The cladding system on high rise tower blocks - A case example for the construction industry

THE CASE - Mulalley & Co Ltd v Martlet Homes Ltd [2022] EWCA Civ 32

Concerns the cladding system on high-rise tower blocks

The Claim

The Claimant, Martlet Homes Ltd, brought an £8m breach of contract and negligence claim against the Defendant, Mulalley & Co Ltd building contractors, alleging that they were in breach of the design and build contract in respect of defects in workmanship and design on a number of issues, including the fitting of combustible expanded polystyrene cladding (EPS) on five high rise towers.

The Defence

The building contractors filed a Defence stating that the Building Regulations at the time of the contract did not exclude the use of EPS and that, given EPS is now banned, Martlet Homes was required to replace it themselves as the building owners.

Martlet Homes filed a Reply stating that they did not agree that Building Regulations allowed the use of EPS at the time of the contract, that Mulalley did not comply with the contract and, on the question of the requirement to change the EPS anyway, that the building contractors will remain liable as the EPS should never have been used in the first place.

Mulalley applied and succeeded in having this part of Martlet’s Reply struck out on the basis that those points were not in response to the defence but raised a new claim and Martlet Homes was not allowed to raise a new claim in a Reply, in accordance with the Civil Procedure Rules. However, the Court allowed Martlet Homes to amend their pleaded case, even though this amendment took place after the limitation period in bringing the claim.

Mulalley & Co appealed, arguing this amendment should not be allowed after the expiry date and was a new claim based on new facts. This appeal was dismissed on the basis that, (as above), the new claim arose out of substantially the same facts, and that Martlet Homes “must be entitled to put in issue what Mulalley say in defence to their original claim, otherwise they would be deprived of a fair trial.”

The Conclusion

This case highlights as an example of the arguments that contractors can run in similar situations. The takeaway from the above is that new claims must be added by amending particulars of claim and not by Reply and that careful consideration should be given of the factual and technical issues at the outset, particularly, where the end of a limitation period is approaching, rather than run the risk of being out of time and denied permission to amend.

As to the ruling on the case itself, this has of course opened the door to an argument that could have significant ramifications to the construction industry, given the extensive costs of replacing cladding and will be of interest to contractors subject to claims from property owners.

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