Eric Johnstone is a senior associate at Brodies LLP Solicitors
Of course, Bob Dylan wasn’t referring to limitation periods in his 1964 hit, but the song title very much reflects the position of the construction industry following the Building Safety Act (BSA) and the changes made to the Defective Premises Act 1972 (DPA).
“Courts are likely to support claims brought against contractors, subcontractors, designers and others involved in the original construction of a defective project”
The Court of Appeal has given its first judgment considering section 135 of the BSA, which significantly extends the time limits within which a claim can be brought under the DPA, so that claims arising before 28 June 2022 can be brought within 30 years of the time the right of action arose. The case also addressed where a contribution may be found to be due under the Civil Liability (Contribution) Act 1978 (CLCA).
In URS Corporation Ltd v BDW Trading Ltd [2023]the court considered a number of issues arising from defects in two developments, each consisting of a series of tower blocks completed between 2007 and 2012. In these projects, BDW was the developer and URS provided consultancy engineering services.
Who has a duty to whom?
Under section 1(1) of the DPA, a “person who undertakes work for or in connection with the provision of housing” has a duty to ensure that “the work undertaken is carried out in a professional manner or, as the case may be, professional… [so that]… the dwelling will be fit for habitation when completed”. Under s1(1)(a), such a duty is owed to a person who commissions the creation of a dwelling. BDW therefore argued that the URS owed it duties under the DPA.
URS argued that under s 1(4) this was not the case because BDW, as a party commissioning such works in the course of its business, owed duties under the DPA and therefore could not be a party to whom a duty was also owed. He also argued that the purpose of the DPA was to provide protection to individuals and not to protect corporate commercial developers.
The court agreed with BDW. He confirmed that the wording of s1(1)(a) was clear and meant that duties were owed to BDW. There was nothing in the terms of the APD to suggest that a party could not simultaneously owe and have obligations. Nor was there anything in the DPA to suggest that its protections should be limited to individuals.
How do LPD rights apply?
The 30-year time limit mentioned above was a significant issue in the current case, as BDW brought its action before the changes made by the DPA came into force. He was now seeking to amend his case to introduce arguments under the new legislation.
URS argued that BDW should not be able to rely on the new provision to update its case. BDW obviously disagreed. The court sided with BDW who held that because the changes were intended to have retrospective effect, the longer statutes of limitations should be treated as if they had always been in place. Nor were there any express words in the APD delimiting pending litigation from the effect of these provisions. This was in direct contrast to the situation where a case had been “finally determined” before the changes came into force.
When can a claim be made under the CLCA?
The CLCA was designed to allow one party to recover sums from others who are liable for the same damages for which the original party was liable. In this case, before any claim was made against it, BDW decided to undertake the required remedial works. He then asked for a contribution from the URS, arguing that the URS was also responsible for these works. These works were carried out at a time when (i) BDW had no interest in the properties (having sold its freehold interest) and (ii) where it could have properly raised a limitation defense as the changes to the LPD had not yet come into force.
URS raised a number of arguments against the claim under the CLCA; chief among them was that, before a claim could be brought under the CLCA, a claim against BDW should have been made or at least disclosed.
The court disagreed. His view was that the only requirement was that both parties (BDW and URS) be liable for the same damage. There was nothing within the terms of the CLCA that established the restrictions that the URS advocated.
Conclusions
This case underscores the fact that courts are likely to support claims brought against contractors, subcontractors, designers, and others involved in the original construction of a defective project.
The new legislation introduced by the BSA is being interpreted broadly and those who have participated in these projects will need to be aware of the potential for historical claims. For those receiving such claims (or even pre-action letters suggesting the existence of potential liability), clarification on the scope of the CLCA will be welcome as it shows a potential route to recovering a proportionate share of any liability incurred.
As for the question of whether this case will lead to a flurry of new claims? The answer, my friend, is blowing in the wind…
