORD JUSTICE BRIGGS
Between
Co-operative Group LimitedAppellant / Claimant
Simon Hughes QC and Thomas Lazur (instructed by DAC Beechcroft LLP) for AppellantFiona Sinclair QC and Richard Liddell (instructed by Clyde & Co LLP) for First RespondentMark Cannon QC and Katie Powell (instructed by Reynolds Porter Chamberlain LLP) for Second RespondentBenjamin Pilling (instructed by Beale and Company Solicitors LLP) for Third RespondentHearing Hearing dates : 30 April / 1 May 2014
JudgmentLord Justice Tomlinson :
[1]This appeal raises for the second time in this court in this litigation the question whether the Appellant/Claimant has in its proposed 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, Akenhead J, sitting in the Technology and Construction Court, thought not, although he declined to permit the amendment on discretionary case management grounds. His decision on the new cause of action point is very largely to be found in his judgment of 27 June 2013, [2013] EWHC 1790 (TCC). His discretionary decision is explained in his judgment of 17 October 2013, [2013] EWHC 3145 (TCC). The Appellant appeals against the judge’s refusal to permit the re-amendment. The Respondents contend that the judge’s exercise of his discretion should be upheld but that in any event the proposed amendment is impermissible because it seeks to rely upon a new cause of action which does not arise 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, s.35; CPR 17.4(2). More specifically, the Respondents say that the claim or cause of action upon which the Appellant now seeks to rely by way of re-amendment is the same claim as this court has already held is a “new claim” which falls outside the category of those which may be added after expiry of the limitation period.[2]The background both to this litigation and to this application is set out in my judgment of 1 May 2013, [2013] EWCA Civ 474, with which Longmore and Rimer LJJ agreed. In particular, I there set out the nature of the causes of action asserted in the Particulars of Claim attached to the Claim Form issued in September 2010.[3]On that occasion the court was considering the nature of the claim sought to be made in paragraph 33A of the then proposed Re-Amended Particulars of Claim. At paragraph 12 of my judgment, borrowing the language of HHJ Stephen Davies in the court below, I drew attention to the fact that the new allegation was that the structural capacity of the floor was 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.[4]At paragraph 17 of my judgment I summarised the then new allegation in my own words:- “. . .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.”[5]It is right to observe that I went on to say:- “Central to paragraph 33A is the hitherto unpleaded allegation that the steel fibre content of the concrete was less than contractually required.” That was so, but it does not detract from the fact that the lack of structural capacity was alleged to be a result of both reduced fibre content and insufficient floor thickness.[6]Thus the introduction of the allegation about lack of steel fibre content was new, but in broader terms what was new was the allegation that the entirety of the concrete floors in the two warehouses suffered from structural inadequacy. Hitherto, the allegation had been of “a group of relatively disparate defects in the floors capable of disparate replacement and repair”. At paragraph 23 of my judgment I attempted to identify the new cause of action as “[relying] 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 consequence of this newly asserted breach was said to be the need to replace the entirety of the two floor slabs.[7]It is correct to observe that in paragraph 23 of my judgment I also pointed out that the new allegation relied upon facts wholly different in kind from those hitherto relied upon, viz the inadequate steel fibre content. However, that does not detract from the fact that the new cause of action also relied upon the variable thickness of the floors which was said to be in some places insufficient.[8]The Particulars of Claim as they stood before the first proposed Re-Amendment, in fact in their then Amended form, made, I believe, only one reference to inadequate thickness. Paragraph 28(iii)(b) in the form in which it was shown to us, and reproduced at paragraph 6 of my judgment of 1 May 2013, read:- “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.”[9]In the version of paragraph 28(iii)(b) now shown to us, the words “being only 112 mm thick in places” have been reinstated.[10]It is common ground that the Specification contains neither an explicit requirement that the concrete slab be of 150mm thickness, whether with or without a tolerance, nor any reference to a design thickness as such. Clause 2.08 of the Specification is set out in paragraph 13 of the Amended Particulars of Claim and reproduced at paragraph 6 of my judgment of 1 May 2013.

