Ruling approving construction claim amendments provides lessons for businesses

The judgment, delivered by Mr Justice Max Barrett in the High Court on 29 January 2025, was issued in proceedings involving a dispute between KC Capital Property Group Limited (KC), a real estate developer, and Keegan Quarries Limited (Keegan), a company that specialises in the production and supply of construction materials.

KC’s claim concerns the provision of concrete by Keegan for the basement and ground floors of a nine-story ‘Greenside Building’ office development at Stephen’s Green, Dublin 2. KC alleges that the concrete was defective and that the total loss and damage amounts to €13 million. Keegan has denied any wrongdoing and argues that even if the concrete was defective, KC did not need to remove all of it, which significantly and unnecessarily increased the cost of the remedial works.

KC sought to amend its statement of claim to allege that Keegan falsely represented that the concrete it supplied complied with the agreed specification for the construction work, and that in these circumstances, Keegan was responsible for fraudulent misrepresentation and/or deceit. The application was contested by Keegan, but Mr Justice Barrett granted KC permission to amend its statement of claim to include the new allegations.

In considering the motion KC filed on 16 September 2024 for an order enabling it to amend its statement of claim, the High Court referenced previous judgments, legal principles and precedents it considered relevant to its decision.

Liberal approach to amendments

The court adopted a liberal approach to amendments, as the Irish Supreme Court provided for with its ruling in the case of Croke v Waterford Crystal in 2004.. The primary consideration for the court was whether the amendments were necessary to determine the real questions of controversy in the litigation.

The court also referenced the 2006 High Court ruling in the case of Woori Bank v KDB Ireland Ltd where the judge stated that a court should lean in favour of allowing an amendment unless it is manifest that the issue sought to be raised must necessarily fail.

The court further cited the 2022 Court of Appeal ruling in the case of Stafford v Rice where the court observed that any cause of action that could have been pleaded at the outset could be added by way of amendment, even if it materially altered the nature and scope of the existing proceedings.

Clarity and precision of amendments

The primary focus of the amendments KC sought was on paragraph 19 of the proposed amended statement of claim, which included allegations of fraudulent misrepresentation and/or deceit. KC sought to amend its statement of claim further to include an expert concrete technology report it received on 6 December 2023.

The court noted that the proposed amendments were clear and precise, meeting the particularity requirements of the Rules of the Superior Courts – the rules governing civil litigation proceedings in Ireland. KC aligned the additional pleas with the expert report, providing, in the High Court’s view, enough material for Keegan to understand the case it would be required to meet at trial.

Delay and prejudice

The court acknowledged some delay by KC but did not find it significant enough to deny it the amendment. The judge in the Woori Bank case had indicated that delay was relevant to the assessment of whether leave to amend should be granted, to the extent that it might cause prejudice to the other parties.

In this case, the court found no logistical prejudice, as the proceedings were still well in advance of any trial. The situation was considered similar to that in the case of Dormer v Allied Irish Banks plc, ruled on the Court of Appeal in 2017, where the claim of fraudulent misrepresentation was new but based on the same facts as the original statement of claim.

The High Court found that the proposed amendments were necessary for determining the real questions at issue and that they did not prejudice Keegan. Therefore, the court granted KC’s application to amend the statement of claim, allowing the inclusion of allegations of fraudulent misrepresentation and/or deceit.

Implications of the judgment

The court’s approach highlights its willingness to allow amendments to claims, even if they introduce new allegations like fraud. Businesses should be aware that courts may permit amendments to address the real questions in controversy, even if this significantly alters the scope of proceedings.

Companies must ensure thorough due diligence in their operations and transactions to avoid any grounds for allegations of fraud. This includes maintaining accurate records and transparent communication.

Allegations of fraud can severely impact a company’s reputation. Businesses must have strategies in place to manage and mitigate reputational damage in the event of such claims.

Defending against allegations of fraudulent misrepresentation can be costly. Businesses may face increased legal fees and the potential for compensatory and punitive damages if found liable. Companies should review their insurance policies to ensure they have adequate coverage for legal claims, including those involving allegations of fraud.

Businesses should include clear and precise terms in their contracts to protect against potential claims of misrepresentation. This includes detailed representations and warranties.