Disputes Yearbook 2023:
Construction disputes

Judicial clarification on statutory defects claims and the basis of contribution claims

In the long-anticipated decision of URS Corporation Limited v BDW Trading Limited [2023] EWCA Civ 772, the Court of Appeal made several key findings in relation to a claim brought under Section 1 (s1) of the Defective Premises Act (DPA) and the Civil Liability (Contribution) Act 1978 (CL(C)A). These included clarifications that a commercial developer could be owed a statutory duty of care under s1(1)(a) DPA, and that for the purpose of the CL(C)A, the liability of a party (Party A) to contribute to another party (Party B) was not contingent upon a third party having served a formal claim on Party B. The Court of Appeal also made important findings in relation to the timing of accrual of a tortious cause of action where the relevant defect caused no immediate physical damage, as well as the retrospective application of the new 30-year limitation period for claims brought under s1 DPA, which was introduced last year by the Building Safety Act 2022. While most of the commentary on this case has focused on its implications for fire safety and defective cladding claims, the decision will be of general interest to the construction industry due to the wider application of the court's findings, particularly relating to the CL(C)A. See here for our analysis of the case and other ongoing fire/building safety-related claims.

Can a collateral warranty ever be a construction contract?

Abbey Healthcare (Mill Hill) Ltd v Simply Construct (UK) LLP [2022] EWCA Civ 823 was the first case in which the Court of Appeal considered whether a collateral warranty could ever be a "construction contract" as defined by the Housing Grants, Construction and Regeneration Act 1996 (HGCRA). The Court of Appeal adopted a broad interpretation of Section 104(1) HGCRA, which defines the term "construction contract", and concluded that the statutory right to adjudicate extended to a collateral warranty, thereby clarifying the extent to which statutory adjudication may be implied into contracts other than those under which construction works and services are paid for and performed. In December 2022, the Supreme Court granted permission to appeal, and is expected to examine the scope of s104 HGCRA and whether collateral warranties fall within the Act. The outcome of this case will be of particular interest to contractors and professionals who, following the Court of Appeal's decision, are more likely to face adjudication claims from a wider class of interested parties.