The Second Proposed Re-Amendment

[11]The new breach of contract alleged is pleaded in Paragraph 36(i) of the Particulars of Claim. I set out that paragraph in its unamended form at paragraph 8 of my first judgment. What is now alleged additionally or in the alternative is that the slab in Warehouses 1 and 2 was “insufficiently thick, as explained in paragraph 33(v) above, to meet the loading requirements of Clause 2.08”.[12]The proposed new paragraph 33(v) contains a summary of “the basis for Co-op’s complaint that the slab was insufficiently thick in places”. As I have already observed, the only complaint of that nature in the preceding part of the pleading is that at paragraph 28(iii)(b) to which I have already referred, with the previously deleted words now reinstated.[13]The proposed paragraph 33(v) is in these terms:- “The basis for Co-op’s complaint that the slab was insufficiently thick in places is summarised below; Measurements taken to record the thickness of the warehouse floors showed the slab to be substantially thinner, in a multitude of randomly-spaced locations and to varying degrees, than the intended 150mm (less 15mm construction tolerance) and therefore unable to provide a ground floor slab which would comply with the strength and loading requirements set out in Clause 2.08 of the Specification to the Building Contract. In particular: a) Clause 2.08 called for a Loading Category 3, Classification “Heavy”. This loading classification typically refers to a floor capable of routinely dealing with traffic carrying very substantial loads such as bulk paper, bulk liquids such as paint, or other heavy industrial materials. In order to deliver a slab meeting this requirement, the designer selected Grade 40 concrete, which was sensible, and a concrete thickness of 150mm. 150mm was an appropriate minimum thickness for this type of floor and is the minimum thickness normally used and is typically the starting point for a design, which is to say: the designer might use a thickness greater than 150mm, but 150mm would be a minimum and/or start-point for an adequate design. b) Clause 2.08 also called for the ground floor concrete slab to reliably deliver a pallet racking leg load of 70kN/leg. As with overall loading classification, pallet racking leg load requirements would only be met on the basis that the floor met the design intent of 150mm thickness (less tolerance). c) Alternatively, taking the various requirements of Clause 2.08 together, and based upon standard practice in the industry, the ground floor concrete slab called for by the Specification would need to have a minimum thickness of 150mm (less tolerance). d) The Employer’s Requirements (2.08), which reference TR34, was an instrument to set (among other things) tolerances for the sub-base level, the slab surface level and by deduction the permitted variation in slab thickness. e) TR34 ed 2 (1994) states:
“the permissible deviation in thickness of ground floor slabs should be not more than 15mm”
. It also states:
“the specification for the sub-base surface level should be restricted so that the permissible construction tolerances give at worst low levels (i.e. 0mm / -25mm level tolerances)” f) TR34 ed 2 Supplement (1997) goes on to specifically state the tolerance of level to datum plane for the surface of FM2 floors should be ± 15mm. g) TR34 ed 3 (2003) is consistent and the above requirements apply equally. h) Applying these considerations the minimum thickness of the slab should be 135mm at any point. Applying the above to the floors in question, the thickness was seen to vary considerably over the slab; thin areas, less than 135mm, were scattered over the area of the slab; and Co-op and its experts had no ability to estimate or predict whether areas of existing slab, left in place, would all be sufficiently thick to withstand the intended loading. The Court is referred to the thickness survey data at Appendix A2 of the Decision to Replace the Warehouse Slabs. For the avoidance of doubt, this degree of inadequate thickness meant that the slab’s performance, consistent with the Specification, could not be assured in service. Moreover, no amount of increase in fibre would ever have addressed these problems.”
