Faculty of law blogs / UNIVERSITY OF OXFORD

What does retrospective mean? Post-BSA claims under the Defective Premises Act

Philip Britton LLB BCL is a Former Visiting Professor and Director, Centre of Construction Law and Dispute Resolution, King’s College London; former Senior Fellow (Melbourne Law Masters); co-author with Matthew Bell of Residential Construction Law (Hart Publishing, 2021)

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Philip Britton

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The Building Safety Act 2022 (BSA) will have significant impacts on construction litigation. This post discusses a recent case, URS Corporation Ltd v BDW Trading Ltd, in which the developers BDW Trading Ltd sought to amend their pleadings in the context of litigation begun prior to April 2022. The amendments sought stemmed from the changes made by the BSA to the limitation periods applicable to the Defective Premises Act 1972 (DPA).

 

Litigation challenges before the BSA

 A long-standing problem for anyone seeking to make a claim in England & Wales for damages for the rectification costs for defective works of construction (or loss of capital value) is the law of limitation. An earlier post outlines the challenges. With some simplification, time will start to run for a claim in contract when the breach occurred (could be early on, at the plans stage); and for a claim in tort, when the harm occurred. Such rules, though modified at the margin by the Latent Damage Act 1986, make it hard for any claimant not to be timed out who wishes to complain about a ‘latent defect’, only discovered long after construction has been completed. What it would be reasonable for a claimant to do on spotting what looks like a defect plays no role: if the fixed period specified by the Limitation Act 1980 has run out, the fact that the claimant has mobilised as soon as a problem becomes obvious will not help.

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Photo by Roman Melnychuk; Source: Unsplash

These procedural hurdles accompany ‘rights of action’ issues. If a claimant has a contractual link with their target defendant (including as an assignee or third party benefitting under the contract – very rare in residential circles) they can sue for its breach, assuming there are relevant quality obligations in the contract. Without such a contractual link (eg a subsequent purchaser of a home wishing to sue the developer or another original project party; or the same claimant wishing to sue the ‘building control’ body which permitted non-compliant work), the English common law of tort treats such situations as only exceptionally giving rise to a duty of care, leading to liability for negligence, at least if all that is claimed is the cost of rectification or loss of value (‘economic loss’).

In this unpromising context, the DPA s 1 acts as ‘a plank in a shipwreck’. Using neither contract or tort terminology, the DPA imposes a set of modest but real mandatory build quality obligations on any person ‘taking on work for or in connection with the provision of a dwelling’. It creates a right of action in anyone who requests that work or who acquires a legal or equitable interest in the dwelling (eg as a first or later buyer), including someone whose right of action came into being before they then disposed of that interest (the claimant’s situation as developer in URS Corporation Ltd v BDW Trading Ltd). Thus it can benefit not only an individual consumer but also a corporate entity (who requests that work), short-circuiting almost all the ‘right of action’ and ‘duty of care’ problems summarised above. However, in The Lessees and Management Company of Herons Court v Heronslea Ltd the Court of Appeal unhelpfully held that a building control body – public or private – does not ‘provide’ the dwelling whose construction it supervises, inspects and certifies. As originally legislated, the DPA s 1(5) imposed a fixed six-year limitation period from the completion of the work: in line with the basic periods for contract and tort, but problematic, once again, for defects declaring themselves long after construction is complete. And the duty is only triggered by ‘provision of a dwelling’, ie a complete dwelling, so Grenfell-type refurbishment work, or an extension being added to an existing home, were not caught by this part of the DPA.

 

BSA changes

The Government’s comprehensive legislative response to the impact of Grenfell Tower, the Building Safety Act 2022, makes significant changes across all types and tenures of residential accommodation. It brings future residential refurbishment projects within the scope of the DPA (s 2A, applicable only to those acting ‘in the course of a business’). It also extends the limitation rules for claims relying on the DPA s 1; both forwards (from 6 to 15 years: ‘to be treated as always having been in force’) and backwards (to 30 years)  The BSA extends the scope of the DPA in s 134; the limitation changes for England & Wales are in s 135, adding a new s 4B into the Limitation Act 1980. These take effect from this section’s commencement date (28 June 2022) and the forward looking extension applies equally to a different statutory right of action (yet to be brought into force for the first time): the Building Act 1984 s 38.

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Photo by Pixource; Source: Pixabay

How do these retrospective limitation changes affect potential claims? Courts are required to strike out claims which are newly in time if to allow them to go ahead would violate the defendant’s human rights under the Human Rights Act 1998 (perhaps the Article 1 of Protocol 1 right to peaceful enjoyment of possessions, and the Article 6 right to a fair trial). The BSA also makes special provision for claims where, under the new rules, time would run out within one calendar year after s 135 came into force (these still become time-barred at the end of that year); and for claims already settled by agreement or ‘finally determined by a court or arbitration’ (s 135(6)), which cannot be reopened. Note that this provision does not include the decisions of adjudicators in construction cases under the Housing Grants, Construction and Regeneration Act 1996: these remain only temporarily binding.

What ‘finally determined’ means looks like an issue in an early case to rely on s 135: URS Corporation Ltd v BDW Trading Ltd. This post-Grenfell litigation, between a residential developer and structural engineers (concerning the defendants’ design responsibility, which had allegedly resulted in unspecified ‘structural defects’ in a series of residential developments), was evidently already well under way when s 135 came into force. In the litigation’s tortuous pre-trial stages, limitation issues had been central; notably the developer’s potential liability to owners of flats in the blocks (for no more than six years, but there were arguments about its starting date, the engineers arguing that this was after the developers had sold on the freehold) and the impact of this on what losses the developer could validly claim against the engineers if it could establish their liability. It was long after Coulson LJ had, in January 2022, given the engineers permission to appeal from the Technology and Construction Court to the Court of Appeal on those preliminary issues that the possible impact of the BSA became obvious. The developers were now asking for permission to add a new claim under the DPA s 1 to the grounds of their appeal. They argued, in effect, that the time for this had now been extended backwards for an extra 24 years.

At this most recent stage, Coulson LJ agreed that it was right to allow the pleadings to be amended to include this new and separate claim before the Court of Appeal. It seemed relevant that a judicial decision on the merits of the case had not yet been reached, as all the many outings to court so far had been about the pleadings and striking out. He acknowledged that, in such a thicket of procedural detail and first-instance hearings, the impact of the BSA’s ‘finally determined’ test was not obvious, at [22]:

The section [135] is novel, and the issues to which it gives rise have never been considered before: because of the pragmatic approach he adopted, they were not considered in detail by the deputy High Court judge [Adrian Williamson KC in the TCC]. Depending on the precise issues which arise on these appeals, some appellate guidance may be helpful.

So these new limitation rules, though intended to benefit all claimants and make potential defendants newly vulnerable to claims originating many years ago, will bring with them plentiful opportunities for challenge and clarification by the courts; insiders will be looking out for the next (full) judgment of the Court of Appeal in URS v BDW. As the case seems to show, B2B litigants already in court about large-scale residential defects may more obviously benefit from the limitation changes than individual homeowners, who continue to suffer all the usual disincentives against undertaking civil litigation.

How to cite this blog post (Harvard style):

P. Britton. (2023) What does retrospective mean? Post-BSA claims under the Defective Premises Act. Available at:https://blogs.law.ox.ac.uk/housing-after-grenfell-blog/blog-post/2023/03/what-does-retrospective-mean-post-bsa-claims-under. Accessed on: 24/07/2024