The owner of high-rise towers fitted with combustible cladding can amend its claim outside the limitation period to challenge issues raised in a pleaded defence, the Court of Appeal has said in a judgment which could have wider implications for the construction industry.

Martlet Homes discovered ‘major fire safety defects’ on its towers in Hampshire following the Grenfell Tower fire in June 2017. It brought an £8m claim against design and build contractors Mulalley & Co, alleging inadequate design and workmanship in relation to the installation of an external wall product system which included expanded polystyrene (EPS) insulation.

Mulalley relied in its defence on a certificate said to demonstrate that the system complied with the building regulations in place at the time of the contract. It also argued that the cause of any loss was the EPS insulation, which was prohibited in 2017 but not at the time of the contract.

Martlet sought permission to amend after the end of the limitation period, to plead that the EPS insulation did not comply with the building regulations at the time, which was granted under CPR 17.4(2) as the new claim arose out of the same or substantially the same facts as already in issue.

In Mulalley & Co Ltd v Martlet Homes Ltd, the Court of Appeal this week dismissed Mulalley’s appeal in a ruling which ‘may be of some significance to the construction industry’.

Lord Justice Coulson said that the question of whether the new claim arose out of the same or substantially the same facts is ‘an important one and may, post-Grenfell, be replicated in analogous situations at blocks of flats across the country’.

‘It is therefore appropriate to address the arguments de novo, without any qualifications to or limitations on the analysis undertaken,’ he added.

The judge held that Martlet ‘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’.

In a short concurring judgment, Lady Justice Andrews said: ‘It would be invidious if a defendant, having deliberately put in issue the compliance of the building design with the regulations in force at the time of construction, could escape the consequences of an adverse finding on that issue by using limitation as a shield against a claim relying upon the non-compliance.’