Limitation periods for claims under the Defective Premises Act 1972 - A review of URS v BDW and other ongoing fire/building safety-related claims

Overview

It has been over a year since the Building Safety Act 2022 ("BSA") overhauled the UK building safety regime. Among the many changes introduced by the BSA was the significant (and retrospective) extension to the limitation periods for bringing claims for defective work rendering a dwelling "unfit for habitation" under the Defective Premises Act 1972 ("DPA").

Since 28 June 2022, when the relevant provisions of the BSA came into force, the English courts have seen a number of claims brought pursuant to the DPA that would otherwise have been time-barred. The most notable of these is URS Corporation Limited v BDW Trading Limited [2023] EWCA Civ 772 in which, among other things, the Court of Appeal provided useful clarification in relation to the retrospective application of the extended 30-year limitation period for claims under s.1 DPA.

In this article, we examine URS v BDW and other ongoing fire/building safety-related claims that appear to take advantage of the retrospective 30-year limitation period, highlight any trends that may be emerging and set out our views on what to expect going forward.

Summary of changes to the limitation periods under the DPA

S.135 is the operative provision of the BSA. It extended the various limitation periods for bringing claims under the DPA as follows:

• From six to 30 years for claims in relation to new dwellings under s.1 DPA accruing before 28 June 2022.
• From six to 15 years for claims in relation to new dwellings under s.1 DPA accruing on or after 28 June 2022.
• 15 years for claims in relation to existing dwellings under new s.2A DPA accruing on or after 28 June 2022.[1]

Of these new limitation periods, the 30-year limitation period has been particularly controversial, not only because of its duration, but due to its retrospective effect. Retrospective legislation is rare as it involves a balance of conflicting public interests, with the public interest in certainty (and so the law not being changed retrospectively) usually outweighing the public interest underpinning the new legislation. In the case of the BSA, however, the need to provide redress to those impacted by historical industry-wide failings in building safety standards has prevailed.

Since s.135 BSA came into force, developers, contractors, and professionals alike have anxiously monitored the practical impact of the retrospective 30-year limitation period and the extent to which they may be exposed to historical liabilities. This is particularly so as the exceptions are limited: the 30-year limitation period can only be disapplied where a claim has already been settled by agreement between the parties or finally determined by a court or tribunal (s.135(6) BSA), or where the court/tribunal is satisfied that it is necessary to do so to avoid a breach of the defendant's human rights (s.135(5) BSA). The latter might arise if, for example, a defendant has, at the expiry of the previous limitation period, destroyed the records that it now needs to defend the claim, albeit this exception is inevitably very fact-specific.

A closer review of fire/building safety-related claims currently being pursued through the courts would appear to show just cause for the construction industry's concern regarding historical claims being brought back to life. However, certain features to emerge from these ongoing claims may also provide reassurance to potential defendants.

URS v BDW

URS Corporation Limited v BDW Trading Limited [2023] EWCA Civ 772 has been the most significant fire/building safety judgment to be handed down so far this year. It is a complex and widely reported judgment in which, among other things, the Court of Appeal confirmed that:

• The claims brought by the claimant (which comprised the cost of investigation, temporary works, evacuation of residents and permanent remedial works) were not claims for reputational damage, but conventional claims for damages to remedy defective work.
• The cause of action in tort accrued, at the latest, on practical completion, although the judgment does refer to cases where the cause of action was found to have accrued earlier.[2]
• A commercial developer can be owed a duty under s.1(1)(a) of the DPA.
• For the purpose of the Civil Liability (Contribution) Act 1978, the liability of a party (Party A) to make a contribution to another party (Party B) is not contingent upon a third party having served a formal claim on Party B.

Another issue that was considered by the Court of Appeal was the interplay between the retrospective application of the 30-year limitation period in relation to claims under the DPA and ongoing litigation (i.e. where the claim was commenced before s.135 BSA came into force). On this point, the Court of Appeal unequivocally confirmed the retrospective effect of the 30-year limitation period and found that, although there was an exception for claims which had been settled or finally determined, there was no exception relating to the rights of parties involved in ongoing litigation.[3]

URS v BDW was one of the first cases in which the claimant took advantage of the retrospective application of the longer 30-year limitation period. A review of ongoing claims being pursued in the TCC would suggest that an increasing number of claimants will look to do the same.

