Countryside Properties v MDS Civil

There are, in broad terms, two areas of amendment which are covered by this application by the Claimants to amend their claim. The first is to add an additional Claimant, which, it is said very much in the alternative by the existing Claimants, was a party to the contract. The Claimants' primary case is that the contract was with the first-named Claimant and, in the alternative, that there may be some effective contractual connection with the second-named Claimant. The Defendant has positively pleaded that the contract in question was entered into between it and the proposed third-named Claimant.

So far as that second aspect of the application to amend is concerned, it is accepted that how the Court deals with that should be largely a matter for case management. It is accepted that I cannot resolve the issue as to whether or not the claim against this third possible Claimant is time-barred and indeed it may turn out, I know not, that it is immaterial because if the contract was with either or effectively both of the first two-named Claimants, then it becomes immaterial in any event. But, if it is established effectively that the contract was with the third-named Claimant, then the trial judge will be able to determine the extent to which the claim against them would be barred by limitation, and in those circumstances the trial judge will be best placed to decide whether the application to add the third-named Claimant succeeds. So I have decided that that part of the application to amend should be adjourned to be resolved at the trial.

The other area of application is some substantive amendments which the Claimants seek to make to their case both as to the terms of the contract as to breach and as to causation. A significant number (in numerical terms) of the proposed amendments are not challenged and I will not address those.

The claim relates to a residential property development undertaken by the Claimants at Great Notley, Braintree, Essex. The Defendant was engaged to carry out the ground works at the site which included the construction of the foundations for the dwellings. There were some 32 properties overall. There is an issue between the parties as to contract formation and as to who the contract was with, as I have already indicated, but it appears that, on any basis, the contract was entered into at some stage between October 200o and May 2001. Although it is apparently accepted that the foundation work was done by the Defendant to the properties to which this claim relates in about November 2000, it is also apparently accepted that the Defendant's contract overall was considered or certified as practically complete about a year later in about November 2001. Within a year or two it seems, and I make no findings about this, that cracking occurred in six of the properties. Those are Nos. 2, 4 and 6 Thatcher's Way, and Nos. 7, 9 and 11 Bridge End Lane. Those two sets of three houses either form terraces or are parts of terraces.

The Claim was issued on 16^th May 2007 in the High Court in the TCC. Particulars of Claim were served later in September 2007. The parties sensibly agreed, following the issue and service of those proceedings, to proceed thereafter on a Pre-Action Protocol process which had not been followed or wholly followed before the proceedings were issued. A summary of what then happened was as set out by the defendant's solicitors in a letter dated 11^th October 2007 in which the parties agreed that there would be a stay of proceedings to enable alternative dispute resolution to take place. Procedures were agreed to seek to achieve that. However, that process, although it took rather longer than anticipated, was concluded in June 2009 and, unfortunately, the parties were not able to resolve their differences. It is clear, without having had to consider any of the without prejudice aspects of the matter, that there had been an extensive exchange of expert views and other views between the parties.

So it was the case that the Claimants produced a draft amended Particulars of Claim in the summer of 2009. The Defendant served its Defence on 28^th August 2009, and it prefaced that pleading, at Paragraphs 5 to 8, by saying that, although it was going to plead to the amended pleading, that was without prejudice to any objections which it might have to those amendments. So the Defence pleads to the draft amended Particulars of Claim but an effective reservation is made about the amendments and thus there is no issue of estoppel, or anything of that sort, about any of the objections which it now makes.

Essentially, the nature of the claim advanced by the Claimants relates to damage to the buildings which occurred, it is said, as a result of various breaches of duty on the part of the Defendant. It is clear that the original Particulars of Claim differentiated, at least in part, between the two sets of terraces, in that, so far as the Thatcher's Way properties were concerned, the complaint was that there had been heave; so far as Bridge End Lane was concerned, the complaint was that it was attributable to heave and/or subsidence.

I should explain that it seems to be common ground in this case that generally the site of this development was on London Clay. In, I suspect, literally hundreds of cases that have come before the TCC (and, before then, the Official Referees) since the 1960s, and probably before, London Clay has featured large in cases about damage to dwellings. There are, and there is no issue about this, essentially two types of problem. When the clay dries out, it contracts in size, sufficient in some instances to cause damage to houses if the foundations are not appropriate or deep enough. Similarly, when there is a substantial amount of moisture introduced into the dried-out clay, there is a propensity for it to swell. That leads to the phenomenon which is known as heave. So there are potentially two problems depending on whether the clay is drying out or whether it is being wetted. It is well known that one of the problems associated with the drying out of material is the effect of vegetation such as trees and hedges. If, however, trees and hedges have been removed and they are no longer affecting matters but were present before any particular development was done, then of course that can have induced a dried-out area of London Clay in time, seasonally if not otherwise, to swell, and heave may result.

