Khan & Anor v Crosmac Ltd & Ors (Approved)

Factual and Procedural Background

The plaintiffs purchased a newly built property located at No. 28 Tarmon Harbour, Tarmonbarry, Co. Roscommon, constructed as part of a larger development including houses and marina berths. The first defendant, Company A, was the main contractor for the construction under a contract dated 2005. The second defendant, Company B, is the architectural firm responsible for design and supervision, involved in issuing certificates in 2007. The third defendant, Company C, was the engineer issuing a certificate related to structural and civil works. The fourth defendant, Company D (in voluntary liquidation), built the house and certified compliance with Building Regulations in 2006.

On 22 November 2009, the property was flooded. The plaintiffs allege that the finished floor level was constructed lower than permitted in planning permission, increasing flood risk. The plaintiffs issued their statement of claim in January 2012. Defences were filed by the first three defendants, while judgment in default was entered against the fourth defendant in January 2014. The case has been listed in the non-jury case management list since January 2023.

The motion before the court arises from the plaintiffs serving updated particulars of loss in August 2023. The second defendant objected, asserting these particulars introduced new claims not pleaded in the statement of claim. The plaintiffs contend the updated particulars are consistent with the existing pleadings and do not require amendment of the statement of claim. The court was tasked with determining whether the plaintiffs are entitled to maintain their claim based on the updated particulars of loss, or alternatively, whether leave to amend the statement of claim should be granted.

Legal Issues Presented

1. Whether the existing statement of claim sufficiently pleads the disputed matters contained in the updated particulars of loss dated 16 August 2023, such that no amendment to the pleadings is required.
2. In the alternative, whether the plaintiffs should be granted liberty to amend their statement of claim pursuant to Order 28 Rule 1 of the Rules of the Superior Courts to include the updated particulars of loss.

Arguments of the Parties

Plaintiffs' Arguments

• The updated particulars of loss do not introduce new causes of action but detail losses arising from facts already pleaded, specifically reliance on certificates issued by the second and third defendants in completing the property purchase.
• The statement of claim and replies to particulars adequately plead that the plaintiffs relied on the certificates and that the property was constructed at a level lower than permitted, which was unsafe from flooding.
• The plaintiffs contend they are entitled to maintain their claim for losses set out in the updated particulars of loss without needing to amend the statement of claim.
• The plaintiffs assert the losses have been ongoing since the flooding event, including inability to pay the mortgage due to inability to rent the property, and that a receiver sold the property in June 2022.

Second Defendant's Arguments

• The updated particulars of loss introduce matters not pleaded in the statement of claim, including a "no transaction" claim that the plaintiffs would not have purchased the property had they been properly informed, which is a new cause of action.
• The statement of claim pleads only costs of remedial works and professional fees, not a claim that the sale would not have occurred.
• The plaintiffs ceased mortgage payments six months before the flooding, undermining claims that losses arose from flooding or defendants' alleged negligence.
• The delay of over a decade in introducing these new claims causes prejudice, as discovery and trial preparation have proceeded on the original pleaded case.
• Allowing the amendment would require extensive new discovery, amended defences, expert evidence, and would cause further delay and costs.
• The contract for sale was executed in 2005, well before the certificates were issued, and the pleadings do not clarify when or if reliance on the certificates induced completion of the sale.
• The updated particulars of loss recast the claim in a materially different way inconsistent with the original pleadings.

Third Defendant's Arguments

• Adopted the second defendant’s submissions.
• Emphasised the importance of clarity and precision in pleadings and noted the plaintiffs affirmed the contract for many years before changing to a "no transaction" claim.
• Submitted that the amendments sought are impermissible without leave of court and that the delay and prejudice weigh against allowing them.

Table of Precedents Cited

Court's Reasoning and Analysis

The court analysed whether the statement of claim, read fairly and in context with replies to particulars, adequately pleaded the plaintiffs’ contention that, had they been informed that the floor levels were not laid at the correct level, they would not have purchased the property. Specific paragraphs of the statement of claim and replies to particulars were identified as putting the defendants on notice of this contention, including allegations of reliance on certificates issued by the second defendant and inducement to complete the purchase.

The court rejected the defendants’ argument that the updated particulars of loss introduced a new "no transaction" cause of action not pleaded. The court found that the pleadings and replies to particulars sufficiently encompassed the plaintiffs’ case on reliance and inducement to complete the sale, and thus no amendment was strictly necessary to maintain the claim for the losses set out in the updated particulars.

Regarding the objections to other disputed matters in the updated particulars of loss (claims related to inability to pay mortgage, lost rental income, management company fees judgment, and stress), the court found these related to the calculation of losses rather than new causes of action. These matters could be addressed by further particulars and discovery if necessary.

The court acknowledged that the defendants raised substantive merits issues, including timing of mortgage payments and causal connection to flooding, but noted these are matters for trial, not for determination on this pleading application.

On the alternative issue of leave to amend the statement of claim, the court considered the governing principles from relevant caselaw, emphasizing a broad and liberal approach to amendments that facilitate determination of real issues in controversy. The court found that the prejudice claimed by defendants related more to the substance of the amended case and associated costs rather than to the fact of delay or belated amendment itself, which is insufficient to refuse leave.

However, since the court held that the existing pleadings were sufficient, it was not strictly necessary to grant leave to amend. The court nonetheless indicated it would have granted leave in the interests of justice and to minimize costs if required to decide.

The court also addressed defendants’ concerns about case readiness and fair procedures, noting that the updated particulars of loss introduced new heads of loss and that defendants remain free to seek further particulars, discovery, or case management directions to ensure fairness and trial readiness. The court refrained from deciding any further case management issues beyond the pleadings question.

Holding and Implications

The court held that the plaintiffs are entitled to maintain their claim for the losses set out in the updated particulars of loss dated 16 August 2023.

HOLDING: The plaintiffs’ motion is granted, allowing them to rely on the updated particulars of loss without the necessity of amending the statement of claim.

Implications: The decision permits the plaintiffs to proceed with their claim as currently pleaded, encompassing the updated particulars of loss. The court recognized that the defendants may still challenge the merits of the claims at trial and may seek further particulars or discovery to address the new heads of loss. The ruling does not set new precedent on substantive liability but clarifies the sufficiency of pleadings in relation to updated particulars. Case management and trial readiness issues remain open for future determination.