[14]The gravamen of the complaint is thus that the thickness of the floors was insufficient to meet the loading requirements specified in Clause 2.08. Insofar as the amendment sought to be made on the last occasion relied on inadequate thickness, as opposed to shortfall in fibre content, this is precisely the same allegation as that which was considered by this court on that occasion. It is true that the earlier allegation was tied specifically to the inability to withstand the required racking leg load. In the current version the racking leg load requirement is now cited as one of several features of the Specification which together mandated a minimum slab thickness of 150mm (less tolerance). There is however a certain sleight of hand about this. Attached to the proposed new pleading is a document entitled “The Decision to Replace the Warehouse Slabs”. Attached to that document are a number of original documents including those submitted to the Board of the Co-op to inform its decision in June 2012 to replace the floor slabs rather than to continue with the hitherto planned localised repairs. It is plain from these documents that the racking leg load requirement was here the critical factor. As pointed out by the Appellant’s consultant, Professor Peter Robery, in his brief report dated 4 September 2013, “In this warehouse the floor was required (among other things) to be suitable to take block stack (pallet) loads of 50kN/m 2 and to take racking leg loads of 70kN. . . . The heavier the leg load and pallet load, the thicker the floor would need to be.” Papers prepared for the Board by Barry Ryder in May 2012 and presented to it by Martyn Hulme made plain that the critical and driving factor was the inability to withstand the racking leg load requirement, also referred to by Professor Robery as the “punching performance of the slab”.[15]All that is in reality or in substance new or different about the second proposed Re-Amendment when compared with the first is the assertion now made, contrary to the case previously advanced, and contrary to the concern expressed in the contemporary documents, that in fact lack of fibre was not and would never have been a separate, free-standing feature which would of itself have compromised the ability of the slab to withstand the required racking leg load.[16]As Mr Mark Cannon QC for the Respondents succinctly pointed out, there was only one decision taken to replace the floor slabs, and it was taken because of the predicted inability of the floors to withstand the required racking leg load. Whilst the first proposed Re-Amendment portrayed lack of fibre content as being capable of being alone the cause of this deficiency, the alternative case was always that it was a combination of lack of fibre content and reduced thickness in a number of localised areas which together gave rise to an inability to meet the racking leg load requirement. Thus the new proposed pleading is in substance the case hitherto proposed to be advanced, merely shorn now of any complaint about fibre content.[17]At paragraph 19 of his judgment of 27 June 2013 Akenhead J observed that the focus of the earlier judgments of HHJ Stephen Davies and of this court was on the then new steel fibre content complaint. That is a fair comment. However, Akenhead J went on to say:- “It seems fair to conclude therefore that the Court of Appeal did not and was not invited to focus on the assertions there made that in effect there were two causes of the need to replace, the steel fibre and (broadly) the thickness complaints. It is therefore rather difficult to suggest that a complaint that the originally pleaded thickness deficiencies at that stage seriously if at all came into the equation in relation to the 70kN requirement or to the need to replace the slab, being considered by the Court of Appeal.” As will be apparent, I respectfully disagree.[18]The point over which I hesitate is whether it is plausible to suggest that the cause of action in the currently proposed form arises out of the same or substantially the same facts as are already in issue on the claim as originally pleaded. It was always alleged that there were areas of the slabs which were of insufficient thickness, although the precise ambit of that allegation had changed with the initial deletion of the words “being only 112mm thick in places”. Mr Simon Hughes QC for the Appellant submitted that the essential character of the complaint in this regard was unchanged – it was simply that the number of areas thought to be thin had been found to be greater than first thought. The change was, he suggested, not qualitative but purely quantitative. I see the force of this argument but in my view it is not appropriate to regard the reformulated version of the allegation that the floor has a fundamental design fault as arising out of substantially the same facts as are already in issue on the pleadings. As I said at paragraph 7 of my first judgment, the factual substratum of the existing allegations is cracking of the concrete slabs, damaged arrises and localised areas of insufficient thickness. These localised areas of insufficient thickness were said to require patchwork repair, the cost of which was first quantified at about £370,000 and more recently at about £823,000. What is now alleged is a systemic defect in the process of construction which has given rise not to localised areas of lack of thickness but to a wholesale lack of thickness affecting substantially the entirety of the floor slabs. The allegation at proposed paragraph 33(v) is that each slab is “substantially thinner in a multitude of randomly-spaced locations and to varying degrees, than the intended 150mm (less 15mm construction tolerance)” and is in consequence unable to withstand the required load, leading to the necessity for complete replacement. This is in my view a qualitative rather than purely a quantitative change, or at the very least a difference in degree which amounts to a difference in kind. I note the allegation at paragraph 33(v)(h) that “this degree of inadequate thickness meant that the slab’s performance, consistent with the Specification, could not be assured in service”. I do not consider it fair, reasonable or accurate to characterise this new case as arising out of substantially the same facts as are already in issue on the pleadings as they stand.[19]I would accordingly uphold on this ground the judge’s decision to refuse permission to re-amend.[20]In the circumstances it is unnecessary to express any view upon the manner in which the judge exercised his discretion to refuse permission to amend. The court has no jurisdiction to permit the amendment and the discretionary considerations do not arise.[21]I would therefore dismiss the appeal.

Lord Justice Briggs :

[22]I agree.