It is necessary to consider the draft amended and the unamended Particulars of Claim, and I am only going to refer to the relevant parts. In Paragraphs 6 to 17 there was pleaded the background, the contract and duty of care. There is reference there in the unamended pleading to the invitation to tender; this is in Paragraph 7 which refers to certain drawings, including drawing N0011/E/101 entitled "General Foundation Layout" which identified, amongst other things, the depth to which the foundations for the properties were to be constructed and specified where Claymaster was to be applied to the foundations. A copy of the drawing was attached as Appendix 2 to the original pleading. Claymaster is a flexible or soft material that is used to attach to the foundations which enables the structure to accommodate a certain amount of swelling of the clay so that it does not impact on, or it limits the impact of, any potential heave problem.

It is pleaded at Paragraph 10 that the Claimants sent the Defendant certain drawings which detailed revised foundation depths for the works. There is then reference in Paragraph 11 to other drawings, including drawing N0011/E/124, which also identified locations at which Claymaster was to be applied to the foundation, and the depths for the foundations to be constructed to. Paragraph 11.2 pleads that:

What is then pleaded, over the next three paragraphs, is how the contract came into being so far as the Claimants plead it. At Paragraph 16 there is then pleaded this in the unamended Particulars of Claim:

Paragraph 16.5 pleads:

Paragraphs 16.7 and 16.8 read:

A duty of care in court is pleaded at Paragraph 17. At Paragraph 18 it is positively pleaded that the site is located in an area of boulder clay over London Clay, and it is then pleaded that:

What is pleaded at Paragraphs 25 to 29 is the damage which occurred to the two sets of premises which is essentially cracking and movement, together with uplift noticed at the Thatcher's Way properties. At the Bridge End Lane terrace cracking is pleaded, which is, it is said "due to heave and/or subsidence".

So far as the breaches of contract are concerned, there was some difference between the two sets of properties. Essentially, so far so far Thatcher's Way is concerned, there were two sets of allegations contained in some 11 subparagraphs. The first relates to a plinth which, it is said, was constructed wrongly by the Defendant, and which, it is said, in conjunction with the foundations that were eventually constructed, facilitated or caused heave movements. The second area of complaint relates to the allegedly ineffective provision of Claymaster to the plinth and indeed to the foundations.

So far as Bridge End Lane is concerned, the same complaint is made in relation to that about the provision of the Claymaster. Then there is pleaded this at Paragraph 30.14:

“[The Defendant] Failed to construct the foundations to the depth required by the drawings and/or the contract and/or applicable NHBC guidelines. For example, and without prejudice to the generality of the foregoing -

30.14.1

As regards the front elevation near the southeast corner of number 7, the Defendant constructed the foundations to a depth of 2 metres. The drawings specified a minimum depth of 2.5 metres.

30.14.2

As regards the west elevation near the northwest corner of number 7, the Defendant constructed the foundations to a depth of 2.3 metres. The drawings specified a depth of 3 metres.

30.14.3

As regards the southwest corner of number 9, the Defendant constructed the foundations to a depth of 2.2 metres. The drawings specified a depth of 2.7 metres."

Paragraph 30.15 pleaded:

It was generally pleaded in respect of both properties, in Paragraphs 30.16 to 30.18, that the Defendant had failed to undertake works or carry out and complete them with reasonable skill and care in a good and workmanlike manner so that they were fit for purpose, and generally it was said they failed to carry out and complete the works referred to, shown upon or described by the contract documents.

In Paragraph 31 there is then set out the causation case in respect of the two properties. So far as that Thatcher's Way is concerned, it is clear that the case is one related to heave, but the case with regard to Bridge End Lane relates to heave and/or what is described as “settlement”.

Thereafter in the pleading loss and damage is claimed, and, although there are a number of amendments to that, they are in substance not objected to are or covered by the order that I propose to make with regard to the addition of the new Claimant.

