The Court of Appeal (CoA) has issued its first decision covering extended time limits for pursuing certain claims under the Building Safety Act 2022 (the Act).
The Building Safety Act
The Act extends the time limits for bringing various claims, including those under the Defective Premises Act 1972 (the DPA). Section 1 of the DPA imposes a duty on parties taking on work in connection with the provision of a dwelling to carry out work in a workmanlike and / or professional manner so that a building is 'fit for habitation' when completed.
The Act also adds a new Section 2A into the DPA which extends the duty to work in relation to any part of a building which contains one or more 'dwellings', and works to existing 'dwellings', not only new ones. This section applies to work completed on or after 28 June 2022.
The time limit has been extended for claims under the DPA from six to 15 years, as well as a longer 30-year retrospective limitation period for claims that accrued before the Act took effect in June 2022.
Background to the Claim
In URS Corporation Ltd v BDW Trading Ltd [2023], BDW engaged URS as its structural engineer in respect of residential developments in London and Leicester (the Buildings). Following practical completion, which took place between February 2005 and October 2012, BDW sold the apartments in both the developments to third parties and transferred its freehold interests.
Following the Grenfell tragedy BDW investigated their developments and discovered serious structural design defects. The Buildings had not yet suffered any physical damage and no claims had been brought against BDW by any of the apartment owners. Nonetheless, BDW incurred costs undertaking temporary works and permanent remedial works and evacuated residents in one block.
BDW brought a claim against URS in 2019 for its losses. After the extended time limits were introduced by the Act, BDW sought to amend their pleadings to include a claim under Section 1 of the DPA, and to also add claims under the Civil Liability (Contribution) Act 1978.
While the case remains the subject of ongoing court proceedings, the judgment was issued in 2023 regarding the amendments sought by BDW.
The Judgment
Scope of duty of care – The scope of the duty owed in negligence by a designer to a developer covers the risk of economic loss caused by structural deficiencies or defects.
The cause of action in negligence – Where there is no physical damage, a cause of action accrues in negligence, at practical completion at the latest. The court clarified that BDW not only had a proprietary interest in the Buildings when URS’ duty of care first arose, but also when the cause of action accrued on practical completion. Had the cause of action accrued when BDW no longer had a proprietary interest in the buildings, its claim in negligence may have failed.
Who owes and is owed a duty of care under the DPA? – Parties who are owed a duty under the DPA include the original developer, but also anyone else who subsequently acquires a legal or equitable interest in the property. Parties owing a duty include the developer as well as anyone taking on design or construction work in respect of a dwelling.
Extended time limits for DPA claims under the Act – BDW were permitted to amend their claim, after proceedings had already commenced, following the extended time limits brought in by the Act. The extended limits are to be treated as always having been in force. Note that claims which have been finally determined by a court or settled cannot be re-opened, however, due to an express carve out in the Act.
Recovery of contribution for remedying defects – It was not necessary for an owner or other third party to make a claim against BDW before BDW were entitled to seek a contribution from URS for liability under the Civil Liability (Contribution) Act 1978.
Comment
Housing providers should note:
- The extended time limits under the DPA may enable housing providers with defects that render a property unfit for habitation to bring claims against the design and construction team that would otherwise have been time-barred. Whilst the extended time limits were brought in with the building safety issues in mind, they are not limited to such issues.
- Housing providers who have developed properties will not be penalised for 'acting responsibly' in carrying out remedial works where safety issues are identified, even where they no longer own a property, and the purchasers have not made claims. This is useful for housing providers who are reviewing their portfolios and wish to take a proactive approach to building safety. It is clear the avenues for such housing providers to recover costs of remedial works for building defects, particularly historic ones, have been widened.
- The extended time limits and the widening of scope of claims that can be brought under the DPA is likely to increase the number of DPA claims. Housing providers should be aware that the extended liability works both ways, i.e., there may be an increase in the number of claims being brought against them by owners too.
- The duties under the DPA cannot be contracted out of and any contractual provision which seeks to do so is deemed void. Housing providers should ensure that any exclusion of liability clauses carve out liability under the DPA so that it cannot be argued the whole clause is void.
Generally, the judgment shows it is becoming more difficult for parties to escape liability for building safety claims.