Other ongoing fire/building safety-related claims

It will come as no surprise that, since s.135 BSA came into force, the courts have received a steady influx of claims for breach of statutory duty under s.1 DPA, which had accrued before 28 June 2022 and would otherwise have been out of time. Of the TCC claims for which particulars were publicly available at the time of writing, there were at least ten such cases[4] at various stages of proceedings. Whilst the legislation is still in its relatively early days and the number of cases relatively few, the following features are of note:

1. Parties – The types of claimant include freeholders, leaseholders, developers, and contractors. Contrastingly, defendants appear to be limited largely to contractors (particularly D&B contractors) and architects, with just one case in which proceedings were brought against a developer. The limited number of defendant developers may be due to the fact that many claims against developers have already been settled following the various measures introduced by the UK government prior to the BSA coming into force, which sought to compel developers to remedy fire/building safety-related defects (e.g. the building safety pledge).
2. Nature of dwellings and timing of completion – Most of the dwellings at the heart of these claims form part of larger developments, and are described as having been completed between 2007 and 2010. The fact that none of the developments appears to predate 2005 may point to the practical difficulties in formulating and evidencing claims concerning buildings completed many years ago. Where contemporaneous evidence is limited, parties may have taken a pragmatic approach and settled outside of the courts.
3. Scope of duty owed under s.1 DPA – In one of the cases, the claimant is a contractor who has brought proceedings against a specialist manufacturer of timber frames and the architect whose appointment was novated ab initio to the contractor. Notably, one of the claimant's arguments is that, pursuant to the novation agreement, it was owed a duty under s.1 DPA. Whilst the claim appears to be in its early stages, it will be interesting to see how the courts decide this point if the claim ultimately proceeds to judgment.
4. Ancillary liability – Among the significant changes introduced by the BSA was to empower the High Court to make a Building Liability Order ("BLO"), which imposes joint and several liability on associated companies in relation to liability incurred by a company under the DPA.[5] Of the claims identified, there were only two (that were also related) where the claimant had sought a BLO against the parent company of the defendant contractor. At the time of review, none of the other ongoing claims included an application for a BLO, which is surprising given that most of the defendants appeared to belong to corporate groups. It is possible, however, that the broad and untested basis[6] on which a court will make a BLO is deterring parties from making out such a claim.

Lookahead  

Whilst there is still limited evidence to confirm that the "floodgates" of litigation have been opened, we can most likely expect a material increase in the number of historical fire/building safety-related claims brought under s.1 DPA, which would otherwise have been time-barred.

That said, each case will continue to turn on "the specific contractual provisions and specific fire safety standards applicable to the particular product chosen as well as on the particular cases pleaded and argued and the evidence called" – a point that was emphasised in the recent decision of Martlet Homes Ltd v Mulalley & Co Ltd [2022] EWHC 1813 (TCC). Of course, the older the claim, the more significant the evidential hurdles, both in bringing and defending claims, may be.

As mentioned above, several points of law also remain to be tested by the courts including the application of the human rights exception envisaged by s.135(5) BSA, the identity of persons to whom a duty may potentially be owed under s.1 DPA, as well as the basis on which a High Court will issue a BLO. With these being just some of the many legal issues to be confronted, it seems that the courts will continue to be busy with fire/building safety-related claims for some time yet.

[1] S.135 BSA introduced these new limitation periods by inserting new ss.4B(1) and 4B(4) in the Limitation Act 1980. [2] See Cameron Taylor Consulting Ltd v BDW Trading Ltd [2022] EWCA Civ 31. [3] See paragraph 160. [4] Identified using the litigation analytics platform, Solomonic. Our search was limited to claims commenced since 2020 for which the defendants had filed an acknowledgement of the claim with the court. [5] See s.130 BSA. A BLO might also be made in relation to liability incurred by a company under s.38 Building Act 1984 or as a result of "building safety risk" which s.130(6) BSA defines in relation to a building as meaning a "risk to the safety of people in or about the building arising from the spread of fire or structural failure". [6] A BLO will only be issued if the High Court considers it "just and equitable to do so" (section 130(1)). There are no direct authorities on the meaning of "just and equitable" in the context of BLOs, although it is generally thought to be a wide concept and other authorities would suggest that the court would be expected to consider all relevant matters at the time.

This article was originally published in our new publication "Spotlight on Building Safety: 360° Perspectives on the Building Safety Act 2022". To read the full magazine, please click here.

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