Co-Operative Group Limited V Birse Development Limited
Over the last 12 months, the parties to this litigation have been frequent visitors to the Technology & Construction Court and the Court of Appeal in relation to amendments to the Particulars of Claim. The resultant Judgments back and forth, and particularly the Judgment in October 2013 of Mr Justice Akenhead, provide interesting and informative authority both as to the criteria when allowing amendments beyond the limitation period, and the application of the overriding objective following refinements and additions to the CPR in April 2013.
The Claimant, Co-Operative Group Limited (‘the Co-Op’), was the leasehold owner of a distribution centre in Rugby. Birse Developments Limited (‘Birse’) was the design and build contractor which undertook the centre’s development and Stuarts Industrial Flooring Limited (‘Stewarts’), the Third Party to the action, were the flooring sub-contractors. An action was brought by the Co-Op against Birse, contending that the internal floor slabs had failed due to particular breaches of contract (specified by numbered clauses) relating to defective workmanship, defective design and non-completion with the Employer’s Requirements. The Co-Op subsequently (and after expiry of the limitation period) sought to amend its claim to plead that the slabs contained insufficient steel fibre content and were therefore under strength, in breach of the clauses already cited and that the slabs would fail if not replaced in their entirety (as opposed to the repair of the slabs originally pleaded).
At first instance, the Co-Op was given permission to amend its case, the Court finding that the amendments did not constitute a new claim, but merely further particularisation of that which was already pleaded. The Co-Op successfully argued that its original claim related to contractual obligations owed to it by Birse in relation to the floor slabs and a breach of those obligations by Birse as a result of poor and/or inadequate design of the internal slabs, poorand/or inadequate workmanship and failure to adhere to the Employer’s Requirements.
When this came before the Court of Appeal, the ruling was reversed, and Birse’s submissions were accepted that the Co-Op’s original pleaded case related to various defects in the slabs, which were capable of replacement and repair whereas the amended case alleged a systemic defect requiring wholesale replacement. The Court of Appeal held that the amendments, relating to insufficient steel fibre content whereby the slabs were under strength, which had been made after the expiry of the limitation period, relied upon a specific aspect of contractual duty which had not previously been pleaded and did not arise out of the same or substantially the same facts as those which had been pleaded previously. In allowing Birse’s appeal, the Court of Appeal adopted a strict approach to amendments attempted outside the limitation period. The decision appeared to go against the authorities which tended to support a more general and higher level analysis of pleadings. The Court of Appeal had therefore found that the Co-Op’s complaint regarding the steel fibre content was an entirely new and different cause of action to that previously relied on and was time-barred.
Undeterred, the Co-Op was subsequently granted permission to amend its Particulars of Claim to plead that defects already pleaded in the action had led causatively to its decision to replace the slabs. The Co-Op then sought permission to re-amend its Particulars of Claim to seek damages for the cost of totally replacing the slabs on the basis that slabs used by Birse were materially defective because they lacked the appropriate thickness. It was this application came before the Technology and Construction Court in October 2013 resulting in a Judgment that has implications generally for the interpretation and application of the overriding objective.
In the event, the Co-Op’s application was refused, for a number of reasons. The Court considered that the proposed re-amendments could have been pleaded some eighteen months earlier. The fact that this was the fifth Judgment considering applications by the Co-Op to re-amend its Particulars of Claim and to seek substantially enhanced damages, and the delay that has already been caused to the trial date, were also doubtless taken into account. A party which decides relatively late in proceedings that it wishes to seek permission to amend its Particulars of Claim materially must take responsibility for the foreseeable delays arising out of such an application.
On the facts of this case, it was held that, had the Co-Op made its application at an earlier point, such amendments could probably have been accommodated within the trial timetable; however, if they were allowed at this late juncture, the trial date (already revised as a result of earlier applications) would have been imperilled and the effect would have been likely to give rise to “real and unquantifiable” prejudice to Birse (and the other defending parties), including irrecoverable costs.
During the course of Mr Justice Akenhead’s Judgment, the interpretation of the overriding objective (to deal with cases justly) was closely considered. This included an amendment to the Civil Procedure Rules (effective from 1 April 2013) which stress the need for Courts to deal with cases at proportionate cost and to enforce compliance with the Rules, Practice Directions and Orders. It is clear from the Akenhead Judgment that the amendments to the CPR are not regarded as “mere verbiage”. Thus, whilst previously the overriding objective might be satisfied if any prejudice to another party caused by an amendment could be compensated for in costs, post April 2013, the proportionality of those costs had to be taken into account. Mr Justice Akenhead therefore found that an amendment could be refused, even if its consequences could be compensated for by a Costs Order, if the costs consequences took the overall costs to a disproportionate level.
Applying the facts of the Co-Op case to the amendments to CPR Part 1, Mr Justice Akenhead concluded that Courts are required in all that they do to have particular regard to keeping overall costs within proportionate bounds and that it was therefore appropriate for a Court to take a robust approach provided that this was fair and within the ambit of the overriding objective as amended. He concluded that the Court must now have regard, particularly in the case management and procedural aspects of any given case, to compliance with Rules and Orders, as part of that process.
Mr Justice Akenhead anticipated that there may well be a genuine public interest in his interpretation of the amendments to the overriding objective and its application. The Co-Op saga may, therefore, not yet be over. However, the decision and the interpretation of the Rules can be seen as part of the general trend in recent years for Judges to be more pro-active in managing cases and for there to be greater costs control and accountability for parties to keep costs within logical tolerances. Not all of these initiatives will have the desired effect; indeed, some initiatives may have the reverse effect. Nonetheless, if the Co-Op Judgment does nothing else, it is another and a timely reminder to Claimants to familiarise themselves with their claim early and then to bring all aspects of the claim as quickly and as crisply as possible, as the Court may not give them leave to do so later.
For more information, please contact Mark Klimt, Partner, on 020 7280 8802
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