The Defence responded to that pleading with the qualification that I have referred to before. Paragraph 18, relating to London Clay and its propensity and tree roots, was admitted. Essentially, so far as the two sets of properties are concerned, although the pleading is a full one, the case is broadly pleaded that, in respect of both sets of properties, the Defendant did properly construct the foundations in accordance with its contractual obligations, and in accordance with the instructions of its client. At Paragraph 65, for instance, in relation to the Bridge End Lane properties, the plea is positively made that the foundations were constructed to the depths required by the drawings and/or contract and/or NHBC guidelines. So far as causation is concerned, it is positively pleaded at Paragraph 70 as follows:

There is a plea of contributory negligence in Paragraph 85, in which it is said that any liability which the Defendant may have arises from the Claimants' own negligence in a number of respects. At (iv) it is said that one aspect of contributory negligence is that the Claimants:

Now, essentially the amendments about contractual terms, which are sought, seek to expand what the drawings say in the notes. There is reference in the amendments to several drawings which were not mentioned in the original pleading (the proposed amendments being underlined):

“7.2.2.

[The ITT included inter-alia] Certain drawings including Drawing N00011/E/1010, which identified the minimum depths to which the foundations… were to be instructed and specified where Claymaster was to be applied to the foundations and (by Note 7) that " all foundation depths are subject to final inspection on site. If active root growth is apparent at founding level then foundation must be deepened to extend 300 mm below any active roots ". A copy of the drawing is attached hereto at Appendix 2.

11.1

The drawings included Drawing N00011/1/124…That drawing identified the locations at which Claymaster was to be applied to the foundations, and the minimum depths to the foundations were to be constructed…

11.2

The Notes to the drawing provided inter alia:

“2.

Minimum foundation depths to be 1000 mm…”

11.4

The Drawings also included Drawing N000/E/120 entitled ‘ Foundation Key Plan ’. A copy is attached hereto at Appendix 3B. The Foundation Depth Specification and Notes to that drawing provided inter alia as follows:

“Zone 1 Minimum foundation depth to be 1000 mm measured from the lower of existing or proposed ground level and to bear within the undisturbed London Clay. Foundation depths to be increased in vicinity of new/existing tree planting in accordance with drawings N00011/E121-129

Note where soft clays are encountered at formation level the foundation depth must be increased to fully penetrate these deposits and bear upon firm strata

Zone 1 Sections and details refer to drawing N00011/E/130

…

So far as Thatcher's Way is concerned, the complaint is added in these terms:

So far as causation is concerned, a plea is added at Paragraph 31.2(a), and various pleas are added between 31.3 and 31.7, which, for instance, changed the word "settlement" or "settling" to "subsidence". At Paragraph 31.7 it is pleaded:

I have been referred to a number of authorities. First of all, the rules Section 35 of the Limitation Act states:

“35 New claims in pending actions: rules of court.

(1)

For the purposes of this Act, any new claim made in the course of any action shall be deemed to be a separate action and to have been commenced

(a)

in the case of a new claim made in or by way of third party proceedings, on the date on which those proceedings were commenced; and

(b)

in the case of any other new claim, on the same date as the original action.

(2)

In this section a new claim means any claim by way of set-off or counterclaim and any claim involving either —

CPR 17.4(2) provides as follows:

“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 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”

Any given application to amend which raises limitation issues will of course depend upon its own facts and the pleadings which precede it. One first needs to go back to the earlier cases about what a cause of action is to determine whether something proposed to be added is a “new claim”. In Letang v Cooper [1965] 1 QB 232 Diplock L.J. stated in this context in a well known and much followed dictum:

In Brickfield Properties Limited v Newton [1971] 1 WLR 862, the Court of Appeal addressed a case about negligent design in which an amendment about negligent supervision was applied for, albeit when the rules were slightly but not substantively different. Sachs LJ with whom Edmund Davies LJ agreed said:

“Where there are found in completed buildings serious defects of the type here under review the facts relating to design, execution and superintendence are inextricably entangled until such time as the court succeeds in elucidating the position through evidence. The design has inevitably to be closely examined even if the only claim relates to superintendence, and all the more so if the designs are, as is further alleged here, experimental or such as need amplification in the construction progresses. The architect is under a continuing duty to check that his design will work in practice and to correct any errors as they emerge. It savours of the ridiculous for the architect to be able to say, as it was here suggested to him that he could say: 'true, my design was faulty, but, of course, I saw to it that the contractors followed it faithfully' and be enabled on that ground to succeed in the action.

The same, or substantially the same set of facts, falls to be investigated in relation to the design claim and the superintendence claim. The plans and specifications and ancillary documents are relevant to the superintendence claim as well as to the designer claim: hence the inability of the defendant to allege prejudice with regard to the preparation of his defence if this appeal is allowed. Accordingly, the "new cause of action" falls within the ambit of RSC Ord. 20 r. 5(5), and it is one which the court has jurisdiction to permit to be pursued”.

Cross LJ added:

“It is no objection to amendment under Ord. 20, r. (5) that some of the facts out of which the new cause of action arises are peculiar to it, and some of the facts out of which the old cause of action arises are peculiar to it. It is enough if the overlap is so great that the new cause of action can fairly be said to arise out of substantially the same facts as the old cause of action. For the reasons given by Sachs L.J. I think that this is the case here and that there was power to allow the amendment in question under Ord. 20, r. 5(5)”

In Secretary of State for Transport v. Pell Frischmann Consultants , Mr Justice Jackson (as he then was) reviewed a large number of authorities (including Steamship Mutual Underwriting Association Limited v Trollope & Colls (City) Limited (1986) 33 Building Law Reports 77 , Hydrocarbons Great Britain Limited v Cammell Laird Shipbuilders Limited (1991) 25 Con LR 131, Welsh Development Agency v Redpath Dorman Long Ltd [1994] 1 WLR 1409, Darlington Building Society v O'Rourke James Scourfield & McCarthy [1999] PNLR 365) on the point and said:

“From this review I derive five propositions which are relevant to the present case:

(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.

(iv)When considering whether one claim arises out of "substantially the same facts" as a previous claim, it is necessary to examine the extent to which the facts of the first claim and the facts of the second claim overlap, and the extent to which they diverge. It will then be a matter of impression whether the test is satisfied.

(v)

When carrying out the analysis required by section 35 of the 1980 Act and CPR r. 17.4, the judge must treat as part of the original claim those amendments which he has already decided to allow.”

In Seele Austria GmbH & Co v Tokyo Marine Europe Insurance Ltd [2009] EWHC 2066 (TCC), Mr Justice Christopher Clark highlighted a number of other authorities which are germane to the current case:

“39.

In Goode v Martin [2002] 1 WLR 1828 the Court of Appeal held that, in the light of the ECHR, CPR 17.4 (2) should be interpreted as though it permitted an amendment whose effect would be to add or substitute a new claim where the new claim arises out of the same facts or substantially the same facts as are already in issue on an existing claim.

A new claim?

40.

…"A claim for damages is a new claim, even if in the same amount as originally claimed, if the claimant seeks, by amendment, to justify it on a different factual basis from that originally pleaded"; per Auld, LJ, in Lloyds Bank Plc v Rogers [1999] 3 EGLR 83. Here the claim put forward in the Reply (which is not in the same amount as originally claimed) is sought to be justified on a different factual basis.

57.

Whether a new claim arises out of the same or substantially the same facts may in a borderline case essentially be a matter of impression but in others it must be a matter of analysis: Welsh Development Agency v Redpath Dorman Long Ltd [1994] 1 WLR 1409, 1418D; Paragon Finance plc v DB Thakerer & Co [1999] 1 AER 400, 418; Aldi Stores Ltd v Holmes Building [2003] EWCA Civ 1882. Both my impression and my analysis is that the claims do not so arise.”

In BP Plc v Aon Ltd [2005] EWHC 2554 (Comm), Mr Justice Colman had to consider a relatively belated application to amend in a case in which the facts are very different to the current one. He reviewed also cases such as Goode v Martin and Lloyds Bank plc v Rogers . At Paragraph 55, he highlighted as relevant the factor of whether the facts would or would not have had to have been investigated before the new claim was made.

In the context of this case there are two observations properly to be made:

I have formed the view that these amendments, which are opposed, should be allowed. It seems to me that in each case they in substance arise out of the same or substantially the same facts. It is highly arguable that there are some new claims being added in contract. It is less clear that as such any new claim is being added in tort. The reason for that is that, whilst the cause of action for breach of contract involves the establishment of a contractual duty and a breach, for the tort of negligence the cause of action is not only the existence of the duty, which is pleaded as being in issue, and breach or breaches, but also damage. It is certainly the case here that the duty is the same and the damage is the same, whilst it is possible that the addition of new breaches may give rise to new causes of action but, on analysis, I am satisfied that they are unlikely to give the addition of a new cause of action in tort.

Dealing with the simpler part of the case first, Bridge End Lane, the primary additions are to change the word "settlement" to "subsidence". It seems to me that there is only a semantic objection to that. Both settlement and subsidence, to the extent that there is any real difference at all, involve the going down of foundations or a property; I cannot see that the change of that word makes the slightest difference in reality. There may be a very technical discussion between structural or civil engineers as to a difference between settlement and subsidence, but the mechanism of a property going down is the same, and therefore that undoubtedly arises out of the same or substantially the same facts. It is just using a different word which may be technically a more precise word. It is not a new claim.

So far as Bridge End Lane is concerned, it was always pleaded that there was a failure to construct the foundations to the depths required by the drawings and/or the contract and/or the applicable NHBC guidelines. It seems to me that what has happened here is that there has been a reconsideration of the drawings by the Claimants and it has decided, sensibly, by way of clarification, if nothing else, to plead that there has been a failure in effect to construct the foundations to an adequate depth. The NHBC guidelines are well known in broad terms, although they are subject to amendment from time to time. But one of the requirements is invariably that foundations should comply with the Building Regulations which in effect require foundations to be taken down to an appropriate depth to avoid the effects of swelling or shrinkage of the subsoil. That was always pleaded as a breach of contract. The addition of the word "minimum" depth is one which, it seems to me, is simply an expansion on what is already pleaded. It is not immensely helpful for it to have been pleaded in Paragraph 30.14. The original breaches were given by way of example "without prejudice to the generality of the foregoing". That said, it seems to me that the same breach is pleaded and the same damage in consequence, and I do not see that it is sensibly arguable that that does not arise out of the same or substantially the same facts. There is reference in Paragraph 30.14.5 to the presence of roots and/or active root growth, but that is in the context of constructing foundations to the depths required by the drawings, which does not significantly add to the case already pleaded.

I do very much bear in mind that it has been the Defendant's case that the cause of the problem here was that the foundations were not constructed to an adequate depth, albeit that it says (perhaps with justification, perhaps not, on the facts) that it constructed the foundations exactly to the depths required and instructed by the experienced developer clients. That is a factor which will, if established on the facts, have to be considered in the context of whether there is any liability. That is a matter for trial. But the whole question as to whether the foundations were constructed to an adequate depth was always in issue even on the un-amended Particulars of Claim.

So far as Thatcher's Way is concerned, Mr. Webb's position is more arguable because what has happened here is the plea that has been added, which was not there at all before, that the foundations were not dug to an effective depth. However, the damage is the same, the investigation is likely to be substantially the same, and the Defendant's own response to this was that the problem had nothing to do with anything pleaded against it, but was attributable to the foundations not being deep enough. In those circumstances, and bearing in mind in particular the case of BP v. Aon and the authorities therein referred to, one can have regard to the area of investigation which is likely to have been required as a result of the originally pleaded case. It is clear that the Defendant has investigated this and has positively pleaded the absence of an adequate depth of foundations.

The amendments, so far as they relate to what the Contract Drawings say and mean and the consequential amendments to the terms of the contract as pleaded, are simply on analysis amplifications of what is already pleaded. Even the Drawings not specifically referred to in the original pleading are clearly part of a series of Drawings, some of the key ones of which were originally pleaded.

So far as all the other amendments are concerned, I am wholly satisfied that they arise out of the same or substantially the same facts or matters, and therefore I propose to give leave to amend.

This was by agreement dealt with by submissions in writing. The costs of and occasioned by making the amendment application and the costs of and occasioned by the amendment (in pleading terms) should, as is conventional, be borne by the Claimants, which made the amendment. However, the Claimant had to deal with a contested application and the costs of and occasioned by contesting the application upon which it succeeded and the Defendant failed and the Defendant should pay those costs.

The Claimant had initially put forward a total bill of £16,899 but accepts in its written submissions dated 15 December 2009 that only £6390 can be claimed. The Defendant seeks the sum of £11,199.17 for its costs.

A number of points are made about the Claimant’s original schedule of costs. I am satisfied on a summary assessment however that a sum of £6000 is properly allowable for its costs entitlement. But for the unjustified opposition to the application to amend, the most that would have been required in terms of attendance would have been a short Case Management Conference.

As to the Defendant’s cost bill, I am sure that some additional cost would have been incurred in pleading to the amended Particulars of Claim as opposed to the un-amended pleading. I do not accept the Defendant’s assertion that in some way it was entitled to prepare for and attend the hearing to contest the application even though the grounds for contesting it were and have proved to be unjustified. Doing the best that I can on the Defendant’s Summary Bill which is not broken down, I strongly get the impression that it is substantially overstated for what should reasonably cover the reasonable extra over cost of pleading to the amended parts of the Particulars of Claim and a reasonable cost and time to consider the amendments and the extent to which they should be opposed or consented to. It seems to me that a reasonable allowance is £3000.

Setting one off against the other, the Defendant should pay the Claimants costs in the net sum of £3000 within 14 days, that is by 5 January 2010. The Claimant should draw up the order to reflect all the directions which were made at the hearing and this judgement.